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World Bank endorses Somalia’s steady economic recovery

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The World Bank has backed Somalia’s economy to grow above expectations for the next three-to-five years, if the country can sustain its current economic reform momentum.

The Horn of Africa country has been in turmoil since 1991, when clan warlords overthrew President Siad Barre and then turned on each other. Over the past decade it has been hit by famine and sporadic terror attacks by al Qaeda-linked militant group al Shabaab.

Several indicators over the last 12 months have demonstrated that Somalia is well on its way to recovery from the years of turmoil and economic distress.

Somalia on the rise
Tax collection by the government increased by 29% last year, as the economy recovered from a drought the previous year and the government changes its tax policies, the World Bank said.

The Washington based lender, in September last year, approved the first loanto Somalia in 30 years, $80 million to fund public finance reforms.

In May this year, the International Monetary Fund said Somalia’s economy was on the right track but warned that it was still vulnerable to fragile security, climate change and poverty.

In November last year, continent aviation powerhouse, Ethiopian Airlines made its first landing in the Somali capital Mogadishu after 40 years absence.

“Our flights will quickly grow to multiple daily flights given the huge volume of traffic between the two sisterly countries and the significant traffic between Somalia and the rest of the world,” Tewolde GebreMariam, Ethiopian Airlines’ chief executive, said in a statement.

Source: Africanews

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Business and Finance

Is China rich or poor?

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Since China began to open up and reform its economy in 1978, GDP growth has averaged almost 10 percent a year, and more than 800 million people have been lifted out of poverty. There have also been significant improvements in access to health, education, and other services over the same period.

China is now an upper-middle-income country.  It will be important going forward that poverty alleviation efforts increasingly shift to address the vulnerabilities faced by the large number of people still considered poor by the standards of middle-income countries, including those living in urban areas, according to a World Bank report.

China’s high growth based on resource-intensive manufacturing, exports, and low-paid labor has largely reached its limits and has led to economic, social, and environmental imbalances. Reducing these imbalances requires shifts in the structure of the economy from manufacturing to high value services, and from investment to consumption.

Over the past few years, growth has moderated in the face of structural constraints, including declining labor force growth, diminishing returns to investment, and slowing productivity. The challenge going forward is to find new drivers of growth while addressing the social and environmental legacies of China’s previous development path.

China’s rapid economic growth exceeded the pace of institutional development, and there are important institutional and reform gaps that China needs to address to ensure a high-quality and sustainable growth path. The role of the state needs to evolve and focus on providing stable market expectations and a clear and fair business environment, as well as strengthening the regulatory system and the rule of law to further support the market system.

Given its size, China is central to important regional and global development issues. China is the largest emitter of greenhouse gases, with per capita emissions now surpassing those of the European Union, although slightly below the OECD average and well below the United States, and its air and water pollution affects other countries. Global environmental problems cannot be solved without China’s engagement. China’s growing economy is also an important source of global demand, and its economic rebalancing will create new opportunities for manufacturing exporters but may reduce demand for commodities over the medium-term.

China is a growing influence on other developing economies through trade, investment, and ideas. Many of the complex development challenges that China faces are relevant to other countries, including transitioning to a new growth model, rapid aging, building a cost-effective health system, and promoting a lower carbon energy path.

Following real GDP growth of 8.1 percent in 2021, growth is projected to slow to 5.0 percent in 2022. The forecast reflects rising headwinds: Domestic demand has slowed, and the global economic environment has worsened significantly with the war in Ukraine. In addition, COVID incursions have become more frequent and widespread. China is currently experiencing the largest COVID wave since the end of the national lockdown in March 2020.

In the face of these shocks, the authorities have announced a significant loosening of policy. The 2022 budget leaves room for a fiscal boost of up to 2.7 percent of GDP.  Risks are firmly on the downside and include a stronger than expected global slowdown, a longer lasting commodity price shock, and more severe financial stress among property developers. China also remains at risk of re-escalating COVID outbreaks, which could lead to significant economic disruption. In a downside scenario, economic growth could slow to 4.0 percent in 2022.

