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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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GSMA Establishes Office In Nairobi To Support Burgeoning African Telecoms Market

Posted on 15 May 2013 by Africa Business

Mobile Connections in Sub-Saharan Africa Increase 20 Per Cent to 500 Million in 2013 and Are Expected to Increase by an Additional 50 Per Cent by 2018

iHub is Nairobi‘s Innovation Hub for the technology community, which is an open space for the technologists, investors, tech companies and hackers in the area. This space is a tech community facility with a focus on young entrepreneurs, web and mobile phone programmers, designers and researchers. It is part open community workspace (co-working), part vector for investors and VCs and part incubator. More information can be found here: http://www.ihub.co.ke/about

About the GSMA
The GSMA represents the interests of mobile operators worldwide. Spanning more than 220 countries, the GSMA unites nearly 800 of the world’s mobile operators with more than 230 companies in the broader mobile ecosystem, including handset makers, software companies, equipment providers and Internet companies, as well as organisations in industry sectors such as financial services, healthcare, media, transport and utilities. The GSMA also produces industry-leading events such as the Mobile World Congress and Mobile Asia Expo.


NAIROBI, Kenya, May 15, 2013 /PRNewswire/ – The GSMA today announced that it has opened a permanent office in Nairobi, Kenya. The office will be based in the heart of Nairobi‘s Innovation Hub (iHub) for the technology community and will enable the GSMA to work even more closely with its members and other industry stakeholders to extend the reach and socio-economic benefits of mobile throughout Africa.

“It is an exciting time to launch our new office in Africa, as the region is an increasingly vibrant and critical market for the mobile industry, representing over 10 per cent of the global market,” said Anne Bouverot , Director General, GSMA. “The rapid pace of mobile adoption has delivered an explosion of innovation and huge economic benefits in the region, directly contributing US$ 32 billion to the Sub-Saharan African economy, or 4.4 per cent of GDP. With necessary spectrum allocations and transparent regulation, the mobile industry could also fuel the creation of 14.9 million new jobs in the region between 2015 and 2020.”

According to the latest GSMA’s Wireless Intelligence data, total mobile connections in Sub-Saharan Africa passed the 500 million mark in Q1 2013, increasing by about 20 per cent year-on-year. Connections are expected to grow by a further 50 per cent, or 250 million connections, over the next five years which requires greater regulatory certainty to foster investment and release of additional harmonised spectrum for mobile.

The region currently accounts for about two-thirds of connections in Africa but the amount of spectrum allocated to mobile services in Africa is among the lowest worldwide. Governments in Sub-Saharan Africa risk undermining their broadband and development goals unless more spectrum is made available. In particular, the release of the Digital Dividend spectrum – which has the ideal characteristics for delivering mobile broadband, particularly to rural populations – should be a priority.

The region also has some of the highest levels of mobile internet usage globally. In Zimbabwe and Nigeria, mobile accounts for over half of all web traffic at 58.1 per cent and 57.9 per cent respectively, compared to a 10 per cent global average. 3G penetration levels are forecast to reach a quarter of the population in Sub-Saharan Africa by 2017 (from six per cent in 2012) as the use of mobile-specific services develops.

However, despite the high number of connections, rapid growth and mobile internet usage, mobile penetration among individuals remains relatively low. Fewer than 250 million people had subscribed to a mobile service in the region, putting unique subscriber penetration at 30 per cent, meaning that more than two-thirds of the population have yet to acquire their first mobile phone. Clearly, there is an important opportunity for the mobile industry to bring connectivity, access to information and services to the people in this region.

The mobile industry contributes approximately 3.5 million full-time jobs in the region. This has also spurred a wave of technology and content innovation with more than 50 ‘innovation hubs’ created to develop local skills and content in the field of ICT services, including the Limbe Labs in Cameroon, the iHub in Kenya and Hive Colab in Uganda.

Of particular note is the role of Kenya as the global leader in mobile money transfer services via M-PESA, a service launched by the country’s largest mobile operator Safaricom in 2007. What started as a simple way to extend banking services to the unbanked citizens of Kenya has now evolved into a mobile payment system based on accounts held by the operator, with transactions authorised and recorded in real time using secure SMS. Since its launch, M-PESA has grown to reach 15 million registered users and contributes 18 per cent of Safaricom’s total revenue.

