Jul 25, 2017

Like many other men and women in Mozambique’s capital, Maputo, Agostinho feels optimistic about the future. After years of living in extreme poverty, he now has his own business and lives with his family in Zimpeto, a growing neighbourhood in the northern outer end of Maputo.

One of the things that has made the biggest difference to him and his family’s life has been improvements in the energy system. In Zimpeto his household is linked to the electricity grid. Agostinho buys electricity through a prepaid system called Credelec. Thanks to Credelec Agostinho has greater control over his electricity spending but prices have gone up and he’s now paying more. Using electricity for cooking is too expensive.

Thus, the game changer in Agostinho’s life has been the arrival of gas. Until last year, the family relied entirely on charcoal for all their cooking needs, a common occurrence in Maputo’s low income neighbourhoods. Last year he invested in a new gas cookstove and a gas cylinder. The convenience soon became apparent. The gas stove cooks faster, is cleaner and can be used inside the house. While the cookstove and gas cylinder cost a fair amount, this represents a significant advancement.

The benefits of gas improved further when in June this year the price halved. An 11kg bottle that used to cost US$13 (773 MZN) now costs US$7 (446 MZN), making it cheaper than charcoal. In a country where firewood and charcoal account for 77% of the total energy balance, the transition to gas can make an enormous difference to the lives of the poorest people.

The drop in prices came just after Mozambique’s Minister of Mineral Resources and Energy, Leticia Klemens, and the Vice-President of Shell, Clare Harris, signed a memorandum of understanding for the domestic exploitation of Mozambique’s gas reserves in the Rovuma Basin. This is one of the largest reserves of natural gas in southern Africa. The announcement of the agreement alone has been sufficient for the government to drop consumer prices.

The agreement follows a public tender to exploit gas reserves for domestic purposes. The government also awarded two other projects. In the past, Mozambique’s energy policy focused on generating revenue through exporting natural resources, such as hydropower and coal, at the expense of developing internal markets. If maintained, these projects will mark a significant departure from previous energy policies.

The one dark cloud hanging over this development is the country’s debt crisis. Many expect that gas revenues will help palliate the consequences of this odious debt, but gas is still not flowing. After last year’s scandal, the government is anxious to show that it’s able to mobilise the country’s natural gas reserves to benefit ordinary Mozambicans.

Difficult transition

The drop in gas prices was a key theme at a workshop with local leaders of some of the poorest neighbourhoods in Maputo.

“People are transitioning to gas”, explained one participant. This transition is clearly visible in Maputo. The charcoal-based urban landscape is disappearing. Gone are the days when there was a charcoal-selling point in every corner, although the charcoal depots remain strong in large markets. As deforestation advances, charcoal is produced farther and farther away, with most coming from the relatively unstable province of Gaza. Charcoal is now so expensive that gas has become a more affordable option for many people.

Yet, for now, charcoal continues to be the fuel of choice for most households in Maputo. The transition to gas is, as yet, incomplete.

In their discussions, local leaders explained that gas is the new norm in cooking practices but most households have not yet adopted it. A heated discussion emerged about why people continue to use charcoal. Is it because gas cookstoves are too expensive? Is it because people prefer to cook with charcoal through habit? Or are they used to the taste of the meat cooked with charcoal? Perhaps people are unaware of the possibilities of gas and how to use it? Or maybe many families perceive gas to be unsafe?

One neighbourhood leader said:

We are just like this, it is difficult to change us!

He said this to justify the need for civic education. Yet, it’s not people who have to change. Rather, a range of institutional, infrastructural and socio-economic factors determine the possibilities for sustainable transitions to universal energy access. For example, in some neighbourhoods, accessing gas supplies is difficult whereas charcoal sellers will bring charcoal right to the door of households in portions small enough to be affordable on a day-to-day basis. Moreover, households may not provide a safe setting to install a gas cookstove, even when the family can afford it.

The transition to gas is not inevitable. As one of the community leaders in the workshop stated, “accessing energy is a process”. Gas may contribute to improve the lives of Maputo’s inhabitants. However, this depends on a gradual process of adjustment of local practices of energy use, changes in the built environment to fit gas technologies and the development of local energy markets to facilitate access to gas supplies.