Over the medium term, China’s economy is facing structural headwinds given adverse demographics, tepid productivity growth, and the legacies of excessive borrowing and environmental pollution. In the face of these challenges, macroeconomic policies need to be careful not to exacerbate financial risks. Structural reforms are needed to reinvigorate the shift to more balanced high-quality growth.

An important element of such a shift is a reduction in the inequality of economic opportunities. The government has highlighted achieving common prosperity as a key economic objective but has not yet defined specific policies to reach this goal. More progressive taxation and a strengthened social protection system could protect the most vulnerable, reduce inequality and help boost private consumption as a driver of growth.

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Business and Finance

If Germany is resource poor, why is it the strongest European economy?

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It is a strong economy for the same reason than Sweden, Finland, Switzerland, Austria, the Netherlands, Japan, Taiwan… are strong economies: work, skills, education, low corruption, and… not much, even very little natural resources. In such situations, you import raw materials for cheap, you work them a lot to produce expensive, refined end-products of all kinds, you promote the quality of these products through brand names which tell the truth: yes, these end products really are quality products, and you control a strong world market share of these products. So they sell at a high price while costing a reasonable cost.

You never forget that when you pretend to pay employees they only pretend to work. And that to do a real good job they must work like teams. And that creating a team takes time.

And you never never go public because when this happens the engineers, designers, scientists and marketers working like a team are replaced by lawyers, accountants, finance strategists who will reduce salary costs, move or close plants and replace them by subcontractors costing less and only variable costs, and will buy back the company ´s own stock to manipulate the stock market. You and they will make fortunes for a time, and then will start again in another industry… until there is little industry left in your country, all foreign-owned. Nice, no? It’s called financialization

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Africa

African business leaders to follow on Instagram

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Business Insider has put together a list of five successful African business leaders to follow on Instagram.

These people frequently use their platform to share the best advice, business tips, updates on investment opportunities, or suggestions on raising much-needed funds. Plus, they also give you a sneak peek of what their lifestyle looks like outside of the business norm people know them for.

1) Tony Elumelu

Businessman, coach, and thought leader Tony Elumelu seeks to empower young Africans to achieve their dreams. He’s become one of the most recognised faces in leadership coaching, helping many aspiring entrepreneurs reach their maximum potential. His Instagram has garnered much attention with over 600,000 followers because it’s not only a source for inspiration with motivational quotes and videos, but it also gives you a glimpse at Robbins’s personal life.

2) Strive Masiyiwa

The Econet founder and chief executive sits on the board of multiple international organisations, including Bank of America, Rockefeller Foundation, and Unilever. He’s passionate, disciplined and motivated, and uses Instagram to teach others to be their best selves. With more than 280,000 followers, strive shares motivational quotes, updates on what he’s doing and other catchy images that will get your heart pumping.

3) Ibukun Awosika

Ibukun is an academic, astute businesswoman and powerful motivational speaker. Awosika is the immediate past Chairman of First Bank Plc. She is the former chair of the Board of Trustees of Women in Management and also sits on the board of the Nigerian Sovereign Wealth Fund.

Awosika trains people to be brave, authentic and effective leaders. To her 240,000-plus Instagram followers, she shares some of her favourite things (such as books, scriptures, and idols), motivational quotes and inspirational images that show her balanced and healthy lifestyle.

4) Vusi Thembekwayo

Serial entrepreneur, bestselling author, international speaker and internet personality Vusi Thembekwayo is one of the most inspirational business leaders of our time. As a venture capitalist, he has transformed businesses across the continent through his expertise in leadership and strategy. His direct approach personality pushes his followers to face challenges head-on. With 390,000-plus followers, his Instagram account is full of motivational quotes, videos and lessons to help you launch a business and pursue your passions.

5) Tara Fela Durotoye

A mother of three and a successful beauty entrepreneur, Tara Fela-Durotoye lives a busy life and shares it with her 280,000-plus followers on Instagram. Her bubbly, positive, and healthy lifestyle shines through her Instagram posts with inspiring quotes, pictures of her husband, relaxing scenic images and some of her favourite books.

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