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G7 Development Finance Institutions, Multilateral Partner to Invest Over $80 Billion in African Businesses

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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 CDCProparco (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

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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West and Central Africa’s Investment Environment and Infrastructure Opportunities in Spotlight

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A new focus report produced by Oxford Business Group (OBG), in partnership with the international brokerage network Groupe Ascoma, will explore the increased focus on compliance, transparency and ethical practices in the West and Central African markets as the region looks to attract investment for its economic development.

Titled “Governance, Risk and Compliance in West and Central Africa”, the focus report will provide in-depth analysis of key issues relating to insurance and reinsurance, against the broader regional socio-economic landscape, in an easy-to-navigate and accessible format, featuring essential data and infographics.

The report will shine a spotlight on the way that doing business is evolving across the region’s economies at a time when ECOWAS members are keen to source funding for a vast range of intra-continental and domestic infrastructure projects.

Subscribers will find detailed coverage of the key role that private sector players such as Ascoma are expected to play in driving change and instilling a culture of insurance and reinsurance across business communities by identifying risks common to the region and providing effective, tailored solutions to them.

The report will examine specific areas of the economy in which governance, risk and compliance (GRC) principles are being given added weight, including energy, infrastructure, mining and the financial services industry.

It will also include an in-depth interview with Farid Chedid, CEO and Chairman, Groupe Ascoma, in which he explains how GRC dynamics are helping the company achieve its objectives, while supporting the region’s bid to make future economic growth sustainable. “Ascoma is committed to the economic and infrastructure development of Africa, and applying Global, Risk and Compliance principles is essential for our operations, not only in the continent but also in the Middle East and the rest of the world. Transparency, compliance, and business ethics are top priorities for us in the moment of investing in any country”. Commenting ahead of the signing of a Memorandum of Understanding for the report, Bernardo Bruzzone, OBG’s Regional Editor for Africa, said that the new report with Ascoma was timely, given the added importance that both corporations and governments are attaching to GRC principles.

“Business environments are changing globally on the back of new requirements from investors, with tighter regulations and greater transparency,” Bruzzone said. “Our research with Ascoma will plot the GRC trends that are gaining momentum regionally, while also highlighting the positive impact they could have on West and Central Africa’s potential as an investment destination.”

“Governance Risk and Compliance in West and Central Africa” will form part of a series of tailored reports which OBG is currently producing with its partners, alongside other highly relevant, go-to research tools, including a range of country-specific Growth and Recovery Outlook articles and interviews.

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How to Save, Invest and Earn in US Dollar in Nigeria

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The continuous plunge in Naira value against global counterparts has made saving in US Dollar, US Dollar investments and earning in United States Dollar attractive to Nigerians and citizens of other import-dependent emerging economies.

In the last 18 months, Naira was devalued four times from N306/US$1 to the current Central Bank of Nigeria’s exchange rate of N410/US$1. However, Nigerian economic structure coupled with limited foreign revenue generation has created chronic dollar scarcity that made access to US Dollar at N410 impossible for most Nigerians and businesses that operate in the country.

This means, most Nigerians are forced to patronise the parallel market, popularly known as the black market, to exchange their hard-earned Naira or foreign currencies at much higher rates. A situation that has eroded the profitability of businesses, escalated the inflation rate, dragged on new job creation and weighed on consumer spending.

Currency experts have said Naira’s true exchange rate to American Dollar is at over N550 and it is inevitable given the mono-product nature of Africa’s largest economy. It means Naira will decline further, and subsequently, affect your future return on investments and business decisions.

Therefore, Investors King has put together how to navigate Naira uncertainties by saving, investing and earning in US Dollars while living in Nigeria.

How to Save Money in US Dollar in Nigeria

There are several ways Nigerians can save money in US Dollar, one of such ways, is to open a US Dollar (note that you can also open A Euro, Pounds Sterling) domiciliary bank account in any Deposit Money Bank in the country, exchange your Naira to US Dollar at the black market and save the exchanged US Dollar in your Domiciliary Bank Account.

While this is a conventional method, it is stressful and exposes one to all kinds of risk given that the black market is not regulated and usually conducted in the open.

However, the advent of Financial Technology (fintech) companies have helped ease the process and one can now save in US Dollar without visiting the black market or leaving the comfort of his/her home.

Companies like Trove Technologies Limited, Chaka Technologies Limited, Rise and Bamboo allow Nigerians to deposit in US Dollars from their Naira bank account.

Read about Securities and Exchange Commission regulatory issues with investment platforms.

