Economy

Global Economic Uncertainty Threatens FDI Flows to Africa

Published

9 years ago

10/05/2017

By Modupe Gbadeyanka

The flow of Foreign Direct Investment (FDI) into Africa is being threatened by global economic uncertainty and if nothing is done promptly about this, the continent may continue to suffer economic hardship.

For African governments, part of what is at stake are much needed foreign direct investments and access to affordable financing necessary to spur development and, specifically, to close the estimated $900 billion infrastructure gap.

Equally, the private sector stands to lose billions of Dollars in lost opportunities if the requirements for a favourable investment environment are not adequately addressed.

To address this problem, a roundtable event was held in Nairobi, where Ministers from across Africa sat together with investors and the private sector to determine how best to tackle the investment and credit risk hurdles in order to make African risks bankable.

Participants to the roundtable saw the event as timely because it came at time of geopolitical uncertainties which, according to The World Bank, could lead to “higher borrowing costs or cut off capital flows to emerging and frontier markets”.

The half day forum, the 4th Roundtable to focus on Political and Credit Risks in Africa, took place on the side lines of the African Trade Insurance Agency’s (ATI) Annual General Meetings. The event opened with pointed remarks from H.E. Patrice Talon, President of Benin.

Subsequent discussions focused on possible solutions to the challenges facing governments from the private sector and export credit agencies from panellists such as: Patrick Chinamasa, Minister of Finance & Economic Development, Zimbabwe; Romuald Wadagni, Minister of Economy & Finance, Benin; Felix Mutati, Minister of Finance, Zambia; Chamsou Andjorin, Director Government Affairs & Market Development, Boeing Intl; Helen Mtshali, Syndication Lead – Sub-Saharan Africa, Industrial Finance Solutions, GE; and Nisrin Hala, Senior Director, Global Trade Finance Bus. Development Emerging Markets, SMBC.

Investors are not immune to political and social developments in emerging regions like Africa. In fact, with reduced earnings – the benchmark emerging-market stock index has lost approximately 4 percent annually since 2010 from a high of 22 percent annual return in the preceding decade – investors are now focusing on more than the bottom line in these markets. During the boom years of the last two decades, Africa was experiencing unprecedented GDP growth rates but depressed commodity prices have seen growth in the sub-Saharan Africa region slow to 1.5 percent rate in 2016. According to World Bank estimates, oil exporters account for most of the slowdown owing to their two-thirds contribution to regional output.

In a Bloomberg article published in March 2016, emerging market investors from some of the most prominent companies noted the dramatic change in their investing tactics due to global fragility, which they see as unveiling institutional weakness, corruption, poor governance and efficiencies. In this current climate, investors are now keenly tracking social indicators such as corruption rankings, gender parity and the extent that rule of law is respected within emerging markets.

“Africa is in a period of realignment in this new global order but I don’t think anyone should bet against its resilience. We are still home to some of the fastest growing economies in the world – as of 2017, the World Economic Forum ranks Côte d’Ivoire, Tanzania and Senegal on the list of the top ten fastest growing economies in the world,” notes George Otieno, ATI’s CEO.

In this climate, it is more imperative than ever for African governments to focus on economic diversity to maintain growth while addressing risks to investors. As an internationally respected African institution, the African Trade Insurance Agency (ATI) offers the ideal solution precisely because the company has strong relationships with governments and because its risk assessments and mitigation solutions are seen as credible by global financiers and investors. With ATI involved in a transaction, governments are able to provide security to investors and suppliers against a range of investment risks.

In 2016, ATI insured close to $2 billion (KES202.8 billion) worth of trade and investments and the company is increasingly supporting some of the continent’s most important transactions such as Ethiopian Airline’s fleet expansion and a USD660 million investment in Lake Turkana, Africa’s largest wind farm and, to date, the single largest investment in Kenya.

In this environment, ATI’s products are being seen as a valuable tool to enable lenders to take sub-investment grade risk in Africa thus allowing governments and corporates to access more affordable financing. Importantly, in its role as an investment insurer of last resort, ATI is also providing the necessary comfort to support continued investments into the continent amidst a period of uncertainty.

Economy

NBA Demands Suspension of Controversial Tax Laws

Published

12 hours ago

24/12/2025

Modupe Gbadeyanka

By Modupe Gbadeyanka

The federal government has been asked by the Nigerian Bar Association (NBA) to suspend the implementation of the controversial tax laws.

In a reaction to the tax reform acts, the president of the group, Mr Afam Osigwe (SAN), the suspension of the laws would allow for a proper investigation into allegations of alterations in the gazetted and harmonised copies.

A member of the House of Representatives, Mr Abdussamad Dasuki, alleged that some parts of the laws passed by the parliament were different from the gazetted copy.

To address the issues raised, the NBA said it is “imperative that a comprehensive, open, and transparent investigation be conducted to clarify the circumstances surrounding the enactment of the laws and to restore public confidence in the legislative process.”

“Until these issues are fully examined and resolved, all plans for the implementation of the Tax Reform Acts should be immediately suspended,” the association declared.

