Finance and Economic Planning Minister Patrick Chinamasa, has said Zimbabwe requires around $1,5 billion annually for infrastructure to kick start economic growth.

This comes as the Government moves to improve roads, rail and housing delivery system to stimulate the economy.

Minister Chinamasa recently told parliament that a significant fund should be reserved yearly to develop energy, water, rail and Information and Communications Technology (ICT) sectors.

“We should be setting aside at least $1,5 billion annually towards our infrastructure. I want us to go on a journey together, collectively, step-by-step to get us out of the current situation and put right the structure of our budget.

“We made serious efforts in this budget to sort out the fiscal deficit, to sort out the employment structure in the civil service.

“All the income that we are receiving is going towards the payment of our wages including ourselves and none is left for operations, which is also an issue raised in the contributions,” said Minister Chinamasa.

He said: “What we have to accept is that, until we change that structure, we are not doing our country any good because we need infrastructure in order to lay the foundation for our economic growth.

“Infrastructure in energy, water, roads, ICT and housing is very important to the country’s new economic growth trajectory.”

In the 2018 budget, Government set aside a total budget of $139 million for rail, road and air projects to improve and rehabilitate the country’s transport network infrastructure to enhance their efficiency.

However, that amount is not sufficient for all infrastructure developments.

The projects, which will be funded through fiscal resources, are expected to rehabilitate and expand rail, road and air projects in 2018.

Minister Patrick Chinamasa said that Government will ensure all planned projects are executed accordingly.

He said: “Given the critical role of transport infrastructure in the socio-economic development of the country, investments in transport infrastructure will be prioritised in 2018, targeting road, rail and aviation.

“Due to the state of our roads, $89,6 million and the Road Fund will target improvement in road network. This is through restoration and upgrading of damaged sections and bridges, dualisation of Harare-Beitbridge and critical sections of the network and capacitation of Road Authorities.”

Meanwhile, the Infrastructure Development Bank of Zimbabwe (IDBZ) said Zimbabwe requires at least $26 billion over a period of 10 years to address a gap in infrastructural development and become competitive for investment.

The country currently has a growing infrastructure gap due to lack of investment.

In 2012, the World Bank estimated that $33 billion is required over two decades that is $1,7 billion per year while the African Development Bank puts its estimates at $2 billion per annum.

The figures are a far cry from reality, considering that Zimbabwe has used $1,9 billion for infrastructural development in the past seven years.

Figures from the IBDZ show that Zimbabwe has been using between $1 billion and $3 billion per year since 2010 with the highest figure being $500 million used in 2016.

Source:Livingstone Marufu, allafrica.com

A High Level Breakfast Meeting was organized on January 27, 2018, by Femmes Africa Solidarité (FAS) on the theme Empowering Women in Agriculture (EWA) at the margins of the 30th African Union Summit of Heads of State and Government in Addis Ababa. Chaired by Olusegun Obasanjo, former president of Nigeria, the event was attended by representatives of heads of states, rural women in agri-business, partners and other stakeholders.

In his opening statements, Dr Obasanjo called for the review of the activities and processes of EWA in the six years since it was launched, as well as the challenges facing rural women in agriculture These include the lack of access to resources like land, credit, limited market space and low productivity. Obasanjo called for commitment and support from various partners and stakeholders. He drew the loudest applause of the meeting when he said: “Why are we not talking about discrimination in favor of women … discrimination in favor of women is positive discrimination.”

He also said that EWA must be seen as a way of achieving the UN SDG 2.

The EWA initiative currently involves 9 pilot countries, Malawi, Ethiopia, Rwanda, Senegal, Tanzania, Burkina Faso, Djibouti, Liberia and Nigeria. Dr Obasanjo said he would like to see the number of participating countries increased to 15 in the next 2 years.

Madam Bineta Diop, who moderated the event, thanked UNWomen for their contribution and push. Ms. Giovanne Biha, who represented Dr. Vera Songwe, the executive secretary of ECA, committed ECA’s continuous support to EWA, especially in the area of data collection.

