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Living the FATCA life in Africa: New U.S. tax regulations add to burden of compliance on financial institutions across Africa

Posted on 21 May 2013 by Eugene Skrynnyk

Eugene Skrynnyk

Eugene Skrynnyk (CIPM, MILE, BComm) is a senior manager and specialist for the asset management industry in the Africa Sub-Area at Ernst & Young in Cape Town, South Africa.

Eugene Skrynnyk is the Ernst & Young Senior Manager and specialist for the asset management industry in the Africa Sub-Area.

Eugene holds a Certificate in Investment Performance Measurement (CIPM), Master of International Law and Economics (MILE) and Bachelor of Commerce and Finance (B.Comm.).

 

When the U.S. Department of the Treasury (“Treasury”) and Internal Revenue Service (“IRS”) issued final Foreign Account Tax Compliance Act (“FATCA”) regulations in January of this year, there was a sigh of relief that the financial services industry in Africa could begin to digest FATCA’s obligations. However, achieving FATCA compliance remains a challenge for banks operating across Africa.

FATCA is already law in the U.S. but negotiations are under way to enshrine it in national law of countries around the world via intergovernmental agreements (“IGAs”) with the U.S. While a variety of African jurisdictions will each face unique obstacles with FATCA compliance, many in the industry share a general unease with FATCA’s scope, as well as scepticism that FATCA’s rewards (an estimated US$1 billion in additional tax revenue annually) justify its expenses. Generally, FATCA attempts to combat U.S. tax evasion by requiring that non-U.S. financial institutions report the identities of U.S. shareholders or customers, or otherwise face a 30% withholding tax on their U.S. source income. Overwhelmingly, FATCA compliance obligations apply even where there is very little risk of U.S. tax evasion and it impacts all payers, including foreign payers of “withholdable payments” made to any foreign entities affecting deposit accounts, custody and investments.

General issues in Africa

Concerns about privacy abound. FATCA requires financial institutions to report to the IRS certain information about U.S. persons. For this reason, IGAs are being put in place so that institutions could instead report information to their local tax authority rather than the IRS. In some jurisdictions, investment funds and insurance companies are permitted to disclose information with client consent. In other jurisdictions, such disclosure is prohibited without further changes to domestic law. The process to make necessary changes locally involves time and effort.

Cultural differences in Africa need to be considered. In certain situations FATCA requires that financial institutions ask a customer who was born in the United States to submit documents explaining why the customer abandoned U.S. citizenship or did not obtain it at birth. African financial institutions never pose such a delicate and private question to their customers. Even apparently straight-forward requirements may pose challenges; for example, FATCA requires that customers make representations about their identities “under penalty of perjury” in certain situations. Few countries have a custom of making legal oaths, so it would not be surprising if African customers will be reluctant to give them.

FATCA contains partial exemptions (i.e., “deemed compliance”) and also exceptions for certain financial institutions and products that are less likely to be used by U.S. tax evaders. It still has to be seen to what extent these exemptions have utility for financial institutions in Africa. For example, the regulations include an exemption for retirement funds and also partially exempt “restricted funds” — funds that prohibit investment by U.S. persons. Although many non-U.S. funds have long restricted investment by U.S. persons because of the U.S. federal securities laws, this exemption could be less useful than it first appears. It should be pointed out that the exemption also requires that funds be sold exclusively to limited categories of FATCA-compliant or exempt institutions and distributors. These categories are themselves difficult for African institutions to qualify for. For example, a restricted fund may sell to certain distributors who agree not to sell to U.S. persons (“restricted distributors”). But restricted distributors must operate solely in the country of their incorporation, a true obstacle in smaller markets where many distributors must operate regionally to attain scale.

Other permitted distribution channels for restricted funds are “local banks,” which are not allowed to have any operations outside of their jurisdiction of incorporation and may not advertise the availability of U.S. dollar denominated investments.

Challenges and lessons learned – the African perspective

Financial institutions will have to consider what steps to take to prepare for FATCA compliance and take into account other FATCA obligations, such as account due diligence and withholding against non-compliant U.S. accountholders and/or financial institutions.

The core of FATCA is the process of reviewing customer records to search for “U.S. indicia” — that is, evidence that a customer might be a U.S. taxpayer. Under certain circumstances, FATCA requires financial institutions to look through their customers and counterparties’ ownership to find “substantial U.S. owners” (generally, certain U.S. persons holding more than 10% of an entity). In many countries the existing anti-money laundering legislation generally requires that financial institutions look through entities only when there is a 20% or 25% owner, leaving a gap between information that may be needed for FATCA compliance and existing procedures. Even how to deal with non-FATCA compliant financial institutions and whether to completely disengage business ties with them, remains open.

The following is an outline of some of the lessons learned in approaching FATCA compliance and the considerations financial institutions should make:

Focus on reducing the problem

Reducing the problem through the analysis and filtering of legal entities, products, customer types, distribution channels and account values, which may be prudently de-scoped, can enable financial institutions to address their distinct challenges and to identify areas of significant impact across their businesses. This quickly scopes the problem areas and focuses the resource and budget effort to where it is most necessary.

Select the most optimal design solution

FATCA legislation is complex and comprehensive as it attempts to counter various potential approaches to evade taxes. Therefore, understanding the complexities of FATCA and distilling its key implications is crucial in formulating a well rounded, easily executable FATCA compliance programme in the limited time left.

Selecting an option for compliance is dependent on the nature of the business and the impact of FATCA on the financial institution. However, due to compliance time constraints and the number of changes required by financial institutions, the solution design may well require tactical solutions with minimal business impact and investment. This will allow financial institutions to achieve compliance by applying low cost ‘work arounds’ and process changes. Strategic and long-term solutions can be better planned and phased-in with less disruption to the financial institution thereafter.

Concentrate on critical activities for 2014

FATCA has phased timelines, which run from 2014 to 2017 and beyond. By focusing on the “must-do” activities, which require compliance as of 1 January 2014 – such as appointing a Responsible Officer, registering with the IRS, and addressing new client on-boarding processes and systems – financial institutions can dedicate the necessary resources more efficiently and effectively to meet immediate deadlines.

Clear ownership – both centrally and within local subsidiaries

FATCA is a strategic issue for the business, requiring significant and widespread change. Typically it starts as a ‘tax issue’ but execution has impacts across IT, AML/KYC, operations, sales, distribution and client relationship management. It is imperative to get the right stakeholders and support onboard to ensure that the operational changes are being coordinated, managed and implemented by the necessary multidisciplinary teams across the organization. These include business operations, IT, marketing, and legal and compliance, to name but a few. Early involvement and clear ownership is key from the start.

