Essential The Africa the Media Doesn't Tell You About
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Egypt: El-Sisi visits Trump, requests Muslim Brotherhood be declared a terrorist group
Dibie Ike Michael with Press Agency | April 3, 2017 | 19:50
Egypt’s president, Abdel- Fattah El-Sisi on Monday became the first Arab head of state to visit the American, white house, El- Sisi during the visit,would request that political Islamic groups especially the Brotherhood be declared a terrorist group.
President Trump praised Sisi and referenced their first meeting, during the 2016 presidential campaign, describing him as “somebody that is been very close to me from the first time I met him.”
Sisi, in return, said to Trump “ I had a deep appreciation and admiration of your unique personality, especially as you are standing very strong in the counter-terrorism field.”
The objective, of the visit, the administration said, is to rebuild relations strained during the Obama years by Egypt’s crackdown on the Muslim Brotherhood.
Unlike Trump, the former president, Barack Obama decline to invite El-Sisi to the White House during his term in office.
El-Sisi led the 2013 overthrow of Egypt’s first democratically elected president, Mohamed Morsi, and later ascended to the top of Egypt’s government. He has since been accused of employing repressive tactics, including jailing thousands of political opponents and protesters.
He and Trump are likely to “see eye-to-eye that there is no political Islam that’s moderate or not moderate.
The meeting between the two leaders comes at a critical time fo El-Sisi, months after the country’s currency exchange restrictions were lifted, annual inflation shot up to over 30 percent and the pound’s value halved against the dollar.
A fellow at the Washington Institute for Near East Policy, Eric Trager said Support from Trump, including an affirmation of Egypt’s Middle East standing, would provide El-Sisi’s policies with a strong measure of validation domestically and regionally.
Egypt: El-Sisi visits Trump, requests Muslim Brotherhood be declared a terrorist group
Dibie Ike Michael with Press Agency | April 3, 2017 | 19:50
Egypt’s president, Abdel- Fattah El-Sisi on Monday became the first Arab head of state to visit the American, white house, El- Sisi during the visit,would request that political Islamic groups especially the Brotherhood be declared a terrorist group.
President Trump praised Sisi and referenced their first meeting, during the 2016 presidential campaign, describing him as “somebody that is been very close to me from the first time I met him.”
Sisi, in return, said to Trump “ I had a deep appreciation and admiration of your unique personality, especially as you are standing very strong in the counter-terrorism field.”
The objective, of the visit, the administration said, is to rebuild relations strained during the Obama years by Egypt’s crackdown on the Muslim Brotherhood.
Unlike Trump, the former president, Barack Obama decline to invite El-Sisi to the White House during his term in office.
El-Sisi led the 2013 overthrow of Egypt’s first democratically elected president, Mohamed Morsi, and later ascended to the top of Egypt’s government. He has since been accused of employing repressive tactics, including jailing thousands of political opponents and protesters.
He and Trump are likely to “see eye-to-eye that there is no political Islam that’s moderate or not moderate.
The meeting between the two leaders comes at a critical time fo El-Sisi, months after the country’s currency exchange restrictions were lifted, annual inflation shot up to over 30 percent and the pound’s value halved against the dollar.
A fellow at the Washington Institute for Near East Policy, Eric Trager said Support from Trump, including an affirmation of Egypt’s Middle East standing, would provide El-Sisi’s policies with a strong measure of validation domestically and regionally.
Egypt: El-Sisi visits Trump, requests Muslim Brotherhood be declared a terrorist group
The Singularity
Pro
They should replace the bamboo with thin metal frame to limit effects of shadows/lack of sunshine. Rotating the support frame to face the sun all day will increase production.Africa needs its own version of the vertical farm to feed growing cities
Author Esther Ndumi Ngumbi
March 22, 2017 10.54am EDT
Hydroponic vertical farming system. Shutterstock
Ghana To Receive $1.2bn From World Bank
Related Stories
Ghana is set to receive about $1.2billion in credit facilities from the World Bank Group within the next three years.
The facility forms part of the World Bank's $75 billion development assistance facility to countries across the globe.
Ghana's allocation is calculated out of the 50 billion dollars allocation to Africa.
When approved, the $1.2 billion dollars facility will be disbursed over a three year period of $400million in each tranche.
Ghana has a four year grace period before repayment starts at an interest rate of 2.5% payable within a twenty-five year period.
The Chief Economist for the Africa Region of the World Bank, Albert G. Zeufack, noted that the rate is favourable compared to the about nine percent interest on the country's Eurobonds.
He could, however, not disclose the respective areas of channeling the credit facility to develop in the Ghanaian economy.
He explained that the support is to cushion countries against the adverse economic impacts following a sluggish economic growth in 2016.
Mr Zeufack, who was interacting with the media, as part of activities of his three-day visit, said it was time for Africa to seize the opportunities available in emerging markets such as those in East Asia.
Diversifying markets and exports
According to him, there are enormous potential for Africa to develop by diversifying its markets and exports.
Value addition
He said while it was important for African countries in general and Ghana in particular to diversify their economies from the exports of mainly raw materials to value added products, it was even more important for them to diversify their markets.
Exports products to East Asia
He noted that after adding value, Africa must look for a diversified market for its exports aside the traditional markets of US and other places to places like East Asia.
“The largest consumption market and the fastest growing consumption market is actually in East Asia, it’s not in the US, it’s not in Europe, it’s in East Asia,” he said.
$16b chocolate market exist in East Asia
He said the market for chocolate in East Asia for instance, for 2018, was more than $16 billion.
Ghana must add value to Cocoa
He said if Ghana, being one of the largest cocoa producers, was able to attract investment to manufacture chocolate and other cocoa products, it would be able to create jobs in Ghana and export chocolate to East Asia.
“This is what La Cote d’Ivoire is starting to do, and that is what Africa must emulate,” he said.
Africa-Asia Flagship Report
In line with this, Mr Zeufack said he would launch a report on how to position Africa to seize opportunities in emerging markets, especially those in Asia, called the ‘Africa-Asia Flagship Report’.
Over-reliance on export of raw commodities
He observed that most African countries were lagging behind their counterparts in other parts of the world due to over-reliance on export of raw commodities, and have been hit hard by the recent commodity price slump.
Ghana-Malaysia gap
Mr Zeufack said while Ghana, for instance, had gained independence at the same time as Malaysia, and had a higher Gross Domestic Product (GDP) per capita than Malaysia at the time, Malaysia’s GDP per capita was currently about nine times above that of the country.
He attributed this gap between the development of the two countries to the adoption of growth models that were focused solely on exporting raw materials instead of diversifying economies and adding more value, as was the case in most other African countries.
Giving an overview of the macro economy in Africa, Mr Zeufack remained optimistic about Africa’s growth, saying that although most African countries had been hit hard by the commodity price slumps, most of Africa remained resilient and continued to grow steadily.
2016 is worst year of growth for sub-Saharan Africa
He described 2016 as the worst year of growth for sub-Saharan Africa in two decades with the continent recording an average of only 1.6 per cent growth, lower than the rate of population growth, due to the collapse of commodity prices and reduced capital flows.