In his address to the group, Dr Akinwunmi Ayodeji Adesina, the president of African Development Bank (AfDB) confirmed the formation of the Affirmative Finance Action for women in Africa (AFWA), which will be a systematic shift in how women, especially women in agriculture, are supported by local commercial banks. He said AfDB would make a $3billion line of credit available towards the AFWA initiative.

Out of this, $300 million would be available towards the EWA initiative through local banks. Commercial and local banks will be rated based on the percentage and volume of money made available to women in agriculture.

Dr Adesina informed the attendees of a $250 Million AfDB program in collaboration with the Bill & Melinda Gates Foundation and the Rockefeller Foundation, the World Bank and AGRA, called Technologies for African Agriculture Transformation (TAAT), in support of the Feed Africa Strategy. He believes this program will empower rural women as technology is scaled up in all the EWA states. While thanking ECA and African Capacity Building Foundation (ACBF) for their continuous support, he promised solid support for EWA programs.

Officials of institutions who pledged support to the EWA initiative at the event include Professor Emmanuel Nnadozie, the executive secretary of ACBF (represented), The Mo Ibrahim Foundation, the African Union Commissioner for Rural Economy and Agriculture, Madam Leonel Correa Josefa Sacko, GIMAC, UN Women, the CEO of NEPAD Agency, Dr. Ibrahim Mayaki, OCP, IFAD, and ambassadors from Rwanda and Burkina Faso.

The Director-General of FAO, Dr Jose Graziano da Silva said FAO is deeply involved with EWA and cautioned that while “working hard to achieve zero hunger, we are also eating less and less healthy with fruits and vegetables missing from our diets”. He hoped the EWA initiatives would help to prevent obesity in Africa.

The rural women, represented by Madam Zainab Isah Arah from northern Nigeria and rural women farmers from Burkina Faso, enjoined all to match their words with action. Zainab said “If women in agriculture are empowered, we will play our role in ending hunger”. Obasanjo thanked Zainab for “allowing herself to be heard coming from an area where women are only supposed to be seen, not heard”.

Amadou Mahtar Ba, the Executive Chairman of AllAfrica and member of United Nations Secretary General high level panel on women affairs, said despite the progress that has been made, “the penny still hasn’t dropped”. He said despite knowing all the problems and knowing almost all the solutions, we are yet to crack the nut on the political determination to solve these problems. He suggested forming a coalition of reporters across Africa who writes on agriculture and women affairs to make sure that people know what rural women in agriculture are doing – an idea that Dr. Obasanjo agreed to quickly.

Source: Ade Adeyemi, Allafrica.com

Mineral and commodity prospects are looking up.

The outlook has been clouded for the last few years, but now the world’s major economies are firing, ensuring demand for many key commoditiesmined on the continent. There are still risks of volatility in the global economy and these could pose problems for these shoots of optimism, as we examine below. However, due to technological changes, prospects may be brighter for many of the continent’s minerals in 2018 and even in the medium term.

Global trade winds

Events in the United States and Europe caused many to believe that the commodities supercycle of the 2000s, or at least the upward trend in commodities prices, had ended. After booming in the early 2000s, prices first fell with the financial crash of 2008. This was followed by a depressed outlook for commodities as growth and trade volumes stagnated, and China, or at least capital investment in its economy, seemed to be stalling.

However, more recent events in emerging economies, and in particular China, pose the question of whether Western economies still have as much influence over commodities markets.

While China seems set to grow at a relatively healthy 6.5%, continued “risk controls”, as Citi Research notes, could take it below 6%. That possibility, notes the American lender, could seriously dampen prices for some of the continent’s most valuable commodities. Zinc, copper, steel, iron ore and coking coal would all be vulnerable in the event of a Chinese slowdown.

More specifically, the cessation of Chinese winter environmental protection controls in some of its most economically vibrant eastern urban areas on the 15 March could act as a spur to commodity prices as Chinese producers rev up their engines again.

However, the actions of President Xi Jinping of China this year could prove decisive. His government may decide that the favourable economic outlook for the year makes this a suitable time to crack down on the shadow banking sector or for the tightening of bank lending rules. This could result in a slowdown in the economy, and a drop-off in fixed asset investment, the traditional Chinese engine of commodity price growth.