*Names are pseudonyms

Vanesa Castán Broto, Senior Lecturer Environment and Sustainable Development, UCL; Domingos Augusto Macucule, Senior Lecturer in Urban Planning and Sustainability, and Shaun Smith, Post-doctoral researcher in energy, UCL

This article was originally published on The Conversation. Read the original article.

Jul 25, 2017

Anti-terrorism and transactional relationships are likely be the main features of US President Donald Trump’s Africa policy. But if Trump’s proposed cuts to the state department hold, the US will be less and less of a presence on the continent, according to Prof Gregory F Treverton, who directed the US National Intelligence Council in the Obama Administration.

Treverton, who is currently Professor of Practice at the University of Southern California, is a world authority on security and intelligence. I put a number of questions to Treverton who visited South Africa recently to deliver the keynote address at a South African Council on International Relations conference on South Africa’s relations with Africa.


Why is Donald Trump’s foreign policy so incomprehensible?

I wish I knew! It’s a continual struggle between, on the one hand, the true believers, the American firsters who are anti-trade and anti-engagement in what they see as an unfriendly world, and on the other more traditional conservative Republicans.

The pattern has been that the more traditional conservative Republicans, like the Secretaries of State and Defence, tug policy in a more familiar direction, only to have the president blow the process up with a tweet condemning the Paris climate agreement or labelling Germany an unfair trader. The intensity of the struggle is reflected in the continuing haemorrhage of leaks, all from the very top of the administration.

Didn’t the post-Second World War liberal international order need a shake up?

Yes, and perhaps in that sense we’ll end up thanking Trump, if, and this is a big if, we get through the next years without a major crisis or too much broken crockery. Some of Trump’s complaints, like (America’s Western) allies bearing too little of the burden, have been true for a long time. And the reaction by Americans to the sense that they pay too much for the “public goods” of international economics and security has been going on for a long time.

Polls routinely show that Americans think the country spends on foreign aid 20 or 30 times what it actually does. So, too, the questioning of what we all too easily call the “liberal international order” has been growing over time.

You suggested that Russia under Vladimir Putin, is a declining power. Doesn’t the evidence point in the other direction?

It surely is a declining power, though Putin has played a weak hand extraordinarily well. It is in demographic decline, and far from modernising the Russian economy, Putin has only deepened its dependence on hydrocarbons. My fear is that as the country declines, it will be all the more tempted to turn to what tools it retains – cyber attacks and nuclear sabre-rattling.

How do you think Trump’s Africa policy will turn out?

In testifying before Congress, Secretary of State Rex Tillerson probably was as clear as the administration could be given its disarray. Africa was in the “turning to other countries” category, and he began with the fight against terrorism. He did, though, mention the economic opportunities in Africa, mostly in the sense of business that might be done. I suspect those will continue to be the emphasis.

So does this mean that anti-terrorism and transactional relationships will be the main features of Trump’s Africa policy?

I think they will continue to be the main drivers, for better or worse, though not the only drivers. The country will have to respond to major humanitarian crises whether the administration wants to or not. And some of the legacy programmes of the last two administrations, like the African Growth and Opportunity Act, or the President’s Emergency Plan for AIDS Relief have had bipartisan support, so we’ll see how they fare in the congressional budget process.

And, if this is so, what are the long-term implications of this for US relations with the continent?

If Trump’s proposed cuts to the State Department and USAID hold, the US will be less and less of a presence on the continent. The main beneficiary, diplomatically, will be China, followed by the Europeans and perhaps even Russia, though it doesn’t have much to contribute except arms sales.

If there is any silver lining, perhaps it will be that Africans, and particularly South Africans, will realise they have to take more initiative on their own.

When it comes to the US itself, you raised the possibility that it might break up? Where you speaking in abstract terms, or is this a real possibility?

I meant it mostly as a metaphor and as a touchstone for thinking about the future. I don’t think it’s likely, but it does have to be considered.

What is certain is that the next few years will be a kind of a guerrilla war, one mostly fought in the courts, between the US federal government and the “blue” (read Democratic Party-controlled) states, led by California, over climate change, immigration and other issues.

What does the Trump presidency mean for these ideas?

