Archive for the 'Infrastructure' Category
May 11th, 2013 by Tom Minney
Ozwald Boateng
“Unity has no meaning unless it is the ability of the coal miner in Botswana to power a plant in Angola or the farmer in Uganda to export food to those short of food in northern Kenya”. This is the verdict of Ozwald Boateng (
ozwaldboateng.co.uk), a powerful force in menswear and fashion for 25 years,
writing in the Times newspaper about the
25 May celebration of the 50th anniversary of the African Union.
He says Africa’s wealth will only be a blessing when put to use. Africa may have 60% of the world’s uncultivated arable land”but this will only be a blessing once the land is cultivated and the produce from that land transported to its markets”. He points out how infrastructure, specifically railways, opened North America, the steppes and China.
“Lack of adequate transportation can add as much as 60% of the farm-gate cost of African agricultural products.. the farm-gate price of palm oil in Sierra Leone is double the world market price.
“Trade between African States stands at only 10% of all trade, compared with 60% in Europe.” He blames lack of infrastructure, restrictive customs, administration and technical barriers and lack of trade finance. But infrastructure is key and Africa needs $93 billion a year to invest in it.
He has formed Made in Africa Foundation (
www.madeinafricafoundation.co.uk) with entrepreneur Kola Aluko and Atlantic Energy to promote, develop and fund feasibility studies for infrastructure projects. They are working with African Development Bank to implement Priority Action Plans of the Programme for Infrastructure Development in Africa (PIDA), including transport, energy, water and information and communications technology (ICT).
“Once countries and people share infrastructure and assets, it is harder to go to war with each other. They have a mutual desire for the other’s survival as the wellbeing of eon becomes balanced with the others.
“Peace encourages industrialized nations to invest in Africa’s growth rather than mining, the sale of arms or in the aid charade of consultant and quick fixes. Virtuous behaviour creates more virtuous behaviour.” He says Africans have substantial work at every level “to change how we see Africa, in order for it to fulfil its potential”.
According to the website, Boateng says: “It’s a well-known statistic that US$400 million of funding for feasibility studies and master plans across sub-Saharan Africa would develop over US$100 billion of infrastructure projects, which in turn would create a trillion dollars of value across Africa. The first step is often the hardest and we have created this Foundation with Atlantic Energy to make that step easier for Africans.”
May 10th, 2013 by Tom Minney
The first Eurobond issued by Rwanda, due to mature in May 2023, raised $400 million at 6.875%. According to this article in Bloomberg Businessweek, some of the money will be used to pay for building a 28-megawatt hydropower plant. The fund received some $3.5 billion in orders for the bond, which has a coupon of 6.625%, and Finance Minister Claver Gatete said on 24 April that 250 investors took part, according to a report in New Times.
Speaking at the World Economic Forum in Cape Town this week, Gatete said the hydropower plant will be fully operational by June 2014, with 14-MW already onstream by December. Last month he told reporters the rest of the money will be used to complete the building of Kigali Convention Centre and pay off some of state-owned RwandAir’s debt for its expansion programme.
According to local news reports in April, he said: “The bond, which was oversubscribed, signals that international investors have confidence in Africa beyond the usual commodity growth story. Rwanda’s intentions are to invest in infrastructure as part of building a modern, dynamic, service-based economy that is connected to international markets and that allows for rapid development.”
Bloomberg quotes him this week: “We didn’t just go to the market to look for any amount of money — we went for specific projects,” he said. “We have to be very careful when we go to the market and defining what the money will be used for.” But it could sell more debt if it needs to fund “high-impact” projects in tourism and energy.
“Very good news for the country…#Rwandabond, investors are honest judges on our country’s story and progress…they have said it,” the President wrote on his Twitter account @PaulKagame.
The bond has which has a coupon of 6.625%, and the issue was handled by BNP Paribas and Citigroup as joint lead managers, with legal work by London lawyers White & Case, according to their press release , which adds they advised 6 of the last 7 sub-Saharan African sovereign issues. A Rwandan Government delegation did roadshows in Boston, Frankfurt, Hong Kong, London, Los Angeles, Munich, New York and Singapore. Reuters quoted the fund managers saying it was “priced to perfection” and quoted Mark Bohlund, senior economist, sub-Saharan Africa, at IHS Global Insight: “If you want to have exposure to sub-Saharan Africa but you’re worried about a drop in commodity prices and you want to rebalance your portfolio Rwanda is a good investment.”