It is widely accepted that there is a burgeoning debt crisis in China and similarly that official growth figures are routinely fudged. Should either of these issues accelerate or blow up, that could have a severe impact on growth. The possibility of Chinese provinces curtailing investment in fixed assets – for instance in  building infrastructure – could turn commodities bearish. While in the long to medium term greater regulatory oversight in China is welcome – particularly with fears of vast semi-hidden debt – the possiblity of investment taking fright is a major short-term worry.

Unpredictability

Chinese policy changes and their effects are slightly easier to predict, but there are also a multitude of potential threats that emanate from ruptures between the “great powers” – chiefly, the unpredictability of US President Donald Trump.

Of note has been his bellicose rhetoric regarding China. Could the White House initiate a trade war between the two powers? A recent report from the US trade representative, Robert Lighthizer, described allowing China’s accession to the World Trade Organisation as a “mistake”.

Reversing this fundamental of American policy, through potential penalties for what Washington sees as punitive Chinese actions towards foreign companies in China, could result in retaliations by China and harm to global growth. President Trump has already imposed tariffs on imported solar cells and washing machines.

Should the White House’s war of words with North Korea move towards action, major commodity prices, in particular iron ore, would be hit. Japan, South Korea and China account for over 80% of seaborne iron ore trade. War in the region would be catastrophic for values of the commodity and global trade in general.

While tensions in East Asia risk blowing up in ways that would be catastrophic to global trade, theyalso raise intriguing possibilities for African miners. For instance, the renewed threat from nuclear conflict raises the interest in uranium sourced in Niger, Gabon and elsewhere on the continent.

The renewed tensions between the major powers and determination to secure supplies and prevent others from doing so offers potential for dampened uranium prices to rebound. Increased demand combined with cuts to supply from Canadian and Kazakh producers mean that the price of the nuclear metal could recover.

Meanwhile the changing tides of technology and the demands new entrants place on suppliers also look to be at decisive juncture. For instance, contrast the fortunes of platinum and cobalt. Platinum’s outlook looks uncertain.

The precious metal is used in the engines of diesel and other combustion engines. But the emissions scandal that has engulfed automakers such as Volkswagen has raised awareness of the pollution caused by diesel. Efforts are being made across the world, at least nominally, to turn away from diesel engines, and combustion engines more generally. As a result, the outlook for platinum has looked weak.

Cobalt surges

Cobalt by contrast surged by around 127% last year to over $75,000 a ton. The precious metal is found in abundance in the Democratic Republic of Congo (DRC). While the advance of sustainable technology is arguably humanity’s greatest tool to meet the challenge of climate change, the mineral’s production in DRC highlights many of the continent’s continued challenges.

With cobalt’s rise analysts fret over instability and the weak regulatory environment in the country, in particular the opaque nature of supply chains. A 2016 report by Amnesty International found that Chinese child labour was used to mine the ore that is used in components for everyday objects such as smartphones.

The increased importance of minerals from DRC has, moreover, shed light in recent years on the loss-making, state-owned mining outfit cum gatekeeper, Gécamines, and the political and civil conflict across the country.

Meanwhile, DRC’s political and humanitarian woes endure. The UN currently estimates that in the Kasai region alone, some 3.2m people face starvation this year without increased external assistance.

Moreover, the threat from further political rupture as President Joseph Kabila continues in power, despite his legal tenure ending in December 2016, remains high. As  Peter Jones, DRC expert at London-based extractive sector watchdog Global Witness, says: “As the political crisis drags on it’s likely that the regime’s need for money increases, so it is very worrying when we see questionable deals being signed.”

Violence and the sentencing to prison in absentia of opposition figure Moïse Katumbi, the former governor of the vital Katanga province, contribute to a difficult environment in a nation which should be thriving. DRC is the source of two thirds of the world’s cobalt and has vast copper reserves.

Both minerals started the year in bullish form. Of note this year is a promised new mining law that threatens to more than double taxes on the export of any commodity the government deem “strategic”, which would most likely include cobalt and copper.

In theory greater tax revenue for Kinshasa would help to sure up the weak regulatory environment, but Jones comments: “The tax agencies are very opaque and it’s not clear what happens to some of those revenues, so it’s not certain that increased taxation through the new mining law would necessarily mean more spending on public services… The new mining law proposals have also caused a lot of concern among investors.”