The Bank however projects a timid recovery of between 2.5 and three per cent in 2017 and three to 3.5 per cent in 2018.
He explained that if Nigeria, South Africa and Angola, who were heavily reliant on mineral and commodities exports, were excluded from the average, the rest of Africa was still growing above five percent.
“We are not giving in to this Afro-pessimism, telling us that Africa is collapsing or that Africa is no longer rising. We believe most of Africa is still resilient and in fact countries like Ethiopia, Rwanda and Tanzania are still growing above seven percent, while others like Senegal and Cote d’Ivoire are all growing above six per cent,” he stated.
Ghana will also recover from its 3.6 per cent growth last year to roughly 5.5 to six per cent depending on how the risks are managed, he added.
Source: The Finder
Ghana To Receive $1.2bn From World Bank
Related Stories
Ghana is set to receive about $1.2billion in credit facilities from the World Bank Group within the next three years.
The facility forms part of the World Bank's $75 billion development assistance facility to countries across the globe.
Ghana's allocation is calculated out of the 50 billion dollars allocation to Africa.
When approved, the $1.2 billion dollars facility will be disbursed over a three year period of $400million in each tranche.
Ghana has a four year grace period before repayment starts at an interest rate of 2.5% payable within a twenty-five year period.
The Chief Economist for the Africa Region of the World Bank, Albert G. Zeufack, noted that the rate is favourable compared to the about nine percent interest on the country's Eurobonds.
He could, however, not disclose the respective areas of channeling the credit facility to develop in the Ghanaian economy.
He explained that the support is to cushion countries against the adverse economic impacts following a sluggish economic growth in 2016.
Mr Zeufack, who was interacting with the media, as part of activities of his three-day visit, said it was time for Africa to seize the opportunities available in emerging markets such as those in East Asia.
Diversifying markets and exports
According to him, there are enormous potential for Africa to develop by diversifying its markets and exports.
Value addition
He said while it was important for African countries in general and Ghana in particular to diversify their economies from the exports of mainly raw materials to value added products, it was even more important for them to diversify their markets.
Exports products to East Asia
He noted that after adding value, Africa must look for a diversified market for its exports aside the traditional markets of US and other places to places like East Asia.
“The largest consumption market and the fastest growing consumption market is actually in East Asia, it’s not in the US, it’s not in Europe, it’s in East Asia,” he said.
$16b chocolate market exist in East Asia
He said the market for chocolate in East Asia for instance, for 2018, was more than $16 billion.
Ghana must add value to Cocoa
He said if Ghana, being one of the largest cocoa producers, was able to attract investment to manufacture chocolate and other cocoa products, it would be able to create jobs in Ghana and export chocolate to East Asia.
“This is what La Cote d’Ivoire is starting to do, and that is what Africa must emulate,” he said.
Africa-Asia Flagship Report
In line with this, Mr Zeufack said he would launch a report on how to position Africa to seize opportunities in emerging markets, especially those in Asia, called the ‘Africa-Asia Flagship Report’.
Over-reliance on export of raw commodities
He observed that most African countries were lagging behind their counterparts in other parts of the world due to over-reliance on export of raw commodities, and have been hit hard by the recent commodity price slump.
Ghana-Malaysia gap
Mr Zeufack said while Ghana, for instance, had gained independence at the same time as Malaysia, and had a higher Gross Domestic Product (GDP) per capita than Malaysia at the time, Malaysia’s GDP per capita was currently about nine times above that of the country.
He attributed this gap between the development of the two countries to the adoption of growth models that were focused solely on exporting raw materials instead of diversifying economies and adding more value, as was the case in most other African countries.
Giving an overview of the macro economy in Africa, Mr Zeufack remained optimistic about Africa’s growth, saying that although most African countries had been hit hard by the commodity price slumps, most of Africa remained resilient and continued to grow steadily.
2016 is worst year of growth for sub-Saharan Africa
He described 2016 as the worst year of growth for sub-Saharan Africa in two decades with the continent recording an average of only 1.6 per cent growth, lower than the rate of population growth, due to the collapse of commodity prices and reduced capital flows.
The Bank however projects a timid recovery of between 2.5 and three per cent in 2017 and three to 3.5 per cent in 2018.
He explained that if Nigeria, South Africa and Angola, who were heavily reliant on mineral and commodities exports, were excluded from the average, the rest of Africa was still growing above five percent.
“We are not giving in to this Afro-pessimism, telling us that Africa is collapsing or that Africa is no longer rising. We believe most of Africa is still resilient and in fact countries like Ethiopia, Rwanda and Tanzania are still growing above seven percent, while others like Senegal and Cote d’Ivoire are all growing above six per cent,” he stated.
Ghana will also recover from its 3.6 per cent growth last year to roughly 5.5 to six per cent depending on how the risks are managed, he added.
Source: The Finder
Ghana To Receive $1.2bn From World Bank
The Odum of Ala Igbo
Hail Biafra!
Ghana To Receive $1.2bn From World Bank
Related Stories
Ghana is set to receive about $1.2billion in credit facilities from the World Bank Group within the next three years.
The facility forms part of the World Bank's $75 billion development assistance facility to countries across the globe.
Ghana's allocation is calculated out of the 50 billion dollars allocation to Africa.
When approved, the $1.2 billion dollars facility will be disbursed over a three year period of $400million in each tranche.
Ghana has a four year grace period before repayment starts at an interest rate of 2.5% payable within a twenty-five year period.
The Chief Economist for the Africa Region of the World Bank, Albert G. Zeufack, noted that the rate is favourable compared to the about nine percent interest on the country's Eurobonds.
He could, however, not disclose the respective areas of channeling the credit facility to develop in the Ghanaian economy.
He explained that the support is to cushion countries against the adverse economic impacts following a sluggish economic growth in 2016.
Mr Zeufack, who was interacting with the media, as part of activities of his three-day visit, said it was time for Africa to seize the opportunities available in emerging markets such as those in East Asia.
Diversifying markets and exports
According to him, there are enormous potential for Africa to develop by diversifying its markets and exports.
Value addition
He said while it was important for African countries in general and Ghana in particular to diversify their economies from the exports of mainly raw materials to value added products, it was even more important for them to diversify their markets.
Exports products to East Asia
He noted that after adding value, Africa must look for a diversified market for its exports aside the traditional markets of US and other places to places like East Asia.
“The largest consumption market and the fastest growing consumption market is actually in East Asia, it’s not in the US, it’s not in Europe, it’s in East Asia,” he said.
$16b chocolate market exist in East Asia
He said the market for chocolate in East Asia for instance, for 2018, was more than $16 billion.
Ghana must add value to Cocoa
He said if Ghana, being one of the largest cocoa producers, was able to attract investment to manufacture chocolate and other cocoa products, it would be able to create jobs in Ghana and export chocolate to East Asia.
“This is what La Cote d’Ivoire is starting to do, and that is what Africa must emulate,” he said.
