The Nation Newspaper

Tag: Sub-Saharan Africa

  • Diaspora remittances hit $24.3b

    Diaspora remittances to Nigeria stood at $24.3 billion last year. It was the highest remittance to any country in sub-Saharan Africa and an increase of more than $2 billion compared to the previous year’s figure of $22.3 billion.

    According to the World Bank’s latest “Migration and Development Brief”, immigrants sent $46 billion to their home countries in sub-Saharan Africa last year, a 10 per cent jump in remittances in 2017.

    The growth in remittances was supported by strong economic conditions in high-income economies, the World Bank said.

    Remittances to sub-Saharan African countries last year contributed significantly to the Gross Domestic Product (GDP) of these nations.

    Looking at remittances as a share of the GDP, Comoros had the largest share, followed by the Gambia, Lesotho, Cape Verde, Liberia, Zimbabwe, Senegal, Togo, Ghana, and Nigeria, according to the Brief.

    Remittances to the Middle East and North Africa grew nine per cent to $62 billion in 2018. The growth was driven by Egypt’s rapid remittance growth of around 17 per cent.

    The Brief said: “Beyond 2018, the growth of remittances to the region is expected to continue, albeit at a slower pace of around three per cent in 2019 due to moderating growth in the Euro Area.”

    Remittances to low and middle-income countries also reached a record high last year. The bank estimates that officially recorded annual remittance flows to low- and middle-income countries reached $529 billion last year, an increase of 9.6 per cent over the previous record high of $483 billion in 2017.

    Global remittances, which include flows to high-income countries, reached $689 billion last year, up from $633 billion the year before.

    Such funds have become one of the most important external sources of finance for Africa over the years. Recent surveys state that most of the money migrant workers send home to sub-Saharan Africa is spent on education, health care, land, building houses, starting a business or improving farms.

    Research by Adams Bodomo of the University of Vienna argues that Diaspora remittance funds constitute a better alternative to Overseas Development Assistance (ODA) funds for the development of Africa for a number of reasons.

    He said: “The funds are less likely to be misspent as compared to the misappropriations and legendary inefficiencies in the foreign aid industry. Diaspora remittance funds, as gifts of love, are better focused on building the family and hence the nation.

    “The distribution of these Diaspora remittance funds is far more efficient than ODA funds since these monies go directly to paying school fees, building houses, and growing businesses.”

    As remittances make up a significant share of gross domestic product in African countries, they help boost the economies of the respective countries.

  • Uzbekistan miracle

    Malaria is undoubtedly one of the most common and deadliest public health problems in the world but, obviously, in Sub-Saharan Africa, it takes the prime position as one of the leading causes of death, especially amongst children under the age of five, and pregnant women. The parasite is usually spread by anopheles mosquitoes.

    Studies have shown that to eliminate the disease from any country might take a long time but attempts at prevention have been the focus of most concerned citizens, governments and organisations around the world. These attempts range from the scientific like the use of insecticides and insecticide-treated nets in homes to very civic actions like just keeping a clean environment to prevent the mosquitoes in question from breeding.

    However, poverty and the unwillingness of governments to truly dedicate resources to fight this deadly disease devastating the African continent have somewhat been boosting the capacity of the disease to claim lives in Africa. Nigeria, which recently turned the poverty capital of the world, is at a very high risk and with successive governments unwilling to invest in the health of the citizens, the deaths, especially of the under-fives due to malaria, would continue to rise.

    A country of 32 million people, Uzbekistan, was in December 2018 certified malaria-free by the World Health Organization (WHO). This successful journey for them took years in coming. Their first attempt was about five decades ago. But they knew that for a developing nation like theirs, a healthy population is the engine room of the economy. They went to work and today, 50 years after their first attempt, a huge and remarkable result has been achieved by their being certified malaria-free.

    The success of Uzbekistan in eliminating malaria is proof that determination, focus and vision played key roles. The health ministry in the country sat down to evaluate the losses due to the disease. They had a vision of what a healthy population can achieve and they went to work, knowing that a healthy nation logically translates to a wealthy one. They set targets and they worked truly hard to achieve their goals.