By some estimates some 30–40% of mining revenues owed to the people or government of DRC disappears. Meanwhile, there is little scope for the political crisis ending in the country, which say analysts will most likely lead to continued instability throughout 2018, with an election tentatively scheduled for December. President Kabila is unlikely to leave willingly, so hopes for stability most likely lie with his government changing the two-term limit on office in the constitution to allow his continued rule, which, if nothing else, would ensure an uneasy degree of stability.

Optimism in South Africa

In contrast, analysts have greeted Cyril Ramaphosa’s ascension to the presidency of the African National Congress (ANC) in South Africa as a positive turn of events. Ramaphosa has both strong political credentials and serious mining credibility, having been general secretary of the country’s National Union of Mineworkers and a member of the board of mining company Lonmin.

He has been criticised for the position he took on the massacre at Lonmin’s Marikana mine in which 34 striking workers were killed in 2012. Lonmin is currently mired in debt, having lost over $1bn last year, with potential for a major takeover and restructuring this year.

Ramaphosa, meanwhile, has vowed to fight corruption, allegations of which have tainted the Zuma administration. There is hope, moreover, that he will produce a more investment-friendly final version of South Africa’s Mining Charter 3 than the Zuma administration had promised.

Similarly, in Zimbabwe there is hope riding on Emmerson Mnangagwa’s presidency after the surprise ousting of Robert Mugabe last year. The new administration in Harare has made promises to turn around the country’s economy, and while some have claimed that the former Mugabe loyalists in power have lacked specificity in their promises, changes to stringent indigenisation laws that have prevented FDI in mining would be welcome news in 2018.

Such moves could help to stimulate interest in the country’s lithium potential. Like cobalt, lithium has surged in price and importance due to its use in batteries that are essential for electric vehicles. Zimbabwe is currently the world’s fifth largest producer of lithium, but it is hoped that new finds can help it to grab market share.

Outlook for copper, gold, cobalt and platinum   

Copper: Industrial demand, particularly in Asia will most likely keep the outlook rosy for the red metal. While it started the year trading at around $7,000, Bank of America Merril Lynch predict it could reach $7,700 a ton by the middle of 2018.

The general trend of demand for infrastructure, spurred by strong growth figures globally bode well. Supply-side issues in Latin America are welcome news for suppliers on the continent, most prominently Zambia. The country is looking to re-open a number of mines and should be able to continue impressive increases in output in 2018.

Gold: Weak demand last year should be gradually corrected in 2018, with a rebound expected in its second largest market, India. Reversals to otherwise strong global stockmarket growth sparked by political instability could similarly see a rush to gold. For instance, fears over America’s government shutdown in January saw gold prices surge briefly.   

Cobalt: 2018 should see continued strong growth in cobalt prices. Political instability in DRC, which has a near monopoly on supply, will likely only have minor impacts on the price of the mineral.

Said instability and fears over doing business in DRC will most likely keep more responsible investors out of the troubled Central African nation. However, threats remain in the short-term.

The major applications for cobalt remain in new battery technologies, which could be affected by cuts to subsidies for electric cars in China. Meanwhile, breakthroughs in technology mean less cobalt could be required in batteries.

Platinum: The precious metal’s broad outlook has been bearish of late. This trend will most likely not disappear.

However, its weakness could result in a moderate correction as prices make it attractive, especially in relation to copper, palladium and gold. While its use in catalytic converters in out-of-favour diesel cars has been the major reason for bearish sentiment, general strong form for car sales in general and a possible up-tick in demand for its use in jewellery in China could result in at least a minor correction.

Restructuring of once mighty Lonmin, which has shut older mines in light of a precipitous fall in the company’s value, could result in a supply deficit which could additionally result in at least short term bullishness.

Source: Joseph Zeitlyn, African Business Magazine

African Reinsurance Corporation (Africa Re) has become the first multi-lateral financial institution to invest in Africa Finance Corporation as it becomes a member of AFC – the  pan-African multilateral development finance institution.

With approximately 107 insurance/reinsurance companies and non-African strategic investors in 41 African states, Africa Re, is one of the continent’s premier reinsurance corporation.

