AFC Invests $142 Million In Hydro-Electric Power Station

Africa Finance Corporation (AFC), one of the leading infrastructure development finance institutions in Africa, has announced to invest in the Nachtigal Hydro Power Company (NHPC), located 65KM north of Yaounde in Cameroon

The US$1.37bn power generation project will consist of a 420MW hydro-electric power station as well as a 50KM transmission line. The financing structure will take a 76:24 debt to equity ratio, with AFC providing US$56.94mn in debt and an additional 18-year interest rate swaps of up to US$85.41mn. Construction is expected to commence by the end of 2018.

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Other lenders participating in the investment consortium include the International Finance Corporation, European Investment Bank, Proparco, Société Générale and Standard Chartered.

Electricité de France International has a 40 per cent stake in NHPC, with InfraVentures, the World Bank’s infrastructure project development fund and the government of Cameroon each holding 30 per cent stakes.

This investment into Cameroon’s power sector comes following consistent growth in the demand for electricity across the country for both domestic and industrial use. For example, during the 2012 – 2016 period, demand grew at a Compound Annual Growth Rate of 7.6 per cent, from 4.2TWh to 5.7TWh in the grid to which Nachtigal will connect. Currently, demand in the grid to which Nachtigal will be connected is expected to more than double from 5.7TWh in 2016 to above 13TWh by 2030.

At the same time, Eneo Cameroon SA, the country’s main electricity company, and off-taker to the NHP, has delivered significant operational improvements. This has consequently meant liquidity support for NHPC is stronger than it was for the Kribi Power Development Corporation IPP, which attracted a similar group of lenders.

As is the case with all projects Africa Finance Corporation participates in, the decision to go forward with the Nachtigal hydro project was based on its potential to drive economic development while also considering its wider impact. The NHPC will be the cornerstone of Cameroon’s low carbon development plan and was selected because it was ranked as the best future hydro project to be developed in the LCDP. AFC, the sponsors and lenders will develop the project in compliance with national and international best practices in terms of environmental and social management and infrastructure building.

Samaila Zubairu, president and CEO to AFC, commented, “Cameroon is a textbook example of a nation that has, in recent years, demonstrated a deep-rooted commitment to surmount its power deficit challenges by successfully creating a highly investible sector.”

“Moreover, with the International Monetary Fund (IMF) having raised Cameroon’s economic growth outlook to 4.2 per cent from 2017’s 3.2 per cent, we will be investing in the country’s essential infrastructure that will help unlock further economic growth in the years to come, and for the people of Cameroon reach their developmental aspirations.”

Source:africanreview.com

 

Burundi And Tanzania Get $322 Million AfDB Loan

In a bid to boost regional integration and trade in East Africa, the African Development Bank Group has approved US$322m in loans to Burundi and Tanzania, mostly for road upgrades.

A major component of the package is paving a 260km gravel road linking Kabingo, Kasulu and Manyovu in Tanzania.

The package also includes: A 45km road improvement project between Rumonge-Gitaza in southwest Burundi;A one stop border post between Tanzania and Burundi at Manyovu/Mugina Border; New health centres, schools and community water sources; and rehabilitation of other rural and urban roads.

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“The project will fundamentally enhance the mobility of goods and services for the people in Burundi and Tanzania”,said Gabriel Negatu, director general of the bank’s East Africa Regional Development & Business Delivery Office.

“The improved transport will bring additional benefits for the two neighbouring countries, including empowering women and youth for whom new market centres will be opened and other economic activities will increase.”

The projects are aimed at strengthening links between the Port of Dar es Salaam to markets in Tanzania, Burundi, Rwanda, Uganda and the Democratic Republic of Congo.

Road upgrades are due to be completed in 2023.

The project coincides with the bank’s ten year strategy , running from 2013 to 2022, focusing on “assisting its regional member countries achieve more inclusive and greener growth” and “including integrating Africa and improving the lives of the people of Africa”.

Source: globalconstructionreview

 

We released N1.62trn for infrastructural development –Buhari

President Muhammadu Buhari has said that in the next four years, his government would achieve an additional 4000 megawatts power generation to add to the already existing 7000 megawatts.

By this, President Buhari hints that the total power generation would stand at 11 million megawatts, which is the fastest in the history of the Nigeria State.

Speaking at the Kano ongoing 39th Trade Fair program, President Muhammadu Buhari, who was represented by the Jigawa State Governor Abubakar Badaru, explained that the government understood the fact that without effective energy generation, there will be no required growth in the nation.

