Abdirashid Duale, CEO Dahabshiil Group
At a time of cautious optimism for the health of the global economy, figures for foreign direct investment (FDI) in Africa might not seem so encouraging at first sight. According to the most recent UN data, FDI inflows to Africa fell for the third consecutive year in 2011, to $42.7bn. The chief reasons cited are the global recession and the Arab Spring in North Africa, both serious issues that continue to create uncertainty. The broad consensus among investors and commentators, however, is that the underlying trends point to a much brighter future for the African economy.
Africa’s resources are in huge demand. China’s growing need for oil and raw materials is the most commonly cited driver of this expansion, but there are other increasingly hungry importers in both the rich and emerging worlds. Nor is the demand confined to extractive industries like oil, gas and mining. Agriculture remains a pivotal sector across the African continent, which boasts some of the world’s most fertile land.
An extraordinary rate of urbanisation has produced a burgeoning middle-income bracket of ambitious, educated, entrepreneurial young people with a global outlook. Consumer demand is soaring as internet and mobile use becomes more widespread. Demographic trends point to this generation as being the crucial one for Africa’s rise: the continent has the fastest-expanding labour force in the world, expected to grow from 500 million today to 1.1 billion by 2040.
Rapid urbanisation has led to an increasingly urgent infrastructure gap: principally in power, transport, hospitals and schools. Africa’s overall current infrastructure spend is about $45bn per year – approximately half of what is needed. This shortfall represents a great opportunity for investors. Power companies in particular have already made inroads. In West Africa, US-based AES’s huge investment in Cameroon and Siemens AG’s presence in Nigeria are good examples of how overseas players can have a central role in carrying Africa’s infrastructure into the 21st century.
According to the United Nations Conference on Trade and Development (UNCTAD), FDI from emerging economies exceeded those from developed economies for the first time in 2011, with China, India and South Korea all stepping up their activities. The US, however, which is historically the dominant investor in Africa, still accounts for the largest number of new projects by any one country.
There is much discussion about the growing role of China in the African economy. Sceptics worry about a lack of commitment to anything beyond purely economic goals. Advocates applaud China’s strictly commercial approach and its increasingly important role in infrastructure development. Over the last decade China’s share of African exports has risen from one per cent to 15 per cent. A quarter of China’s oil imports originate in sub-Saharan Africa, and state-owned Chinese oil companies are now active throughout the continent.
Outside extractive industry Chinese investment is showing increasing signs of being a genuine catalyst for diversification. More than half of FDI from China goes into manufacturing, finance and construction, while less than a third goes into mining. China has also become a major source of foreign aid to Africa, as well as of official development assistance in the form of low-interest loans – commonly channelled into large-scale infrastructure projects.
Inflows to North Africa halved in the wake of the Arab Spring, while FDI to sub-Saharan Africa rose 25 per cent to $36.9bn in 2011, close to its pre-crisis high of $37.7bn. Commodity-rich countries such as Nigeria, Ghana, Congo, Equatorial Guinea and the Democratic Republic of Congo attracted the most investment in their respective regions. Africa’s most populous country, Nigeria, topped the list of recipients on the continent with $8.92bn – a fifth of all FDI to the continent. Nigeria’s and, increasingly, Ghana’s oil sectors constitute the main driving force behind West Africa’s strongly resource-focused capital inflows.
East Africa has also begun to feel the increasing benefit of investment interest from overseas. FDI there grew from $4bn in 2010 to $6bn in 2011, and the growing number of new projects bodes well for increased growth and diversification over the next few years. Kenya in particular has made significant strides in recent years towards a balanced economy, with increasing investment in real estate, manufacturing, IT and tourism complementing a rising mineral resource profile. The UK’s Financial Times recently ranked Kenya as the third most attractive FDI destination in Africa, after South Africa and Morocco.
Kenya is an example of how advances in infrastructure and human capital can play a crucial role in a push towards foreign investment that is better distributed across sectors and social groups. The growth of strong services industries such as IT and telecoms, coupled with the emergence of highly skilled professionals in areas like law and accountancy, have created the conditions for foreign capital to make a difference right through the economy.
Our company, Dahabshiil, operates in many countries in the East and Horn of Africa, providing a vital service to people living in urban areas as well as remote rural locations. We provide remittance and other services to people in the Somali territories, Ethiopia, Kenya, Uganda, South Sudan, Sudan, Rwanda and elsewhere both inside and outside the continent.
