By Adedapo Adesanya
The World Bank has said Somalia’s economy is rebounding from the “triple shock”; the COVID-19 pandemic, extreme flooding, and the locust infestation, that ravaged the country in 2020.
The Bretton Wood institution noted that the country, located in the Horn of Africa, is expected to record a Gross Domestic Product (GDP) growth of 2.4 per cent in 2021.
This growth momentum is expected to continue in the medium term and reach pre-COVID-19 levels of 3.2 per cent in 2023.
This was contained in the latest World Bank Somalia Economic Update reports, which point out that the economy contracted by 0.4 per cent in 2020, less severe than the 1.5 per cent contraction projected at the onset of the global pandemic.
The World Bank pointed out that higher-than-anticipated aid flows, fiscal policy measures put in place by the Somali government to aid businesses, social protection measures to cushion vulnerable households, and higher-than-expected remittance inflows mitigated the adverse effects of the triple shock.
The report notes that the disruptions stemming from COVID-19 containment measures reduced federal and state revenue collection while increasing pressure to spend more on health and disaster relief.
Large increases in external grants enabled the federal government to begin rebalancing public spending toward economic and social services and to provide funds for new social programs and emergency response projects to increase resilience.
Speaking on this, Ms Kristina Svensson, World Bank Country Manager for Somalia noted, “As Somalia embarks on the road to recovery from the triple shocks, policy interventions that raise productivity, create jobs and expand pro-poor programs will be key.
“Creating jobs and ensuring that the most vulnerable are supported throughout the crisis need to be at the centre of policy action and private sector response.”
Interventions to improve the investment climate and encourage the formalization of businesses to attract more private investment would include reforms focused on reducing the cost of electricity and improving its reliability, levelling the playing field among private firms, reducing red tape, and broadening financial inclusion.
The special focus of the report is on the health sector which highlighted that 30 years of political instability has made Somalia’s health system the second most fragile in the world.
The COVID-19 pandemic has brought the sector under sharp focus and put investing in Somalia’s health system as an urgent political and economic consideration that is foundational to reducing fragility.
This was emphasised by Mr John Randa, World Bank Senior Economist, who said, “Support for the health sector is an essential component of resilient and inclusive development and investing in health sets Somalia on a path to reaping substantial demographic dividends from improvements in life expectancy and reductions in fertility.
“These investments are planned to contribute to improved health outcomes and strengthened government systems.”
The report also notes that strengthening Somalia’s health system is one of the biggest direct influences on improving human development and enhancing economic development in the country.
OPEC to Launch 2021 Annual Statistical Bulletin on September 30
By Adedapo Adesanya
The Organisation of the Petroleum Exporting Countries (OPEC) will launch the 2021 edition of its Annual Statistical Bulletin (ASB) on Thursday, September 30 2021.
The bulletin will be unveiled at 14:00 (CEST) – 1 p.m. Nigerian time via videoconference.
OPEC Secretary-General, Mr Mohammad Sanusi Barkindo, will present the publication’s major highlights, as well as the new additions and improvements integrated into this year’s version of the ASB.
The event will also feature a round table session with the Secretariat’s key analysts and researchers involved in the ASB, in addition to showing a highlight video.
First published in 1965, the ASB, which is one of OPEC’s flagship publications, continues to provide a wide range of data on the global energy industry, as well as key economic indicators, serving as an important source of reliable data for policy-makers, analysts and researchers, academics and other industry stakeholders.
It features data focused on production, supply and demand, imports and exports, and exploration and transportation activities, including important statistics covering OPEC’s 13 member countries – Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, Algeria, Angola, Congo, Equatorial Guinea, Gabon, Libya, Nigeria and the United Arab Emirates.
The Secretary-General stated: “I am very pleased to announce the launch event of the 56th edition of OPEC’s Annual Statistical Bulletin, which has become a key reference source for stakeholders across the industry.