He said, “We actively give maximum concentration to power generation in the country and that could be seen from our efforts in improving greatly from less than 2000 megawatts when we assumed office to whooping 7000 megawatts”.

President Muhammadu Buhari noted that in the ” Next Level” agenda, Nigeria will see a tremendous progress in the infrastructural development with roads, railway and agricultural revamping.

The President added that already, his government has released N1.62 trillion for the infrastructural development across the nooks and crannies of the country. This, he explained, will be used prudently to make heavy change in the nation.
Buhari notes that already, Nigeria is witnessing Railway revolution with every state capital targeted to be connected and fully linked.

“We have so far completed over 220 abundant roads across the nation and added 130 new roads all across the federation which have been slated for completion in the next level”.

Governor Abdullahi Umar Ganduje noted during the 39th Trade Fair with the theme “Ease of doing Business in Sustainable Economic Development,” that his government is investing heavily in security because without security, no meaningful economic and commercial activities could be achieved.

Governor Ganduje, who commended President Buhari for ensuring peace in Kano after the gory experience of Insurgency, noted that today, the ancient city is one of the most peaceful across Nigeria and with conducive environment for business activities.

The Kano Governor noted that after the devastating fire incidences across Kano Markets, the state government is building solar power to save the markets from the unfortunate incidents. He added that the government is complimenting the Federal Government power generation by building Challawa and Goje Dam Hydro Private Power generation.
Sourec: Muhammad Kabir Kano

Slow growth, uncompetitive economy highlight challenge for next president

Nigeria’s economic performance has been lacklustre since 2015 when the country slipped into its first major recession in 25 years.

GDP growth declined from 2.11 percent in Q4 2017 to 1.95 percent in Q1 and 1.5 percent in Q2 of 2018.

The manifesto released by PDP presidential candidate, Atiku Abubukar, mentions some of these problems, stating, “Nigeria’s economy is uncompetitive, undiversified and foreign direct investments are in decline.”

The challenge for the next president (whoever it is may be) would be to navigate these problems amid a still fragile recovery, little or no elite consensus on the way forward and a short electoral cycle (four years) that discourages reforms.

Key economic sectors are dragging owing to what many analysts call ‘absence of economic direction’.

The major economic challenge facing Africa’s biggest economy is poor ease of doing business environment. Nigeria ranks 115th out of 140 countries in World Economic Forum (WEF) competitiveness ranking, which is worse when compared peers such Brazil, South Africa and Turkey.

In 2016, Nigeria embarked on several reforms—ranging from ports to taxes— to attract new investors and retain existing ones. This culminated into the establishment of the Yemi Osinbajo, the vice president-led Presidential Enabling Business Environment Council (PEBEC), whose reforms moved Nigeria 24 places in the World Bank Ease of Doing Business index, from 169 to 145 in 2018.

However, Nigeria dropped a spot to 146th among 190 countries in the World Bank’s 2019 Doing Business Index despite an improvement in ease of doing business score from 51.52 to 52.89.

In 2017, Foreign Direct Investment returned $987 million in 2017 as against $4.7 billion in 2014.

The FDI slumped by 29 percent to N379.84 billion in the first half of 2018 from N532.63 billion in the corresponding period of 2017 owing to the closure of two global lenders, according to CBN 2018 half year data.

Foreign portfolio investors who brought in N437.14billion into the stock market as of August took N469.71billion out of the same market, according to the trading figures from major custodians and market operators on their Foreign Portfolio Investment (FPI) flows. Total transactions on the Nigerian Bourse declined from January high of N394.44billion to N133.84billion in August.

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Analysts say portfolio inflow into the Nigerian equity market will remain subdued over the rest of the year. They angle their expectations on political uncertainties, the trade spate between the United States and China.

“Higher yield in developed economy and tensed political climate in the country were major reasons for investors pulling out despite the relative stability in exchange rate”, Damilare Asimiyu, economist and research analyst at GTI Group said in a recent note.

Two foreign banks—HSBC and UBS— have exited the country, bringing the number of foreign banks to eight as of end of June 2018, according to CBN.

In 2014, Procter&Gamble set up a $300million diaper line in Agbara, Ogun State, which was tapped as biggest US non-oil investment in Nigeria.

Four years after, the company has packed up, citing restructuring as its main reason. But those familiar with the company told BusinessDay that the company had to shut down its Agbara plant due to high production cost incurred at the plant.

Local manufacturers spend billions of naira annually on energy, resulting in high production cost and skyrocketing prices of goods. Manufacturers spent N51.35 billion on alternative energy sources in the second quarter (H2) of 2017; N66.03 billion in the first half (H1) of 2017; N62.96 billion in H1 of 2016, and N69.99 billion in H2 of 2016, according to the Manufacturers Association of Nigeria (MAN).