Each of the platform quote Naira-US Dollar exchange rate for buying (exchanging Naira to US Dollar) and selling (exchanging US dollar to Naira) daily. With this, a potential depositor can determine the forex rate he/she wants to deposit.

Here is how to sign up on any of the platforms

Download their mobile application and click on signup. Complete the signup form and send in your identification for verification. Once approved, click dollar deposit and you will be redirected to the Naira-US dollar exchange rate and ask to transfer Naira from your Nigerian bank account to a designated bank account. The quoted rate will be used to credit your account in US dollars. The process is the same if you are withdrawing.

Now here is the logic, you can leave your money in US Dollar and wait until Naira decline further against US Dollar to profit from forex differential or start investing in US Dollar on the platform you deposit your US Dollar. To start investing and earn in US Dollar keep reading.

How to Invest in US Dollar in Nigeria

Each of these platforms has a partnership with a US-regulated stockbroker that allows them to offer foreign stocks to Nigerians. They also offer Nigerian stocks, meaning potential investors can trade global and local stocks on their phones with ease.

Therefore, you can learn to trade foreign stocks with as little as $20 dollars while saving simultaneously to give yourself an opportunity to profit from both your investment and Naira decline. The good thing about these platforms is that you can do all these with your smartphone. To learn how to trade foreign stocks, contact us.

Few other platforms, Cowrywise, Afrinvest, Stanbic IBTC, offer US Dollar investment opportunities.

Cowrywise – Dollar Mutual Fund investment

Investors can now invest in Cowrywise Dollar mutual funds called the United Capital Nigerian Eurobond Fund. “You’re probably wondering why it’s called a Eurobond fund when it’s a dollar-based investment option. We’re here to break it down for you,” Cowrywise stated.

Eurobond funds are a type of bond. This type of bond is issued in the host countries currency. A great example is that the Nigerian government can issue a bond that is denominated in dollars to allow foreign investors to have access to them too.

Now you’re probably wondering what a bond is. A bond is an agreement between two different parties. Another great example is that it’s like having a friend borrow from you and payback with a set interest rate. This means a government bond is simply the government borrowing money from the public with the agreement to pay back with a certain interest rate.

How to set up a Nigerian Eurobond investment plan

  1. Download the latest version of the Cowrywise app on the Playstore or Appstore.
  2. Signup and create a free account. You can log in after this.
  3. Tap “Actions”, followed by “Invest in Mutual Funds”.
  4. Select “Nigerian Eurobond Fund” to invest in.

Afrinvest Dollar Fund

The Afrinvest Dollar Fund is an open-ended mutual fund that Afrinvest invests in Dollar-denominated Securities registered in Nigeria.

The objective of the Fund is to achieve income generation and capital appreciation in the short to medium term for investors with dollars and designed to deliver significantly higher returns than what is obtainable from the average domiciliary account in the local banks. There is free entry and exit for investors subject to the prevailing Fund price.

  • Capital appreciation
  • Competitive returns
  • Diversified portfolio; and
  • Regular and steady income stream.

The issue price is $100 per unit but there is a minimum initial subscription of 10 units or US$1000. The minimum holding period is 180 days. This means your investment needs to stay untouched within this period.

The projected return is 6 to 7.5% per annum.

To subscribe, click any of the links below to get the subscription form. Email the completed form to aaml@afrinvest.com

Stanbic IBTC Dollar Fund

Stanbic IBTC Dollar Fund is similar to Afrinvest Dollar Fund.

Stanbic IBTC provides currency diversification, income generation, and stable growth in USD. The leading financial institution seeks to achieve this by investing a minimum of 70 percent of investors’ funds in high-quality Eurobonds, a maximum of 25 percent in short-term USD deposits, and a maximum of 10 percenr in USD equities approved and registered by the Securities and Exchange Commission of Nigeria.

Here is Highlight of Stanbic IBTC Dollar Fund

  • Stanbic IBTC Dollar Fund (SIDF) was launched in January 2017
  • The Fund invests a minimum of 70% of its portfolio in high quality Eurobonds, , maximum of 25% in short term USD deposits and a maximum of 10% in USD equities
  • 180 days minimum holding period
  • The penalty for redeeming within the minimum holding period is 20% on the accrued income
  • The minimum investment amount is $1,000 while additional investment is $500
  • It is an open ended Fund
  • The risk profile is “Moderately Conservative”
  • The expense ratio is 3.5%
  • The management fee is 1.5%

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IEA Pushes for $1T Investment In Clean Energy By 2030, To Achieve Net-Zero Emission By 2050

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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.

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