It noted that the controversies “raise grave concerns about the integrity, transparency, and credibility of Nigeria’s legislative process.”

“These developments strike at the very heart of constitutional governance and call into question the procedural sanctity that must attend lawmaking in a democratic society,” it noted.

“Legal and policy uncertainty of this magnitude has far-reaching consequences. It unsettles the business environment, erodes investor confidence, and creates unpredictability for individuals, businesses, and institutions required to comply with the law. Such uncertainty is inimical to economic stability and should have no place in a system governed by the rule of law.

“Nigeria’s constitutional democracy demands that laws, especially those with profound economic and social implications, emerge from processes that are transparent, accountable, and beyond reproach. Anything short of this undermines public trust and weakens the foundation upon which lawful governance rests.

“We therefore call on all relevant authorities to act swiftly and responsibly in addressing this controversy, in the overriding interest of constitutional order, economic stability, and the preservation of the rule of law,” the organisation stated.

Economy

MRS Oil, Two Others Raise NASD Bourse Higher by 0.52%

Published

14 hours ago

24/12/2025

Adedapo Adesanya

By Adedapo Adesanya

Demand for hot stocks, including MRS Oil Plc, buoyed the NASD Over-the-Counter (OTC) Securities Exchange by 0.52 per cent on Tuesday, December 23.

The energy company was one of the three price gainers for the session as it chalked up N19.69 to sell at N216.59 per share versus the previous day’s value of N196.90 per share.

Further, FrieslandCampina Wamco Nigeria Plc gained N2.95 to close at N56.75 per unit versus N53.80 per unit and Golden Capital Plc appreciated by 84 Kobo to N9.29 per share from Monday’s N8.45 per share.

Consequently, the market capitalisation went up by N10.95 billion to N2.125 trillion from N2.125 trillion and the NASD Unlisted Security Index (NSI) rose by 18.31 points to 3,570.37 points from 3,552.06 points.

Yesterday, the NASD bourse recorded a price loser, the Central Securities Clearing System Plc (CSCS), which gave up 17 Kobo to close at N33.70 per unit against the previous trading value of N33.87 per unit.

The volume of securities traded at the session went down by 97.6 per cent to 297,902 units from the previous day’s 12.6 million units, the value of securities decreased by 98.5 per cent to N10.5 million from N713.6 million, and the number of deals remained flat at 32 deals.

By value, Infrastructure Credit Guarantee Company (InfraCredit) Plc ended as the most actively traded stock on a year-to-date basis with 5.8 billion units exchanged for N16.4 billion. This was followed by Okitipupa Plc, which traded 178.9 million units valued at N9.5 billion, and MRS Oil Plc with 36.1 million units worth N4.9 billion.

In terms of volume, also on a year-to-date basis, InfraCredit Plc led the chart with a turnover of 5.8 billion units traded for N16.4 billion. Industrial and General Insurance (IGI) Plc ranked second with 1.2 billion units sold for N420.7 million, while Impresit Bakolori Plc followed with the sale of 536.9 million units valued at N524.9 million.

Economy

NGX All-Share Index Soars to 153,354.13 points

Published

15 hours ago

24/12/2025

Dipo Olowookere

By Dipo Olowookere

It was another bullish trading session for the Nigerian Exchange (NGX) Limited as it closed higher by 0.59 per cent on Tuesday.

The market further rallied due to continued interest in large and mid-cap stocks on the exchange by investors rebalancing their portfolios for the year-end.

Yesterday, Aluminium Extrusion sustained its upward trajectory after it further appreciated by 9.96 per cent to N14.90, as Austin Laz gained 9.81 per cent to close at N2.91, Custodian Investment improved by 9.69 per cent to N38.50, and First Holdco soared by 9.35 per cent to N50.30.

Conversely, Royal Exchange declined by 7.22 per cent to N1.80, Champion Breweries shrank by 6.57 per cent to N15.65, NASCON lost 5.36 per cent to trade at N105.05, Sovereign Trust Insurance depreciated by 5.28 per cent to N3.77, and Japaul went down by 4.51 per cent to N2.33.

At the close of business, 29 shares ended on the gainers’ table and 27 shares finished on the losers’ log, representing a positive market breadth index and bullish investor sentiment.

This raised the All-Share Index (ASI) by 895.06 points to 153,354.13 points from 152,459.07 points and lifted the market capitalisation by N579 billion to N97.772 trillion from the previous day’s N97.193 trillion.

VFD Group finished the day as the busiest stock after it recorded a turnover of 192.0 million units worth N2.1 billion, GTCO exchanged 63.5 million units valued at N5.6 billion, Access Holdings traded 49.8 million units for N1.0 billion, First Holdco sold 45.8 million units valued at N2.3 billion, and Secure Electronic Technology transacted 38.3 million units worth N28.4 million.

In all, market participants bought and sold 677.4 million units valued at N20.8 billion in 27,589 deals compared with the 451.5 million units worth N13.0 billion traded in 33,327 deals on Monday, showing an improvement in the trading volume and value by 50.03 per cent and 60.00 per cent apiece, and a shortfall in the number of deals by 17.22 per cent.