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.

Africa’s Debt Challenge – Specialized Advice From CWIIL Group of Companies

It’s been a rough year for the West African countries most affected by the Ebola virus that has ravaged their communities and crippled their economies, disrupting agriculture and trade.

Forecast to lose a combined $1.6 billion in predicted economic growth in 2015, the people of Guinea, Liberia and Sierra Leone breathed a collective sigh of relief when the International Monetary Fund (IMF) forgave a combined $100 million in loans, shortly after disbursing $130 million in aid last September. The intention was to free up funds for relief and recovery efforts.

But with the need to overhaul their health systems, these countries are once again accumulating debt—like the $160 million interest-free loan awaiting approval by the IMF executive board.

The acquisition of new debt is an emerging pattern among beneficiaries of the world’s most comprehensive debt reduction programme to date. The 1996 Heavily Indebted Poor Countries (HIPC) Initiative, supplemented by the 2005 Multilateral Debt Relief Initiative, has helped 35 sub-Saharan African countries cancel $100 billion in external debt. These internationally coordinated relief programmes, managed by the World Bank, IMF and the African Development Bank, were designed to find a sustainable solution to Africa’s debt burden.

No longer forced to divert scarce resources to repay costly loans amassed during the Cold War period by corrupt and repressive regimes, the poorest and most indebted countries on the continent were able to lower their public debt and increase social spending by almost 3.5% of their gross domestic product between 2001 and 2012, the World Bank and IMF claim. For example, Benin used its savings from debt to invest in rural primary health care and HIV programmes. Tanzania abolished primary school fees and Mozambique began offering free immunization to children.

Freeing up additional resources for development was another aim of the HIPC Initiative. However, a lot of the money forgiven was already tied up in arrears, meaning it was owed but had not yet been reimbursed, so there was no new cash flow and no real savings in terms of resources.

In some countries the write-off just helped mop up overdue debt. And while the initiative did erase most of the foreign debt of these countries, it did not clear all of it. What the whole process did achieve, according to a Huffington Post article by Marcelo Giugale, a World Bank director, was instilling “discipline” that came in handy when the price of oil, gas and minerals climbed in the mid-2000s and the technologies to look for these natural resources got better. To qualify for a debt cancellation, countries had to be transparent in their operations and open to scrutiny, and they had to monitor and report their poverty reduction strategies, invest savings into social programmes and refrain from accumulating expensive debt. Which is why, according to Mr. Giugale,  African governments had “more money to spend and new offers to borrow – this time from private bankers.”

Faced with the phasing out of the HIPC Initiative and a decline in official development assistance, some countries seized the opportunity provided by their healthier balance sheets and continued economic growth to explore new sources of funding. China, leading the group of emerging economies called BRICS (Brazil, Russia, India, China and South Africa), has been investing heavily in infrastructure.

International bond markets provide another avenue. According to Amadou Sy, the director of the Africa Growth Initiative at the Brookings Institution, a US think tank, 12 countries in sub-Saharan Africa have issued a total of $15 billion in international sovereign bonds. Investors are also keen to snatch up these bonds, seduced by the continent’s favourable growth outlook and promise of high returns. The World Bank reports average GDP in sub-Saharan Africa is projected to remain broadly unchanged at 4.6% in 2015, rising gradually to 5.1% in 2017.

Some observers worry that countries are borrowing too much and too fast. “Africa may have the fastest-growing continental economy on the planet,” freelance journalist Richard Walker writes in the Economist, “but growing fastest of all is debt – personal, corporate and government.”

Mr. Walker points to Ghana’s issuance in late 2014 of $1 billion in euro-denominated bonds, although the country is deep in debt and has what he calls Africa’s “worst-performing currency.”  The West African nation was one of the first beneficiaries of the HIPC initiative.

Côte d’Ivoire, the Democratic Republic of the Congo, Gabon, Namibia, Nigeria, Rwanda, Senegal and Zambia also beneficiaries of the debt cancellation programme, have also issued similar bonds.

