Growth in Africa to reach 3.4 pct in 2017, 4.3 pct in 2018: OECD, AfDB

FILE PHOTO: Employees work on the manufacturing line at the United Aryan Export Processing Zone textile factory in Nairobi

Employees work on the manufacturing line at the United Aryan Export Processing Zone textile factory in Nairobi, Kenya April 13, 2017. REUTERS/Baz Ratner/File Photo

The Organisation for Economic Co-operation and Development (OECD) and the African Development Bank (AfDB) expect economic growth in Africa to pick up this year and next.

Presenting their latest forecasts at the sidelines of a G20 Africa summit in Berlin, both organisations forecast gross domestic product (GDP) to expand by 3.4 percent this year after 2.2 percent in the previous year.

For 2018, OECD and AfDB expect the upturn to gain further momentum with a predicted expansion rate of 4.3 percent.

Originally reported by Reuters.

Remember, no problem has a quick fix solution. Thus, always ensure to consult highly knowledgeable group of professionals whom would provide you with a collective advice, never individual advice. This group advice and approach is unique with CWIIL Group and is based on the overall Management Philosophy of all CWIIL Group Companies.

Consulting CWIIL Group of Companies, for any / all investment matters ensures advice based on highest level of knowledge which are given to you by a team of select research-oriented experts whom each will do their own assessment of your matter, and also assess it together, thus ensuring that in case a mistake has been made by one, it will be noticed and corrected even before it is being passed on to you. Receiving incorrect and un-knowledgeable investment advice can be disastrous and thus should be avoided.

CWIIL Group of Companies is a global group of multi-specialized units with diversified interests and activities, wherein each company is a separate legal entity registered under prevailing laws in different parts of the world. CWIIL Group of Companies Products, Services, Project and Solutions are in a multitude of Verticals including, but not limited to, Infrastructure, Power, Oil & Gas, Legal, Media, Technology, ITES, HR, Shipping, Aviation, Real Estate, Hospitals, Health and Medicine, Education, Funding & Investment, Business and Legal Consultancy, and Public Private Partnerships, and other CWIIL Group Units, worldwide, to name a few.

For Queries Feel Free to Contact :

Mr. Mohammad Mukhtar Mustafa,
Deputy Global Director, No. 4,
Strategic Business & Intelligence Division,
Email : deputy.gd.4@cwiilgroup.eu
Voice : +45.8176.1923
Connect : LinkedIn – Twitter – Facebook – Quora

For Queries Specific to Africa :
Email : africa@cwiilgroup.com , hq@cwiilgroup.eu
Web : www.cwiilgroup.com , www.cwiilgroup.eu

For Any / All Other Queries :
CWIIL Group Global Regional Headquarters Denmark,
Address : No. 1, Klokkebjergevej, DK6900 Skjern, Denmark
Voice : +45.5148.3608
Fax : +45.7014.1498
Email : corpcomm@cwiilgroup.eu
Web : www.cwiilgroup.eu
Connect : LinkedIn – Twitter – Facebook – Quora

Office Hours :
Monday to Friday : 10.00 – 17.00 CET.
Saturday : 10.00 – 14.00 CET.
Sunday : Closed.

The Corporate Communications Team would require minimum a fortnight for Reviewing & Responding to Queries, which please note.

Can Africa Fund Its Own Growth? – Investment Advice From CWIIL Group

Despite witnessing exceptional growth in development finance in recent years, Africa is still faced with the arduous task of mobilizing adequate resources to fund its growth and future transformation agenda. Given the paucity of external development assistance, and low commodity prices for its goods and services, Africa has awakened to the fact that it must rely on its own financial resources for sustainable development.

One of the leading pan-African bodies, the United Nations Economic Commission for Africa (ECA), says infrastructure development in Africa has the potential to raise gross domestic product (GDP) by 2% and develop the backbone for rapid industrialization, which in turn could boost the capacity of the continent to generate more domestic resources.

In its Innovative Financing for the Economic Transformation of Africa report, published in March 2015, ECA reckons that Africa’s current infrastructure needs stand at a whopping $93 billion annually, out of which $45 billion is mobilised, leaving an annual deficit of almost $50 billion.

Thus, as Côte d’Ivoire’s President Alassane Ouattara aptly put it, Africa’s greatest challenge is ensuring that its transformation is bolstered by sufficient and innovative sources of funding.

“One solution would be to speed up the development of our financial markets with a view to sparking the transformation of African economies,” President Ouattara told the Ninth African Development Forum in Morocco last year. “To do so, we must come up with innovative financial products and set up effective national and regional financial institutions and services.”