Understand your footprint in Africa

Many African financial institutions have operations in various African countries and even overseas, and have strategically chosen to make further investments throughout Africa. The degree to which these African countries have exposure to the FATCA regulations needs to be understood. It is best to quickly engage with appropriate stakeholders, understand how FATCA impacts these African countries and the financial institutions’ foreign subsidiaries, and find solutions that enable pragmatic compliance.

What next for financial institutions in Africa?

Negotiations with the U.S. are under way with over 60 countries to enshrine FATCA in national law of countries around the world via IGAs. Implementation of FATCA is approaching on 1 January 2014 and many local financial institutions have either not started or are just at the early stages of addressing the potential impact of FATCA. In South Africa, only few of the leading banks are completing impact assessments and already optimizing solutions. Other financial services groups and asset management institutions are in the process of tackling the impact assessment. Industry representative in Ghana, Kenya, Mauritius, Namibia, Nigeria and Zimbabwe have started engaging relevant government and industry stakeholders, but the awareness is seemingly oblivious to date. In the rest of Africa, FATCA is mainly unheard of.

Financial institutions choosing to comply with FATCA will first need to appoint a responsible officer for FATCA and register with the IRS, ensure proper new client on-boarding procedures are in place, then identify and categorize all customers, and eventually report U.S. persons to the IRS (or local tax authorities in IGA jurisdictions). Institutions will also need to consider implementing a host of other time-consuming operational tasks, including revamping certain electronic systems to capture applicable accountholder information and/or to accommodate the new reporting and withholding requirements, enhancing customer on-boarding processes, and educating both customers and staff on the new regulations. Where possible, institutions should seek to achieve these tasks through enhancing existing initiations so as to minimise the cost and disruption to the business.

Conclusion

Financial institutions in Africa face tight FATCA compliance timelines with limited budgets, resources, time, and expertise available. This is coupled with having to fulfil multiple other regulatory requirements. To add to the burden, FATCA has given stimulus to several countries in the European Union to start discussing a multilateral effort against tax evasion. The support of other countries in the IGA process indicates that some of these countries will follow with their own FATCA-equivalent legislation in an attempt to increase local tax revenues at a time when economies around the world are under unprecedented pressure. The best approach for African financial services industry groups is to engage their local governments in dialogue with the IRS and Treasury, while for African financial institutions to pro-actively assess their FATCA strategic and operational burdens as they inevitably prepare for compliance.

 

About Ernst & Young

Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 167,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

The Ernst & Young Africa Sub-Area consists of practices in 28 countries across the African continent. We pride ourselves in our integrated operating model which enables us to serve our clients on a seamless basis across the continent, as well as across the world.

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Ernst & Young refers to the global organisation of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. All Ernst & Young practices in the Africa Sub Area are members of Ernst & Young Africa Limited (NPC). Ernst & Young Africa Limited (NPC) in turn is a member firm of Ernst & Young Global Limited, a UK company limited by guarantee. Neither Ernst & Young Global Limited nor Ernst & Young Limited (NPC) provides services to clients.

For more information about our organisation, please visit www.ey.com/za

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Aung San Suu Kyi to attend the 2nd Myanmar Oil and Gas Summit

Posted on 21 May 2013 by Africa Business

Aung San Suu Kyi gives speech to supporters at Hlaing Thar Yar Township in Yangon, Myanmar on 17 November 2011. Author Htoo Tay Zar. Source: Wikipedia.org

 

It is with great pleasure that we are able to announce that Daw Aung San Suu Kyi, Nobel Prize laureate and Chairperson of the National League for Democracy will be attending The 2nd Myanmar Oil and Gas Summit, Yangon, 17-18 June.

The conference and exhibition which is endorsed by the ASEAN Council on Petroleum (ASCOPE) will also be attended by a delegation from the Myanmar Oil and Gas Enterprise (MOGE), local and international oil companies and service providers form throughout the world.

To receive the latest event agenda as well as registration details, please reply to this email and my colleague will be in touch. This is the largest oil and gas event which takes place in Myanmar and we do expect it to sell out again.

SPEAKERS INCLUDE:

Ms Cho Cho Wynn, Deputy Director General, MINISTRY OF NATIONAL PLANNING & ECONOMIC DEVELOPMENT / DIRECTORATE OF INVESTMENT AND COMPANY ADMINISTRATION (DICA)

VICTORINO BALA, Secretary in Charge, ASEAN COUNCIL ON PETROLEUM (ASCOPE)

U KYAW SOE, Exploration Geologist, PARAMI ENERGY DEVELOPMENT CO LTD

DR DEVA GHOSH, Professor in Geophysics, Universiti TEKNOLOGI PETRONAS,

U Kyaw Kyaw Hlaing, Chairman, SMART GROUP OF COMPANIES

U LYNN MYINT, Vice President, NORTH PETRO-CHEM CORPORATION (MYANMAR), Former Chief Geologist, MOGE

U AUNG MIN, Freelance Consultant, ASIA PIONEER PETROLEUM EXPLORATION TEAM, FORMER MOGE

U AUNG MYAT KYAW, Secretary Geotechnical Committee MYANMAR GEOSCIENCES SOCIETY

DR ANDRZEJ BOLESTA, Economic Counsellor, EMBASSY OF THE REPUBLIC OF POLAND IN BANGKOK

CHRIS FAULKNER, CEO, BREITLING OIL & GAS

JOHN MCCLENAHAN, Ashurst, PARTNER

JAMES FINCH, DFDL Mekong Group, PARTNER

Kenneth Stevens, Managing Partner, LEOPARD CAPITAL

Sebastian Pawlita, Partner, POLASTRI WINT & PARTNERS

DR EULOGE ANICET NKOUNKOU, Minerals on Energy, INTERNATIONAL LAW OF PETROLEUM EXPERT

Please visit: http://www.myanmarsummit2013.com/

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Daily Analysis for Monday May 20

Posted on 21 May 2013 by Africa Business

This week begins with great anticipation for profitable trading opportunities. Banks in Europe and Canada will be closed on Monday, but traders could take advantage of the release of the Australian Monetary Policy Meeting Minutes. Later in the week, we are expecting inflation and retail sales data out the United Kingdom. These announcements will surely pave a clear direction for the British Pound. Meanwhile, home sales in the world’s largest economy will be put forth on Thursday. Whether the U.S. dollar is affected, that remains to be seen.

