February Updates Finance

Finance| Focus The Organization for Economic Cooperation and Development (OECD) has predicted that the global economy will grow during 2018 and 2019 by approximately 3.9% as increases in private investment and trade has been seen with global inflation set to rise slowly. Most G20 countries have already seen growth and continued expansion, while a short-term boost is expected in the US from new tax reductions and increased spending. South Africa has expected growth from 1.9% in 2018 to 2.1% in 2019, more than originally predicted by the National Treasury, after a new president was reinstated and VAT was raised from 14% to 15%. There are big growth projections for specific markets in Africa with Mozambique expecting to grow by an average of 5.3 percent per year (2017-2019), while Mauritius is predicted at 4%, Malawi’s average GDP growth at 5 % and Botswana ay 5%' per-annum growth over the same period is forecast at 4 percent. To add to this, average real GDP growth of 5 percent and 4.6 percent is expected in Malawi and Botswana respectively. The cryptocurrency market has been on a rollercoaster, when Bitcoin dropped dramatically this month, slowly making its way back, but not all the way to where it was. Some currencies held strong during a turbulent month, while others are trying to recuperate. The release of the US Consumer Price Index showed a drop in retail sales but higher than expected economic inflation, with a bad reaction from the markets. The release of this US data left investors worried and searching for wiser markets than the US. The USD/EUR dropped over 1% to 0.8014 February 15th. Brexit remains a concern for Sterling. GBP/USD exchange rate dropped by over 3% to 1.3755 on February 10th from its February 2nd high of 1.422, then increasing and decreasing during the month following multiple Brexit speeches.   Alternative Investments Focus Cryptocurrencies According to a report done by the property group, Knight Frank, approximately 21% of wealth advisors and private bankers exposed their clients to cryptocurrencies, with the elusive currency making massive strides during 2017. Crowdfunding Crowdfunding has been gathering momentum and many investors are asking if Africa is ready for this new so called “alternative-debt.” Crowdfunding focuses on projects as opposed to focusing on the financing of the entire business, with little expectation of return as they might not be financial, but forms of tokens or product. Alternatively, the parties could agree to share revenue and take one the risk of the venture, with equity taking the form of shares. Pensions Focus|Africa A $10 million loan to the Africa Local Currency Bond Fund has been granted by the board of the African Development Bank in order to ultimately promote development of domestic capital markets across Africa. The fund aims to enhance ease within local currency bond issuers in high impact sectors by giving technical assistance.  This should apply to all African countries where local currency bonds are possible, including Nigeria, Botswana, Ghana, Kenya, Zambia, Lesotho, Senegal, Cote d”ivoire, Uganda, Malawi, Gabon and Togo. Pensions Focus | South Africa In South Africa, The January take-home pay rose 1.2% year-on-year, increasing at a slow rate, while pensioner pay performed better, with the pension pay average increase more than previous performances.  The BankServAfrica Index showed that there was a “positive, real increase” for money banked by employees. Infrastructure Focus| Africa UKDIT to provide billions to help African Infrastructure The United Kingdom Department for International Trade (UKDIT) has a presence in 21 countries in Africa  and enables the provision of facilities through the United Kingdom’s export credit agency.  UKDIT has taken a particular interest in the local currencies of nine African countries in the transportation, mining and general construction sectors, with the criteria of including 20% of UK content.  This will aid the African infrastructure deficit in order to increase its ability to trade with the rest of the world, critical to the growth of the economy. BRICS to help  mobilise developing economies. The NDB, an initiative of Brazil, Russia, India  China and South African, known as BRICS aim to mobilise resources for development projects in the above named countries as well as other emerging economies. Bob Kalanzi, The New Partnership for Africa’s Development capacity development officer pointed to the importance of infrastructure development to hasten industrial development. The African Union also announced that they aim to increase intra-African trade to 50% by 2045, with Africa’s global trade share to 12%, from its current 2%.   Public Private Partnership Focus | South Africa Bridge City to boost economic development. Bridge City in Kwazulu Natal, South Africa is a prime example of the transformative potential of coordinated public investment, with this particular project having revived the township economy through infrastructure investments and including the private sector to catalyse these investments.   “We partner with varying levels of government to realise transformation and growth,” says Mike Deighton, Tongaat Hulett Development Managing Director, “ “We have a unique portfolio with a well-established development platform, ensuring that property is developed in such a way as to present the best economic opportunities for South Africa and for the KwaZulu-Natal community.” Digital connection to boost Africa A new organisation, Smart Cities, which is made up of an alliance between 22 governments, international organisations such as World Bank, the African Union Commission and the United Nations, as well as private sector firms aim to boost integration and development by building a single digital market. This will enable bandwidth affordability and capacity across the continent  and eliminate roaming charges. The cost of connectivity is a barricade for trade within the continent. Upcoming events: