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ICRC Partners with Tony Elumelu Foundation to Create Economic Opportunities in Conflict Prone Regions

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Lagos, NIGERIA, September 12, 2019; At the just concluded Forum organised by the International Committee of the Red Cross (ICRC), key speakers Tony O. Elumelu, Founder of the Tony Elumelu Foundation and Peter Maurer, President of the International Committee of the Red Cross (ICRC) proffered entrepreneurship as the most sustainable solution to accelerating Africa’s transformation. During a one-on-one conversation at the event, both speakers called for a new private-sector-led approach to humanitarian development in Africa.

While speaking at the Forum, Peter Maurer commended the Tony Elumelu Foundation’s private-sector-led approach as the gold standard of humanitarian development in Africa focused on impacting lives at scale and transforming the continent.

Mr. Maurer said: “On one side, it is important that we assist and protect people when they are disrupted by violence and war. But what brought me together with Tony is not the white shirt and the blue suit, it is his deep conviction that with longer and protracted conflict we need to bring people much earlier into independence.”

He added: “We need, more than ever, in the most fragile, violent parts of society to show the pathway to independence and to a dignified life and this goes with income-generating activities, productive activities, with small businesses. This is why we partnered with the Tony Elumelu Foundation”.

On his part during the discussion themed “Private Sector Partnerships with Humanitarian Organisations: Putting People First”, Mr. Elumelu commended Mr. Maurer’s leadership and the decision to partner with the Tony Elumelu Foundation to eradicate extremism and violence.

He said: “Through the partnership between TEF and ICRC, a lot is happening that shows the catalytic impact of your vision. Ours was the first ever partnership that ICRC had explored using a different approach to humanitarian development, from the angle of empowering the private sector. Today, the Tony Elumelu Foundation has partnered with AfDB on empowering 1000 beneficiaries, UNDP which started with 1000 entrepreneurs and has now been scaled up to empower 100,000 African entrepreneurs starting with the Sahel region.

The most important thing is that we give economic hope and opportunity to our people and reduce the cases of fragility that we see across the continent.”

In 2018, ICRC and the Tony Elumelu Foundation partnered to sponsor 200 entrepreneurs from the North East and Niger Delta regions of Nigeria to catalyse and accelerate transformation while scaling impact in conflict-prone areas. The intervention is built on the existing Tony Elumelu Foundation’s USD 100 million commitment to empower 10,000 young African entrepreneurs in 10 years across the continent. Driven by the economic philosophy of Africapitalism,  it represents a bottom-up approach with the goal of creating millions of jobs and increased revenue on the continent.

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The ICRC Forum took place in Lagos yesterday and gathered key stakeholders in government and humanitarian development to explore alternative approaches to impacting lives on the continent.  Present at the event were Princess Aderemi Adebowale, representing the Executive Governor of Lagos State, Mr. Babajide Sanwo-Olu; Mr. Babtunde Paul Runwase, President, Lagos Chamber of Commerce and Industry; Juan Luis Coderque Galligo, Head, New Financing Models, ICRC; and Mrs. Ifeyinwa Ugochukwu, CEO, Tony Elumelu Foundation; amongst others.

 

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Economy

Arab central banks’ chief laud Egypt’s successful economic reform experience

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Governor of the Central Bank of Egypt (CBE) Tarek Amer

CAIRO – 15 September 2019: Governors of Arab central banks and monetary institutions applauded Sunday Egypt’s successful economic reform, which helped restore investors confidence.

This came during the 43rd session of the Arab Central Banks Governors and Arab Monetary Associations, which kicked off earlier in the day at the Central Bank of Egypt (CBE) with the participation of over 200 Arab bankers, central banks’ governors, ministers, economic experts and officials of the Arab Monetary Fund.

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Participants asserted that the Egypt’s economic reform experience over the past four years should be documented as a model to be followed by other countries.