USD/CAD


Friday’s inflation report was softer than consensus expectations. Headline CPI is increasing at its slowest since October 2009 when the economy was still experiencing the consequences of the recession. In this environment, inflation is clearly not the main radar the Bank of Canada is looking at for now, but growth is. Given our expectations of subpar growth for 2013, rate hikes in Canada are unlikely anytime soon. Look for the Loonie to continue weakening in the coming days.

Stop loss 1.0250

Take profit 1.0315

Gold


The yellow metal started the new week on the wrong foot, tumbling during Monday’s morning session as traders increased their bearish bets on this commodity. It has been falling since October 2012, with the sharpest market movement taking place just last month. We have recently reached the lowest point last seen on April 14th. Traders are advised to hold onto their short positions until further notice. We expect to reach $1,300 within days, possibly by Thursday of this week.

Stop loss $1,370

Take profit $1,300

USD/ILS


The Bank of Israel surprised with a 25 basis point rate cut to 1.5% last week, an intra-meeting move. The next scheduled meeting is set for May 27th. We’ve been looking for more cuts, especially as the Shekel has strengthened in recent weeks. As it cut rates, the central bank noted that the shekel has been boosted by natural gas sales and global monetary easing. Furthermore, the Bank of Israel announced a plan to increase its holdings of foreign exchange in an effort to offset the money from gas sales. For now, the high probability of sequential rate cuts suggests this pair is likely to continue heading north. We’re currently aiming at 3.6370.

Stop Loss 3.6316

Take profit 3.6370

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DC Finance’s CEO will be visiting NYC from June 17thto promote the East Coast Family Office & Wealth Management Conference and the firm’s institutional investment, corporate finance, going public and family office events in Israel. Available for meetings

Posted on 21 May 2013 by Africa Business

 

DC Finance, the manager of one of the world’s largest Family Office events, ( www.israelwealth.com), is proud to present the East Coast’s top HNWI & SFOs wealth management event – The Annual East Coast Family Office & Wealth Management Conference, OCT 2nd, at the Union League Club, New York City ( www.nyc-wealth.com).

We are currently seeking firms who wish to support and join this 1st tier event. Mr Denny Chared, DC Finance’s CEO, will be more than happy to meet firms who may be intrested in meeting our target audiance of SFOs and HNWI.

The event will bring together 200 UHNWI, HNWI and SFOs with an average net worth of $400 million, with 50 of the best speakers in the fields of oil and gas investments, real estate, homeland security, high tech investments, philanthropy, private family banks, families in business, direct investing, family office, estate planning, trusts and other various investment alternatives.

Our current confirmed speakers lisr include: Dr. Yossi Vardi, Mr. Martin S. Indyk, vice president and director of the Foreign Policy Program at the Brookings Institution in Washington D.C., and former U.S. ambassador to Israel Mr. Howard Cooper , CEO, Cooper Family Office | Mr. David Sable , Global CEO, Y&R | Mr, Tewodros Ashenafi ,  CEO, SouthWest Energy Ltd, Ms. Kay Koplovitz , Founder, USA Networks and Chairman and CEO of Koplovitz & Co. LLC. Kay Koplovitz | Mr. Dror Berman , Founding Managing Partner, Innovation Endeavors (The Eric Schmidt Investment Fund), Ms. Wendy Craft , Executive Vice President and General Counsel, Fulcrum Equities | Mr. Lowell Sands , Rosewood Resources | Mr. Angelo J. Robles, CEO, Family Office Association Mr. Munib R. Masri, Chairman, Engineering and Development Group | Mr. David Gorman , Americas Advisor, The Table Club | Ms. Candice Beaumont , Managing Director, L. Investments | Mr. Harold F. “Rick” Pitcairn , II, CFA, CIO, Pitcairn and Chairman, Wigmore Association | Mr. Steve Oyer , Partner, Grail Partners | Mr. Ira Perlmuter , Head of Family Office Direct Investing, T5 Equity Partners| Mr. Nirmal Saverimuttu , Principal, Virgin Group | Mr. Andy Unanue , Managing Partner, AUA Private Equity Partners | Ms. Karen Wawrzaszek , Managing Director, Pitcairn | Mr. Warner King Babcock , Chairman and CEO, AM Private Enterprises, Inc. | Ms. Raya Strauss Bendror , President and Co-Owner, Strauss Investment, The Strauss Family | Ms. Nava Michael Tsabari , Academic Director, Family Business Program, Lahav-Executive Education, Recanati Business School, Faculty of Management Tel Aviv University, The Strauss Family | Mr. Guy Schory , Head of New Ventures, eBay | Mr. Shimon Eckhouse , Co-founder and Chairman of the Board, Syneron Medical |  Mr. Jamie McLaughlin , Owner, J. H. McLaughlin & Co., LLC |   Mr. Louis Hanna , Corigin Family Office | Ms. Kay Koplovitz , Founder, USA Network | Mr. Kent M. Swig , President, Swig Equities, LLC | Ms. Steffi Claiden , Founder/Editor-in-Chief, Family Office Review | Mr. Daniel Shakhani , CEO, RDS Capital

 

 

Other events:The trip also supports The 2014 institutional investment conference , March 2014, ( www.tlvii.com ), The Israeli Family Office & Wealth Management Conference, June 2013, ( www.israelwealth.com ), the “Family Wealth” magazine and advisors sourcebook, The Annual Kibbutz Industries Financial Conference, Sep 10th 2013, The Annual Going Public and Raising Capital Abroad Conference Oct 9th 2013 and Israel’s Annual Corporate Finance Conference, Nov 22nd 2013 ( www.israel-finance.com( .

Firms with an interest in meeting our target audience are welcome to reply to this email and we will do our best to schedule a meeting. Please be advised that due to a busy schedule not all requests may be fulfilled.

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Un nouveau rapport de la Banque mondiale prévoit un triplement de la part des pays en développement dans les investissements mondiaux d’ici 2030

Posted on 20 May 2013 by Africa Business

D’ici dix-sept ans, les pays en développement, et principalement ceux d’Asie de l’Est et d’Amérique latine, abriteront la moitié des capitaux mondiaux — soit 158 000 milliards de dollars (en dollars de 2010) — contre un tiers seulement aujourd’hui. C’est ce que prévoit la dernière édition des Global Development Horizons (GDH) de la Banque mondiale, un rapport qui étudie l’évolution probable des tendances en matière d’investissement, d’épargne et de mouvement de capitaux sur les vingt prochaines années.

