Monthly Archives: October 2014

5 Things to Know About Climate Change in the Caribbean!

caribbeanclimate

Natural events and human activities contribute to an increase in average temperatures around the world. Increases in greenhouse gases such as Carbon Dioxide (CO2) is the main cause. Our planet and our region are warming. This leads to a change in climate.

  1. The Caribbean is a minute contributor to global greenhouse gas emissions, but will be among the most severely impacted.
  2. We are already experiencing its impacts. More frequent extreme weather events, such as the 2013 rain event in the Eastern Caribbean; the extreme droughts being experienced across the region, with severe consequences in places like Jamaica; the 2005 flooding in Guyana and Belize in 2010. And further Climate Change is inevitable in the coming decades.
  3. Inaction is VERY costly! An economic analysis focused on just three areas - increased hurricane damages, loss of tourism revenue and infrastructure damages - could cost the region US$10.7 billion by 2025. That is…

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How Anti-World Bank Activists Misunderstand Business

I was recently made aware of Interoccupy‘s (link) protest against the World Bank at their fall meeting in Washington. What follows is my reaction to what I feel is Interoccupy’s misunderstanding of the arena in which most businesses operate:

I have followed the history of problems with World Bank lending. Economist Joseph Stiglitz has written extensively about the issue. I find that the World Bank is torn between its role as a bank–it does after all make loans and its business model depends on loans being repaid–and its role as a development institution. When countries fall behind on a loan the World Bank behaves as banks usually to, telling the debtor to cut back on anything not directly related to loan repayment, which sometimes means cutting muscle as well as fat out of public budgets.

Interoccupy’s complaints revolve around the World Bank’s Doing Business rankings and the Bank’s alleged encouragement of large land acquisitions by agribusiness corporations. I take issue with Interoccupy’s charge that the rankings are only about serving the interests of multinationals. The countries that score high on this and similar rankings by the World Economic Forum have been the best performers in recent years not only in GDP growth but in income growth and lifting their people out of poverty. Furthermore the rankings also serve the interests of smaller businesses who do not have the ability to influence governments. The rankings are based on surveys local businesses which in the developing world will be mostly small and mid sized. Among the survey topics are Starting a Business, Getting electricity, Enforcing Contracts, and Getting Credit.

What would really change the game is if a group like Interoccupy developed their own doing Business ranking based on a concept of profitable and responsible business. Organizations like the Global Impact Investor Network (www.theGIIN.org) are developing tools to measure social impact that they would find useful. If they then cited examples of commercially successful companies that followed these principles they would have a strong case for reform.

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Africa 8 and 3 Cities to Watch

Two recent stories caught my attention for their deeper analysis of African economic growth:

A post in LinkedIn’s African Financial Professionals group links to an article about the Africa 8. The Africa 8 are 8 countries highlighted in a study by Ecobank, a pan African bank based in Togo. Ecobank predicts Angola, Republic of the Congo, Cote d’Ivoire, Ghana, Kenya, Mozambique, Nigeria, and Rwanda to be the drivers of growth on the the continent. Ghana, Nigeria and Kenya are known to be attractive due to their political stability (Ghana), size (Nigeria) and tech driven dynamism (Kenya). Cote d’Ivoire has put its civil conflict in the past and in some ways is like a francophone version of Ghana. Congo and Angola are all about oil. Mozambique shows high rates of growth but one wonders if its influence is felt beyond its borders.

The question for all these countries is whether they will evolve into more than just natural resource plays which are vulnerable to market swings and technological and social trends such as the global imperative to move away from fossil fuels. Many of these economies are also carrying large amounts of public debt which could become a problem if US interest rates rise or commodity prices fall.

The second story identifies three African cities that are at the beginning of their growth curve: 1) Abidjan, Cote d’Ivoire, 2) Dakar, Senegal, 3) Ouagadougou, Burkina Faso. http://www.emia.org/news/story/978 This is another way of acknowledging the growth prospects of the countries for which these are the major cities.

In addition to Cote d’Ivoire’s positive outlook, Abidjan is considered one of the most attractive cities in West Africa and is an important center for meetings, tourism and commerce. Dakar, the capital of Senegal is a port at the westernmost location on the African continent, giving it easy access to Europe, North and South America. If West Africa is serious about regional integration then Dakar will become even more attractive as a gateway city. Ouagadougou stands out in this group in that although it is a national capital it is not one of the region’s most important cities. It is included largely because of growth in Burkina Faso’s gold mines.

Investors and entrepreneurs considering entry into Africa should start by investigating the locations cited above. Each is brimming with opportunities and fraught with challenges—all for different reasons. Knowledgeable advisors both at home and on the ground can help point the way.

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