The year 2014 for Sub-Saharan Africa did not have a particularly good year. There were internal conflicts in South Sudan, and Central African Republic. Nigeria’s north east and Kenya experienced considerable insecurity that led to loss of lives. The death toll from Ebola in the three worst-affected West African countries of Sierra Leone, and Liberia was horrific, estimated for over 8,000 death according WHO. In the realm of politics, several long-serving rulers engaged in various schemes to extend their hold power, political riots,demonstrations and insurgence of Boko Haram terrorist
But great things happened in Sub-Saharan Africa — one new and two ongoing efforts — a combination of which hold tremendous potential to empower and improve lives.
People’s power in Burkina took the world by storm. This revolution was spontaneous. It had no single hero but thousands of women, men, youth, and people from all walks of life singularly driven by thirst and hunger for freedom. The outcome could not have been more uplifting for Burkinabé and Africans at large. The now famous two-day uprising sent President Blaise Compaore into exile three years short of three decades in power. Typical of “big man” politics, government had become a matter of a personal patrimony. There was even talk of Jamila Compaore, the president’s daughter, taking over state power from his father. It was estimated that no more than 30 individuals constituted Burkina Faso’s ruling elite that determined the fate of 17 million Burkinabé. In the end though, national humiliation and frustration endured over 27 years led to a spectacular and successful revolt. That is how Burkinabé hunger for freedom gave Sub-Saharan Africa a gift for 2014 – peaceful removal of an autocratic government in a region where at least half a dozen of such regimes remain deeply entrenched.
A different kind of revolution continued to gather momentum in 2014 — the rebirth of the state of Osun, Nigeria. When this developmental revolution began, the agrarian economy, Educational revolution and people orientation policies -six integral action plan. Ogbeni Aregbesola was able to work with meagre funding from federal account to change the tourism and cultural heritage of the state making it UNESCO accepted project. Ogbeni Rauf Aregbesola was remarkable ingenious in his relation to his people , that latter transformed into a landslide election victory . The victory gives him constitutional rights to serve as governor for the second terms. His second term course is to overhauling governance systems, improving security , sanitation, reducing traffic congestion, expanding infrastructure and transit — and most spectacular — raising revenues for provision of basic services.
This developmental revolution has given state of Osun autonomy from the Federal Government and enabled the city to raise capital in global agrarian economy to invest billions of dollars in infrastructure program that includes a rapid-transit network .
The third great thing that happened in 2014 is the rolling out of President Barack Obama’s Power Africa, an innovation based on US government-private sector partnerships to increase access to electricity in Sub-Saharan Africa. The importance of this effort can hardly be overstated. Two out of three sub-Saharan Africans or 600 million people, lack access to electricity, and essentially depend on firewood for cooking. Furthermore, enormous funding needed to overcome this challenge far outstrips the financial capacity of Sub-Saharan African governments and foreign donors — hence the need to leverage US private sector strengths, not least energy companies. Progress reported after one year of operations is encouraging.
The United States government has committed more than $7 billion in financial support over the next five years. The World Bank Group is programming $5 billion in new technical and financial support for energy projects in six African countries, namely, Ethiopia, Ghana, Kenya, Liberia, Nigeria, and Tanzania, which have partnered with Power Africa. Several US corporations are engaged in provision of expertise, energy technology and capital in Africa. These firms include General Electric, Heirs Holdings, Symbion Power, Aldwych International, Harith General Partners, and Husk Power Systems.
As 2014 draws to a close, sub-Saharan Africa has issued nearly $7bn worth of sovereign bonds this year to international markets. This already tops the full-year figure for 2013, itself a boom year. Prior to 2013, this year’s figure tops any other annual figure by a factor of two.
African governments are borrowing cheaply. Entering international debt markets for the first time in 2012, Zambia borrowed $750m in 10-year bonds at 5.6%, a rate lower than that available to Portugal, Greece, or even Spain at that time. Zambia’s debt issue was reportedly oversubscribed by a factor of 15.
Non-sovereign borrowing has grown too. In 2013, bank lending to sub-Saharan Africa reached $138bn, beating the 2007 high of $118bn.
