Tag Archive for: African Development Bank

Andrew Stegmann
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Africa Energy Insights: Virtual Event 2020

The Africa Energy Indaba is launching a series of Energy Insights with thought-provoking and progressive discussions from influential energy experts. The objective of the Energy Insights will be to identify and capitalize on opportunities that have the propensity to take energy businesses to unprecedented levels of growth in Africa. The inaugural Energy Insight will deliver an address by Mr. Wale Shonibare – Director, Energy Financial Solutions, Policy and Regulation from the African Development Bank on; Financing and regulatory trends in the African power sector – Perspectives from the African Development Bank.

KEY POINTS OF DISCUSSION INCLUDE:

  • The market for the financing of private sector transactions on power projects: key trends in regulation, tariffs, financials and procurement practices
  • The need for new instruments to fund power projects: examples of Blended Finance, Climate Finance, Public-Private Partnerships, and other instruments developed by the African Development Bank and its partners
  • The role of local currency and capital markets to fill the financing gap for power projects

Registration is free, and can be obtained by visiting this page.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Andrew Stegmann
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Pivotal Investments for African Recovery

Investments will be pivotal for an African recovery after Covid-19. Last week the Africa Investment Forum’s founding partners unveiled a unified COVID-19 response to support Africa’s private sector, which includes 15 deals valued at about USD3.79-billion.

Increased and decisive investment will be the channel for Africa’s economic recovery post COVID-19. Partners of the Africa Investment Forum expressed confidence in the continent’s potential to rebound from the ongoing health and economic crises.

“Africa will come out of this pandemic, tough as it is, and will build better and stronger economies. As partners of the Africa Investment Forum, the premier investment platform for Africa, our gaze must be clear. It must be to help Africa reboot its economy,” said African Development Bank President Dr. Akinwumi Adesina, during a two-day virtual meeting.

In a virtual marketplace which mirrored typical sessions of its annual market-days, the Africa Investment Forum convened over 190 participants including current and prospective partners, investors, and project sponsors. The Forum showcased its unified COVID-19 response and provided an update on its activities, as well as opportunities for new partners and investors to engage with the platform.

During the meeting, the Africa Investment Forum revealed 15 projects identified across five sectors for priority funding consideration under its unified COVID-19 response. The sectors include agriculture and agro-processing, energy, health, ICT and telecoms and industrial and trade. Collectively, these 15 deals which are from the Forum’s current portfolio, amount to USD3.79-billion and will help increase the continent’s self-sufficiency and resilience against future shocks. Four projects sponsors were invited to pitch their deals to over 100 investors present at the meeting. These included a dairy processing project in Angola, a vaccine manufacturing plant in Kenya, a cotton manufacturing project in Mozambique and a proprietary telemedicine platform in Nigeria.

Following the meeting, the Africa Investment Forum’s deal tracker mechanism was immediately deployed to capture investment interest and ensure effective investor-project matchmaking.

The meeting took place as the Africa Investment Forum continues to build on the successes of its first two years in bringing to market deals with transformative potential for Africa’s development.

“The Africa Investment Forum is not a talk shop. What we are trying to do is to focus our partner’s efforts on the platform’s bankable deals from the 2018 and 2019 portfolio, as well as some new ones in 2020,” said Chinelo Anohu, head and senior director of the Africa Investment Forum. “We are concentrating not just on the health sector, but also on other sectors that will help jumpstart recovery across the continent,” she said, adding that deals “more responsive” to the pandemic are being curated, in order to provide much-needed support to the private sector.

Beyond boardroom sessions, the Africa Investment Forum continues to support project sponsors through its Deal Tracker mechanism which monitors the conversion of investment interests to financing commitments and facilitates the progress of deals towards financial close. So far, the forum has facilitated the closure of eight deals valued at about USD2.18-billion from the 2018 portfolio.

The Africa Investment Forum, championed by the African Development Bank and its founding and institutional partners, is working to accelerate the closure of the continent’s investment gaps. Founding Partners are the African Development Bank; Africa 50; Africa Finance Corporation; African Export-Import Bank; Development Bank of Southern Africa; Trade and Development Bank; European Investment Bank; and Islamic Development Bank. Institutional partners include development finance institutions, multilateral development banks, commercial banks and institutional investors.

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Andrew Stegmann
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Mauritius and Ethiopia: Success Comes in Many Guises

Ethiopia and Mauritius show there is no single formula for putting a country on the road to progress.

Both Ethiopia and Mauritius are members of the African Union (AU) and the Common Market for Eastern and Southern Africa (COMESA). Apart from these links, it’s difficult to see much similarity between the landlocked Ethiopia which stretches over more than a million square kilometers and the small island nation of Mauritius.

What they have in common is that they have found a way to improve their economies. To do that, both nations’ politics needed to be less fractious. Mauritius has achieved that. Ethiopia shows signs that it is on the way to stability.

The other common denominator is textile manufacturing, although the two countries approached the opportunity from opposite ends. Mauritius chose to focus on the high-end market and has developed the skills and quality-control protocols needed to supply that niche. Ethiopia is building a sector which can handle huge volumes. A Bangladeshi garment manufacturer has set up a factory in Ethiopia which supplies H&M and a Sri Lankan company, Hela Clothing, has produced and shipped its one-millionth garment from its factory in Ethiopia. This is part of a drive by Ethiopia to increase its annual export earnings in clothing from $145-million to $30-billion (CNN).

