Business

Global Economy’s “Speed Limit” Set to Fall to Three-Decade Low

28, March 2023

Global Economy’s “Speed Limit” Set to Fall to Three-Decade Low 0

The global economy’s “speed limit”—the maximum long-term rate at which it can grow without sparking inflation—is set to slump to a three-decade low by 2030. An ambitious policy push is needed to boost productivity and the labor supply, ramp up investment and trade, and harness the potential of the services sector, a new World Bank report shows.

The report, Falling Long-Term Growth Prospects: Trends, Expectations, and Policies, offers the first comprehensive assessment of long-term potential output growth rates in the aftermath of the COVID-19 pandemic and the Russian invasion of Ukraine. These rates can be thought of as the global economy’s “speed limit.”

The report documents a worrisome trend: nearly all the economic forces that powered progress and prosperity over the last three decades are fading. As a result, between 2022 and 2030 average global potential GDP growth is expected to decline by roughly a third from the rate that prevailed in the first decade of this century—to 2.2% a year. For developing economies, the decline will be equally steep: from 6% a year between 2000 and 2010 to 4% a year over the remainder of this decade. These declines would be much steeper in the event of a global financial crisis or a recession.

“A lost decade could be in the making for the global economy,” said Indermit Gill, the World Bank’s Chief Economist and Senior Vice President for Development Economics. “The ongoing decline in potential growth has serious implications for the world’s ability to tackle the expanding array of challenges unique to our times—stubborn poverty, diverging incomes, and climate change. But this decline is reversible. The global economy’s speed limit can be raised—through policies that incentivize work, increase productivity, and accelerate investment.”

The analysis shows that potential GDP growth can be boosted by as much as 0.7 percentage points—to an annual average rate of 2.9%—if countries adopt sustainable, growth-oriented policies. That would convert an expected slowdown into an acceleration of global potential GDP growth.

“We owe it to future generations to formulate policies that can deliver robust, sustainable, and inclusive growth,” said Ayhan Kose, a lead author of the report and Director of the World Bank’s Prospects Group. “A bold and collective policy push must be made now to rejuvenate growth. At the national level, each developing economy will need to repeat its best 10-year record across a range of policies. At the international level, the policy response requires stronger global cooperation and a reenergized push to mobilize private capital.”

The report lays out an extensive menu of achievable policy options, breaking new ground in several areas. It introduces the world’s first comprehensive public database of multiple measures of potential GDP growth—covering 173 economies from 1981 through 2021. It is also the first to assess how a range of short-term economic disruptions—such as recessions and systemic banking crises—reduce potential growth over the medium term.

“Recessions tend to lower potential growth,” said Franziska Ohnsorge, a lead author of the report and Manager of the World Bank’s Prospects Group. “Systemic banking crises do greater immediate harm than recessions, but their impact tends to ease over time.”

The report highlights specific policy actions at the national level that can make an important difference in promoting long-term growth prospects:

Align monetary, fiscal, and financial frameworks: Robust macroeconomic and financial policy frameworks can moderate the ups and downs of business cycles. Policymakers should prioritize taming inflation, ensuring financial-sector stability, reducing debt, and restoring fiscal prudence. These policies can help countries attract investment by instilling investor confidence in national institutions and policymaking.

Ramp up investment: In areas such as transportation and energy, climate-smart agriculture and manufacturing, and land and water systems, sound investments aligned with key climate goals could enhance potential growth by up to 0.3 percentage point per year as well as strengthen resilience to natural disasters in the future.

Cut trade costs: Trade costs—mostly associated with shipping, logistics, and regulations—effectively double the cost of internationally traded goods today. Countries with the highest shipping and logistics costs could cut their trade costs in half by adopting the trade-facilitation and other practices of countries with the lowest shipping and logistics costs. Trade costs, moreover, can be reduced in climate-friendly ways—by removing the current bias toward carbon-intensive goods inherent in many countries’ tariff schedules and by eliminating restrictions on access to environmentally friendly goods and services.

Capitalize on services: The services sector could become the new engine of economic growth. Exports of digitally delivered professional services related to information and communications technology climbed to more than 50% of total services exports in 2021, up from 40%in 2019. The shift could generate important productivity gains if it results in better delivery of services. 