The yield on the 6.875 percent dollar bond due in May 2023 was little changed at 6.9 percent by 8 May. it is traded on the Irish Stock Exchange. Fitch Ratings rated long-term foreign and local currency rating at B, five levels below investment grade. Standard & Poor’s also gave B with stable outlook. Rwanda’s economy grew by 8.2% for the last 5 years but the Government targets an average 11.5% annual growth in the Economic Development and Poverty Reduction Strategy II (EDPRS II).
The latest IMF mission commented [link] on 16 April: “The economic outlook for 2013 has weakened somewhat since the 5th review. The growth of the construction and service sectors is expected to slow down in response to tighter economic policies. This will be partly offset by stronger growth in agriculture (food crops), for which the first harvest of the year was good, and an acceleration in foreign-financed investment projects. Growth is expected at 7.5% for the year. Downside risks predominate, stemming from possible cutbacks in aid, delays in project implementation, and a more challenging global environment. Inflation is expected to rise to 7.5% by end-2013.”
November 29th, 2012 by Tom Minney
New giants are arising in African investments – the domestic pension funds. In Nigeria the National Pensions Commission (PenCom) estimated registered pensions to be worth US$14bn in June 2011, with asset values up by 8% in three months; Namibia’s Government Institutions Pension Fund alone is worth some $6bn; South Africa’s pension funds grew at a compound annual growth rate of 14.3% in US dollar terms over 10 years to December 2010, including over 28% in 2010 and Tanzania’s pension industry was audited at $2.1bn for 2010, and growing by 25% a year.
The number of pensioners is set to soar, according to United Nations figures, as the number of people over 60 years in Africa will rise from 55m in 2010 to 213m by 2050, compared to 236m Europeans over 60 years old by 2050. Current pension funds cover only 5%-10% of Africans ranging from 3% in Niger but it used to be 80% in North African countries such as Egypt, Libya and Tunisia. Pensions are not available at all in some countries.
Regulatory reforms are driving the growth of African pensions. Recent reformers include Cote d’Ivoire, Gabon, Kenya, Nigeria, Senegal and Uganda. Ghana created a National Pensions Authority with a 2010 act. Reform in Kenya, including investment guidelines and a new regulator, resulted in strong growth and good investment returns. Tanzania passed the Social Security Regulatory Act in 2008. The rising pension industry is likely to boost fund management and equity industries, exits for private equity and even to fill some of the $45bn annual funding gap for infrastructure. For instance, In January 2012, Tanzania’s National Social Security Fund signed an agreement to finance 60% of the $137m cost of building Kigamboni Bridge. South Africa’s $130bn Government Employees Pension Fund is a major investor in the Pan-African Infrastructure Development Fund which raised $625m in 2007 and is targeting $1bn on its second offering.
For more details on Africa’s pension industry, please check my article published in The Africa Report magazine and website, here is the link www.theafricareport.com and for brief profiles of 6 giant African funds, check here.
September 14th, 2012 by Tom Minney
“There is a great appetite for Africa credit and a lack of supply,” is the comment from Standard Bank group analyst Yvette Babb interviewed by Bloomberg as Zambia went to the global market yesterday (13 September) with a USD750 million 10-year bond priced at a final coupon of 5.625%. It is Zambia’s first international bond and will be used to fund its budget and invest in infrastructure.
Reuters reports that the bond has “come 25bp tighter than initial guidance after generating an order book in excess of USD11bn”. Barclays and Deutsche Bank are the leads for the bond issue, although a roadshow reportedly planned for August was delayed.
Bloomberg also quotes Sashi Kumi, a trader at Nedbank Capital “Demand looks very good. The Africa story, in general, is carrying favor with investors. People see great growth on the continent.” The story noted that yields on Ghana’s eurobonds maturing 2017 have dropped 170 basis points, or 1.7 percentage points, this year to 4.85%.
Fitch Ratings and Standard & Poor’s have both rated the bond B+. Fitch says that this matched the southern African nation’s sovereign rating, which has negative outlook. It is 4 levels below investment grade. Fitch comments: “Zambia’s ‘B+’ rating is supported by its political stability, combined with a decade of growth above 6%, buoyed by macroeconomic stability, policy reforms as well as the emergence of a vibrant copper mining sector. Added to this, the country has a track record of fiscal discipline under IMF surveillance, with gross public debt of 22% of GDP, below the ‘B’ category median. External finances are a key strength, with the IMF/World Bank Debt Sustainability Assessment putting the risk of debt distress at low. External debt ratios are below ‘B’ and ‘BB’ peer group medians.