Even with the recent surge in borrowing, most of the post-HIPC countries are not at risk of “debt distress,” a group of economists with the World Bank insists. Dino Moretto, Tihomir Stucka and Tau Huang concede that “some countries may be borrowing too quickly,” but they also specify that “overall, governments have been borrowing responsibly since receiving debt relief.”

The trio explain that one of the objectives of the debt relief programme was to clear debt overhang and allow countries to borrow again, responsibly. Many countries have been careful in taking on loans at commercial terms, and the World Bank and other development banks have been giving grants in lieu of loans to riskier, poorer countries.

Africa’s Current Debt

Africa’s current debt is the lowest it has been in decades, Oxford University professor Mthuli Ncube and Economic Advisor at the African Development Bank Zuzana Brixiova concur in their review for the European Centre for Development Policy Management. The fastest decline, they stress, is posted by the most indebted countries, because of debt relief and accompanying prudent policies.

Aid has been critical in helping low-income countries lift people out of poverty, but financing to the region has also increased in quality and quantity, spurred by the 2002 Monterrey Consensus and subsequent 2008 Doha Conference. These UN-backed global conferences brought together heads of state and top leaders in finance, business and humanitarian groups to realize a vision called Financing for Development (FfD). The Monterrey Consensus was also the impetus behind the HIPC Initiative, since it called for innovative mechanisms to address the debt owed by poor nations.

Meanwhile, the FfD July 2015 conference in Addis Ababa is intended to advance the debate on “responsible lending and borrowing” by tabling issues on improving domestic resource mobilization, including strengthening tax administration, curbing illicit financial flows, scaling up infrastructure investment and attracting private sector financing.

“Despite misgivings about certain countries, Africa is still in a fundamentally different place than it was 20 or 30 years ago when old debts were taken on,” Todd Moss, a senior fellow at the Washington-based Centre for Global Development, told Reuters, adding that taking out loans from private creditors puts a “higher burden” on leaders to be responsible.

To keep from reverting to old ways, analysts say, post-HIPC African countries will have to be smart with their handling of new loans. Borrowing strategies need to be put in place so governments can get a return on their investments in order to service their debts. Governments also need to be prepared to withstand shocks from price fluctuations on the natural resource markets and must reduce their dependency on commodity exports. Diversifying borrowing sources is another way to sensibly manage public debt, says Citigroup economist David Cowan in the Africa Research Institute publication, Counterpoints, referring to sovereign bonds as an alternative to concessional loans.

While concessional loans come with no strings attached, help raise a country’s debt profile and put it on the radar of international debt markets, Mr. Cowan cautions that they do present currency risks and can expose a defaulting borrower to specific legal risks, notably from hedge funds or private equity funds, also known as “vulture funds.”

Good old-fashioned tax collection, transparency and tapping into local currency debt markets are avenues that should not be ignored. In the end, sound fiscal and complementary monetary policies will prevail. It’s too soon to predict whether the post-HIPC African countries will maintain sustainable levels of public debt while wrangling with bottlenecks such as weak institutions, infrastructure investment gaps, poverty and (in some places) instability. Only time will tell.

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.

Think Beyond Microfinance When Talking About Businesswomen – Specialized Advice From CWIIL Group

As the Third International Financing for Development conference kicks off in Addis Ababa, Ethiopia, Africa is set to begin implementing its ambitious 50-year development blueprint, Agenda 2063, bringing into focus the issue of how to finance development plans.

Agenda 2063 will require significant financing from a wide range of sources to fund infrastructure development, industrialization, private sector growth, technology and human capital development if the continent is to achieve the socioeconomic transformation that it is envisioning. True, financing in general, is a challenge for Africa, but no group faces more barriers to accessing finance than the women of Africa.