    A nation like Nigeria must learn from this tiny landlocked country. They were as determined as they had goals to achieve and no challenge was huge enough to stand in their way. Dr. Anatoly Kondrashin who was one of WHO’s Malaria Elimination Certification Panel commended the government’s collaborative efforts as most ministries like that of health, education, agriculture,  transportation and even immigration and even non-governmental organisations  all worked together to achieve this marvelous result.

    There was a deliberate effort to check, conduct early diagnoses, treat with utmost care and to achieve results and prevent re-infection of others. In all these, the country had their eyes on the ball literarily.

    We congratulate Uzbekistan for this rare display of bravery and commitment to its people. We urge our governments and their ministries and agencies at all levels to learn from the tiny country which today is not popular from oil exports but for service to the people. Our ministries and agencies must begin to work together for the good of the people rather than the present supremacy battles over which ministry is superior to the other.

    It is only in genuinely working together that results as perfect as this can be achieved. Their effort is also a lesson on what value each government must place on its citizens as a precursor to serving them.

    Malaria is a devastating disease and given the huge loss of our human capital through the disease, governments at all levels must draw lessons from the tiny country under reference and begin to make efforts at eliminating the killer that is malaria.

  •  ‘70% of workers in Nigeria, sub-Saharan Africa in vulnerable employment’

    About 70 per cent of workers in sub-Saharan Africa, including Nigeria, are in vulnerable employment, compared to a global average of 46 per cent.

    A report by the World Economic Forum (WEF) indicated that unemployment and underemployment ranked in first place in sub-Saharan Africa as the top risk for doing business.

    The forum stated in the report that 22 of the 34 economies surveyed cited it as the top risk for doing business in the region.

    “In sub-Saharan Africa, countries face the profound challenge of creating sufficient jobs to meet the needs of the working-age population,” the report stated.

    The forum predicted that the working age population of sub-Saharan Africa is expected to more than double to 1.6 billion by 2050 and that this must be matched with quality of employment.

    Read also: Lagos to complete largest rice mill in Sub-Saharan Africa early 2019

    It is the view of more than 12,000 business people across 140 economies, according to findings that the World Economic Forum published in the first edition of a new Regional Risks for Doing Business report that  unemployment and underemployment represent the biggest risk for doing business around the world.

  • ‘600m have no electricity in sub-Saharan Africa’

    Global law firm, Hogan Lovells, has said about 600 million people in sub-Saharan Africa have no access to electricity.

    This is contained in a new report published by the law firm entitled: “Africa and Renewables: Wholesale Change or Short term surge?”  launched at the African Energy Forum in Mauritius.

    The report was compiled with input from the firm’s partners and many of its clients, spanning infrastructure, energy, finance, and private equity. The report highlights the challenges posed by producing and accessing renewable energy in Africa, and how these can be overcome to achieve potential and scale.

    In sub-Saharan Africa, approximately one-third of the population (about 600 million people) has no access to electricity, with demand outstripping supply due to increasing life expectancy driven by greater access to healthcare, increased urbanisation, and technological advances. The estimated investment needed is $50 billion yearly, the report said.

    The report also highlighted the potential for renewable energy production to revolutionise access to energy throughout the continent. Africa has vast potential to tap into its natural abundance of hydro, solar, wind, and geothermal energy sources, while the technological and financial hurdles to achieve major energy breakthroughs are increasingly surmountable.

  • Nigeria has highest interest rate in Africa-study

    Nigeria has the highest interest rate in Africa, a study has revealed. According to a study sub-Saharan Africa has some of the highest interest rates in the world. The study conducted last year by Investmentfrontier.com, showed that four of the six countries with the world’s highest interest rates are in sub-Saharan Africa.

    The countries are Nigeria, Malawi, Gambia and Ghana, and they reflect the broad picture in the region – and, indeed, the wider African continent – of generally high interest rates.

    The interest rate is dependent on the base rate or monetary policy rate which is fixed by a country’s central bank. The base rate for Nigeria is 14%. In contrast, that of Kenya is 10% and that of South Africa is only 6.75%. In Tanzania, the interest rate is 8.91 percent from 9.50 percent.

