Following on from the last Ashay Mervyn blog post discussing the report on economic development in Sub-Saharan Africa from the World Bank, here and in the attached video emerging market trader we are taking a closer look at the winds of change that are blowing through countries such as Ethiopia, Kenya, Ghana, Tanzania and South Africa. These nations have made significant progress in terms of economic development in recent years and yet the Sub-Saharan region as a whole is still facing crisis. Infrastructural issues such as loss of energy provision are having a detrimental effect on many countries in the region in terms of business lost. According to figures released by the World Bank, many Sub-Saharan countries are seeing between 10% and 25% of value of sales lost due to electrical outages. More needs to be done to help these countries improve economically. The Centre for Global Development has suggested that some countries may benefit from the introduction of SPGs. Following posts will explain exactly what SPGs are and how they could be used to help attract targeted investment where it is needed most.
A report from the World Bank shows that certain countries in Sub-Saharan Africa can be great places to do business. As can be seen in the attached infographic, nine of the top twenty global economies which are making the most progress in terms of improvements to business regulations are situated in this region. Rwanda is currently a better place than France to do business despite the fact that France has a 61-times higher per-capita GDP, while Mauritius ranked 20th in the 2013 “Doing Business” index from the World Bank. However, the overall picture for the Sub-Saharan region still has room for improvement. While SSA countries may have nine places in the top twenty, they also make up nineteen of the bottom twenty-four in the ranking.
Traders such as Ashay Mervyn who focus their business and investments in emerging markets are looking at the possibility of a new take on interventionism in certain SSA countries based on a suggestion from the Centre for Global Development think tank. The think tank suggested that countries in Sub-Saharan Africa that are well-managed but seeking to diversify foreign investment outside of the extractions sector may well benefit from the introduction of Service Performance Guarantees. Countries which are likely to see the benefits of this include Ghana, Ethiopia and Tanzania, each of which has a stable government and could therefore become more attractive to investors if that government became more accountable. However, SPGs would not be suitable for less stable countries such as South Sudan or Somalia, where poor and unstable governance could lead to SPGs building up huge liabilities where targets are missed. SPGs are also probably not as attractive a proposition to those countries in the region that already maintain a reputation for efficiency and friendliness in business.
In posts to follow, the Ashay Mervyn blog will explore accelerating growth and development within Sub-Saharan Africa and how targeted investment could help make that growth sustainable and explain exactly what SPGs are and how they work.
In the previous post emerging markets the Ashay Mervyn blog provided an overview of what the NIPC (Nigerian Investment Promotion Commission) is all about. Here and in the attached PDF document we will now explore in more detail the work of the Commission and the various ways in which it supports investors and markets attractive investment opportunities within the country.
The NIPC participates in a range of promotional activities to market investment opportunities and to stimulate investors in a variety of ways. These include exhibitions, seminars and conferences and using effective promotional means to promote investments both within the country and overseas.
Investment Support Services
The NIPC supports all investors pre and post-investment as well as during the lifecycle of each investment. This support includes monitoring and offering guidance and information, effectively co-ordinating investments to boost returns, supporting and initiating measures that enhance the overall investment climate of the country, acting as a liaison between private investors and organisations such as the government, lending institutes and other authorities and providing and disseminating up-to-the-minute information for investors in terms of incentives. The NIPC also registers all businesses to which the NIPC Act legislation applies and keeps records of these enterprises.
Evaluation and Sourcing
As a one-stop-shop for Nigerian investment, the NIPC performs a range of evaluation services to ensure investors are kept informed of all relevant information. This includes identifying specific projects and matching them to the investor profile best suited, inviting those investors to participate. It also includes the collection of information regarding investment opportunities and potential sources of capital as well as advising on the suitability, chance or availability of partners for any joint-venture projects. The impact of the NIPC itself is also evaluated and additional remedies and appropriate incentives are suggested to boost investment in Nigeria.