“For over 61 years, OPEC has placed a high priority on providing accurate, timely and transparent data, and the ASB has been a key tool in helping us achieve this.”
“Despite the various restrictions and challenges brought on by the COVID-19 pandemic, the OPEC Secretariat team has prevailed in producing a publication that will be extremely effective in meeting the industry’s growing need for reliable information,” he added.
This year’s ASB will be available as an interactive version and a PDF on the OPEC website, as well as through a smart app compatible with iOS and Android platforms. Further details in this regard will be available following the launch.
Business Leaders, Investors Gear up for Nordic-African Business Summit
By Aduragbemi Omiyale
All is not set for the 10th Nordic-African Business Summit taking place in four cities; Harare, Lagos, Nairobi and Oslo at the same time, on Thursday, September 30, 2021.
Over 300 business leaders and investors are expected to grace the occasion organised to discuss opportunities and collaboration in the new business landscape.
The Nordic-African Business Summit 2021 is a live experience where the four cities are connected through live plenary and parallel sessions.
This year’s Summit will also feature a new edition of the Africa Finance Corporation (AFC) Great Debate, this year discussing the continent’s energy transition and climate.
Since the first summit in 2011, more than 300 speakers, and more than 3,000 delegates have made the conference the place to meet for African and Nordic businesspeople.
In Harare, an investment firm and NABA-member Spear Capital, as well as Sweden’s ambassador to Zimbabwe, will co-host the regional Summit edition.
By inviting companies to gather in Lagos, Nairobi, Harare and Oslo, the organisers want this year’s event to continue to connect business people across borders when discussing Reimagining business in Africa.
“How has the pandemic changed the business landscape? We know that some economies have been more affected than others, but also noticed that some sectors have been strengthened.
“What are the new opportunities arising, and how can we continue connecting and strengthening Nordic and African business communities?” asks Eivind Fjeldstad, the CEO of the Norwegian-African Business Association (NABA).
“We think businesspeople are tired of screen time and would prefer to meet – and that is why we want to convene in Lagos, Nairobi, Harare and Oslo at the same time on the 30th of September,” Fjeldstad further said.
“With 2021 marking the 10th event of the Nordic-African Business Summit, the theme of the event is Reimaging Business in Africa, because that is exactly what we have tried to achieve for the last 10 years.
“Nordic investors and companies in particular need to update their knowledge on investment opportunities in Africa – and the Summit creates the platform to do so,” the CEO added.
The Nordic-African Business Summit is the Nordic region’s leading business conference focusing exclusively on African markets. The programme is co-hosted by NABA and the Norwegian Ministry of Foreign Affairs.
With a focus on promoting business opportunities on the African continent, NABA seeks to increase knowledge about emerging markets on the African continent among business people in the Norwegian private sector, as well as among policymakers in the region.
Why Africa Might Define the Future of the Crypto Market
While many prominent experts call the African continent one of the most promising for the future of the cryptomarket, the numbers so far are not convincing. But what makes it so interesting and how do people in Africa actually use cryptocurrencies in 2021?
What makes Africa such a promising market
The report “The Stare of Crypto Africa” calls the region “one of, if not the most promising region for the adoption of cryptocurrencies”. Jack Dorsey, the CEO of Twitter and Square, tweets that “Africa will define the future” of the whole crypto industry.
At the same time, Africa is still the smallest economy by the total value of transactions in the world: with over 1.2 billion population it accounts only for 2% of the global value transacted in cryptocurrencies. So how does being the smallest economy in transactional volume in crypto blend with being one of the most promising regions?
The first answers can be derived from a recent Chainalysis report that states that only in one year, from July 2020 to June 2021, the African crypto-economy had grown over 1200%. Moreover, some countries in the region like Kenya or Nigeria are among the top 20 of the Global Adoption Index.