Increase labor force participation: About half of the expected slowdown in potential GDP growth through 2030 will be attributable to changing demographics—including a shrinking working-age population and declining labor force participation as societies age. Boosting overall labor force participation rates by the best ten-year increase on record could increase global potential growth rates by as much as 0.2 percentage point a year by 2030. In some regions—such as South Asia and the Middle East and North Africa—increasing female labor force participation rates to the average for all emerging market and developing economies could accelerate potential GDP growth by as much as 1.2 percentage points a year between 2022 and 2030.

The report also underscores the need to strengthen global cooperation. International economic integration has helped to drive global prosperity for more than two decades since 1990, but it has faltered. Restoring it is essential to catalyze trade, accelerate climate action, and mobilize the investments needed to achieve the Sustainable Development Goals.

Scramble For Africa: Gunmen kill 9 Chinese at mine in Central African Republic

20, March 2023

Scramble For Africa: Gunmen kill 9 Chinese at mine in Central African Republic 0

Gunmen stormed a Chinese-operated gold mining site that had recently been launched in Central African Republic, killing nine Chinese nationals and wounding two others Sunday, authorities said.

However, the rebel coalition initially blamed by some for the attack put out a statement later in the day. Without providing evidence, it accused Russian mercenaries from the Wagner Group of being behind the violence.

The attack early Sunday came just days after gunmen kidnapped three Chinese nationals in the country’s west near the border with Cameroon, prompting President Faustin Archange Touadera to plan a trip to China in a bid to reassure investors.

The assault on the Chimbolo gold mine began around 5 a.m. when the gunmen overpowered the site’s guards and opened fire, said Abel Matipata, mayor of the nearby town of Bambari, located 25 kilometers (16 miles) away. The mining site’s launch had taken place just days earlier, he added.

The bodies of the victims were brought to the capital, Bangui, later Sunday. Local authorities said they were pursuing the assailants, but declined further comment. Residents said that the violence was the latest incident undermining confidence in security forces.

“The government is having difficulty proving its ability to protect Central Africans and foreigners living in the country,” said Ange Morel Gbatangue, a resident of Bambari.

There was no immediate claim of responsibility, but suspicion fell on the Coalition of Patriots for Change, or CPC, which is active in the area and regularly launches attacks on the country’s armed forces. The alliance of rebel groups is aligned with former President Francois Bozize.

Anselme Bangue, who supports the current president’s administration, called the attack on Chinese businessmen an act of “indescribable cowardice.”

“The CPC has not only slowed down the country’s economic momentum, but is now attacking the foundation of development. This is unacceptable,” Bangue said.

However, CPC military spokesman Mamadou Koura said those allegations were false. He claimed without evidence that Russian mercenaries had planned the attack “with the goal of scaring Chinese who have been present long before the Russians settled in this part of the country.”

The shadowy Russian mercenary group was hired by Touadera to provide security and military training, but has been accused by U.N. observers of committing human rights abuses including massacres.

Central African Republic remains one of the poorest countries in the world despite its vast mineral wealth of gold and diamonds among others. A myriad of rebel groups have operated with impunity across the embattled country over the past decade, thwarting mining exploration by foreign companies.

Many of those now operating in the country are Chinese-run and have faced security challenges. In 2020, two Chinese nationals died when local residents led an uprising against a Chinese-operated mine in Sosso Nakombo. And in 2018, three Chinese citizens were killed by angry community members after a local leader died in a boating accident while accompanying Chinese miners to a site.

Source: ABC News

France-Afrique: One-Day CEMAC Summit Ends In Yaoundé

19, March 2023

France-Afrique: One-Day CEMAC Summit Ends In Yaoundé 0

Heads of state from the Economic and Monetary Community of Central Africa (CEMAC) met in Yaoundé, for a one-day summit to discuss the region’s economy and impact of the war in Ukraine.

The heads of state welcomed the “exceptional” economic measures undertaken by the group’s members to mitigate the impact of the conflict.

“We are fully satisfied because the objectives sought have been achieved by our heads of state and I believe that the best is yet to come in terms of sub-regional integration”, said Cameroon’s Ambassador to Equatorial Guinea, Désiré Menguele.

The meeting, which began at ministerial level on Wednesday, also saw 90-year-old Paul Biya pass on the mandate as head of the conference to Central African Republic President Faustin-Archange Touadera for one year.

The six-nation group comprises the Central African Republic, Chad, Gabon, Equatorial Guinea and the Republic of Congo in addition to Cameroon, in a union around a common currency, the CFA franc.

