Archive | October, 2013

40% Debt Ceiling Inadequate For Nigeria’s Infrastructural Deficit

31 Oct

NTURES AFRICA – Nigeria’s current debt ceiling of 40 percent is insufficient for an economic transformation push, given the present infrastructural deficit, business analysts suggest.

The Fiscal Responsibility Act of 2007 placed the country’s public debt limit at 40 percent, though it was lifted this year to 56 percent by the International Monetary Fund (IMF).

A $360 billion infrastructural shortfall, owing to decay and neglect, has sparked debates concerning the rationality of leaving the threshold at 40 percent.

Business experts and financial analysts, advocating for greater public borrowing, have emphasized that there is a clear-cut difference between a run up of bad debt and a constructive build up of good debt.

According to a bi-monthly economic and business report by Financial Derivates Company Limited (FDC): “For a country like Nigeria that has an infrastructure deficit of $360 billion, according to the African Development Bank (AfDB), a 40 percent debt cap is insufficient in getting the job done.”

The report revealed that an overhaul of the infrastructure gap would cost approximately $350 billion for an economy with an estimated GDP of $282 billion and an annual GDP growth rate of approximately 6.8 per cent.

It further argued that the Nigeria’s debt to GDP ratio of 35 percent is an unsuitable measurement tool for how much debt can be incurred, noting that such standards suited more advanced economies than developing markets.

Retrieved from:


Zimbabwe should…

30 Oct

Zimbabwe should engage China, with about US$36 billion for investment in special economic zones, to attracting foreign investment to resuscitate critical sectors of the economy-Comesa secretary-general Dr Sindiso Ngwenya

Should African countries look for Foreign Direct Investment (FDI) or mobilise local resources?

Send your comments to:

Look East for FDI, Comesa boss tells Zimbabwe

30 Oct

Zimbabwe should engage China, with about US$36 billion for investment in special economic zones, to attracting foreign investment to resuscitate critical sectors of the economy, a senior Common Market for Eastern and Southern Africa official said.
Presenting a paper on value chains and their roles in economic development at this year’s edition of the Zimtrade Exporters Conference in Harare last week, Comesa secretary-general Dr Sindiso Ngwenya said this country could court successful economies such as China for investment.

The first step would be the consolidation of special economic zones, which are areas designed to export goods and provide employment while they are exempted from certain taxes and quota laws meant to make goods manufactured in those zones fetch competitive global prices.
“In China, Shenzhen is a success story of a special economic zone which was established in the 80s and by 1994 the city was accounting for 35 percent of total Chinese exports, Zimbabwe should therefore go the SEZ route in order to revive critical sectors.
“Zimbabwe, therefore, needs to engage China to get that investment which can be channelled towards establishment and rehabilitation of power plants and revival of the manufacturing sector,” he said.

Mr Ngwenya said value addition was an effective strategy that would help Zimbabwe capture its fair share of the global market.
“Even the country’s vast minerals are not fetching enough revenue on the global market because they are exported in their raw state,” he added.

Mr Ngwenya added that in order to realise meaningful economic development there is also need to issue Diaspora bonds so that locals living abroad can participate in rebuilding the economy.

Funds mobilised can then be channelled towards infrastructural rehabilitation such as road dualisation among other critical infrastructural needs.

Retrieved from:

BRICS ministers meet in Pretoria

30 Oct

brics_logo2PRETORIA. — Agriculture ministers from BRICS countries met in Pretoria yesterday to address the negative effects of climate change on world food security. The gathering, the third of its kind, will culminate in the signing of a joint declaration which will demonstrate BRICS’ determination to meet the challenges confronting food security.

“We are required to ensure that the decisions we make today impact positively on the continent and the quality of the land we leave for the next generation and their children,” South African Agriculture, Forestry and Fisheries Minister Tina Joemat- Pettersson said at the conference.

“It is my expectation that we will emerge from this meeting with a shared sense that it was instructive, successful and well worth of the investment and effort we have made to be here.”

Food security is a huge challenge and thus a key priority for the African continent, said Joemat-Pettersson. She said the meeting will consider and provide leadership on the important matters related to food security.

“Our priority on the continent and in South Africa is to promote sustainable agricultural and food production, which will enable Africa to feed itself and the world,” the minister said.