Africa’s economic growth over the past decade has been positive, but the impressive numbers do not tell the whole story. While women own about 48% of all enterprises in Africa, the African Development Bank estimates that they account for only 20% of the continent’s banked population. Roughly four in every five women on the continent lack access to a bank account at a formal financial institution, compared to about one in every four men. The disparity is particularly glaring in agriculture. Although more than 70% of farmers in Africa are women, they benefit from only one-tenth of the credit given to small-scale farmers and less than 1% of total credit to agriculture.

The challenges African women face in accessing finance include women’s lack of collateral, legal and cultural barriers to land and property ownership, discriminatory regulations, limited employment in the formal sector, lack of availability of financial products targeted to their needs and the fact that banks do not fully understand female-run businesses or the market niches they occupy. These barriers have hindered the capacity of women to grow and develop businesses, which, as a result, has held back economic growth on the continent.

The widening disparity in access to finance has led to the rising popularity of microfinance for women. In the past decade, microfinance institutions, which include non-profit groups, savings and credit cooperatives, regulated specialized providers and others, have reached many women who were previously excluded from formal financing, through small-scale loans and credit to small enterprises and poor households.

Yet while the discussion about financing for development has widened in scope, the discussion about financing for women has remained stubbornly locked on one scale – micro. Speaking early this year in Addis Ababa at a conference of African finance ministers, Nkosazana Dlamini-Zuma, the chairperson of the African Union Commission, implored participants to think beyond “micro” when discussing finance for projects run by women in Africa.

“We hear micro this, micro that…there is nothing micro about women!” Ms. Dlamini-Zuma told participants.

Similarly, Elizabeth Rasekoala, the co-founder of SET4Women, the Southern African Reference Group on Gender, Science and Technology, urged participants at a conference on the role of women in implementing Agenda 2063 to “start thinking big and stop prefacing everything to do with women with ‘small’ or ‘micro’ but to engage them as entrepreneurs.”

Gender advocates say that as key drivers in implementing Africa’s post-2015 development agenda and Agenda 2063, female business owners must be empowered to go beyond small- and micro-enterprises and get access to the finance needed to create medium- and large-scale businesses. Access to finance on such a scale would be transformative, and empower women to enter productive value chains, expand hiring and employment opportunities, utilize efficient technologies and expand the reach of their businesses beyond their borders.

Analysts agree that for this goal to be reached, banks have to open their doors and ensure financial inclusion and increased access for women. This would require formal financial institutions to consider new and innovative approaches to conducting business in order to meet women’s needs. A small but growing number of African banks have developed products that target women, and others have adopted women-friendly banking procedures, including eliminating minimum balances, widening the scope of elements considered in credit evaluations, reducing collateral requirements and allowing alternate forms of collateral. Such practices, which have shown positive results and contributed towards reducing gender-based barriers, should be implemented and expanded by more banks on the continent.

According to gender advocates, empowering African businesswomen is critical; it demystifies credit application processes, addresses risk aversion and ultimately strengthens women’s access to financing. Other areas that might need to be strengthened include education and capacity building in financial literacy and business skills.

What Can Be Done

In order to create an enabling environment, governments will need to modify and adjust their legal, regulatory and supervisory frameworks to remove barriers to finance for women, such as discriminatory legal provisions that confine women to the legal status of minors and laws that prohibit women from owning property. After such laws and policies are changed, women and decision-makers should be informed of these changes.

Governments and development organizations, especially international financial institutions, also have important roles to play in promoting equal opportunities for women and men. They should encourage banks and other formal institutions to increase credit access for African women, and provide technical assistance and training to institutions that are unfamiliar with lending to women. They should also provide guarantees to raise the confidence of lending institutions so that they invest greater capital in women-owned businesses.

Finally, governments will need to bridge the gap between the formal and informal sectors by simplifying business registration procedures and encouraging women-owned businesses in the informal sector to register with governments and tax authorities, as this will also facilitate their access to financial markets.

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.