<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/06/OYSLL7OT2BLMVOGKKGITWL2LUQ-820x547.jpg" alt="" class="wp-image-493908" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/06/OYSLL7OT2BLMVOGKKGITWL2LUQ-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/06/OYSLL7OT2BLMVOGKKGITWL2LUQ-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/06/OYSLL7OT2BLMVOGKKGITWL2LUQ-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/06/OYSLL7OT2BLMVOGKKGITWL2LUQ-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/06/OYSLL7OT2BLMVOGKKGITWL2LUQ-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/06/OYSLL7OT2BLMVOGKKGITWL2LUQ-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: A money changer counts U.S. dollar banknotes at a currency exchange office in Ankara, Turkey September 27, 2021. REUTERS/Cagla Gurdogan/File Photo</figcaption></figure>



Looking for growth? Africa is the continent that every country, trade minister, and business owner should turn their heads toward.&nbsp;<a href="https://www.afdb.org/en/news-and-events/press-releases/africa-dominates-list-worlds-20-fastest-growing-economies-2024-african-development-bank-says-macroeconomic-report-68751" target="_blank" rel="noreferrer noopener">According to the Africa Development Bank</a>’s latest macroeconomic report, it confirmed that the African continent is set to maintain its position as the second-fast-growing region, just next to Asia. According to the report, next year “up to 41 countries across the continent will achieve an economic growth rate of 3.8% and in 13 of them, growth will be more than 1 percentage point higher than in 2023.” These are incredible statistics that demonstrate the growth opportunity across Africa due to the surging population and booming GDP growth.&nbsp; Africa is forecasted to outpace global growth averages throughout 2024.



The report also counted 11 African nations among the world’s twenty fastest-growing economies this year &#8211; enviable, especially to our neighbors in North America and Europe. Additionally, according to the&nbsp;<a href="https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/ZAF/GHA/KEN/ETH/CIV/RWA" target="_blank" rel="noreferrer noopener">International Monetary Fund</a>’s GDP growth tracker, the African region significantly outpaces South America’s GDP growth, with a real GDP growth rate of 3.5% versus South America’s 1.4%. On the other hand, Africa still maintains a close range behind Asia, which leads with 4.4% to Africa’s 3.5%. However, in the coming years, according to&nbsp;<a href="https://www.statista.com/statistics/1224205/forecast-of-the-total-population-of-africa/#:~:text=Forecast%20of%20the%20total%20population%20of%20Africa%202020%2D2050&amp;text=According%20to%20the%20forecast%2C%20Africa's,as%20the%20most%20populous%20countries." target="_blank" rel="noreferrer noopener">Statista</a>, Africa will experience a significant population boom, with an estimated 2.5 billion inhabitants by 2050. This, in turn, will significantly close the population gap with Asia by 2100. As GDP growth typically grows as the population does, the GDP growth gap could be narrowed down within the next few years.&nbsp;



Needless to say, not only will there be tremendous population growth, but foreign direct investment, employment opportunities, standard of living, purchasing power, and more will grow exponentially as countries that have been listed as “commodity-dependent” will expand into diversified services fit for their young, digital population.



Why doesn’t money “follow” the data from Africa the way it does in other continents, like into Asia or South America? Often, companies considering expansion tell us that they see Africa as “more complex,” “more corrupt,” and more “volatile” than other emerging continents. &nbsp;



However, if you spend any time with a CEO or politician from Asia or South America &#8211; it’s clear that they also operate in markets with high barriers to entry and difficult operational environments.



Perception is the enemy of foreign investment in Africa.&nbsp; This is why the biggest new entrants to the continent in the last decade have come directly from Asia and South America &#8211; where they feel the market is similar, rather than more difficult.



The diversity of currencies, varying regional regulations, and lack of legacy financial infrastructure are hurdles to rolling out a pan-African business in a snap. However, fintechs have flooded the market to fill this gap for the last 15 years. &nbsp;



Now, those with the most longevity, experience, and long-term consistent growth are making it easy to do business across the continent.



These fintechs (and their supporting ecosystem of service providers) know that Africa’s currency diversity is a strength, not a weakness. They also know that African fintech infrastructure rivals, if not surpasses, many other markets.



And finally, there are more than enough professional services providers, banks, and other partners with which to scale in Africa.



So, while many new entrants to African commerce are quick to blame other reasons for their difficulties in scaling, the only major obstacle to their growth (aside from their own perceptions of Africa) is cost.



Cross-border payments still cost African and African-based businesses too much. African businesses shouldn&#8217;t have such a high price (in time or fees) to move into other African or G20 currencies or to make transfers across the continent or into Europe. Yet, they do.



At a recent gathering of corporate treasurers operating in Africa, the single biggest complaint was that the internal policies only allowed them to partner with a single bank. This policy and the outlook on what available partners should be is beyond outdated.



Now, these costs may surprise many businesses as they begin their expansion to African markets. However, it is not a problem of currency diversity, financial infrastructure, or service. Instead, the problem is the knock-on effect of how businesses in Africa have not been prioritized by non-African partners. Historically, limited choices in foreign exchange, cross-border transfers, and international market access still drive these higher costs of doing business today. &nbsp;



These costs have also made Africa’s fintech sector the most inventive. Our tradition of financial innovation, dating back to mobile money, directly results from African founders and fintechs actively challenging and dismantling this system. In every sector they’ve expanded into, they’ve provided more and better choices. This ecosystem of fintech and alternative financing is nearly identical to what resolved the higher costs of cross-border business in Asia and Latin America as well, and their economic growth proves it is worth the effort.



African businesses need more choice. The opportunity (and pressure) of international liquidity should help it finally arrive.



In doing so, however, we must be vigilant that the systems evolving to serve new expansions into Africa also work for African businesses. This means using partners that can facilitate direct African-to-African currency exchange. Not just to protect the exchange rate of the currencies themselves but also to maintain the speed of value exchange.



We cannot allow our system to evolve into one where business owners have days or weeks-long wait times to access their capital. We must also watch carefully to ensure that any business looking to capitalize on African value invests equally in African success. This should include hiring employees in Africa and encompass partnering with African companies, using African banks, and routing payments through African-licensed payments services providers (as well as holding and doing business in African currencies).



Africa is already a benchmark for fintech invention and is quickly becoming the ideal standard for economic growth. Within the next decade, we will be the global hub of international talent, as well as home to one of the most important consumer markets in the world. We can arrive at this future even more quickly if we can cut costs for African businesses while maintaining our high expectations for those companies that seek to join us here.&nbsp;

FILE PHOTO: A money changer counts U.S. dollar banknotes at a currency exchange office in Ankara

Cross-border payments are still costing businesses in Africa too much

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="333" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/06/hero-editors-letter-lighter-c-Daniel-Lievano-820x333.jpg" alt="" class="wp-image-493885" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/06/hero-editors-letter-lighter-c-Daniel-Lievano-820x333.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/06/hero-editors-letter-lighter-c-Daniel-Lievano-300x122.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/06/hero-editors-letter-lighter-c-Daniel-Lievano-160x65.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/06/hero-editors-letter-lighter-c-Daniel-Lievano-768x312.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/06/hero-editors-letter-lighter-c-Daniel-Lievano-1536x625.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/06/hero-editors-letter-lighter-c-Daniel-Lievano-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



“Prosperity, like peace, is indivisible,” US Treasury Secretary Henry Morgenthau Jr. said as he opened the Bretton Woods conference in 1944. It was, as he put it, an “elementary economic axiom” to help guide the founders of the IMF.



Today, these words are more important than ever. Our biggest challenges—from global warming to demographic and technological transformations—cannot be resolved by countries acting alone.



Yet just when we need greater international cooperation, we get the opposite: more fragmentation, conflict, and global disengagement; more zero-sum thinking that risks leaving our world poorer and less secure.



As we mark the IMF’s 80th anniversary, we ask: How can the Fund continue to adapt to the new realities and the changing needs of our 190 members? This&nbsp;<a href="https://www.imf.org/en/Publications/fandd?utm_medium=email&amp;utm_source=govdelivery">F&amp;D issue</a>&nbsp;seeks to provide answers that are inspiring and thought-provoking.



IMF Managing Director&nbsp;<a href="https://www.imf.org/en/Publications/fandd/issues/2024/06/Economic-possibilities-for-my-grandchildren-Kristalina-Georgieva?utm_medium=email&amp;utm_source=govdelivery">Kristalina Georgieva</a>&nbsp;strikes an optimistic note and calls for “21st century multilateralism”—a framework for international cooperation that’s more open and representative, with a better balance between advanced economies and the voices of emerging market and developing economies.



These voices are represented in this issue by top policymakers such as Barbados’ Prime Minister&nbsp;<a href="https://www.imf.org/en/Publications/fandd/issues/2024/06/The-IMF-Must-Lead-on-Debt-Sustainability-Mia-Amor-Mottley?utm_medium=email&amp;utm_source=govdelivery">Mia Mottley</a>, Kenyan President&nbsp;<a href="https://www.imf.org/en/Publications/fandd/issues/2024/06/A-Consensus-is-Forming-for-IMF-Reform-William-Ruto?utm_medium=email&amp;utm_source=govdelivery">William Ruto</a>, and&nbsp;<a href="https://www.imf.org/en/Publications/fandd/issues/2024/06/Latin-America-and-The-IMF-Pablo-Garcia-Silva?utm_medium=email&amp;utm_source=govdelivery">Pablo García-Silva</a>, a former vice-governor of Chile’s central bank. The economic fortunes of their regions depend, in many ways, on a better multilateral system, and they suggest ways in which the IMF can deliver that for its members.



On that point, proposals abound. <a href="https://www.imf.org/en/Publications/fandd/issues/2024/06/Geopolitics-Corroding-Globalization-Adam-S-Posen?utm_medium=email&amp;utm_source=govdelivery">Adam Posen</a> reckons that narrowing the IMF’s mandate to its core macroeconomic mission and giving it greater operational independence would make it more evenhanded. <a href="https://www.imf.org/en/Publications/fandd/issues/2024/06/Point-of-View-Reform-or-Risk-Irrelevance-Raghuram-Rajan?utm_medium=email&amp;utm_source=govdelivery">Raghuram Rajan</a> makes a related point: delegating more authority to the IMF’s management—coupled with reform to more fairly allocate quotas, the financial contributions paid by each member—could help bring a fragmented world together on critical issues.



Among these is&nbsp;<a href="https://www.imf.org/en/Topics/climate-change?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener">climate change</a>. That brings us to&nbsp;<a href="https://www.imf.org/en/Publications/fandd/issues/2024/06/The-IMFs-Climate-Change-Debate-Masood-Ahmed?utm_medium=email&amp;utm_source=govdelivery">Masood Ahmed’s</a>&nbsp;piece, which considers the ongoing debate over the IMF’s proper role in addressing the climate threat.