She urged BRICS countries to urgently and significantly accelerate agricultural and food production, so that people on the continent can enjoy sustainable access to safe, nutritious and affordable food.

BRICS ministers must promote smart, responsible and sustainable agriculture, the minister stressed. BRICS is an acronym for world’s major emerging markets, namely Brazil, Russia, India, China and South Africa.

“As we consider ‘Negative Effect of Climate Change on World Food Security’, we must remain mindful that, with few exceptions rural women fare worse than rural men and urban men and women against all the Millennium Development Goals indicators,” Joemat- Pettersson said.

This includes areas such as diverse as agriculture, health, education, paid and unpaid work and social protection. — Xinhua.

Retrieved from

Zim deciding on structuring mine funding bond

29 Oct

ZIMBABWE’S government is determining how to structure the sale of the country’s first international bond and is seeking advisers as it aims to raise financing to fund mining development, Walter Chidakwa, the country’s mines minister, said.

Chidakwa said he will meet with Finance Minister Patrick Chinamasa to discuss the plan ahead of the release of the country’s budget, scheduled for next month.

“We haven’t worked out how much we are going to raise and who is actually going to work in putting together the bond,” Chidakwa said in an interview on Saturday at Mimosa platinum mine near Zvishavane, 299 kilometers southwest of the capital, Harare.

On October 10, Chidakwa told an industrial conference in Bulawayo, the country’s second-biggest city, that the government was considering a bond sale to create a fund to finance mining.

The government of Zimbabwe, which has the world’s second-biggest platinum and chrome reserves, is compelling mining companies to sell or cede 51% of their local assets to black citizens of the country or the state.

Companies including Rio Tinto Plc, Mwana Africa Plc and Anglo American Platinum Ltd dig minerals and metals ranging from diamonds to gold and platinum in Zimbabwe. Mimosa is an equally owned venture between South Africa’s Impala Platinum Holdings and Aquarius Platinum.

The platinum industry needs as much as $5,3 billion if it is to expand to produce more than 500 000 ounces of the metal and to construct precious and base metal refineries, the Platinum Produces Committee said in a report this month. Production is forecast at 365 000 ounces this year, according to the group, which represents Impala, Anglo American Platinum and Aquarius.

Chidakwa declined to comment further on the planned bond.

Retrieved from:

Zim in Busan implementation hitch

24 Oct

ZIMBABWE, a highly aid dependent country has made little steps in implementing measures meant to bail it out of donor dependency, a move likely to shut it out of developmental support from the international community.Zimbabwe was among developing countries that signed a treaty in South Korea in 2011 committing it to implement a raft of measures under a so-called Busan agreement that called for developed countries and donors to start channeling developmental funding to signatory States and move away from humanitarian funding.

Reports submitted at a regional multi-stakeholder forum for East and Southern Africa on development effectiveness last week indicate that Zimbabwe is one of few countries that have failed to implement the Busan agreement.

Collin Magalasi, an executive director with AFRODAD, said Zimbabwe’s situation was different from that of other countries when it signed to Busan. “Busan took place when Zimbabwe had no donors, which was very different from other countries,” Magalasi said on the sidelines of the forum. “I think they are trying to put some systems in place but they are too far away. The fact that Zimbabwe does not have many donors as yet should not be an excuse for them not to put systems in place. They better put their house in order because donors will follow the systems,” said Magalasi.
A director responsible for Domestic and International finance in the Ministry of Finance, Margireta Makuwaza, told the delegates that Zimbabwe was not fully funded and that has contributed to delays in the implementation of the Busan principles.

She however underlined the need for government to review the Aid Coordination Architecture (ACA) policy document administered by the finance ministry to improve its implementation with the aim of aligning the policy document with the new constitution.
ACA was crafted in 2009 under the Government of National Unity (GNU) and its principles are premised on the aid Declarations signed in Paris (2005) Accra (2008) and Busan (2011) with a view of ultimately reducing Zimbabwe’s dependency on donors.