“It is no more news that manufacturers in Nigeria currently self-generate over 13,000MW through alternative sources of energy in order to stay afloat. In fact, cost of alternative electricity generation alone constitutes about 40 percent of our production cost. With such high costs, made-in-Nigeria products will hardly be competitive,” Frank Jacobs, immediate past president of MAN, said at a special interactive forum on Eligible Customer Regulation of the Nigeria Electricity Regulatory Commission (NERC) in June 2018.

Number of taxes payable by businesses across the country is 54 as against 37 in 2014.

The sudden suspension of the Export Expansion Grant in 2013 and continued delay in its implementation since Buhari came on board in 2015 have axysphiated exporters, making their products uncompetitive in the global market. The scheme was originally meant to cushion the effect of high production cost for exporters in order to make them competitive, but exporters are now left with little option as some of them like RN Global have closed shop.

Manufacturers say that high interest rate, necessitated by high inflation rate, is squeezing them.

Results of survey conducted by MAN shows that the average interest rate banks charged manufacturers in the second half (H2) of 2017 was 23.05 percent as against 22.65 percent in first half (H1) of 2017 and 21.4 percent  in H1  of 2016.

Nigeria’s infrastructure state has worsened, with roads to Apapa and Tin Can ports in Lagos almost inaccessible.

GE, last week, pulled out of the consortium that was going to invest $2.0 billion into the country’s railway into Apapa.

The country dithered for two and a half years until GE sold its global transport business, resulting automatically in a pull-out of the deal it had with Nigeria.

Nigeria loses N6.7 trillion annually to the state of the ports, according to a latest report released on Tuesday by the Lagos Chamber of Commerce and Industry (LCCI).

A breakdown of the numbers shows that  Africa’s biggest economy loses N600 billion in customs revenue, $10 billion (N3.6trn) in non-oil export sector and N2.5 trillion in corporate earnings across various sectors on annual basis.

“The concessioning of Onitsha seaport  should be finalised, while government should improve the security situation along and within the Warri port in order to ward off militants and touts. Stakeholders request that government should approve and publicise a bouquet of incentives to importers and exports that patronise ports outside Lagos,” Babatunde Paul Ruwase, president of the LCCI, said in a press conference.

Source: Patrick Atuanya & Odinaka Anudu

What You Need To Know About Home Insurance

Homeowners insurance is a contract designed to protect you as a homeowner against sudden and accidental losses. The home insurance policy is a contract between the homeowner, also known as the insured, and the insurance company.

The contract creates an agreement that, in exchange for the premium paid by the home owner, the insurance company will compensate the homeowner for unexpected, sudden, and/or accidental damage or disasters that occur to the home, and/or the contents of the home, as agreed upon in the policy wording.

Homeowners insurance protects a homeowner’s assets and ensures that a covered loss, risk or disaster will not leave them in financial distress. Whether you are looking to buy insurance as a first time homeowner or need information to make sure you are getting the best value for your money, or looking for help to understand your policy, here are some basics about homeowners insurance.

How Does Homeowners Insurance Work?

Your insurance policy is a contract that agrees to cover you for specified risks or perils that may happen causing you financial loss.

In exchange for a premium (the amount of money you will pay for your contract) the insurance policy forms an agreement that the insurance company will compensate you for losses as described and detailed in your home insurance policy.

All the terms and conditions of your policy dictate what is covered, how a claim will be paid, and what is excluded or limited. You can find the basic coverage information of your insurance contract on the Declaration Page of your Insurance Policy.

The insurance policy contract clearly outlines definitions and special limits to let you know what to expect as an insurance policy holder.

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How Much Does Home Insurance Cost?

There are many factors that determine how much home insurance costs. The cost can vary, based on the following three factors:

  • Your personal information including your age, occupation, if you have insurance history, your credit rating, if you belong to any organizations that have group insurance plans or discounts, your lifestyle and use of your home.
  • The Information related to the location of your home, the loss experience in the area where your home is located and anticipated risk factors about where your home is physically situated impact insurance rates.
  • The details about your home, including renovations, the year of construction and the materials used in building your home as well as any additional security you have at your home.

Your personal insurance history and information usually allows for discounts to be added to a policy, so even if you compared the price of insurance for two identical houses right next to each other, the price might be different if the people who own those houses have different personal situations.

Is Home Insurance Worth It?