The Fund, of course, has long adapted to change. The IMF’s&nbsp;<a href="https://www.imf.org/en/Publications/fandd/issues/2024/06/New-Surveillance-Tests-Ceyla-Pazarbasioglu?utm_medium=email&amp;utm_source=govdelivery">Ceyla Pazarbasioglu</a>&nbsp;shows how much the organization has evolved in its regular reviews of member economies and its regional and global analyses. In a similar vein,&nbsp;<a href="https://www.imf.org/en/Publications/fandd/issues/2024/06/Picture-This-The-Evolving-IMF?utm_medium=email&amp;utm_source=govdelivery">Atish Rex Ghosh and Andrew Stanley chart</a>&nbsp;how IMF lending, in particular, has evolved rapidly over the past 30 years. And historian&nbsp;<a href="https://www.imf.org/en/Publications/fandd/issues/2024/06/Moving-To-Complexity-Harold-James?utm_medium=email&amp;utm_source=govdelivery">Harold James</a>&nbsp;draws lessons from the past for global financial risk management.



As we move forward, one thing remains clear. “We cannot have a better world without international cooperation,” notes Georgieva. Taking inspiration from John Maynard Keynes, one of the IMF’s founding fathers, she concludes: “Keynes would encourage us to go even further as a global ‘transmission line’ for sound economic policies, financial resources, knowledge—and as the ultimate platform for global economic cooperation.”



We also mark the&nbsp;<a href="https://www.imf.org/en/Publications/fandd/issues/2024/06/FandD-at-60-the-life-and-times-of-Finance-Development-Anna-Postelnyak?utm_medium=email&amp;utm_source=govdelivery">60th anniversary</a>&nbsp;of this quarterly magazine,&nbsp;<a href="https://www.imf.org/en/Publications/fandd?utm_medium=email&amp;utm_source=govdelivery">Finance &amp; Development</a>.&nbsp;Just as the Bretton Woods institutions and the global economy have adapted, so too has F&amp;D. Today we are a platform on which thought leaders in many fields and from many countries explain and debate issues central to the global economy.



I want to express my gratitude to all our readers and contributors as we look forward to another 60 years of fresh thinking and inspiring debate.

hero-editors-letter-lighter-c-Daniel-Lievano

As IMF Turns 80, Mounting Global Challenges Mean World Must Work Together

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="602" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/06/d2395096-83de-5eaa-f46e-9146c37f3330-820x602.jpeg" alt="" class="wp-image-493622" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/06/d2395096-83de-5eaa-f46e-9146c37f3330-820x602.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/06/d2395096-83de-5eaa-f46e-9146c37f3330-300x220.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/06/d2395096-83de-5eaa-f46e-9146c37f3330-123x90.jpeg 123w, https://cms.cnbcafrica.com/wp-content/uploads/2024/06/d2395096-83de-5eaa-f46e-9146c37f3330-768x564.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/06/d2395096-83de-5eaa-f46e-9146c37f3330-1536x1127.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/06/d2395096-83de-5eaa-f46e-9146c37f3330.jpeg 1677w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



At this critical junction for our democracy, it is vital that our politicians put the country first. It is time for the women and men of integrity who wish to guide this country on the path to growth and prosperity stand up and provide leadership. We need a stable government that will continue the vital work that has already been done to put our economy on the right track to create jobs and tax revenue. We cannot afford any disruption to this momentum.



The results will be a shock to many politicians, but when it comes to what we as citizens need, nothing changes. We need jobs, we need the economy to grow, and we need to generate revenue that can be taxed.



To have that, we need a stable and reliable government, committed to the rule of law and economic reform. As the parties that are sending members to parliament seek a workable plan, they must be clear about what “workable” means. It must be capable of enduring – we do not need a spectacle of votes of no confidence and repeat elections that we see in some countries where coalitions are the norm. The deals struck now must be capable of going the distance for a full five-year term.



Critically, though, the deals struck now must underpin policy continuity – they must enable the government to stick to the fiscal prudence that we have managed to return to governance over the last few years, and they must maintain the reform momentum needed to get the economy growing. Key interventions like Operation Vulindlela must be embraced and strengthened. The next government must continue the hard work of rebuilding institutions, particularly the criminal justice system. As a country, we must continue to restore our international standing, escape the FATF grey list and improve the national balance sheet so we can one day regain an investment grade credit rating. These objectives must be clear for the next government if it is going to deliver for South Africans.



I am confident that many parties share these objectives, but I know also that some do not. We must be wary of populism. The majority of South Africans voted for parties that are committed to clean governance, retaining the integrity of the constitution and the rule of law, and continuing to protect and safeguard the independence of our democratic institutions, including the judiciary and the Reserve Bank. The business community and global investors are aligned with this majority.



I know that many in our country suffer in conditions they should never have to endure. For over five years citizens have been getting poorer on average as the economy has grown slower than the population. Unemployment has continued to grow. This is a distressing position to be in 30 years after democracy, especially when at the halfway point we had been growing at 5%, unemployment was under 20% and it felt like we were making progress. There are lots of reasons we lost that momentum, among them that our institutions and governance were systematically undermined. We have for the last few years begun to rebuild our institutions and enact reforms that will help facilitate increased investment and private participation. This takes time to result in improved economic performance – business confidence must be rebuilt and investors have to actually make the investment and build the capacity to take advantage of an improved environment. I know that we are at the beginning of that recovery, with electricity stability returning and a proactive plan to improve logistics and other network industries. Populism would risk once again destroying this momentum before it has been able to grow and deliver.



We need instead a recommitment to reforms and evidence-based policy making that does the hard work of getting institutions to work effectively. We need to continue the professionalisation and reskilling of the public sector, enabling improved frontline delivery from the most rural districts to the biggest metros. We need effective policy making from the top, with economic planning closely developed alongside fiscal policy to maximise economic outcomes. We need investment in infrastructure to improve the capacity of our economy.



The negotiations from now on must put these objectives front and centre. That is what putting South Africa first means. This is what South Africans deserve. We do not want the spectacle of parties putting their narrow ambitions first, even less so individual personalities doing so. We certainly do not need a government that will reverse the progress made. I hope that we can quickly find a resolution and get to work in building the country that we all deserve.

d2395096-83de-5eaa-f46e-9146c37f3330

It is time for our politicians to put South Africa first

Geneva, Switzerland, 29 May 2024&nbsp;– The latest&nbsp;<a href="https://www.weforum.org/publications/chief-economists-outlook-may-2024/">Chief Economists Outlook</a>&nbsp;released today presents a growing sense of cautious optimism about the global economy in 2024. More than eight in ten chief economists expect the global economy to either strengthen or remain stable this year – nearly double the proportion in the previous report. The share of those predicting a downturn in global conditions declined from 56% in January to 17%.



But geopolitical and domestic political tensions cloud the horizon. Some 97% of respondents anticipate that geopolitics will contribute to global economic volatility this year. A further 83% said domestic politics will be a source of volatility in 2024, a year when nearly half the world&#8217;s population is voting.



“The latest&nbsp;Chief Economists Outlook&nbsp;points to welcome but tentative signs of improvement in the global economic climate,” said Saadia Zahidi, Managing Director, World Economic Forum. “This underscores the increasingly complex landscape that leaders are navigating. There is an urgent need for policy-making that not only looks to revive the engines of the global economy but also seeks to put in place the foundations of more inclusive, sustainable and resilient growth.”



<h2 class="wp-block-heading" id="h-regional-variations">Regional variations</h2>



Growth expectations have improved, though unevenly, across the globe. The survey reveals a significant boost in the outlook for the United States, where nearly all chief economists (97%) now expect moderate to strong growth this year, up from 59% in January.



Asian economies also appear robust, with all respondents projecting at least moderate growth in the South Asia and East Asia and Pacific regions. Expectations for China are slightly less optimistic, with three-quarters expecting moderate growth and only 4% predicting strong growth this year.



By contrast, the outlook for Europe remains gloomy, with nearly 70% of economists predicting weak growth for the remainder of 2024. Other regions are expected to experience broadly moderate growth, with a slight improvement since the previous survey.



<figure class="wp-block-image"><img decoding="async" src="https://assets.weforum.org/editor/IO4DnivC687EtO1AJbeZmdy9rfqIjBXRQ96_ubSGNzk.jpg" alt=""/></figure>



<h2 class="wp-block-heading" id="h-a-challenging-landscape-for-decision-makers">A challenging landscape for decision-makers</h2>



The latest survey highlights the escalating challenges confronting businesses and policy-makers. Tensions between political and economic dynamics will be a growing challenge for decision-makers this year, according to 86% of respondents, while 79% expect heightened complexity to weigh on decision-making.



Among the factors expected to affect corporate decision-making are the overall health of the global economy (cited by 100%), monetary policy (86%), financial markets (86%), labour market conditions (79%), geopolitics (86%) and domestic politics (71%). Notably, 73% of economists believe that companies&#8217; growth objectives will drive decision-making, almost double the proportion that cited the role of companies’ environmental and social goals (37%).



<h2 class="wp-block-heading" id="h-long-term-prospects-and-priorities">Long-term prospects and priorities</h2>



Most chief economists are upbeat about the prospects for a sustained rebound in global growth, with nearly 70% expecting a return to 4% growth in the next five years (42% within three years). In high-income countries, they expect growth to be driven by technological transformation, artificial intelligence, and the green and energy transition. However, opinions are divided on the impact of these factors in low-income economies. There is greater consensus on the factors that will be a drag on growth, with geopolitics, domestic politics, debt levels, climate change and social polarization expected to dampen growth in both high- and low-income economies.



<figure class="wp-block-image"><img decoding="async" src="https://assets.weforum.org/editor/uWdP2yTU2GLztw6zgvz4DTLDRg5OYGH6P2vq8doEPvY.jpg" alt=""/></figure>



In terms of the policy levers most likely to foster growth in the next five years, the most important across the board are innovation, infrastructure development, monetary policy, and education and skills. Low-income economies are seen as having more to gain from interventions relating to institutions, social services and access to finance compared to high-income economies. There is a notable lack of consensus on the impact for growth of environmental and industrial policies.



<h2 class="wp-block-heading" id="h-about-the-chief-economists-outlook-report">About the Chief Economists Outlook Report</h2>



The&nbsp;<a href="https://www.weforum.org/publications/chief-economists-outlook-may-2024/">Chief Economist Outlook</a>&nbsp;builds on the latest policy development research as well as consultations and surveys with leading chief economists from both the public and private sectors, organized by the World Economic Forum’s Centre for the New Economy and Society. It aims to summarize the emerging contours of the current economic environment and identify priorities for further action by policy-makers and business leaders in response to the compounding shocks to the global economy. The survey featured in this briefing was conducted in April 2024.



The&nbsp;Chief Economists Outlook&nbsp;supports the World Economic Forum’s&nbsp;Future of Growth Initiative, a two-year campaign aimed at inspiring discussion and action on charting new pathways for economic growth and supporting policy-makers in balancing growth, innovation, inclusion, sustainability and resilience goals. Learn more about the&nbsp;Future of Growth Initiative&nbsp;<a href="https://initiatives.weforum.org/future-of-growth-initiative/home" target="_blank" rel="noreferrer noopener">here</a>.

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Chief Economists: The Economic Outlook Is Brightening But Political Risks Loom Large in 2024

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/03/MicrosoftTeams-image-8-820x547.jpg" alt="" class="wp-image-415808" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/03/MicrosoftTeams-image-8-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/MicrosoftTeams-image-8-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/MicrosoftTeams-image-8-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/MicrosoftTeams-image-8-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/MicrosoftTeams-image-8-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/MicrosoftTeams-image-8-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Black woman in an African market receiving payment via contactless transfer from a customer using their mobile phones.
Photo: via Shutterstock</figcaption></figure>



Imagine Salimata working in Nairobi and sending money home to her mother every month, instantly and directly from her mobile money account in Kenya into her mother’s mobile money account in Burkina Faso. Instead of withdrawing cash to give to a remittance company and requiring her mother to travel to an agent to collect it, they both save time and money with lower fees and a better exchange rate.