To support this huge increase in innovation, the mobile industry has invested around US$ 16.5 billion over the past five years (US$ 2.8 billion in 2011 alone) across the five key countries in the region, mainly directed towards the expansion of network capacity. At the same time, given the exponential growth, Sub-Saharan Africa faces a looming ‘capacity and coverage crunch’ in terms of available mobile spectrum and the GSMA is working with operators and governments to address this critical issue.

GSMA research has found that by releasing the Digital Dividend and 2.6GHz spectrum by 2015, the governments of Sub-Saharan Africa could increase annual GDP by US$82 billion by 2025 and annual government tax revenues by US$18 billion and add up to 27 million jobs by 2025. In many Sub-Saharan African countries, mobile broadband is the only possible route to deliver the Internet to citizens and the current spectrum allocations across the region generally lag behind those of other countries.

“A positive and supportive regulatory environment and sufficient spectrum allocation is critical to the further growth of mobile in Africa,” continued Ms. Bouverot. “I am confident that now that we have a physical presence in Africa, we will be able to work together with our members to put the conditions in place that will facilitate the expansion of mobile, bringing important connectivity and services to all in the region.”

For more information, please visit the GSMA corporate website at www.gsma.com or Mobile World Live, the online portal for the mobile communications industry, at www.mobileworldlive.com.

SOURCE GSMA

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MTN UGANDA FOUNDATION ENDORSES ALL SAINTS COMMUNITY INITIATIVES

Posted on 15 May 2013 by Africa Business

All Saints Cathedral Cheque Hand Over

MTN Uganda Foundation has joined All Saints Cathedral in a drive to raise money to support the cathedral’s community initiatives as well as build the new church building.

Speaking during a courtesy call on the New Archbishop of the Church of Uganda, the MTN Uganda CEO Mazen Mroué said that MTN is heartened by the noble community activities the church is involved in, saying they resonate with the telecommunication giant’s philosophies on Corporate Social Responsibility

All Saints Cathedral is one of the oldest churches in Uganda, and is involved in community activities such as Compassion and Hospitality for street kids, orphans and the destitute, counseling and health/healing (HIV/AIDS initiatives), education, Stewardship, Leadership development and a host of other youth programs.

“We are motivated by what All Saints Cathedral stands for because it’s in line with what our MTN foundation believes in. There are many people out there that need a compassionate hand. At MTN, we are not involved in such activities directly, but we are very glad to lend a helping hand to such institutions that drive such noble causes,” said Mazen Mroué’ CEO MTN Uganda.

During the same visit, MTN Uganda contributed shs10 million towards the construction of the new cathedral building, which is intended to create more room for the barging Christian community that throng the church all week. The new building will also create more capacity for it to do more community activities.

The current church was build many years ago with a plan to accommodate 600 people, but this has become very small. The new building is planned to take up to 4500 people.

Mazen called upon every individual and institution to make a contribution towards such causes, whether financially or physically.

“AT MTN, we know the importance of giving back to the communities in which we operate. By this contribution, we hope that we have re-ignited the drive for more people to come and be a part of this support great initiative,” Mroué said.

The Archbishop of the church of Uganda, Stanley Ntagali said that MTN’s support is very timely as the activities of the church are financially demanding and yet there is always need for more.

“The church depends on contributions of its members as well as well-intentioned companies like MTN Uganda. We would like to encourage more people to borrow a leaf from MTN and come in to support the church,” he said.

The MTN Uganda Foundation is a not-for-profit legal entity that was inaugurated in July 2007 as a vehicle through which MTN Uganda implements its’ Corporate Social Investments (CSI). The Foundation strives to improve the quality of life in communities where MTN Uganda operates in a sustainable way. Over the past five years since its launch, the MTN Foundation has supported a number of initiatives in the areas of Education, Health, Arts and Culture, Environment, Community Development and Low cost housing.

The MTN Uganda Foundation partners with both public and non-profit credible organizations to execute sustainable projects in each of the chosen focus areas. The Foundation is committed to ensuring that the selection and approval of its projects are conducted in a manner that is transparent, systematic, efficient, and effective while promoting its mission.

In 2013 and onwards, the MTN Foundation will focus on three key areas so as to leverage scale to achieve significant development impact. The three sectors will be Education, Health and National Priority Areas.

