Africa Investments Rising

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The middle class is widely acknowledged to be Africa’s future, the group that is crucial to the continent’s economic and political development. But it is difficult to determine exactly who falls into this key group and even harder still to accurately establish how many middle-class people there are in Africa, according to the AfDB.
“In Uganda, being middle class is determined by having a good education, being able to rent or own a good home, having access to the Internet, making frequent visits to a supermarket and spending the equivalent of $15 a day,” Stephen Kaboyo, the managing partner of Uganda-based research company Alpha Partners, told IPS.
Joseph Nsubuga, a land dealer near Kampala, the Uganda capital, saw an opportunity to be part of the rising middle class and grabbed it.
“Rising incomes for many people in the country sparked off demand for land where I saw an opportunity to advance my own fortunes. I started by selling what I inherited from my parents but it is now my fulltime job to buy and sell land. My fortunes have improved and I am able to send my children to good schools,” Nsubuga told IPS.
James Babalanda, a Kampala-based educationist, also saw an opportunity to improve his quality of life.
“Since people with increased incomes wanted good electronic equipment, I decided to open a number of shops dealing in these items in the capital and, believe me, I am living a fairly good life. My business is ever growing because of a ready market,” he told IPS.
Bategeka said room for further growth of Africa’s middle class abounds, but depends on increased government investment in infrastructure.
Uganda is a good example of how economic reforms are enhancing people’s incomes, and this growth would have been higher if investments in infrastructure were higher. Most countries have been slow in providing faster private growth because of deficits in infrastructure, which is key to growth, Bategeka said.
By ditching state controls and embracing private sector-led policies, African economies stimulated the growth of the middle class, and there is room for further expansion with more public sector investments in infrastructure projects, Bategeka said.
In the 1990s African economies embraced the World Bank and the International Monetary Fund’s (IMF) structural adjustment programs, which advocated free market policies.
Bategeka said the introduction of liberalization, which focused on private sector-led growth, is key to the growing middle class on the continent. Countries introduced sound economic policies which controlled inflation, benefiting investments in their economies.
Investments in the service sector are some of the drivers of middle class growth on the continent. The sound macroeconomic policies at the same time attracted foreign direct investments which helped to grow the middle class.
North African countries have a higher concentration of middle class society, with Tunisia having the highest proportion at 89.5 percent, followed by Morocco with 84.6 percent.
Liberia has the lowest concentration of middle class among the countries surveyed, with only 4.8 percent of the population falling into this category, followed by Burundi at 5.3 percent.
Africa’s middle class is a key source for private sector growth in Africa, accounting for much of the effective demand for goods and services supplied by the private sector, according to the AfDB.
Sub-Saharan Africa remains insulated from the negative factors affecting growth in developed countries and the economic activity in the region is generally robust with growth in 2012-13 expected to remain the same as it was a year earlier, the IMF said in its October 2012 regional outlook for sub-Saharan Africa.

Fitch Affirms IBRD’s AAA Rating

Fitch Ratings has affirmed the International Bank for Reconstruction & Development’s (IBRD) Long-term Issuer Default Rating (IDR) at ‘AAA’ with a stable outlook and short-term IDR at ‘F1+’.
IBRD’s ratings are supported by the bank’s intrinsic strengths, including its solid capitalization, its excellent asset quality, its conservative risk management policies and adequate liquidity, Reuters reported.
Additionally, Fitch considers shareholders’ willingness and ability to support the bank as strong.
The bank is strongly capitalized despite the regular decline of capitalization in recent years. At 18x at June 2012, Fitch’s ratio of usable to required capital compared favorably with peers. The debt to equity ratio was moderate, at 406.3 percent, and the bank benefits fromexcellent financial flexibility.
Despite the expected proceeds from the 45.4-percent capital increase, which will be spread until 2016, capitalization should slightly weaken and leverage slightly increase in the coming years: activity should remain strong and the IBRD, subject to the adequacy of reserves, intends to maintain significant transfers to the International Development Association (IDA), another branch of the World Bank Group.
The excellent credit risk represents a rating strength. Loans extended to investment-grade member-states at June 2012 were 67.8 percent of the total, one of the highest rates among peers and the average rating of loans was ‘BBB-’.
The marginal non-performing loan (NPL) rate (0.3 percent of gross loans at June 2012) is underpinned by the bank’s preferred creditor status as loans are only made to sovereigns or sovereign-guaranteed borrowers. Even though the IBRD is strongly concentrated, with the five largest loans accounting for 166.5 percent of its equity, this ratio is in line with peers, and nine of the 10 largest borrowers are rated in the investment-grade category.
Liquidity is lower than for peers, with treasury assets accounting for 11.7 percent of total assets at June 2012. However, Fitch deems liquidity adequate as treasury assets structurally cover short-term liabilities and are particularly liquid.
Their excellent credit quality (nearly 80 percent were rated ‘AA-’ and above at June 2012) also limits the potential losses of the bank on its investment portfolio.
This reflects the bank’s conservative risk management framework.
Despite IBRD’s ability to generate a rather resilient operating income, profitability is volatile because of the accounting asymmetry in valuation of borrowings and loans, which generated a net loss in FY12.
The bank also recorded a large negative adjustment to other comprehensive income related to the accounting treatment of liabilities under its pension plan. The bank’s equity cushion is, therefore, subject to volatility.

