As the global business environment adapts to the new normal of Brexit, the Trump presidency and the implications of a post-oil economy, Sub‐Saharan Africa continues to be an increasingly important component of global economic growth. In particular, the expansion of Islamic ﬁnance in the region is providing new growth opportunities and propelling stronger trade &investment ties across Sub‐Saharan Africa and internationally. For Uganda, specifically, 2016 has been a landmark year for Islamic finance as important new legislation has moved its way through the legal enactment process and 2017 promises to be even more significant for the progress of Islamic finance on the continent.
The inaugural 2016 international gathering of the Sub-Saharan Africa Islamic Finance Convention, the first of its kind to be held in Uganda, was convened by Ethico Live UK in collaboration with ABL Dunamis and supported by the Private Sector Foundation of Uganda (PSFU) and the Islamic Chamber of Commerce in Uganda (ICCIU). The convention attracted over 200 delegates and speakers from key regional and international markets, including: Uganda, Kenya, Tanzania, the UK, India, Ethiopia, Chad, Rwanda, Nigeria, Egypt, Pakistan, Saudi Arabia, and the UAE.
The purpose of the Sub-Saharan Africa Islamic Finance Convention is to provide a strong platform for the growth of the Islamic finance industry that will help to further establish Uganda as an exciting investment destination and also enable the development of the broader Sub-Saharan Africa market. The event was attended by several high-level delegations from the Ministry of Finance in Uganda and Bank of Uganda as well as major private sector financial institutions from across Africa and internationally.
One of the major outcomes of last year’s convention was the publication of The Kampala Islamic Finance Declaration 2016, which is a unique document focused on advancing the dialogue with the broader economic stakeholder community beyond the confines of the conference room. The Declaration built on the core objectives of the convention, which included: advancing the key opportunities within the Islamic banking sector in the region; creating consumer awareness about Islamic banking; deepening the talent pool in Islamic finance on the continent; attracting investors to Islamic financial institutions; facilitating meetings and networking to create relationships for capacity building between experienced international players and emerging African leaders; dispelling the myth that Islamic banking is only for Muslims; providing a platform for policy makers and regulators to communicate to domestic and foreign investors in both the private and public sectors; and establishing Uganda as a meaningful hub for Islamic finance in the region.
2017 promises to be an even more dynamic year that will firmly establish the role that Islamic finance (including newly enabled Islamic insurance legislation) can play in positioning Uganda and the larger region to more effectively tap into FDI from key sources across the Middle East as well as the broader OIC markets. Islamic finance mechanisms, in particular Sukuk, are well placed to meet the funding needs
of large-scale infrastructure requirements on the continent and can bring new sources of capital to the local markets. In addition, Islamic banking provides a powerful catalyst for improving financial inclusion across the region, including technology innovations such as mobile money that will help boost consumer banking penetration on the continent.
Against this dynamic backdrop Ethico Live and ABL Dunamis, joint organizers of The Sub-Saharan Islamic Finance Convention, are delighted to announce that the 2nd annual edition of this important gathering will take place on the 6th of April 2017 at the Sheraton Kampala Hotel in Uganda, and will focus on further advancing these opportunities.
Speaking at the announcement of the launch of the 2017 edition of The Sub-Saharan Islamic Finance Convention, David McLean, President of Ethico Live, said that: “Africa is expected to see a massive population boom, with favourable demographics which will help drive further demand for Islamic financial products and services on the continent. However, much work still needs to be done if the Islamic finance industry is to deliver on its potential in Africa. Nevertheless, 2017 promises to be an even more dynamic year that will ﬁrmly establish the role that Islamic ﬁnance can play in enabling key African markets to advance their strategic economic priorities through Islamic finance. The Sub-Saharan Africa Islamic Finance Convention 2017 is an important tool for furthering debate and accelerating the progress of the industry across the continent and, following the success of the first year of the Sub-Saharan Africa Islamic Finance Convention, it is my pleasure to announce that we will be continuing our collaboration with ABL Dunamis to make the 2nd edition in April 2017an even more relevant and outcome-focused platform for Islamic finance in Africa.”
Echoing these sentiments, Abubaker B. Mayanja, Managing Director of ABL Dunamis Ltd. said that: “2016 has been a transformational year for Islamic Finance in Uganda. Uganda may be somewhat late to adopt the Islamic banking model but the country has an important strategic advantage of being a member of the IDB group and this will over time result in long term capital from IDB giving it an advantage in the race to become an important hub for Islamic finance in Africa. Islamic finance offers an opportunity for Uganda to tap into Foreign Direct Investment (FDI) from across the Middle East as well as broader OIC markets, while the Sukuk instrument is well suited to meet the funding needs of high-priority infrastructure projects on the continent as the instrument can provide state institutions with access to a new international investor base and broaden their sources of fiscal funding. In addition, Islamic banking provides a powerful catalyst for improving ﬁnancial inclusion in Africa that will help boost consumer banking penetration. We look forward to welcoming an even larger delegation of international industry leaders to at the Sub Saharan Africa Islamic Finance Convention in Kampala in April 2017”.