In terms of a financial market index published by Absa in 2019, the two countries are at opposite ends of the scale. The survey concluded that Mauritius ranked second in Africa (behind South Africa) in a set of indicators including market depth, access to foreign exchange and transparency. Ethiopia placed 20th but – crucially and typically in the current environment – Ethiopia was sure to improve its position in 2020 because it is about to establish a stock exchange.

Reforms in Ethiopia are just beginning, Mauritius has been a work in progress for several decades.

Ethiopia

The Nobel Peace Prize winner for 2019 was Ethiopian Prime Minister Abiy Ahmed. He won the award primarily for unblocking a post-war stalemate between his country and Eritrea and calming other regional conflicts, but he has also made big changes domestically since taking office in 2018.

In the words of the Director of the Institute for Pan-African Thought and Conversation Adekeye Adebajo, Ahmed has been a “reformist new broom unleashing political freedoms, encouraging foreign investment and promoting reconciliation”.

The peace dividend has allowed the construction of a vital rail link to Djibouti and encouraged a number of new investors to visit Ethiopia, mostly notably from Turkey. Chinese companies have long been present in the country, with the previous rulers of Ethiopia having been close to China.

Ethiopian Airways has used the country’s strategic location between Asia and Europe to build Addis Ababa’s position as a freight and passenger hub. So successful has it been that in 2018 it replaced Dubai as the top transit hub for long-haul passengers to Africa.

The country’s population of about 94-million is young (about 50% are younger than 15 and 70% are younger than 30) and the state is focused on education. Science and technology are emphasised and the number of Ethiopians in higher education in 2017 was five times what it was in 2005 (World Bank).

Spending on public infrastructure has focussed on transport, energy and industrial parks. The percentage of public spending is due to come down, but it will be replaced by the private sector as a vigorous privatisation process begins. Manufacturing currently accounts for 10% of GDP so there is huge scope for growth. Other state-owned assets which will become available to private investors are in the following sectors: maritime, aviation, electricity, logistics and railways. Exports in renewable energy are expected to generate up to $1-billion annually.

Mauritius

Although Mauritius ranked second to South Africa in the Absa Financial Market Index, in almost every other index the island country is ranked number one in Africa.

For “Doing Business in Africa: Sub Saharan Africa 2018”, the World Bank places Mauritius 25th in the world, and first in Africa. The Heritage Foundation’s 2019 “Index of Economic Freedom” has exactly the same result. This trend is repeated across a range of measures; a global competitive index rates the country 45th and 1st, the WEF’s enabling trade report gives scores of 39th and 1st.

Where the country’s GDP per capita was around $400 at independence in 1968, it’s now above $10 000. Between 1977 and 2008, the country’s growth rate performed well above the Sub-Saharan average of 2.9%, at 4.6%.

As a colony Mauritius was a sugar-based mono-culture. Sugar accounted for 20% of GDP and 60% of exports. Today sugar cane is still in the export basket but there are also textiles, clothing, processed fish and cut flowers. Services exports such as financial services and tourism are rising, and medical tourism and higher education are seen as a high-value sectors worth investing in.

The African Development Bank (AfDB) expects growth of more than 5% in several sectors including information and communications technology, retail and wholesale, food processing and financial services. In 2016 the Kenyan economy received $50-million of investment from Mauritius-based banks and financial institutions (AfDB).

Mauritian post-independence politics was not always stable, but a parliamentary system and strong institutions have helped the country move forward. Property rights and an independent judiciary are factors that promote foreign investment. Shrewd investment in an Export Processing Zone helped to turn the economy away from a single commodity. Personal and corporate tax rates are a flat 15% and in 2018 property transfers were simplified and other reforms were introduced to encourage entrepreneurs.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Andrew Stegmann

African Growth at 7-Year High, But Not Thanks to Its Major Economies

Growth in Africa’s two largest economies may be sputtering along but that won’t stop the continent’s gross domestic product from expanding at the fastest pace since at least 2012.

GDP growth for the continent is forecast to accelerate to 4 percent this year, up from an estimated 3.5 percent in 2018, making it the fastest-growing region in the world after Asia, according to the African Development Bank. And that’s despite Nigeria and South Africa, which make up almost half of the continent’s GDP, “pulling down Africa’s average growth,” as the Abidjan-based lender said in its latest economic outlook report.

Nigeria’s GDP will expand by 2.3 percent in 2019, which is below the rate of population growth, as the government struggles to reduce the nation’s oil dependence and attract foreign investment. South Africa’s expansion will be even slower, at 1.7 percent, as the continent’s most-industrialized economy battles to recover from last year’s recession. Both countries are in the AfDB’s list of 10 slowest-growing economies.

While the powerhouses in western and southern Africa struggle to gain meaningful momentum, the continent’s economic growth will once again be driven by East Africa, which will be the fastest-expanding region for the fifth straight year. Ethiopia, Kenya, Rwanda and Tanzania all feature on the AfDB’s list of 10 fastest-growing economies for 2019. Egypt, the biggest economy after Nigeria and South Africa, will also help drive growth. Output in the Arab world’s most-populous country will rise around 5.5 percent this year as the government’s structural reforms attract more investment.

Subdued growth in southern Africa is due to South Africa’s weak output, which affects neighboring countries, the AfDB said. While West Africa’s prospects are more upbeat, they may be clouded by risks including uncertainty in global commodity prices and security concerns in some countries, the lender said.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: EJ Yao [1], [2].