While Africa is fully cognizant of the significant strides it has made since the Monterrey Consensus in March 2002 in mobilizing financial and technical resources for development, it contends that there is a huge gap.

“Current policy, financing and investment patterns are not delivering the future we want. There are enormous unmet financing needs for sustainable development. Estimates vary due to the complexities of quantifying needs, but consistently point to a significant financing shortfall,” African heads of state and governments affirmed in a zero draft of the outcome document of the Third Financing for Development (FfD) Conference, held  in Addis Ababa, Ethiopia, in July.

What Are The Options?

Development analysts say Africa has realized that traditional sources of development finance, such as official development assistance and foreign direct investment, which have buoyed the continent’s development efforts over the years, are not sustainable and cannot be relied upon as its main sources of funding, as was shown during the 2007–2008 global financial crisis.

Oswell Binha, president of the Association of SADC (Southern African Development Community) Chambers of Commerce and Industry, says Africa can create a $2 trillion dollar economy if it can simplify rules that govern trade and domestic investment. “When you look at the thread of World Trade Organisation and economic partnership discussions around the continent, Africa has realised that intra-Africa trade is a serious opportunity from which to raise internal resources,” Binha told Africa Renewal.

Mateus Magala, African Development Bank (AfDB) resident representative in Zimbabwe, says Africa has the greatest investment potential of all frontier markets globally.

“These include sovereign wealth funds, pension funds, foreign reserves and remittances, among others. In addition, the continent has substantial natural resources and countries with extractive industries can tap into this important source of revenue,” Magala said in an interview with Africa Renewal.

He noted that with political determination and leadership to create appropriate governance mechanisms, Africa’s extractive revenues could drive the continent’s transformation by enabling it to invest in competitiveness, diversification and efficient and sustainable use of resources.

At an African Group Perspective Conference on FfD in March, stakeholders said they were committed to funding sustainable development by mobilizing domestic resources, clamping down on corruption and illicit financial flows (IFFs) and addressing issues surrounding good governance.

“To finance its development priorities, Africa has developed a financing framework that prioritises domestic resource mobilization and trade as main sources of financing structural transformation and sustainable development, with a focus on infrastructure, human capital and sustainable agriculture, which is essential for achieving African Sustainable Development Goals [SDGs],” Adam Elhiraika, the director of macroeconomic policy at the ECA, said at a recent regional meeting in Addis Ababa.

ECA says Africa’s resource potential is enormous. The continent can support, develop and implement viable domestic finance instruments such as financial flows from securitizing remittances, earnings from minerals and mineral fuels, international reserves held by central banks and the growing marketplace for private equity funds.

This is bolstered by evidence from the New Partnership for Africa’s Development (NEPAD) and other sources, which show that African countries raise more than $527.3 billion annually from domestic taxes, compared to $73.7 billion received in private flows and $51.4 billion in official development assistance.

Mr. Magala says $550 billion can be raised from official foreign reserves, $200 billion from pension funds, $150 billion from sovereign wealth funds, $50 billion from foreign direct investments, $60 billion from remittances and $20 trillion from monetizing natural resources.

Domestic Savings

Carbon-finance mechanisms can also be explored in greater depth for the implementation of some of the continent’s projects. A number of African countries are considering carbon taxation as a form of mobilizing additional financial resources and tackling the challenges posed by climate change.

However, the ECA says that compared to domestic savings in other developing regions, those in Africa remain low largely due to an unbanked population, though the potential exists if the informal sector’s resources are tapped and the sector is given incentives to use formal banking services. Africa’s savings-to-GDP was about 22% between 2005 and 2010, compared to 46% in East Asia and the Pacific and 30% for middle-income countries.

Mr. Binha says African governments should also foster an environment for high-level public-private sector consultations, considering that the private sector has so far played a limited role in implementing Africa’s development. “Engaging with the private sector genuinely increases investments internally and also becomes an effective means of attracting external investment. There is no rapport between governments and the private sector. There is a them-and-us syndrome,” notes Mr. Binha.

The ECA estimates the private equity market in Africa to be worth about $30 billion. In 2011 alone, private equity firms raised $1.5 billion for business in Africa.

Reducing The Cost Of Remittances

While remittances have increased, averaging $21.8 billion over the past decade, with countries such as Nigeria and Senegal receiving about 10% of their GDP in remittances, experts say the cost of sending remittances to Africa has remained the highest in the world, with the cost of transfers within Africa even higher. For remittances to have an impact, they must be made cheaper and used effectively to spur development.

Sometimes tough anti–money laundering laws and counter-surveillance regulations meant to combat financial terrorism can stifle remittances, thereby negating the continent’s progress. This recently happened when US banks plugged remittance services to Somalia.