Other countries, including Burundi and Sierra Leone, have been recognised by the World Bank as having made strenuous efforts at reforming their investment policies, making life easier for investors by improving processes such as dealing with construction permits and paying taxes. Momentum is now building for coordinating investment policy reform at regional level. Such integration of policy environments will be more and more relevant as large foreign firms start eyeing bigger markets and more ambitious cross-border projects.
With the exception of remittance finance, which has remained broadly stable over the last decade, averaging 2.4 per cent of Africa’s GDP, much of the inflow of FDI to the continent is of course governed by perceptions. Indications are that these are improving among emerging economies, but still lag some way behind improvements on the ground among rich-world investors. A recent report by Ernst & Young found that companies with an existing presence in Africa regard it as the second most attractive destination after Asia, while those with no experience of doing business there are overwhelmingly negative. There can be no doubt that this discrepancy will hold Africa back for as long as it persists, and that it reaffirms the need to keep telling a different story – one of a wealth of opportunity amid a steadily improving political and regulatory environment.
FDI to Africa has outstripped official development assistance since 2005, as good an indication as any that the continent has come of age as an investment destination. The UN forecasts growth of between $70-$85bn in 2013 and $75-$100bn in 2014. Given this shift it is essential that governments look to harness the growing inflow of overseas capital to spur job creation, technology and knowledge transfer and export diversification. Developing policies that channel investment not just into extractive industries but into manufacturing and services too will be an increasingly important part of that process.
Abdirashid Duale is CEO of Dahabshiil, the largest international payments firm in the Horn of Africa. Abdirashid was recently recognised as one of the 50 most influential Africans by the Africa Report. For further information please visit www.dahabshiil.com
What is the procedure for proving a missing or lost Will?
By Alexa Payet, Partner at Bolt Burdon and listed specialist in the Certainty
Contentious Probate Hub & Area
When an individual dies it is necessary to search their paperwork to establish whether they made a Will and gather information regarding their estate. This is important because the personal representatives of the estate have a legal duty to distribute the estate correctly and could be held financially responsible for any mistakes made through any breach of duty.
Where a Will cannot be found but is believed to exist there are a number of steps that can be taken to help confirm its existence, including (but not limited to) the following:
- making enquiries of the deceased’s family and friends;
- making enquiries with the deceased’s professional advisors;
- instructing The National Will Register to undertake a Certainty Will Search.
Presumption of revocation
Where the original Will is known to have been in the testator’s possession before their death and cannot be located afterwards, there is a rebuttable presumption that the Will was destroyed by the testator with the intention of revoking it. If an order for the proof of a copy is to be obtained then this presumption must be rebutted.
Procedure for proving a copy Will
The procedure for proving a copy Will is set out in Rule 54 of the Non-Contentious Probate Rules 1987 (‘NCPR’).
The application is made to the Probate Registry at which the application for the grant will be made and the order can be made by a district judge or registrar.
The application must be supported by evidence in the form of an affidavit (although during the global pandemic the rules have been amended by the Non-Contentious Probate (Amendment) Rules 2020, SI 2020/1059, to provide for the use of witness statements as an alternative to affidavits).
The evidence must set out the grounds of the application and any available evidence that the applicant can adduce as to the Will’s existence after the death of the testator or, where there is no such evidence, the facts on which the applicant relies to rebut the presumption that the Will was destroyed by the testator during his/her life.
The applicant must ensure that the Court has the best available evidence of what happened to the testator’s Will in order that effect may be given to his/her testamentary wishes.
It is important to understand that the applicant does not need to demonstrate that the Will has been lost (it is the fact of its loss which gives rise to the presumption of revocation). Instead, the applicant must establish, by evidence, that the Will was not in fact revoked.
What is a Certainty Will Search and why is it necessary?
A Certainty Will Search searches for Wills that have been registered on The National Will Register (circa 8.7 million Will registrations in the system) and for Wills that have not yet been registered in geographically targeted areas where the deceased used to live and/or work. A Certainty Will Search is extremely important as it will be necessary to notify the probate registry of any persons who would be prejudiced by the grant if the copy Will is proved. If no such person exists then the registrar is more likely to grant the application. Alternatively, if such a person does exist then you should seek to obtain their written consent to the application. The written consents can then be lodged with (or following) your application.
Oil prices rise as investors look to higher demand seen in second half
By Shadia Nasralla
LONDON (Reuters) – Oil prices climbed on Tuesday as optimism that government stimulus will eventually lift global economic growth and oil demand trumped concerns that renewed COVID-19 pandemic lockdowns globally are cooling fuel consumption.
