The Nation Newspaper

Tag: economic outlook

  • Africa’s reinsurers worry about poor economic outlook

    The mood among Africa’s reinsurance executives has become more bearish as declining rates and rising claims weigh on the profitability of the reinsurance markets with premium volume of about $ 7.5 billion, a report has shown.

    The report from the fourth Africa Reinsurance Pulse, published at the 24th African Reinsurance Forum in Tunis, Tunisia, disclosed that while Africa’s economies are still recovering from the commodity crisis of 2016, which highlighted the continent’s vulnerability to external shocks, executives are once again concerned about the current outlook in light of renewed economic and political uncertainties.

    According to the report, this is the main outcome of the 4th edition of the Africa Reinsurance Pulse, which was published at today’s 24th African Reinsurance Forum in Tunis, Tunisia.

    The report read: “However, the senior executives of Africa’s leading brokers and reinsurers interviewed also expect that the inflow of excess capacity from advanced markets into the continent has finally come to a standstill. In fact, insured values as well as premiums might benefit from the current economic growth and outgrow GDP.

    Authors of the study at Dr. Schanz, Alms & Company, Andreas Bollmann and Henner Alms, said the market assessment among Africa’s reinsurance executives has deteriorated after it had already been on a road to recovery.

    “While rates, terms and conditions and profitability are low, Africa’s economic growth has improved somewhat and may translate into volume growth. But executives fear the next crisis may be lurking around the corner as rising trade barriers and a slow-down in appetite for Africa’s commodities cloud the outlook.

    With the report, we aim to present an overview of the current state and future prospects of Africa’s reinsurance markets and provide a comprehensive yet nuanced picture of market sentiment and track this over time.

    “The report is based on a survey of market practitioners, complemented with a summary of key regional (re)insurance market data and an overview of the most relevant trends shaping the region’s reinsurance markets, which according to our assessment surpassed last year’s reinsurance premium volume of US$ 7.5 billion.

    “The survey is based on 19 in-depth interviews with senior executives of regional and international reinsurance companies and brokers operating in Africa. The key strength of the Africa Reinsurance Pulse lies in its comprehensiveness, diversity and diligence. Our interviews have enabled us to probe deeper and obtain clarity from participating executives.

    In addition, by including both global and regional reinsurers, as well as traditional and niche players, we are able to collate a comprehensive view of the market place,” they noted.

  • Economic outlook not always as presented

    Sir: There seems to be a contradiction apparently unnoticed between the business community and ordinary people of this country. I have observed in recent years the performance especially published accounts, audited or unaudited of most Nigerian companies-multinationals as well as wholly owned Nigerian businesses in the various division of manufacturing, merchandising or a combination of both. The contradictions between these businesses and the Nigerian people are spectacular. But like many other important aspect of our life, little notice is made of these.

    In many countries even in Africa, performance of business especially the manufacturing sub-sector reflects on the quality of life and standard of living of the populace. Indeed the major indices employed in measuring economic development or progress in many countries derives from the success or failure of business. Put simply, they relate to profitability or loss of both the industrial and commercial sectors.

    In our country there have been consistent reports of a declining economy sometimes bordering on depression. But when you look quickly at some of major newspapers where snappy reports of business and industries are made periodically, there is a big gap bordering on contradictions between these productive sectors, and the populace at large. In this connection, I have to acknowledge the invaluable service rendered by some leading newspapers which periodically publicize the performance of these productive sectors. I have wondered how many Nigerians bother to compare or relate the annual results or quarterly results of major companies and business as published by our newspapers.

    The situation is made worse by the fact that political parties particularly in opposition often emphasize the growing poverty in the land without bothering to ask what effect the often published profit or dividends figures receive regularly. I crave your pardon to identify short headlines in the performance of businesses in some newspapers particularly the very enlightened ones like the Nation, the Punch etc. Some quotes:

    1. Portland Paints recorded over N94million in 2ndquarter ended 30thJune, 2019.
    2. Unity Bank recorded N1.05billion in six month of this year.

    iii. Livestock Feeds Plc (a subsidiary of UAC of Nigeria) recorded a  gross profit of N4.8billion as of 30th June, 2019.