Many governments across the continent have taken a giant leap forward in making this scenario real. More than half of all countries in Africa already have an instant payment system that allows every person, business, or government entity to transfer money to each other, no matter which bank or financial service provider they use. We believe it is possible to establish such inclusive instant payment systems in every African country by 2030.



But we mustn’t stop there. Governments should seize this momentum to connect these systems to each other to enable continent-wide instant payments by the end of the decade &#8212; building a future-ready interoperable African payment systems that can be an exemplar for cross-border payments globally.



This is an ambitious but achievable objective – and vital to enable the <a href="https://www.worldbank.org/en/topic/trade/publication/free-trade-deal-boosts-africa-economic-development">African Continental Free Trade Area</a> to grow intra-Africa trade from 18% to about 50% by 2030. There are already instant payment systems in place across 34 African countries. Systems&nbsp;that support&nbsp;instant payments across borders are available today (such as GIMACPAY in the CEMAC region, PAPSS, TCIB in the SADC region, BUNA for the Arab countries) or are being built (in the WAEMU, COMESA,&nbsp;ECOWAS, and EAC regions).



By enabling instant payments from local currency to local currency, these regional instant payment systems have the potential to become early exemplars of the G20 Roadmap for Enhancing Cross-border Payments, demonstrating the high potential to boost growth and trade by making these payments faster, cheaper, and more transparent.



As they become increasingly interconnected, these systems will catalyze the emergence of pan-African companies, driving innovation and competition for the benefit of all consumers. Inclusivity must be at the heart of these efforts, particularly addressing the challenges that women face in accessing financial services. Five African countries still forbid women to open a bank account without a male co-signer. We need more women at the table helping design these systems and the products they make possible, and we need to track data by gender to measure progress. Inclusivity also requires that non-bank financial service providers be connected to these systems. Mobile-money providers are the drivers of financial inclusion across Africa.



As African leaders meet at the African Development Bank’s annual meeting in Kenya later this month, they have an opportunity to harness the momentum to enable all countries in Africa to deliver inclusive growth, jobs, and streamlined access to services and opportunities.&nbsp;Instant payment systems are an integral component of building a safe, inclusive digital public infrastructure (DPI), along with other components like digital ID and data exchange, and they provide the most immediate opportunity to begin implementing interconnected DPI across Africa. This is also a moment to guide the existing and future regional systems towards a continental blueprint so that every single African country is connected to at least one and possibly several of these systems.



Realizing this opportunity starts with mobilizing the political will, technical assistance, and funding to implement inclusive instant payment systems in every country in Africa. Interconnecting these systems and achieving the full benefits requires harmonizing regulations, including &#8220;passporting&#8221; risk-proportional payment licenses to allow easier expansion of fintech companies across countries.



We urge decision-makers to work toward establishing a unified payment services directive at the African Union. Similar to Europe&#8217;s initiative, such a directive could not only address the challenges inherent to dealing with a complex regulatory landscape, but also boost competition, consumer protection, and women’s economic power across the continent.



As more and more countries move to build an instant payment system, they can turn to a powerful network to support their immediate needs for information and funding. Technical assistance is freely available from entities including the World Bank and <a href="https://www.africanenda.org/">AfricaNenda</a> who can share lessons and best practices. Countries can freely adapt open-source software, like <a href="https://mojaloop.io/">Mojaloop</a> or <a href="https://tazama.org/index.html">Tazama</a>, to build their payment systems rather than start from scratch, lowering costs. Funding is available from initiatives like Co-Develop and other donors, and more resources are being mobilized. We estimate it would cost a few $100 million to set up inclusive, instant payment systems across all of Africa, offering an amazing social impact with a relatively small investment compared to other infrastructure. We recognize this will not be an easy task, but we are optimistic that continent-wide, interconnected &nbsp;inclusive instant payment systems are within reach. And in doing so, the African continent can be a role model for the rest of the world. Salimata will continue to support her mother, only instantly and affordably. Hundreds of millions like her will prosper and build resiliency as well.



Sabine Mensah is deputy CEO of AfricaNenda Michael Wiegand is Director of Inclusive Financial Systems at the Bill &amp; Melinda Gates Foundation

Black,Woman,In,An,African,Market,Receiving,Payment,Via,Contactless

How instant payment systems across Africa can be the role model for the world

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/05/levi-meir-clancy-bxyV1SfGMFU-unsplash-820x547.jpg" alt="" class="wp-image-490015" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/05/levi-meir-clancy-bxyV1SfGMFU-unsplash-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/levi-meir-clancy-bxyV1SfGMFU-unsplash-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/levi-meir-clancy-bxyV1SfGMFU-unsplash-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/levi-meir-clancy-bxyV1SfGMFU-unsplash-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/levi-meir-clancy-bxyV1SfGMFU-unsplash-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/levi-meir-clancy-bxyV1SfGMFU-unsplash.jpg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo Credit: Levi Meir Clancy</figcaption></figure>



All for health, health for all. That’s the theme of this year’s World Health Assembly (WHA)’s annual meeting. It encapsulates the central problem facing all health systems – and, by extension, the ministers who direct them – that every individual should have equal access to the health services they require without financial hardship. The truth is that very few people do.



The COVID-19 pandemic has been a transformative force for healthcare systems, both positively and negatively. On the positive side, it accelerated the development of vaccines, fostered the creation of alternative care models, and spurred the digitalization of health services. However, it also unleashed a host of challenges. It disrupted universal health coverage, disproportionately affecting low- and middle-income countries (LMICs), triggered a mass departure of healthcare workers, and wreaked havoc on families and societies with its toll on lives and resources.



Health ministers are agents of change; the more effective they are, the greater the change. Typically, however, health ministers face a raft of challenges, blunting their effectiveness. Health portfolios are often under-resourced in terms of funding and personnel. Compared to their ministerial counterparts, the health minister typically has less influence and power, resulting in health needs slipping down the list of priorities in the face of mounting geopolitical and economic challenges. And yet, health ministers should be at the forefront of setting and championing health policies on the pressing challenges of our day.



As the World Health Organisation’s decision-making body, the WHA is at the vanguard of tackling global health-related challenges. It has enjoyed marked success since its inception, notably in eradicating smallpox and polio and facilitating the collaboration required to develop and distribute vaccines for malaria and COVID-19. The WHA is currently turning its attention to continued work in the field of immunisation and pandemic preparedness, as well as improving maternal health, addressing Antimicrobial Resistance (AMR), climate and health issues, and finally, workforce health, the progress on which then affects health-related elements of the SDGs.



The organization operates at the direction of its member states. Still, it is important to note that its mandate has grown disproportionately large in relation to its funding, potentially affecting its longer-term ability to deliver. This is vital to understand because it means that some of the support to effect change needs to come from elsewhere, most obviously through the health ministers of WHA member states and through the type of collaboration and knowledge sharing that the World Economic Forum and its stakeholders can offer.



Governments often view the likes of health, education, housing, transport, or the green transition as conflicting priorities when, in fact, they should be viewed holistically as drivers of health and invested in as such. On a broad level, we need to think about why healthcare is not better prioritised in different situations globally and how the situation can be changed. This may, in turn, provide the answers and solutions to the dilemma of the health minister, who faces the same problems at a ministerial level. The crux of the issue is that health ministers make decisions affecting all societal sectors and, ultimately, a country’s prosperity. Therefore, health ministries must be adequately resourced, and their ministers must be given the agency and knowledge to effect change.



No ‘one size fits all’ approach will eradicate the world’s health and healthcare provision problems, but all would benefit from stronger collaboration, dialogue, and shared best practices. Through its multistakeholder approach, which naturally provides a range of perspectives on an issue, the World Economic Forum’s Centre for Health &amp; Healthcare helps to strengthen the knowledge and understanding of those health ministers and ministries with which it works. In doing so, it seeks to propel the global health agenda and accelerate the progress of health-related SDGs.



Mirroring the WHA’s current priorities, the Forum has several primary action areas for its workstreams during 2024 and 2025 – AMR, climate &amp; health, digital health, health equity and women’s health. These are vital areas in need of further attention and action, without which health services globally will face increased challenges and costs.



AMR offers a good example because as antibiotics and antimicrobial drugs prove increasingly ineffective against infection, mortality rates will increase, hospital stays lengthen and healthcare costs rise, potentially reaching trillions of dollars by 2050. To address this, health ministers must be given the agency to champion multifaceted policies, but they need support to achieve this.



The Forum is dedicated to strengthening continued collaborations between government – and with them, their health ministers – and business to improve access to healthcare worldwide. A prime example of how it supports knowledge sharing between the public and private sectors is the Forum’s support for the Global Alliance for Women’s Health, which, at the WHA meeting, will launch the Cervical and Breast Cancer Coalition in collaboration with Kenya’s Ministry of Health.



Highlighting how health ministers can be empowered with greater knowledge and expertise, the coalition will provide ministers and their teams with access to expert partners and resources to help identify gaps and challenges and then step in to support health strategy. Incidents of regional best practice can then be shared and scaled up, where appropriate.



Everyone deserves quality, affordable, accessible healthcare products and services, and healthcare services deserve the resources and agency to offer this. By better supporting health ministries and strengthening the role and position of health ministers, we can create a virtuous circle in which health is prioritised, accelerating progress in tackling local and global health challenges.

levi-meir-clancy-bxyV1SfGMFU-unsplash

Why health ministers must be at the forefront of global healthcare processes

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/Absa_HQ-820x547.jpg" alt="" class="wp-image-400651" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/Absa_HQ-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/Absa_HQ-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/Absa_HQ-768x513.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/Absa_HQ.jpg 830w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">ABSA has rebranded itself and its logo is on display at its headquarters in Johannesburg and surrounds on Tuesday, August 7 2018. Pic: Waldo Swiegers / Bloomberg</figcaption></figure>



Authors: Sejeng Matlhako, Head: Regional Transactional Banking Sales (Business Banking) Absa CIB and Stanley Hlamalani Godi, Regional Segment Head: Relationship Banking Coverage Growth, Absa Group



Growth-focused businesses in South Africa are increasingly looking to cross-border trade for opportunities to develop their bottom-line and deepen their revenue channels. A combination of the right banking partner and technology is making this a viable option for organisations looking for new markets.



It is no secret that economic growth in South Africa has been constrained through a number of factors which has left the International Monetary Fund (IMF) forecasting a growth rate of just 1% in 2024.



With a growth rate of 1%, the economic pie is not getting any bigger and entrepreneurs are forced to compete with each other and navigate increasingly narrow operating margins.



The problem with being inwardly focused and purely looking at the South African market is that we forget that we form a part of the global economy. Tourism for example has recorded a significant rebound in 2023 – while it hasn’t quite reached pre-COVID-19 levels, 8.5 million tourists came into South Africa. While the sector has been negatively impacted by the pandemic enforced lockdowns, it does contribute nearly 9% to Gross Domestic Product (GDP). In Rand terms, data from Statistics South Africa indicated that domestic visitors spent R435bn in 2022 and pre-pandemic, international tourists were bringing in over R121bn per year. These are sizable markets in the South African context and represent very real business opportunities.