Brent crude futures for March rose 72 cents to $55.47 a barrel by 1152 GMT after slipping 35 cents in the previous session.
“The perception that any retracement will be quick as confidence in economic and oil demand recovery is unlikely to fade away,” said PVM analysts in a note.
U.S. West Texas Intermediate crude was at $52.65 a barrel, up 29 cents. There was no settlement on Monday as U.S. markets were closed for a public holiday. Front-month February WTI futures expire on Wednesday.
Investors are upbeat about demand in China, the world’s top crude oil importer, after data released on Monday showed its refinery output rose 3% to a new record in 2020.
China also avoided an economic contraction last year.
Investors are watching out for U.S. oil inventory data from the industry association API, due on Wednesday, the same day U.S. President-elect Biden’s inauguration speech will likely give details on the country’s $1.9 trillion aid package.
The International Energy Agency cut its outlook for oil demand in 2021, but pointed to a recovery in demand in the second half of the year to an annual average of 96.6 million barrels per day.
“Border closures, social distancing measures and shutdowns…will continue to constrain fuel demand until vaccines are more widely distributed, most likely only by the second half of the year,” it said in its monthly report.
(Additional reporting by Florence Tan, editing by Louise Heavens)
Can Thematic Investing provide investors with growth opportunities in uncertain times?
New whitepaper from CAMRADATA explores
CAMRADATA’s latest whitepaper on Thematic Investing, considers the role this type of investing can play in asset management and explores trends that can permeate society and traverse sectors. The whitepaper includes insights from guests who attended a virtual roundtable on Thematic Investing hosted by CAMRADATA in November, including representatives from CPR Asset Management, Sarasin & Partners, Impact Investing Institute, PwC, Quilter Cheviot, Scottish Widows and Stonehage Fleming.
Sean Thompson, Managing Director, CAMRADATA said, “In these seminal times, thematic investing has the potential to shape how the future unfolds. Yet running a successful thematic fund is no easy feat – it is a bit like navigating unchartered waters trying to identify the trends and the long-term opportunities.
“Trends such as AI and biotechnology are still in their relative early days, for example, and global economies are undergoing dramatic changes. But mapping out certain trends, identifying potential sustainable returns through a unifying thread that spans multiple sectors, could help future-proof investments. “Our roundtable guests considered current key themes, which themes worked well, and which have not and how thematic investors could identify trends with the potential to offer future growth.”
The guests named themes they currently like which included artificial intelligence, China, climate change, clean energy, automation, evolving consumption, ageing, digitalisation, water, waste management, biodiversity, and board diversity.
After discussing themes that have worked or not, the guests looked at total allocation to themed funds, and whether clients might be blinded by themes to the overall risk exposure in their portfolios.
Key takeaway points were:
- Themes have a habit of coming and going. One guest recognised that automation and robotics, for example, were cyclical, which means that investors will have to think carefully about entry-points.
- It was agreed that the commodities ‘super cycle’ of the 2000s came about with the economic development of China. Many commodities-based products found their way into mainstream investing, but this is unlikely to happen again.
- One guest was surprised by some of the themes that interested their customers; with their research showing that Board Diversity was almost the lowest-ranking concern among the ESG choices they listed.
- There was correlation between environmental impact and social benefits to investing. The theme that concerns the Impact Investing Institute, which is less than two years old, is improved measurement of such relationships.
- In terms of successful themes, one clear winner due to COVID had been digitalisation.
- One theme that has not done so well is the Ageing theme focused on older people travelling and enjoying experiences abroad later in life.
- One guest said their firm used themes for ideas generation, not as a shortcut for portfolio construction. They said themes lead to good ideas, but they then spend at least three months researching a stock, so that the best themes are represented by the best investments.
- The final point was that there are sensitivities for any global investor in allocating to themes, even the biggest one of all, Climate Change.
- But on a positive note, one guest added if all stakeholders can resolve their differences on definitions such as impact and ethical investing, then more capital will be readily transferred into opportunities.
The whitepaper also features two articles from the sponsors offering valuable additional insight. These are:
- CPR Asset Management: ‘Central Banks: leading the path towards Impact Investing’
- Sarasin & Partners: ‘Theme or fad? How to invest for the long term’
To download the Thematic Investing whitepaper, click here
For more information on CAMRADATA visit www.camradata.com
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