    1. CAP Plc (Chemical and Allied Products Plc) made a net profit of N868million for the second quarter ended 30th June 2019.
    2. Nestle Nigeria ltd. Nets N26billion profits in six months
    3. Honeywell Flour Mills ltd. Gross N19billion in three months

    vii. Chams Plc as recorded has assured its shareholders of N140m dividends at the end of the current fiscal year etc.

    In economics, any organization – free, controlled, manipulated or whatever, the above listed figures are sterling performances. There are probably hundreds and hundreds of others that this writer is not aware of, but are making progress and profitable returns on investment. But do these performances reflect on the overall performance of the Nigerian economy? Or the standard of living of what people call the average Nigerian?

    While the performance of most of the private sector is commendable going by their published results, do they put smiles and joy on the face of the Nigerian populace. There is a Federal Ministry of Trade and Industry apart from setting guidelines for businesses to operate or ensuring that banned goods and other commodities are not allowed in the country, it is doubtful whether that important organ of government cares that prices are reasonable, competitive and not oppressive.

    My conclusion generally is that the Nigerian economy is not in depression nor does it show signs that it can go under considering all aspects for the productive sector. I think the sooner we stop politicizing every aspect of our life without digging deep into necessary parameters the better for our country. The economy of a country is not and should not be run in the social media. There should be a limit to our romance with this wild forum by people with shallow minds.  Our economy is moving on, the industries and commercial enterprise should watch their prices

    • Asiwaju Deji Fasuan MON:JP Ado-Ekiti

  • African economic outlook

    Sir: The African Development Bank’s annual meeting came to an end on the 25th of May 2018 and the theme for the meeting was accelerating Africa’s industrialization. The meeting was held in Busan, South Korea’s second largest city. The Republic of Korea (South Korea) joined the African Development Bank (AFDB) in 1980 and has been one of the banks most active and generous partners.

    The theme of the AFDB 53rd annual meeting was, “Accelerating Industrialization in Africa”. Is Africa ready? That was the thought that blazed through my mind during the AFDB annual meeting. Where is the infrastructure or the enabling environment to enable industrialization take place in Africa? Does the political will exist? The world is moving towards the 4th industrial revolution where the jobs of today won’t be the jobs of the future, are we in Africa entrenched with the skill set or education to move into the 4th industrial revolution? Even the 5th industrial revolution is almost here – the quantum leap. The future of money is cryptocurrency, what understanding or policies can be drawn to fit the constant change in the world terrain? Can Africa leapfrog and achieve the 4th industrial revolution? Yes, it’s possible.

    Investing in people is key in achieving steady economic growth and industrialization in Africa. Education and Health must be invested in and not left to donor agencies, we cannot place a price on education, the world is changing at a sporadic pace and Africa has continued to maintain the same educational curriculum when the world has continued to evolve. If Education is given the right priority, our universities will not produce half-baked graduates but graduates who can compete globally and the need to invest in ideas is key in the actualization of an industrial Africa.

    We have seen youths in Nigeria, Kenya, Rwanda, Zambia just to mention a few thrive amidst the stringent bottlenecks of the African economy. Africa is blessed with vast human and natural resources, but the missing link is education. Fear of the 4th revolution is the loss of jobs, since Africa already faces mass unemployment, how can Africa pull through from this? Through investments in education and harnessing entrepreneurial skills. Also, Africa is known for the export of raw materials but not finished products. We export cocoa but not chocolate, we export crude oil and import petroleum products, we export raw gold and its sold back to us in the refined form. Its amazing that the price of chocolate never goes down but up, but the price of cocoa fluctuates, why then are we not tapping into the huge market of finished products.