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SA tooling and Manufacturing tackle revival challenge

Posted on 14 May 2013 by Africa Business

South Africa’s tooling and manufacturing sectors are aggressively tackling skills challenges, and modernising and growing their operations, with a view to taking on global manufacturing giants.

AfriMold, is the 4th annual manufacturing trade fair and conference for the design, precision engineering & machining, automotive component, tooling, tool making, production and application development sectors, and is taking place 4 – 6 June at the NASREC Expo Centre in Johannesburg.


Speaking ahead of this year’s AfriMold manufacturing trade fair from 4 – 6 June at the NASREC Expo Centre in Johannesburg, key industry players said South Africa’s manufacturing sector is experiencing a new spirit of revival, on the back of an aggressively modernising and growing tooling sector.

Dirk van Dyk, CEO of the National Tooling Initiative Programme, and representative of the Tooling Association of South Africa (TASA), noted that statistics released by ISTMA (International Specialized Tooling and Machining Association at the recent World Tooling Conference in Toronto, Canada, indicate that up to 50% of any manufactured component’s cost competiveness is governed by Tooling. However, the local TDM sector only provides approximately 20% of the local manufacturing sector’s tooling requirements. “The opportunity is there for the local TDM sector to increase this percentage significantly,” he said.

“There are more than 500 local Tool, Die and Mould manufacturing companies involved in local support of the manufacturing value chain ranging from 1st to 4th tier suppliers. The local tooling sector is gearing up for growth, presenting a positive outlook for manufacturing, and with it – job creation.”

Skills development is a key component of the tooling and manufacturing industry’s growth plans, says industry heads.

Van Dyk said the TDM Powered Pilot project, which started in 2010 as part of the turnaround strategy for the distressed tooling industry, has entered its 4th year of piloting with 408 students on Level II and Level III of the Apprenticeship Programme at 12 FET institutions in the country.

The National Skills Fund has allocated funding to Instimbi through the dti to fund another apprenticeship programme with 650 students at 12 FET institutions in the country.  It is envisaged that these students should be placed by May 2013.

In addition, enterprise development is reaching companies country wide through benchmarking exercises (based on international best practice and comparison to peers) to guide local Tool, Die and Mould manufacturing companies towards increased competiveness. Intervention projects are launched to aid companies on this journey.  A new round of benchmarking will start with 30 companies in April 2013.

Coenraad Bezuidenhout, Executive Director of Manufacturing Circle, says the Manufacturing Circle is launching two important initiatives to support government’s local procurement initiative and set an important example to the private sector, and to broaden its membership. The organisation plans to rapidly increase the approximately 200 000 manufacturing jobs that the Circle membership gives direct representation to today, and to include many more smaller and medium-sized manufacturers in the Manufacturing Circle. On 16 May, the Manufacturing Circle will launch its 2013 Q1 Manufacturing Circle Quarterly Survey on manufacturing business conditions, with a new component that will provide an indicator of the measure to which manufacturers procure locally, as well as the degree to which government’s local procurement impacts on manufacturers.

Meanwhile, the automotive sector, seen as a potentially promising growth area for local manufacturing, is seeking greater engagement with local organisations.

Roger Pitot, Executive Director of the National Association of Automotive Components and Allied Manufacturers (NAACAM) says: “We must double vehicle production volumes to over a million, and we must significantly increase local content from the present dismal 35%.”

Pitot says NAACAM members employ almost 50,000 people with a turnover last year of R57 billion. The total automotive sector, including vehicle assemblers, employs over 100,000 in manufacturing and 200,000 in sales and service operations.

“Unfortunately, the automotive trade deficit has been growing and reached an all-time high of R49 billion in 2012, mainly due to a record 72% of all cars sold in South Africa being imported. Exports in 2012 at R87 billion almost recovered to the record achieved in 2008, but the outlook for the future depends largely on the global economic situation, particularly in Europe, our biggest market.  The local auto industry has to compete globally, therefore our focus is on improving our competitiveness through efficiencies and cost reductions.”

Pitot adds: “Areas of uncompetitiveness include certain materials such as steel, wages, logistics and, increasingly, electricity. So opportunities lie in improving our efficiencies and our technological capabilities. These include manufacture of higher-level tooling, more local R&D and developing capabilities to produce the lighter and greener components that will form part of vehicles in future.”