The Sub-Saharan Africa Islamic Finance Convention is created in collaboration between Ethico Live! and ABL Dunamis.
Ethico Live Limited is a UK registered company with its corporate headquarters at 110 Queen Street, Glasgow G13BX, UK. Through our on-the-ground presence in key centres across the world we are able to serve our clients in the global financial markets with high-profile international conferences in Europe, the Middle East, Africa and Asia.
ABL Dunamis a Sub-Saharan Africa focused financial advisory and investment services firm that is a provider of services in the field of finance and investment including: financial and investment advisory services, research, analysis, structuring, corporate finance and transaction services to private, public, individual and institutional entities.
UK might need negative rates if recovery disappoints – BoE’s Vlieghe
By David Milliken and William Schomberg
LONDON (Reuters) – The Bank of England might need to cut interest rates below zero later this year or in 2022 if a recovery in the economy disappoints, especially if there is persistent unemployment, policymaker Gertjan Vlieghe said on Friday.
Vlieghe said he thought the likeliest scenario was that the economy would recover strongly as forecast by the central bank earlier this month, meaning a further loosening of monetary policy would not be needed.
Data published on Friday suggested the economy had stabilised after a new COVID-19 lockdown hit retailers last month, while businesses and consumers are hopeful a fast vaccination campaign will spur a recovery.
Vlieghe said in a speech published by the BoE that there was a risk of lasting job market weakness hurting wages and prices.
“In such a scenario, I judge more monetary stimulus would be appropriate, and I would favour a negative Bank Rate as the tool to implement the stimulus,” he said.
“The time to implement it would be whenever the data, or the balance of risks around it, suggest that the recovery is falling short of fully eliminating economic slack, which might be later this year or into next year,” he added.
Vlieghe’s comments are similar to those of fellow policymaker Michael Saunders, who said on Thursday negative rates could be the BoE’s best tool in future.
Earlier this month the BoE gave British financial institutions six months to get ready for the possible introduction of negative interest rates, though it stressed that no decision had been taken on whether to implement them.
Investors saw the move as reducing the likelihood of the BoE following other central banks and adopting negative rates.
Some senior BoE policymakers, such as Deputy Governor Dave Ramsden, believe that adding to the central bank’s 875 billion pounds ($1.22 trillion) of government bond purchases remains the best way of boosting the economy if needed.
Vlieghe underscored the scale of the hit to Britain’s economy and said it was clear the country was not experiencing a V-shaped recovery, adding it was more like “something between a swoosh-shaped recovery and a W-shaped recovery.”
“I want to emphasise how far we still have to travel in this recovery,” he said, adding that it was “highly uncertain” how much of the pent-up savings amassed by households during the lockdowns would be spent.
By contrast, last week the BoE’s chief economist, Andy Haldane, likened the economy to a “coiled spring.”
Vlieghe also warned against raising interest rates if the economy appeared to be outperforming expectations.
“It is perfectly possible that we have a short period of pent up demand, after which demand eases back again,” he said.
Higher interest rates were unlikely to be appropriate until 2023 or 2024, he said.
($1 = 0.7146 pounds)
(Reporting by David Milliken; Editing by William Schomberg)
UK economy shows signs of stabilisation after new lockdown hit
By William Schomberg and David Milliken
LONDON (Reuters) – Britain’s economy has stabilised after a new COVID-19 lockdown last month hit retailers, and business and consumers are hopeful the vaccination campaign will spur a recovery, data showed on Friday.
The IHS Markit/CIPS flash composite Purchasing Managers’ Index, a survey of businesses, suggested the economy was barely shrinking in the first half of February as companies adjusted to the latest restrictions.
A separate survey of households showed consumers at their most confident since the pandemic began.
Britain’s economy had its biggest slump in 300 years in 2020, when it contracted by 10%, and will shrink by 4% in the first three months of 2021, the Bank of England predicts.
The central bank expects a strong subsequent recovery because of the COVID-19 vaccination programme – though policymaker Gertjan Vlieghe said in a speech on Friday that the BoE could need to cut interest rates below zero later this year if unemployment stayed high.
Prime Minister Boris Johnson is due on Monday to announce the next steps in England’s lockdown but has said any easing of restrictions will be gradual.
Official data for January underscored the impact of the latest lockdown on retailers.