Source: Von.gov.Ng                                                                                          

Cameroon banana exports down, mainly due to poor performance by market leader

9, March 2023

Cameroon banana exports down, mainly due to poor performance by market leader 0

According to data from banana association Assobacam, Cameroonian banana exporters sold a total of 16,185 tons of fruits in February 2023. Compared to the 16,525 tons sold over the same period last year, this is a decline of 340 tons (-2%). This slight decrease is mainly due to poor performance by market leader Plantations de Haut Penja SA (PHP). The company only shipped 12,919 tons of bananas in February 2023, against 14,209 tons in February 2022 (down 1,290 tons).

Minor market player Boh Plantations also saw a slight decline of 75 tons, from 1,172 tons in February 2022 to 1,097 tons in February 2023. However, CDC achieved a good performance over the period, shipping a total of 2,169 tons; up 47% compared to 1,144 tons in February 2022.

CDC has thus maintained steady progress since January 2023, when its exports increased by 83% YoY. However, there is concern that the recent attack on the company’s employees could end this momentum.

Source: Business in cameroon.com                                           

Pace of Reform Toward Equal Rights for Women Falls to 20-Year Low

2, March 2023

Pace of Reform Toward Equal Rights for Women Falls to 20-Year Low 0

The global pace of reforms toward equal treatment of women under the law has slumped to a 20-year low, constituting a potential impediment to economic growth at a critical time for the global economy, a new World Bank report shows.

In 2022, the global average score on the World Bank’s Women, Business and the Law index rose just half a point to 77.1—indicating women, on average, enjoy barely 77 percent of the legal rights that men do. At the current pace of reform, in many countries a woman entering the workforce today will retire before she will be able to gain the same rights as men, the report notes.

“At a time when global economic growth is slowing, all countries need to mobilize their full productive capacity to confront the confluence of crises besetting them,” said Indermit Gill, Chief Economist of the World Bank Group and Senior Vice President for Development Economics. “Governments can’t afford to sideline as much as half of their population. Denying equal rights to women across much of the world is not just unfair to women; it is a barrier to countries’ ability to promote green, resilient, and inclusive development.”

Women, Business and the Law 2023 assesses 190 countries’ laws and regulations in eight areas related to women’s economic participation—mobility, workplace, pay, marriage, parenthood, entrepreneurship, assets, and pensions. The data—which are current through Oct. 1, 2022—offer objective and measurable benchmarks for global progress toward legal gender equality. Today, just 14 countries—all high-income economies—have laws that give women the same rights as men.

Worldwide, nearly 2.4 billion women of working age still do not have the same rights as men. Closing the gender employment gap could raise long-term GDP per capita by nearly 20% on average across countries. Studies estimate global economic gains of $5-6 trillion if women started and scaled new businesses at the same rate as men do.

In 2022, only 34 gender-related legal reforms were recorded across 18 countries—the lowest number since 2001. Most reforms focused on increasing paid leave for parents and fathers, removing restrictions to women’s work, and mandating equal pay. It will take another 1,549 reforms to reach substantial legal gender equality everywhere in the areas measured by the report. At the current pace, the report, notes, it would take at least 50 years on average to reach that target.

The latest Women, Business and the Law report provides a comprehensive assessment of global progress toward gender equality in the law over the past 50 years. Since 1970, the global average Women, Business and the Law score has improved by about 2/3, rising from 45.8 to 77.1 points.

The first decade of this century saw strong gains towards legal gender equality. Between 2000 and 2009, over 600 reforms were introduced, with a peak of 73 annual reforms in 2002 and 2008. Since then, reform fatigue seems to have set in—particularly in areas that involve long-established norms, such as the rights of women to inherit and own property. New analysis of the data shows that economies with historically larger legal gender gaps have been catching up, especially since 2000.

Currently, equality of economic opportunity for women is highest in OECD high-income economies but important reforms have continued in developing economies. Sub-Saharan Africa made significant progress last year. The region accounted for over half of all reforms worldwide in 2022, with seven economies—Benin, the Republic of Congo, Côte d’Ivoire, Gabon, Malawi, Senegal, and Uganda—enacting 18 positive legal changes.

Although great achievements have been made over the last five decades, more needs to be done worldwide to ensure that good intentions are accompanied by tangible results —that is, equal opportunity under the law for women. Women cannot afford to wait any longer to reach gender equality. Neither can the global economy.

MTN, Orange and Camtel pledge CFA156bn expansion investment

17, February 2023

MTN, Orange and Camtel pledge CFA156bn expansion investment 0

Three mobile operators in Cameroon, namely MTN, Orange and Camtel have committed to invest CFA156 billion this year to improve the quality of their service and broaden their network coverage. The information was announced in a statement issued last February 13 by Philemon Zoo Zame, the Director General of the Telecommunications Regulatory Agency (ART).

