Coral Reefs Report and Climate Change News

Originally posted on caribbeanclimate:

With only about one-sixth of the original coral cover left, most Caribbean coral reefs may disappear in the next 20 years, primarily due to the loss of grazers in the region, according to the latest report by the Global Coral Reef Monitoring Network (GCRMN), the International Union for Conservation of Nature (IUCN) and the United Nations Environment Programme (UNEP).

The report, Status and Trends of Caribbean Coral Reefs: 1970-2012, is the most detailed and comprehensive study of its kind published to date – the result of the work of 90 experts over the course of three years. It contains the analysis of more than 35,000 surveys conducted at 90 Caribbean locations since 1970, including studies of corals, seaweeds, grazing sea urchins and fish.

The results show that the Caribbean corals have declined by more than 50% since the 1970s. But according to the authors, restoring parrotfish

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Dr Mark Bynoe on GCCA and Climate Financing

Originally posted on caribbeanclimate:

Dr Mark Bynoe, the Caribbean Community Climate Change Centre‘s senior environment and resource economist, discusses the benefits of the Global Climate Change Alliance, as well as the challenge of accessing climate finance and how to ensure this reaches those most in need.

Credit: Capacity4dev.eu

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3 African Currencies – Outlook for Direct Investors

What follows is a brief analysis of the behavior of currencies in 3 important African economies.

GHANA CEDI
The persistent trade deficit that is the norm in Ghana seems to be increasing. That deficit contributes to price inflation and the two conditions combine to weaken the currency.
The Ghana Central Bank is fighting back by raising interest rates which are already high. The cedi is likely to remain weak until the general pattern of Ghanaian trade changes. One of the reasons for Ghana’s growing trade deficit is the increase in equipment imported to support oil production which has not yet reached the desired production levels. When oil production will grows to the point at which it reduces the need to import, and when Ghana develops additional sources of high value export earnings, then a lower trade deficit will become the norm.
Although investors should build currency weakness into their assessment of Ghanaian deals and projects, they should also build the ability to raise prices locally into financial forecasts, and consider Ghana as a possible export platform.

KENYA SHILLING
The shilling has fallen only about 1% in the last year and a half through March 2014. Since then it has stayed within a narrow range.
Kenya’s trade surplus is rising and so are international reserves. The Kenyan Central Bank has kept interest rates steady and treasury bills have fallen slightly. It seems a radical devaluation is not likely, though the shilling/dollar rate might move outside the 86-88 range where it has been for about the last 18 months.

NIGERIA NAIRA
Recent inflation has been falling on a quarter on quarter basis. Nigeria’s trade surplus increased during 2013. Interest rates held within a narrow band during 2013 and have fallen a bit in 2014. Naira has stayed between 155-165 for 2 years. While the naira could lose a little ground vs the dollar simply due to much lower US inflation, many investors consider it stable for investment purposes.

 

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Climate, Economy, Finance- Everything you need to know about the IPCC 5th Assessment Report- Mitigation of Climate Change

Originally posted on caribbeanclimate:

On April 15th the third and final volume of the IPCC Fifth Assessment Report on Climate Change was presented. The report is the most comprehensive survey of scientific knowledge about climate change, updated after the 2007 edition. Working Group 3 of the Intergovenmental Panel on Climate Change focuses on actions and policies for mitigating climate change, that is on the possibility of reducing the concentration of greenhouse gases in the atmosphere.

The report makes clear why climate change cannot be dealt with solely from an environmental point of view, given its powerful financial and economic repercussions, on both the global and domestic levels. While the continuous rise in global emissions furthers us from the aim of maintaining temperature increase below 2° C at the end of the century, science is seeking ways to control climate change that also take into account economic efficiency and equity…

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Major Latam Stock Index & Exchange Rate Changes in Q1-2014

 

 

Advansa International follows exchange rates and stock market indexes for several emerging and frontier markets. Exchange rates and stock indexes are recorded on the last trading day of the week. The tables below show changes from the last trading day of the last full week of the quarter for several key markets in Latin America, and the Caribbean.