    African policy makers should focus on key priority areas for the attainment of the 4th industrial revolution in Africa.

     

    • Folawiyo Kareem Olajoku, Ph.D, writes from Osun State.

  • AfDB releases economic outlook

    African Development Bank (AfDB) yesterday released its first highlights of 2018 African Economic Outlook in Arabic, Hausa and Kiswahili. The bank said the three languages are among the most widely spoken by over 300 million Africans. Releasing the report in local languages aims to increase accessibility of the publication’s findings to a large segment of Africans and promote linguistic inclusiveness. This release is also the latest innovation for increasing the relevance and timeliness of the African Economic Outlook.

    For the first time in the publication’s 15-year history, the 2018 edition of the report was launched early in the year – on January 17, 2018 – at the bank’s headquarters by its president, Akinwumi Adesina.

    The 2018 edition of the African Economic Outlook focuses on infrastructure. As noted by Akinwunmi, “Infrastructure projects are among the most profitable investments any society can make. When productive, they significantly contribute to propel and sustain a country’s economic growth.” Based on preliminary results, the African Development Bank estimates that investment needs for infrastructure will be in the range of $130-170 billion a year, much higher than the commonly cited US $93 billion.

    Another milestone was the release of regional Economic Outlooks for Africa’s five sub-regions, at the Bank’s regional hubs on March 12, 2018. These self-contained reports focus on priority areas of concern for each sub-region and provide analysis of the economic and social landscape. Specifically, the regional Economic Outlook focuses on the importance of the Congo Basin forest for Central Africa; assesses the manufacturing sector potential in Eastern Africa; discusses food security and rural poverty in North Africa; analyzes competition in food value chains in Southern Africa; and addresses labour markets and job issues in West Africa.

     

     

    With these new improvements, the Bank aims to transform the African Economic Outlook series (main and regional editions) into a flagship that provides comprehensive and rigorous analysis, reliable and up-to-date data and reference material on Africa’s development challenges for researchers, investors, civil society organizations, development partners, and the media. In the coming years, a particular emphasis will be placed on promoting linguistic inclusiveness by expanding the number of local languages in which the AEO is released.

    The bank will also take its knowledge products to influential development stakeholders such as local government officials or local non-governmental organisations, especially in rural areas, which are often not fully engaged in critical development discussions. Through such efforts, the African Development Bank will further celebrate Africa’s linguistic diversity and multilingualism, while fostering home-grown solutions to Africa’s challenges.

     

     

  • Economic Outlook: Executive intelligence for winning

    Economic Outlook: Executive intelligence for winning

    There is no doubt that business leaders across the Nigerian economic landscape are feeling the pressure of the fiscal and monetary crisis. The sheer scale of the crisis and its corresponding impact will test the most well-thought through strategy, leadership, organisational resolve and resilience.

    When all is said and done, all the daily, weekly and hourly economic outlook data bombarding us as business executives point to a year marked by Volatile, Uncertain, Complex and Ambiguous (VUCA) Disruptive Change and it is therefore no wonder the anxiety in boardrooms and management meetings across the country is rising.

     

    Look to the Future

    The late Peter Drucker warned Managers that “The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.” The key questions that business leaders must answer today are: Can we win in the VUCA Change Scenario? If so, how?

    I believe, based on objectively verifiable evidence, that businesses and organisations can thrive, excel, win and succeed during these volatile, uncertain, complex, ambiguous, disruptive market and industry changes. To do so, Business Leaders will need to develop and deploy their most aggressive and innovative strategies for driving revenues, reducing cost, eliminating waste, aligning people, accelerating workforce performance and delivering exponentially more results with the same or lesser financial and non-financial assets. Looking to the future with confidence is crucial to our strategic response to the crisis. John F. Kennedy once noted that “change is the law of life and those who look only to the past or present are certain to miss the future.”

