Place to Consider Investing Emerging Markets
By Saghir Aslam
Rawalpindi, Pakistan
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities)
Emerging markets in Africa are leading the way for foreign investment into the continent, according to speakers at an Africa investment event.
Africa is now seeing a marked increase in investment in previously non-traditional sectors, with figures from FDI Intelligence showing sectors such as construction ($37 billion), logistics ($12.8 billion), power ($12.2 billion), as well as internet and telephony penetration and increasing banking and financial institution penetration beginning to overtake mining and extraction, leading business figures said at ALN’s 5 th Africa Investment Conference.
Former prime minister of Mali and ALN Chairman Dr Cheick Diarra; leader of the Democratic Alliance, Republic of South Africa Mmusi Maimane; and Vice President of the Republic of Malawi Saulos Chilima, were Joined by leading business figures at the opening day.
Opening with an address from renowned author and Africa expert, Dr Greg Mills, the conference focused on the key drivers for change on the Continent.
Addressing the conference with a keynote address, Sheikh Nahayan Mabarak Al Nahayan, Minister for Tolerance, said the conference would strengthen common interests in Africa. “A Happy, educated and healthy population lays a solid foundation for long-term investment and growth.”
Speakers discussed democracy as a driver for economic growth was, with calls for private and public sector to work closely together to drive prosperity and innovation across the continent. Africa has always been commodity rich, and investment has long been focused around this sector, for example extraction and oil. Because of this, the African GDP has traditionally been linked to commodity prices.
However, with a rapidly growing population–the population of Africa is expected to double by 2045 – and accompanying urbanization, a number of new opportunities are beginning to spring up for investors.
In a panel discussion focused around the social, economic and political challenges of opening up the continent for investment, industry leaders and heads of state discussed the need for governments to leverage private sector opportunities.
There has been a tremendous amount of reform and good business across the continent. “I anticipate that we are going to see Africa growing economically.”
Africa has to move away from state-led economic development. Many African states seem to focus on the idea that government needs to be at the forefront of industry.
“I think a key take away is that the breakdown between public and private sector, must be that we enhance private-sector led growth and investment. The next decade for Africa must be driven by private sector interest and innovation around product because I think the rest of the elements will follow.”
“GCC sovereign’ combined central government deficit has much improved, and we estimate it will be around $7.5 billion in 2019 (5,5 per cent of combined GDP), way below the 2016 nadir of $190 billion [16 per cent of combined GDP],” he said.
Saudi Arabia’s deficit makes up the majority ---50 per cent --- of the GCC sovereigns’ expected $300 billion financing needs in nominal terms, but as a proportion of GDP is similar to that of Abu Dhabi and Oman in 2021, at 5 per cent. Kuwait, however, represents 20 per cent of the total, reflecting fiscal deficits widening to about 13 per cent of GDP, at least in part linked to mandatory transfers into the future generations fund.
The Abu Dhabi and Kuwait governments hold liquid assets which are more than 100 per cent of their GDP, which positively effects the ratings of the countries and help them combat against economic cycles. Data revealed that general government liquid assets of Abu Dhabi are estimated to grow from $618 billion in 2018 to $686 billion in 2021. It’s estimated that the emirate’s liquid assets amounted to 232 per cent of GDP in 2018 which will increase to 249 per cent by 2021.
The reduced financing needs means highly liquid assets will ensure that there will be plenty of liquidity in the UAE for projects such as Expo 2020, airports expansion, the Dubai Metro and other mega infrastructure projects. Official data revealed that there is already plenty of liquidity in the UAE banking sector. In addition, some analysts have projected that oil prices will hit $100 per barrel within months, which will further boost revenues for the GCC governments and help them overcome their funding needs.
Moreover, the UAE, government will also register Dh12 billion revenues from the implementation of VAT this year and other Dh12 billion in 2019, while excise tax will generate additional Dh7 billion in revenues for the UAE government.
“We expect that debt issuance will meet 70 per cent of the $300 billion financing requirement. Gross debt has increased on average from 14 per cent of GDP at the end of 2014 to an estimated 38 per cent of GDP by the end of 2018, as a result. We expect that Bahrain and Qatar will finance the vast majority of their deficits through debt, while Abu Dhabi and Kuwait will draw more on their assets.
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)
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