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Developing World’s Share of Global Investment to Triple by 2030, Says New World Bank Report

Posted on 18 May 2013 by Africa Business

Seventeen years from now, half the global stock of capital, totaling $158 trillion (in 2010 dollars), will reside in the developing world, compared to less than one-third today, with countries in East Asia and Latin America accounting for the largest shares of this stock, says the latest edition of the World Bank’s Global Development Horizons (GDH) report, which explores patterns of investment, saving and capital flows as they are likely to evolve over the next two decades.

Developing countries’ share in global investment is projected to triple by 2030 to three-fifths, from one-fifth in 2000, says the report, titled ‘Capital for the Future: Saving and Investment in an Interdependent World’. With world population set to rise from 7 billion in 2010 to 8.5 billion 2030 and rapid aging in the advanced countries, demographic changes will profoundly influence these structural shifts.

“GDH is one of the finest efforts at peering into the distant future. It does this by marshaling an amazing amount of statistical information,” said Kaushik Basu, the World Bank’s Senior Vice President and Chief Economist. “We know from the experience of countries as diverse as South Korea, Indonesia, Brazil, Turkey and South Africa the pivotal role investment plays in driving long-term growth. In less than a generation, global investment will be dominated by the developing countries. And among the developing countries, China and India are expected to be the largest investors, with the two countries together accounting for 38 percent of the global gross investment in 2030. All this will change the landscape of the global economy, and GDH analyzes how.”

Productivity catch-up, increasing integration into global markets, sound macroeconomic policies, and improved education and health are helping speed growth and create massive investment opportunities, which, in turn, are spurring a shift in global economic weight to developing countries. A further boost is being provided by the youth bulge. With developing countries on course to add more than 1.4 billion people to their combined population between now and 2030, the full benefit of the demographic dividend has yet to be reaped, particularly in the relatively younger regions of Sub-Saharan Africa and South Asia.

The good news is that, unlike in the past, developing countries will likely have the resources needed to finance these massive future investments for infrastructure and services, including in education and health care. Strong saving rates in developing countries are expected to peak at 34 percent of national income in 2014 and will average 32 percent annually until 2030. In aggregate terms, the developing world will account for 62-64 percent of global saving of $25-27 trillion by 2030, up from 45 percent in 2010.

“Despite strong saving levels to finance their massive investment needs in the future, developing countries will need to significantly improve their currently limited participation in international financial markets if they are to reap the benefits of the tectonic shifts taking place,” said Hans Timmer, Director of the Bank’s Development Prospects Group.

GDH paints two scenarios, based on the speed of convergence between the developed and developing worlds in per capita income levels, and the pace of structural transformations (such as financial development and improvements in institutional quality) in the two groups. Scenario one entails a gradual convergence between the developed and developing world while a much more rapid scenario is envisioned in the second.

The gradual and rapid scenarios predict average world economic growth of 2.6 percent and 3 percent per year, respectively, during the next two decades; the developing world’s growth will average an annual rate of 4.8 percent in the gradual convergence scenario and 5.5 percent in the rapid one.

In both scenarios, developing countries’ employment in services will account for more than 60 percent of their total employment by 2030 and they will account for more than 50 percent of global trade. This shift will occur alongside demographic changes that will increase demand for infrastructural services. Indeed, the report estimates the developing world’s infrastructure financing needs at $14.6 trillion between now and 2030.

The report also points to aging populations in East Asia, Eastern Europe and Central Asia, which will see the largest reductions in saving rates. Demographic change will test the sustainability of public finances and complex policy challenges will arise from efforts to reduce the burden of health care and pensions without imposing severe hardships on the old. In contrast, Sub-Saharan Africa, with its relatively young and rapidly growing population as well as robust economic growth, will be the only region not experiencing a decline in its saving rate.

In absolute terms, however, saving will continue to be dominated by Asia and the Middle East. In the gradual convergence scenario, in 2030, China will save far more than any other developing country — $9 trillion in 2010 dollars — with India a distant second with $1.7 trillion, surpassing the levels of Japan and the United States in the 2020s.

As a result, under the gradual convergence scenario, China will account for 30 percent of global investment in 2030, with Brazil, India and Russia together accounting for another 13 percent. In terms of volumes, investment in the developing world will reach $15 trillion (in 2010 dollars), versus $10 trillion in high-income economies. China and India will account for almost half of all global manufacturing investment.

“GDH clearly highlights the increasing role developing countries will play in the global economy. This is undoubtedly a significant achievement. However, even if wealth will be more evenly distributed across countries, this does not mean that, within countries, everyone will equally benefit,” said Maurizio Bussolo, Lead Economist and lead author of the report.

The report finds that the least educated groups in a country have low or no saving, suggesting an inability to improve their earning capacity and, for the poorest, to escape a poverty trap.