    Banks in Nigeria factor in the high cost of doing business and set their lending rate at 25% or more. The CBN has kept the benchmark rate at 14% as a way of checking inflationary pressure. There is an inverse relationship between interest rates and inflation. When interest rates are reduced people are able to borrow more and spend more and this leads to an increase in inflation rate.

    On the other hand, when interest rate is high, inflation is checked because people are discouraged from borrowing and thus spending is reduced. The second way in which inflation affects interest rate is that banks cannot fix their lending rate lower than the inflation rate else they run at a loss. Since he inflation rate in Nigeria is currently 15.37%, this means that the lending rate cannot be lower than this.

    The cost of doing business is high in Nigeria. For banks these include the costs associated with defaults, high speed broadband internet and technology, running the branches including cost of diesel to power the generator and the cost of security personnel for the branches.

    Financial intermediation costs include administrative costs incurred by banks, cash reserve requirement (CRR) and liquidity ratio requirement. We have already established that administrative costs are high for banks because of the high cost of doing business. The cash and liquidity ratio requirements are also high at 22.5% and 30% respectively. The high intermediation cost incurred by banks is reflected in high interest rates charged to borrowers.

     

  • Lagos to complete largest rice mill in Sub-Saharan Africa early 2019

    …revs up New Mile 12 Market, Agbowa Timberville Sawmill, others

     

    The Lagos State Government on Wednesday said all hands are on deck to complete the largest rice mill in Sub-Saharan Africa currently ongoing in Imota Local Council Development Area of the State within the first quarter of 2019.

    Apart from ensuring availability of rice in the market, the mill which is of 32 metric tons per hour production capacity, is projected to facilitate the creation of over 200,000 jobs across the agricultural value chain, while it will also bring about the cultivation of 32,000 hectares of farm land to produce rice paddy, equating to an estimated 130million Kg of processed rice per year (an equivalent of 2.6milion 50kg bags of rice).

    Speaking during an extensive inspection tour of major projects in Ikorodu, Imota and Agbowa axis by members of the Lagos State Executive Council, the State Governor, Mr. Akinwunmi Ambode said the project would be completed by January 2019, while the initial production would commence by February of the year.

    The Governor, who was represented by Commissioner for Works and Infrastructure, Mr Adebowale Akinsanya, said the project was part of the grand policy of his administration to ensure food security, and as well give a quantum leap to economic integration of the Southwest region as the land to be cultivated and rice paddy for the mill would be supplied largely by farmers from the region.

    Briefing journalists alongside other Exco members after being taken round the level of work done so far by Project Engineer, Gboyega Odunlami, Governor Ambode said it was gratifying to note that the project was progressing steadily and would be delivered on schedule.

    “The key take away from here is that the construction of the rice mill and the industrial park among other complementing facilities are going on as planned. The administrative building, the restaurant, fire station, power station and other facilities needed to support the park and the rice mill are all ongoing concurrently.

    “The mill is part of the food security strategy of this administration as well as Southwest integration efforts. It will be the largest rice mill not just in Nigeria but in Sub Saharan Africa.

    “Already, we have commitment from the contractors working on the project that it would be delivered by January 2019 and the rice mill that would be the food engine of the Southwest will be in production by February,” the Governor said.

    At the Imota Regional Food Stuff Market where the present Mile 12 Market and other markets within the axis would be relocated, the Governor said the first phase of the project which would accommodate about 1500 shops was already at 75 per cent completion stage, while the second phase, among other facilities such as concretized roads, fire stations, drainages, sewage system, power stations, sewage treatment, 1000 capacity Car Park, over 100 capacity Trailer Park, bus layby, among others would all be delivered before the end of the year.

    The Governor said adequate provisions have been made in the new market to avoid the challenges which the present Mile 12 Market and other markets in the area constituted to the environment, saying at least 70 meters of buffer zone had been created between the proposed Ikorodu-Itoikin-Epe road expansion project and the market to prevent interface.

    “We have seen what is going on as to our commitment to make this place a regional market. The first phase is 75 per cent completed. The major challenge has been accomplished though we still have some things to sort out but we are over the hurdle.