Nigeria is the 8th largest exporter and 12th largest producer of oil and petroleum products in the world and has long attracted foreign investment within the oil sector. The NIPC is now working to diversify overseas investment into the critical non-oil sector. Industries that the NIPC work with include agriculture, communications, financial services, manufacturing, mining, oil and gas, pharmaceuticals, power, privatisation, solid minerals, textile and apparels and tourism. Natural resources within Nigeria are plentiful and include minerals such as coal and tin, agricultural products such as sugar cane, palm oil and groundnuts and arable land as well as one of the largest proven reserves of natural gas and petroleum.
The services of the NIPC are designed to smooth the pathway for investors in a wide variety of ways and to offer a fully co-ordinated and streamlined investment journey with full support every step of the way.
The Nigerian Investment Promotion Commission was established in 1995 by the NIPC Act No.16 as a Federal Government Agency for the promotion, co-ordination and monitoring of all investments within the country of Nigeria. As shown in the attached infographic and short video, the NIPC provides a full range of services for local and international investors in Nigeria, including business entry permit granting, authorisations, licences and attractive incentives all in one place. The NIPC smooths the pathway into Nigeria for global investors and provides services that are transparent, streamlined and fully co-ordinated to meet the individual needs of each investor.
As a Private Management and Investment Fundraising Consultant focusing on the region of West Africa, Ashay Mervyn understands the need for organisations like the NIPC. Experienced trader Ashay Mervyn also works as the Head of Region for Emerging Markets in the private sector, where he is responsible for investment and currency flows, leveraged trades and liquidity within all emerging markets including Nigeria. The Executive Director of the NIPC recently called on all investors within Nigeria both local and overseas to ensure their interests were registered with the NIPC in order to protect those investments and discover all the relevant information on how to invest in Nigeria.
The country has improved drastically in terms of access to credit ranking, moving up from position 125 in 2014 to position 52 in 2015. The recently instated NIPC Diamond-Taking beyond Oil investment strategy is aimed at promoting the diversification of investment beyond the oil and infrastructure sectors in order to both increase exports and decrease imports. The NIPC promotes and facilitates a wide range of private investment within the country, providing long-term support before, during and after investment maintaining responsibility for the creation of a supportive, friendly and conducive business environment. In the post to follow, we will be looking in more detail at the various ways the NIPC markets the attractions of investment in Nigeria and supports private investors throughout their investment journey.
Investments in emerging markets were predicted to be a bigger growth area than in developed countries such as the US in 2015, according to a report from Barclays issued in June of that year. The forecast according to the report expected economies in emerging markets, Japan and Europe (ex-UK) to grow by 12% or more over the second half of 2015, while the US was predicted growth of just 7% over the same period.
As explored in the attached PDF document, the imminent approval in Japan of the TPP (Trans-Pacific Partnership) was seen as an added bonus for Japanese stocks. In light of the findings, Barclays added emerging markets to its overweight stock holdings alongside Japan and Europe. For traders and investors such as Ashay Mervyn, focusing on emerging market investments can expect to see higher returns on those investments than on others in US stocks. While emerging market investments remain volatile, the high returns long-term coupled with attractive dividend yields in the short to medium term compensate for that volatility. Factors underpinning the strong economic growth of emerging markets forecast include lower energy costs, competitive currencies and aggressive easing of monetary policy. While this growth was not expected to be universal certain emerging markets, such as India and Indonesia in particular, were expected to see robust growth.
Of the three countries (Russia, Brazil and Greece) on the iShares MSCI Emerging Markets ETF (EEM) in correction territory, Russia was expected to see recession slowing down economic growth and Brazil was expected to bottom soon, while fallout from the Greek exit or default from the Eurozone was predicted to bring more opportunities for investors to buy European stocks. The weaker yen and euro combined with ease of monetary policy at both the Bank of Japan and the European Central Bank and signs that the economy in both regions was set to improve made those territories equally attractive for investors as emerging markets. Barclays stated in their report that the TPP was ‘an under-appreciated positive for Japan’ and analysts recommended focus on cyclical assets like financial over sectors like consumer staples.
Check back soon for more posts on investments and emerging markets