Africa-Asia Flagship Report
In line with this, Mr Zeufack said he would launch a report on how to position Africa to seize opportunities in emerging markets, especially those in Asia, called the ‘Africa-Asia Flagship Report’.
Over-reliance on export of raw commodities
He observed that most African countries were lagging behind their counterparts in other parts of the world due to over-reliance on export of raw commodities, and have been hit hard by the recent commodity price slump.
Ghana-Malaysia gap
Mr Zeufack said while Ghana, for instance, had gained independence at the same time as Malaysia, and had a higher Gross Domestic Product (GDP) per capita than Malaysia at the time, Malaysia’s GDP per capita was currently about nine times above that of the country.
He attributed this gap between the development of the two countries to the adoption of growth models that were focused solely on exporting raw materials instead of diversifying economies and adding more value, as was the case in most other African countries.
Giving an overview of the macro economy in Africa, Mr Zeufack remained optimistic about Africa’s growth, saying that although most African countries had been hit hard by the commodity price slumps, most of Africa remained resilient and continued to grow steadily.
2016 is worst year of growth for sub-Saharan Africa
He described 2016 as the worst year of growth for sub-Saharan Africa in two decades with the continent recording an average of only 1.6 per cent growth, lower than the rate of population growth, due to the collapse of commodity prices and reduced capital flows.
The Bank however projects a timid recovery of between 2.5 and three per cent in 2017 and three to 3.5 per cent in 2018.
He explained that if Nigeria, South Africa and Angola, who were heavily reliant on mineral and commodities exports, were excluded from the average, the rest of Africa was still growing above five percent.
“We are not giving in to this Afro-pessimism, telling us that Africa is collapsing or that Africa is no longer rising. We believe most of Africa is still resilient and in fact countries like Ethiopia, Rwanda and Tanzania are still growing above seven percent, while others like Senegal and Cote d’Ivoire are all growing above six per cent,” he stated.
Ghana will also recover from its 3.6 per cent growth last year to roughly 5.5 to six per cent depending on how the risks are managed, he added.
Source: The Finder
Ghana To Receive $1.2bn From World Bank
The Ghana-Malaysia gap omits that Ghana began decades of bad socialist macro-economic policies. Thanks Nkrumah!
The Odum of Ala Igbo
Hail Biafra!
Made in Senegal? New industrial park woos Chinese firms
Four new factory buildings rise up from fields on the outskirts of Senegal's capital, the first phase of a government plan to woo Chinese companies shifting low-end manufacturing to Africa as wages in East Asia rise.
African countries are vying for millions of jobs that China is expected to shed. So far Ethiopia is ahead of the pack, with a fledgling shoe and garment-making sector that has made it one of Africa's rising stars.
Now Senegal, a country with a tiny manufacturing base and main exports including fish and peanuts, hopes to replicate that success with a new industrial park and a deal with the Chinese businesswoman whose shoe factory kickstarted Ethiopia's nascent industrial revolution.
Senegal's stable democracy and Atlantic Ocean port make it a natural candidate for export-based industry, but it ranks 147 out of 190 countries on the World Bank's ease of doing business index due to problems with electricity access and bureaucracy.
The 85 billion CFA franc ($138.59 million) project in the town of Diamniadio is gambling on hopes it resuscitate a manufacturing sector that has languished for decades.
If it works, this will be one of the first cases of Chinese industry spreading to Francophone West Africa.
The stakes are high. Senegal suffers chronic underemployment that sends millions abroad in search of a better life.
"Lots of Chinese companies are discovering Senegal for the first time," Mines and Industry Minister Aly Ngouille Ndiaye told Reuters in a phone interview. "In the industrial domain, we have everything to learn from China."
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An administrative building at Senegal's new Diamniadio industrial park in Senegal November 15, 2016.REUTERS/Nellie Peyton
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Kenya, Tanzania and Rwanda are among the other African countries that are chasing Chinese textiles investment and have launched or planned new industrial zones in the last three years. None, however, are as far along as Ethiopia.
China has also invested in manufacturing in Ghana and Nigeria, West Africa's top economies, but its activity in the French-speaking countries has been centered around more traditional areas like infrastructure and mining.
"SNOWBALL EFFECT"
C&H Garments, a Chinese company active in Ethiopia and Rwanda, plans to hire 5,000 workers at Diamniadio and export clothes to the U.S. and Europe, said co-owner Helen Hai.
Hai expects the plant to open this year.
Around 20 other companies from Senegal, North Africa, Europe and Asia have applied for factory space and are awaiting selection, Ndiaye told Reuters, although Senegal still needs to pass new tax laws for the special economic zone.
Senegal developed a textile industry in the 1960s but it was heavily supported by the state, which couldn't sustain it.
Now it imports almost everything from clothes to matchsticks to toilet paper, often from China.
ALSO IN BUSINESS NEWS
While there are some factories canning fish, making cement and rolling cigars for export, they are dwarfed by a services sector that makes up more than half the GDP.
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"If Senegal is able to demonstrate a quick success as a French-speaking country, this could have a big snowball effect ... on the African continent," Hai said.
This was the case in Ethiopia. After Hai's shoe company Huajian opened a plant near Addis Ababa in 2012, other firms clustered around it and foreign direct investment grew over 300 percent to reach $1.2 billion by 2014, according to a U.N. World Investment Report.
Senegal has higher wages and electricity costs than Ethiopia, but its proximity to target markets in Europe and North America makes it attractive, said Hai, who is also advising the government.
But analysts say Senegal will still need to work quickly to seize the opportunity in a brutally competitive environment.
Between five and 10 African countries are likely to see their industrial sectors take off in the next decade as production shifts from Asia, said John Page, a Brookings fellow and former chief Africa economist at the World Bank.
"It's going to be a combination of better governance, better policies and some good luck" that distinguishes the countries that pull ahead from those that don't, Page said
The Odum of Ala Igbo
Hail Biafra!
Egypt attracts $3.1 bln foreign investment in domestic debt since flotation – deputy finminNaija247news | Naija247news
The Positive Effects of Devaluation of Currency, I suppose
The Positive Effects of Devaluation of Currency, I suppose
The Odum of Ala Igbo
Hail Biafra!
25-year Kenya-Uganda railway deal terminated
The Kenya Railways Corporation has terminated Rift Valley Railways’ (RVR) 25-year contract to run the Kenya-Uganda railway, casting dark clouds over the future of the private operator. FILE | NATION MEDIA GROUP
By BUSINESS DAILY
Posted Wednesday, April 5 2017 at 12:30
The Kenya Railways Corporation has terminated Rift Valley Railways’ (RVR) 25-year contract to run the Kenya-Uganda railway, casting dark clouds over the future of the private operator.
The Business Daily has learnt that Kenya Railways terminated the contract last Thursday, citing RVR’s failure to meet set operating targets, including payment of concession fees.
RVR, whose ownership is controlled by Egyptian private equity firm Qalaa Holding, was informed of the decision through a letter delivered to its bosses on Thursday morning — a day after the operator moved to court seeking orders to stop it.
The termination process was set in motion in January when Kenya Railways managing director Atanas Maina issued RVR with a notice over unpaid fees amounting to $5.8 million (Sh600m) and a string of misses in cargo haulage targets.