Retail sales volumes slumped by 8.2% from December, a much bigger fall than the 2.5% decrease forecast in a Reuters poll of economists, and the second largest on record.
“The only good thing about the current lockdown is that it’s no way near as bad for the economy as the first one,” Paul Dales, an economist at Capital Economics, said.
The smaller fall in retail sales than last April’s 18% plunge reflected growth in online shopping.
BORROWING SURGE SLOWED IN JANUARY
There was some better news for finance minister Rishi Sunak as he prepares to announce Britain’s next annual budget on March 3.
Though public sector borrowing of 8.8 billion pounds ($12.3 billion) was the first January deficit in a decade, it was much less than the 24.5 billion pounds forecast in a Reuters poll.
That took borrowing since the start of the financial year in April to 270.6 billion pounds, reflecting a surge in spending and tax cuts ordered by Sunak.
The figure does not count losses on government-backed loans which could add 30 billion pounds to the shortfall this year, but the deficit is likely to be smaller than official forecasts, the Institute for Fiscal Studies think tank said.
Sunak is expected to extend a costly wage subsidy programme, at least for the hardest-hit sectors, but he said the time for a reckoning would come.
“It’s right that once our economy begins to recover, we should look to return the public finances to a more sustainable footing and I’ll always be honest with the British people about how we will do this,” he said.
Some economists expect higher taxes sooner rather than later.
“Big tax rises eventually will have to be announced, with 2022 likely to be the worst year, so that they will be far from voters’ minds by the time of the next general election in May 2024,” Samuel Tombs, at Pantheon Macroeconomics, said.
Public debt rose to 2.115 trillion pounds, or 97.9% of gross domestic product – a percentage not seen since the early 1960s.
The PMI survey and a separate measure of manufacturing from the Confederation of British Industry, showing factory orders suffering the smallest hit in a year, gave Sunak some cause for optimism.
IHS Markit’s chief business economist, Chris Williamson, said the improvement in business expectations suggested the economy was “poised for recovery.”
However the PMI survey showed factory output in February grew at its slowest rate in nine months. Many firms reported extra costs and disruption to supply chains from new post-Brexit barriers to trade with the European Union since Jan. 1.
Vlieghe warned against over-interpreting any early signs of growth. “It is perfectly possible that we have a short period of pent up demand, after which demand eases back again,” he said.
“We are experiencing something between a swoosh-shaped recovery and a W-shaped recovery. We are clearly not experiencing a V-shaped recovery.”
($1 = 0.7160 pounds)
(Editing by Angus MacSwan and Timothy Heritage)
Oil extends losses as Texas prepares to ramp up output
By Devika Krishna Kumar
NEW YORK (Reuters) – Oil prices fell for a second day on Friday, retreating further from recent highs as Texas energy companies began preparations to restart oil and gas fields shuttered by freezing weather.
Brent crude futures were down 33 cents, or 0.5%, at $63.60 a barrel by 11:06 a.m. (1606 GMT) U.S. West Texas Intermediate (WTI) crude futures fell 60 cents, or 1%, to $59.92.
This week, both benchmarks had climbed to the highest in more than a year.
“Price pullback thus far appears corrective and is slight within the context of this month’s major upside price acceleration,” said Jim Ritterbusch, president of Ritterbusch and Associates.
Unusually cold weather in Texas and the Plains states curtailed up to 4 million barrels per day (bpd) of crude production and 21 billion cubic feet of natural gas, analysts estimated.
Texas refiners halted about a fifth of the nation’s oil processing amid power outages and severe cold.
Companies were expected to prepare for production restarts on Friday as electric power and water services slowly resume, sources said.
“While much of the selling relates to a gradual resumption of power in the Gulf coast region ahead of a significant temperature warmup, the magnitude of this week’s loss of supply may require further discounting given much uncertainty regarding the extent and possible duration of lost output,” Ritterbusch said.
Oil fell despite a surprise drop in U.S. crude stockpiles in the week to Feb. 12, before the big freeze. Inventories fell by 7.3 million barrels to 461.8 million barrels, their lowest since March, the Energy Information Administration reported on Thursday. [EIA/S]
The United States on Thursday said it was ready to talk to Iran about returning to a 2015 agreement that aimed to prevent Tehran from acquiring nuclear weapons. Still, analysts did not expect near-term reversal of sanctions on Iran that were imposed by the previous U.S. administration.
“This breakthrough increases the probability that we may see Iran returning to the oil market soon, although there is much to be discussed and a new deal will not be a carbon-copy of the 2015 nuclear deal,” said StoneX analyst Kevin Solomon.
(Additional reporting by Ahmad Ghaddar in London and Roslan Khasawneh in Singapore and Sonali Paul in Melbourne; Editing by Jason Neely, David Goodman and David Gregorio)
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