“Policy makers in developing countries have a central role to play in boosting private saving through policies that raise human capital, especially for the poor,” concluded Bussolo.

Regional Highlights:

East Asia and the Pacific will see its saving rate fall and its investment rate will drop by even more, though they will still be high by international standards. Despite these lower rates, the region’s shares of global investment and saving will rise through 2030 due to robust economic growth. The region is experiencing a big demographic dividend, with fewer than 4 non-working age people for every 10 working age people, the lowest dependency ratio in the world. This dividend will end after reaching its peak in 2015. Labor force growth will slow, and by 2040 the region may have one of the highest dependency ratios of all developing regions (with more than 5.5 non-working age people for every 10 working age people). China, a big regional driver, is expected to continue to run substantial current account surpluses, due to large declines in its investment rate as it transitions to a lower level of public involvement in investment.

Eastern Europe and Central Asia is the furthest along in its demographic transition, and will be the only developing region to reach zero population growth by 2030. Aging is expected to moderate economic growth in the region, and also has the potential to bring down the saving rate more than any developing region, apart from East Asia. The region’s saving rate may decline more than its investment rate, in which case countries in the region will have to finance investment by attracting more capital flows. The region will also face significant fiscal pressure from aging. Turkey, for example, would see its public pension spending increase by more than 50 percent by 2030 under the current pension scheme. Several other countries in the region will also face large increases in pension and health care expenditures.

Latin America and the Caribbean, a historically low-saving region, may become the lowest-saving region by 2030. Although demographics will play a positive role, as dependency ratios are projected to fall through 2025, financial market development (which reduces precautionary saving) and a moderation in economic growth will play a counterbalancing role. Similarly, the rising and then falling impact of demography on labor force growth means that the investment rate is expected to rise in the short run, and then gradually fall. However, the relationship between inequality and saving in the region suggests an alternative scenario. As in other regions, poorer households tend to save much less; thus, improvements in earning capacity, rising incomes, and reduced inequality have the potential not only to boost national saving but, more importantly, to break poverty traps perpetuated by low saving by poor households.

The Middle East and North Africa has significant scope for financial market development, which has the potential to sustain investment but also, along with aging, to reduce saving. Thus, current account surpluses may also decline moderately up to 2030, depending on the pace of financial market development. The region is in a relatively early phase of its demographic transition: characterized by a still fast growing population and labor force, but also a rising share of elderly. Changes in household structure may also impact saving patterns, with a transition from intergenerational households and family-based old age support to smaller households and greater reliance on asset income in old age. The region has the lowest use of formal financial institutions for saving by low-income households, and scope for financial markets to play a significantly greater role in household saving.

South Asia will remain one of the highest saving and highest investing regions until 2030. However, with the scope for rapid economic growth and financial development, results for saving, investment, and capital flows will vary significantly: in a scenario of more rapid economic growth and financial market development, high investment rates will be sustained while saving falls significantly, implying large current account deficits. South Asia is a young region, and by about 2035 is likely to have the highest ratio of working- to nonworking-age people of any region in the world. The general shift in investment away from agriculture towards manufacturing and service sectors is likely to be especially pronounced in South Asia, with the region’s share of total investment in manufacturing expected to nearly double, and investment in the service sector to increase by more than 8 percentage points, to over two-thirds of total investment.

Sub-Saharan Africa’s investment rate will be steady due to robust labor force growth. It will be the only region to not see a decrease in its saving rate in a scenario of moderate financial market development, since aging will not be a significant factor. In a scenario of faster growth, poorer African countries will experience deeper financial market development, and foreign investors will become increasingly willing to finance investment in the region. Sub-Saharan Africa is currently the youngest of all regions, with the highest dependency ratio. This ratio will steadily decrease throughout the time horizon of this report and beyond, bringing a long lasting demographic dividend. The region will have the greatest infrastructure investment needs over the next two decades (relative to GDP). At the same time, there will likely be a shift in infrastructure investment financing toward greater participation by the private sector, and substantial increases in private capital inflows, particularly from other developing regions.

Source: WorldBank.org

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Developing countries to dominate global saving and investment, but the poor will not necessarily share the benefits, says report

Posted on 18 May 2013 by Africa Business

STORY HIGHLIGHTS
  • Developing world’s share of global investment to triple by 2030
  • China, India will be developing world’s largest investors
  • Boost to education needed so poor can improve their well-being

In less than a generation, global saving and investment will be dominated by the developing world, says the just-released Global Development Horizons (GDH) report.

By 2030, half the global stock of capital, totaling $158 trillion (in 2010 dollars), will reside in the developing world, compared to less than one-third today, with countries in East Asia and Latin America accounting for the largest shares of this stock, says the report, which explores patterns of investment, saving and capital flows as they are likely to evolve over the next two decades.

Titled ‘Capital for the Future: Saving and Investment in an Interdependent World’, GDH projects developing countries’ share in global investment to triple by 2030 to three-fifths, from one-fifth in 2000.