Curtailing IFFs remains a major challenge that Africa must vigorously undertake. Such outflows from Africa may have been as high as $854 billion between 1970 and 2008, which amounts to an annual average of close to $22 billion in lost finances – more than half of it coming from the extractive industries sector. The domestic resource mobilization effort will receive a significant boost if IFFs from the continent are curtailed.

Several policy options have been suggested to stem the flows, such as raising awareness and sharing best practices among African policymakers and other stakeholders on the magnitude and development impact of the IFFs.

Some of the key initiatives taken so far include African Union finance ministers’ setting up the High Level Panel on Illicit Financial Flows from Africa, and the establishment of regional initiatives such as the African Regional Anti-Corruption Programme (2011–2016) and the African Tax Administrative Forum (ATAF).

Mr. Binha says Africa’s biggest challenges are confidence, the unfavourable policy matrix, the rigidities of domestic trade and intra-trade and differences across nations. “Confidence is a huge deterrent to attracting sustainable, dependable and credible internal investment. African states have to create a dashboard around which there is proper governance, accountability and dependability with investors. The potential is there, but Africa has to first clearly define its priorities in Agenda 2063, their cost and the mechanisms to meet them,” added Mr. Binha. Agenda 2063 is the African Union’s economic development blueprint for the 50 years following 2013, when it was adopted.

Maintaining Growth

According to the World Bank, to raise enough funds from domestic sources, Africa will need to grow at a rate of 5% of GDP for the next two decades. The bank forecasts that economic growth for African countries will slow to 4.0% in 2015 from 4.5% in 2014, a downturn that largely reflects the sharp fall in global prices for oil and other key commodities.

The World Bank’s chief economist, Francisco Ferreira, told African finance ministers and central banks chiefs during a recent spring (April) meeting in Washington, DC, that the forecast was below the 4.4% average annual growth rate of the past two decades and well short of Africa’s peak growth rates of 6.4% in 2002–2008. Although the boom is over, Ferreira noted, the “Africa Rising” phenomenon predated the boom and should be able to outlive it.

Innovative domestic financing mechanisms such as Africa50, launched by the AfDB last year, are therefore expected to lead or complement other external resources and new financing forces like the BRICS countries (Brazil, Russia, India, China and South Africa) to achieve Africa’s ambitious development needs.

These materials are not intended and should not be used as legal / investment advice or other recommendation. If you need a legal / investment opinion on a specific issue or factual situation, please contact a lawyer / investment advisor. Anyone using these materials should not rely on them as a substitute for legal / investment advice.

Remember, no problem has a quick fix solution. Thus, always ensure to consult highly knowledgeable group of professionals whom would provide you with a collective advice, never individual advice. This group advice and approach is unique with CWIIL Group and is based on the overall Management Philosophy of all CWIIL Group Companies.

Consulting CWIIL Group of Companies, for any / all investment matters ensures advice based on highest level of knowledge which are given to you by a team of select research-oriented experts whom each will do their own assessment of your matter, and also assess it together, thus ensuring that in case a mistake has been made by one, it will be noticed and corrected even before it is being passed on to you. Receiving incorrect and un-knowledgeable investment advice can be disastrous and thus should be avoided.

CWIIL Group of Companies is a global group of multi-specialized units with diversified interests and activities, wherein each company is a separate legal entity registered under prevailing laws in different parts of the world. CWIIL Group of Companies Products, Services, Project and Solutions are in a multitude of Verticals including, but not limited to, Infrastructure, Power, Oil & Gas, Legal, Media, Technology, ITES, HR, Shipping, Aviation, Real Estate, Hospitals, Health and Medicine, Education, Funding & Investment, Business and Legal Consultancy, and Public Private Partnerships, and other CWIIL Group Units, worldwide, to name a few.

For Further Queries or to Request a Personal Quote Feel Free to Contact :

Mr. Francis Thomas Matthews,
Deputy Global Director, No. 8
Marketing Research & Development Division,
Email : deputy.gd.8@cwiilgroup.eu
Voice : +45.8176.1924
Connect : LinkedIn I Twitter I Facebook I Tumblr

For Queries Specific to Africa :
Email: africa@cwiilgroup.comhq@cwiilgroup.eu
Web: www.cwiilgroup.comwww.cwiilgroup.eu

For Any / All Other Queries :
CWIIL Group Global Regional Headquarters Denmark,
Address : No. 1, Klokkebjergevej, DK6900 Skjern, Denmark
Voice : +45.5148.3608
Fax : +45.7014.1498
Email : corpcomm@cwiilgroup.eu
Web : www.cwiilgroup.eu
Connect : LinkedIn – Twitter – Facebook – Quora

Office Hours :
Monday to Friday : 10.00 – 17.00 CET.
Saturday : 10.00 – 14.00 CET.
Sunday : Closed.