Selon cette nouvelle publication intitulée Capital for the Future: Saving and Investment in an Interdependent World (« Les capitaux de demain : épargne et investissement dans un monde interdépendant »), les pays en développement, qui ne représentaient qu’un cinquième des investissements mondiaux en 2000, devrait voir leur part tripler d’ici 2030. Les changements démographiques joueront un grand rôle dans ces mutations structurelles puisque la population mondiale devrait passer de 7 milliards en 2010 à 8,5 milliards en 2030 tandis que les pays développés connaissent un vieillissement rapide.

« Le rapport GDH repose sur l’exploitation d’une somme phénoménale d’informations statistiques et constitue l’un des efforts les plus aboutis de projection dans un futur éloigné », explique Kaushik Basu, premier vice-président et économiste en chef de la Banque mondiale. « L’expérience de pays aussi divers que la Corée du Sud, l’Indonésie, le Brésil, la Turquie et l’Afrique du Sud nous montre combien le rôle de l’investissement est crucial pour la croissance à long terme. Dans moins d’une génération, l’investissement mondial sera dominé par les pays en développement, la Chine et l’Inde en tête. Ces deux pays devraient, en effet, assurer 38 % des investissements bruts mondiaux en 2030. Ces changements vont modifier le paysage économique mondial et c’est ce qu’étudie le rapport GDH. »

Le rattrapage des retards de productivité, l’intégration croissante dans les marchés mondiaux, la poursuite de bonnes politiques macroéconomiques ainsi que les progrès accomplis dans l’éducation et la santé sont autant de facteurs d’accélération de la croissance qui créent d’énormes opportunités d’investissement, lesquelles entraînent à leur tour une modification de l’équilibre économique mondial en faveur des pays en développement..À cela s’ajoute l’explosion démographique de la jeunesse, qui contribuera aussi à doper l’investissement : la population globale des pays en développement devrait s’accroître de 1,4 milliard d’individus d’ici 2030, sachant que le bénéfice de ce « dividende démographique » n’a pas encore été totalement récolté, en particulier dans les régions relativement plus jeunes que sont l’Afrique subsaharienne et l’Asie du Sud.

Les pays en développement auront probablement, enfin, les ressources nécessaires pour financer des investissements massifs dans les infrastructures et les services, au premier rang desquels l’éducation et la santé, ce qui est une bonne nouvelle. Les robustes taux d’épargne des pays en développement devraient culminer à 34 % du revenu national en 2014 et enregistrer une moyenne annuelle de 32 % jusqu’en 2030. Globalement, le monde en développement représentera 62 à 64 % de l’épargne mondiale en 2030 (25 à 27 000 milliards), contre 45 % en 2010.

Toutefois, comme le souligne Hans Timmer, directeur du Groupe des perspectives de développement à la Banque mondiale, « malgré de hauts niveaux d’épargne, et pour être en mesure de financer leurs importants besoins d’investissements, les pays en développement devront à l’avenir accroître considérablement leur participation, actuellement limitée, aux marchés financiers internationaux s’ils souhaitent tirer parti des profonds bouleversements en cours ».

Le rapport GDH envisage deux scénarios qui diffèrent par la vitesse de convergence entre les niveaux de revenu par habitant des pays développés et des pays en développement, et par le rythme des transformations structurelles des deux groupes (sur le plan du développement du secteur financier et de l’amélioration des institutions notamment). Le premier scénario prévoit une convergence progressive entre les pays développés et les pays en développement et le second une évolution nettement plus rapide.

Pour les vingt prochaines années, le scénario progressif et le scénario rapide prévoient une croissance économique moyenne de, respectivement, 2,6 % et 3 % par an dans le monde, et de 4,8 % et 5,5 % dans les pays en développement.

Dans les deux hypothèses, à l’horizon 2030, les services représenteront plus de 60 % de l’emploi total dans les pays en développement et plus de 50 % du commerce mondial. Ce changement est lié à l’augmentation de la demande en services d’infrastructure induite par l’évolution démographique. Le rapport GDH chiffre d’ailleurs à 14 600 milliards de dollars les besoins de financement d’infrastructures du monde en développement d’ici 2030.

Le rapport souligne aussi le vieillissement des populations d’Asie de l’Est, d’Europe de l’Est et d’Asie centrale, régions dans lesquelles les taux d’épargne privée devraient afficher une baisse particulièrement marquée. L’évolution démographique mettra à l’épreuve la pérennité des finances publiques et les États devront résoudre des enjeux complexes afin de maîtriser la charge des soins de santé et des retraites sans imposer de trop grandes difficultés aux personnes âgées. L’Afrique subsaharienne qui a une population relativement jeune, en augmentation rapide, et qui connaît une solide croissance économique, sera la seule région à ne pas enregistrer de baisse du taux d’épargne.

En termes absolus, l’épargne continuera néanmoins à être dominée par l’Asie et le Moyen-Orient. Selon le scénario de convergence progressive, en 2030, la Chine épargnera nettement plus que les autres pays en développement (9 000 milliards en dollars de 2010), suivie de loin par l’Inde (1 700 milliards), dépassant les niveaux d’épargne du Japon et des États-Unis dans les années 2020.

Selon le même scénario, à l’horizon 2030, la Chine représentera à elle seule 30 % des investissements mondiaux, tandis que le Brésil, l’Inde et la Russie y contribueront ensemble à hauteur de 13 %. En volume, les investissements atteindront 15 000 milliards (en dollars de 2010) dans les pays en développement contre 10 000 milliards pour les pays à revenu élevé. La Chine et l’Inde représenteront près de la moitié des investissements mondiaux dans le secteur manufacturier.

« Le rapport GDH met clairement en évidence le rôle croissant des pays en développement dans l’économie mondiale, et c’est incontestablement une avancée significative », indique Maurizio Bussolo, économiste principal à la Banque mondiale et auteur principal du rapport, tout en soulignant que « cette meilleure répartition des richesses entre pays ne signifie pas que tous les habitants des différents pays en bénéficieront de manière égale ».

Selon le rapport, les groupes de population les moins instruits d’un pays, qui ont peu ou pas du tout d’épargne, se trouvent dans l’impossibilité d’améliorer leur capacité de gain et, pour les plus pauvres, d’échapper à l’engrenage de la pauvreté.

Maurizio Bussolo conclut : « Les responsables politiques des pays en développement ont un rôle déterminant à jouer pour stimuler l’épargne privée par des mesures qui permettront d’élever le capital humain, en particulier pour les plus pauvres ».

