- Enelamah Claims Nigeria Recorded over $20bn Investment Inflows in One Year
In a remark certain to befuddle Nigerians, the federal government claimed at the weekend that the country recorded over $20 billion investment inflows in the last one year, adding that such inflows came by way of infrastructure financing, transactions between local private sector players and their offshore counterparts, as well as sundry commitments, among others.
This is coming amid moves by the international oil companies (IOCs) to attract huge offshore funds to boost operational capacity.
The Minister of Trade, Industry and Investment, Dr. Okechukwu Enelamah, who made the disclosure in an interview weekend, listed investment inflows in the past 12 months as those from the China Eximbank, General Electric (GE), Kellogs, Coca Cola, and Chi Company, among others.
Ironically, the so-called investment inflows have not been evident in an economy reeling from a severe foreign exchange shortage, rising unemployment and spiralling inflation.
“Yes, people are surprised about how big investment inflows are because they have come in large chunks. But let me tell you that we have gotten a total of well over $20 billion,” he said.
He stated that the major infrastructure projects were part of the investment inflows, adding that what people see as investment inflows are “not just the money physically”, but also the commitments that have come.
He added: “If you look at the infrastructure projects that we are doing, there is a $20 billion or more infrastructure projects with the China Eximbank. It has been signed and it’s now implemented around railways and related infrastructure.
“There is an agreement with General Electric, which is about $2 billion which they have committed in the last one year. There are private sector investments such as Chellarams, which sold a major part of their business to Kellogs of the United States. That deal was may be about $400 million.
“There was a deal that was done by Chi with Coca Cola. That deal also ran into hundreds of millions of dollars. BUA also sold something (its flour mills unit) to an international player (Olam International of Singapore) for a substantial sum.
“However, we want to increase the steady inflow of foreign direct investment across all levels because there are many more people waiting on the sidelines, apart from the big people who are doing multi-year infrastructure projects.”
The minister recalled that the Nigerian Investment Promotion Council (NIPC) had “just appointed a new hand for the private sector”, adding that “as a government, we want to partner with the private sector”.
According to him, the government doesn’t have all the money it needs to develop the country, and it is therefore willing and committed to partnering with the private sector players and development capital to develop the country by making sure such capital goes into the right places.
“I think you will find that in investment, things are picking up even in terms of statistics. There is a significant uptick in investment, even though some of it has to do with fixed income investment. But it’s still capital that we need.
“Another thing I want to say regarding investment is that the oil companies have reached an agreement that is now being finalised to bring in more money into the oil and gas sector.
“You will hear more about it from next week (this week). We are just going through the process. You know oil; everybody has a stake in it… There was a meeting with the National Economic Council and other stakeholders will be briefed but it’s a very important programme to bring in billions of dollars into the country.
“They say you need oil to get out of oil and this will improve the oil sector significantly,” Enelamah said.
On what his ministry is doing to diversify the economy vis-a-vis trade and investment, the minister said the ministry was more of an enabler trying to put in place the requisite environment for businesses to thrive.
“The Ministry of Trade and Investment has a particularly important role to play because we view ourselves as a key enabler to those that are in industry, trade and investment.
“Permit me to explain what I mean by being a key enabler. I think all those issues that people have with doing business, whether it takes too long, whether people are trying to give them a hard time, I think we have a particular responsibility as a ministry to make it easy for them to understand and make sure government is listening to them.
“The good news is that this is what is shared by the entire government, right from the president. That was why the president launched the Presidential Enabling Business Council. That’s why it is chaired by the vice-president,” the minister stated.
He added that the ministry was also working on the Nigerian Industrial Revolution Plan as a key programme of government that would help to diversify the economy away from oil, and tilt more towards agriculture and agro processing.
IEA Pushes for $1T Investment In Clean Energy By 2030, To Achieve Net-Zero Emission By 2050
The International Energy Agency (IEA) has said that investment in clean energy in emerging and developing economies need to rise more than seven times, topping $1 trillion per year by 2030, to put the world on track for net-zero emissions by 2050.
A report conducted with the World Bank and the World Economic Forum (WEF) by the IEA stated that without stronger action, energy-related carbon dioxide emissions from those economies – mostly in Asia, Africa, and Latin America – would grow by five billion tonnes over the next two decades.
It said while developing and emerging economies account for two-thirds of the world’s population, they receive only one-fifth of investment in clean energy.
Annual investments across all parts of the energy sector in developing and emerging markets have fallen by about 20 percent since 2016, it added, partly because of challenges including weak regulation and a lack of profitable clean energy projects.
According to the report, last year, $150 billion was put into renewables, adding that unless much stronger action was taken, the 2050 target may not be met.