Table 1 

 STOCK MARKET INDEX TRACKER 1ST QUARTER 2014

LATIN AMERICA/CARIBBEAN

COUNTRY

1ST QUARTER PCT CHANGE

ARGENTINA MERVAL-Local Currency

16.22%

ARGENTINA MERVAL-US$

-2.65%

BRAZIL BOVESPA-Local Currency

-6.02%

BRAZIL BOVESPA-US$

-0.36%

COLUMBIA IGBC-Local Currency

5.11%

COLUMBIA IGBC-US$

2.59%

JAMAICA MAIN INDEX-Local Currency

-4.12%

JAMAICA MAIN INDEX-US$

-7.07%

MEXICO-Local Currency

-6.33%

MEXICO-US$

-6.56%

MSCI LATIN AMERICA-Local Currency

-1.61%

MSCI LATIN AMERICA-US$

-4.20%

MSCI EMERGING MARKETS-Local Currency

0.79%

MSCI EMERGING MARKETS-US$

-0.23%

Sources: Stock exchangewebsites, Financial Times, Advansa International data

 

Table 2

1ST QUARTER 2014 EXCHANGE RATE CHANGE

LATIN AMERICA/CARIBBEAN

COUNTRY

1ST QTR PCT CHG

YTD

MAR PCT CHANGE

ARGENTINA

-18.87%

-18.87%

BRAZIL

5.66%

5.66%

CHILE

-4.88%

-4.88%

COLOMBIA

-2.51%

-2.51%

COSTA RICA

-8.05%

-8.05%

JAMAICA

-2.95%

-2.95%

MEXICO

0.24%

0.24%

PERU

-0.91%

-0.91%

TRINIDAD & TOBAGO

0.47%

0.47%

Sources: Financial Times, Advansa International data

In the Americas as in Africa the correction in emerging markets has become clearly visible in the 1st quarter of 2014. The MSCI Latin America index lost 1.6% and several currencies lost value, with Argentina being the standout due to continued high inflation. Exports of commodities played a bigger role in Latin America’s growth story than in other regions. Consequently, declining exports to Asia have put pressure on the trade balances of the big exporters like Argentina and Peru. Rising interest rates have helped the Brazilian real recover from previous losses but slow growth has contributed to lower stock prices. The long term outlook among investors is optimistic, with the length and depth of China’s economic slowdown being a major risk factor. Long term growth can resume if the future brings:

  • Political reform or even change of governments in some of the more volatile countries.
  • Adopting policies that enhance the region’s human capital (i.e. promoting education and entrepreneurship) and position their societies to enter high value industries that are more inclusive, and less dependent on undependable commodity prices.

 

 

 

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Major African Stock Index and Exchange Rate Changes in Q1-2014

 

 

 

Advansa International follows exchange rates and stock market indexes for several emerging and frontier markets. Exchange rates and stock indexes are recorded on the last trading day of the week. The tables below show changes from the last trading day of the last full week of the quarter for several key markets in Africa.

Table 1 

 STOCK MARKET INDEX TRACKER 1ST QUARTER 2014

AFRICA

COUNTRY

1ST QUARTER PCT CHANGE

GHANA-Local Currency

11.37%

GHANA-US$

-0.80%

KENYA-Local Currency

1.76%

KENYA-US$

0.88%

NIGERIA-Local Currency

-4.72%

NIGERIA-US$

-7.45%

SOUTH AFRICA-Local Currency

0.48%

SOUTH AFRICA-US$

3.68%

WEST AFR. BOURSE-Local Currency

5.07%

WEST AFR. BOURSE-US$

4.88%

MSCI AFRICA-Local Currency

3.80%

MSCI AFRICA-US$

0.33%

MSCI EMERGING MARKETS-Local Currency

0.79%

MSCI EMERGING MARKETS-US$

-0.23%

Sources: Stock exchangewebsites, Financial Times, Advansa International data

 

Table 2

1ST QUARTER 2014 EXCHANGE RATE TRACKER

AFRICA

COUNTRY

1ST QTR PCT CHG

YTD

MAR PCT CHANGE

CFA AREA*

-0.18%

-0.18%

GHANA

-12.16%

-12.16%

KENYA

-0.88%

-0.88%

NIGERIA

-2.73%

-2.73%

SOUTH AFRICA

-1.12%

-1.12%

TANZANIA

-3.30%

-3.30%

UGANDA

-1.88%

-1.88%

Sources: Financial Times, Advansa International data

*Includes most French speaking countries such as Benin, Cameroon, Cote D’ivoire, Guinea, Senegal, Togo and others

2014 marks a change in investor sentiment towards the emerging and frontier markets. We see a shift from the mad rush into EMs of the past 3-4 years to people wondering if all the emerging market hype is a bit overblown. The announcement of tapering by the US Fed in 2013 was the trigger. In Africa the new outlook is manifest in continued currency weakness and retrenchment in several key stock indexes.