Agriculture has been another positive proof point for international trade with South African products being exported across the globe and soybeans and avocadoes are in great demand from the European Union (EU) through to China. Research out of the Agriculture Business Chamber released in February 2024 indicated that South Africa hit a new record in exports in 2023 with $13.2bn – this was achieved despite major issues at the ports and other logistics constraints. Importantly, the sector was not simply driven by exports but also included $7bn in imports.



Import and Export trade is not limited purely to the traditional markets like the EU, China, India, and the US. Earlier this year, President Ramaphosa announced South Africa’s first shipment and preferential trading under the African Continental Free Trade Area (AfCFTA). According to the World Bank, if fully implemented, the AfCFTA could raise incomes by 9% by 2035 and lift 50 million people out of extreme poverty.



As South African – and broader African businesses – are waking up to the opportunities beyond their home markets, the issue of access to finance becomes a key challenge. If we look across our portfolio and where we are seeing a lot of activity, it is typically in capital-intensive sectors including logistics, automotive, mining and manufacturing.



A major pain point that many of the growth businesses in our commercial and business banking portfolios face is that they often struggle with cashflow issues and then are forced to pursue funders who offer quick turnaround times but at very expensive rates. This is an interesting dynamic that is playing out in the market at the moment where fintech’s in the lending space are offering funding solutions which are perhaps nimbler than those offered from traditional banks, but which often come at a higher cost to the entrepreneurs.



One of the frustrations that the banking sector often encounters is that its clients are taking on the incorrect type of funding solutions for their long-term sustainability. The right solutions may take longer to unlock but should be more suitable for the client in the long run. This could include cheaper debt, lower administration fees and more flexible payment terms.



While there is a natural tension between the banks and the fintech operators, one of the areas where we are seeing some encouraging gains is around the Digitisation of client documents and other records required for finance. Whether you are applying for funding or you are importing and exporting goods, you shouldn’t be filling in the same forms over and over again with high levels of administrative friction inhibiting your ability to do business.



We are encouraged by the partnerships we are seeing with our stakeholders to introduce digital solutions to reduce friction and allow for swifter transacting across the business banking ecosystem – from SME through to larger corporate transactions.



Lastly, we believe that if we are serious about the subject of growth in South Africa, then we cannot ignore the Environmental, Social and Governance (ESG) discussion. While many of the larger businesses – including multinationals and those listed on the JSE &#8211; in South Africa are beginning to understand the role that ESG plays in terms of unlocking funding and opportunities, many of our business banking clients and stakeholders do not understand how they can utilise this as a growth channel for themselves.



Banks have a key role to play in educating the market around ESG solutions and how they can participate.



South African and African businesses form a key part of the global economy and while there are some constraints around growth, we have the ability to participate in the broader global economy. If we can identify solutions that include import and export of products, we are no longer constrained by the domestic economy. It is a global playground for entrepreneurs, and we look forward to working with them to unlock these growth opportunities to see them flourish.

Absa Reboots Image As 100 Years Of Barclays In Africa Ends

Unlocking growth: Cross-border trade gives African entrepreneurs access to new markets

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="216" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/05/2099x600-ssa-cf-critical-minerals-hero-820x216.jpg" alt="" class="wp-image-486162" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/05/2099x600-ssa-cf-critical-minerals-hero-820x216.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/2099x600-ssa-cf-critical-minerals-hero-300x79.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/2099x600-ssa-cf-critical-minerals-hero-160x42.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/2099x600-ssa-cf-critical-minerals-hero-768x202.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/2099x600-ssa-cf-critical-minerals-hero-1536x405.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/2099x600-ssa-cf-critical-minerals-hero-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



The region has an opportunity to develop critical minerals markets and processing industries to maximize the coming boom



From electric vehicles to solar panels to future innovations, the global transition to clean energy is set to further heighten demand for critical minerals. Between 2022 and 2050, demand for nickel will double, cobalt triple and lithium rise tenfold, according to the International Energy Agency. With sub-Saharan Africa estimated to hold about 30 percent of the volume of proven critical mineral reserves, this transition—if managed properly—has the potential to&nbsp;<a href="https://www.imf.org/-/media/Files/Publications/REO/AFR/2024/April/English/MineralsNote.ashx">transform the region</a>, the latest&nbsp;<a href="https://www.imf.org/en/Publications/REO/SSA/Issues/2024/04/19/regional-economic-outlook-for-sub-saharan-africa-april-2024">Regional Economic Outlook</a>&nbsp;reports.



<figure class="wp-block-image"><img decoding="async" src="https://www.imf.org/-/media/Images/IMF/News/Country-Focus/2024/Charts/afr-cf-critical-minerals-chart1-v1.ashx?w-1200px" alt=""/></figure>



Sub-Saharan Africa is already at the center of global critical mineral production. The Democratic Republic of Congo accounts for over 70 percent of global cobalt output and approximately half the world’s proven reserves. South Africa, Gabon and Ghana collectively account for over 60 percent of global manganese production. Zimbabwe, alongside the Democratic Republic of Congo and Mali, hold substantial but yet-to-be-explored lithium deposits. Other countries with significant critical mineral reserves include Guinea, Mozambique, South Africa, and Zambia.



With growing demand, proceeds from critical minerals are poised to rise significantly over the next two decades. Global revenues from the extraction of just four key minerals—copper, nickel, cobalt, and lithium—are estimated to total $16 trillion over the next 25 years, in 2023-dollar terms. Sub-Saharan Africa stands to reap over 10 percent of these cumulated revenues, which could correspond to an increase in the region’s GDP by 12 percent or more by 2050. Given the volatile nature of commodity prices and the unpredictability over the future direction of technological innovation, these estimates have a high degree of uncertainty—but the general direction is certainly encouraging.



Beyond extraction



The region can generate even greater windfalls by not only exporting raw materials but processing them as well. Raw bauxite, for instance, fetches a modest $65 per ton, but when processed into aluminum it commands a hefty $2,335 per ton, in end-2023 prices. Yet the thousand trucks a day that carry unprocessed lithium from Zimbabwe to ports for shipping to China show that local processing options for critical minerals are too often limited.



<figure class="wp-block-image"><img decoding="async" src="https://www.imf.org/-/media/Images/IMF/News/Country-Focus/2024/Charts/afr-cf-critical-minerals-chart2-v2a.ashx?w-1200px" alt=""/></figure>



Developing local processing industries could significantly boost value added, create higher-skilled jobs, and increase tax revenues—thereby also supporting poverty reduction and sustainable development. By diversifying their economies and moving up the value chain, countries will become less exposed to volatile commodity prices, and more able to protect themselves against exchange rate volatility and foreign currency reserve pressures.



Foreign direct investment can help provide the capital and expertise to develop mineral processing industries, but the absence of a substantial regional market makes local processing investments less enticing. Policymakers need to remedy this.



Regionally coordinated policies



A regional strategy built on cross-border collaboration and integration can create a larger, more attractive regional market for much-needed investment. A regional strategy is also essential to fully leverage the diversity of critical minerals—clean energy technology requires combining multiple minerals scattered across the region.



Sub-Saharan Africa’s anticipated population boom, coupled with rapid urbanization and industrialization, will likely increase demand for renewable energy and expand the market for processed minerals. The African Continental Free Trade Area can play a key role in reducing trade barriers and developing infrastructure, potentially uniting fragmented critical mineral markets for larger-scale operations and forming regional value chains that draw on both raw and processed mineral inputs. Coordination can also start on a smaller scale, paving the way for larger regional hubs. For example, the Democratic Republic of the Congo and Zambia are collaborating on battery production for two- and three-wheeled electric vehicles popular in African markets.



Countries also need to collaborate on policies to create more favorable investment and business environments. Simplifying bureaucratic procedures and harmonizing mining regulations across borders would foster a stable, predictable investment environment. Efforts to minimize the environmental impacts of mining and processing will help unlock new funding and investment opportunities in green finance. Strengthening the Africa Mining Vision, launched in 2009 by the African Union, could serve as a key framework for these regional efforts.



Domestic reforms



Complementing regional approaches, countries can undertake structural reforms to support domestic companies in mining and related processing sectors. They should approach the application of local content requirements, which mandate the use of local materials and labor, with caution. More broadly, many countries need to reevaluate their inward-looking policies, which can often result in inefficiencies, market distortions, and increased costs. Export bans on raw materials, in particular, can backfire and cause production to fall.



Countries can develop a supportive business environment by strengthening domestic financial markets and improving access to finance. New fintech innovations offer exciting potential to help firms that serve the mining sector but face difficulties in securing traditional financing. Managing new resource windfalls responsibly also requires accountable and transparent institutions, allied with appropriate tax regimes and sound public financial management.

2099×600-ssa-cf-critical-minerals-hero

Harnessing Sub-Saharan Africa’s Critical Mineral Wealth

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1024" height="682" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/05/IMG-20240424-WA0008-1.jpg" alt="" class="wp-image-485072" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/05/IMG-20240424-WA0008-1.jpg 1024w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/IMG-20240424-WA0008-1-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/IMG-20240424-WA0008-1-820x546.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/IMG-20240424-WA0008-1-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/IMG-20240424-WA0008-1-768x512.jpg 768w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Yershen Pillay, CEO of Chemical Industries Education &amp; Training Authority(CHIETA)</figcaption></figure>



The recent announcement by Shell that it will be divesting from its downstream operations in South Africa has been turned into a political football to score cheap political points by some in society. The sensationalism surrounding Shell’s exit is associated with the upcoming national elections. However, a more comprehensive analysis paints a picture of a company implementing its global strategy, regardless of what the issues may be in the South African context.



It’s important to highlight the facts. This is not the first time that an oil major has taken a decision to divest from some of its key business operations. Similar decisions were taken by Chevron in 2018, including Engen and Puma. Why was the same level of attention not given to these companies over similar decisions made in the past? Perhaps the context was not favourable for any political party to do so. That said, we cannot ignore the fact that such decisions by oil and gas companies are not new or unique in the chemical industries.



The decision taken by Shell to divest from its downstream business operations is aligned to its 2024 Energy Transition Strategy. Shell has openly communicated its strategy to reduce carbon emissions and focus on its more profitable upstream businesses. In the actual strategy document, Shell Chairperson Sir Andrew Mackenize states, “We aim to grow our public charging network for electric vehicles and remain one of the world’s largest blenders and distributors of biofuels. As the energy transition progresses, we expect to sell more low-carbon products and solutions, and less oil products including petrol and diesel.”



Furthermore, it is important to consider that Shell has taken similar decisions in other countries and not just South Africa. This includes countries such as Singapore and Malaysia. Shell has sold its 61-year-old refinery in Singapore, announced plans to sell its 950 service stations in Malaysia, and the company recently announced its plans to sell its onshore subsidiary in Nigeria. These decisions are more aligned to Shell’s 2024 Energy Transition Strategy than they are to any of the other factors being highlighted in the mainstream media.



What does this mean for us in South Africa? It means that we have been presented with a massive opportunity. Why is this an opportunity and how can we seize this opportunity?



