Monthly Finance & Infrastructure Update: January 2018
2018 has seen a strong start for global economic activity. Global output is said to have increased by 3.7 percent during 2017. Forecasts for global growth during 2018 and 2019 have therefore even been pushed up, expecting 3.9 percent growth.
The MSCI All-Country World Index increased by 4.8 percent over a two week period, between January 2nd and January 18th 2018.
Even with the strong start to the global equity market, investors are being warned to remain cautious in their movements as investors are cutting down their cash position and aggressively investing in risk assets.
In Cryptocurrency news, Trading Technologies International plans to add Coinbase, a cryptocurrency marketplace to its roster this year. Coinbase will allow traders to buy and sell Bitcoin, Bitcoin Cash, Ether and Litecoin.
The US Dollar has experience a month long decline after sinking to fresh lows this past week. Whereas the Euro, Sterling and Canadian dollar have already seen signs of strengthening.
Alternative Investments Focus
Cryptocurrencies remain a buzz word and a topic of much debate as the market is sitting amidst major changes in the digital currency.
Investing in alternative asset classes known as Section 12J funds, introduced by the South African Revenue Service as a tax incentive to stimulate growth of SMEs through venture capital investment, offers attractive benefits.
Pensions Focus | Mauritius
Mauritius is currently having to spend more each year in terms of social benefits. Not only do they increase pensions as well as other social benefits yearly, but the population is slowly growing older and the number of retirees is increasing. Mauritius utilises more than Rs 25 billion over one year to finance social grants.
200 783 people had a basic pension in 2016. In 2017, the number of beneficiaries increased to 209 346, a growth of more than 8000 retirees.
Pensions Focus | South Africa
After last years Steinhoff accounting scandal, South Africa’s civil servants union has teamed up with government pension fund to pursue Steinhoff for an estimated 1.4 billion USD of pensioners money.
Steinhoff saw an 85 percent share price drop that took more than 10 billion USD off its market capitalization.
Infrastructure Focus| Africa
According to the latest African Development Banks flagship report, The African Economic Outlook, Africa’s infrastructure deficit is estimated to be between $130 billion USD and 170 billion USD, which lies far above the initial estimation of 93 billion USD. The financing gap is estimated to be approximately 108 billion USD.
“With such a large infrastructure gap, and urgent needs in health, education, administrative capacity, and security, Africa has to attract private capital to accelerate the building of critical infrastructure needed to unleash its potential.” The report said. “But African countries do not need to wait until all financing gaps are filled before they transform their economic structures.”
Africa is said to collect an estimated 500 billion USD in tax revenue every year, 50 billion USD in foreign aid, 60 billion USD in remittance and another 60 billion in foreign direct investment inflows.
“African countries seeking financial resources now have a wide variety of options, well beyond foreign aid,” the report said.
ICD to raise 1 billion USD
The Saudi Arabia-based Islamic Corporation for the Development of the Private Sector (ICD) will focus on funding infrastructure projects across Africa and aims to raise 1 billion USD to do so. A shareholder agreement has been put in place between ICD, the Islamic Development Bank and the private equity arm of India’s Infrastructure Leasing and Financial Services Group.
Infrastructure Focus| Zimbabwe
Zimbabwe recently acquired a new president, Emmerson Mnangagwa, and the country hopes to show signs of change, seeing only the remains of the Zimbabwe dollar and its hyperinflation which decreased at a rate of 79.6 billion percent over the last decade.
It is crucial that the new leader moves quickly to reinstitute institute macroeconomic fundamentals and stabilise fiscal and monetary policies. The Reserve Bank of Zimbabwe now predicts 4% GDP growth in 2018. But some analysts believe mining and manufacturing exports can be massively stimulated through a rapid corralling of international financing injections.
Infrastructure Focus| Mozambique
Emerging Africa Infrastructure Fund (EAIF) has refinanced one of Mozambique’s newest and strategically important power stations with a 21 million USD loan to Central Termica de Ressano Garcia S.A. (CTRG).
Infrastructure Focus| Mozambique
Angola Cables have taken a step closer to completion of the South Atlantic Cable System (SACS) which is the first direct link between Africa and South America. This will strategically enhance Angola’s digital economy and improve communication infrastructure.
Public Private Partnerships Focus | Nigeria
A 2.8 billion USD gas pipeline project, Aiaokuta-Kaduna-Kano (AKK) has been approved by the FEC of Nigeria. The 40 inch pipeline, spanning 614 km’s, will transport gas north from Aiaokuta through Abuja and Kaduna, before terminating at a terminal gas station in Kano. The project will be delivered through a Build and Transfer (BT) PPP model with financing provided entirely by the contractor.
The Federal Government of Nigeria as well as the Akwa Ibom state government has issued a Request for Qualifications in order to develop the Ibom Deep Seaport via a PPP agreement on a design-build-finance-maintain-operate-transfer basis. The IDSP will be located in the south east of Akwa Ibom state, a leading oil & gas producer.
Public Private Partnerships Focus | Ghana
Another Request for Qualifications has been issued by the Government of Ghana for the country’s first ever PPP project in the road sector. The Accra-Tema motorway is a 19km dual carriageway, forming an integral part of the National Route, linking the city of Accra, the Kotoka International Airport and Tema Port.