So far it seems bound to increase the divide in America. Trump has talked and acted entirely to please his base. He has played on fear, fanning it by portraying the country in dire straits surrounded by a hostile world. So far that base – especially older and often poorer white Americans – seems to have been satisfied by word, words they see as validating them.

But we’ve known from the beginning that Trump can’t deliver on his promises: those “good” low-skilled jobs in manufacturing or mining (as he has portrayed them) aren’t coming back. So we’ll see, but I expect that realisation to only deepen the anger and disaffection.

 

The co-hosts of the conference Treverton addressed were the Johannesburg Institute for Advanced Study (JIAS) and the Wits School of Public Management.

Peter Vale, Professor of Humanities and the Director of the Johannesburg Institute for Advanced Study (JIAS), University of Johannesburg

This article was originally published on The Conversation. Read the original article.

Jul 24, 2017

South Africa's rand extended gains against an ailing dollar on Monday, as U.S. political ructions pushed the greenback close to a 13-month low against a basket of major currencies.

At 0700 GMT, the rand was fetching 12.9150/dollar, 0.15 percent firmer.

In fixed income the benchmark yield was unchanged at 8.515 percent.

Stocks opened firmer with the top-40 index up 0.58 percent.

Reporting by Ed Stoddard; editing by John Stonestreet - Reuters

Jul 24, 2017

South Africa needs bold structural reforms to boost the ailing economy as there is limited room for monetary and fiscal stimulus, the Organisation for Economic Cooperation and Development (OECD) Economic Survey showed on Monday.

Africa's most industrialised economy entered recession in March. The country is also struggling with a high unemployment rate and credit downgrades by two of the top three ratings agencies, based on the economic and political turmoil, have dented business and consumer confidence in South Africa.

"Reviving economic growth is crucial to increase well-being, job creation and inclusivity. As there is limited room for monetary and fiscal stimulus, bold structural reforms, supported by social partners, are needed to unlock the economy," the Paris-based OECD said.

The government has developed a 14-point economic strategy to stimulate growth, released by Finance Minister Malusi Gigaba on July 13, but the plan has received a lukewarm reception from investors.

Critics say the plan, which included the possible sale of assets and partial privatisation of state-owned firms, was not enough to restore business confidence and stimulating private sector investment. Ratings agencies have also warned of further credit ratings downgrades.

The South African Reserve Bank last week halved its 2017 growth forecast to 0.5 percent and cut the benchmark lending rate for the first time in five years to help the ailing economy.

Reporting by Olivia Kumwenda-Mtambo; Editing by James Macharia - Reuters

Jul 20, 2017


World Bank Group commitments to help developing countries take on poverty and boost opportunity reached nearly $59 billion in loans, grants, equity investments and guarantees in fiscal year 2017 (July 1, 2016 and June 30, 2017).

"With aspirations of the poor on the rise, and overlapping crises such as forced displacement, famine, and climate change adding urgency to our mission, our staff this year worked to provide marked increases in financing from IDA, IFC, and MIGA," World Bank Group President Jim Yong Kim said. "While this year we have had to actively manage IBRD lending, the Board and management are discussing approaches to ensure adequate capacity across the World Bank Group to best help countries achieve their development goals. As always, we are committed to working with our member countries and other partners to crowd in private investment and maximize resources for the poor."

Commitments from the International Bank for Reconstruction and Development (IBRD) ”which provides development knowledge to countries, combined with financing and risk management products” were at $22.6 billion in FY17. This reflects the Bank's careful attention to ensuring continued strong capital adequacy ratios and prudent financial management into the future while responding to client countries most pressing development challenges

Commitments from the International Development Association (IDA), which provides zero or low-interest loans and grants to the world's 77 poorest countries, hit $19.5 billion in FY17. IDA's increased commitments reflect strong demand for financing, as well as IDA's efforts to better leverage resources and expand financing options for borrowing countries. FY17 continued to reflect very high demand for IDA financing from clients, fully committing the three-year resource envelope of IDA17.

 These efforts include an additional $3.9 billion allocated for non-concessional lending to finance transformational projects in qualified IDA countries. Increased financing has also allowed IDA to respond rapidly to global crises, including a special allocation to Jordan and Lebanon to respond to the refugee crisis and funding from IDA's Crisis Response Window to provide immediate relief and strengthen resilience in countries affected by famine.