The challenges and potential growth areas for design, precision engineering & machining, automotive component, tooling, tool making, production and application development sectors will come under the spotlight at the 4th annual AfriMold conference and trade fair. The event, a partner of the highly successful EuroMold trade fair, is endorsed by major industry bodies, as well as by the Department of Trade and Industry.

Ron MacLarty, Managing Director of AfriMold, says: “AfriMold 2013 will continue to innovate and push boundaries for the manufacturing industries’ continued growth and improved competitiveness as we strive for collaboration and cohesion on the home front.”

Bob Bond, Chairman of the Plastics Institute of South Africa (PISA) Northern Branch and AfriMold Conference Convenor, says the event’s theme, ‘Enabling For Tomorrow with a focus on precision engineering and tooling as a key enabler for the South African manufacturing sector, was chosen in light of the renewed drive for competitiveness.

Among the issues to be addressed at the conference are:

· What the SA Automotive sector expects from the local tooling industry

· Industrial Design: The Competitive Edge for Tooling and Manufacture

· Solutions for super profitable tool rooms

· How to fund equipment with IDC money

· Initiatives to boost Toolmaking Enterprises Development.

The AfriMold Trade Fair and Conference will also include the PISA/ AfriMold Student Design Presentations and PISA Member Awards.

For more information about AfriMold, visit www.afrimold.co.za or contact Terri Bernstein at Tel: +27 83 635 3539 or terri@afrimold.co.za

 

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China and Russia commit to World Energy Congress

Posted on 14 May 2013 by Africa Business

“Most important energy event in the world this year”

SEOUL – May 14, 2013: The Chinese and Russian governments have committed to sending high-level delegations to the World Energy Congress in South Korea in October, organizers said.

The Organizing Committee for the 2013 World Energy Congress said it had been notified that China’s National Energy Administration (NEA) would send a ministerial-level delegation to the event and that the government body had advised Chinese energy companies of its plan to attend.

The Chinese delegation will be one of the largest to the Congress, which will host up to 5,000 delegates from around the world, organizers said.

The Committee further announced that Alexander Novak, the Minister of Energy of the Russian Federation, would lead a delegation that will include the Russian ministries of Natural Resources and Environment, and of Foreign Affairs, as well as Gazprom, Transneft, Rosneft, RusHydro, the State Atomic Energy Corporation and other major energy companies.

The Russian delegation is planning a “Russia Day” event at the Congress.

The World Energy Congress is the world’s premier energy gathering and will take place on 13–17 October in the city of Daegu.

More than 200 prominent speakers, including energy ministers, industry CEOs and top experts and researchers, will answer the most pressing questions facing the global energy industry today

Under the theme of ‘Securing Tomorrow’s Energy Today’, topics range from the future prospects of the oil & gas, coal, nuclear, and renewables sectors to the tough policy decisions needed to balance the often conflicting priorities of energy security, universal access to affordable energy, and environmental protection. Delegates will also be given insights into how finance and innovation are shaping our energy future.

“We are delighted with the decision by the governmental and industry leaders in China and Russia,” said Dr. Christoph Frei, Secretary General of the London-based World Energy Council, which hosts the triennial event. “Having just been in China and Russia I know that this high level participation in the Congress will provide a fascinating overview of the opportunities and challenges of our energy world in transition. Such engagement by the world’s biggest players is crucial for a meaningful event.”

“Both countries are in the centre of many critical energy developments. We want to understand, within the global energy transformation, whether there is a refocus of ambition within the respective governments,” he said.

“We look forward to hearing more about developments in Russia and the energy challenges and opportunities in China at the World Energy Congress in October,” said Cho Hwan-eik, Chair of the Organising Committee of the 2013 World Energy Congress.

He added: “This will be the first time in the 90-year history of the event that China will have participated in such a significant way. For both the Chinese and Russians now to commit to the Daegu event underscores the fact that the Congress is the most important event on the global energy calendar this year.”

The Organising Committee also confirmed that a number of other governments are currently planning significant activity for the Congress. Mr. Cho added, “The discussions we are having with many governments at this early stage in our planning only serve to highlight the importance of this global event being staged in the heart of Asia at a time of significant transition in the energy sector.”