The Corporate Communications Team would require minimum a fortnight for Reviewing & Responding to Queries, which please note.

New Bond Issue Set To Help Africa Go Green – Investment Consultancy From CWIIL Group of Companies

Johannesburg, or Jozi, as it is affectionately known, is the largest commercial hub on the continent, attracting millions of visitors each year, including students, artists and business leaders. Its population of about 4.8 million people is projected to grow to 6.5 million by 2040, according to the World Population Review.

Faced with this record growth and its foreseeable impact on the city’s aging infrastructure and social services, Johannesburg’s Executive Mayor Parks Tau gave a nod to a greener path for development in his 6 May 2015 State of the City address. Among the promised innovations he listed were low-flush toilets and water-saving urinals to become a standard feature in Johannesburg homes, offices and commercial sites, alleviating the pressure on the city’s scarce water reserves.

Organic waste is to be harvested for fuel and energy, and solar heaters and smart metres installed to reduce the consumption of electricity. Furthermore, to lower pollution, he hopes to reduce the commuters’ reliance on private vehicles in favour of walking and biking. The mayor also promised to improve the public transport system and switch to diesel fuel to lower the city’s carbon footprint.

To finance these initiatives, the city auctioned its first ever “green bond” on the Johannesburg Stock Exchange (JSE) last June. The bond, which is worth $143 million and is expected to mature in 2024, was 150% oversubscribed – a success! In a speech delivered shortly after the listing of the bond, Mayor Tau said it was a clear demonstration of “investor confidence in the City of Johannesburg and commitment to environmental stewardship and climate change.”

A bond is a type of loan or an IOU which companies, governments or banks use to finance projects. The issuer is obliged to pay back the debt within a time agreed and with a certain interest. What warrants the “green” label is that the proceeds are allocated to climate and environment-friendly projects. By issuing this type of bond, Johannesburg became not only a pioneer in Africa, but also within the C40 Cities Climate Leadership Group, a network of megacities sharing best practices and feasible solutions to changing weather patterns.

Green Bond Allure

Green bonds are not different from conventional bonds in their pricing. Much of their allure lies in the fact that investors feel they are being “socially responsible” and that they are having a positive impact on the environment. According to the World Bank’s senior sustainability advisor, Laura Tlaiye, investors are increasingly recognizing the threats environmental degradation and climate change can create for long-term financial value, and are considering it when they choose their investments.

At the same time, investors are also drawn to these fixed-income green loans that promise regular returns and a full refund of the principal amount once the bond has matured. And in the case of the World Bank, one of the largest financiers for climate-smart projects in developing countries, their bonds bring triple “A” ratings, indicating they are extremely safe and low-risk. But as the market expands, so does the need for more clarity on how the capital raised is used. International institutions providing development financing, like the European Investment Bank (EIB), were the first to enter the green bond market in 2007. A year later, the World Bank joined forces with the Swedish financial group, Skandinaviska Enskilda Banken AB (SEB), to respond to a demand by Scandinavian pension funds looking to invest in environmentally friendly fixed-income products. Since then, the World Bank has continued to raise a lot of capital for projects that seek to mitigate climate change in developing countries or seek to help affected people adapt to it.

So far, Tunisia has received a loan of over $30 million to promote better water management by using the country’s irrigation and drinking water more efficiently, while Morocco has successfully applied for funds to build North Africa’s biggest solar power plant in an effort to curb its reliance on coal and other fossil fuels. To date, the bank has issued the equivalent of $8 billion in green bonds through more than 90 transactions in 18 currencies.

Socially Responsible Investors

Climate change is presently one of the greatest challenges confronting the developed and the developing world, warns the African Development Bank (AfDB), which set up a green bond programme in 2013. Without a concerted effort to reduce greenhouse gas emissions, echoes the International Finance Corporation, an affiliate of the World Bank, the earth’s temperatures could rise considerably within this century. In order to keep global temperatures below 2 degrees Celsius as agreed by negotiators during the United Nations Framework Convention on Climate Change (UNFCC) negotiations.

Business editor and author Mark Gunther, in the Yale Environment 360 online magazine, questions whether green bonds could “bankroll a clean energy revolution” and is uncertain where the money would come from. In a sense, he argues, green bonds are the latest example of “themed bonds for a specific purpose ” pointing to the 1862 civil war bonds that helped finance the US army and World War II bonds sold by celebrities at the time.