With this boom has come volatility. Following the global financial crisis, the US government bought large volumes of domestic bonds to keep interest rates low and prevent the economy from collapsing. This led to investments flowing into the higher-yielding emerging market bonds, including from Africa.
However, in 2014, the continent’s debt markets rebounded for a while. From April 2014 to July, cash flowed back into African sovereign and corporate bonds, pushing markets back up toward their pre-taper highs.
Now, however, African debt is looking fragile. In mid-October, the IMF cut its 2014 forecast for sub-Saharan African GDP growth from 5.5% to 5%, and bond yields are drifting upwards.
Complex global conditions
It is hard to say whether the African bond markets are now facing a real downturn, or are simply wavering as they rise.
There are reasons for confidence about the future. A growing glut of Eurozone savings continues to stoke demand for African debt, as European investors take their cash out of Europe in search of yield abroad. And many African countries are showing dynamic business growth, giving them excellent reasons to borrow. But global threats abound.
The IMF has warned African governments to be “cautious about not overloading the countries with too much debt”. Commodities markets have dipped, with oil prices plumbing lows not seen since 2010. These low prices harm developing economies.
This October, for instance, Nigeria ceased exporting oil to the United States. Eurozone weakness and slowing Chinese growth will also reduce demand for African exports further. The US Federal Reserve has finished its tapering of QE, and may now be considering rate rises and Ebola is still a major news story indiscriminately depressing Africa’s prospects. On the whole, global conditions are becoming less favourable for Africa.
They offer few reasons to think that volatility will moderate. The crucial question for many African sovereigns, and for investors, is whether this volatility endangers the sustainability of current high borrowing levels.
Were investors to turn cautious and the recent lending binge to collapse, we would see rising yields and, potentially, debtors struggling to restructure or roll over their debt.
The process would obviously be painful. Recent research has suggested, however, that a downturn might also become significantly more abrupt than is currently expected by many bullish holders of African debt.
Decision-making among fund managers
In a paper published this September, the Bank of International Settlements (BIS) revealed that fund managers overseeing emerging market investments are more inclined toward ‘pack behaviour’ than previously known. If correct, a flight out of, say, Ghanaian Eurobonds and into US Treasuries could be more like a stampede than a trickle. (‘Pack behaviour’ is when fund managers behave like a herd and react collectively).
For Africa, this issue is particularly worrying. Because African markets are not widely understood, the vast majority of foreign-held African securities are bought and sold not by private investors, but by professional fund managers. Their collective movements matter a great deal.
Instead of investing the smart money, selling high and buying the ‘hot potato’ stocks or bonds dropped by a panicked market, the BIS argues that managers are often all buying, or all selling, at the same time.
The BIS argues that this is more than a case of “animal spirits”, in which investors buy and sell together according to collective euphoria or panic. Indeed, the problem derives from managers’ reliance upon benchmarks.
In the emerging market funds investigated, the BIS discovered widespread dependence on the same set of benchmark indices, which themselves also exhibit similar behaviours. Two JP Morgan indices, for example, are used to guide 38% of all actively managed bond fund investments.
In the BIS’s words, “The low share of activism, the high concentration in the use of benchmarks and the strong correlation between benchmarks introduce a high degree of similarity in the behaviour of asset managers investing in EME [emerging market economy] assets.”
Explaining the potential seriousness of this phenomenon, the Financial Times’ senior investment columnist John Authers has warned that:
“Following the BIS arithmetic, a 1 percentage point reallocation of assets by the largest 500 managers, which manage $70tn between them, would result in additional portfolio flows of $700bn to EM. This is larger than the gross outflows from EM during the 2008 crash ($246bn), or the $368bn inflows documented by the IMF in 2012.”
The implications of such a large shift would be acute. African markets are relatively shallow: African buyers of African debt are growing in number, but are far from abundant. A large volume of sellers might not find a correspondingly large pool of willing local buyers.
In any major sell-off, African governments that have issued Eurobonds might be most vulnerable.