    “What remains is to keep going, speed up and with the commitment of this government, we should be able to complete this project by September and hopefully by the end of the year, all the different markets in Mile 12 will be able to move here and it will be a one shop centre for everybody,” he said.

    While inspecting the 2.7kilometre Agbowa-Timberville Road under construction and the Agbowa Timberville Sawmill where the present day Okobaba Sawmill in Ebute Metta would be relocated, the Commissioner for Physical Planning and Urban Development, Mr Rotimi Ogunleye said the project was at the final completion stage with few outstanding facilities.

    “The main project of the Agbowa Timberville Sawmill is about 250 shops out of which over 200 have been completed and the project is sitting on 150 hectares. The various infrastructure – the road networks, the shops, sheds and all that have been put in place.

    “The two outstanding areas for us to move the traders from Okobaba to this place are the short road that leads to the Timberville from Agbowa which is swampy in some areas and we have to do decompile and then the second outstanding area is the boom area which is the place where the timber merchant will anchor their logs.

    “We have spoken with the traders and they are very much ready to come here. Apart from the shops, we have the halls for them to do their meetings; we have conveniences, cafeteria, 24/7 power supply, among others so that they can do their business in a more conducive and friendly environment, and then we can  have the opportunity of regenerating the present Okobaba which is within the city,” he said.

    Also, while conducting members of the State Executive Council round the Odo Onosa/Ayandelu Housing Scheme, Commissioner for Housing, Mr Gbolahan Lawal said the project had already been incorporated into the rent-to-own housing policy of the present administration where people would just pay five per cent of the total amount and spread the rest over ten years.

    He said the scheme is one of the 17 estates spread across the State with a total of 5008 units, and that interested residents need not know any government official to apply for the scheme.

    Responding on behalf of the community, Oba of Odo Ayandelu Kingdom in Ikosi-Ejirin, Oba Ganiu Aderibigbe recalled how he approached the Governor during a town hall meeting held at Ajelogo on the need to revisit the project, saying the work done so far was a practical example of the fact that the Governor was a listening Governor, adding that the project would boost economic activities in the axis.

    “To us, we see this project as our own company in the sense that it would create a lot of jobs for our people. I also want to commend the Governor for not increasing the price. When the project commenced under the administration of Governor Babatunde Fashola, cement was sold for N2,600 and the price of the house remain the same till date which means Governor Ambode has cushioned the gap in between,” the monarch said.

  • $2.5b Eurobond: Nigeria faces higher debt service cost – Fitch

    Nigeria’s issuance of $2.5 billion Eurobond in the first quarter of this year is expected to raise the country’s debt service cost and refinancing risks, Fitch Ratings, said on Wednesday.

    In a report titled:  Sub Saharan Africa Sovereign Debt Steadies but Refinancing Risk May Rise, the global rating agency said borrowing in foreign currency in international markets also exposes sovereigns to foreign exchange refinancing risk and a potentially higher debt service/Gross Domestic Product (GDP) burden in the event of local currency depreciation.

    “Thus although it can appear cheaper if domestic interest rates are high, as in Nigeria, which used the proceeds of its February issue to refinance more expensive naira-denominated debt, it generally involves a net increase in risk, in Fitch’s view,” it said.

    It said weak Public Financial Management (PFM) could increase the challenge of transitioning from concessional to commercial funding, and of managing the associated risks, such as exposure to tighter global monetary policy and the capacity to navigate interest rate and currency risks.

    It said SSA Eurobond maturities are spread out over the next decade, but weak Public Finance Management still means there are risks associated with them. Weak PFM also means that upward pressure on government debt will persist, as it limits the capacity to implement consolidation plans and to contain spending and mobilise domestic revenue sources more fully.

    It hinted that Sub Saharan Africa (SSA) sovereigns, including Nigeria, are making greater use of international debt market financing. This continued in first quarter of this year with issues from Kenya ($2 billion), Cote d’Ivoire (EUR1.7 billion) and Nigeria ($2.5 billion). Ghana’s parliament last month approved plans for a Eurobond issue.