Attend the meeting
RVR’s chief executive Isaiah Okoth declined to comment.
The journey to termination picked pace in mid-March when Kenyan officials travelled to Kampala for a meeting with their Ugandan counterparts to assess RVR’s performance.
Qalaa’s head of transportation division Karim Sadek, who was expected to attend the meeting, failed to show up, instead choosing to send a junior officer.
The snub infuriated the top government officials, who left the meeting having passed a resolution to terminate the contract at the end of the 90-day notice they had issued in January.
Rushed to court
Mr Sadek is reported to have got wind of the looming termination and rushed to court for an injunction to stop it.
But the court declined to issue the order and instead asked the rail firm to return to court the next day (March 30) with the defendants for an inter-partes hearing.
Kenya Railways, which was expected in court on Thursday morning, however made a pre-emptive strike by serving RVR with the termination letter that effectively made the impending court appearance irrelevant.
The dispute
The termination of the contract leaves RVR shareholders, including Qalaa, Uganda’s Bomi Holding, the Kenyan government and the international finance institutions (IFIs) that invested millions of dollars in the rail firm with 180 days to sell it to a strategic investor or return it to Kenya Railways.
On March 31, RVR obtained an order asking parties to the dispute to seek an out-of-court settlement.
25-year Kenya-Uganda railway deal terminated
The Kenya Railways Corporation has terminated Rift Valley Railways’ (RVR) 25-year contract to run the Kenya-Uganda railway, casting dark clouds over the future of the private operator. FILE | NATION MEDIA GROUP
By BUSINESS DAILY
Posted Wednesday, April 5 2017 at 12:30
The Kenya Railways Corporation has terminated Rift Valley Railways’ (RVR) 25-year contract to run the Kenya-Uganda railway, casting dark clouds over the future of the private operator.
The Business Daily has learnt that Kenya Railways terminated the contract last Thursday, citing RVR’s failure to meet set operating targets, including payment of concession fees.
RVR, whose ownership is controlled by Egyptian private equity firm Qalaa Holding, was informed of the decision through a letter delivered to its bosses on Thursday morning — a day after the operator moved to court seeking orders to stop it.
The termination process was set in motion in January when Kenya Railways managing director Atanas Maina issued RVR with a notice over unpaid fees amounting to $5.8 million (Sh600m) and a string of misses in cargo haulage targets.
Attend the meeting
RVR’s chief executive Isaiah Okoth declined to comment.
The journey to termination picked pace in mid-March when Kenyan officials travelled to Kampala for a meeting with their Ugandan counterparts to assess RVR’s performance.
Qalaa’s head of transportation division Karim Sadek, who was expected to attend the meeting, failed to show up, instead choosing to send a junior officer.
The snub infuriated the top government officials, who left the meeting having passed a resolution to terminate the contract at the end of the 90-day notice they had issued in January.
Rushed to court
Mr Sadek is reported to have got wind of the looming termination and rushed to court for an injunction to stop it.
But the court declined to issue the order and instead asked the rail firm to return to court the next day (March 30) with the defendants for an inter-partes hearing.
Kenya Railways, which was expected in court on Thursday morning, however made a pre-emptive strike by serving RVR with the termination letter that effectively made the impending court appearance irrelevant.
The dispute
The termination of the contract leaves RVR shareholders, including Qalaa, Uganda’s Bomi Holding, the Kenyan government and the international finance institutions (IFIs) that invested millions of dollars in the rail firm with 180 days to sell it to a strategic investor or return it to Kenya Railways.
On March 31, RVR obtained an order asking parties to the dispute to seek an out-of-court settlement.
25-year Kenya-Uganda railway deal terminated
Angola will have a power production capacity of 5,000 MW at the end of 2017
7 April 2017
Power production capacity in Angola will increase from 2,000 to 5,000 megawatts by the end of the 2012-2017 period, said on Wednesday in Luena the Minister of Planning and Territorial Development.
Minister Job Graça was speaking on the sidelines of the opening ceremony of the Chiumbue hydroelectric facility, in the city of Dala, Lunda Sul province, which will supply electricity to two municipalities and the provincial capital.
The Chimbue hydroelectric facility has an installed capacity of 12.45 megawatts, and its construction along with the substations of Dala and Luna and their transmission lines, cost the Angolan state over US$97 million.
The construction of the project, which began in the 1980s, was interrupted due to the civil war that ended in 2002, and once it was re-launched, in 2014, took just over two years to build, according to Angolan news agency Angop.
This project was awarded to China’s Sinohydro Corp with a lead time of 28 months, and an additional five, with the construction of the dam and power station costing US$42.1 million and the substations and transmission lines US$54.9 million. (macauhub)
Angola will have a power production capacity of 5,000 MW at the end of 2017
7 April 2017
Power production capacity in Angola will increase from 2,000 to 5,000 megawatts by the end of the 2012-2017 period, said on Wednesday in Luena the Minister of Planning and Territorial Development.
Minister Job Graça was speaking on the sidelines of the opening ceremony of the Chiumbue hydroelectric facility, in the city of Dala, Lunda Sul province, which will supply electricity to two municipalities and the provincial capital.
The Chimbue hydroelectric facility has an installed capacity of 12.45 megawatts, and its construction along with the substations of Dala and Luna and their transmission lines, cost the Angolan state over US$97 million.
The construction of the project, which began in the 1980s, was interrupted due to the civil war that ended in 2002, and once it was re-launched, in 2014, took just over two years to build, according to Angolan news agency Angop.
This project was awarded to China’s Sinohydro Corp with a lead time of 28 months, and an additional five, with the construction of the dam and power station costing US$42.1 million and the substations and transmission lines US$54.9 million. (macauhub)
Angola will have a power production capacity of 5,000 MW at the end of 2017
The Odum of Ala Igbo
Hail Biafra!
A lecture on the continent. Familiar subject matter for us, but the perspective may be interesting:
Tanzania: Key Challenges, New Directions in Tanzania's Mining Sector
9 APRIL 2017
By Paul Kibuuka Paul
The conundrum facing Tanzania's mining sector has its roots in the country's colonial history. Today, 56 years after independence, integration of the sector into the national economy is still held back by a heavy focus on exportation of mineral sand concentrates for smelting abroad.
Besides the integration challenge, another key challenge lies in the extraction activities being typified by remarkably weak linkages with the rest of the economy.
While it is well-documented that Tanzania is endowed with natural resources and ranks 5th--after South Africa, Ghana, Sudan and Mali --in the league table of African gold producing countries, post-independence resource nationalism was a botched effort in addressing these challenges.
Following the 1970s and 1980s decline in Tanzanian mining, which was partially due to the 1978-79 Kagera War, a 1993 World Bank 'Tanzania--Mineral Sector Development Technical Assistance Project' proposed a raft of liberal reforms and programmes designed to attract much-needed mining foreign direct investment.
Consequently, Tanzania changed its mining regime by formulating the Mining Policy, 1997 and enacting the Mining Act, 1998. Under the change, state participation in mining operations was abolished. This further entrenched exportation of mineral sand concentrates.
