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Somalia Rebounding from Triple Shock—World Bank

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Somalia Triple Shock

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.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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World

Russia Proposes Complete Ban on Cryptocurrencies

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Cryptocurrencies

By Adedapo Adesanya

The Russian central bank has proposed a complete ban on cryptocurrencies in the country.

The proposal emphasized that crypto is extremely volatile and has helped to spread fraudulent activities in the country, adding that it is also a potential risk to the country’s national economy.

Director of the Bank of Russia, Ms Elizaveta Danilova, during a presentation, said that a complete ban would mean no mining, trading, or usage of crypto in the country.

However, owning cryptocurrencies would still be legal.

The report also suggested that the government should introduce punishments for individuals who buy or sell products/services using crypto.

The central bank, which is planning to issue its own digital currency, said crypto assets becoming widespread would limit the sovereignty of monetary policy, with higher interest rates needed to contain inflation.

This isn’t the first time the Bank of Russia has gone after cryptos as it had banned mutual funds from investing in any cryptocurrencies.

In 2019, the country blamed cryptocurrencies for spreading money launching and terror financing.

However, the government legalized crypto in 2020, although banning their use as payments.

The move is the latest in a global cryptocurrency crackdown as governments from Asia to the United States worry that privately operated and highly volatile digital currencies could undermine their control of financial and monetary systems.

With the total ban of the asset by China, Russia witnessed a rise in crypto mining and this move has already triggered investors to dump their coins.

In September, China intensified its crackdown on cryptocurrencies with a blanket ban on all crypto transactions and mining, hitting bitcoin and other major coins and pressuring crypto and blockchain-related stocks.

Market analysts note that although the Bank of Russia’s proposal can cause significant worry for its crypto traders and miners, it’s still not confirmed if the government will follow through with a total ban.

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World

Proposed Amazon Headquarters in South Africa Under Threat

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amazon south africa

By Adedapo Adesanya

Plans by Amazon to establish its Africa headquarters in Cape Town, South Africa, could hit a snag if a legal challenge by indigenous activists is allowed to proceed, a Cape Town court heard on Thursday, January 20.

According to reports, construction is already underway for Amazon’s $262 million African headquarters on land that Khoisan communities hold sacred as a site of their early resistance to European colonisers in 1510.

Several Khoisan groups threw their support behind the project after the developers agreed to build a heritage, cultural and media centre that will be operated by indigenous groups.

However, the Goringhaicona Khoi Khoin Indigenous Traditional Council and a neighbourhood association have asked the Western Cape High Court to halt construction.

A lawyer for the property developers, the Liesbeek Leisure Property Trust, told the court that Amazon has signalled it will pull out of the project if the delay is granted.

According to an advocate, Mr Sean Rosenberg, “If Amazon has indicated, even directly, that it’s not going to tolerate any further delays, that’s not hearsay evidence.

“That’s direct evidence of what Amazon’s intentions are.”

“The much more likely possibility is that this project will not go ahead, given what has happened up until now, given Amazon’s impatience, given Amazon’s indication,” he added.

Amazon itself is not named in the case but the hearing is expected to conclude Friday.

Once hunter-gatherers, known under the now-discarded label of Bushmen, the Khoisan suffered deeply under colonisation and apartheid.

Many in their community say they still endure wide social inequalities and economic opportunities today, and their past remains overlooked.

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World

DR Congo Raises Stake in Shelter Afrique 2.46%

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DR Congo Shelter Afrique

By Aduragbemi Omiyale

The government of the Democratic Republic of Congo (DRC) has increased its shareholding in Shelter Afrique to 2.46 per cent, up from 1.68 per cent held previously.

This followed the payment of $1.7 million capital arrears in the pan-African housing development financier on December 22, 2021, to add to the initial $2.5 million.

DR Congo has now joined Tanzania, Morocco, Mali, Lesotho, Namibia, Togo and Zimbabwe as Shelter Afrique Class A shareholders who have fully paid their capital obligations.

“We are grateful to the government of the Democratic Republic of Congo as this is a show of strong belief in the role and mandates of Shelter Afrique in the provision of affordable housing in Africa, and particularly the DRC.

“We are particularly appreciative of the roles played by the Minister for Urban Planning and Housing, Mr Pius Mukala and the Minister for Finance, Mr Nicolas Kazadi, for making the disbursements,” the Group Managing Director and Chief Executive Officer of Shelter Afrique, Mr Andrew Chimphondah said.

“We wish to show our gratitude to the eight shareholders who have fully paid their capital subscriptions and to those who continue to increase their stakes in the company – it is a huge vote of confidence in our board approved strategy which is being implemented successfully by the management,” Mr Chimphondah added.

In the recent past, DRC has enhanced its engagement with Shelter Afrique. Consequently, the company has ramped up its activities in the country by actively pursuing large-scale, low-cost housing projects in DRC through public-private partnerships and equity investments.

Recently, Shelter Afrique approved a line of credit worth $11.4 million to a financial institution to finance 285 mortgages in the country.

Shelter Afrique is also keen on supporting urban regeneration projects in Lubumbashi and Goma, which is expected to develop 500 housing units – the company has set aside $20 million, pending board approval.

“Additionally, under our social housing plans, we are currently reviewing a housing project in Goma that seeks to develop 1000 housing units for families displaced by the eruption of Mount Nyiragongo and Kanyaja, which occurred in May and June 2021. When approved, we will invest $1 million in equity for a period of 7 years,” he further stated.

Other projects so far financed by Shelter Afrique in the DRC include Devimco’s 7-floor office building for rental purposes, La Tradition, Le Concorde, L’Ambassadeur; Azda; and a 10-storey building in Kinshasa developed by ELOLO SPRL.

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