    Read Also: Nigeria’s population now 198m, says NPC

    It said that tapping international capital markets can be an important financing option where liquidity in local funding markets is low. “Long-dated international issuance can extend repayment schedules (Kenya and Cote d’Ivoire’s 1Q18 deals both featured 30-year tranches). Market access that allows for opportunistic international debt issuance is therefore beneficial for SSA sovereigns,” it said.

    It however, said that the rise in debt since 2011, growing use of commercial funding, and in some cases currency depreciation have increased debt servicing costs in some countries.  It said seven of the 18 Fitch-rated SSA sovereigns had general government interest payments/revenues above 15 per cent last year, the highest since at least 2000.

    The SSA sovereign debt levels are stabilising following their recent sharp increase, but growing use of the international capital markets may increase refinancing risk as the amount of international debt coming due rises, Fitch Ratings says. Maturities appear manageable in the near term, but public financial management (PFM) in the region is often weak, meaning that capacity to manage refinancing risk is an important factor in our SSA sovereign credit assessments.

    “We expect median SSA general government debt to be broadly stable this year at 52.6 per cent of GDP, following a rise of over 20 percentage point in the preceding six years. This reflects improved commodity prices and fiscal consolidation in some countries, including those with International Monetary Fund programmes

  • Petrolex Group to launch Sub- Saharan Africa’s largest tank farm

    Petrolex Group to launch Sub- Saharan Africa’s largest tank farm

    Petrolex Oil & Gas Limited, Africa’s emerging indigenous energy giant, is set to launch its ultra-modern tank farm facility on Tuesday, next week, at Ibefun, Ogun State as part of its plan to revolutionise the country’s oil and gas landscape.

    A first of its kind in sub-Saharan Africa, the 300 million-litre tank farm will be commissioned by Vice President Prof. Yemi Osinbajo. It has the capacity to turnover 600 million litres of petroleum products every month, enabling products to be stored and distributed effectively for better services and higher turnover.

    The facility is expected to create over 10,000 new direct and indirect jobs, improve throughput capacity for distribution of petroleum products by over 500% whilst Petrolex’s extensive social investment programme is expected to impact over two million lives and maintain a very healthy balance with the environment.

    Equipped with state-of-the-art technology, the facility is set to decongest Apapa and Ibafo tanker traffic by 60 per cent thereby eliminating hazards associated with storage and transportation of petroleum products in those areas.

    According to Segun Adebutu, Chairman/CEO of of the company, “As a solutions-driven company, we are positioned to drive increased efficiency and consistent value creation across the West African downstream oil and gas value chain through our strategic investments and the delivery of superior quality products and services.”

    To facilitate the achievement of its strategic goals, Petrolex has 16 barges, eight tugboats and a 30KT vessel.

  • Economic growth to rise to 3.4% in sub-Saharan Africa in 2018 – IMF

    Economic growth to rise to 3.4% in sub-Saharan Africa in 2018 – IMF

    Economic growth is expected to rise to 3.4 per cent in sub-Saharan Africa in 2018 from 2.6 per cent in 2017, the IMF said in a report on Monday.

    The IMF, however, warned that rising debt and political risks in larger economies would weigh down future growth.

    The IMF said a good harvest and recovery in oil output in Nigeria would contribute more than half of the growth in the region this year.

    The fund added that an uptick in mining and a better harvest in South Africa as well as a rebound in oil production in Angola will add to growth.

    The fund said South Africa has been clouded by the rule of Jacob Zuma, who has battled scandals, including corrupt allegations ahead of his ANC party’s conference in December to elect a new party leader.

    “Key downside risks to the region’s growth outlook emanate from the larger economies, where elevated political uncertainty could delay needed policy adjustments and dampen investor and consumer confidence,” the IMF said in a report launched in Harare.

    “A further pickup in growth to 3.4 per cent is expected in 2018, but momentum is weak, and growth will likely remain well below past trends in 2019.”

    To help maintain growth, IMF advised countries to diversify from dependence on commodities and oil, implement fiscal reforms to stimulate growth and attract private investment.

    The IMF said public debt would rise to 53 per cent of GDP this year from 48 per cent in 2016.