Every currency in our table lost ground in the first quarter. This is in spite of monetary tightening and rising interest rates across the board. Indeed, monetary policy in most of these markets has been fairly rational. On the fiscal side, however governments are finding it difficult to control spending. These are countries with young populations climbing out of poverty. They are at a developmental stage that demands rapid growth and are under tremendous political pressure to deliver social services and better infrastructure, all of which leads to deficits in the trade and fiscal accounts.

Ghana is a conspicuous example among this group. We see from the tables that Ghanaian stocks performed quite well while the currency was the weakest among prominent African economies. Many companies are performing well and investors anticipate future growth so stock prices are rising. However the trade benefits of the nascent oil sector have not materialized and have in fact generated additional imports as production ramps up. Thus the trade balance deteriorates. The resulting inflation on top of politically driven spending increases puts downward pressure on the cedi.

Yet it is these same characteristics that make the emerging markets such as Ghana attractive to investors. Among the larger markets that attract most of the trading volume, the currency issue is not as urgent. If this is a short term correction and if governments and investors don’t panic, then the long term trends will continue to imply growth and favorable investment outcomes.

 

 

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Annual CERMES Study Tour Underway in Belize

Originally posted on caribbeanclimate:

(L-R) John Moody (5Cs), Neetha Selliah (CERMES), Dr. Adrian Cashman (CERMES), Renata Goodridge (CERMES), Dr. Nurse (5Cs and CERMES), and Earl Green (5Cs)

(L-R) John Moody (5Cs), Neetha Selliah (CERMES), Dr. Adrian Cashman (CERMES), Renata Goodridge (CERMES), Dr. Nurse (5Cs and CERMES), and Earl Green (5Cs)

A group of students, faculty and support staff from the Centre for Resource Management and Environmental Studies (CERMES), which is located at the University of the West Indies, Cave Hill Campus in Barbados, arrived in Belize today (April 7 through to April 16) for an extensive field laboratory.

This marks the tenth year that the Caribbean Community Climate Change Centre is funding a contingent of CERMES students and faculty to visit Belize, one of the region’s most diverse ecological settings, to put into action the range of tools they are learning, and observe the relationships between scientific theory and the measurement of critical variables and parameters.

The 9 students who hail from across the region were drawn from graduate studies in both climate change and water resources management.

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EMERGING MARKET INVESTING PART III – 5 KEY TAKEAWAYS FOR THE ENTERPRISE

For managers and entrepreneurs seeking private investment to fund an enterprise, the current environment is challenging, though still an improvement compared to prior decades. In Part III of our series, we offer 5 takeaways from 2013. These are concepts that are particularly appropriate to current market conditions and sensible in any period in the cycle.

1. Be mindful of the investing environment. We recall from Part I that private equity activity was down somewhat in 2013. Deals were down 7% and fundraising down 19% from the previous year. We know that the BRICS and other emerging economies have slowed down. So for the time being at least the emerging markets have lost some of their luster. All this has affected investor’s attitudes. Yet the long term outlook still looks good which is the message we stick to and the reason emerging economies still attract investor interest.

2. Owners and management should have a realistic understanding of the value of their enterprise, and where it fits into the spectrum of potential investments. They should also have thought through carefully their mission and objectives for the enterprise, for themselves, and for their communities.

3. Demonstrate the strength of the business model including evidence that the business or project can provide consistent cash flow. Examples include:

  • Signed contracts for current and future sales
  • For housing developments, a significant proportion of homes pre-sold either to residents or a large employer buying for its staff.
  • Offtake agreements for energy and power projects
  • Infrastructure projects that can collect tolls or user fees

4. Government support never hurts. Although most developing countries have improved business and political climates, they are still relatively difficult places to do business. It is therefore desirable to be on good terms with the relevant government bodies so. When everyone’s interests are aligned the red tape can be minimized.

The extent to which government backing is needed varies with the type of deal. For small startups it may not be necessary at all. In some cases the government is the customer then of course the company must be in a position to win a contract. In lieu of a contract, an MOU or government guarantee may be sufficient.