    Like never before, the practice of strategy is all important; the ability to formulate multiple strategic scenarios and options, the capabilities to execute quickly, adjust rapidly and navigate fast changing business and industry landscapes is a must to survive. Furthermore, the Organisational HR Leadership required to realign managers and employees to new strategies in shorter decision-making and planning cycles, has created a new sea change in management requirements for 2016 going forward. This requires that Business Leaders demonstrate and model positive Executive Instinct, Emotions and Reason during this Crisis.

    Fight or Flight?

    Studies into Executive Instincts during an economic crisis show that there are two basic categories: there is the Retreat Instinct driven by the fear of loss, failure and devastation and there is the Advancement Instinct fuelled by Informed Confidence, Insightful Engagement and Measured Optimism. A review of the last century of Economic Crisis, from the 1929-33 Wall Street Crash, to 1973-74 Oil Crash, the 1987 Black Monday, 1997 Asian Crisis, 2001 Dotcom Crisis, the 2008 Subprime Crisis, 2015 China Black Monday, right up to the 2016 Global Oil Price Crash, points to one well established fact: the Emotion of Fear has done more to destroy business initiative than over-confidence and optimism has done to push business leaders off the proverbial financial cliff.

    Executives will always find reasons to support their fear or optimism. This will then become a self-fulfilling prophecy as their instincts for action drives the activities that create the future they fear or the one they have confidence in. While instincts for actions may be similar, Retreat Instincts and fear creates panic actions leading to rushed asset sales, unstructured and inhuman lay offs, shrinking of product and service portfolio and ultimately poor priced market exits.

    Executive Advancement Instincts usually leads to deeper levels of innovation and radical thinking to match the disruptions, which for most cases leads to reinvention of the business revenue and product mix, mergers and acquisition, unprecedented business transformations to drive efficiencies, measured and informed rightsizing, intelligent talent sourcing and outsourcing, creation of new market spaces and segments etc.

    Once Executives demonstrate the corresponding actions from either of these two instincts, the organisational emotional wavelength has been set. While the Retreat Instincts and Actions guarantee that managers and employees across the organisation become increasingly de-motivated and business momentum grinds to a chaotic halt, Advancement Instincts drives the workforce to rally around new radical strategies and reinventions, leaders are inspired to create the sense of urgency necessary to breakout into new territory, managers confront the brutal realities and employees are mobilised to support broad-based actions that allow the organisation respond quickly and adjust to shorter decision making cycles. In the end, Executives and Organisations with Advancement Instincts do much better.

     

    Take Charge

    So how do we demonstrate Advancement Instincts?

    1. Executives must simply believe in their potential and that of their organisation and people to succeed and thrive in these Volatile, Uncertain, Complex and Ambiguous Operating Environments;
    2. Executives must engage in Aggressive, Radical and Flexible Strategic Reviews in continual iterations. These reviews must be supported by ever deepening industry, business and environmental insights and perspectives;
    3. Executives must develop and implement an agile, radical and responsive Business Model for creating New Sources of Revenue, Doing More with Less and Improving Cost and Margin Leadership;
    4. Executives must provide Strategic Change Readiness and Leadership sponsorship to drive organisation-wide sense of urgency supported by clear short term action plans;
    5. Executives must get off Cruise Control. When a Pilot is in a storm, he is not in cruise control, he is in charge. He is on top of all the navigational instruments and monitoring every flight success indicator. In the same way, business leaders need to institute a Strategic War Room Scenario all year long;
    6. Executives must realign the Organisation (Structure, Systems and Processes and People) to the New Realities;
    7. Executives must realign HR and People to the new capabilities required to excel in the New Realities;
    8. Executives must take personal responsibility for seamless execution, insist on realism, drive follow through, force a culture of performance, discipline and result orientation, and keep everyone focused throughout the Crisis;
    9. Executives must create quick wins and drive iterations of celebrations and recognition to inspire commitment, no matter how small the wins are;
    10. Executives must saturate the organisation with positive, bold, confidence communication – literally drown out the fear.