It contains guidelines, principles, structures and objectives for coherent interactions between government and the co-operating partners.
“We are not moving at the desired pace in term of implementing the Busan principles but it is essential to bring in the necessary changes to the ACA policy to align it with the new constitution,” Makuwaza said.
The three day regional consultation forum held in Rustenburg, South Africa from 16-18 October 2013, under the auspices of African Union Commission in collaboration with NEPAD Agency, African Forum and Network on Debt and Development (AFRODAD), United Nations Development Programme and the department of National Treasury of the Republic of South Africa, brought together more than 80 participants, mainly government officials, parliamentarians, civil society organisations and journalists from 17 countries.

The forum was held under the theme: “Leveraging Global Partnership to optimize Africa’s Resources – from Busan to Reality”.
The Busan principles aim at reframing the global aid reform agenda from aid effectiveness to development effectiveness which should result in poverty eradication, reducing inequality, sustainable development and enhanced capacities for developing countries.

It also promises engagement with business towards improved regulatory and policy environments for private investment, and business participation in the design and implementation of development policies.
It also calls for openness, trust, mutual accountability and transparent practices as the basis for accountability.

The 2011 forum on aid effectiveness held in the South Korean coast city, Busan, and attended by over 2500 State and non state delegates from developed and developing countries, including more than 300 civil society representatives, holds all the parties to account with an annual monitoring exercise for the aid industry. It put in place systems for countries to focus on the quality of development assistance given by donors.
Under the Busan principles, States are expected to develop a monitoring framework consisting of 10 indicators that measure progress in improving the effectiveness of development cooperation in areas such as the transparency and predictability of aid, gender equality, participation of civic society and the contribution of the private sector.

Busan, which produced an agenda for aid reform was built on the previous aid effectiveness commitments made in Rome (2003), Paris (2005) and Accra (2008) on the principles on aid ownership, inclusive development, transparency, results and accountability.

Busan also brought on board new players in the aid landscape such as China, Brazil and India. These countries agreed, on a voluntary basis to abide by Busan principles.
But two years on, the global partnership which sounds very grand is at risk of fading away in Zimbabwe because of lack of systems as agreed under Busan.


Ghana’s external debt rises 300% in six years – AFRODAD

19 Oct

dollarsGhana’s external debt has increased by 306 percent between 2006 and 2012 to reach $8.835 billion as at the end of 2012.

Madam Nyasha Munditi, Policy Research Assistant, Domestic Debt of AFRODAD, said some reasons for the increase in the external debt include Government issuing a $750 million – 10 year Eurobond on the international market in 2007. She said new loans of about $2.8 billion to fund sectoral priorities in health, agriculture, rural development, roads, communication and housing for public sector employees also led to the current external debt.

Madam Munditi made this known at a validation workshop on Ghana’s Public Loan Contraction and Management in Accra on Wednesday.

Giving an overview of “Ghana’s Public Debt” she said, in addition to the external debt, domestic debt also increased from 15.5 per cent of Gross Domestic Product (GDP) in 2006 to 25.4 per cent in 2012; and this was issued mainly to finance budget deficits and to develop the domestic debt market.

Using the International Debt Sustainability Borrowing Ceiling of 60 percent for total public debt of GDP ratio, Madam Munditi said Ghana’s performance against this indicator showed that it was still within the 60 per cent threshold as Ghana’s current domestic debt ratio is pegged at 50 per cent.

She explained that unlike external debt, there were no international agreed thresholds for measuring domestic debt sustainability.

She, however, said by the Debt Relief International Interpretation, domestic debt sustainability ratio prevailing within 92-167 percent range, shows a sign of potential unsustainability.

Madam Munditi said even though Ghana’s total debt ratio is still below the 60 percent threshold, the falling of the domestic debt to GDP ratio in the Debt Relief International unsustainability range should be treated cautiously.

She said with a large bias towards domestic debt at 77.3 percent of the total public debt, and almost half of the 22.7 percent external being sourced from the non-concessionary international capital market and bilateral sources, there was more use of commercial financing to fund Ghana’s various project investments in the Medium Term Debt Strategy.

Mr Dakarayi Matanga, Senior Policy Officer, Domestic Debt at AFRODAD, who spoke on “The Legal Framework of Loan Contraction and Management”, said Civil Society Organisations must be given legislative recognition and a role in the process of loan contraction and management.

He called for the establishment of a Debt Monitoring Board that would check the conformity of any new project loan with overall economic policy before its approval.