S. Korea’s Jobless Rate Rises to 3.4 percent

South Korea’s jobless rate rose above 3 percent for the first time in five months due to a seasonal factor, but job growth accelerated on the back of strong job creation in the manufacturing sector, a government report showed on Wednesday.
The unemployment rate was 3.4 percent in January, topping the 3 percent mark for the first time since August last year, according to Statistics Korea. The reading was up from 2.9 percent in the prior month, Xinhua reported.
The rise was attributed to a seasonal factor.
“The unemployed tends to increase in January as job-seeking activity strengthens ahead of a university graduation,” the statistical agency said in a statement.
The number of people unemployed, who failed to land work despite job-hunting efforts, increased to 847,000 last month after posting 737,000 in the previous month.
The jobless rate gauges the percentage of unemployed people who actively sought jobs over the past four weeks to the economically active population, or the sum of people employed and those unemployed.
The jobless rate among those aged between 15 and 29 was 7.5 percent in January, unchanged from the previous month. The figure was down 0.5 percentage point from the same month of last year.
Job creation accelerated due to solid performance in the manufacturing industry. The total number of people employed rose 322,000 from a year earlier to 24,054,000 in January. The gain was up from 277,000 jobs created in the previous month.

Saudis Least Paid In PGCC Private Sector

Saudis employed by their private sector are paid less than nationals in neighboring Persian Gulf countries despite a Saudi government drive to make local companies give higher salaries to local employees, according to the World Bank.
In a study published in a Saudi newspaper, the Washington-based World Bank said an aggressive job Saudization campaign announced by the world’s largest oil exporter recently has created corruption turmoil in the local labor market, Emirate247 wrote.
The study showed Saudi employees in the private sector are paid an average SR6,400 compared with SR15,200 for nationals and SR23,600 for European private sector employees in nearby Persian Gulf oil producers.
Women are paid far less, with the average monthly wage for Saudi female workers in the private sector standing at SR3,900 compared to SR8,700 for national women and SR15,000 for Europeans in other Persian Gulf nations.
This means that Saudis working in the private sector in the Persian Gulf kingdom are the least paid in the Persian Gulf Cooperation Council (PGCC), the World Bank said in the study, partly published in the Saudi Arabic-language daily Aleqtisadiah.
The study, conducted at the request of the Saudi Labor Ministry but has not been made public yet, criticized Saudi Arabia’s latest job nationalization drive known as “Nitaqat”, saying it had created corruption and anarchy in the job market.
Riyadh announced the launching of Nitaqat in mid 2011 to tackle national unemployment, which was estimated at around 11 percent at the end of 2011.
The level is far higher among women and university graduates, ranging between 20 and 45 percent, according to independent estimates.

Mazandaran Fishery Exports At $28m

Economy Desk

The value of fishery exports reached $28 million during March 20, 2012-Jan. 20, 2013, said director general of Mazandaran Fisheries Department.
Hassan Habibnejad also told ISNA that close to 7,125 tons of cultured fish were exported to Asian and European nations.
“Of this figure, 156 kg pertained to cultured caviar, 221 tons to kilka fish and 17 tons to cultured caviar fillet,” he said.
He explained that the fishery products were exported from the cities of Sari, Babol, Behshahr and Amol to UAE, Iraq, Azerbaijan, Turkmenistan, France, Germany and Switzerland.
Gholamreza Razzaqi, the head of Iran Fishery Organization, said last October that $210 million worth of aquatics were exported in the past year and the figure is expected to exceed $350 million in the current year.
He predicted that more than 800 tons of aquatics will be produced this year while the figure for last year was 663 tons.
The official also said development of aquatic breeding is one of the top priorities of agricultural sector, pointing out that implementation of cage fish farming is among the objectives pursued by the organization.
Razzaqi referred to China, South Korea, European and neighboring countries as the main destinations of Iran’s aquatic exports.

Indonesia Reluctant to Comply With Oil Sanctions

An Indonesian diplomat stressed that his country is not interested in implementing the Western sanctions on Iran’s oil industry and will continue its transactions with Tehran.
Indonesia is reluctant to comply with the oil sanctions and will not be affected by the embargos in its transactions with Iran, Indonesian Ambassador in Tehran Dian Wirengjurit told FNA on Tuesday.
He said his country’s officials and their Iranian counterparts have negotiated the possibility of constructing an oil refinery by Iran in Indonesia.
“Indonesia is negotiating with Iran so that, if possible, the two countries will reach a final agreement in this regard,” Wirengjurit added.
Iranian and Indonesian officials have on many occasions stressed their resolve to expand bilateral relations and mutual cooperation in different fields.
Late in February 2012, Indonesian Foreign Minister Marty M. Natalegawa in a meeting with his Iranian counterpart Ali Akbar Salehi underscored the importance of expanding his country’s ties with Iran in line with the two nations’ common interests.

Iran-Uzbekistan Trade Hit $350m in 2012

Trade between Iran and Uzbekistan stood at $350 million in 2012, Iranian Ambassador in Tashkent Ali Mardanifard announced, stressing the need for further expansion of trade cooperation between the two countries.
“The value of trade exchanges between Iran and Uzbekistan surpassed $350 million in 2012,” Mardanifard said in a press conference in Tashkent, FNA wrote.
He underscored the necessity of boosting trade and economic cooperation between the two countries, and said an intergovernmental cooperation commission will soon start work to study bilateral economic, trade and cultural cooperation.
Iran and Uzbekistan have recently enhanced efforts to boost political, economic and cultural ties.
Uzbek President Islam Karimov, in a message to his Iranian counterpart Mahmoud Ahmadinejad in May, underscored his country’s commitment to further expand relations between Tehran and Tashkent.

Jordan to Hold WEF Meeting

Jordan will host the World Economic Forum (WEF) meeting on the Middle East and North Africa in May 24-26, 2013, at the Dead Sea under royal patronage.