Points marquants des différentes régions

L’Asie de l’Est et le Pacifique enregistreront une baisse de leur taux d’épargne et une chute encore plus forte de leur taux d’investissement, taux qui resteront toutefois élevés à l’échelle internationale. Malgré cette baisse des taux, la part de la région dans l’investissement et l’épargne continuera d’augmenter au plan mondial jusqu’en 2030 en raison d’une solide croissance économique. La région connaît un fort dividende démographique, avec moins de 4 personnes d’âge non actif pour 10 personnes d’âge actif, ce qui représente le plus faible taux de dépendance du monde. Ce dividende arrivera à son terme après avoir atteint un pic en 2015. La croissance de la population active ralentira ensuite et en 2040 la région pourrait afficher l’un des taux de dépendance les plus élevés de toutes les régions en développement (avec plus de 5,5 personnes d’âge non actif pour 10 personnes d’âge actif). La Chine, grand moteur de la région, devrait continuer à enregistrer d’importants excédents de la balance des opérations courantes, en raison de fortes baisses de son taux d’investissement liées à l’évolution du pays vers un système de plus faible engagement public dans les investissements.

L’Europe de l’Est et l’Asie centrale forment la région la plus avancée en termes de transition démographique, qui devrait être la seule du monde en développement à atteindre une croissance démographique nulle d’ici 2030. Ce vieillissement, qui devrait ralentir la croissance économique de la région, pourrait aussi entraîner une baisse du taux d’épargne plus forte que dans les autres régions en développement, à l’exception de l’Asie de l’Est. Le taux d’épargne pourrait ainsi descendre au-dessous du taux d’investissement, ce qui obligerait les pays de la région à attirer des flux de capitaux extérieurs pour financer leurs investissements. La région devra également faire face à une importante pression budgétaire due au vieillissement. La Turquie, par exemple, pourrait voir ses dépenses de retraites publiques augmenter de plus de 50 % d’ici 2030 en application du régime actuel. Plusieurs autres pays de la région seront aussi confrontés à d’importantes augmentations des dépenses de retraites et de santé.

L’Amérique latine et les Caraïbes forment une région où l’épargne est historiquement faible, qui pourrait afficher l’épargne la plus faible au monde en 2030. La démographie devrait certes y jouer un rôle positif (avec une baisse du taux de dépendance jusqu’en 2025) mais cet avantage sera probablement neutralisé par le développement du marché financier (qui réduit l’épargne de précaution) et une croissance économique modérée. De même, l’effet positif puis négatif de la démographie sur la croissance de la population active devrait d’abord entraîner une hausse du taux d’investissement à court terme puis une baisse progressive. Toutefois, la relation entre inégalité et épargne pourrait déboucher sur un autre scénario dans cette région. Comme ailleurs, les ménages les plus pauvres ont tendance à moins épargner ; l’amélioration des capacités de gain, l’augmentation des revenus et la réduction des inégalités pourraient donc doper l’épargne nationale et surtout contribuer à rompre le cercle vicieux de la pauvreté entretenu par le faible niveau d’épargne des ménages pauvres.

Le Moyen-Orient et l’Afrique du Nord disposent d’une importante marge de développement du marché financier, susceptible de soutenir l’investissement mais aussi, en raison du vieillissement de la population, de réduire l’épargne. De ce fait, les excédents de la balance des opérations courantes pourraient baisser modérément jusqu’en 2030, en fonction du rythme du développement du marché financier. Cette région est dans une phase de transition démographique relativement précoce qui se caractérise par une croissance encore rapide de la population générale et de la population active en même temps qu’une augmentation de la part des personnes âgées. Le changement de la structure des ménages pourrait aussi influencer les modèles d’épargne. Cette structure pourrait, en effet, évoluer d’une organisation intergénérationnelle, où la famille prend en charge les anciens, vers une structure composée de ménages plus petits avec une plus grande dépendance des personnes âgées vis-à-vis des revenus patrimoniaux. C’est dans cette région que les ménages à faible revenu recourent le moins aux institutions financières officielles pour épargner, d’où une marge importante de développement du rôle des marchés financiers dans l’épargne des ménages.

L’Asie du Sud restera l’une des régions où l’on épargne et investit le plus jusqu’en 2030. Toutefois, compte tenu des possibilités de progression rapide de la croissance économique et des marchés financiers, l’évolution de l’épargne, de l’investissement et des flux de capitaux peut varier considérablement : dans l’hypothèse d’une progression plus rapide de la croissance économique et des marchés financiers, les taux d’investissement resteront élevés tandis que l’épargne baissera considérablement, d’où d’importants déficits de la balance des opérations courantes. L’Asie du Sud est une région jeune qui, vers 2035, aura probablement le plus haut ratio au monde des personnes d’âge actif par rapport aux personnes d’âge non actif. Le phénomène général de déplacement des investissements vers le secteur manufacturier et le secteur des services aux dépens de l’agriculture devrait être particulièrement marqué en Asie du Sud ; la part de cette région dans les investissements globaux devrait ainsi presque doubler dans le secteur manufacturier et gagner au moins huit points de pourcentage dans le secteur des services, dépassant les deux tiers du total.

En Afrique subsaharienne, le taux d’investissement restera stable en raison d’une solide croissance de la population active. C’est la seule région qui n’enregistrera pas de baisse de son taux d’épargne dans l’hypothèse d’un développement modéré des marchés financiers, le vieillissement n’y étant pas un facteur significatif. Dans le scénario d’une croissance plus rapide, les pays africains plus pauvres connaîtront un développement plus marqué des marchés financiers et les investisseurs étrangers seront de plus en plus disposés à financer des investissements dans la région. L’Afrique subsaharienne est actuellement la région la plus jeune, qui affiche aussi le plus haut ratio de dépendance. Ce ratio enregistrera une baisse constante sur toute la période considérée et au-delà, entraînant un dividende démographique durable. C’est cette région qui aura les plus grands besoins d’investissement en infrastructures au cours des vingt prochaines années (en pourcentage du PIB). Dans le même temps, on observera probablement un changement dans le financement des investissements en infrastructures qui devrait être davantage ouvert au secteur privé, avec une augmentation substantielle des afflux de capitaux privés, venant notamment des autres régions en développement.

Source: WorldBank.org

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Forte progression du poids du monde en développement d’ici 2030

Posted on 19 May 2013 by Africa Business

  • La part des pays en développement dans les investissements mondiaux va tripler d’ici 2030.
  • La Chine et l’Inde seront les plus grands investisseurs du monde en développement.
  • L’amélioration des conditions de vie des populations pauvres passe par une meilleure éducation.

