Archive for the 'ESG – Environment' Category

Top speakers for BAFM capacity-building seminar 18-19 May


Leaders and movers of African capital markets are heading to Casablanca for the 6th Building African Financial Markets (BAFM) capacity-building seminar on 18-19 May, organized by Casablanca Stock Exchange with the African Securities Exchanges Association and supported by member exchanges.
This year focuses on “Global best practices to enhance African capital markets”. The agenda features CEOs of top African exchanges and other industry leaders: Oscar Onyema CEO of Nigerian Stock Exchange and President of ASEA, Siobhan Cleary of the World Federation of Exchanges, Karim Hajji CEO of Casablanca Stock Exchange, and speakers from Bloomberg, International Finance Corporation, Ethiopian Commodity Exchange, Tanzania Capital Markets and Securities Authority, Securities and Exchange Commission (Nigeria), Safaricom, Kenya Retirement Benefits Authority, Maroclear, and many others.
Topics include: demutualization and growth, what the new US administration means for African markets, financial inclusion, pensions, liquidity, green finance, global principles on IT infrastructure, and regional integration of exchanges in East, West and Southern Africa.
It will be held at Casablanca Most Events Business Center, Anfa Place, Casablanca, Morocco. Don’t miss a great chance to meet the drivers of Africa’s capital markets development. For more, check the Casablanca Stock Exchange website page.

Africa Progress Panel urges triple energy win – for people, power and planet

APP_KA_quote

Africa is a potential low-carbon superpower and can show the world how to fight poverty, grow economies and fight climate change at the same time. It is a crucial message for 2015, when critical climate talks will set the future direction of the world’s weather and world leaders commit to achieving sustainable development goals.

Kofi Annan’s Africa Progress Panel today (5 Jun) issues its report Power, People, Planet: Seizing Africa’s Energy and Climate Opportunities. It calls on governments, private investors, and international financial institutions to unlock the Africa’s vast potential for renewable and a low-carbon energy and fight poverty by delivering universal access to electricity by 2030. The report is available for download here.

Source: Africa Progress Panel

Source: Africa Progress Panel

The report says Africa does not have to choose between economic growth and low-carbon energy development. Just as the continent leapfrogged decades of telecoms development with cheap rollout of mobile telephony, Africa has the sun, wind, water and geothermal resources to fire up energy without damaging the world climate.

Power against poverty
Many Africans cannot escape poverty because 621 million of them do not have access to electricity and they pay a heavy price in resources, time and environmental decline for energy such as firewood, which they use for lighting and cooking. A rural woman in northern Nigeria spends around 60 to 80 times more per unit of energy consumed than a resident of New York or London.

“Our report calls for a 10-fold increase in power generation by 2030,” said Mr Annan, adding: “Africa needs to utilize all of its energy assets in the short-term while seizing the opportunity to put in place the foundations for a competitive, low-carbon energy infrastructure.”

The Africa Progress Panel report highlights the scale of Africa’s energy deficits. Power shortages cut the region’s growth by 2-4 per cent a year, holding back job creation.

Electricity consumption in sub-Saharan Africa (excluding South Africa) is less than that of Spain. On current trends it will take until 2080 for every African to have access to electricity. The APP report identifies Ethiopia, Kenya, Rwanda and South Africa as emerging front-runner countries in the global transition to low-carbon energy.

There is a $10 billion-a-year opportunity in tackling deficits and the report authors estimate that households living on less than US$2.50 a day collectively spend this amount on energy-related products, such as charcoal, candles and torches.

Source: Africa Progress Panel

Source: Africa Progress Panel

“This is market failure on an epic scale. Low-cost renewable technologies could slash the cost of energy, benefiting millions of poor households, creating investment opportunities, and cutting carbon emissions,” said Mr Annan. “African governments should take responsibility for tackling corruption in energy utilities, strengthening energy governance to facilitate private investments, and increasing investment in energy infrastructure.”

The report urges African governments to redirect the US$21 billion spent on subsidies for loss-making utilities and electricity consumption for the rich, towards connection subsidies and renewable energy investments geared towards the poor.

It estimates the energy-sector financing gap will be US$55 billion each year until 2030. The panel members call for strengthened international cooperation and a global connectivity fund to reach an additional 600 million Africans by unlocking private investment and expanding public investment in on-grid and off-grid energy provision. Aid donors and financial institutions can do more to unlock private investment through risk guarantees and mitigation finance.

Time to end “climate negotiations poker”
Africa brings a message of hope for December’s climate talks, set for Paris. The world’s leaders must commit and act to implement agreements to cut emissions and limit global average temperature increase to 2OC above pre-industrial levels. Africa contributes the least to man-made climate change and already endures the worst effects such as droughts, floods, falling crop yields and rising temperatures. A bigger increase would mean these changes could spiral out of control within a few years.

The African Progress Panel report challenges African governments and the international community to scale-up the level of ambition ahead of the summit. It recognizes that the EU, the US and China have raised their levels of ambition but says current proposals fall far short of a credible deal for keeping global warming within the 2ºC limit. It condemns Canada, Australia, Russia and Japan for effectively withdrawing from constructive engagement of climate.