Media Enquiries:

Organizing Committee, World Energy Congress

Inang Park

Tel: +82 (2) 739 7016

M: 010 3213 7465

Email: inang.park@insightcomms.com

John Burton

Tel: +82 (2) 739 7045

M: +82 (0)10 2437 6265

Email: john.burton@insightcomms.com

World Energy Congress – international

Seán Galvin

Tel: +44 (0)20 7269 7133

M: +44 (0)7788 568 245

Email: sean.galvin@fticonsulting.com

World Energy Council

Monique Tsang

Tel: +44 (0)20 3214 0616

Email: tsang@worldenergy.org

About the World Energy Congress

The World Energy Congress is the world’s premier energy gathering. The triennial World Energy Congress has gained recognition since the first event in 1923 as the premier global forum for leaders and thinkers to debate solutions to energy issues. In addition to the discussions, the event provides an opportunity for executives to display their technologies and explore business opportunities. With the upcoming Congress in Daegu the event will have been held in 20 major cities around the world since its founding.

Further details at www.daegu2013.kr and @WECongress

About the World Energy Council (WEC)

The World Energy Council (WEC) is the principal impartial network of leaders and practitioners promoting an affordable, stable and environmentally sensitive energy system for the greatest benefit of all. Formed in 1923, WEC is the UN-accredited global energy body, representing the entire energy spectrum, with more than 3000 member organisations located in over 90 countries and drawn from governments, private and state corporations, academia, NGOs and energy related stakeholders. WEC informs global, regional and national energy strategies by hosting high-level events, publishing authoritative studies, and working through its extensive member network to facilitate the world’s energy policy dialogue.

Further details at www.worldenergy.org and @WECouncil

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WORLD ENERGY CONGRESS UNVEILS PROGRAM THEMES

Posted on 14 May 2013 by Africa Business

Ministers, CEOs and experts to address full range of energy issues

LONDON &SEOUL– 14th May 2013: The 2013 World Energy Congress Organizing Committee announced today some of the significant program topics that will be discussed by leading figures in the energy sector at the world’s premier energy event, to be held in Daegu, South Korea from October 13 to 17, 2013.

Under the theme of ‘Securing Tomorrow’s Energy Today’, topics range from the future prospects of the oil & gas, coal, nuclear, and renewables sectors to the tough policy decisions needed to balance the often conflicting priorities of energy security, universal access to affordable energy, and environmental protection. Delegates will also be given insights into how finance and innovation are shaping our energy future.

“The Congress will provide a fascinating overview of the opportunities and challenges of our energy world in transition,” said Dr. Christoph Frei, Secretary General of the World Energy Council. “The issues to be highlighted will be addressed from a number of viewpoints, encompassing the perspectives of individual energy sectors and geographical regions, as well as providing a strategic overview of global energy trends.”

More than 200 prominent speakers, including energy ministers, industry CEOs and top experts and researchers, will answer the most pressing questions facing the global energy industry today, such as:

· Oil: Will state oil companies and independents come to dominate the industry?

· Gas: Will shale gas be a game changer in redrawing the global energy map or is it just a bubble?

· Coal: Can demand for coal overcome environmental concerns?

· Renewables: Is the honeymoon over?

· Nuclear: Can effective international governance rules keep alive the nuclear renaissance?

· Hydro: Has its time finally come?

· Biofuels: What are the critical success factors for sustainable projects?

· Utilities: Will new business models succeed in promoting decentralization?

· Energy access: Is it achievable against the competing demands for water and food?

· Energy security: What are the next big energy sources?

· Environment mitigation: Are green growth and rapid economic growth compatible?

· Energy efficiency: Are yesterday’s cities fit for tomorrow’s energy?

· Finance: Is development finance delivering inclusive green growth?

· Energy innovation: Is venture capital more important than government support?

· Asia: Can the region become a showcase for green growth?

· Eurasia: Can it achieve partnerships to unlock its full energy potential?

· Middle East: Will it balance the needs of energy exports, local energy growth and job creation?

· Latin America: Blessed with resources, but overwhelmed by choice?

· Europe: Can it achieve effective energy market integration?

· Africa: Is there an energy infrastructure road map?

“The program at the 22nd World Energy Congress captures the full range and complexity of today’s energy challenges,” said Cho Hwan-eik, chair of the Organizing Committee of the 2013 World Energy Congress. “The Congress offers an impressive and unmatched list of speakers to provide insights on how these challenges can be addressed and overcome.”

Specific sessions and speakers will be announced shortly.