Home insurance provides people who own their home a valuable resource to protect their investment and financial stability if a situation comes up where there is sudden and accidental damage to your personal property or house itself. It also protects you by providing liability insurance that arises as a result of your home ownership, or even as a result of your actions and activities as an individual worldwide.

How Much Home Insurance Do You Need?

Your home insurance needs to have enough coverage to provide you with compensation for financial losses in 3 major categories.

(A)The value of your structure, or building. Also known as the dwelling insured value. This does not include the cost of the land.

(B) The value to replace your contents or personal property.  “Personal property” encompasses the things that are not part of the structure — the things you brought with you when you moved into the home, or furniture and other property you bought and keep in your home.

(C) Cost of additional living expenses. These are expenses that you would incur as a result of a claim if you were unable to live in your home due to a covered loss or insured peril while the insurance company repairs your home when it is unliveable.

A home is unliveable when there is no running water or electricity, or when there is destruction that makes it impossible to live in the home during repairs. Each insurance company may define this differently or may assess the need to move out on a case-by-case basis.

Other Home Insurance Coverages

There are other coverages that can be included in home insurance policies  for example a homeowner policy will also include additional structures as a percentage of the building amount. As an overview, the above are the base sections of coverage that you would want to focus on in order to figure out how much home insurance coverage you need.

Additional coverage can be added by endorsement if you need more coverage than is included in the home insurance package. Home insurance policies usually have special limitations on certain items, like jewelry; if after reviewing your policy special limitations there’s property you want to make sure is covered, then you may decide to add insurance rider.

Water Damage and Home Insurance

Water damage is a tricky coverage when it comes to home insurance. Some water damage is covered, and some coverages can be added by endorsement, such as sewer back-up coverage; other water damage. When choosing a home insurance policy be sure and ask about the different types of water damage that are included in your policy and find out which ones you can add coverage for by optional endorsement. Water damage is an increasing risk due to changing weather patterns and aging infrastructures.

Who Is Covered By a Home Owner Policy?

In your insurance policy, there is a definition of the insured. Under this definition you will usually find the description of who is covered under your insurance policy. The policy usually will specify that the named insured and spouse or domestic partner. (through common law or marriage) are considered insured under the policy. Along with this, the dependent children of the insured while living at home may also be included.

Who Is Not Covered Under a Home Insurance Policy?

Domestic helps, relatives not included in the definition of the insured, temporary house guests and roommates are not included or covered under a home insurance policy because these people do not fit into the definition of the insured.

Insurance If You Rent Your Home

If you rent your home and do not own it, whether it is a house, an apartment or a condo, then you need renters insurance.

If You Rent Out Your Home

Home insurance is intended to insure a home being used as a primary residence. If you rent out your home, then a homeowner policy is not the right policy for you, and you may not be insured if you have a claim that arises while the home is being rented out.

Home Business Activity and Home Insurance

If you use your home for business, you should speak to your insurance company to find out if they can add a rider for home based business. Home insurance is not intended to cover business use, so using your home for business and not mentioning it to the insurance company could render your coverage null and void. Not reporting changes on a home policy or in your personal situation may cause the insurance company to cancel your policy.

Home Insurance for Condo or Co-op Owners

If you own a condo or co-op, then you do not need homeowner insurance; you need condo or co-op insurance because condos and co-ops take into consideration many of the special circumstances that exist when you own only one unit of a building, or shares in a cooperative. For example, one coverage that is specific to a condo owner but would not be included in a homeowner policy is loss assessment, or contingent insurance.

What “Perils” Are Covered By a Home Insurance Policy?

When you buy a home insurance policy you have the option to choose what kind of coverage you want. There are two basic concepts of coverage in a home insurance policy:

  • Open Perils
  • Named Perils

Understanding these two concepts helps show the difference in the level of coverage your different options in insurance policy can offer you since they have significant differences in coverage levels:

  • An Open Perils policy covers you for “all risks” unless they are excluded.
  • A Named Perils or Specified Perils policy covers you for very limited risks. The risks are usually limited to 16 core “disasters” that could happen to you, but then after that, anything else is not covered. Some policies may provide less coverage, such as the HO-1 form.

Be sure and ask if the policy you are buying covers open perils on the insured dwelling structure and on the contents, or only on the insured dwelling. This makes a difference in what you get paid in a claim.

How Does a Home Insurance Policy Pay out in a Claim?