With the market raking in billions of dollars a year, it seems the appetite for these new debts is growing as well as the emergence of new types of issuers as evidenced by the case of Johannesburg. In March 2014, corporations like Toyota joined the fray to fund consumer loans for electric and hybrid cars. During the same period, the global consumer goods company Unilever and the French utility company GDF Suez of France issued green bonds to finance their renewable energy and energy efficiency projects.

Although there is no market standard for the definition of green, Marilyn Ceci, managing director and head of Green Bonds at JP Morgan wrote in the global knowledge sharing platform called Meeting of the Minds, in February 2015, that there are the Green Bonds Principles (GBP), which serve as voluntary guidelines on transparency and disclosure and are endorsed by environmental groups, investors and other issuers.

Transparency

The four components of the GBP include a description of how the proceeds of the bonds are to be used, an outline of the decision-making process disclosing the criteria used to review and determine the eligibility of the project, as well as tracking the proceeds and reporting on how they are being used at least once a month.

The World Bank initially set the bar high with its rigorous six-stage selection, approval, review and reporting process. The eligibility criteria are verified by experts from the Norway-based Centre for International Climate and Environmental Research (CICERO). Interested investors can check the institution’s website to get detailed updates on the projects, complete with pictures, graphics and summaries.

The World Bank applies a “gold standard” in the selection of its eligible projects. For example, the bank’s green bond portfolio will not include nuclear projects or those that deal with natural gas extraction by fracking. The bulk of the bank’s green bond projects are in middle-income countries like Mexico, China and Africa’s Maghreb region like Egypt, Tunisia and Morocco whose low-carbon projects funded by the World Bank are in full swing.

Projects in sub-Saharan Africa receive support through the International Development Association (IDA), the bank’s fund for the poorest, which doles out “low-interest loans, credits or grants from donors rather than from capital markets”.

However, while African countries south of the Sahara have made a grand debut into the international debt market scene, their presence in the green bond market is nascent. For now it seems, Johannesburg is leading having listed the first “African green city bond” in the region.

These materials are not intended and should not be used as legal / investment advice or other recommendation. If you need a legal / investment opinion on a specific issue or factual situation, please contact a lawyer / investment advisor. Anyone using these materials should not rely on them as a substitute for legal / investment advice.

Remember, no problem has a quick fix solution. Thus, always ensure to consult highly knowledgeable group of professionals whom would provide you with a collective advice, never individual advice. This group advice and approach is unique with CWIIL Group and is based on the overall Management Philosophy of all CWIIL Group Companies.

Consulting CWIIL Group of Companies, for any / all investment matters ensures advice based on highest level of knowledge which are given to you by a team of select research-oriented experts whom each will do their own assessment of your matter, and also assess it together, thus ensuring that in case a mistake has been made by one, it will be noticed and corrected even before it is being passed on to you. Receiving incorrect and un-knowledgeable investment advice can be disastrous and thus should be avoided.

CWIIL Group of Companies is a global group of multi-specialized units with diversified interests and activities, wherein each company is a separate legal entity registered under prevailing laws in different parts of the world. CWIIL Group of Companies Products, Services, Project and Solutions are in a multitude of Verticals including, but not limited to, Infrastructure, Power, Oil & Gas, Legal, Media, Technology, ITES, HR, Shipping, Aviation, Real Estate, Hospitals, Health and Medicine, Education, Funding & Investment, Business and Legal Consultancy, and Public Private Partnerships, and other CWIIL Group Units, worldwide, to name a few.

For Further Queries or to Request a Personal Quote Feel Free to Contact :

Mr. Francis Thomas Matthews,
Deputy Global Director, No. 8
Marketing Research & Development Division,
Email : deputy.gd.8@cwiilgroup.eu
Voice : +45.8176.1924
Connect : LinkedIn I Twitter I Facebook I Tumblr

For Queries Specific to Africa :
Email: africa@cwiilgroup.comhq@cwiilgroup.eu
Web: www.cwiilgroup.comwww.cwiilgroup.eu

For Any / All Other Queries :
CWIIL Group Global Regional Headquarters Denmark,
Address : No. 1, Klokkebjergevej, DK6900 Skjern, Denmark
Voice : +45.5148.3608
Fax : +45.7014.1498
Email : corpcomm@cwiilgroup.eu
Web : www.cwiilgroup.eu
Connect : LinkedIn – Twitter – Facebook – Quora

Office Hours :
Monday to Friday : 10.00 – 17.00 CET.
Saturday : 10.00 – 14.00 CET.
Sunday : Closed.

The Corporate Communications Team would require minimum a fortnight for Reviewing & Responding to Queries, which please note.