As researchers from Arcane put it, the African market’s success сan be attributed to “the unique combination of economic and demographic trends”. One of the drivers of its uniqueness is the fact that, according to different estimates, 57% to 66% of the population has no such thing as a simple bank account.
The situation forces people to look for alternatives and that is why such countries as Kenya and Nigeria are among the countries with the highest adoption rate of cryptocurrencies. In the end, due to the lack of the infrastructure affordable for the majority of citizens, people adapted and now they “have no problems with mastering new technologies”, as Sergey Ordin, marketing director of the international crypto community Roy Club with representative offices in Africa, puts it.
He also shared that “remarkably high interest towards innovative financial opportunities with low entry levels” shows in the Roy Club members statistics: however the offices in Africa opened their doors in 2021, the number of its participants is already 15% of all members at a global level (approximately 100 000 out of 700 000)
Use cases: From cutting transactional costs to financial independents
With most of the population unbanked and the fact that cross-border payments in Africa cost on average more than at any other main continent (per the World Bank, up to 8.9% per transaction while the global average is 6.8), there is no surprise that remittance payments became the most popular use case for cryptocurrencies.
Remittance payments volume has been steadily growing for the last couple of years. Per Chainalysis, it has grown 10 times from April 2019 to April 2021, for example. Also, with time, not only individuals but businesses started to use cryptocurrencies for doing international business in some areas. Artur Schaback, the confounder of the popular in Africa P2P exchange Paxful illustrated this point with an example:
“If you’re working with a partner in China to import goods to sell in Nigeria or Kenya, it can be hard to send enough fiat currency to China to complete your purchases. It’s often easier to just buy Bitcoin locally on a P2P exchange and then send it to your partner”
The situation drastically changed in the middle of 2020 when stay-home policies and other restrictions became a catalyst for exploring other use cases for cryptocurrencies. There is no surprise that when the pandemic worsened the situation with national currencies that had high devaluation rates even before 2020 people started to preserve their savings by using bitcoin and other cryptocurrencies. For example, in Nigeria, Chainalysis shows the correlation between the peaks of the devaluation of Naira, the local currency, and trading volumes on P2P platforms with this currency.
Also, 2020 inevitably worsened the situation with employment. Young people who are in general more well-versed in new technologies in a moment with growing unemployment and uncertainty opted to use cryptocurrencies as a source of income. Buchi Okoro, the CEO of the African crypto exchange Quidax, shared that a high proportion of the users of the exchange use cryptocurrencies “to earn a living”. And indeed, those who invested in bitcoin, for example, in March 2020 at a price of $6500 definitely succeeded making 900% profits by March 2021 when the bitcoin price was already $60000.
Now, when the bitcoin price growth is slowing down, another way to earn a living becomes more and more popular in Africa – staking. Staking is in many ways similar to mining since it involves users in performing such network functions as block validation with two main exceptions: it does not require expensive equipment and there is no need to acquire special skills. Staking is the mechanism of getting profit from owning cryptocurrencies that work on the Proof-of-Work algorithms and putting them on hold for some time.
Since P2P platforms are also very popular in Africa, the idea of sharing with the community is no stranger there. That is probably why staking pools became so popular. They work in the following way: members of the community pool their resources together to increase their chances for a good profit. For example, at Roy Club, according to Ordin, staking pools bring their members from 5% (for pools with 50,000 UMI) to 40% (for pools with over 1 billion UMI) monthly.
Moreover, the people’s readiness to adopt new technologies is coupled with their readiness to learn. Sergey Odin specifically highlighted the significant local interest in educational products like Roy School and Roy Academy that offer courses for both novices and advanced users free of charge.
To conclude, while the transactional volume is still tiny compared with other economies, the African continent has all chances to define the future of the crypto market with current growth rates and the readiness of its population to learn and adopt new technologies. While people immediately noticed that cryptocurrencies are useful for cutting costs of remittance payments, with time they also started to see a chance for financial independence and additional income in more complex products, like staking.
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