The basis of claims settlement listed in your policy wording will tell you what you can expect in a claim as far as compensation goes. The two basic forms of compensation in a claim are:

  1. Actual Cash Value:This is the cost of replacement, less the depreciation. This means that you will not get enough money to replace the home or items if the basis of claims settlement is Actual Cash Value. This is the least desirable form of claims settlement.
  2. Replacement Cost:Replacement cost provides you with compensation for replacement of the insured items in the loss. Find out if this applies to your building and contents. This allows you to replace what you have lost after a claim and get back to where you were at before the loss since you will get the money to replace.

It is important to read your policy wording about the basis of claims settlement when you get a home insurance policy to make sure you understand the provisions in the contract, exclusions and limitations.

High-Value Home and Specialty Home Insurance Policies

High-value homes, historic homes, and homes with special features may qualify for high-end home insurance. If you have a home with high value or above-average construction and quality you may want to look into a specialty high-value home insurer. High-value home insurance offers the broadest coverage available, but comes at a premium cost.

The benefits may include full replacement value, with no obligation to replace policies (cash-out options), by-law coverage, greater allowances for additional living expenses and coverage for higher limits of jewelry, fine arts, antiques or items that can not be replaced due to their inherent nature. These kinds of items are not covered easily on a standard home policy due to limits and exclusions.

Do All Homeowners Have to Have a Home Insurance Policy?

No, all homeowners do not have to have a home insurance policy. However, if you have a loan or a mortgage and you do not fully own your home, the mortgage lender may require you to have home insurance because they want to protect the money they have given you as part of the loan. They may require you to provide a binder of insurance before granting your mortgage or loan.

Home Insurance Policy Guidelines: Always Check Your Own Policy Terms and Conditions

It is always best to have a discussion with your insurance representative about how claims work with your insurance policy since conditions vary from insurer to insurer, concepts discussed in this article are the basic guidelines you need to help you ask the important questions about your coverage.

SOURCE: thebalance.com

 

This could be a game changer for financing Africa’s transformation

It is estimated that around $170 billion is required per annum to finance the African Development Bank’s High Five Agenda. Moreover, Africa’s annual infrastructure gap is estimated anywhere between $68 – $130 billion a year.

It is estimated that around $170 billion is required per annum to finance the African Development Bank’s High Five Agenda. Moreover, Africa’s annual infrastructure gap is estimated anywhere between $68 – $130 billion a year.

When placed within the context of the continent’s growing population, youth bulge and economic potential, the need for increased private sector involvement is immediate. Decades of public spending, for instance on infrastructure has not been sufficient to adequately address the gap in the quantity or quality of much-needed infrastructure across the continent.

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Africa does need a pool of investible funds that are accessible and long-tenured to finance its transformation. There is, therefore, an obvious need for Africa to significantly formalize its economies, create businesses that operate as corporate entities, and separately from their owners, as well as the right policy, regulatory and economic environments that are attractive to long term capital. Together with effective institutions for capital intermediation and appropriate investment market places, connecting providers and users of capital, such as the Africa Investment Forum, Africa can accelerate its economic and social transformation.

Across regions and in specific countries, there are several silver linings in the cloud. Much of it thanks to the active engagement of the private sector, and this is increasingly through financial markets.  This year, we witnessed the Initial Public Offer (IPO) and listing on the Johannesburg Stock Exchange of Vivo Energy’s, that raised over $740 million, which remains the largest listing of an Africa-focused business since 2005. Moreover, one of the most talked about IPOs was the MTN Group’s Ghana offering.

As investors focus greater attention on opportunities, what is coming into sharp focus is the premium that investors and markets are placing on good governance, market depth, the rule of law, policy and regulatory environments.

Aside from South Africa whose Johannesburg Stock Exchange market capitalization is around $1.06 trillion, most African financial markets remain small.

Despite challenges, Africa’s private sector and financial markets present strong possibilities and realistic potential for bridging the financing gap critical for the continent’s economic and social transformation, and the achievement of our priorities in agriculture, regional integration, energy, industrialization, and improvement of the standards of living across the continent as well as the sustainable development goals.

The fact is, the private sector and financial market contribution in helping to close the financing gap is neither a miracle nor a mirage. It is not a miracle as it is based on unleashing the full potential of the real economy and encouraging investment. It is also not a mirage as the public and private sector must continue to work together, and through the markets and other intermediary institutions, to raise capital especially the much needed long term funding.

The Africa Investment Forum, November 7 -9, 2018, will no doubt help raise the bar when it comes to bringing together all stakeholders,  public and private, and matching investment capital with the private sector, bankable projects and the continent’s ambitious goal of reducing its multi-billion dollar financing gap,  including for infrastructure.

Source: Stella Kilonzo, Senior Director, Africa Investment Forum, African Development Bank

 

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