“In many emerging and developing economies, emissions are heading upwards while clean energy investments are faltering, creating a dangerous fault line in global efforts to reach climate and sustainable energy goals.
“Countries are not starting on this journey from the same place – many do not have access to the funds they need to rapidly transition to a healthier and more prosperous energy future – and the damaging effects of the Covid-19 crisis are lasting longer in many parts of the developing world.
“There is no shortage of money worldwide, but it is not finding its way to the countries, sectors and projects where it is most needed. Governments need to give international public finance institutions a strong strategic mandate to finance clean energy transitions in the developing world,” the IEA Director, Fatih Birol, stated.
The report noted that recent trends in clean energy spending point to a widening gap between advanced economies and the developing world even though emissions reductions are far more cost-effective in the latter.
Besides, it stated that emerging and developing economies currently account for two-thirds of the world’s population, but only one-fifth of global investment in clean energy, and one-tenth of global financial wealth.
“Annual investments across all parts of the energy sector in emerging and developing markets have fallen by around 20 percent since 2016, and they face debt and equity costs that are up to seven times higher than in the United States or Europe,” it said.
Avoiding a tonne of CO2 emissions in emerging and developing economies costs about half as much on average as in advanced economies, according to the report, stressing that it is partly because developing economies can often jump straight to cleaner and more efficient technologies without having to phase out or refit polluting energy projects that are already underway.
Describing the report as a global call to action – especially for those who have the wealth, resources and expertise to make a difference – and offers priority actions that can be taken now to move things forward fast, Birol stressed that as the world expands energy access, it also needs a global transition to low-carbon energy.
World Bank Global Director for Energy and Extractives, Demetrios Papathanasiou, said the bank would continue to support countries that seek assistance to transition away from fossil fuels and scale up low-carbon, renewable energy, and energy efficiency investments.
deVere Launches ‘Green’ Investment Products as ESG Demand Soars
Growing interest in environmental, social and governance (ESG) investing has prompted one of the world’s largest independent financial advisory and fintech organisations to unveil a new product to help clients benefit from this decade’s “ultimate megatrend.”
deVere Group will now be able to offer its clients a fixed-yield note of which the proceeds are allocated to the financing of eligible projects with a clear and defined environmental benefit, such as the reduction of carbon emissions.
In June last year, deVere revealed that 26% of clients around the world are eyeing exposure to or already have exposure to ESG investments. This has now increased to 44% over the last 12 months.
Of this new financial solution, Nigel Green, deVere Group CEO and founder says: “An increasing number of clients want to achieve profits with a purpose by investing in companies that prioritise reducing carbon, protect employees’ and consumer rights, and promote board diversity, corporate transparency and stakeholder accountability.
“As such, we feel it is our responsibility to bring to market financial solutions that can help them do this.”
“At the beginning of 2020 we identified that ESG will be this decade’s ultimate investment megatrend. Therefore, we will continue to develop products with legitimate ESG credentials.
He continues: “The ESG trend is set to gain further momentum for several reasons.
“First, governments and regulators are becoming increasingly pro-ESG which boosts investor confidence.
“For example, in the U.S. – the world’s largest economy – the Biden Administration is taking a tougher approach to the use of fossil fuels and is promising swift action to tackle climate change.
“In addition, the new chairman of the Securities and Exchange Commission (SEC), the U.S. financial regulator, Gary Gensler, is a proponent and is likely to strengthen investment and disclosure rules to help the U.S. catch up with Europe.”
He goes on to add: “Second, as millennials, who are statistically more likely to seek responsible investment options, become the major beneficiaries of the largest intergenerational transfer of wealth – an estimated $30tn in the next few years – we can expect both retail and institutional investors to continue to pile into ESG.
“And third, the pandemic has focused minds on the fact that the health of our planet directly affects human health which, in turn, affects the way we all live and work.”
As sustainable investments move from a ‘quirk’ or ‘nice to have’ to a legitimate portfolio diversification tool that delivers profits with purpose, deVere earlier this year announced it is to offer free, independent advice to clients on socially responsible investing, with the aim of positioning $1bn in environmental, social and governance investments within five years.
Of the new financial solution, Mr Green concludes: “This note is the next step in our sustainability journey. We look forward to developing more to help our clients with theirs.”
G7 Development Finance Institutions, Multilateral Partner to Invest Over $80 Billion in African Businesses
The G7 DFIs, the IFC, the private sector arm of the African Development Bank, EBRD and the European Investment Bank today announced that they were committed to investing $80 billion in the private sector over the next five years to support sustainable economic recovery and growth in Africa.
The Covid-19 pandemic has caused a severe global economic and health crisis. The announcement is a welcome boost to support the long-term development objectives of African economies that have been negatively impacted by the crisis. It is the first time the G7 DFIs have come together to make a collective partnership commitment to the African continent.