Then some national soul-searching about how to manage effectively Tanzania's mineral sector began, taking a more serious tone after the commencement of the 2000s commodities boom, when retired President Jakaya Kikwete appointed the Bomani Commission on Mineral Sector Review in 2007.
The commission's recommendations culminated in the Mineral Policy of Tanzania, 2009--by which the state participates strategically in the ownership of mines--and the Mineral Act, 2010, both of which are still in effect today.
Tanzania's mining legacy, considered with reference to President John Magufuli's reiterated ban on the exportation of mineral sand concentrates for smelting abroad, inevitably brings to the fore important issues about the contribution of mining to the country's broader, long-term development goals.
Realising mineral linkages whilst minerals still exist
The presence of stronger linkages is vital for growth and development of a versatile economy that can significantly create employment, reduce poverty and generate value-added activities.
For Tanzania to fully benefit from its mining sector, therefore, it must strengthen linkages by making a major effort to expand mineral extraction and to build up related industries and at the same, earnestly add agriculture--the backbone of the country's economy--into the growth and development equation.
In 2012, a study by the University of Dar es Salaam "The Role of Mining in Industrialisation in Tanzania and Implications for Structural Transformation Agenda" revealed that a weak link existed between the mining and manufacturing sectors--reflecting the Tanzanian mining sector's inclination to extracting and exporting mineral sand concentrates for processing abroad.
A large infrastructure deficit, technological deficiencies and skills gap are some of the key challenges holding back Tanzania from strengthening mineral linkages. To strengthen linkages, Tanzania has to craft the right policies or strategic plans for leveraging extraction and processing of minerals into economy-wide development outcomes.
This would entail investments in power infrastructure--and more specifically: restructuring state-owned Tanesco to improve its performance and promoting investment in reliable generation, transmission and distribution of power.
Interventions are also needed for appropriately balanced incentives for the private sector to legally structure mining projects in a manner that integrates the projects into the wider Tanzanian economy.
Of course, developing human capital and skills through, for instance, quality apprenticeship training programs that help the government and mining companies mobilise skilled Tanzanian workers and bolster hiring for citizens.
Seizing opportunities in the global mining industry
The global mining market is forecast to witness excellent growth--reaching $1,783 billion by 2017--with a CAGR of 7.4 per cent from 2012 to 2017, according to the report "Global Mining Market 2012-2017: Trend, Profit, and Forecast Analysis" by global management consulting and market research firm Lucintel.
Additionally, P.A.J Lusty and A.G. Gunn of the British Geological Survey argue in their article "Challenges to Global Mineral Resource Security and Options for Future Supply" that as the world population expands over the next century and living standards rise across the world, demand for minerals is anticipated to continue growing.
The question, then, is how much of that demand is Tanzania prepared to meet?
The demand surge would emanate mainly from the UK, US, Canada, Japan, China, India, Brazil and the Emirates. With such demand, opportunities abound for transforming Tanzania's mining sector towards a more development-oriented regime--as long as the government, in consultation with mining companies and other stakeholders, redresses the challenges facing the sector.
Integrating artisanal and small-scale mining into the formal economy
Artisanal and small-scale mining (ASM) in Tanzania represents a vital livelihood and income source for the local population. It has the potential to contribute a lot more to the country's development by providing jobs and slowing rural-urban migration.
Not surprisingly, the World Bank approved in 2015 a $45 million credit to help Tanzania develop its mining sector, particularly ASM.
There's still, however, a need for integrating informal ASM activities into the formal economic system through improving access to financial, technical and marketing support for artisanal small-scale miners.
Key to this integration is increased cooperation between small- and large-scale miners. The cooperation could be achieved with the help of clear legal provisions on how sub-division of large mining companies' concessions could create legal possibilities for sharing land areas with artisanal small-scale miners.
Minimising detrimental impacts of mining operations
Mining can become more environmentally and socially sustainable in Tanzania, through better laws and regulations and greater attention to efforts on enforcing the Environment Management Act, 2004 and on meeting global standards, such as the Equator Principles that provide a mechanism by which banks can manage environmental and social issues in project financing.
The upshot of this development is that it is becoming more challenging for private sector companies in Tanzania to obtain equity and loan financing for mining projects unless they comply with global standards of good practice, including those issued by the International Finance Corporation and the European Bank for Reconstruction and Development--both of which lend to mining projects in developing countries.
Apart from that, the Tanzanian government and private-sector companies could seek high-level guidance from the Natural Resource Charter and the African Mining Vision so as to capitalise on the opportunities created by the country's vast mineral wealth.
The guidance could help to enhance the capacity and effectiveness of the state institutions, including the Local Government Authorities, in improving the way they interact with Tanzanians and mining investors.
Developing clear legislation on corporate social responsibility
Corporate social responsibility (CSR) as stipulated in the Mining Policy, 2009 is fragmented and lacks focus on how the social responsibilities of mining companies are to be ensured. The government in consultation with stakeholders could initiate the process to develop and implement clear legislation for CSR to guide mining companies' responsibilities and ensure CSR initiatives complement Tanzania's development plans, beyond contributing to mining companies' growth.
It should be noted, however, that matters like repeated changes in legislation; falling mineral commodities prices; and illegal ASM activities may prevent mining companies from implementing CSR initiatives.
Fostering cooperation through good governance
Attention could be paid to recognising and harnessing the positive potential of the Tanzanian state institutions, while promoting democratic norms to encourage cooperative thinking and attitude for the mining sector.
Tanzania has made progress in furthering public involvement in law-making and in increasing the space for community and civil society organisations to work in, although there's much more that the government could do.
Renegotiating agreements to achieve a win-win situation
According to a 2006 annual survey on mining companies conducted by the Fraser Institute, countries possessing proven and high value minerals may have a better opportunity of obtaining bigger revenue share and still maintain foreign investors even if they would be investing under less favourable terms. It is, thus, debatable whether Tanzania can fruitfully renegotiate existing concession agreements it entered into with mining companies to address hot issues without cutting FDI.
Conclusion
The exportation of mineral sand concentrates for smelting out of Tanzania is the outcome of a particular phase of the country's history, but it should not be seen as an inescapable part of its destiny.
Auspiciously, the Tanzania Development Vision 2025 and the Sustainable Industrial Development Policy for Tanzania 2020 point to deepening private sector-led industrial growth as a way of transforming the economy from its heavy reliance on agriculture.
The time is now for Tanzania to face up to the challenge of building a domestic mineral smelting industry, because the country's economy and security could well depend on looking beyond the domain of colonial history and acting immediately to commission a fresh study to evaluate the prospects of establishing such an industry.
More specifically, the study could investigate the potential of Tanzania's discovered and unexploited mineral deposits to offer greater possibilities for smelting concentrates locally.
The author is Managing partner of Isidora &Company Advocates, where he advises natural resources projects in Tanzania.