Over a dozen African governments have issued Eurobonds since 2007. These bonds, denominated in Euros or dollars, require the debtor to have ready access to a stream of hard currency. If investors were to turn tail, selling the issuing country’s currency, hard currency would become too expensive for the afflicted government to acquire, and it would risk falling into default.
Avoiding a race for the door
African debt markets, therefore, are in an environment of low investor activism, rising foreign ownership of African securities, and record highs in sovereign borrowing.
Taken from the worst angle, the picture begins to look akin to, and in certain respects worse than, that of East Asia prior to the crash of 1997. Alternatively, like the US in 2007, Africa could be seen as a market awash with foreign savings that could find no outlet at home. Then it was Chinese savings and American sub-prime; now it may be European savings and African sovereign debt.
Parallels are never direct, however, and it would be wrong to say that this worst-case scenario for Africa is in any way guaranteed.
Some facts are reassuring. Most of Africa’s new sovereign debt has been raised with 10-year instruments, and will not come due for many years yet. Most African countries, furthermore, are also borrowing from a relatively low base, thanks to earlier debt forgiveness. And African growth, meanwhile, continues to outstrip that of the developed world, and many other developing markets to boot. It remains conceivable that higher African sovereign borrowing will prove to be sustainable.
But if African debt markets are rising on an unsustainable, easy-credit boom, then borrowers and lenders both face a particularly hazardous climb-down. If the market is going to dip calmly, the sell-off must begin before US rate hikes get under way.
Thankfully, recent disappointing figures from the US may have bought investors some time. They need it: the alternative to a slow sell-off of African debt – a crash – could be sudden and painful, and the after-effects prolonged.
-Lifted by yield-seeking foreign capital, African sovereign bond markets have boomed. However, as the market faces a possible cool-down, new research suggests that a downturn could be more sudden, and more intense, than previously thought, warns Frankie Evans.
The Afrika Market hopes 2015 brings more great things more than the the above — peaceful removal of autocrats, improved democratic governance and socioeconomic transformation, and a greater share of foreign direct investment especially in energy infrastructure that is urgently needed to light up Sub-Saharan Africa’
As we leap into 2015 , The Afrika market want to thank all our clients, fans , fellow media organisations, United Na and world leaders for their undying patronage and support through the tough and ride tides of 2014. we sincerely thank you and promise to upgrade the standards to greater height , making our information and reporting unparalleled and human in all ramification of life
FRENCH VERSION
Emprunt non souverains a grandi trop. En 2013, les prêts debanque à l’Afrique subsaharienne a atteint $138, battant le record2007 de $118bn.
FRENCH VERSION
Mais les grandes choses qui s’est passé en Afrique subsaharienne—une nouvelle et deux efforts continus—une combinaison quirecèlent un potentiel énorme à habiliter et à améliorer des vies.
Pouvoir du peuple au Burkina Faso a pris le monde par latempête. Cette révolution était spontanée. Il avait pas un hérosunique, mais des milliers de femmes, hommes, jeunes etpersonnes de tous horizons singulièrement poussés par la soif etla faim pour la liberté. Le résultat pourrait pas plus édifiant pourles Burkinabé et les africains en général. Le désormais célèbresoulèvement de deux jours a envoyé le président Blaise Compaoréà l’exil trois ans court de trois décennies au pouvoir. Typique de lapolitique de « big man », le gouvernement était devenu unequestion d’un patrimoine personnel. On a même parlé de JamilaCompaore, la fille du Président, reprenant le pouvoir de l’état deson père. Il a été estimé que pas plus de 30 personnesconstituaient une élite dirigeante du Burkina Faso qui a déterminéle sort de 17 millions de Burkinabé. En fin de compte cependant,humiliation nationale et la frustration enduré plus de 27 ans, a conduit à une révolte spectaculaire et réussie. Voilà comment la faim Burkinabé pour la liberté a donné à l’Afrique subsaharienneun cadeau pour 2014 – retrait pacifique d’un gouvernementautocratique dans une région où une au moins demi-douzaine detels régimes restent profondément enracinée.