First, the decision by Shell may present an opportunity for substantive transformation and local economic development rather than a loss of foreign investment. The petroleum sub-sector in the chemical industries remains largely untransformed. Many of the transformation initiatives have led to BBBEE companies becoming “post-box” type companies without any involvement in actual oil and gas production or petroleum operations. Shell’s exit from its downstream operations presents an opportunity for increasing transformation in the sector. The gap in the market will be filled by another oil or energy major. The question is whether our local South African companies will be supported to seize such an opportunity or will it be left to international oil and energy majors such as Vitol to step in.



The second opportunity lies in the potential for new jobs to be created. Jobs will not be lost. In fact, as we have seen with Astron Energy after Chevron exited South Africa in 2018, it is highly likely that most jobs will be sustained. Shell has actually been “job-shedding” since 2019 with employment across its three businesses in South Africa declining from 1&nbsp;423 to 1&nbsp;062 employees in the country. A new business with a new strategy could turn this tide towards more positive jobs figures.



The third opportunity lies in SMME and skills development. The takeover of Shell’s downstream businesses could present an opportunity for new venture creation and local skills development which is much needed in the petroleum sub-sector. This is not to suggest that Shell has not been contributing to SMME or local skills development. Shell contributes significantly to skills levies being the 11th largest contributor in the chemical industries. What it does present is an opportunity for a &nbsp;more rigorous focus on SMME and skills development through a more innovative strategy.



There was no need to justify why South Africa remains a desirable investment destination. The government of Singapore did not attempt to explain why Singapore remains a desirable investment destination when Shell recently decided to sell its 61-year-old refinery in the country. The Malaysian government did not bother explaining why Malaysia is still good for business after Shell announced it’s plans to divest from 950 service stations throughout the South East Asian country. Similarly, the South African government should interpret Shell&#8217;s exit from its downstream operations as an opportunity rather than a loss.



The Chemical Industries SETA, CHIETA, will continue to support the growth and development of the petrochemicals sector through our increased investments into skills development and training. Shell’s exit presents three opportunities. First, an opportunity for new job creation that benefits local citizens. Second, an opportunity for substantive transformation through local beneficiation. Third, an opportunity for increasing the scale, scope, and speed of SMME and skills development. The question is whether we can seize these three opportunities for the benefit of local South Africans.

IMG-20240424-WA0008-1

Shell’s exit from SA is not a loss, it’s an opportunity.

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/05/SA24_28April_AJAS-01369-1-820x547.jpg" alt="" class="wp-image-483477" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/05/SA24_28April_AJAS-01369-1-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/SA24_28April_AJAS-01369-1-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/SA24_28April_AJAS-01369-1-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/SA24_28April_AJAS-01369-1-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/SA24_28April_AJAS-01369-1-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/05/SA24_28April_AJAS-01369-1-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Anwar Ibrahim, Prime Minister of Malaysia; Bola Ahmed Tinubu, President of Nigeria; Børge Brende, President, World Economic Forum; Faisal Alibrahim, Minister of Economy and Planning of Saudi Arabia; Kristalina Georgieva, Managing Director, International Monetary Fund (IMF), Washington, DC; Maroun Kairouz, Head of Middle East and North Africa, World Economic Forum; Paul Kagame, President of Rwanda; Peter Orszag, Chief Executive Officer, Lazard, USA; Speaking in the Opening Plenary: A New Vision for Global Development session at the Special Meeting on Global Collaboration, Growth and Energy for Development 2024. Riyadh, Saudi Arabia. 28 April 2024. King Abdul Aziz International Conference Center, Plenary.Copyright: World Economic Forum/Deepu Das</figcaption></figure>



MENA faces multiple challenges, from conflict to economic woes, humanitarian problems, and mounting climate-related issues, all of which are exacerbated by a lack of cohesiveness. As the World Economic Forum’s forthcoming <a href="https://www.weforum.org/events/special-meeting-on-global-collaboration-growth-and-energy-for-development-2024/">Special Meeting on Global Collaboration, Growth and Energy for Development</a> in Riyadh highlights, not only must MENA navigate this context, but also prepare for an emerging economic era, which could be called the “age of intelligent economies”. The idea behind intelligent economies is to have multiple intelligence systems – like artificial intelligence (AI), 5G and the internet of things (IoT) – working together, a situation that is more likely to result in far greater gains and innovations. Currently, however, these technologies are developing in isolation.



AI, particularly generative AI, is receiving a lot of attention, after leaping to the forefront of the wider consciousness during 2023 through apps like ChatGPT. These models are expected to develop to the point where they significantly boost productivity and growth, empower individuals, and address major social challenges. Although MENA’s take up of the tools of the intelligent economy is, like much of the rest of the world, lacking uniformity and a coherent strategy, this hasn’t dampened prospects for parts of the region – <a href="https://frontierview.com/insights/mena-region-aims-to-enhance-advanced-technology/">growth figures for AI</a> have the potential to reach <a href="https://www.pwc.com/m1/en/publications/potential-impact-artificial-intelligence-middle-east.html">$320 billion by 2030</a> – and notably, Saudi Arabia, in March, pledged a <a href="https://www.nytimes.com/2024/03/19/business/saudi-arabia-investment-artificial-intelligence.html">$40 billion</a> AI investment fund.



The region is already using AI to address specific problems, including MENA’s rapidly dwindling supply of potable water. <a href="https://www.thenationalnews.com/opinion/comment/2024/01/05/in-the-mena-region-water-scarcity-is-ais-biggest-challenge-and-opportunity/">Growing water scarcity</a> is a well-documented problem and it is estimated that by 2050, MENA will need an extra 25 billion cubic metres of water annually. This equates to 65 desalination plants the size of the world’s largest, Saudi Arabia’s Ras Al Khair plant. Currently, AI is being used to make the desalination process more cost effective and energy efficient. In time, it is envisaged that AI will better optimize the process, reduce its environmental impact and help detect potential infrastructure vulnerabilities.



As real-world applications multiply for intelligent economy technologies, it is feared that their access and take-up, along with development and growth, will be uneven. For MENA, looking at the issue and pace of digital transformation, attention is mainly focused on the Gulf. There has, for example, been significant <a href="https://economymiddleeast.com/news/generative-ai-in-mena-to-hit-23-5-billion-by-2030/">investment into data centres</a> in these countries since 2022, creating large-scale projects worth hundreds of millions of dollars.



Gulf states are also publishing plans for how to modernize public services through technology. They are also producing measures to promote the growth of the ICT sector, supporting 5G adoption, enhancing the accessibility of digital services to their citizens, and enacting accompanying legislation, particularly in data and cybersecurity. This activity isn’t mirrored in the poorer states.



To take full advantage of the benefits of intelligent economies, the region must pursue four key shifts. The first of these is to play to its strengths. MENA has a massive advantage in having cheap electricity and abundant, unused land, both of which are key inputs for data centres. It should more swiftly green its energy supply, which would in turn, compound its natural advantages, resulting in a more sustainable, lower-cost energy market.



In terms of policy changes and underscoring its strong relations with countries and blocs as diverse as China, Europe and the US, MENA would be well positioned to offer to both “greenshore” and “friendshore” critical industries, such as certain types of semiconductors. To support this transition, it should replace fossil fuel subsidies. The region has made progress in this area, according to the Forum’s <a href="https://initiatives.weforum.org/energy-and-industry-transition-intelligence/energy-transition-index">Energy Transition Index 2023</a>, but continues to spend $500 billion to $600 billion a year, money that could be better spent on social security or intelligent economy investment.



Secondly, MENA needs to pursue more initiatives that will support the push to make AI work in an inclusive and non-biased way. Currently, just 0.7% of the <a href="https://www.arabnews.com/node/2388336/middle-east">top content</a> for large language learning (LLMs) models is in Arabic. In May last year, Abu Dhabi made its AI model, <a href="https://www.reuters.com/technology/abu-dhabi-makes-its-falcon-40b-ai-model-open-source-2023-05-25/">Falcon 40B</a>, open source, &nbsp;in July 2023, <a href="https://www.arabnews.com/node/2388336/middle-east">Jais</a>, the first LLM to support Arabic, was released, and in March this year, Saudi developers released <a href="https://www.middleeastainews.com/p/first-llm-trained-saudi-data-sets">Mulhem</a>, an LLM trained exclusively using Saudi data sets. MENA is ideally placed – in terms of technological know-how and influence – to pursue this further.



This type of activity is ripe for public-private partnerships, as are the changes to facilitate intelligent economies more widely. This is an important third point and will require a significant shift in thinking. The changes that are under way are too large to be handled solely by the public sphere. The private sector needs to be a partner in this transformation, and in doing so, create a strong competitive advantage on the new-look global stage. In this regard, the recent announcement that Microsoft is investing <a href="https://www.google.com/search?client=safari&amp;rls=en&amp;q=G42%2FMicrosoft&amp;ie=UTF-8&amp;oe=UTF-8">$1.5 billion</a> in Abu Dhabi’s AI group, G42, marks a step in the right direction.



A fourth important area is integration. MENA is one of the world’s least integrated regions with just <a href="https://www.economist.com/middle-east-and-africa/2022/09/22/trade-and-security-ties-are-knitting-israel-into-its-region">18%</a> of intra-regional trade. Scale matters and the larger the market, the more attractive the region will become to investors. MENA operating as a region, rather than piecemeal, makes it more likely it can develop technologies that suit its needs. Its oil-rich states have the capital and talent to develop this type of policy, but it needs to extend this regionwide.



Integration would spread gains more equally throughout the region to support nascent strides that are made in countries like Morocco and Tunisia. The former recently inaugurated the <a href="https://aim.um6p.ma/en/home/">Moroccan International Centre for Artificial Intelligence</a>, aiming to transform the nation into a regional AI hub, while the Tunisian AI and tech sectors have made remarkable leaps; notably, German-based company BioNTech has acquired <a href="https://www.instadeep.com/2024/02/time-honours-instadeep-ceo/">InstaDeep for $550m</a>.



It is clear that intelligent economies potentially offer MENA a means to address some of its most pressing challenges. This potential can be realized if technologies are developed holistically and the region works together. Failing to do so, threatens to exacerbate existing problems and scuttle wider progress. That’s why meetings like the one in Riyadh are ever-more important, providing an opportunity to harness dialogue and cooperation for the most pressing and contentious frontier technology challenges and opportunities.



The World Economic Forum is convening the <a href="https://www.weforum.org/events/special-meeting-on-global-collaboration-growth-and-energy-for-development-2024/">Special Meeting on Global Collaboration, Growth and Energy for Development</a> from 28-29 April 2024, in Riyadh.

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Four steps MENA must take to develop intelligent economies

Energy2

Africa’s future must stand on the shoulders of a new Afrocentric philosophy

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="333" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/afr-ssa-reo-sm24-hero-image-820x333.jpg" alt="" class="wp-image-479650" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/afr-ssa-reo-sm24-hero-image-820x333.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/afr-ssa-reo-sm24-hero-image-300x122.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/afr-ssa-reo-sm24-hero-image-160x65.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/afr-ssa-reo-sm24-hero-image-768x311.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/afr-ssa-reo-sm24-hero-image-1536x623.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/afr-ssa-reo-sm24-hero-image-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



After four turbulent years, the outlook for sub-Saharan Africa is gradually improving. Growth will rise from 3.4 percent in 2023 to 3.8 percent in 2024, with nearly two thirds of countries anticipating higher growth. Economic recovery is expected to continue beyond this year, with growth projections reaching 4.0 percent in 2025. Additionally, inflation has almost halved, public debt ratios have broadly stabilized, and several countries have issued Eurobonds this year, ending a two-year hiatus from international markets.