Key challenges, new directions in TZ’s mining sector
9 APRIL 2017
By Paul Kibuuka Paul
The conundrum facing Tanzania's mining sector has its roots in the country's colonial history. Today, 56 years after independence, integration of the sector into the national economy is still held back by a heavy focus on exportation of mineral sand concentrates for smelting abroad.
Besides the integration challenge, another key challenge lies in the extraction activities being typified by remarkably weak linkages with the rest of the economy.
While it is well-documented that Tanzania is endowed with natural resources and ranks 5th--after South Africa, Ghana, Sudan and Mali --in the league table of African gold producing countries, post-independence resource nationalism was a botched effort in addressing these challenges.
Following the 1970s and 1980s decline in Tanzanian mining, which was partially due to the 1978-79 Kagera War, a 1993 World Bank 'Tanzania--Mineral Sector Development Technical Assistance Project' proposed a raft of liberal reforms and programmes designed to attract much-needed mining foreign direct investment.
Consequently, Tanzania changed its mining regime by formulating the Mining Policy, 1997 and enacting the Mining Act, 1998. Under the change, state participation in mining operations was abolished. This further entrenched exportation of mineral sand concentrates.
Then some national soul-searching about how to manage effectively Tanzania's mineral sector began, taking a more serious tone after the commencement of the 2000s commodities boom, when retired President Jakaya Kikwete appointed the Bomani Commission on Mineral Sector Review in 2007.
The commission's recommendations culminated in the Mineral Policy of Tanzania, 2009--by which the state participates strategically in the ownership of mines--and the Mineral Act, 2010, both of which are still in effect today.
Tanzania's mining legacy, considered with reference to President John Magufuli's reiterated ban on the exportation of mineral sand concentrates for smelting abroad, inevitably brings to the fore important issues about the contribution of mining to the country's broader, long-term development goals.
Realising mineral linkages whilst minerals still exist
The presence of stronger linkages is vital for growth and development of a versatile economy that can significantly create employment, reduce poverty and generate value-added activities.
For Tanzania to fully benefit from its mining sector, therefore, it must strengthen linkages by making a major effort to expand mineral extraction and to build up related industries and at the same, earnestly add agriculture--the backbone of the country's economy--into the growth and development equation.
In 2012, a study by the University of Dar es Salaam "The Role of Mining in Industrialisation in Tanzania and Implications for Structural Transformation Agenda" revealed that a weak link existed between the mining and manufacturing sectors--reflecting the Tanzanian mining sector's inclination to extracting and exporting mineral sand concentrates for processing abroad.
A large infrastructure deficit, technological deficiencies and skills gap are some of the key challenges holding back Tanzania from strengthening mineral linkages. To strengthen linkages, Tanzania has to craft the right policies or strategic plans for leveraging extraction and processing of minerals into economy-wide development outcomes.
This would entail investments in power infrastructure--and more specifically: restructuring state-owned Tanesco to improve its performance and promoting investment in reliable generation, transmission and distribution of power.
Interventions are also needed for appropriately balanced incentives for the private sector to legally structure mining projects in a manner that integrates the projects into the wider Tanzanian economy.
Of course, developing human capital and skills through, for instance, quality apprenticeship training programs that help the government and mining companies mobilise skilled Tanzanian workers and bolster hiring for citizens.
Seizing opportunities in the global mining industry
The global mining market is forecast to witness excellent growth--reaching $1,783 billion by 2017--with a CAGR of 7.4 per cent from 2012 to 2017, according to the report "Global Mining Market 2012-2017: Trend, Profit, and Forecast Analysis" by global management consulting and market research firm Lucintel.
Additionally, P.A.J Lusty and A.G. Gunn of the British Geological Survey argue in their article "Challenges to Global Mineral Resource Security and Options for Future Supply" that as the world population expands over the next century and living standards rise across the world, demand for minerals is anticipated to continue growing.
The question, then, is how much of that demand is Tanzania prepared to meet?
The demand surge would emanate mainly from the UK, US, Canada, Japan, China, India, Brazil and the Emirates. With such demand, opportunities abound for transforming Tanzania's mining sector towards a more development-oriented regime--as long as the government, in consultation with mining companies and other stakeholders, redresses the challenges facing the sector.
Integrating artisanal and small-scale mining into the formal economy
Artisanal and small-scale mining (ASM) in Tanzania represents a vital livelihood and income source for the local population. It has the potential to contribute a lot more to the country's development by providing jobs and slowing rural-urban migration.
Not surprisingly, the World Bank approved in 2015 a $45 million credit to help Tanzania develop its mining sector, particularly ASM.
There's still, however, a need for integrating informal ASM activities into the formal economic system through improving access to financial, technical and marketing support for artisanal small-scale miners.
Key to this integration is increased cooperation between small- and large-scale miners. The cooperation could be achieved with the help of clear legal provisions on how sub-division of large mining companies' concessions could create legal possibilities for sharing land areas with artisanal small-scale miners.
Minimising detrimental impacts of mining operations
Mining can become more environmentally and socially sustainable in Tanzania, through better laws and regulations and greater attention to efforts on enforcing the Environment Management Act, 2004 and on meeting global standards, such as the Equator Principles that provide a mechanism by which banks can manage environmental and social issues in project financing.
The upshot of this development is that it is becoming more challenging for private sector companies in Tanzania to obtain equity and loan financing for mining projects unless they comply with global standards of good practice, including those issued by the International Finance Corporation and the European Bank for Reconstruction and Development--both of which lend to mining projects in developing countries.
Apart from that, the Tanzanian government and private-sector companies could seek high-level guidance from the Natural Resource Charter and the African Mining Vision so as to capitalise on the opportunities created by the country's vast mineral wealth.
The guidance could help to enhance the capacity and effectiveness of the state institutions, including the Local Government Authorities, in improving the way they interact with Tanzanians and mining investors.
Developing clear legislation on corporate social responsibility
Corporate social responsibility (CSR) as stipulated in the Mining Policy, 2009 is fragmented and lacks focus on how the social responsibilities of mining companies are to be ensured. The government in consultation with stakeholders could initiate the process to develop and implement clear legislation for CSR to guide mining companies' responsibilities and ensure CSR initiatives complement Tanzania's development plans, beyond contributing to mining companies' growth.
It should be noted, however, that matters like repeated changes in legislation; falling mineral commodities prices; and illegal ASM activities may prevent mining companies from implementing CSR initiatives.
Fostering cooperation through good governance
Attention could be paid to recognising and harnessing the positive potential of the Tanzanian state institutions, while promoting democratic norms to encourage cooperative thinking and attitude for the mining sector.
Tanzania has made progress in furthering public involvement in law-making and in increasing the space for community and civil society organisations to work in, although there's much more that the government could do.
Renegotiating agreements to achieve a win-win situation
According to a 2006 annual survey on mining companies conducted by the Fraser Institute, countries possessing proven and high value minerals may have a better opportunity of obtaining bigger revenue share and still maintain foreign investors even if they would be investing under less favourable terms. It is, thus, debatable whether Tanzania can fruitfully renegotiate existing concession agreements it entered into with mining companies to address hot issues without cutting FDI.