Dans moins d’une génération, le monde en développement dominera l’épargne et les investissements mondiaux. C’est ce qui ressort du dernier rapport Global Development Horizons (GDH).

Ce rapport étudie l’évolution probable des tendances en matière d’investissement, d’épargne et de mouvement de capitaux au cours des vingt prochaines années. Il prévoit que, d’ici 2030, les pays en développement, et principalement ceux d’Asie de l’Est et d’Amérique latine, abriteront la moitié des capitaux mondiaux — soit 158 000 milliards de dollars (en dollars de 2010) — contre un tiers seulement aujourd’hui.

Selon cette nouvelle publication intitulée Capital for the Future: Saving and Investment in an Interdependent World (« Les capitaux de demain : épargne et investissement dans un monde interdépendant »), les pays en développement, qui ne représentaient qu’un cinquième des investissements mondiaux en 2000, devrait voir leur part tripler d’ici 2030.

Le rattrapage des retards de productivité, l’intégration croissante dans les marchés mondiaux, la poursuite de bonnes politiques macroéconomiques ainsi que les progrès accomplis dans l’éducation et la santé sont autant de facteurs d’accélération de la croissance qui créent d’énormes opportunités d’investissement, lesquelles entraînent à leur tour une modification de l’équilibre économique mondial en faveur des pays en développement.

À cela s’ajoute l’explosion démographique de la jeunesse, qui contribuera aussi à doper l’investissement. D’ici 2020, c’est-à-dire dans moins de sept ans, la croissance de la population mondiale en âge de travailler sera exclusivement déterminée par les pays en développement dont la population globale devrait s’accroître d’1,4 milliard d’individus d’ici 2030. Or tout le bénéfice de ce « dividende démographique » n’a pas encore été récolté, en particulier dans les régions relativement plus jeunes que sont l’Afrique subsaharienne et l’Asie du Sud.

Le rapport GDH envisage deux scénarios qui diffèrent par la vitesse de convergence entre les niveaux de revenu par habitant des pays développés et des pays en développement, et par le rythme des transformations structurelles des deux groupes (sur le plan du développement du secteur financier et de l’amélioration des institutions notamment). Le premier scénario prévoit une convergence progressive entre les pays développés et les pays en développement et le second une évolution nettement plus rapide.

Dans les deux hypothèses, à l’horizon 2030, les services représenteront plus de 60 % de l’emploi total dans les pays en développement et plus de 50 % du commerce mondial. Ce changement est lié à l’augmentation de la demande en services d’infrastructure induite par l’évolution démographique. Le rapport GDH chiffre d’ailleurs à 14 600 milliards de dollars les besoins de financement d’infrastructures du monde en développement d’ici 2030.

Le rapport souligne aussi le vieillissement des populations d’Asie de l’Est, d’Europe de l’Est et d’Asie centrale, régions dans lesquelles les taux d’épargne privée devraient afficher une baisse particulièrement marquée. L’évolution démographique mettra à l’épreuve la pérennité des finances publiques et les États devront résoudre des enjeux complexes afin de maîtriser la charge des soins de santé et des retraites sans imposer de trop grandes difficultés aux personnes âgées. L’Afrique subsaharienne qui a une population relativement jeune, en augmentation rapide, et qui connaît une solide croissance économique, sera la seule région à ne pas enregistrer de baisse du taux d’épargne.

Open Quotes

Les responsables politiques des pays en développement ont un rôle déterminant à jouer pour stimuler l’épargne privée par des mesures qui permettront d’élever le capital humain, en particulier pour les plus pauvres. Close Quotes

Maurizio Bussolo
Auteur principal du rapport, Global Development Horizons 2013

En termes absolus, l’épargne continuera néanmoins à être dominée par l’Asie et le Moyen-Orient. Selon le scénario de convergence progressive, en 2030, la Chine épargnera nettement plus que les autres pays en développement (9 000 milliards en dollars de 2010), suivie de loin par l’Inde (1 700 milliards), dépassant les niveaux d’épargne du Japon et des États-Unis dans les années 2020.

Selon le même scénario, à l’horizon 2030, la Chine représentera à elle seule 30 % des investissements mondiaux, tandis que le Brésil, l’Inde et la Russie y contribueront ensemble à hauteur de 13 %. En volume, les investissements atteindront 15 000 milliards (en dollars de 2010) dans les pays en développement contre 10 000 milliards pour les pays à revenu élevé. La Chine et l’Inde seront aussi en tête du classement des plus gros investisseurs du monde en développement, ces deux pays représentant ensemble 38 % des investissements bruts mondiaux en 2030 et près de la moitié des investissements mondiaux dans le secteur manufacturier.

« Le rapport GDH met clairement en évidence le rôle croissant des pays en développement dans l’économie mondiale, et c’est incontestablement une avancée significative », indique Maurizio Bussolo, économiste principal à la Banque mondiale et auteur principal du rapport, tout en soulignant que « cette meilleure répartition des richesses entre pays ne signifie pas que tous les habitants des différents pays en bénéficieront de manière égale ».

Selon le rapport, les groupes de population les moins instruits d’un pays, qui ont peu ou pas du tout d’épargne, se trouvent dans l’impossibilité d’améliorer leur capacité de gain et, pour les plus pauvres, d’échapper à l’engrenage de la pauvreté.

Et Maurizio Bussolo de conclure : « Les responsables politiques des pays en développement ont un rôle déterminant à jouer pour stimuler l’épargne privée par des mesures qui permettront d’élever le capital humain, en particulier pour les plus pauvres ».

Points marquants des différentes régions

L’Asie de l’Est et le Pacifique enregistreront une baisse de leur taux d’épargne et une chute encore plus forte de leur taux d’investissement, taux qui resteront toutefois élevés à l’échelle internationale. Malgré cette baisse des taux, la part de la région dans l’investissement et l’épargne continuera d’augmenter au plan mondial jusqu’en 2030 en raison d’une solide croissance économique. La région connaît un fort dividende démographique, avec moins de 4 personnes d’âge non actif pour 10 personnes d’âge actif, ce qui représente le plus faible taux de dépendance du monde. Ce dividende arrivera à son terme après avoir atteint un pic en 2015. La croissance de la population active ralentira ensuite et en 2040 la région pourrait afficher l’un des taux de dépendance les plus élevés de toutes les régions en développement (avec plus de 5,5 personnes d’âge non actif pour 10 personnes d’âge actif). La Chine, grand moteur de la région, devrait continuer à enregistrer d’importants excédents de la balance des opérations courantes, en raison de fortes baisses de son taux d’investissement liées à l’évolution du pays vers un système de plus faible engagement public dans les investissements.