Andrew Alli,  the out-going President and CEO of AFC commented: “We welcome African Reinsurance Corporation (Africa Re) as a member and shareholder of AFC. As the first multilateral financial institution to become a member of AFC, this is a key milestone for us, as the Corporation seeks to further diversify its shareholding. We are, therefore, pleased to welcome Africa’s premier reinsurance corporation into membership of AFC and look forward to collaborating with Africa Re to provide innovative solutions to the development and financing of infrastructure assets in Africa.”

In recent months, AFC has grown its country membership in Francophone, East and Southern Africa, with the accession in 2017 of Benin, Kenya and Zambia, respectively. AFC now seeks to consolidate this success by further expanding its shareholder base.

 “As a Corporation with both private and public shareholders, we see many synergies with AFC in the pursuit of African continent development agenda as well as business growth. Indeed, we have long admired AFC, and the transformative impact it has made across many of the geographies in which we operate, whilst delivering competitive returns. We are therefore delighted to become a part of one of Africa’s best success stories,” said Corneille Karekezi, Group Managing Director & Chief Executive Officer of Africa Re, following the signing ceremony which took place in Lagos, Nigeria on Thursday 1 February.

To date, AFC  has invested approximately US$4 billion in projects within 28 countries across North, East, West and Southern Africa.

The Africa Finance Corporation an investment grade multilateral finance institution, was established in 2007 with an equity capital base of US$1 billion, to be the catalyst for private sector-led infrastructure investment across Africa. With a current balance sheet size of approximately US$3.5 billion, AFC is the second highest investment grade rated multilateral financial institution in Africa with an A3/P2 (Stable outlook) rating from Moody’s Investors Service.

AFC successfully raised US$750 million in 2015 and US$500 million in 2017; out of its Board-approved US$3 Billion Global Medium Term Note (MTN) Programme. Both Eurobond issues were oversubscribed and attracted investors from Asia, Europe and the USA.

The Corporation’s  investment approach combines specialist industry expertise with a focus on financial and technical advisory, project structuring, project development and risk capital to address Africa’s infrastructure development needs and drive sustainable economic growth. AFC invests in high quality infrastructure assets that provide essential services in the core infrastructure sectors of power, natural resources, heavy industry, transport, and telecommunications.

To date, AFC  has invested approximately US$4 billion in projects within 28 countries across North, East, West and Southern Africa.

Source: Africa Business Magazine

Analysts at Capital Bancorp Plc have forecasted a positive year for Nigeria in 2018, in terms of economic growth, healthy foreign reserves and the stock market growth.

Managing Director of Capital Bancorp, Mr Higo Aigboje, who spoke on Tuesday in Lagos at the presentation of its Economic Review and Outlook For 2018, disclosed that the nation’s bourse would post 25 percent growth this year.

In 2017, the Nigerian Stock Exchange, NSE, soared by 42.3 percent, emerging the third best performing markets globally.

In its 70-page report, the firm said performance in 2018 would be hinged on stability of oil prices, effective management and improved liquidity of the foreign exchange market, improvement on the corporate earnings, significant focus on the non-oil sector to increase output and lower interest rate regime.

Mr Aigboje explained that effective synergy in the use of fiscal and monetary policies, government’s focus on the real sector of the economy, improved market participation by local investors and domestic institutional investors, efficient regulation of the market by the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) are other factors that will help to sustain the market rally.

“Others are passage, passage of Petroleum Industry Bill, unbundling of Nigerian National Petroleum Corporation and listing of resultant companies and deliberate efforts aimed at encouraging more listing on the NSE company such as Telecom, Gencos among others,” Mr Aigboje said.

The capital market operator also disclosed that by the end of 2018, the nation’s external reserves will cross $48.50 billion.

He said this growth would be achieve if government does not irrationally increase its spending during the year especially in the second half of the year as the country begin to close in on the election period and the price of oil continues to firm up or remains stable at current level.

However, he warned that sudden rise in insecurity can trigger exit of the Foreign Portfolio Investors (FPI), political instability owing to forthcoming general elections, sudden reversal in oil prices, an upturn in the yields of fixed income securities and failure in the banking sector, which may trigger a sell-off and cause further damage to the entire stock market.

Source: Africa Business News