Productivity catch-up, increasing integration into global markets, sound macroeconomic policies, and improved education and health are helping speed growth and create massive investment opportunities, which, in turn, are spurring a shift in global economic weight to developing countries.

A further boost is being provided by the youth bulge. By 2020, less than 7 years from now, growth in world’s working-age population will be exclusively determined by developing countries. With developing countries on course to add more than 1.4 billion people to their combined population between now and 2030, the full benefit of the demographic dividend has yet to be reaped, particularly in the relatively younger regions of Sub-Saharan Africa and South Asia.

GDH paints two scenarios, based on the speed of convergence between the developed and developing worlds in per capita income levels, and the pace of structural transformations (such as financial development and improvements in institutional quality) in the two groups. Scenario one entails a gradual convergence between the developed and developing world while a much more rapid one is envisioned in the second.

In both scenarios, developing countries’ employment in services will account for more than 60 percent of their total employment by 2030 and they will account for more than 50 percent of global trade. This shift will occur alongside demographic changes that will increase demand for infrastructural services. Indeed, the report estimates the developing world’s infrastructure financing needs at $14.6 trillion between now and 2030.

The report also points to aging populations in East Asia, Eastern Europe and Central Asia, which will see the largest reductions in private saving rates. Demographic change will test the sustainability of public finances and complex policy challenges will arise from efforts to reduce the burden of health care and pensions without imposing severe hardships on the old. In contrast, Sub-Saharan Africa, with its relatively young and rapidly growing population as well as robust economic growth, will be the only region not experiencing a decline in its saving rate.

Open Quotes

Policy makers in developing countries have a central role to play in boosting private saving through policies that raise human capital, especially for the poor. Close Quotes

Maurizio Bussolo
Lead Author, Global Development Horizons 2013

In absolute terms, however, saving will continue to be dominated by Asia and the Middle East. In the gradual convergence scenario, in 2030, China will save far more than any other developing country — $9 trillion in 2010 dollars — with India a distant second with $1.7 trillion, surpassing the levels of Japan and the United States in the 2020s.

As a result, under the gradual convergence scenario, China will account for 30 percent of global investment in 2030, with Brazil, India and Russia together accounting for another 13 percent. In terms of volumes, investment in the developing world will reach $15 trillion (in 2010 dollars), versus $10 trillion in high-income economies. Again, China and India will be the largest investors among developing countries, with the two countries combined representing 38 percent of the global gross investment in 2030, and they will account for almost half of all global manufacturing investment.

“GDH clearly highlights the increasing role developing countries will play in the global economy. This is undoubtedly a significant achievement. However, even if wealth will be more evenly distributed across countries, this does not mean that, within countries, everyone will equally benefit,” said Maurizio Bussolo, Lead Economist and lead author of the report.

The report finds that the least educated groups in a country have low or no saving, suggesting an inability to improve their earning capacity and, for the poorest, to escape a poverty trap.

“Policy makers in developing countries have a central role to play in boosting private saving through policies that raise human capital, especially for the poor,” concluded Bussolo.

Regional Highlights:

East Asia and the Pacific will see its saving rate fall and its investment rate will drop by even more, though they will still be high by international standards. Despite these lower rates, the region’s shares of global investment and saving will rise through 2030 due to robust economic growth. The region is experiencing a big demographic dividend, with fewer than 4 non-working age people for every 10 working age people, the lowest dependency ratio in the world. This dividend will end after reaching its peak in 2015. Labor force growth will slow, and by 2040 the region may have one of the highest dependency ratios of all developing regions (with more than 5.5 non-working age people for every 10 working age people). China, a big regional driver, is expected to continue to run substantial current account surpluses, due to large declines in its investment rate as it transitions to a lower level of public involvement in investment.

Eastern Europe and Central Asia is the furthest along in its demographic transition, and will be the only developing region to reach zero population growth by 2030. Aging is expected to moderate economic growth in the region, and also has the potential to bring down the saving rate more than any developing region, apart from East Asia. The region’s saving rate may decline more than its investment rate, in which case countries in the region will have to finance investment by attracting more capital flows. The region will also face significant fiscal pressure from aging. Turkey, for example, would see its public pension spending increase by more than 50 percent by 2030 under the current pension scheme. Several other countries in the region will also face large increases in pension and health care expenditures.

Latin America and the Caribbean, a historically low-saving region, may become the lowest-saving region by 2030. Although demographics will play a positive role, as dependency ratios are projected to fall through 2025, financial market development (which reduces precautionary saving) and a moderation in economic growth will play a counterbalancing role. Similarly, the rising and then falling impact of demography on labor force growth means that the investment rate is expected to rise in the short run, and then gradually fall. However, the relationship between inequality and saving in the region suggests an alternative scenario. As in other regions, poorer households tend to save much less; thus, improvements in earning capacity, rising incomes, and reduced inequality have the potential not only to boost national saving but, more importantly, to break poverty traps perpetuated by low saving by poor households.