“The prospects for growth beyond 2012 are less certain. Growth in mining production could be constrained by weaker growth in China, Zambia’s main export destination, as well as persistent capacity constraints. The revision of Zambia’s Outlook to Negative on 1st March 2012 reflected concerns about the direction of economic policy since the change of government in 2011. Concerns centred around the reversal of a privatisation deal without as yet compensating the investing parties, which could undermine property rights, while proposed reforms of the mining and banking sectors could risk unintended consequences in terms of their potential impact on investment, and consequently on the growth outlook and macro-economic stability.”
S&P also highlighted the strong growth story – Bloomberg says it will grow by 7.7% in 2012, S&P says real per capita GDP will increase by slightly more than 5%. However, it also highlights policy issues: “We estimate GDP per capita at $1,510 in 2012. In addition, the balance of payments is vulnerable to swings in copper prices (copper accounts for about 80% of exports) and the government’s economic policy direction since the October 2011 elections remains uncertain. The ratings are supported by promising investment and economic growth trends, a fairly strong external balance sheet, and moderate general government debt, which has benefited from debt relief and nominal GDP growth.
“We believe some cabinet members’ apparently uncoordinated and sometimes contradictory views have added to economic policy uncertainty. This relates in particular to windfall tax, export tracking, and the government’s participation in the mining sector. We view positively the government’s objective to promote good governance and transparency. However, its reversals of several privatizations on the grounds of a lack of transparency and flawed processes may be perceived as politically motivated.”
A report by Carol Dean of the Wall Street Journal highlights the fundamentals: “It is looking to borrow money more cheaply than Portugal and only slightly more expensive than Spain. But rather than raise money to support a collapsing economy, Zambia’s money is going to be used for real economic development and growth. That is something rare in the old developed world. The proceeds are to be invested in developing energy, railways, roads and other infrastructure projects. In stark contrast to the euro-zone’s sluggish growth at best, Zambia’s economy has grown from 6.4% to 7.7% over the 2009 to 2012 period and enjoyed falling inflation, low debt and a stable balance of payments.
“And despite the pitfalls of possible mining reforms and nationalizations, the rare opportunity to invest in a sovereign growth story plus the ever present hunt for yield, is likely to make this deal fly.”
July 12th, 2012 by Tom Minney
Uganda’s only power distributor, Umeme, said it plans to raise capital to invest in Uganda’s electricity sector through an initial public offering (IPO) on the Ugandan and Nairobi securities exchanges later in 2012. Umeme is a distribution company and is 100% owned by private equity firm Actis, according to this report on Reuters.
The news came on 6 July at the switching of 5 turbines to add 50MW to the power grid as part of the $860 million Bujagali 250MW hydropower project, one of Africa’s largest power schemes. Umeme has a 20-year electricity distribution concession. Managing director Charles Chapman says the company has opted for the IPO as electricity is now available – Uganda had been suffering power cuts before Bujagali capacity was added – and there was agreement on regulatory targets.
The company would not say how much it hopes to raise and has not finalized plans for the IPO, but Reuters suggests it could be 20% of the shares. The report quotes Chapman: “The initial public offering (IPO) will support Umeme’s capital raising initiatives to finance the continued development of the electricity distribution network, including projects such as prepayment metering and energy loss reduction. We believe that Umeme will be stronger, more transparent and accountable with the input of our customers and employees as shareholders.”
He adds that customers are up to about 460,000 in 2011 from 354,839 in 2009. After power sector unbundling, power in Uganda is generated by the Uganda Electricity Generation Company and transmitted to Umeme by the Uganda Electricity Transmission Company.
According to this blog story, Umeme has already put in its application to the Capital Markets Authority in Uganda and has appointed Stanbic Bank (Uganda) as Transaction Advisor and African Alliance (Uganda) as Sponsoring Broker. Writer Angelo Izama comments: “The company is a safe investment given its monopoly and demand from customers. Many who worry about the risks it faces will look to political risk something to which we will return. Suffice to say that a great degree of the risk will likely be offset when the company lists given the divesting of its ownership to locals.”
June 28th, 2012 by Tom Minney
The International Finance Corporation (www.ifc.org, the private sector investment arm of the World Bank group) will invest and mobilize more than $1 billion into private infrastructure in Africa during 2012, up from $200 million 5 years ago. But it still does not close the infrastructure finance gap, with an estimated $93bn a year needed.
Private sector infrastructure includes roads, ports, and power stations across Africa, and the pace of investment is both driven by the huge demand from the continent’s people and its growing economies and by the beneficial effects of continued reform programmes.