It should be noted that while government support is crucial, companies should avoid any activity that can be construed as corrupt as it will be an immediate turnoff to the investor. US investors are especially wary of running afoul of the Foreign Corrupt Practices Act. Any investor not appropriately concerned is probably one to avoid.

5. Strength of the management team. Investors look for relevant experience, a level of professionalism and an understanding of international performance standards. Most important, management and founders/owners should be prepared to act in the interest of building the value of the enterprise.

Current market conditions in emerging market PE investing indicate a plateau in deal growth. In this environment founders/owners should pay special attention to those factors that attract good investors. We think this is a short term phenomenon—a sensible pullback from the emerging market fever of the past few years. However the broader demographic, economic and geopolitical trends will continue to favor emerging markets in the long run. We believe capital will flow towards companies that have strengthened their foundations during the current slowdown.

 

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EMERGING MARKET INVESTING PART II – 3 VALUE ENHANCEMENT STRATEGIES

 

This 2nd installment of our private equity series looks at how investors have succeeded this past year. While these tactics are well known by major private equity institutions we also consider the smaller investor and those investors new to emerging market investing. This investor could be a family office, or an accredited individual investor or investor group that prefers direct investing over the limited partner role. [We will use the term “small investor” to encompass all of thee groups realizing that they are not always small in dollar terms] The approach we advocate comes under the general heading of value enhancement or value creation.

Successful emerging market investors contribute more than money to the success of their portfolio companies. With their own resources and by marshaling expertise in their networks they can enhance the value of these companies leading to a more favorable outcome at exit. This is typical of the large PE firms whose senior staff often have operating as well as financial experience.

Although not all investors will have this kind of expertise on staff, those with strong networks can mimic the kind of value enhancement that is standard procedure at the large institutions. There are professionals with region or sector specific expertise that can deliver on an outsourced basis what they cannot do in house.

Here are three value enhancement strategies:

1. Upgrading business processes

 

The investors’ due diligence should include an assessment of the company’s strengths as well as any challenges that would impede its ability to implement its business strategy. Process improvements can occur in any of several areas:

 

  • Distribution

  • Strengthening the management team

  • accounting/finance/risk management

  • ESG (Environmental, Social, and Governance) upgrades such as social impact measurement using IRIS, implementing a diversity strategy, or improving environmental sustainability

 

Small investor’s approach: Engage advisors with background in: the portfolio company’s industry, accounting and/or finance, ESG reporting & measurement.

 

 

2. Help portfolio companies open new markets

 

Within their region – especially important in African countries where it makes sense to combine several small country markets into larger regional ones.

 

In investor’s home market. There are companies that assist international firms in entering and selling in the US.

 

Essential for companies with small domestic markets. Opening new markets is key for Caribbean companies who need to go outside their small markets in order to scale.

 

Small investor’s approach:

 

Use investor’s network to link portfolio company to export opportunities.

 

Engage business development & marketing firms that specialize in helping foreign firms enter the US market

 

 

3. Provide constructive influence to portfolio companies even with a minority share

 

Small investor’s approach:

 

Work with companies where entrepreneurs’ managers’ and investor’s interest are aligned. Use the due diligence period to assess the mindset and culture of management. Look for:

 

  • Management teams and shareholders with a long term outlook

  • Shareholders with skin in the game, cash or mortgageable real estate for example.

  • In some cases it is feasible and desirable to have a level of decision making authority written into the deal.

 

Create alliances with like minded shareholders.

 

These are some of the ways in which a small PE investor can be helpful to emerging market portfolio companies to the benefit of all stakeholders.

 

 

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Angel Fair West Africa 2014

 

 

In our last post on emerging market private equity we mentioned the African startup infrastructure and its potential to attract local and international venture capital. The startup community will be on full display in two weeks at Angel Fair West Africa, starting March 31 in Lagos, Nigeria.

 

Startups at the seed venture and growth stages will be featured. There will be two rounds of entrepreneurs pitching their businesses and panel discussions from founders and investors. In addition to the home country there will be startups from Cameroon, Ghana,Kenya and Senegal.

 

African venture capitalists and other investors will also be in attendance including 32 members of the Lagos Angel Network.

 

 

For more on Angel Fair West Africa, click here.

 

 

 

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