However, not all is favorable. The funding squeeze persists as the region’s governments continue to grapple with financing shortages, high borrowing costs, and impending debt repayments. Risks to the outlook remain tilted to the downside. The region continues to be more vulnerable to global external shocks, as well as the threat of rising political instability, and frequent climate events. Three policy priorities can help countries adapt to these challenges: improving public finances without undermining development; monetary policy focused on ensuring price stability; and implementing structural reforms to diversify funding sources and economies. Amid these challenges, sub-Saharan African countries will need additional support from the international community to develop a more inclusive, sustainable, and prosperous future.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="450" height="800" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/AFR-REO-Table-April-2024-450x800.jpg" alt="" class="wp-image-479649" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/AFR-REO-Table-April-2024-450x800.jpg 450w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/AFR-REO-Table-April-2024-169x300.jpg 169w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/AFR-REO-Table-April-2024-51x90.jpg 51w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/AFR-REO-Table-April-2024-768x1366.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/AFR-REO-Table-April-2024-864x1536.jpg 864w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/AFR-REO-Table-April-2024-scaled.jpg 1152w" sizes="auto, (max-width: 450px) 100vw, 450px" /></figure>

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A Tepid and Pricey Recovery

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="234" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/blog-fm1-adobestock-768870401-c-morimori-820x234.jpg" alt="" class="wp-image-477518" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/blog-fm1-adobestock-768870401-c-morimori-820x234.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/blog-fm1-adobestock-768870401-c-morimori-300x86.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/blog-fm1-adobestock-768870401-c-morimori-160x46.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/blog-fm1-adobestock-768870401-c-morimori-768x220.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/blog-fm1-adobestock-768870401-c-morimori-1536x439.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/blog-fm1-adobestock-768870401-c-morimori-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Credit: MoriMori / AdobeStock</figcaption></figure>



The global economic and financial outlook has improved in the last six months. Inflation has fallen, financial conditions have eased, and risks to the outlook are balanced. However, many countries continue to struggle with high public debt and fiscal deficits amid new challenges from high real interest rates and dimming medium-term growth prospects.



Our&nbsp;<a href="https://www.imf.org/en/Publications/FM/Issues/2024/04/17/fiscal-monitor-april-2024?cid=bl-com-SM2024-FMOEA2024001&amp;utm_medium=email&amp;utm_source=govdelivery">latest Fiscal Monitor</a>&nbsp;calls for governments to avoid slippages and focus more on rebuilding buffers and safeguarding fiscal sustainability over the medium term.



Fiscal policy shifted to be more expansionary last year after a rapid improvement in debt and deficits in the prior two years. Only half of the world’s economies tightened fiscal policy last year, down from about 70 percent in 2022.



Four years after the start of the pandemic, public spending, excluding interest payments, remained about 3 percentage points of gross domestic product above prepandemic projections in advanced economies, excluding the United States, and 2 percentage points above them in emerging market economies, excluding China. This spending level reflects the slow unwinding of crisis-era fiscal policies and the introduction of new support measures, alongside new industrial policy measures including subsidies and tax incentives. Higher nominal interest rates pushed up interest payments in most economies.



<a></a>Global public debt edged up to 93 percent of GDP in 2023 and remained 9 percentage points above the prepandemic level. The increase was led by the two largest economies, United States and China, where debt rose by over 2 and 6 percentage points of GDP respectively.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2024/04/17/why-our-world-needs-fiscal-restraint-in-biggest-ever-election-year?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2024/04/9330944/5390323/fm-ch1-chart1-v4_crop.png" alt="Charts showing general government gross debt and primary balance, from 2019 - 2028"/></a></figure>



These two economies also shape global fiscal developments and outlook. Slowing growth in China could weigh on global growth and trade, posing fiscal challenges for countries with strong trade and investment linkages. High and volatile government bond yields in the United States would lead to tighter financing conditions in the rest of the world.



Moderate fiscal tightening is expected to resume this year, but significant uncertainty remains.



In 2024, a record number of countries, home to more than half of the world’s population, are holding national elections. History shows governments tend to spend more and tax less during election years. Deficits in election years tend to exceed forecasts by 0.4 percentage points of GDP, compared to non-election years. In this great election year, governments should exercise fiscal restraint to preserve sound public finances.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2024/04/17/why-our-world-needs-fiscal-restraint-in-biggest-ever-election-year?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2024/04/9330911/5390324/fm-ch1-chart2-v4_crop.png" alt="Chart depicting the effect of election years on the fiscal deficit"/></a></figure>



While we project modest fiscal tightening over the medium term, it will be insufficient to stabilize public debt in many countries. Our chapter shows that, under current policies, primary deficits—which exclude interest expenses—will remain above debt-stabilizing levels in 2029 in about a third of advanced and emerging market economies and in almost a quarter of low-income developing countries. The size of necessary further adjustments varies. The required average reduction in primary deficits is particularly large for emerging markets with rising public debt-to-GDP ratios in our projections. We estimate it at 2.1 percentage points of GDP. The country groups in this paragraph include the two largest economies—the United States and China—in the appropriate aggregate.



Without further efforts, the return of fiscal policy to its prepandemic normal may take years. Spending pressures to address structural challenges—including demographic and green transitions—are becoming more pressing, while slowing medium-term growth prospects and high real interest rates are likely to further constrain fiscal space in most economies.



Countries need decisive efforts to safeguard sustainable public finances and rebuild fiscal buffers. The pace of consolidation should be calibrated depending on fiscal risks and macroeconomic conditions that each country faces. Countries will need to act resolutely in cases where sovereign risks are elevated and fiscal credibility is lacking.



Governments should immediately phase out legacies of crisis-era fiscal policy, including energy subsidies, and pursue reforms to curb rising spending while protecting the most vulnerable. Advanced economies with aging populations should contain spending pressures for health and pensions through entitlement reforms and other measures.



Revenue should keep up with spending over time. In advanced economies, targeting excessive profits as part of the corporate income tax system could further bolster revenues. Emerging market and developing economies could raise their tax revenue potential by broadening tax bases, improving the design of their tax systems, and strengthening revenue administration. Such measures could, in ideal circumstances, yield as much as an additional 9 percent of GDP, our research shows.



The foundations for sound and sustainable public finances require a medium-term approach to budgetary planning and execution. All countries can benefit&nbsp;from&nbsp;enhanced transparency of public finances and greater use of modern technology, known as GovTech. For countries in severe debt distress, orderly and timely debt restructuring is important. Continued international cooperation, including through the Group of Twenty Common Framework and the Global Sovereign Debt Roundtable, is crucial to facilitate an efficient debt restructuring process.

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Why Our World Needs Fiscal Restraint in Biggest-Ever Election Year

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="234" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/blog-gfsr1-adobestock-104956743-c-grandfailure-820x234.jpg" alt="" class="wp-image-477515" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/blog-gfsr1-adobestock-104956743-c-grandfailure-820x234.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/blog-gfsr1-adobestock-104956743-c-grandfailure-300x86.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/blog-gfsr1-adobestock-104956743-c-grandfailure-160x46.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/blog-gfsr1-adobestock-104956743-c-grandfailure-768x220.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/blog-gfsr1-adobestock-104956743-c-grandfailure-1536x439.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/blog-gfsr1-adobestock-104956743-c-grandfailure-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Credit: grandfailure / AdobeStock</figcaption></figure>



A sense of optimism has pervaded financial markets in recent months, amid investor confidence that the fight against inflation is entering its “last mile” and that central banks will ease monetary policy in the coming months. Stock markets around the world have risen substantially this year. Corporate and sovereign borrowing spreads have narrowed. And major emerging markets’ currencies and capital flows have remained resilient, while several frontier markets have regained access to international funding markets.



And yet, there are likely to be bumps along this last mile, as we show in the latest&nbsp;<a href="https://www.imf.org/en/Publications/GFSR/Issues/2024/04/16/global-financial-stability-report-april-2024?cid=bl-com-SM2024-GFSREA2024001&amp;utm_medium=email&amp;utm_source=govdelivery">Global Financial Stability Report</a>. Geopolitical tensions could intensify and weigh on investor sentiments. Strains in commercial real estate have become more acute, which could increase pressure on some lenders. China’s financial markets continued to be weighed down by ongoing problems in the property sector. Beyond these more immediate concerns, debt vulnerabilities continue to grow, with both the public and private sectors in many countries borrowing heavily, even though interest rates are still high and economic growth will likely not accelerate, as projected by the World Economic Outlook.



Taking a step back, there is recent evidence that disinflation may have stalled in some countries, and that underlying inflation may be persistent in some sectors. In some cases, core inflation has come in higher than analyst forecasts for consecutive months. Higher-than-expected readings could challenge the last-mile narrative and the related investor optimism, potentially leading to financial market repricing and higher volatility.&nbsp;



Sticky inflation



After decelerating quickly worldwide, inflation has diverged more recently across countries. Data so far this year show that core inflation accelerated in the most recent three months versus the three months prior in a number of major advanced and emerging economies (Czech Republic, France, Germany, Italy, Philippines, South Africa, Sweden, United Kingdom, United States).



Looking ahead, some investors appear to anticipate price pressures may not subside rapidly. Expectations for inflation in major economies over the next year or two—implied by the difference between nominal and inflation-linked government bond yields—have been climbing again. Importantly, they remain above central bank target levels of 2 percent, as in France, the United Kingdom and the United States, or 3 percent, as in Brazil and Mexico. Other measures of inflation expectations, like those from household surveys, appear more stable.&nbsp;



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2024/04/16/central-banks-must-remain-vigilant-along-the-last-mile-of-disinflation?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2024/04/9324394/5388173/gfsr-ch1-chart1-v2a_crop.png" alt="Chart of annual rate of bond yields (in percent) from November 2023 through April 2024 in Mexico, Brazil, UK, US, and France"/></a></figure>



At the same time, an intensification of geopolitical tensions could further disrupt shipping and energy production and push up inflation once again. So far, financial markets have remained broadly sanguine about stalling disinflation and other headwinds and risks, with volatility in major asset classes currently at low levels despite elevated measures of economic policy uncertainty.&nbsp;



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2024/04/16/central-banks-must-remain-vigilant-along-the-last-mile-of-disinflation?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2024/04/9324387/5388174/gfsr-ch1-chart2-v2_crop.png" alt="Chart of asset price volatility and economic policy uncertainty from 2013 to 2023"/></a></figure>



Repricing risks



Traditionally, a divergence between asset price volatility and uncertainty has preceded volatility spikes, which could occur when investors are jolted by adverse shocks, prompting their re-valuing of assets to account for high uncertainty.