Conclusion
The exportation of mineral sand concentrates for smelting out of Tanzania is the outcome of a particular phase of the country's history, but it should not be seen as an inescapable part of its destiny.
Auspiciously, the Tanzania Development Vision 2025 and the Sustainable Industrial Development Policy for Tanzania 2020 point to deepening private sector-led industrial growth as a way of transforming the economy from its heavy reliance on agriculture.
The time is now for Tanzania to face up to the challenge of building a domestic mineral smelting industry, because the country's economy and security could well depend on looking beyond the domain of colonial history and acting immediately to commission a fresh study to evaluate the prospects of establishing such an industry.
More specifically, the study could investigate the potential of Tanzania's discovered and unexploited mineral deposits to offer greater possibilities for smelting concentrates locally.
The author is Managing partner of Isidora &Company Advocates, where he advises natural resources projects in Tanzania.
Key challenges, new directions in TZ’s mining sector
The cost of SA, Nigeria’s junk status on Africa
by TC Chetty, RICS South Africa Country Manager 2 hours ago 33 views0
Image: CNBC Africa
With South Africa and Nigeria being Africa’s two biggest economies, the recent credit rating downgrades by global ratings agencies, will negatively affect both nations and hit Africa’s overall economic growth.
The downgrades will have a ripple effect on the built environment sector and the cost of infrastructure development.
South Africa’s downgrade to sub‐investment or ‘junk’ status is a setback the economy can ill‐afford, especially in this already low growth environment. SA joins the majority of African countries currently rated below investment grade, including Nigeria, which in September 2016 was downgraded by S&P further into junk status, with a B rating, five levels below investment grade. Fitch also revised its outlook for Nigeria to negative in January this year.
Both S&P and Fitch downgraded South Africa’s sovereign credit rating to below investment grade last week, while Moody’s put the country on review for downgrade, with a decision expected between 30‐90 days. Besides capital outflows from South Africa as a result of the downgrade, the country’s debt servicing costs are set to increase.
South Africa finds itself in uncertain territory having been above investment grade for 17 years. We cannot underestimate the impact, especially because South Africa has a well developed financial and investment sector compared to the rest of Africa. While Nigeria has always been rated below investment grade, its ratings have deteriorated since 2012 and last year its economy contracted. These downgrades are not good, not just for South Africa and Nigeria, but for Africa’s overall GDP growth prospects. We heard at the recent RICS Africa Summit in
Johannesburg, that the economies of these two countries account for about half of Africa’s GDP. Referring to Nigeria and South Africa as ‘Africa’s big brother economies”, keynote speaker at the RICS Africa Summit, Bennet Kpentey, said the economies of these two nations needed to perform for Africa’s sake.
Kpentey, the Chief Executive and Managing Consultant at Ghanaian‐based Sync Consult Management Consultants, said the poor economic performance of Africa’s two largest economies was the main contributing factor to the continent’s slowing overall growth.
“When South Africa and Nigeria don’t perform well economically, it affects Africa’s overall performance… To put the rest of Sub Saharan Africa’s economic performance into perspective, you just have to exclude Nigeria and South Africa to see Africa actually still shows a good economic growth picture. Yes, five years ago it was higher, but much of the slowing growth also has to do with a multiplicity of external shocks, such as low commodity prices, weak global trade and political instability,” he explained.
Citing African Development Bank research, Kpentey said between 2012 and 2016, the world economy grew by a modest average of 2.5%, while Sub Saharan Africa’s economic growth averaged 3.7%. When Nigeria and South Africa’s GDP growth is excluded, Sub Saharan Africa’s economic performance increased to 5%.
“This is still world leading economic growth, much higher than the 1.6% growth of advanced economies during this period, and still higher growth than that of the group of Emerging and Developing Economies, which averaged 4.2%,” he added.
With Sub-Saharan Africa’s economic growth slowing to just 1.5% in 2016, Kpentey acknowledged that Africa’s growth has fallen the fastest. But, he said Africa was in no recession. “It is not a disaster. We need to deal with the issues and get strategies in place to mitigate the drop. This also illustrates why Africa’s big brother economies of Nigeria and South Africa need to perform, and why Africa’s economy overall needs to diversify, reducing its reliance on commodities,” he said.
Kpentey said Africa’s hurdles included the continent’s huge infrastructure gap; declining manufacturing; high poverty and inequality; government inaction and bureaucratic delays; climate change; and, the major issue of corruption. However, he said there was still “shine beyond the gloom”, including Africa’s resilience; its labour force and young population; urbanisation and growing middle‐class; its overwhelming adoption of information and communication technologies; increased business and foreign direct investment; and, its rich natural resources.
Speaking at the RICS Africa Summit, Amanda Clack, President of RICS, and Head of Infrastructure Advisory for EY in the UK & Ireland, said collaboration was key to meeting the demands of Africa’s rapid urbanisation and growth. She also said policy uncertainty was a major threat to infrastructure investment in Africa.
by TC Chetty, RICS South Africa Country Manager 2 hours ago 33 views0
With South Africa and Nigeria being Africa’s two biggest economies, the recent credit rating downgrades by global ratings agencies, will negatively affect both nations and hit Africa’s overall economic growth.
The downgrades will have a ripple effect on the built environment sector and the cost of infrastructure development.
South Africa’s downgrade to sub‐investment or ‘junk’ status is a setback the economy can ill‐afford, especially in this already low growth environment. SA joins the majority of African countries currently rated below investment grade, including Nigeria, which in September 2016 was downgraded by S&P further into junk status, with a B rating, five levels below investment grade. Fitch also revised its outlook for Nigeria to negative in January this year.
Both S&P and Fitch downgraded South Africa’s sovereign credit rating to below investment grade last week, while Moody’s put the country on review for downgrade, with a decision expected between 30‐90 days. Besides capital outflows from South Africa as a result of the downgrade, the country’s debt servicing costs are set to increase.
South Africa finds itself in uncertain territory having been above investment grade for 17 years. We cannot underestimate the impact, especially because South Africa has a well developed financial and investment sector compared to the rest of Africa. While Nigeria has always been rated below investment grade, its ratings have deteriorated since 2012 and last year its economy contracted. These downgrades are not good, not just for South Africa and Nigeria, but for Africa’s overall GDP growth prospects. We heard at the recent RICS Africa Summit in
Johannesburg, that the economies of these two countries account for about half of Africa’s GDP. Referring to Nigeria and South Africa as ‘Africa’s big brother economies”, keynote speaker at the RICS Africa Summit, Bennet Kpentey, said the economies of these two nations needed to perform for Africa’s sake.
Kpentey, the Chief Executive and Managing Consultant at Ghanaian‐based Sync Consult Management Consultants, said the poor economic performance of Africa’s two largest economies was the main contributing factor to the continent’s slowing overall growth.
“When South Africa and Nigeria don’t perform well economically, it affects Africa’s overall performance… To put the rest of Sub Saharan Africa’s economic performance into perspective, you just have to exclude Nigeria and South Africa to see Africa actually still shows a good economic growth picture. Yes, five years ago it was higher, but much of the slowing growth also has to do with a multiplicity of external shocks, such as low commodity prices, weak global trade and political instability,” he explained.