The Middle East and North Africa has significant scope for financial market development, which has the potential to sustain investment but also, along with aging, to reduce saving. Thus, current account surpluses may also decline moderately up to 2030, depending on the pace of financial market development. The region is in a relatively early phase of its demographic transition: characterized by a still fast growing population and labor force, but also a rising share of elderly. Changes in household structure may also impact saving patterns, with a transition from intergenerational households and family-based old age support to smaller households and greater reliance on asset income in old age. The region has the lowest use of formal financial institutions for saving by low-income households, and scope for financial markets to play a significantly greater role in household saving.

South Asia will remain one of the highest saving and highest investing regions until 2030. However, with the scope for rapid economic growth and financial development, results for saving, investment, and capital flows will vary significantly: in a scenario of more rapid economic growth and financial market development, high investment rates will be sustained while saving falls significantly, implying large current account deficits. South Asia is a young region, and by about 2035 is likely to have the highest ratio of working- to nonworking-age people of any region in the world. The general shift in investment away from agriculture towards manufacturing and service sectors is likely to be especially pronounced in South Asia, with the region’s share of total investment in manufacturing expected to nearly double, and investment in the service sector to increase by more than 8 percentage points, to over two-thirds of total investment.

Sub-Saharan Africa’s investment rate will be steady due to robust labor force growth. It will be the only region to not see a decrease in its saving rate in a scenario of moderate financial market development, since aging will not be a significant factor. In a scenario of faster growth, poorer African countries will experience deeper financial market development, and foreign investors will become increasingly willing to finance investment in the region. Sub-Saharan Africa is currently the youngest of all regions, with the highest dependency ratio. This ratio will steadily decrease throughout the time horizon of this report and beyond, bringing a long lasting demographic dividend. The region will have the greatest infrastructure investment needs over the next two decades (relative to GDP). At the same time, there will likely be a shift in infrastructure investment financing toward greater participation by the private sector, and substantial increases in private capital inflows, particularly from other developing regions.

 

Source: WorldBank.org

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IFC to Support Central Bank of Nigeria in Strengthening Sustainable Banking

Posted on 15 May 2013 by Africa Business

About IFC

 

IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments. In FY12, our investments reached an all-time high of more than $20 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world’s most pressing development challenges. For more information, visit http://www.ifc.org.

 

 

ABUJA, Nigeria, May 15, 2013/African Press Organization (APO)/ IFC, a member of the World Bank Group, today signed an agreement with the Central Bank of Nigeria to support the implementation of standards, policies and guidelines for environmental and social best practices in the Nigerian banking sector, with the aim of promoting sustainable and inclusive growth of the Nigerian economy.

 

 

As part of the agreement IFC will train Central Bank staff on how to supervise the financial sector in the implementation of the Nigerian Sustainable Banking Principles and Sector Guidelines, passed by the Central Bank of Nigeria in July 2012 and signed by all Nigerian banks.

 

 

The Nigerian Sustainable Banking Principles include commitments by the signatories to integrate environmental and social considerations into business activities, respect human rights, promote women’s economic empowerment, and promote financial inclusion by reaching out to communities that traditionally have had limited or no access to the formal financial sector.

 

 

Aisha Mahmood, Sustainability Advisor to the Governor of the Central Bank of Nigeria, said, “Working with IFC will help us further develop existing practices and capacities on environmental and social risk management among financial institutions. As regulators of the Nigerian financial sector, we recognize that financial institutions are key drivers in supporting sustainable economic growth.”

 

 

The partnership with the Central Bank of Nigeria is part of IFC’s Environmental Performance and Market Development Program, which aims to encourage sustainable lending standards among financial institutions in Sub-Saharan Africa and to promote environmental and social standards at a market level.

 

 

Solomon Adegbie-Quaynor, IFC Country Manager for Nigeria, said, “Sustainable business practices are important to financial institutions as they effectively add value both to the banking sector and to the general economy. We will support the Central Bank of Nigeria in this key initiative by sharing knowledge and technical resources.”

 

 

IFC is a leading investor in Sub-Saharan Africa and Nigeria, with a fast-growing, well-performing portfolio. IFC’s portfolio in Nigeria stands at $1.1 billion, the largest country portfolio in Africa and the eighth-largest globally.

 

 

SOURCE

International Finance Corporation (IFC) – The World Bank

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IFC Promotes Mobile Financial Services in Cote d’Ivoire to Encourage Inclusive Development

Posted on 14 May 2013 by Africa Business

ABIDJAN, Côte d’Ivoire, May 14, 2013/African Press Organization (APO)/ IFC, a member of the World Bank Group, and The MasterCard Foundation today convened key financial industry players to build further momentum for mobile financial services in Cote d’Ivoire. The event recognized the market’s enormous potential, especially for increasing access to finance for low income households, small scale businesses and in hard-to-reach areas.