One such adverse shock along the last mile could be upside inflation surprises. Despite the aforementioned uptick in projected future inflation in various countries, investors anticipate substantive policy rate cuts this year—reduction of about 75 basis points by the European Central Bank and the Central Bank of Brazil. Despite a string of upside inflation surprises in the United States, the Federal Reserve is still expected to cut rates by about 50 basis points. Investors appear to trust that data-dependent central banks will ease monetary policy when inflation decelerates further. But if inflation remains high, such lofty expectations could topple, which could lead to a correlated selloff of assets, from bonds to stocks to crypto assets.



Under this scenario, financial conditions would broadly tighten. Most immediately, some investors would face losses on the assets they hold, especially leveraged investors whose negative returns would be magnified. Globally, borrowers would find it&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2023/10/10/higher-for-longer-interest-rate-environment-is-squeezing-more-borrowers?utm_medium=email&amp;utm_source=govdelivery">harder to service debt</a>, given higher bond yields.



Emerging market borrowers are often disproportionately affected in these situations. Many such issuers already face refinancing rates higher than interest rates on outstanding US dollar-denominated sovereign bonds. More vulnerable emerging markets—those with credit ratings of B and CCC or below—face the largest increase in rates. An inflation-driven tightening of global financial conditions would make refinancing even more difficult.&nbsp;



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2024/04/16/central-banks-must-remain-vigilant-along-the-last-mile-of-disinflation?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2024/04/9324403/5388175/gfsr-ch1-chart3-v1_crop.png" alt="Chart of current interest rates vs. refinancing rates on US dollar bonds"/></a></figure>



Commitment to disinflation



The stalling of disinflation may surprise investors who are increasingly convinced that the battle against inflation has already been won and that low rates will prevail again. In economies still experiencing persistent and above-target inflation, central banks should not prematurely ease to avoid having to backpedal later. They should also push back against overly optimistic investor expectations for monetary policy easing, which has led to some exuberance in financial markets. Of course, where progress on inflation suggests it is moving sustainably toward target, central banks should gradually move to a less restrictive stance of policy.&nbsp;



Preserving financial stability along the last mile requires a multi-pronged approach. Financial regulatory authorities should take steps to ensure banks and other institutions can withstand defaults and other risks, using stress tests, early corrective actions, and other supervisory tools. Regulators should prioritize full and consistent implementation of internationally agreed prudential standards, notably finalizing the phase-in of Basel III. Further progress on recovery and resolution frameworks is also of first order importance, to limit the fallout from the demise of weaker institutions. Central banks should ensure banks have access to liquidity facilities when needed and be prepared to intervene early to address funding stress in the financial sector.

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Central Banks Must Remain Vigilant Along the Last Mile of Disinflation

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="529" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/isayas-berhe-820x529.jpeg" alt="" class="wp-image-474960" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/isayas-berhe-820x529.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/isayas-berhe-300x194.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/isayas-berhe-139x90.jpeg 139w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/isayas-berhe-768x495.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/isayas-berhe-1536x991.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/isayas-berhe-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Isayas Desale Berhe, CEO of Heran Group</figcaption></figure>



Investing in infrastructure and job creation in Africa has the potential to drive sustainable economic growth over the long term. With everyone working together, transforming Africa into a thriving, prosperous and equitable continent where skilled workers stay and contribute to their economies is possible.



To deliver sustainable growth in Africa, smart investments in promising sectors like manufacturing, technology and tourism are necessary. By diversifying, economies’ long-time dependence on the extraction of natural resources can be reduced – making them less vulnerable to volatile commodity prices.



A sustainable economy means making investments in which more than just the bottom line is considered. When allocating capital, choosing projects and partners, and making operational decisions, investors should ensure their investments:



<ul class="wp-block-list">
<li>Foster equity and inclusivity: Investors should direct capital toward initiatives that will lead to improved well-being, including greater access to healthcare and education, and reduce poverty and income inequality. As investors build a business empire, build consensus and connection, too, giving respectful consideration to local perspectives, needs and cultural nuances.</li>



<li>Are environmentally conscious: First, do no harm. Be mindful of the ecological footprint of investments. Responsibly utilize resources, and embrace renewable energy and sustainable agriculture.</li>



<li>Boost resilience over the long term: Through investing in infrastructure, education and healthcare, economies will be better able to withstand shocks like climate change or economic downturns.</li>
</ul>



<h2 class="wp-block-heading" id="h-primed-for-growth">Primed for growth</h2>



Investments in transportation, energy and communication infrastructure are vital for facilitating trade and nurturing regional integration. An excellent example of this is the proposed Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) Corridor in East Africa. The project – which includes railways, airports, road networks and a port – will go a long way toward making the movement of goods and people in the region faster, cheaper and more efficient.



Investing in Africa&#8217;s growing tech scene has the potential to significantly enhance innovation, leading to the development of locally relevant solutions to challenges, increased productivity and the emergence of competitive businesses on the global stage. One success story worth emulating is M-PESA, which has brought convenient, cheap and secure financial services to more than 50 million customers across Africa. M-PESA offers a mobile wallet to store, send and receive money (no bank account necessary).



With its abundant sunshine and wind, Africa is set to be at the vanguard of the global energy transition. Investing in renewable energy, sustainable agriculture and climate-resilient infrastructure will help African countries adapt to climate change and mitigate its impact while offering new revenue and lucrative streams. The Noor Ouarzazate Solar Complex in Morocco is already generating a whopping&nbsp; 582MW&nbsp; of clean energy, reducing reliance on fossil fuels.



Improving access to – and investing in – healthcare will result in a healthier, more productive workforce and increased economic growth. Ghana is one nation leading the way. Its National Health Insurance Scheme (NHIS) aims to achieve universal healthcare by providing financial access to essential services for all citizens.



<h2 class="wp-block-heading" id="h-collaboration-and-cutting-edge-technologies">Collaboration and cutting-edge technologies</h2>



The poet John Donne wrote, “No man is an island,” and it is our view that neither are businesses. Collaboration unlocks powerful benefits – both for companies and for the economic “ecosystems” they are part of:



<ul class="wp-block-list">
<li>Joint innovation, technology transfers and resource pooling lead to trailblazing solutions, greater cost-efficiencies and healthier profit margins.</li>



<li>Expanded markets and robust supply chains promote resilience, economic stability and growth.</li>



<li>Job creation, meaningful community engagement and lasting, trust-based partnerships will lead to inclusive, lasting prosperity built on a happy workforce and loyal customers.</li>
</ul>



 Africa needs more skilled workers for businesses to thrive, and to achieve this, quality education needs to be cheaper and easier to access. As job opportunities grow, trained workers are more likely to stay – boosting economies and achieving their own success.



Companies must invest in people and innovation using user-friendly tech, training and collaboration. Without proper training, technology investments falter, demoralizing the workforce. Keep employees engaged with flexible work, tailored jobs and well-being initiatives. Open communication is essential.



Remember the ethical aspects of new technologies, as well. Measure their impact on productivity and job creation to ensure a smooth integration between tech and human talent, driving sustainable growth.



<h2 class="wp-block-heading" id="h-2024-a-promising-year">2024: A promising year</h2>



2024 shows great promise for many sectors in Africa. In order for Africa’s vast potential to be fully tapped, companies should:



<ul class="wp-block-list">
<li>Invest in people, embracing both education and innovation.</li>



<li>Be environmentally responsible, respectfully engage communities and navigate political hurdles with caution, care and sensitivity.</li>



<li>Collaboratively diversify risks for long-term success.</li>
</ul>



At Heran Group, we believe investments can be both profitable and impactful. Our new pharmaceutical plant in Angola is a prime example. It’s creating more than 100 jobs, leveraging technology to improve local access to medications and has the potential to export in the future. This aligns with our overall approach: we seek investments that generate returns while creating jobs, empowering communities and promoting long-term sustainability. We’re betting on Africa&#8217;s potential, and we&#8217;re here to see it through – one sustainable project at a time.

isayas-berhe

The Secrets to Unlocking Sustainable Economic Growth

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="234" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/BLOG-GFSR2-Private-credit-credit-da-kuk-iStock-820x234.jpg" alt="" class="wp-image-474649" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/BLOG-GFSR2-Private-credit-credit-da-kuk-iStock-820x234.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/BLOG-GFSR2-Private-credit-credit-da-kuk-iStock-300x86.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/BLOG-GFSR2-Private-credit-credit-da-kuk-iStock-160x46.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/BLOG-GFSR2-Private-credit-credit-da-kuk-iStock-768x220.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/BLOG-GFSR2-Private-credit-credit-da-kuk-iStock-1536x439.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/BLOG-GFSR2-Private-credit-credit-da-kuk-iStock-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Credit: da-kuk/iStock by Getty Images</figcaption></figure>



The private credit market, in which specialized non-bank financial institutions such as investment funds lend to corporate borrowers, topped $2.1 trillion globally last year in assets and committed capital. About three-quarters of this was in the United States, where its market share is nearing that of syndicated loans and high-yield bonds.



This market emerged about three decades ago as a financing source for companies too large or risky for commercial banks and too small to raise debt in public markets. In the past few years, it has grown rapidly as features such as, speed, flexibility, and attentiveness have proved valuable to borrowers. Institutional investors such as pension funds and insurance companies have eagerly invested in funds that, though illiquid, offered higher returns and less volatility.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2024/04/08/fast-growing-USD2-trillion-private-credit-market-warrants-closer-watch?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2024/04/9278274/5371538/gfsr-ch2-private-credit-blog-chart1-v2a_crop.png" alt="chart showing returns of private equity, private credit, and equity benchmarks"/></a></figure>



Private corporate credit has created significant economic benefits by providing long-term financing to corporate borrowers. However, the migration of this lending from regulated banks and more transparent public markets to the more opaque world of private credit creates potential risks. Valuation is infrequent, credit quality isn’t always clear or easy to assess, and it’s hard to understand how systemic risks may be building given the less than clear interconnections between private credit funds, private equity firms, commercial banks, and investors.



Today, immediate financial stability risks from private credit appear to be limited. However, given that this ecosystem is opaque and highly interconnected, and if fast growth continues with limited oversight, existing vulnerabilities could become a systemic risk for the broader financial system.



We identify a number of fragilities in our April 2024&nbsp;<a href="https://www.imf.org/en/Publications/GFSR/Issues/2024/04/16/global-financial-stability-report-april-2024?cid=bl-com-SM2024-GFSREA2024001&amp;utm_medium=email&amp;utm_source=govdelivery">Global Financial Stability Report</a>.



First, companies that tap the private credit market tend to be smaller and carry more debt than their counterparts with leveraged loans or public bonds. This makes them more vulnerable to rising rates and economic downturns. With the recent rise in benchmark interest rates, our analysis indicates that more than one-third of borrowers now have interest costs exceeding their current earnings.