For further information, registration and other details, please log on to www.daegu2013.kr

Media Enquiries:

World Energy Congress – international

Seán Galvin

Tel: +44 (0)20 7269 7133

M: +44 (0)7788 568 245

Email: sean.galvin@fticonsulting.com

World Energy Council

Monique Tsang

Tel: +44 (0)20 3214 0616

Email: tsang@worldenergy.org

About the World Energy Congress

The World Energy Congress is the world’s premier energy gathering. The triennial World Energy Congress has gained recognition since the first event in 1923 as the premier global forum for leaders and thinkers to debate solutions to energy issues. In addition to the discussions, the event provides an opportunity for executives to display their technologies and explore business opportunities. With the upcoming Congress in Daegu the event will have been held in 20 major cities around the world since its founding.

Further details at www.daegu2013.kr and @WECongress

About the World Energy Council (WEC)

The World Energy Council (WEC) is the principal impartial network of leaders and practitioners promoting an affordable, stable and environmentally sensitive energy system for the greatest benefit of all. Formed in 1923, WEC is the UN-accredited global energy body, representing the entire energy spectrum, with more than 3000 member organisations located in over 90 countries and drawn from governments, private and state corporations, academia, NGOs and energy related stakeholders. WEC informs global, regional and national energy strategies by hosting high-level events, publishing authoritative studies, and working through its extensive member network to facilitate the world’s energy policy dialogue.

Further details at www.worldenergy.org and @WECouncil

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LICEX 2013 Launched Sustainable development and investment opportunities in Lebanon’s infrastructure

Posted on 14 May 2013 by Africa Business

May 2013 – The Lebanon Infrastructure Conference and Exhibition (LICEX 2013) is taking place in the prestigious Hilton Habtoor Grand Hotel, Beirut on 10 and 11 October 2013 with the support of the Secretariat General of the Higher Council for Privatisation.

Organized by Global Events Partners Ltd (GEP) from the UK and Lebanon’s Planners and Partners S.A.L., LICEX 2013 is also supported by the UK Department of Trade and Industry, the Brazilian Chambers of Commerce and other international and local organizations.

‘’LICEX 2013 will feature an exhibition and conference bringing together the infrastructure community in Lebanon,’’ said Paul Gilbert from the GEP. ‘’Participants will have the opportunity to hear from industry experts about the latest planned infrastructure projects and to discuss the vast investment opportunities available in the country. They will have also a chance to hear from international experts about the latest on the Public Private Partnership.”

“There are a lot of new business opportunities to develop in Lebanon, particularly through possible contracts in the sectors of telecommunications, public transport, power and water management,” explained Dory Renno from Planners and Partners.

Gilbert explained that “LICEX 2013 will open the door for companies to introduce their latest products and services and to position themselves as leaders in their field to develop new business in Lebanon and to take advantage of the infrastructure contracts on offer.”

LICEX 2013 will attract exhibitors and visitors from across the infrastructure supply chain; EPC contractors, Government departments and companies from the following sectors: Construction, Technology, Regulators, Banks, Legal, Consultants, Telecommunications, Electricity, Transportation and Water and Power.

Despite the political instability all around the Middle East, Lebanon has kept a stable economy with a great potential for growth in the future. The constantly increasing interest in the country as a leading tourist destination, along with the emerging oil and gas sector offshore, are just two of many drivers for such an expected growth.

“The timing of the event is excellent,” said Renno, “it coincides with the increased interest and talk about the much-needed partnership between the private and public sectors in Lebanon.” A new PPP law is being prepared within the Lebanese Government, and could be approved at any time.

The programme of LICEX 2013 conference is being developed by government and industry partners. Conference will focus on the following main topics which will be structured in two or three days:

1- The investment climate in Lebanon particularly in infrastructure projects

2- The concept of PPP and its application in Lebanon

3- Presentations by a leading government ministries on their available projects

4- Leading local governments and the projects they have on offer

Speakers will include a large number of high-ranking government officials from involved ministries and governmental organizations, as well as representatives of leading infrastructure companies in Lebanon and internationally.

LICEX 2013 is being developed by the organisers of the Lebanon International Oil and Gas Summit (LIOG) which was held in December 2012 under the patronage of the Ministry of Energy and Water and in collaboration with the Ministry of Finance. It attracted over 330 delegates and 35 speakers from 23 countries representing 150 local and international companies and organizations, including major international oil companies (IOCs).