 

Mobile phone penetration in Cote d’Ivoire is more than 90 percent, while only 14 percent of Ivoirians have access to financial services. Mobile network operators have registered more than two million mobile financial services customers in the past three years. The Ivorian market for mobile financial services is the largest and the most dynamic in the West African Economic and Monetary Union region.

 

Cassandra Colbert, IFC Resident Representative in Cote d’Ivoire,

said,”Improving access to finance is important for supporting shared prosperity in Cote d’Ivoire. IFC and The MasterCard Foundation want to help local financial institutions realize the opportunity in Cote d’Ivoire for the development of agent banking and mobile financial services that will accelerate the reach of financial services to those currently without banking services.”

 

At the seminar in Abidjan, IFC highlighted the business case for engaging in mobile financial services in Cote d’Ivoire. The workshop marked the beginning of the implementation of a four year program by IFC and The MasterCard Foundation to contribute to the development and expansion of mobile financial services in the country.

 

IFC and The MasterCard Foundation consider access to financial services a key tool in poverty alleviation that can dramatically change the lives of the economically marginalized.

 

About The Partnership for Financial Inclusion In January 2012 IFC and The MasterCard Foundation launched the $37.4 million Partnership for Financial Inclusion to bring financial services to an estimated 5.3 million previously unbanked people in Sub-Saharan Africa in five years. The program aims to develop sustainable microfinance business models that can deliver large-scale low-cost banking services, and provides technical assistance to mobile network operators, banks and payments systems providers in order to accelerate the development of low-cost mobile financial services.

 

About IFC

IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments. In FY12, our investments reached an all-time high of more than $20 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world’s most pressing development challenges. For more information, visit http://www.ifc.org

 

SOURCE

International Finance Corporation (IFC) – The World Bank

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Hope for financing Africa’s Development through private equity

Posted on 09 May 2013 by Africa Business

CAPE-TOWN, South-Africa, May 9, 2013/African Press Organization (APO)/ A high-level roundtable on Building Private Equity and Private Capital Markets in Africa, met on 8 May, to explore the promise and obstacles facing private capital investments in Africa. The roundtable of investors and policy makers met under the auspices of the Economic Commission for Africa (ECA) and the World Economic Forum on Africa to navigate the complex world of private equity, which in recent years has shown increased interest. According to the participants, this could be Africa’s next development financing frontier and could mark an end to an aid dependency.

However, the bane of negative perceptions, which portray Africa as “a risky continent in which to do business”, must be tackled. According to Mr. Carlos Lopes, Executive Secretary of the ECA, these perceptions hinder the growth of the sector.

“No one mentions the Saba insurgency in Malaysia or the Mindanao problem in the Philippines, which affect the investment climate for these countries; investors must understand that the Continent is not any riskier than other regions. There are far more people affected by conflict and insecurity in Asia than in Africa,” he stresses.

Issues that concern many industry players here at the World Economic Forum on Africa include working with the high cost of raising capital in Africa; the mix of regulatory systems; and low levels of skills in the area of private equity.

There are positive indications, however. The investors and policy makers here underscore that harmonizing regulatory systems and deepening regional integration as a means to develop capital markets across boundaries, could bring about long-term investments that could bolster the Continent’s development aspirations.

This view is backed by some good news sprouting across the landscape. After a decade of macro-economic reform, the financial sector in a country like Rwanda for instance, has grown at 20 per cent, which is more than double the average of 8 per cent growth rate in the overall economy over the last decade. Thus, African countries have the basis for developing capital markets that can finance the Continent’s development.

But entrenched views on doing development are being unhinged; and according to ECA officials, Vision 2063, currently under preparation in partnership with the African Union and the African Development Bank, will help to change mindsets.

“In this visionary document, we contend that the discourse on financing Africa’s development must shift; it must move out of the aid syndrome,” says Lopes. Furthermore, the ECA forthcoming study on domestic resource mobilization for Africa aims to demonstrate that the Continent can harness enough resources to finance development by tapping into reserves held by African Central Banks and in remittances.

A number of proposals are being mooted for further analysis, such as establishing minimum standards that governments could sign on to for attracting more private capital, particularly in areas where governments may not be able to invest.

With opportunities presented in many developments, such as Africa’s rapid urbanization and a growing middle-class, investors agree that entrepreneurship and growth is encouraging; the need for infrastructure is enormous and there is a need for pooled funds that could also help attract additional capital. In addition, these opportunities mean that the growth of Africa’s private equity ought to be based on a model that benefits local people.