APP member Bob Geldof contrasted the “comfort blanket mood music” surrounding the Paris climate summit with current policies: “G7 and G20 governments tell us they want a climate deal. Yet the same governments – the UK, the United States, Germany, China, Brazil and India – are spending billions of dollars of taxpayer’s money subsidizing the discovery of new coal, oil and gas reserves. They should be pricing carbon out of the market through taxation, not subsiding a climate catastrophe that threatens the lives of millions of Africans and jeopardizes our children’s future.”

“This is a moment for bold global leadership and decisive action by governments around the world,” said Mr Annan. “Playing poker with our planetary and the lives of future generations is not a smart move.”

OPIC invests $285m in 6 impact investing funds

The Directors of the U.S. Government’s development finance institution, the Overseas Private Investment Corporation (www.opic.gov), decided on 27 October to provide financing up to $285 million to equity funds. These in turn should raise more than $875m, representing the largest commitment by the U.S. Government to impact investing in emerging markets so far.
“Impact investing” usually means private investing looking for investments that deliver social and environmental benefits while generating profits, and is a very fast-growing area of investment. OPIC called for impact investing proposals in March and received 88 applications from which it picked 6 funds. According to a OPIC press release, the response was “so positive that OPIC expects to announce additional approved facilities in 2012.”
OPIC President and CEO Elizabeth Littlefield commented in the press release: “This is a watershed day in the evolution of impact investing. These new funds, and the additional investment facilities we announce in 2012, will help to fill financing gaps and introduce more innovation into the impact investing space, helping it grow and mature.”
The 6 funds are:
Investment Fund for Health in Africa II (IFHA II): A private equity fund investing in companies that improve health for Africans with low and middle incomes. It expects to target investments in companies that operate in small and medium-sized hospitals and clinics, healthcare products import, distribution and manufacturing, insurance and supporting industries such as water and sanitation, food and nutrition, education and environmental services. The fund manager is Africa Health Systems Management Company B.V. The International Finance Corporation in 2007 invested in the Netherlands-based IFHA I. OPIC: $83m, target capitalization: $250m.
ManoCap: This fund will invest in small and medium enterprises (SMEs) in Sierra Leone, Liberia and other West African countries, with a focus on post-conflict nations. It will invest in sectors including agriculture, agro-processing, sustainable fisheries, services, healthcare, sanitation, construction and building materials, tourism, light manufacturing, and financial services. These SMEs are expected to have a direct effect on the standard of living of “base-of-the-pyramid” communities by providing employment and access to goods and services. Fund manager is ManoCap LLC. OPIC: $34m, target: $100m.
Latin Idea: Growth capital to Mexican SMEs within the technology, media, telecomms and services sectors. Fund manager Latin Idea Ventures III LLC. OPIC: $25m, target: $125m.
MPOWER Ventures: Unbanked and the under-banked populations in emerging markets through providing prepaid debit cards (or GPR cards), and related alternative financial services, starting with Mexico, Brazil, Colombia, Peru and Bolivia. Fund manager MPOWER Ventures III L.P.,OPIC: $15m, target: $50m.
Sarona: Fund-of-funds will invest in 12-18 private equity funds that target market-based returns while investing in SMEs in frontier markets. Fund manager Sarona Asset Management, Inc. OPIC: $87.5m, target: $250m
Terra Bella: Private equity fund will invest in projects that generate carbon credits through protecting and enhancing forests while generating valuable social and environment co-benefits. Terra Bella will generate returns through the sale of carbon on the growing voluntary, compliance and pre-compliance markets that are emerging in the forest and land-use carbon sector. Fund manager Terra Global Investment Management LLC. OPIC: $40m, target: $100m.
According to Ms. Littlefield: “Each of them promises a strong development impact —be it mobile banking for the unbanked, investing in small businesses in the post-conflict countries of Liberia and Sierra Leone, improved health care in Africa, preservation of highly vulnerable forests, or growing small businesses in Mexico. OPIC has a long history of investing for both social and financial returns and we believe impact investing will gain significant traction in the coming years. We are proud to support its development.”