This decision follows pressure from the telecom regulator, which revealed it had already sent no less than 13 formal notices to the country’s four mobile operators (MTN, Orange, Nexttel and Camtel), inviting them to implement corrective measures within a given period.

During a meeting with ART officials on January 31 in Yaoundé, the CEO of Orange Cameroon, Patrick Benon, said his company will invest a total of CFA150 billion over the next five years, starting with CFA30 billion in 2023. It is unclear whether this first disbursement of CFA30 billion by Orange is included in the joint investment with MTN and Camtel.

Source: Business in Cameroon

COVID-19’s Impact on Young People Risks a Lost Generation

16, February 2023

COVID-19’s Impact on Young People Risks a Lost Generation 0

The COVID-19 pandemic caused a massive collapse in human capital at critical moments in the life cycle, derailing development for millions of children and young people in low- and middle-income countries, according to the first analysis of global data on young people who were under the age of 25 at the onset of the pandemic.

The new World Bank report, Collapse and Recovery: How COVID-19 Eroded Human Capital and What to Do About It, analyzes global data on the pandemic’s impacts on young people at key developmental stages: early childhood (0-5 years), school age (6-14 years), and youth (15-24 years). It found that today’s students could lose up to 10% of their future earnings due to COVID-19-induced education shocks. And the cognitive deficit in today’s toddlers could translate into a 25% decline in earnings when these children are adults.

Human capital—the knowledge, skills, and health that people accumulate over their lives—is key to unlocking a child’s potential and enabling countries to achieve a resilient recovery and strong future growth. Yet the pandemic shuttered schools and places of employment and disrupted other key services that protect and promote human capital, such as maternal and child health care and job training.

“The pandemic and school closures threatened to wipe out decades of progress in building human capital. Targeted policies to reverse the losses in foundational learning, health, and skills are critical to avoid jeopardizing the development of multiple generations,” said World Bank Group President David Malpass. “Countries need to chart a new course for greater human capital investments to help citizens become more resilient to the overlapping threats of health shocks, conflict, slow growth and climate change and also lay a solid foundation for faster, more inclusive growth.”

Due to the pandemic, preschool-age children in multiple countries have lost more than 34% of learning in early language and literacy and more than 29% of learning in math, compared to pre-pandemic cohorts. In many countries, even after schools had reopened, preschool enrollment had not recovered by the end of 2021; it was down by more than 10 percentage points in multiple countries. Children also faced greater food insecurity during the pandemic.

Among school-age children, on average, for every 30 days of school closures, students lost about 32 days of learning. This is because school closures and ineffective remote learning measures caused students to miss out on learning and also forget what they had already learned. In low- and middle-income countries, nearly 1 billion children missed out on at least a full year of in-person schooling due to school closures, and more than 700 million missed one and a half years. As a result, learning poverty—already 57% before the pandemic—has increased further in these countries, with an estimated 70% of 10-year-olds unable to understand a basic written text.

COVID-19 dealt a heavy blow to youth employment. Forty million people who would have had a job in the absence of the pandemic did not have one at the end of 2021, worsening youth unemployment trends. Youth earnings contracted by 15% in 2020 and 12% in 2021. New entrants with lower education will have 13% less earnings during their first decade in the labor market. Evidence from Brazil, Ethiopia, Mexico, Pakistan, South Africa, and Vietnam showed that 25% of all young people were neither in education, employment nor training in 2021.

The window for addressing setbacks in human capital accumulation is small, as gaps in early stages of the life cycle tend to widen over time. Without urgent action, the pandemic also threatens to deepen poverty and inequality. This report highlights evidence-based policy options to recover from current losses and forestall future ones. It also provides an approach to help countries prioritize among different crisis recovery policy options.

In the short term, for young children, countries should support targeted campaigns for vaccinations and nutritional supplementation; increase access to pre-primary education; and expand coverage of cash transfers for vulnerable families. For school-age children, governments need to keep schools open and increase instructional time; assess learning and match instruction to students’ learning levels; and streamline the curriculum to focus on foundational learning. For youth, support for adapted training, job intermediation, entrepreneurship programs, and new workforce-oriented initiatives are crucial.

In the longer term, countries need to build agile, resilient, and adaptive health, education, and social protection systems that can better prepare for and respond to current and future shocks.