According to an IFC website, infrastructure and services development is hampered by lack of know-how to develop and guide infrastructure projects so that African governments can benefit from private-sector expertise, management and finance. This is an even more serious hurdle than shortage of funding. Developing deals requires time, effort, experience, and the ability get the right balance between private and public interests.
IFC focuses on the building blocks of any modern economy: ports, railways, telecoms, and power, including renewable energy. But it is also leading the way in advisory services and has successfully advised African governments, including local municipalities, on ways to engage the private sector in essential public services, and on how to restructure state-owned enterprises.
$4bn in public-private partnerships (PPPs)
IFC’s support to private-public partnership (PPP) arrangements between fiscal years 2008 and 2011 is expected to facilitate more than $4bn in private financing for infrastructure and health, providing improved services to approximately 19m people.
Recent highlights include:
• Senegal: IFC was the global coordinator of financing for a €230m ($302m) toll road project, which, when complete in 2013, will run 25 km from Diamniadio to Dakar, cutting travel time to and from the capital city from 2 hours to less than 30 minutes. France’s Eiffage won the project’s 30-year concession, which is supported by the World Bank and for which IFC provided €22.5m ($30m) in long-term debt alongside €40m ($52.3m) from the African Development Bank, the West African Development Bank, and local bank CBAO.
• Cameroon: IFC advised the Government in 2001 on privatizing its power sector. Since then, new owner-operator AES Sonel has invested more than $1bn and has connected nearly 340,000 people to its system. The most recent transaction was the 2011 financing for the company’s 216 MW Kribi project, the first commercial use of Cameroon’s substantial offshore natural gas reserves. In addition to providing €60m ($86m) in direct financing to the €263m ($360m) project, IFC coordinated a larger loan package from partner institutions, and worked with the World Bank on an IDA (International Development Association, part of the World Bank group) partial risk guarantee to facilitate Cameroon’s first long-term, local-currency loan for infrastructure.
May 29th, 2012 by Tom Minney
The dual-listing of Hana Mining Ltd last week on the Foreign Venture Capital Board of the Botswana Stock Exchange (www.bse.co.bw) could bring a giant new cross-Africa railway closer. Hana is also listed on the Toronto Stock Exchange venture board and the Frankfurt exchange. It plans a copper-silver mine near Ghanzi.
The company’s shares started trading on the BSE on 23 May, according to an announcement. On 14 May the company released its most recent (NI 43-101 compliant) preliminary economic assessment which calls for US$285.5 million initial capital expenditure to create a 10,000 tonne per day open-pit mining and milling operation. This is expected to produce approximately 66.4m pounds of copper and 878,000 ounces of silver annually over a minimum 13-year mine life. It says the Ghanzi property is one of Africa’s premier future copper-silver resources.
Hana Mining’s CEO and Chairman, Marek Kreczmer, was quoted as saying: “The listing of the company’s shares on the BSE is an important step in enhancing the relationship of the Company with the government of Botswana in that it allows the people of Botswana to invest directly in the company and gives the company access to some of the largest investment funds in Africa. Also, by establishing a listing in Botswana, we are aligning the goals of the Company with the people of Botswana.”
The Ghanzi Project covers 2,149 square kilometres in the centre of the Kalahari Copper Belt in northwestern Botswana. Favourable geology extends over an estimated strike length of 600 kilometres. The closest existing railhead to port is at Gobabis, in Namibia, approximately 550 km away. A feasibility study has been carried out with funding from the World Bank and the governments of Botswana and Namibia on completion of a rail link to connect Botswana with the Namibian port of Walvis Bay, on the Atlantic coast. More mining projects will make the railway more likely.
Construction is well advanced on a 600MW expansion of the government-owned Moropule Power Plant, which secured US$825m project funding in May 2009. The Trans-Kalahari highway passes within 15 km of the Ghanzi property, which is also near local population centres and workforce.
December 5th, 2011 by Tom Minney
“Africa reminds me of China back in 1999. If you missed China then, don’t do that (miss Africa) now,” is how Plamen Monovski, chief investment officer at Russia’s Renaissance Asset Managers, describes prospects for Africa. “It’s the last place in the world that is due for that rapid change and advancement.”
He was speaking in an interview with Reuters on 2 Dec. He said investors looking at China will find assets already “very discovered” and more expensive. He said African equities were trading at “exceptionally cheap” levels, while Chinese demand for natural resources and Chinese investments are boosting African business.