Legislation should also ensure that line ministries provide regular progress reports on implementation of projects funded by loans, while the Presidency’s power of remuneration of the Auditor-General be loosened to foster accountability.

Members of Parliament, representatives from the Ministry of Finance and Economic Planning, civil society organisation, and AFRODAD representative as well as the media attended the workshop.

The Ghana Anti-Corruption Coalition and AFRODAD jointly organised the forum to share preliminary findings with stakeholders, solicit comments from participants on their research.

Source: GNA
– See more at:

Regional Consultation for East and Southern Africa on Development Effectiveness

16 Oct

Leveraging Global Partnership to Optimize Africa’s Resources – From Busan to Reality

media_advisoryThe African Forum and Network on Debt and Development (AFRODAD), African Union Commission (AUC), NEPAD Planning and Coordinating Agency, Government of South Africa, Southern African Development Community (SADC) and the East African Community (EAC) member states, and the United Nations Development Programme (UNDP) are hosting an East and Southern Africa Regional Post-Busan Implementation Engagement workshop. The workshop is aimed at creating a platform to promote mutual learning and knowledge sharing on best practices and experiences in the implementation of a Global Partnership within the AU context. The workshop is taking place at Hunters Rest Mountain Resort, Rustenburg, South Africa from the 16th to 18th of October 2013.

The Regional Consultation under the auspices of the Africa Platform for Development Effectiveness (APDev) follows two similar engagements held in West and Central Africa. The Global Partnership for Effective Development Cooperation (GPEDC) at the 4th High Level Forum in Busan in 2011 represented the international community’s commitment towards a fundamental transformation of the aid architecture. This meeting has drawn experts from; Governments, CSOs, Parliaments, Regional Economic Bodies, Development Partners, the Private Sector among others.

You can follow the events on AFRODAD blog, Facebook, APDev, UNDP

Media enquiries should be directed to:

Munyaradzi T. Nkomo, Information and Communications, AFRODAD
Tel: +263 777 782 651 or + 2779 7269401

IMF issues warning on South African economy

2 Oct


The International Monetary Fund warned Tuesday that South Africa is trailing other emerging markets and must quickly implement reforms if it wants to avoid crisis.

The IMF, in an annual report on Africa’s largest economy, pointed to painfully high unemployment and a plethora of other economic troubles staking the country.

“South Africa’s growth has underperformed and vulnerabilities have increased considerably,” the IMF said, predicting “continued sluggish growth” of 2.0 per cent this year and 2.9 pe rcent in 2014.

“Absent structural reforms, growth will be insufficient to reduce unacceptably high unemployment” the report said, pointing an economy “increasingly vulnerable to shocks.”

“Risks are tilted firmly to the downside.” Unemployment is officially at 25 per cent, but is closer to 35 per cent including those who have given up looking for work. Around 50 pe rcent of all young people are without a job.

While South Africa has made “important strides” to correct disparities caused by decades of apartheid rule, the Washington-based institution said systemic problems have “come to the fore” in recent years.

“The economy has underperformed other emerging markets and commodity exporters, exacerbating South Africa’s already high levels of unemployment and inequality and contributing to rising social tensions.”

Nearly two decades after Nelson Mandela swept to power South Africa is among the most unequal countries in the world.

Street protests are common across the country, often prompted by the lack of basic services or the presence of foreign workers.

A series of strikes have also hit the mining, automotive, transport, public and manufacturing sectors, halting production and often resulting in deadly clashes with police and between rival unions.

The ruling African National Congress has pointed to the economic crises in Europe — a key trading partner — as the main cause of the country’s economic malaise.

The IMF agreed that “contributed” to weak growth, but said “domestic factors were an important reason why South Africa’s growth has been below that of other emerging markets.”

The IMF warned serious domestic reforms were needed to the labour market as well as improvements in the business climate and trade liberalisation.

A far-reaching economic plan — dubbed the National Development Plan — put forward by the government in 2011 has been put on ice amid opposition from within the ruling ANC and its trade union and communist allies.

“Prompt progress on NDP implementation could build reform momentum and reduce policy uncertainty,” the IMF stated.

“Limited reform progress leads to an inexorable build-up of vulnerabilities.”

But with general elections due within the year, quick implementation is unlikely.