Un autre type de révolution a continué à profiter de l’élan en2014—la Renaissance de l’Etat d’Osun, Nigéria. Quand a commencé cette révolution du développement, l’économieagraire, les politiques éducatives de l’orientation de révolution etgens-6 plan d’action intégrale. Ogbeni Aregbesola était capablede travailler avec les maigres fonds fron fédéral verse pourchanger le tourisme et quelques culturelle de l’État, ce qui en faitl’UNESCO accepté le projet. OROU Rauf Mohammed a étéremarquable qu’ingénieux dans sa relation à son peuple, ce dernier transformé en un glissement de terrain remportantl’élection pour lui pour un mandat de gouverneur deuxième. Sondeuxième cours à terme est de refonte des systèmes degouvernance, améliorer la sécurité et l’assainissement,désengorger le trafic, développer les infrastructures et transport en commun—et plus spectaculaires—augmenter le chiffre d’affaires des services de base.
Cette révolution du développement a donné l’état d’Osunautonomie du gouvernement fédéral et permis à la ville de leverdes capitaux sur les marchés mondiaux de l’argent à investir desmilliards de dollars au programme d’infrastructure qui comprendun réseau de réseau express régional.
La troisième grande chose qui s’est passé en 2014, c’est les rollingout of Africa de pouvoir du président Barack Obama, uneinnovation basée sur nous, les partenariats des secteurs public et privé pour améliorer l’accès à l’électricité en Afriquesubsaharienne. L’importance de cet effort peut difficilement êtresurestimée. Deux des trois africains sub-saharienne ou 600millions de personnes, n’ont pas accès à l’électricité et dépendentessentiellement du bois de chauffage pour la cuisson. En outre,énormes de financement nécessaires pour surmonter ce défi loinsurpasse la capacité financière des gouvernements africains sub-saharienne et donateurs étrangers—d’où la nécessité de tirer partides atouts de secteur privé américain, pas moins énergéticiens.Progrès rapportés après qu’un an d’opérations est encourageant.
Le gouvernement américain a commis plus de $ 7 milliards dansle soutien financier au cours des cinq prochaines années. Legroupe de la Banque mondiale est de programmation $ 5milliards dans la nouvelle prise en charge technique et financièrepour des projets énergétiques dans six pays africains, à savoir,Éthiopie, Ghana, Kenya, Libéria, Nigeria et en Tanzanie, qui ontétabli un partenariat avec l’Afrique de la puissance. Plusieurssociétés américaines sont engagées dans la prestation d’expertise,de technologie de l’énergie et de capitaux en Afrique. Cesentreprises incluent General Electric Holdings héritiers, puissancede Symbion, Aldwych International, Harith générale partenaires etHusk Power Systems.
Alors que 2014 tire à une étroite Afrique subsaharienne a publiéprès de 7 milliards $ d’une valeur d’obligations souveraines cetteannée aux marchés internationaux. Cela déjà en tête de la figuretoute l’année 2013, elle-même une année boom. Avant 2013,figure cette année en tête de n’importe quel autre chiffre annuelpar un facteur de deux.
Les gouvernements africains sont emprunts à moindre coût.Entrer dans les marchés de la dette internationale pour lapremière fois en 2012, Zambie emprunté 750 millions de dollarsen obligations à 10 ans à 5,6 %, un taux inférieur à celuidisponible au Portugal, la Grèce ou Espagne même à ce moment-là. Question de la dette de la Zambie a été sursouscrit aurait étépar un facteur de 15.
Expliquant la gravité potentielle de ce phénomène, chroniqueurd’investissement supérieurs le Financial Times’ John Authers aaverti que :
“Suite à l’arithmétique du BIS, une réaffectation de point depourcentage des actifs par les 500 plus grands gestionnaires, quigèrent la $70tn entre eux, se traduirait par des flux de portefeuillesupplémentaire de $700bn à EM. C’est plus grand que les sortiesbrutes de EM pendant le krach de 2008 ($246bn), ou les entréesde $368bn, documentées par le FMI en 2012. »
Les implications d’un tel grand changement serait aiguës. Lesmarchés africains sont relativement peu profonds : les acheteursafricains de la dette africaine se multiplient, mais sont loin d’êtreabondante. Un grand nombre de vendeurs pourrait pas