The rapid growth of private credit has recently spurred increased competition from banks on large transactions. This in turn has put pressure on private credit providers to deploy capital, leading to weaker underwriting standards and looser loan covenants—some signs of which have already been noted by supervisory authorities.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2024/04/08/fast-growing-USD2-trillion-private-credit-market-warrants-closer-watch?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2024/04/9278275/5371539/gfsr-ch2-private-credit-blog-chart2-v2_crop.png" alt="chart showing median firm size and leverage by issuer type in North America"/></a></figure>



Second, private market loans rarely trade, and therefore can’t be valued using market prices. Instead, they are often marked only quarterly using risk models, and may suffer from stale and subjective valuations across funds. Our analysis comparing private credit to leveraged loans (which trade regularly in a more liquid and transparent market) shows that, despite having lower credit quality, private credit assets tend to have smaller markdowns during times of stress.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2024/04/08/fast-growing-USD2-trillion-private-credit-market-warrants-closer-watch?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2024/04/9278276/5371540/gfsr-ch2-private-credit-blog-chart3-v2a_crop.png" alt="chart showing accounting fair value of business development companies first-lien loans"/></a></figure>



Third, while private credit fund leverage appears to be low, the potential for multiple layers of hidden leverage within the private credit ecosystem does raise concerns given the lack of data. Leverage is deployed also by investors in these funds and by the borrowers themselves. This layering of leverage makes it difficult to assess potential systemic vulnerabilities of this market.



Fourth, there appears to be a significant degree of interconnectedness in the private credit ecosystem. While banks do not seem to have a material exposure to private credit in aggregate—the Federal Reserve has&nbsp;<a href="https://www.federalreserve.gov/publications/files/financial-stability-report-20230508.pdf?utm_medium=email&amp;utm_source=govdelivery">estimated</a>&nbsp;that US private credit borrowing amounted to less than about $200 billion, less than 1 percent of US bank assets—some banks may have concentrated exposures to the sector. In addition, a select group of pension funds and insurers are diving deeper into private credit waters, significantly upping their share of these less-liquid assets. This includes private-equity-influenced life insurance companies, as we discussed in a&nbsp;<a href="https://www.imf.org/en/Publications/global-financial-stability-notes/Issues/2023/12/13/Private-Equity-and-Life-Insurers-541437?utm_medium=email&amp;utm_source=govdelivery">recent report</a>.



Finally, though liquidity risks appear limited today, a growing retail presence may alter this assessment. Private credit funds use long-term capital lockups and impose constraints on investor redemptions to align the investment horizon with the underlying illiquid assets. But new funds targeted at individual investors may have higher redemption risks. Although these risks are mitigated by liquidity management tools (such as gates and fixed redemption periods), they have not been tested in a severe runoff scenario.



Overall, although these vulnerabilities currently they do not pose a systemic risk to the broader financial sector, they may continue to build, with implications for the economy. In a severe downturn, credit quality could deteriorate sharply, spurring defaults and significant losses. Opacity could make these losses hard to assess. Banks could curb lending to private credit funds, retail funds could face large redemptions, and private credit funds and their institutional investors could experience liquidity strains. Significant interconnectedness could affect public markets, as insurance companies and pension funds may be forced to sell more liquid assets.



The cumulative effect of these links may have significant economic implications should stress in private credit markets result in a pullback from lending to companies. Severe data gaps make monitoring these vulnerabilities across financial markets and institutions more difficult and may delay proper risk assessment by policymakers and investors.



Policy implications



It is imperative to adopt a more vigilant regulatory and supervisory posture to monitor and assess risks in this market.



<ul class="wp-block-list">
<li>Authorities should consider a more active supervisory and regulatory approach to private credit, focusing on monitoring and risk management, leverage, interconnectedness, and concentration of exposures.</li>



<li>Authorities should enhance cooperation across industries and national borders to address data gaps and make risk assessments more consistent across financial sectors.</li>



<li>Regulators should improve reporting standards and data collection to better monitor private credit&#8217;s growth and its implications for financial stability.</li>



<li>Securities regulators should pay close attention to liquidity and conduct risk in private credit funds, especially retail, that may face higher redemption risks. Regulators should implement <a href="https://www.fsb.org/2023/12/fsb-and-iosco-publish-policies-to-address-vulnerabilities-from-liquidity-mismatch-in-open-ended-funds/?utm_medium=email&amp;utm_source=govdelivery">recommendations</a> on product design and liquidity management from the Financial Stability Board and the International Organization of Securities Commissions.</li>
</ul>



—This blog is based on Chapter 2 of the April 2024 Global Financial Stability Report: “The Rise and Risks of Private Credit.”&nbsp;

BLOG-GFSR2-Private-credit-credit-da-kuk-iStock

Fast-Growing $2 Trillion Private Credit Market Warrants Closer Watch

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="546" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/Senegalese-women-cast-their-ballots-in-the-presidential-elections-in-February.-EPA-EFENic-Bothma-820x546.jpg" alt="" class="wp-image-472513" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/04/Senegalese-women-cast-their-ballots-in-the-presidential-elections-in-February.-EPA-EFENic-Bothma-820x546.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/Senegalese-women-cast-their-ballots-in-the-presidential-elections-in-February.-EPA-EFENic-Bothma-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/Senegalese-women-cast-their-ballots-in-the-presidential-elections-in-February.-EPA-EFENic-Bothma-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/Senegalese-women-cast-their-ballots-in-the-presidential-elections-in-February.-EPA-EFENic-Bothma-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/04/Senegalese-women-cast-their-ballots-in-the-presidential-elections-in-February.-EPA-EFENic-Bothma.jpg 926w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



The term ‘democratic backsliding’ Is much in vogue.&nbsp; But it is misleading, and for Africa, wrong.



We all know to what it refers: the recent flurry of coups in Africa, the unconstitutional changes of government, the growing number of 100% predictable election results, the ‘legislative manipulation’ or legal manoeuvres to limit the number of candidates or restrict the number of voters to increase the chances of an incumbent (or their party) winning again, the constraints on journalists, media and free speech to obstruct or limit opposing views … These are real and worrying developments.



But the phrase also carries assumptions about what democracy is, how it should behave and what form it should take, that may not be either appropriate or useful.&nbsp; &nbsp;&nbsp;



It is possible to see what is happening in an alternative light: that democracy in Africa is evolving, just in a different direction to that presumed by many outside observers.&nbsp; The debate over the best form(s) of governance in Africa is real and live: one frontline lies between the Alliance of Sahelian States (AES) and the remaining members of ECOWAS. But it also encompasses the long-running dispute over the viability of the relatively authoritarian ‘developmental state,’ with Rwanda and (once upon a time) Ethiopia seen as the models.&nbsp;



It is no coincidence the Sahel juntas have apparently been sending missions to Rwanda to learn how to do it, though they should remember that this model can all too easily slide towards civil war: the attempt to repress differences can lead simply to a more violent expression of them.



This debate matters not just for Africa, but globally.&nbsp;China and Russia are explicitly challenging the ideological hegemony of western-style democracy, along with its supporting infrastructure of human rights, multilateral organisations and the international rule of law, as the best model for achieving peace and prosperity.&nbsp; At the least, they argue, other countries should be free to decide whether these norms are right for them.&nbsp;



In 2023, Xi Jinping&nbsp;<a href="http://ws.china-embassy.gov.cn/eng/xwdt/202305/t20230522_11081047.htm">launched</a>&nbsp;China’s ‘Global Civilisations Initiative, its ‘Global Development Initiative’ and a ‘Global Security Initiative’.&nbsp; Like the old Belt and Road Initiative, these are designed to re-orient the world towards China, in this case ideologically rather than physically.&nbsp; While their substance remains vague, the initiatives provide an alternative to the ‘western’ norms embodied in the UN, its multilateral institutions and the multiple charters and agreements promulgated under its auspices.



They are an integral part of efforts to re-frame the debate from one of ‘democrats vs. authoritarians’, to ‘the Global South and its reliable friends in the Global East vs. the neo-colonialist exploitative West’.&nbsp; The latter narrative is gaining traction in Africa, boosted by the Gaza crisis, where western countries are seen (hypocritically) as quick to condemned Hamas but slow to criticise the huge death toll Israel has inflicted on Palestinian civilians.&nbsp;



Recent polling by&nbsp;<a href="https://www.afrobarometer.org/articles/declining-satisfaction-threatens-african-democracy-afrobarometer-ceo-reveals/">Afrobarometer</a>&nbsp;suggests that an average of 66% of Africans want to live in a democracy, but not necessarily the one they’ve got. &nbsp;Only 38% are satisfied with the way their democracies operate, while 53% are now willing to contemplate military intervention if elected leaders fail in their duties.&nbsp;



This reflects the ease with which electoral democracy has been manipulated, making people feel increasingly disenfranchised. &nbsp;In Senegal we have just seen popular protest, international pressure and robust judicial institutions stop one attempt to prolong a presidential term – and ultimately lead to the dramatic defeat of the government, despite the fact that the election was anything but free and fair.&nbsp;



Elsewhere, however, as in Guinea or Gabon, military intervention may be the only way to change the regime. The question is not whether a country has the trappings of democracy, but whether the system works, enabling people to change a ruler when they want to.



The key criteria for a system of governance that people will trust are whether they provide adequate accountability, balance, and a mechanism for peaceful succession.&nbsp; A fully functioning, robust democracy can provide all these things, but even the oldes (like the UK or US) can find it difficult.&nbsp; Many other countries, not just in Africa, are still searching for their own formula to meet these criteria.



Balance, for example, requires that powerful groups, peripheral regions or minorities feel their views or interests are adequately represented in governance structures.&nbsp; Elections alone rarely provide this.&nbsp; Accountability and trust will be lacking where too many people feel that the formal mechanisms benefit only an elite who decide when it is ‘their turn to eat.’



In the Sahel, five countries now have de facto military governments, but Mauritania and Chad have been more successful at maintaining an adequate balance as well as a modicum of democratic forms.&nbsp; They have also remained closer to ‘the West’ while the three juntas have explicitly realigned themselves with Russia.&nbsp; Is it therefore their international allegiance rather than their governance structures that matter in how they are viewed?



I would argue it is more than that.&nbsp; Whatever their original motivation for seizing power, and their use of anti-French rhetoric to legitimise their rule, the juntas in Mali, Burkina Faso and Niger seem determined to resist any external accountability to ECOWAS or AU norms of governance, and reject the notion that civilian rule should be re-established within a time-limit.&nbsp; Hence their apparent determination to leave ECOWAS despite the economic hardship it would inflict on their people – unless of course they can change the balance of power&nbsp;within&nbsp;ECOWAS to support new, more flexible norms. &nbsp;&nbsp;



So democracies along the coast have good reason to be wary of the juntas’ intentions.&nbsp; To protect themselves, they – and their rulers – need to be more scrupulous in respecting the current norms, and reflecting their citizens views in government so that citizens have a greater sense of ownership and will resist efforts to overthrow it.&nbsp; This is the best defence of democracy and in effect what we have seen in Senegal. But governments in Nigeria, Cote d’Ivoire, Sierra Leone and Togo need to take urgent note.



My conclusion is that the current crisis of governance in Africa may just as likely lead to a renewal of democracy as a further slide into authoritarianism.&nbsp; It is the less accountable systems – in Cameroon, Equatorial Guinea, Togo – that are most at risk.&nbsp; Nevertheless, Africa’s own norms, embodied in the AU&nbsp;<a href="https://au.int/en/treaties/african-charter-democracy-elections-and-governance">Charter on Democracy, Elections and Governance</a>, are under threat as authoritarian governments can now find willing international supporters to back them up.&nbsp;



The fate of democracy in Africa is in the hands of African people themselves.&nbsp; But those trying to strengthen deserve it deserve all the support we can give.



Nick Westcott is Professor of Practice in Diplomacy at SOAS University of London and former Director of the Royal African Society.

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