Egypt Today

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Economy

World Bank funds 2nd phase of Takaful, Karama by $500M

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Marina Wes, the new country director of the World Bank in Egypt – Photo by Ahmed Maarouf/Egypt Today

CAIRO – 12 September 2019: Egypt signed on Wednesday, Sept. 11 an agreement with the World Bank to finance the second phase of the Social Security Nets Support Project, Takaful and Karama, by $500 million.

The agreement was signed by Minister of Investment and International Cooperation Sahar Nasr and Regional Director of the World Bank in Egypt Marina Wes.

Nasr clarified in a press release that the agreement is part of a $8 billion portfolio between Egypt and the World Bank.

She stressed that this project is an important part of the most important indicators to be followed up with the World Bank, which was announced at its annual meetings in Washington, which is investment in human capital.

Nasr expected that all components of this project will contribute to improving the income of Egyptian citizens.

She pointed out that this agreement came within the framework of projects and discussions that took place between President Abdel Fatah al Sisi, and the new president of the World Bank, who chose Egypt as the first destination in the Middle East.

The minister pointed out that the first phase of Takaful and Karama program contributed to the coverage of about 2 million families, or about 9.5 million citizens, revealing that the project reached beneficiary families in all governorates, and that women represent 88 percent of the total beneficiaries so far.

Based on this additional funding, the project will strengthen the social safety nets for an additional three years based on its achievements and willexpand its geographical scope, Nasrclarified, noting that the second phase is expected to include 12.8 million citizens, to reach 22.3 million.

The minister added that the additional funding will be allocated to develop the productive social protection network and employment program under the name of “Forsa”, and will continue to apply health and education considerations to the beneficiary families.

Meanwhile, Minister of Social Solidarity Ghada Waly explained that the signing of a second financing agreement comes to develop the program and works to expand its activities to shift from cash support only to productive support. This is addition to the transfer of assets and sustainable economic activities, which will achieve great returns for the beneficiary families.

Waly noted that the ministry has always worked to benefit from international experiences and practices in this regard, and from the recommendations of the international assessments.

“The objectives of the project have already been achieved in its first phase, and the funding for this phase has ended.We are working to provide highly concessional financing over a long period of more than 35 years, with a grace period of up to 5 years,” Minister Waly stressed.

For his part, the regional director of the World Bank in Egypt explained,“Through this project, we will continue our commitment to support Egypt’s efforts to develop human capital and create jobs, which are essential for the success of its reform program.”

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Wes pointed out that the project reflects the World Bank’s commitment to promoting human capital development through effective social safety nets targeting eligible groups.

She said the project came in line with the World Bank Group’s partnership with Egypt and the expanded regional strategy for the Middle East and North Africa to promote sustainable and inclusive growth through development of skills and livelihood opportunities for women and youth.

Egypt Today

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Economy

Infrastructural Development In Nigeria In The Face Of A Rising Debt Profile

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Nigeria’s external debt currently stands at US$25 million, which is about 24.1% of its GDP. Although this debt ratio is one of the lowest in the world, it is still a significant percentage. More worrisome is the fact that Nigeria’s debt service to revenue ratio is at 60%, significantly higher than the World Bank prescribed ration of 22.5%. Also, despite the fact that Nigeria is Africa’s largest economy, its GDP of $400 billion is not nearly enough to service an economy that has a population of almost 200 million people. These two realities have significant implications for major infrastructural investment.

First of all, it ensures that over 25% of expenditure under the 2019 National budget is directed towards debt servicing. More importantly, it also suggests that any major infrastructural projects taking place in the foreseeable future will be funded to an extent by some form of borrowing. Two main questions stem from this: can infrastructural development still be possible without a significant rise in our debt profile and if so, how?

In answering the first, it is important to consider what areas of infrastructural expenditure are most relevant to our debt profile. In the author’s view, the most pressing infrastructural needs in this regard are provision of stable electricity and a viable transport network.These factors according to recent Investment Climate Assessments (ICA) conducted by the World Bank constitute two of the three most important constraints to doing business effectively in Nigeria, particularly in the context of private sector participation.