UK’s regulator FSA warns on unregistered “ethical” tree investment schemes

The UK’s regulator, the Financial Services Authority (FSA), has issued a warning on its website about unregulated “sustainable, ethical and alternative” investments. It says: “We are seeing an increasing number of overseas schemes that offer investment opportunities in tree and crop plots abroad, and other ethical investments.
“These schemes may be promoted by an operator ‘cold calling’ with an offer for you to buy a plot on a plantation which harvests agricultural commodities such as teak trees, jatropha, paulownia and biofuels. The investment is usually stated to be low risk but promising high, often guaranteed returns of around 15-25%. The investment period is typically about five years, after which your plot will be harvested and sold on your behalf and the profits forwarded to you.”
They note that some of the schemes being offered to UK investors are structured so they do not meet requirements and therefore then do not have to be registered. However, UK investors should know that the schemes are not covered and they will not be protected by complaints procedures or compensation if things go wrong.
According to the FSA: “We have heard reports of promoters using aggressive, high-pressure sales tactics, and often claiming we do not need to authorise the schemes, as they are not collective investment schemes (CIS). While we regulate CIS, we do not regulate the sale of land, trees or crops.”
The FSA (www.fsa.gov.uk) has been investigating and says that some tree and crop schemes seem to be structured to avoid CIS rules. In simplistic terms, a CIS would be involved if the investors do not have day-to-day control over managing their plot, where investors’ funds are pooled or where the operator is responsible for managing the scheme as a whole.
The regulator wonders how investors do have day-to-day control over business performance, when the plot is thousands of miles away. According to the FSA “We are continuing to look into several schemes to establish whether they are CIS, but we suggest investors treat such opportunities with caution.” It advises that if you think a scheme is suitable for you and you are aware that you may not be protected, you should consult an independent financial adviser or lawyer. It also offers a consumer helpline.
The FSA issued an earlier warning in July 2010 about the rise of unregulated CIS and says: “sustainable, ethical and alternative investment opportunities are increasingly being offered to investors without the protection of UK complaints procedures or compensation schemes if things go wrong.”
COMMENT: This blog supports sustainable, ethical investment 110% and strongly believes individuals have the right to choose what to do with their money and to follow their beliefs. But they need to be aware of the risks, to understand what they are investing in, and to be aware that social business can sometimes be harder to make succeed.

Ethiopia plans more bonds for $4.7bn hydropower dam

Ethiopia has raised Birr 7 billion ($408 million) of debt to finance the $4.8 bn Grand Ethiopian Renaissance Dam on the Blue Nile River and plans to issue more bonds. Communications Minister Bereket Simon said the country is not raising funds from foreigners in a bid to demonstrate its economic resurgence, according to an interview on Bloomberg yesterday (29 Sept).
The 5,250-megawatt dam, also called the “Millennium Dam”, is scheduled for completion in 2017 with the first 700 MW to be generated in 2015. It is on the Blue Nile, the main tributary of the Nile River, about 30 kilometres from the border with Sudan. According to the report, the dam wall is to be 145 meters high and 1.8 kilometres long and the lake will be 1,680 square kilometres (Lake Tana is 3,000-3,500 square kilometres according to Wikipedia), reportedly mostly uninhabited forest in the western Benishangul-Gumuz region.
Prime Minister Meles Zenawi launched the project and construction in April. Ethiopia is busy with many giant hydropower, wind and other generation projects to use its potential to generate 45,000 MW of hydropower, 10,000 MW of wind and at least 1,000 MW from geothermal sources. It is becoming a regional electricity exporter to counteract shortages in the nine East African Power Pool (www.eappool.org) countries, including Kenya, Djibouti, Sudan and Uganda, which are to be connected by a regional grid by 2016. The country started exports to Djibouti in May, a transmission line to Sudan may be completed by January and a feasibility study for a link to Kenya has been finished. Ethiopia is seeking to diversify the fast-growing economy, which used to rely on commodities such as coffee for most of its foreign currency.
Bloomberg quotes Bereket: “Building a dam on the Nile has been the dream of every Ethiopian. For millennia, we have been looking at the Nile as if it has been a curse that took our fertile soil and benefited others while Ethiopia was impoverished.” Bereket is heading a “public mobilization council” to raise funds for the project.
Egypt depends on the flow of the Nile for all of its water. Previous President Hosni Mubarak opposed infrastructure projects by upstream nations, citing old treaties established by the British which favoured Egypt. However, Ethiopia announced the dam soon after Mubarak was deposed in February and the new government has reportedly sought details of the technical and environmental studies on the effect of the dam on Egypt’s Nile water flow. Bereket told Bloomberg that Egyptian and Ethiopian officials have met twice and relations are improving.
Zemedeneh Negatu, managing partner for Ernst & Young LLP in Ethiopia, told Bloomberg: “The financial capacity to build the dam I don’t think should be in doubt at all. Over the next six years, Ethiopia can collect from taxes somewhere between Birr 450 and 500 billion.” He said the dam is “very critical” for Ethiopia to achieve its industrialization goals and for neighbouring states.
Donations of a month’s salary by civil servants have been converted into bonds to help boost the nation’s savings rate, currently 5.5% of gross domestic product, Bereket said. The opposition have criticized funding pressure on civil servants.
Public funding is unlikely to be maintained as it would be “too taxing,” so private companies have been encouraged to buy the debt, which offers a coupon of 5%. There are also plans for bonds to be offered to the Ethiopian diaspora with returns above the London Interbank Offered Rate, while sales to farmers are planned “early next year,” he said. A “significant” portion of funding will also come from the government’s development budget, Bereket said. A National Bank of Ethiopia directive was issued in April compelling banks to buy government bonds equivalent to 27% of their loans each month may raise Birr 11 bn for development programs in its first year, according to Access Capital (www.accesscapitalsc.com), the Addis Ababa-based research group. That amount is likely to increase in subsequent years, it said in an April research note.
The Ethiopian Government plans to borrow Birr 398.4 bn by mid- 2015 to invest in industry and infrastructure. The World Bank said in June this may lead to the economy over-heating and debt problems, the. Annual inflation in Ethiopia was 40.6% in August, partly because the central bank boosted money supply.