 

L’Europe de l’Est et l’Asie centrale forment la région la plus avancée en termes de transition démographique, qui devrait être la seule du monde en développement à atteindre une croissance démographique nulle d’ici 2030. Ce vieillissement, qui devrait ralentir la croissance économique de la région, pourrait aussi entraîner une baisse du taux d’épargne plus forte que dans les autres régions en développement, à l’exception de l’Asie de l’Est. Le taux d’épargne pourrait ainsi descendre au-dessous du taux d’investissement, ce qui obligerait les pays de la région à attirer des flux de capitaux extérieurs pour financer leurs investissements. La région devra également faire face à une importante pression budgétaire due au vieillissement. La Turquie, par exemple, pourrait voir ses dépenses de retraites publiques augmenter de plus de 50 % d’ici 2030 en application du régime actuel. Plusieurs autres pays de la région seront aussi confrontés à d’importantes augmentations des dépenses de retraites et de santé.

 

L’Amérique latine et les Caraïbes forment une région où l’épargne est historiquement faible, qui pourrait afficher l’épargne la plus faible au monde en 2030. La démographie devrait certes y jouer un rôle positif (avec une baisse du taux de dépendance jusqu’en 2025) mais cet avantage sera probablement neutralisé par le développement du marché financier (qui réduit l’épargne de précaution) et une croissance économique modérée. De même, l’effet positif puis négatif de la démographie sur la croissance de la population active devrait d’abord entraîner une hausse du taux d’investissement à court terme puis une baisse progressive. Toutefois, la relation entre inégalité et épargne pourrait déboucher sur un autre scénario dans cette région. Comme ailleurs, les ménages les plus pauvres ont tendance à moins épargner ; l’amélioration des capacités de gain, l’augmentation des revenus et la réduction des inégalités pourraient donc doper l’épargne nationale et surtout contribuer à rompre le cercle vicieux de la pauvreté entretenu par le faible niveau d’épargne des ménages pauvres.

 

Le Moyen-Orient et l’Afrique du Nord disposent d’une importante marge de développement du marché financier, susceptible de soutenir l’investissement mais aussi, en raison du vieillissement de la population, de réduire l’épargne. De ce fait, les excédents de la balance des opérations courantes pourraient baisser modérément jusqu’en 2030, en fonction du rythme du développement du marché financier. Cette région est dans une phase de transition démographique relativement précoce qui se caractérise par une croissance encore rapide de la population générale et de la population active en même temps qu’une augmentation de la part des personnes âgées. Le changement de la structure des ménages pourrait aussi influencer les modèles d’épargne. Cette structure pourrait, en effet, évoluer d’une organisation intergénérationnelle, où la famille prend en charge les anciens, vers une structure composée de ménages plus petits avec une plus grande dépendance des personnes âgées vis-à-vis des revenus patrimoniaux. C’est dans cette région que les ménages à faible revenu recourent le moins aux institutions financières officielles pour épargner, d’où une marge importante de développement du rôle des marchés financiers dans l’épargne des ménages.

L’Asie du Sud restera l’une des régions où l’on épargne et investit le plus jusqu’en 2030. Toutefois, compte tenu des possibilités de progression rapide de la croissance économique et des marchés financiers, l’évolution de l’épargne, de l’investissement et des flux de capitaux peut varier considérablement : dans l’hypothèse d’une progression plus rapide de la croissance économique et des marchés financiers, les taux d’investissement resteront élevés tandis que l’épargne baissera considérablement, d’où d’importants déficits de la balance des opérations courantes. L’Asie du Sud est une région jeune qui, vers 2035, aura probablement le plus haut ratio au monde des personnes d’âge actif par rapport aux personnes d’âge non actif. Le phénomène général de déplacement des investissements vers le secteur manufacturier et le secteur des services aux dépens de l’agriculture devrait être particulièrement marqué en Asie du Sud ; la part de cette région dans les investissements globaux devrait ainsi presque doubler dans le secteur manufacturier et gagner au moins huit points de pourcentage dans le secteur des services, dépassant les deux tiers du total.

 

En Afrique subsaharienne, le taux d’investissement restera stable en raison d’une solide croissance de la population active. C’est la seule région qui n’enregistrera pas de baisse de son taux d’épargne dans l’hypothèse d’un développement modéré des marchés financiers, le vieillissement n’y étant pas un facteur significatif. Dans le scénario d’une croissance plus rapide, les pays africains plus pauvres connaîtront un développement plus marqué des marchés financiers et les investisseurs étrangers seront de plus en plus disposés à financer des investissements dans la région. L’Afrique subsaharienne est actuellement la région la plus jeune, qui affiche aussi le plus haut ratio de dépendance. Ce ratio enregistrera une baisse constante sur toute la période considérée et au-delà, entraînant un dividende démographique durable. C’est cette région qui aura les plus grands besoins d’investissement en infrastructures au cours des vingt prochaines années (en pourcentage du PIB). Dans le même temps, on observera probablement un changement dans le financement des investissements en infrastructures qui devrait être davantage ouvert au secteur privé, avec une augmentation substantielle des afflux de capitaux privés, venant notamment des autres régions en développement.

Source: WorldBank.org

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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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Fi Istanbul’s Success Demonstrates Unlimited Market Opportunities in Turkey, the Middle East & North Africa

Posted on 18 May 2013 by Africa Business

Staggering 3,000 Visitors + 150 Exhibiting Brands and Record Re-Booking Volumes for the 2014 Event

Yes, we’ve got a lot to shout about and so we would like to start with a huge thank you to all of our exhibitors who helped to make Food ingredients Istanbul such a great success. As the only dedicated food ingredients event in the region, last week’s highly successful show demonstrates that this region is thriving and thirsty for the very latest ingredients, solutions, innovations and networking opportunities.

We are delighted to announce that Food ingredients Istanbul exceeded all forecasts and expectations with the impressive amount of 3,000 visitors and a 94% rebooking rate. As a launch event, Fi Istanbul welcomed attendees from over 80 different countries, filling all aisles and bustling exhibitor stands.

It is clear that the industry responded well to this launch event. Building on the high growth rates that the food industry is experiencing in this region, Fi Istanbul provided a strong platform for all food and beverage manufacturers to source from over 150 local, regional and international food ingredients suppliers.