LICEX 2013 is the next step in the partnership between the UK based Global Event Partners Ltd and their local Lebanese partner company Planners and Partners SAL. Both companies are committed to holding the leading industry events in Beirut, with a strong commitment to Lebanon and its business climate.

To learn more about the event, how to participate and other details on the programme, participating delegates, speakers and sponsors, please visit: www.lebanoninfrastructure.com

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Successful infrastructure project bonds require improved regulatory frameworks, says AfDB study

Posted on 14 May 2013 by Africa Business

TUNIS, Tunisia /African Press Organization (APO)/ African countries need to improve their regulatory frameworks in order to ensure the successful launch of African infrastructure project bonds, says a new report launched by the African Development Bank (http://www.afdb.org).

Read the report: http://j.mp/10RPwzm

Africa is ready for the launch of such infrastructure bonds provided some conditions are met, says the report, titled “Structured Finance – Conditions for infrastructure project bonds in African markets”.

With Africa having now no other option than to tap into its own internal resources, the book “points in the right direction,” said Donald Kaberuka, President of the African Development Bank, in the foreword. “I hope it will be useful for all Africans who are involved in infrastructure development.”

The report is of the view that domestic capital markets can contribute to funding some of the most important local and regional infrastructure projects. Given the limited ability of local banks to provide long-term funding and the shrinking international assistance, the report encourages project sponsors to turn to domestic institutional investors by issuing infrastructure project bonds.

The legal and regulatory framework for bond issuance exists in many countries which are active issuers of bonds for their own funding needs. However, competition between the sovereign and other issuers is a potential issue in all markets.

Many of the ingredients for infrastructure project bond issuance are present, but more needs to be done to make it attractive for sponsors to tap local markets. From a sponsor’s perspective, issuing an infrastructure project bond must offer the optimal tenor and pricing compared to other options. It is therefore essential that governments do more to reduce local market rates and lengthen the yield curve.

According to the report, a crucial barrier in African markets is the enabling environment for infrastructure. The regulatory and tariff framework in many sectors is incomplete. Many countries have established public-private partnership (PPP) laws and institutions, but often they lack the resources and capacity to prepare bankable projects for the market. As important, there is often a lack of advocacy and political support for driving concessions and PPP projects through government, and too few are coming to market, although it remains early days in many countries.

There is a crucial role for governments in promoting infrastructure project bonds. Governments can play a greater role in supporting stable economic conditions, developing local capital markets and strengthening institutions. Those actions will encourage all issuers to come to market, particularly corporations for whom bond issuance has been limited to date. Promoting reform and corporatization of utilities and parastatals, including professional management and a clear regulatory environment, are preconditions for such entities to issue in the local bond markets – an important landmark in the development of local capital markets and the emergence of infrastructure project bonds.

“The African Development Bank can play various roles in that regard,” said Cedric Mbeng Mezui, the report’s lead author. “It can provide technical assistance in infrastructure, capital markets and domestic issuance, and work with intermediaries. For specific projects, it can use instruments such as the partial credit guarantee as well as any new tailored instruments, to enhance bond issuance and catalyze the market. Direct funding for projects in early-stage preparation and through debt and equity investments at financial close will help promote the overall market. Finally, the AfDB can play a role in unblocking the political bottlenecks that obstruct projects from being developed and implemented,” he added.

For Moono Mupotola, Regional Integration Manager, AfDB, “the book was prepared with a number of objectives in mind: firstly, to highlight the opportunity for project bonds; secondly, to elaborate on the conditions for efficient capital markets; thirdly, to explain the crucial role of constructive government policies; and finally to highlight lessons learned in other markets that might be useful for Africa.”

The report was launched during the IMF and World Bank Spring Meetings in April 2013 by Charles Boamah, AfDB Finance Vice-President.

 

SOURCE

African Development Bank (AfDB)

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IMF Mission Concludes the 2013 Article IV Mission to the Republic of Congo

Posted on 14 May 2013 by Africa Business

BRAZZAVILLE, Republic of the Congo, May 14, 2013/African Press Organization (APO)/ An International Monetary Fund (IMF) mission led by Mr. Mbuyamu Matungulu visited Brazzaville during April 29–May 13, 2013, to conduct discussions for the 2013 Article IV consultations. The mission met with the Honorable Obami Itou, President of the Senate; the Honorable Koumba, Speaker of Parliament; State and Finance Minister Ondongo, Special Presidential Advisor Gokana, National Director of the BEAC Ondaye Ebauh, and other senior officials. It held discussions with development partners and representatives of the private sector, including members of the banking profession.