The IMF estimates that sub-Saharan Africa needs additional financing of around $425 billion between now and 2025 to help strengthen the pandemic response spending and reduce poverty in the region.
The UK Minister for Africa, James Duddridge, said: “The UK is proud to back this commitment by world leaders at the G7 Summit to invest more than $80 billion in Africa’s private sector over the next 5 years.
“This investment will create jobs, boost economic growth, help tackle climate change and fight poverty. It comes at a crucial time as the continent rebuilds its economies, severely impacted by Covid-19.”
Nick O’Donohoe, the CEO of CDC Group, said: “The patient, high quality capital that DFIs provide is urgently needed if African economies are to start to rebuild quickly from the impact of the pandemic. CDC is committed to building long term investment partnerships in Africa that fuel sustainable private sector growth in support of the UN’s Sustainable Development Goals.”
Werner Hoyer, President of the European Investment Bank, said: “The EIB welcomes G7 leadership to enhance support for high-impact investment across Africa during and after the pandemic. Last year the EU Bank’s engagement in Africa, as part of Team Europe, represented the largest ever support for climate action and investment in fragile states in 55 years of EIB operations on the continent. We stand ready to cooperate further with African and multilateral partners to tackle both COVID-19 and accelerate the green transition in Africa.”
Makhtar Diop, IFC’s Managing Director, said: “Ensuring an inclusive and sustainable recovery for people, businesses and economies across Africa in coordination with our development partners, is at the core of IFC’s development mandate today. We know that the private sector will play a major role in financing Africa’s future by creating millions of jobs that are essential to ensuring sustained economic growth and poverty reduction. We, therefore, welcome this important partnership and are proud to provide financing and to work with partners to help create the right conditions to bring more private investment to Africa.”
David Marchick, Chief Operating Officer of U.S. International Development Finance Corporation (DFC), said: “Under President Biden’s leadership, investing more in Africa is a top priority for DFC in fulfilling our development mandate. DFC is proud to be doubling down on our commitment to Africa alongside our G7 and multilateral partners and will continue to prioritize investments in vaccine manufacturing, COVID-19 response, climate mitigation and adaptation, and gender equity on the African continent.”
Dario Scannapieco, Chief Executive Officer of Cassa Depositi e Prestiti (CDP), said: “Closer collaboration among Development Finance Institutions and multilateral partners is an essential factor in fostering sustainable economic recovery and growth in Africa. CDP looks forward to contributing to this strategic partnership, supporting the African continent in developing its entrepreneurial and financial private sector, to unlock its vast, untapped potential.”
Solomon Quaynor, African Development Bank VP, Private Sector, Infrastructure & Industrialization said: “We welcome this global partnership and the opportunity to provide the African voice, as Africa builds back better and boldly. The opportunity to create jobs particularly for youth and women, from a focus on industrializing Africa underpinned by the African Continental Free Trade Area, will be our priority. Given the gap between the IMF estimates and what this partnership is committing to, we will seek to crowd-in African development partners, as well as African savings from SWFs, pensions, and insurance pools, estimated to have US$1.8 trillion AUM.”
Heike Harmgart, EBRD Managing Director, Southern & Eastern Mediterranean, said: “Harnessing the potential of the private sector is essential to supporting prosperity in Africa and meeting the continent’s development needs. In the North African countries where we work – Egypt, Morocco and Tunisia – we have invested over €11.5 billion in only 9 years, focused on boosting the private sector, developing green sustainable infrastructure and promoting youth and women participation in the economy. We will pursue our efforts to expand private sector investment opportunities at scale in the region in close cooperation with other development actors.”
Monika Beck, member of the DEG-Management Board, said: „Many of our African partner countries have been hit hard by the pandemic. We quickly developed new services to support private sector SME and to help protecting jobs and livelihoods. In Africa, DEG has always been specifically committed to creating prospects for the young, growing population. In addition to the continuing massive impact of Covid-19 we expect a further acceleration of the challenges connected to developments such as digitization and climate change. Therefore DEG welcomes and is proud to be part of the G7 DFI Africa initiative”.
Each DFI has its own investment criteria which are aligned to an assessment of need to achieve development impact across a range of sectors. DFIs play an important role in helping to build markets, mitigate risk and pave the way for other investors to enter new markets.
The G7 DFI group consists of CDC, Proparco (France), JICA and JBIC (Japan), DFC (US), FinDev Canada (Canada), DEG (Germany) and CDP (Italy). This commitment is also supported by the IFC, the Africa Development Bank, the European Bank for Reconstruction and Development and the European Investment Bank
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