The International Finance Corporation (IFC), the largest global development institution focused exclusively on the private sector, leveraged its capital, expertise, and influence to create markets and opportunities wherever they were needed most.

Preliminary and unaudited data as of June 30 indicated that IFC’s long-term investments totaled approximately $18.7 billion, including funds mobilized from other investors. In FY17, IFC made nearly $11.9 billion in long-term investments from its own account and mobilized about $6.8 billion from other investors. These often-complex investments supported 342 long-term finance projects in developing countries around the world.

IFC maintained its strategic focus on the poorest countries and regions. It provided more than $4.6 billion in long-term financing to accelerate development in IDA countries, including funds mobilized from other investors. These countries accounted for nearly 25 percent of IFC's total investments. Investments in businesses in fragile and conflict-affected areas totaled $858 million, including funds mobilized from other investors. This is in line with the Bank Group's broader strategy to channel resources to hard-hit countries.

As the Bank Group continued to look for new ways to ramp up infrastructure investment, in October 2016, IFC introduced MCPP Infrastructure, a pioneering initiative to mobilize up to $5 billion from insurance companies and other institutional investors for investment in infrastructure projects in emerging markets. The effort builds on the success of IFC's $3 billion Managed Co-Lending Portfolio Program, a loan-syndications initiative that enabled third-party investors to participate passively in IFC's senior loan portfolio.

The Multilateral Investment Guarantee Agency (MIGA), the political risk insurance and credit enhancement arm of the World Bank Group, issued a record $4.8 billion in guarantees in FY17 in support of 33 projects, helping draw in $15.9 billion in foreign private capital to developing countries. Some 45 percent of the projects were in IDA countries, while 21 percent were in fragile and conflict-affected states, including Burundi and Myanmar. The projects will collectively help avoid an estimated 1.1 million tons of CO2e in greenhouse gas emissions, increase delivery or improve quality of electricity for 8.5 million people, and deliver health care to 8.7 million patients annually. MIGA’s total gross outstanding exposure at the end of FY17 was a record high $17.8 billion in support of 144 projects across the world, representing an increase by 25 percent from FY16.

Commitments to sub-Saharan African countries ”a key priority for the Bank Group” rose to $15.27 billion in FY17 from $12.5 billion in FY16. FY17 commitments to Africa included $10.7 billion from IDA and $1.2 billion from IBRD; $2.33 billion from IFC (own account); and $1.04 billion in MIGA guarantees for projects in the region. 

IBRD issued $56 billion in bonds in the international capital markets to support sustainable development programs and capital market development in client countries. This included the "Mulan bond” the first bond denominated in Special Drawing Rights to be issued in China's domestic bond markets, supporting the internationalization of the renminbi. IBRD also issued bonds to specifically highlight the role of the private sector in achieving the Sustainable Development Goals. The bonds link their returns to an equity index of companies that support the SDGs in their operations.

With the launch of the first World Bank (IBRD) pandemic bonds in June 2017, the world's poorest countries will receive insurance against pandemic risk under the Pandemic Emergency Financing Facility. The PEF, a partnership developed by the World Bank with support from donors, will provide more than $500 million to cover developing countries against the risk of pandemic outbreaks over the next five years, through a combination of insurance and cash windows.

Source: thebftonline.com/Ghana    

Jul 19, 2017

Gold prices held steady on Wednesday, not far from the over two-week highs hit in the previous session, as the dollar crept up from multi-month lows even as fading prospects of a U.S. monetary tightening continued to pressure the greenback.

The dollar stayed on the defensive and remained near over 10-month lows as investors wagered any further tightening in the United States would be slow at best, while optimism on China's economy underpinned Asian shares and commodities.

"We still remain somewhat neutral on gold this year despite a rather good run of late," said Edward Meir, analyst at INTL FCStone. "Still, we are not overly bearish on the precious metal at the stage either, as the backdrop of a falling dollar is too difficult to ignore."

Also weighing on the dollar was the collapse of Republican efforts to overhaul or repeal Obamacare in the U.S. Senate on Tuesday, dealing a sharp setback to Trump and the Republican Party's seven-year quest to kill former President Barack Obama's signature healthcare law.