    I believe that if Executives and Organisations do what is necessary, regardless of the external turbulence, they will ride the wave and, at the other end, more resilient, more successful and more mature corporations of enduring impact and excellence will emerge.

     Bolaji Olagunju is the Lead Consultant/CEO of Workforce Group; a Management Consulting Firm that offers diverse services in the areas of Learning, Development & Research, HR and Business Consulting, People & Task

  • World Bank lowers economic outlook

    World Bank lowers economic outlook

    •Urges developing countries to step up reforms

    Developing countries are heading for a year of disappointing growth, as first quarter weakness this year has delayed an expected pick-up in economic activity, the World Bank’s Global Economic Prospects (GEP) report, has shown.

    According to the report which was released yesterday, bad weather in the United States (US), crisis in Ukraine, rebalancing in China, political strife in several middle-income economies, slow progress on structural reform, and capacity constraints are all contributing to a third straight year of sub five per cent growth for developing countries as a whole.

    In addition, the structural reform agenda in many developing countries which has stalled in recent years, needs to be reinvigorated in order to sustain rapid income growth, the report noted.

    World Bank Group President Jim Yong Kim, lamented the stunted growth rate in developing countries.

    He said: “Growth rates in the developing world remain far too modest to create the kind of jobs we need to improve the life.”

    He noted that “countries need to move faster and invest more in domestic structural reforms to get broad-based economic growth to levels needed to end extreme poverty in our generation.”

    The global lender lowered its forecasts for developing countries, now eyeing growth at 4.8 per cent this year, down from its January estimate of 5.3 per cent.

    National budgets have deteriorated significantly since 2007. In almost half of developing countries, government deficits exceed three per cent of gross domestic product (GDP), while debt-to-GDP ratios have risen by more than 10 percentage points since 2007. Fiscal policy needs to tighten in countries where deficits remain large, including Ghana, India, Kenya, Malaysia, and South Africa.

    Current account deficits in some of the hardest hit economies during 2013 and early 2014 have declined, and capital flows to developing countries have bounced back.

    Developing countries’ bond yields have declined, and stock markets have recovered, in some cases surpassing levels at the start of the year, although they remain down from a year ago by significant margins in many instances.

    Signs point to strengthening next year and 2016 to 5.4 and 5.5 per cent respectively. China is expected to grow by 7.6 per cent this year, but this will depend on the success of rebalancing efforts. “If a hard landing occurs, the reverberations across Asia would be widely felt,” the report warned.

    It also stated that despite first quarter weakness in the US, the recovery in high-income countries is gaining momentum. “These economies are expected to grow by 1.9 per cent in 2014, accelerating to 2.4 per cent in 2015 and 2.5 per cent in 2016.

    “The Euro Area is on target to grow by 1.1 per cent this year, while the US economy, which contracted in the first quarter due to severe weather, is expected to grow by 2.1 per cent this year (down from the previous forecast of 2.8 per cent),” said the report.

    The global economy is expected to pick up speed as the year progresses and is projected to expand by 2.8 percent this year, strengthening to 3.4 and 3.5 per cent in 2015 and 2016, respectively.

    Using 2010 purchasing power parity weights, global growth would be 3.4, 4.0 and 4.2 per cent in 2014. 2015 and 2016 respectively. High-income economies will contribute about half of global growth in 2015 and 2016, compared with less than 40 per cent in 2013.

    According to the report:  “Acceleration in high-income economies will be an important impetus for developing countries. High-income economies are projected to inject an additional $6.3 trillion to global demand over the next three years, which is significantly more than the $3.9 trillion increase they contributed during the past three years, and more than the expected contribution from developing countries.”

    Short-term financial risks have become less pressing in part because earlier downside risks have been realised without generating large upheavals and because economic adjustments over the past year have reduced vulnerabilities.