At the end of the mission, Mr. Matungulu issued the following statement:

“In 2012, real GDP growth rebounded to about 4 percent despite a marked decline in oil production. Activity in the non-oil sectors was robust, driven by a surge in public spending in response to the ammunitions depot explosion of March 2012. The brisk increase in spending put pressures on prices, bringing end-year inflation to 7.5 percent as domestic supply response was limited. Reflecting the high import content of increased government outlays, the external current account turned negative in 2012. Credit growth remained robust. The basic non-oil primary budget deficit increased considerably, stemming from the expansion of government spending. However, the deficit was smaller than projected, with domestically-funded investment outlays somewhat lower than anticipated.

“Real GDP growth is expected to strengthen to 5.8 percent in 2013 despite a further decline of oil production, underpinned by continuing strong activity in construction and public works, telecommunications, as well as a timid start of iron ore production. Inflation eased to a monthly average of -0.1 percent in January-February 2013, and is projected to remain subdued during the remainder of the year as pressures from the 2012 ammunitions explosions fallout gradually recede. While the current account is expected to improve, the country remains vulnerable to adverse changes in external conditions, particularly on terms of trade. Compared to the initial budget, the mission’s current fiscal projections for 2013 reflect a shortfall in oil revenue equivalent to 4.8 percent of non-oil GDP, a reduction in government spending, as well as much higher-than-anticipated payments on arrears to social sectors. While the basic non-oil primary budget deficit should be contained below the projected level, the build-up of government deposits with the central bank would likely be much lower than targeted under the 2013 budget. The mission urged stronger treasury management and discussed quarterly fiscal targets for the remainder of the year to minimize slippages.

“The authorities’ medium-term development agenda seeks to foster private sector development, facilitate economic diversification, and secure growth inclusiveness. It appropriately emphasizes preservation of macroeconomic stability, improvements in governance and transparency and in business conditions, as well as a scaling up of investment to begin closing large infrastructure and skills gaps, while seeking further gains in budget consolidation. The mission encouraged the authorities to expedite reforms to improve the quality of spending; and welcomed World Bank involvement in the efforts to improve the management of the public investment program and enhance the productivity of the development budget. It underscored accelerated implementation of World Bank-supported reforms to improve the business environment, including in financial sector; and to roll out envisaged social protection systems. Regarding the management of oil resources, the mission reiterated calls for early adoption by Parliament of the draft law on budget transparency and accountability, following the achievement last February of compliant status under the Extractive Industries Transparency Initiative (EITI). As Congo moves ahead with the establishment of Special Economic Zones, the staff team urged caution. In particular, the mission encouraged the authorities to refrain from extending special fiscal incentives, and to focus instead on revamping infrastructure, including the inadequate electricity network, and advancing administrative facilitation. The staff team favored implementation of economy-wide reforms that improve the business environment for all so as to prevent abuses. It confirmed Congo’s low risk of debt distress but noted the need for continuing prudent borrowing policies to maintain long-term debt sustainability in the post-HIPC era.

“The mission discussed a medium- and long-term fiscal framework aimed at protecting spending from oil revenue volatility and ensuring budget and debt sustainability while supporting growth and guarding against the risks in the face of declining oil reserves. The framework makes provisions for scaled up investment and a buildup of net wealth that would sustain expenditures when oil resources are depleted. Under the agreed framework, nearly 65 percent of projected total oil revenue for 2013–2019 would be spent (two thirds of which on capital goods), and 35 percent saved; and the basic non-oil primary budget deficit would be limited to 36.1 percent of non-oil GDP by 2015.

“The authorities concurred with the need to improve coordination of economic policy management through development of appropriate reform-monitoring mechanisms. In this context, staff welcomed the government’s support to the ongoing review of the Economic and Monetary Community of Central African States (CEMAC)’s reserves pooling framework. Finally, the mission reminded the authorities of Congo’s legal obligations under Article VIII, Section 5, including the obligation to provide data to Fund staff on official holdings of foreign exchange.

“The mission wishes to express gratitude to the authorities for their hospitality. Upon its return to Washington D.C., the team will prepare a staff report to be discussed by the IMF’s Executive Board.”

 

SOURCE

International Monetary Fund (IMF)

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