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Saturday, September 18, 2021

IMF exploring long-term financing options for climate change & digitalisation

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For the first time ever, the Annual Pan-Africa Investor Conference event included a specialist Nigeria Tech / Fintech Conference that was held on 9 September and covered every aspect of the fast-growing and high-opportunity sector – from digital payments and digital lenders, to logistic companies, to neo-banks and digital wealth management, with speakers representing incumbent companies as well as new burgeoning players.

The conference opened with a global economy and Africa presentation, delivered by Charles Robertson, Global Chief Economist, Head of Macro Strategy Unit, Renaissance Capital, followed by his conversation with Abebe Aemro Selassie, Director, African Department, IMF. The interview mostly focused on the hot topic of SDR allocation.

Abebe Aemro Selassie, Director, African Department, IMF, said: “One of the big things that has been happening over the past four months is a recognition by the international community that there is going to be a need for low-income countries to have access to adequate financing to support the reforms they need to do to enjoy a robust recovery and reverse a lot of deterioration in social indicators. The SDR allocation offers an opportunity to do this, but it is an exciting idea to go beyond. There is a desire at the IMF to explore long-term financing options aimed at climate change challenges or digitalisation. And if we do not want to be susceptible to more shocks, we will need to support transformation and structural change. The only way that a region can enjoy strong growth is through economic reforms, and financing can facilitate that.”

Leading companies from across Nigeria, Kenya, Rwanda and Uganda came together. The event saw more than 150 one-on-one meetings between 42 corporates and 150+ investors, representing 70+ major international and local investment funds with total AUMs over $4.1trn. The public part of the conference provided access to macroeconomic updates on the region and first-hand opinions from some of the region’s most prominent policy makers and business leaders.

Economic Recovery

The conference proceeded with a panel discussion on ‘Navigating an economic recovery amid a pandemic’ with Tobias Rasmussen, Resident Representative in Kenya, IMF, and Dr Hassan Mahmud, Director, Monetary Policy Department, Central Bank of Nigeria.

Tobias Rasmussen, Resident Representative in Kenya, IMF, said: “As with the rest of the world, the onset of the Covid-19 pandemic was a big shock for the Kenyan economy. But from what we are seeing now, the shock appears to be relatively short-lived, with activity recovering robustly. Covid is not over of course, with case numbers still high, and only a small fraction of the Kenyan population has been vaccinated. Still, from an economic perspective, it seems that businesses and people have been to a large extent able to adjust and get on. We see improvements in many indicators on the domestic side, including the output of cement and electricity and in the PMI Index. On the external side, imports have substantially increased across all categories, reflecting a general pick-up in activity and robust demand. In the financial sector, credit to the private sector has been expanding – slowly but expanding, and the ratio of NPLs has been broadly stable. Moreover, deposits growth has been strong and the usage of mobile money has increased sharply.”

Dr Hassan Mahmud, Director, Monetary Policy Department, Central Bank of Nigeria, said: “Inflation remains sticky in Nigeria, still double-digit despite some easing recently. In the composition of CPI, food accounts for more than 50 percent, therefore food inflation has a significant role to play in that, although other factors such as prices for petroleum products or electricity are contributing as well. On the food side, we have seen the supply side shrinking due to structural issues. There is a debate as to whether the inflation number is a monetary or structural phenomenon and I won’t disagree that there is a monetary factor to it, but supply-side challenges are hard to deny. Since price stability is the primary goal of a central bank, the CBN has applied its monetary tools to address those supply-side problems, including interventions across the value chain in the agricultural sector, to ease the constraints, which has translated into the gradual moderation we are seeing in the inflation trend and positive output growth. However, I believe that for now we have reached a peak as we have witnessed a gradual decrease in headline inflation numbers for three consecutive months already.”

Day one also featured a panel discussion on ‘Nigeria and West Africa O&G outlook’ with representatives of O&G majors – The Nigerian National Petroleum Corporation (NNPC), Seplat and Kosmos Energy – and concluded with a conversation with Karl Toriola, CEO, MTN Nigeria, who was interviewed by Samuel Sule, Acting CEO, Nigeria, Renaissance Capital.

The second day of the conference started with an SSA macro update presentation, delivered by Yvonne Mhango, Head of Research Africa, Africa Economist, Renaissance Capital, who further proceeded as a moderator of a roundtable discussion ‘2022 Elections’, hosted by Danstan Omari, Advocate of the High Court of Kenya, and Charles Kerich, County Executive Committee Member, Lands, Urban Planning and Housing, Nairobi City County Government.

Danstan Omari, Advocate of the High Court of Kenya, said: “I would like to start this conversation by saying that Kenya is a democratic country and we have many political parties, we practice a multi-party system, therefore what we are seeing now is normal – political parties’ individuals, practicing their constitutional rights, so there is no political war in Kenya. The noise and headlines that you may be hearing in the political arena which the media often exaggerate is happening under the constitution that we have. In my view, the politics that we are seeing today is transitional and some political heat is only normal. Investors coming to Kenya should not be worried, this country is safe because it is governed by the constitution and the rule of law.”

Charles Kerich, County Executive Committee Member, Lands, Urban Planning and Housing, Nairobi City County Government, said: “Before the evolution of Kenya’s governance structure, the centralised government was not able to understand the needs of various regions and some regions were marginalised: Areas with potential were the ones to be developed, while areas without potential were left without resources. With a new two-tier approach in place, every region will be guaranteed a minimum amount as a share in revenues collected by the national government, and they are also expected to raise their own revenues.”

The rest of the event was taken up by the Nigeria Tech / Fintech Conference and one-on-one meetings. The conference was broadcast on a dedicated website as well as Renaissance Capital’s YouTube channel, with all the recordings saved and available.

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