More studies, however, are needed on private equity scalability and getting African markets to work together as a means of building liquidity. Industry players and policy makers here think that the regional integration experience can offer useful lessons in this regard. For instance, the expansion of the banking sector across the continent shows that it is possible to overcome national sovereignty concerns.

Given that Africa is in the early stages of developing its financial sector, there may be a need to create frameworks and institutions that will allow for leveraging existing capital. In addition, policymakers warn that leveraged buyouts are not in the interest of developing countries due to tax erosion. Countries may also need to balance short-term returns with long-term sustainability and promote related financing options, such as venture capital.

The message from policy makers and development finance experts is that while private equity investors have seen tremendous returns in Africa, thus fueling the idea of Africa as the new El Dorado, new investment may need to contend with Africa’s emerging priorities and tap into sectors that can use and develop local skills as well as benefit the Continent.

ECA intends to sponsor the establishment of a high-level task force that will analyze these issues in depth and present a proposal, as well as recommendations, for follow-up at the next World Economic Forum on Africa.

 

SOURCE

Economic Commission for Africa (UNECA)

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IFC Support for Country Bird’s Expansion Encourages Agribusiness, Employment in Southern Africa

Posted on 03 May 2013 by Africa Business

About IFC

IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments. In FY12, our investments reached an all-time high of more than $20 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world’s most pressing development challenges. For more information, visit http://www.ifc.org.

 

WASHINGTON, May 3, 2013/African Press Organization (APO)/ IFC, a member of the World Bank Group, today announced a convertible loan of $25 million to support poultry producer Country Bird’s expansion in Africa. IFC’s investment will allow Country Bird to increase production and operations; encouraging a thriving agribusiness enterprise and creating employment opportunities in Southern Africa and beyond.

 

With operations including South Africa, Botswana, Namibia and Zambia, Country Bird’s business comprises poultry breeding, broiler production, stock feed, and processing. IFC funding will support Country Bird increase chick production over the next three years in Zambia and Botswana, expand feed mill capacity in Zambia, and add poultry processing facilities and two soybean plants in South Africa.

 

Country Bird’s expansion will provide more affordable proteins in Southern Africa, create jobs in the rural areas where the company operates, and increase revenues for its 21,500 maize farmers and 112,000 workers employed through the company’s supply chain.

 

Kevin James, Founder of Country Bird, said “In just a decade since we started operations, Country Bird has become the third largest integrated poultry producer in South Africa. We are seeking to expand our production, so we can meet increasing consumer demand in the region. IFC’s investment supports Country Bird’s growth and our goal to provide more affordable proteins in Southern Africa.”

 

With increasing urbanization and disposable incomes, per capita meat consumption is expected to double in Africa by 2030, particularly that of poultry, which is cheaper relative to other meats.

 

Saleem Karimjee, IFC Senior Country Manager for Southern Africa, said, “IFC is committed to investing in companies like Country Bird that catalyze growth in this important sector. Africa needs dynamic regional agribusiness companies that help encourage competitiveness and can expand successful models outside their home markets.”

 

 

Agriculture accounts for one third to one half of GDP in most African countries, and 80 percent of the poor in Africa live in rural areas.

Promoting agribusiness in Africa is a key priority for IFC as is food security, given that the sector employs a large percentage of Africa’s labor force, and has a strong impact on micro, small and medium-sized enterprises.

 

 

SOURCE

International Finance Corporation (IFC) – The World Bank

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IFC supports Top Vocational Institution Reach More Students in Morocco

Posted on 25 April 2013 by Africa Business

About IFC

IFC, a member of the World Bank Group is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments. In FY12, our investments reached an all-time high of more than $20 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world’s most pressing development challenges. For more information, visit http://www.ifc.org

 

RABAT, Morocco, April 25, 2013/African Press Organization (APO)/ IFC, a member of the World Bank Group, is investing $7 million in the Institut des Hautes Etudes de Management, to support the leading private business and vocational school double its student body and expand educational access across the country.

 

IFC’s equity investment in HEM marks its first direct involvement with the education sector in Morocco. Increasing access to higher education for young people is a priority of the partnership, and as such HEM’s expansion plans include constructing new HEM Business School campuses in Fes and Oujda, and upgrading its Rabat campus.

 

Additionally, the partnership will facilitate affordable tuition fees by establishing a new technical university to reach more students and develop professional skills relevant to growing sectors of the Moroccan economy.

This new independent entity will expand and differentiate from HEM’s current model.

 

“This new university will increase opportunities for young people throughout Morocco, enabling them to make themselves employable and build a positive future,” said Yasmine Benamour of HEM.

 

The investment is part of the E4E Initiative to support the role of the private sector in providing post-secondary education and training that meets the demands of the labor market and improves youth employability. It is also in line with IFC’s strategy in Morocco to focus on job creation, access to finance for small businesses, and improved access to quality education

 

“Finding partners like HEM is crucial to the E4E Initiative,” said Guy Ellena, IFC Director of Manufacturing, Agribusiness, and Services in Europe, the Middle East, and North Africa. “The need to address youth unemployment is particularly urgent in North Africa and the Middle East, and private education has an important role to play.”