The response from the exhibitors was overwhelming! Many claimed to have had one of the best shows ever, with a high quality of visitors, a steady flow of traffic during the 3 days and a good mix of visiting companies, including food manufacturers from dairy, ice cream, confectionary, meat, poultry and many more.

Turkey, for a global company, is a very important market for us to be close to our customers. Food ingredients Istanbul has been a great experience to meet new customers in 3 days and share projects, prototypes, concepts and innovations” Luis Fernandez , Vice-President Global Applications, Tate & Lyle

Natasha Berrow , UBM’s Brand Director, also commented, “Last week’s event really did surpass even our expectations! The positive response to this launch event, the new Fi branding and signage provided the innovative environment that such a growing region deserves.”

She continued “the record re-bookings are further indication that exhibitors see Fi Istanbul as the place to continue to meet their customers and to expand into this booming region. I’d like to express our appreciation for the tremendous and ongoing support of all our customers.”

“We are very impressed by the quality of visitors; quality is more important than quantity. We found a lot of good customers that we’ll probably start new business with” Stella Wu , International Sales Manager, JK Sucralose

Visitor feedback also surpassed all expectations. The great mix of local, regional and international food ingredients suppliers was complimented by many attendees looking to source new ingredients from companies they never heard of.

“I want to know new suppliers and I want to see some different varieties of products that I can use for my customers. This is the first year for this exhibition and it feels like it has being a successful opening and I’m sure it will get greater and bigger in the coming years.” Meleknur Tuzun, Sales Manager, Agrana

Fi Istanbul is a key part of the Food ingredients Global Portfolio strategy to extend the its brand into new regions, offering exhibiting clients a platform to engage with new customers and present their new business growth opportunities. With the key focus on business development, innovation and trade, in a region with one of the fastest economic growth rates in the world, Fi Istanbul proved to be one of the most cost-effective platforms to source new ingredients, grow market share and act as a stepping stone to this vastly and yet close to untouched food industry.

 

About Fi ingredients Global – the trusted route to market since 1986

Food ingredients first launched in Utrecht, The Netherlands in 1986 and its portfolio of live events, publications, extensive database, digital solutions and high-level conferences are now established across the globe to provide regional and a global meeting place for all stakeholders in the food ingredients industry. Over 500,000 people have attended our shows over the years, and billions of Euros of business have been created as a result. With over 25 years of excellence, our events, digital solutions and supporting products deliver a proven route to market with a truly global audience.

About UBM Istanbul

UBM Istanbul was established in April 2012 to connect people and create opportunities for companies wishing to build business between Europe and Asia, meet customers, launch new products, promote their brands and expand their markets. Premier brands such as Fi Europe, CPhI, IFSEC, Black Hat, Mother & Baby Show , Jewellery and many others and will become an integral part of the marketing plans of companies across more than 10 industry sectors.

About UBM

UBM plc is a global events-led marketing services and communications company. We help businesses do business, bringing the world’s buyers and sellers together at events and online, as well as producing and distributing specialist content and news. Our 5,500 staff in more than 30 countries are organised into specialist teams which serve commercial and professional communities, helping them to do business and their markets to work effectively and efficiently.

For more information, go to http://www.ubm.com

SOURCE UBM Live

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Unreliable Power Supply Creates Huge Demand for Non-renewable Inverters, Finds Frost & Sullivan

Posted on 18 May 2013 by Africa Business

Cost competitiveness vital to expand in developing markets

MOUNTAIN VIEW, Calif. /PRNewswire/ — The global non-renewable inverter market grew steadily on the back of rising demand for reliable power and the lack of stable power infrastructure in many regions of the world. Higher disposable incomes and greater affordability in developing regions such as Latin America, as well as parts of Africa and South Asia, encourage the adoption of power inverters, especially in residential markets.

New analysis from Frost & Sullivan’s (http://www.powersupplies.frost.com) Analysis of the Global Non-renewable Inverter Market research finds the market earned revenue of approximately $1.94 billion in 2012 and estimates this to reach $2.34 billion in 2018.

For more information on this research, please email Britni Myers , Corporate Communications, at britni.myers@frost.com, with your full name, company name, job title, telephone number, company email address, company website, city, state and country.

“The need for power reliability stimulates demand for power inverter and inverter/chargers, as they are employed as part of a back-up power system involving a battery,” said Frost & Sullivan Energy and Environment Senior Industry Analyst Anu Elizabeth Cherian. “The manufacturing and commercial sectors’ increased awareness and proactive protective measures such as employing adequate back-up resources to manage business more efficiently gives a significant boost to the market’s prospects.”

The market will also gain from the escalating use of electronic equipment in boats, cars, trucks, ambulances and recreational vehicles. Power inverters and inverter chargers can meet business travelers’ or vacationers’ demand for connectivity on the go as well.

While power inverters are establishing a foothold in the power industry, the gradual pace of economic recovery and restrained spending environment are stymieing inverter manufacturers’ efforts to expand. Further, the slowdown in infrastructural build-outs in telecommunications and investments makes customers cautious about investing in inverters.

“Inverter manufacturers could attempt to offset the price issue by offering enhanced features for the premium products or lowering prices,” noted Cherian. “We know that without a solid solution, power quality issues will continue to persist.  This improved awareness of the need to be well prepared for power outages bolsters the power inverter market.”

Analysis of the Global Non-renewable Inverter Market is part of the Energy and Environment Growth Partnership Service program. Frost & Sullivan’s related research services include: Analysis of the Mexican Distributed Power Generation Market, Asia-Pacific Rental Power Market, Bangladesh Uninterruptible Power Supply Market, and Critical Energy Infrastructure Protection in Europe. All research services included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.

Connect with Frost & Sullivan on social media, including Twitter, Facebook, SlideShare, and LinkedIn, for the latest news and updates.

About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today’s market participants.

Our “Growth Partnership” supports clients by addressing these opportunities and incorporating two key elements driving visionary innovation: The Integrated Value Proposition and The Partnership Infrastructure.

  • The Integrated Value Proposition provides support to our clients throughout all phases of their journey to visionary innovation including: research, analysis, strategy, vision, innovation and implementation.
  • The Partnership Infrastructure is entirely unique as it constructs the foundation upon which visionary innovation becomes possible. This includes our 360 degree research, comprehensive industry coverage, career best practices as well as our global footprint of more than 40 offices.

For more than 50 years, we have been developing growth strategies for the global 1000, emerging businesses, the public sector and the investment community. Is your organization prepared for the next profound wave of industry convergence, disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics and emerging economies?

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Analysis of the Global Non-renewable Inverter Market
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SOURCE Frost & Sullivan

 

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