“The real appeal of Africa is the rise of the consumer society. Africa has got a population the size of India and consumer force as big as India,” he said. Renaissance is backing Africa’s infrastructure, consumer-related and financial sectors, as these will gain from growing prosperity within Africa, rather than commodities which depend on external growth.
The International Monetary Fund (IMF) in October said it expects 6% growth for sub-Saharan Africa in 2012, up from 5% in 2011. It is positive about the outlook because of growth in mining and other areas. Africa is seeing new entrants and efforts by the world’s largest banks and corporate, including large funds
Monovski helps manage $2.5 billion of assets. Renaissance’s funds include a sub-Saharan fund which has fallen about 17% since it was launched in October 2010 as investors pull out of risky assets in the current crisis. The fund includes South Africa’s teleco MTN Group and Nigeria’s Zenith Bank Plc among its top holdings. He joined the fund management arm of Russia’s Renaissance Capital from Blackrock last year.
He also said China will grow and will not have a “hard landing” of strong correction in the current crisis, but much growth is already priced into Chinese equities: “We want to look at other regions in the world which looked like China in the late 90s.”
October 20th, 2011 by Tom Minney
Moving back to Cote d’Ivoire may be on the agenda for the African Development Bank (www.afdb.org), according to an interesting story on the website www.devex.com (you may have to sign in to read it?). The bank fled from Abidjan in a rush in 2003, as rebels advanced on Abidjan in the brutal and all-encompassing civil war. Now the new Cote d’Ivoire President Alessane Ouattara wants it back. and it was on the agenda at the bank’s AGM in June in Lisbon, although it may take up to 3 years before this happens.
The article also notes that the bank is increasingly important and playing a bigger role as an African institution in channeling funding to African projects.
In January 2011, the bank lived through Tunisia’s jasmine revolution, although one bank staff member told me that it did not much affect the area around their building, as street action was mostly concentrated in other parts of town. They did miss a few days work, before bosses had them back in action.
According to the article, AfDB president Donald Kaberuka said uncertainty over the permanent location of the bank had a “significant effect” on morale, frustrated “horizon planning” and was difficult for the human resources department. Some bank staff may be happy to leave Tunis, others not.
Ouattara, who got into power in April 2010 after being blocked by his predecessor, Laurent Gbagbo who disputed the election result, is moving fast to re-establish Abidjan as the financial hub for West Africa and has been lobbying hard for the bank. It is not sure what the criteria for the move are, but it is possible they will need to see at least another successful multi-party election and a period of stable government.
The AfDB attended Ouattara’s inauguration and was a leader in an accelerated package of loans to help the new administration and initial renovation has started for the bank’s headquarters in Plateau district, according to the article.
New confidence, bigger role going forward
Then bank also led multilateral lenders to sign of $1 billion in loans to Tunisia’s new administration. Kaberuka, a former finance minister from Rwanda, reportedly says that after the political shocks, swift intervention can limit collateral damage. The African Development Bank is credited for its role after the 2008 global financial crisis in encouraging African states to apply fiscal restraint but to ease potential economic disruption through investment in infrastructure, and many countries are praised for successful countercyclical interventions.
The article also argues that the bank is increasingly the biggest and best bet for Western donors who are its principal shareholders. Experienced author Mark Ashurst writes: “As the bank’s loan book grows bigger and more diverse, donors, including the United States, Germany and the United Kingdom, are keen to devolve the task of managing their African exposure to an African institution.” He adds that the bank has done a skilful job of developing a terminology that avoids words such as “conditionalities” and uses “policy-based lending” and success in developing the skilful balancing acts required to work with nations. It also reflects aspirations for greater African voices in international development policy and it is likely that more international financial institutions could devolve administrative work to the AfDB.
In 2010 the African Development Bank passed the World Bank and became the leading source of multilateral financing for new African infrastructure. The same year, the bank’s sixth general capital increase included pledges to treble the bank’s reserves to $100 trillion by 2021, signalling new confidence. The bank’s loan book is stsill less than the sum of China’s resources-for-infrastructure swaps but the AfDB is much more closely involved than other lenders in African institutions such as the African Union and the Economic Commission for Africa and has a unique standing in the regard with which it is seen in Africa.
The article goes on to argue about the bank’s changing role as growth of 5% a year or more becomes the norm in Africa for coming years. This includes work to support bond and capital markets and leveraging private capital (20%), infrastructure (40%), budget support (20%), industries, including mining and manufacturing (20%). It is well worth reading Mark’s article in full here.
September 30th, 2011 by Tom Minney
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.