    More worryingly, it said, most countries were now borrowing from local banks, which could distabilise the domestic financial sector and fuel inflation.

    Debt servicing costs were also up, but high debt levels were in particular complicating the economic outlook for six nations, including Zimbabwe, which is gripped by a crunch forex shortage.

    “Debt servicing costs are becoming a burden, especially in oil-producing countries … and are expected to absorb more than 60 per cent of government revenues in 2017,” IMF said.

    The IMF said that while some countries had made progress in reducing their fiscal deficits, others, like Africa’s most advanced economy South Africa would see the deficit widen.

    South Africa on Friday raised its estimate for this year’s budget deficit, saying the country faced sluggish economic growth, shortfalls in revenue and costly bailouts of struggling state-owned companies.

    The IMF in thye report added that inflation pressures are easing especially in east Africa, which was hit by drought and the governments there increased maize imports to cut food prices.

    The IMF said in other places like Zimbabwe the high cost of imports is raising price pressures.

    NAN

  • Mobile subscribers in sub-Sahara Africa to pass 500m by 2020 – Report

    Mobile subscribers in sub-Sahara Africa to pass 500m by 2020 – Report

    Mobile subscribers in Sub-Saharan Africa are expected to surpass 500 million by the end of 2020.

    According to a report launched on Tuesday by the GSM Association (GSMA) forecasts the number of unique mobile subscribers in sub-Saharan Africa will grow from 420 million at the end of 2016 to 535 million in 2020.

    The new report, “The Mobile Economy: Sub-Saharan Africa 2017” highlights the mobile ecosystem’s growing contribution to the region’s GDP, job creation, innovation and socio-economic development.

    This, the association said, will make it the fastest growing region in the world over this period on mobile phones.

    Mats Granryd, Director-General of the GSMA said: “sub-Saharan Africa will be a key engine of subscriber growth for the world’s mobile industry over the next few years as we connect millions of previously unconnected men, women and young people across the continent.

    “Mobile is also offering sustainable solutions that address the lack of access to services such as health, education, electricity, clean water and financial services, which still affect large swathes of the population.”

    It said subscriber growth was expected to be concentrated in large, underpenetrated markets such as the Democratic Republic of the Congo (DRC), Ethiopia, Nigeria and Tanzania.

    All these from the countries will together account for half of the 115 million new subscribers expected in Sub-Saharan Africa by 2020.

    It said growth would also focus on currently under-represented segments such as the under-16 age group, which accounts for more than 40 per cent of the population in many countries.

    Women, who are currently 17 per cent less likely to have a mobile phone subscription than men.

    According to GSMA, mobile is also a vital tool in delivering digital and financial inclusion in Sub-Saharan Africa.

    “Around 270 million people in the region now access the internet through mobile devices, while the number of registered mobile money accounts has reached 280 million,” it said.

    It finds that mobile operators and others are also leveraging the ubiquity of mobile networks across the region to deliver services that are working towards achieving the UN Sustainable Development Goals (SDGs).

    The SDGs will focus energy, water and sanitation, healthcare, education among others.

    “As Sub-Saharan Africa transitions to higher levels of mobile engagement, underpinned by growing access to mobile data services and smart devices.

    “We are seeing a flourishing mobile ecosystem emerge, supported by growing investments by operators and others in mobile-focused start-ups and tech hubs,” Granryd said.

    Mobile technologies and services generated 110 billion dollars of economic value in Sub-Saharan Africa in 2016, equivalent to 7.7 per cent of regional GDP.

    This a figure expected to grow to 142 billion dollars (8.6 per cent of GDP) by 2020.

    The mobile ecosystem also supported approximately 3.5 million jobs in the region in 2016, and made a 13-billion-dollar contribution to the public sector in the form of taxation.

    Local mobile operators have invested 37 billion dollars in their networks over the past five years, mainly to deploy new 3G/4G mobile broadband networks.

    About a third of mobile connections in region were running on mobile broadband networks at the end of 2016, forecast to rise to 60 per cent by 2020.

    These new networks, alongside rising smartphone adoption, are driving demand for digital content and services.