“People under the age of 25 today—that is, those most affected by the erosion of human capital—will make up more than 90% of the prime-age workforce in 2050,” said Norbert Schady, Chief Economist for Human Development at the World Bank, and a lead author of the report. “Reversing the pandemic’s impact on them and investing in their future should be a top priority for governments. Otherwise, these cohorts will represent not just a lost generation but rather multiple lost generations.”

The World Bank Group is working closely with governments to protect and invest in people as they cope with and recover from the pandemic. The World Bank’s pandemic response financing reached $72.8 billion between April 2020 and June 2022, including $37.6 billion and $35.1 billion in IBRD and IDA commitments, respectively. During the same period, its financing in human development reached $47.5 billion, supporting 300 projects in low- and middle-income countries.

CPDM Crime Syndicate: Motazé prepares end of IMF-led program

16, February 2023

CPDM Crime Syndicate: Motazé prepares end of IMF-led program 0

Cameroon’s Minister of Finance, Louis Paul Motazé, is pushing for a plan to anticipate the impact of the end of the IMF-led program. On February 10, 2023, as the new managers of the Autonomous Amortization Fund (CAA) and the National Deposit and Consignment Fund (CDEC) were being installed, the official invited them to find solutions to compensate for the reduction in budget support that will accompany the end of the IMF program.

“(I’m) not sure right now that if the current program, which is scheduled to end in 2024, ends, another one will be negotiated,” the Minister said. “Cameroon will not be indefinitely under programs, we should remember that to manage is to foresee, and it is therefore up to all of us, and to you too, to find resources to replace these budgetary supports, so that Cameroon continues to move forward, and that the financing of our development continues. I am counting on you,” he added.

As a reminder, the 3-year IMF-led program was concluded on July 29, 2021, with the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) arrangements. Under this program, Cameroon will obtain a total of CFA770 billion in aid, according to the Minister of Finance. CFA380 billion will be provided by the IMF, while the rest should come from donors such as the World Bank, the AfDB, the European Union, and France.

Source: Business in Cameroon

Increased gasoline prices trigger panic buying in Cameroon

2, February 2023

Increased gasoline prices trigger panic buying in Cameroon 0

Following the government’s announcement on Monday, January 30, that fuel prices will go up come February 2023, Cameroonians across the country rushed to filling stations to top their tanks, causing long lines at the filling stations.

Cameroonians are now faced with a fuel price rise of about 15 percent, meaning a litre of diesel that used to cost them 575 CFA francs (0.87 euros), will now go up to 720 CFA francs (1.09 euros).

The rise came after the International Monetary Fund (IMF) had put pressure on the government to cut its fuel subsidy.

But there will be a 5.2 percent salary rise for civil service workers to help soften the blow, the prime minister’s office stated.

“They recognized the need to reduce the costly fuel subsidies, which are unsustainable under the current international oil price projections and are poorly targeted to those in need and crowd out priority spending,” the IMF, referring to the government, said in a news release on Tuesday.

“The fuel subsidies represent six times the budget allocated to agriculture, four times that to health, and over three times that to energy and water. Fuel subsidy reform would need to be accompanied by measures to mitigate the impact on the most vulnerable, including cash transfers,” it added.

In March the IMF is scheduled to give 68.5 million euros in credit to the government.

By Camcordnews and Africa News

IMF and Cameroon reach $74.6 mln staff-level agreement

31, January 2023

IMF and Cameroon reach $74.6 mln staff-level agreement 0

The International Monetary Fund and Cameroon have reached a staff-level agreement that will give the country access to around $74.6 million once the Board formally completes the review, the IMF said in a statement on Monday.

The announcement followed an IMF mission to Cameroon earlier this month and virtual meetings to discuss progress made on reforms and policy priorities in the context of the third review of the program, supported by Extended Credit Facility and Extended Fund Facility arrangements.

“The mission has reached staff-level agreement with the Cameroonian authorities on the economic and financial policies that could support the approval of the third review of the program,” IMF mission chief for Cameroon Cemile Sancak said in the statement.

“Conclusion of the third review by the IMF Executive Board scheduled in early March 2023 would enable the disbursement of SDR 55.2 million (about US$74.6 million),” she added.

The central African country’s economy grew at an estimated 3.4% in 2022, up from 3.6% in 2021. It is projected to reach 4.3% growth this year, the statement said.

Headline inflation is expected to reach 6% at the end of 2022, mainly driven by food prices due to higher import costs and domestic supply pressures.

Source: Reuters

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