"The recent strength (in gold prices) is due to currency dynamics more than anything else," said Mark Keenan, commodity strategist at Societe Generale.

"We continue to forecast lower prices moving forward," Keenan said.

Spot gold was nearly flat at $1,241.46 per ounce at 0408 GMT. In the previous session, it hit its highest since June 30 at $1,244.56. U.S. gold futures for August delivery fell 0.1 percent to $1,240.90 per ounce.

Spot gold may rise more to $1,250 per ounce, as it has cleared a resistance at $1,239, according to Reuters technical analyst Wang Tao.

"We think the market may have done too much, too quickly for the time being and may be in store for a breather," Meir said.

Meanwhile, holdings at the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.68 percent to 821.45 tonnes on Tuesday from 827.07 tonnes on Monday.

In other precious metals, silver rose 0.1 percent to $16.26 per ounce, after touching its highest in about two weeks in the previous session.

Platinum fell 0.2 percent, to $920.50 per ounce. On Monday, it had touched its highest since mid June.

Palladium fell 0.3 percent to $861.25 per ounce.

Reporting by Nithin Prasad and Arpan Varghese in Bengaluru; Editing by Joseph Radford and Gopakumar Warrier  (Reuters)

Jul 18, 2017

Madagascar has appointed Vonintsalama Andriambololona as the new minister of finance and budget, a statement from the presidency said on Tuesday, a day after the previous minister resigned, citing a lack of support.

Andriambololona is the former general secretary of the ministry of finance and a member of the board of the Central Bank of Madagascar.

Reporting by Lova Rabary; Writing by Katharine Houreld; Editing by Louise Ireland   (Reuters)

Jul 18, 2017

South Africa's Reserve Bank is expected to leave interest rates unchanged at its July 20 meeting, according to a Reuters poll released on Monday, but economists expect a dovish statement as the Bank gets closer to its easing cycle.

Twenty-four of 27 economists said the Reserve Bank will hold rates at 7.00 percent on Thursday. Two predicted a 25-basis- point cut and one expects the repo rate to be cut by half a percent.

Economic growth in South Africa will be weaker this year after the country slipped into recession in the first quarter, and with inflation easing an interest rate cut is expected in the first quarter of next year.

"While our consumer price index view indicates that the SARB has room to ease rates from as early as next week, it will first look to change its inflation rates narrative before pulling the trigger," said Jeffrey Schultz, an economist at BNP Paribas.

Schultz said at least two members of the Monetary Policy Committee could vote in favour of a 25-basis-point cut next Thursday. At its May meeting, only one of the six committee members voted for a cut.

"This should send a signal that September is a `live' meeting," he said.

At 5.4 percent in May, inflation has been slowing after a drought last year and will probably average 5.4 percent this year and 5.3 percent next year.

The rand is expected to end this year around 13.60 per dollar. It is currently at 12.96 with slower rate increases now expected in the United States [ZAR/POLL].

Wall Street's top banks brought forward expectations for when the Federal Reserve will begin reducing its $4.5 trillion bond portfolio to as early as September. They see balance sheet reduction as more of a priority than another rate rise [FED/R].

South Africa's economy is expected to expand 0.7 percent in 2017 and 1.2 percent the following year, after contracting 0.7 percent in the first quarter.

South Africa's finance minister has laid out a 14-point programme on Thursday to lift the economy out of recession. It includes the sale of non-core assets and partial privatisation of state-owned companies.

(For other stories from the global poll:)

Editing by Larry King  Reuters

Jul 17, 2017

Annual inflation in Nigeria stood at 16.10 percent in June, compared to 16.25 percent in May, the National Bureau of Statistics said in a report.

A separate food price index showed inflation at 19.91 percent, up from 19.27 percent in May.

Reporting by Chijioke Ohuocha; Editing by Gareth Jones (Reuters)

Jul 17, 2017

Madagascar's finance minister announced his resignation on Monday following media speculation over differences of opinion between him and the president.

"The conditions enabling me to successfully complete my mission are not fulfilled," Gervais Rakotoarimanana told a news conference, without providing any further explanation for his decision.

"That's why I handed in my resignation as minister of finance and budget to the president of the republic on Friday."

reporting by Lova Rabary; writing by Katharine Houreld; Editing by Gareth Jones -  Reuters

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