 

POWER SUPPLY

Provision of stable electricity has remained a significant problem in Nigeria notwithstanding the various strategies applied by successive governments aimed at reviving the power sector. The latest in a series of commitments to electrification in Nigeria is the World bank electrification project which is expected to cost about US$765 million . The power sector recovery programme (PRSP) initiated by the government in conjunction with the World Bank in 2017indicates that the total bailout fund required for Nigeria’s power sector is close to US$7.5 billion. This seems like a significant investment, especially considering the fact that such bailout funds will most likely be secured by borrowing.

However, this is a small price to pay considering the fact that Nigeria could potentially save more than $1 billion per year if a nationwide electrification project is successful, a figure that could rise  as high as US$25billion if PRSP estimates are taken into account.

 

TRANSPORT NETWORKS

Ensuring infrastructural development takes place in a country with scarce resources requires that infrastructural projects represent good value for money. Great emphasis is currently being placed on rail travel to boost transportation and ease domestic trade. Major ongoing railway projects in this respect include the light rail project connecting Abuja-Kaduna and a railway connecting Lagos-Ibadan. The former is estimated as costing US$876 million for a distance of 186 kilometres (US$4.70 million per kilometre while the other is estimated to cost $1.6billion for a distance of 156 kilometres (US$10.6 million per kilometre.

Comparison with similar projects in other countries suggests that this is good value for money. The688-kilometre East Coast rail project in Malaysia is costing the Malaysian government about $11billion dollars($15.9 million per kilometre. The Eglinton Crosstown project covering 19 kilometres in Toronto, Ontario is expected to cost US$5billion dollars(US$263million per kilometre). The CBD light rail project in Sydney Australia costs US$1.58billion for a distance of 12 kilometres (US$131million per kilometre).

Questions will nevertheless remain as to the true value of expenditure on the projects and the quality of materials being used. This is particularly given the corruption prone nature of our infrastructure sector evident in the mismanagement of previous rail projects such as the 2.6 kilometre downtown monorail project in Port-Harcourt.

 

PURSUING INFRASTRUCTURAL DEVELOPMENT WITHOUT INCREASING DEBT PROFILE: A FEW CLOSING THOUGHTS

Investment in infrastructure is an integral part of economic growth and cannot be avoided in the 21st century. However, with a rising debt profile, Nigeria must begin to consider alternative strategies for securing funds outside of borrowing. The first strategy will be to reduce recurrent government expenditure particularly in the area of salaries and allowances for public officials. Nigeria’s legislators are the 2nd highest paid lawmakers in the world and nearly $400 million is being used to service a National Assembly of less than 550. This amount is hardly sustainable particularly in view of revenue generated by the government which is less than The various interests involved indicates that doing so will prove extremely difficult but it is not impossible.

Secondly, projects must be arranged in order of priority in accordance with recognized economic laws of allocation of scarce resources. One will argue that given its importance to large and small scale businesses as well as families, projects relating to power supply should be prioritized. This will not only save costs of nearly $1bn per year, it will also enhance FDI and provide alternative means of income for both the government and citizens.

Finally, procedural requirements for infrastructural investment must function in such a way as to provide easier access to market for potential investors. Privatization of the power sector for example is of little benefit if investors still struggle to obtain permits and licenses for development of power plants and other power generation mechanisms.One particular measure that has been proven by research to enhance long-term macroeconomic growth is enhanced property rights.In particular , modern economists have established a connection between protecting property rights and economic growth  and further acknowledged that properly enforced property rights lead to increased participation in economic activities.

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Thus, one would advocate that access to property through land registration be made less complex, especially for infrastructure investors. Other measures such as better access to credit facilities and reduced import and excise duties may also prove useful in developing an investment-friendly climate.

Infrastructural development remains a key aspect of economic growth in Nigeria, rising debt notwithstanding. A properly structured approach in this regard may serve as the way to debt reduction and will provide an invaluable boost to the economy.

 

Author: Fifehan Ogunde Ph.D (Resarch Consultant)

 

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