 

HEM is one of Morocco’s premier private business schools, with 25 years of experience and campuses in Rabat, Casablanca, Marrakech, Tangier, and Fes.

Recognizing the importance of employment following graduation, HEM ensures that 70 percent of its students find a job within three months of graduation.

 

SOURCE

International Finance Corporation (IFC) – The World Bank

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World Organization of Creditors took part in the United Nations thematic debates

Posted on 23 April 2013 by Africa Business

April 15, Robert Abdullin – President of the World Organization of Creditors – took part in the thematic debates at the United Nations headquarters in New York. These debates were devoted to the issue of “Global Economic Governance”.

Prime ministers and ministers of the developed and developing countries of the world also became participants of this event. The discussions were held in the run-up to the meeting of Secretaries of the Treasury and Central Banks Governors from all over the world in Washington.

During the opening of the thematic debates the President of the UN General Assembly Vuk Jeremić pointed out that “with the onset of the global economic, financial and debt crisis, discussions on the ways of improvement of global economic governance and its efficiency became more frequent”.  Jeremić also made a note of the importance of General Assembly in this process. According to him, it is General Assembly which should serve as the springboard for strengthening the interaction between international financial and trade institutions of G20 member countries and other alignments for the purpose of solving their common problems.

General Assembly Vice President, Jan Eliasson, addressed G20 member countries and suggested allocating 0.7% of GDP by way of an aid to the UN Assistance Fund for further development of the countries facing a difficult economic situation.

Robert Abdullin -  President of WOC – on the debates: “There were extremely interesting speeches made by Deputy Prime Minister of Turkey Ali Babacan, Minister for National Policies of Nicaragua government Paul Oquist and other high-ranking officials from different countries of the world;  they have expressed radically different opinions related to G20 and the future of the world”.

Discussions will be continued in May, 2013 within the framework of VI Astana Economic Forum in Kazakhstan. World Anti-crisis Conference (WAC) will be held in Astana under the auspices of the United Nations Organizations. Upon the results of WAC work there will be worked out recommendations on overcoming the world crisis for G-20 member countries.

REFERENCE: Non-profit Partnership, World Organization of Creditors (WOC) was established in 2009 to unify the creditors by well-established organizations with years of practical experience in the international financial market. WOC Research – is a project of the World Organization of Creditors (WOC) which analyzes the global and regional economies.

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Dubai: Annual Investment Meeting (AIM)

Posted on 04 April 2013 by Africa Business

Under the Patronage of His Highness Sheikh Mohamed Bin Rashid Al Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai

Organized by the UAE Ministry of Foreign Trade: The “Annual Investment Meeting” opens doors to investments in 80 countries and gathers 5000 investors

Lubna Al Qasimi: this meeting is in line with the continuous approach to adopt innovative initiatives and programs that improve the reputation of the UAE at the regional and international levels

 

Dubai, United Arab Emirates

 

Under the Patronage of His Highness Sheikh Mohamed Bin Rashid Al Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai, the Ministry of Foreign Trade is organizing the third edition of the Annual Investment Meeting (AIM) scheduled from April 30th until May 2nd at the Dubai International Convention and Exhibition Center (DICEC). With the participation of 80 countries and around 5000 investors and businessmen from the region and the world, the meeting is set to offer participants the opportunity for promoting and identifying available investment opportunities as well as identifying investment opportunities available in the participating countries.

This edition will be focused on the future of the global economy, the implications that are expected for direct foreign investments as well as growth prospects in emerging markets. AIM has been witnessing an increasing importance since its inception two years ago as the world currently faces political, economical and financial challenges that require word leaders to discuss obstacles that could be imposed by these challenges in the face of the flow of direct foreign investments while focusing on growth prospects in emerging markets at a time when the global economic power is moving from the West to the East.

Discussions shall assess the potential capacities of emerging markets as well as the long-term viability of future economic growth through increased investments and foreign trade. Discussions will also focus on matters related to successful policies and frameworks in order to overcome the challenges faced by a global economy that is dominated by recession and make growth and development prospects less negative.

Commenting on this, H.E. Sheikha Lubna Bint Khalid Al Qasimi, UAE Minister of Foreign Trade said: “the Annual Investment Meeting is in line with the ministry’s continuous approach to adopt innovative initiatives and programs that would improve the UAE’s reputation at the regional and international levels as one of the leading countries in the Middle East”.

 

“The United Arab Emirates adopts an open door policy to attract foreign investments and the central government is taking the necessary steps to establish the rules that facilitate investments. This is the reason why the UAE was ranked second among Arab countries attracting foreign investments in the last decade after Saudi Arabia which was ranked first, according to the latest report issued by the United Nations Conference on Trade and Development (UNCTAD)”, she added.