Citing African Development Bank research, Kpentey said between 2012 and 2016, the world economy grew by a modest average of 2.5%, while Sub Saharan Africa’s economic growth averaged 3.7%. When Nigeria and South Africa’s GDP growth is excluded, Sub Saharan Africa’s economic performance increased to 5%.
“This is still world leading economic growth, much higher than the 1.6% growth of advanced economies during this period, and still higher growth than that of the group of Emerging and Developing Economies, which averaged 4.2%,” he added.
With Sub-Saharan Africa’s economic growth slowing to just 1.5% in 2016, Kpentey acknowledged that Africa’s growth has fallen the fastest. But, he said Africa was in no recession. “It is not a disaster. We need to deal with the issues and get strategies in place to mitigate the drop. This also illustrates why Africa’s big brother economies of Nigeria and South Africa need to perform, and why Africa’s economy overall needs to diversify, reducing its reliance on commodities,” he said.
Kpentey said Africa’s hurdles included the continent’s huge infrastructure gap; declining manufacturing; high poverty and inequality; government inaction and bureaucratic delays; climate change; and, the major issue of corruption. However, he said there was still “shine beyond the gloom”, including Africa’s resilience; its labour force and young population; urbanisation and growing middle‐class; its overwhelming adoption of information and communication technologies; increased business and foreign direct investment; and, its rich natural resources.
Speaking at the RICS Africa Summit, Amanda Clack, President of RICS, and Head of Infrastructure Advisory for EY in the UK & Ireland, said collaboration was key to meeting the demands of Africa’s rapid urbanisation and growth. She also said policy uncertainty was a major threat to infrastructure investment in Africa.
How long would it take S.A to recover from downgrade?
by Christie Viljoen, economist at KPMG South Africa 10 months ago 57 views0
On the evening of Friday 3 June, Standard & Poor’s (S&P) Ratings Service will release its latest review of the South African sovereign’s credit rating.Sovereigns are the national governments of an independent country who have control over state finances and management of their economy. To be clear, a sovereign rating does not assess countries and their economies, but rather the public entity charged with managing the country and is able to issue financial instruments.
In December 2015, S&P rated the South African sovereign “BBB-” (the lowest possible investment grade rating) with a negative outlook. The negative stance was largely associated with the fact that S&P believed that economic growth could underperform compared to its projections for 2016-17. Any downward adjustment in the country’s rating would place the South Africa government in non-investment grade territory, generally referred to as ‘junk status’.
Moody’s Investors Service recently commented that it sees the country’s economic growth gradually strengthening after reaching a trough during 2016, and S&P might have the same perspective on this issue when it decides whether South Africa should retain its investment-grade rating. However, in December last year, S&P listed other points of concern, including risks posed to the public sector balance sheet by struggling state-owned enterprises, a potential reduction in fiscal flexibility and an increase in external imbalances.
Analysts believe that the immediate fallout from a downgrade would see a weaker exchange rate, a decline in local equities, and a rise in government bond yields. According to a recent South African Reserve Bank (SARB) study of 70 countries,a downgrade to non-investment grade is likely to increase a sovereign’s short-term foreign currency borrowing costs by 80 basis points. Indeed, ratings have for decades played an important role in the pricing and marketing of fixed-income assets to investors.
If South Africa were downgraded to non-investment grade this week, how long would it take to regain its lost investment grade rating? Considering the sovereign ratings assigned by the three largest rating agencies – S&P, Fitch Ratings and Moody’s Investors Service – over the past three decades, 15countries have seen their investment-grade ratings revoked but were then able over time to regain this status. These include (alphabetically) Colombia, Croatia, Hungary, Iceland, India (twice), Indonesia, Ireland, Korea Republic, Latvia, Romania, Slovakia, Slovenia, Thailand, Turkey and Uruguay.
The causes behind the rating downgrades are broadly grouped into four categories:
Strategies and narratives on countries that recovered their investment-grade ratings are broadly grouped into six categories:
by Christie Viljoen, economist at KPMG South Africa 10 months ago 57 views0
On the evening of Friday 3 June, Standard & Poor’s (S&P) Ratings Service will release its latest review of the South African sovereign’s credit rating.Sovereigns are the national governments of an independent country who have control over state finances and management of their economy. To be clear, a sovereign rating does not assess countries and their economies, but rather the public entity charged with managing the country and is able to issue financial instruments.
In December 2015, S&P rated the South African sovereign “BBB-” (the lowest possible investment grade rating) with a negative outlook. The negative stance was largely associated with the fact that S&P believed that economic growth could underperform compared to its projections for 2016-17. Any downward adjustment in the country’s rating would place the South Africa government in non-investment grade territory, generally referred to as ‘junk status’.
Moody’s Investors Service recently commented that it sees the country’s economic growth gradually strengthening after reaching a trough during 2016, and S&P might have the same perspective on this issue when it decides whether South Africa should retain its investment-grade rating. However, in December last year, S&P listed other points of concern, including risks posed to the public sector balance sheet by struggling state-owned enterprises, a potential reduction in fiscal flexibility and an increase in external imbalances.
Analysts believe that the immediate fallout from a downgrade would see a weaker exchange rate, a decline in local equities, and a rise in government bond yields. According to a recent South African Reserve Bank (SARB) study of 70 countries,a downgrade to non-investment grade is likely to increase a sovereign’s short-term foreign currency borrowing costs by 80 basis points. Indeed, ratings have for decades played an important role in the pricing and marketing of fixed-income assets to investors.
If South Africa were downgraded to non-investment grade this week, how long would it take to regain its lost investment grade rating? Considering the sovereign ratings assigned by the three largest rating agencies – S&P, Fitch Ratings and Moody’s Investors Service – over the past three decades, 15countries have seen their investment-grade ratings revoked but were then able over time to regain this status. These include (alphabetically) Colombia, Croatia, Hungary, Iceland, India (twice), Indonesia, Ireland, Korea Republic, Latvia, Romania, Slovakia, Slovenia, Thailand, Turkey and Uruguay.
The causes behind the rating downgrades are broadly grouped into four categories:
- economic deterioration (Colombia, Hungary, India, Latvia and Romania);
- unsustainable macroeconomic imbalances (India, Slovakia and Slovenia);
- a domestic currency, financial or banking crisis (Croatia, Iceland, Ireland, Thailand, Turkey and Uruguay); and
- a currency, financial or banking crisis resulting directly from neighbouring or regional influences (Indonesia and the Korea Republic).
Strategies and narratives on countries that recovered their investment-grade ratings are broadly grouped into six categories:
- fiscal consolidation and/or austerity (Hungary, Ireland, Latvia, Romania and Slovenia);
- significant economic and political reforms (Colombia, India, Indonesia, Turkey and Uruguay);
- declining external and fiscal vulnerabilities (India and Thailand);
- debt restructuring and economic policy reform (Korea Republic);
- privatisation of the sovereign’s holdings in private/semi-state companies (Croatia); and
- active intervention by a newly elected government (Iceland and Slovakia).