 

“Foreign direct investments (FDI) flowing into the UAE amounted to USD 7.7 billion of the total amount of FDI to GCC countries, which was USD 26 billion in 2011 – according to the World Investment Report 2012 issued by the UNCTAD. This is an additional incentive to push us to work better on offering the suitable environment to double this number in the years to come by taking advantage of the UAE’s competitive advantages at the global level”, she continued.

 

“The Annual Investment Meeting is a unique opportunity for investors to gather and study the current investment opportunities in emerging markets. It is designed as a unique platform where international investors interested in viable innovative projects and long term investments meet with businessmen and decision makers from many world countries. Many foreign companies and investors consider the UAE as a safe haven for investments at a time when other countries in the region are witnessing political and security turmoil. The UAE is safe and is politically stable. It also has a strong infrastructure and is considered a leading hub for trade, logistics and services in the region. Furthermore, it provides an encouraging investment environment that helps foreign companies and investors to develop their trade and investment activities in the country and expand their businesses in the markets of the region and the world starting from the UAE.” she said.

She also pointed out that the UAE is ranked fourth, globally, in EC Harris Built Asset Consultancy’s ‘Infrastructure Investment Index’, which is a report that ranks 40 countries across the globe according to how attractive they are to infrastructure funds.

“There are significant and radical changes in the source, direction and flow of foreign direct investments. According to the World Investment Report 2012 issued by the UNCTAD, the global rate of FDI in 2011 has exceeded the average that was registered prior to the economic crisis, reaching USD 1.5 trillion despite the challenges facing the global economy.  Whereas the rate of FDI increased in 2011 amongst economic blocks, developing countries attracted 45% of global investments”, H.E. Sheikha Lubna Bint Khalid Al Qasimi concluded.

 

Heads of State, Ministers of Trade and Industry, financiers and academics from Asia, Africa, Europe, the Middle East and the Gulf and international organizations such as the World Bank, the World Trade Center, the United Nations Industrial Development Organization (UNIDO) and the United Nations World tourism Organization (UNWTO) as well as food and agriculture international organizations are getting ready to participate in this high level event which has been gaining more importance since its inception.

Please visit http://www.aimcongress.com

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IFC Makes First Islamic Finance Investment in Sub-Saharan Africa

Posted on 28 March 2013 by Africa Business

About IFC

IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments. In FY12, our investments reached an all-time high of more than $20 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world’s most pressing development challenges.

 

NAIROBI, Kenya, March 28, 2013/African Press Organization (APO)/ IFC, a member of the World Bank Group, today announced the investment of $5 million equity in Gulf African Bank to support corporate finance and lending to small and medium businesses in

East Africa. The investment in Gulf African Bank marks IFC’s first

engagement with an Islamic finance institution in Sub-Saharan Africa.

 

Gulf African Bank, one of Kenya’s only two Islamic banks, has fourteen branches in Kenya, offering a range of Sharia-compliant banking products and services. The bank will use IFC’s financing to increase finance for retail and corporate customers, develop programs for women entrepreneurs and extend more services to small and medium businesses.

 

Jamal Al Hazeem, Chairman of Gulf African Bank, said, “We are delighted by IFC’s decision to take up a 15% shareholding stake in Gulf African Bank.

This is a clear indication of their belief not only in our Bank’s future but the future of Islamic Banking in the region. In addition to the IFC partnership, the Bank is undertaking a rights issue simultaneously to increase its capital base by an additional Kshs 850M. We feel priviledged that this is the first investment by IFC in an Islamic financial Institution in Sub_saharan Africa. IFC’s involvement will open up more opportunties for Gulf African Bank’s growth and expansion and enhance our processes.”

 

Gulf African Bank, which was established in 2007, has in the past five years greatly raised awareness in Kenya about Islamic banking. The bank’s shareholders are institutional investors from the Middle East and North Africa.

 

Oumar Seydi, IFC Director for East and Southern Africa, said, “IFC is committed to helping expand access to financial services in Africa. In Kenya, new financial market segments like Islamic banks enhance competition and can help reach a greater number of small businesses and women entrepreneurs, who are often excluded from banking services. IFC looks forward to working with Gulf African Bank to extend services and offer clients a more diverse range of financial products.”

 

In addition to the equity investment, a further $3 million trade line will be made available to Gulf African Bank under IFC’s Global Trade Finance Program. The Program complements the capacity of banks to deliver trade financing by mitigating risk in new or challenging markets where trade lines may be constrained.

 

To date, IFC’s investment and advisory services have partnered with 11 banks and one microfinance institution in Kenya, to help them sustainably increase business with small and medium enterprises.

 

For more information, visit http://www.ifc.org

 

SOURCE

International Finance Corporation (IFC) – The World Bank

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