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China Retreats Globally | By Milton Ezrati

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China has retreated globally – not from its artificial islands in the South China Sea but economically and financially. It seems just yesterday that the Middle Kingdom, as China calls itself, resembled an unstoppable juggernaut, cutting constructions contracts and buying properties all over the world. That is no longer the case.

Trade war with the United States bears much of the blame (or gets the credit, depending on one’s perspective), but even if Washington and Beijing were to sign a deal tomorrow, China would not regain its old momentum.

Official Ministry of Finance (MOF) figures, not surprisingly, offer a soothing picture of moderate decline, but private sources tell a much more dramatic story. According to the American Enterprise Institute’s well-regarded China Global Investment Tracker (CGIT), Chinese overseas investments of all kinds in the first half of this year averaged only $27.5 billion, half the rate averaged during the same time in 2018 and barely a quarter the rate of 2017’s first half.  This year’s figures are lower than any time since 2008. Construction contracts, largely in the third world as part of China’s Belt and Road initiative, have fallen off, too, but less dramatically. China clearly has become much less engaged with the world than it was.

Two things have caused this retreat. One is a growing hostility among host countries toward Chinese investment. Especially developed countries, the United States in particular, have balked over the Chinese practice of extracting technology. Suspicions along these lines have held up approvals for Chinese purchases and other direct flows of funds. Some familiar with Chinese practice have gone a step further. The European Chamber of Commerce has warned against developing a dependence on China and Chinese funds. This combination of concerns and suspicions have centered primarily on China’s huge state owned enterprises and less on private Chinese investment. But if private investment has fallen off less dramatically, this growing reluctance in the West has had its effect there, too.

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More significant is China’s relative shortage of hard currency. Despite Beijing’s efforts to make the yuan a global currency, it is little used in currency transactions – no more than 2% of the total in fact – and so is of little use in overseas purchases.  Meanwhile the trade war with the United States has already begun to cut into Beijing’s supplies of foreign exchange.  Beijing actually anticipated the problem and in 2017 and began to ration foreign exchange even before the White House added any tariffs. The first major investment declines occurred in late 2018, when the While House first imposed 10% tariffs on a range of Chinese products. The next drop coincided with this past spring’s increased tensions. To be sure, Beijing’s foreign exchange hoard remains huge, but officials are wary of how rapidly it has shrunk, falling some 25% from almost $4 trillion at its peak in 2014 to barely over $3 trillion during the first half of this year.  Beijing’s rationing of these financial resources has affected the state-owned sector in particular. Private companies have a greater willingness and ability to borrow hard currencies abroad.

Within the investment pullback, North America, which historically has accounted for some 17% of China’s overseas investment flows, has seen the biggest drop. No doubt, the hostility created by trade friction has played a role.  But China has also pulled back in Europe, where British and Swiss destinations have long dominated.  Australia and Singapore, which historically have accounted for about 10% of Chinese overseas investment flows, have seen less relative shortfall but some nonetheless.

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China has concentrated its remaining financial resources on less developed countries. The reasons are two fold.  First, activities in these countries center more on construction contracting than investing. Such efforts may require subsidies, but they demand little hard currency. Indeed, China collects fees on many of these projects. Second, Beijing has clearly made its Belt and Road initiative (BRI) a political priority. This effort at land trade routes between China on one side and Europe and the Middle East on the other may not generate the secure financial returns that investments in the developed world offer, but monies spent in these projects pay Beijing huge political dividends by tying these countries to China and by advancing a project that China has touted as an alternative to U.S.-led, mostly maritime trade arrangements. BRI historically has captured more than three-fifths of China’s overseas construction volumes with almost three quarters of the monies involved in energy and transportation in such places as Pakistan and Iran, Saudi Arabia and Nigeria. Preliminary figures for 2019 show that as all other efforts have diminished BRI has captured a still larger proportion of China’s efforts.

Even if China and the United States were to sign a trade deal tomorrow, these trends would likely persist. Though trade would increase with a new treaty, the terms would no doubt create a more even balance than previously, making it highly unlikely that China could replenish its reserves of hard currency quickly, if at all. At the same time, suspicions of Beijing’s agenda and practices, especially China’s state-owned enterprises, will persist, trade deal or no. Political imperatives will, of course, keep China focused on BRI and its construction projects.  For the investment flows, the best to expect is stability. It seems that for better or worse, the world has already seen the high water mark of Chinese investment flows.

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Source : Forbes

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Ecobank wins Bank of the Year, Best Bank in prestigious London awards ceremonies

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Ecobank wins “Bank of the Year” and “Best Bank” at The Banker and EMEA Finance Awards in London.

Ecobank Cameroon, Gambia and Rwanda won Bank of the Year at The Banker Awards on 28thNovember. This recognition came just before Ecobank Cabo Verde, Gambia, Liberia and Zimbabwe won Best Bank at the EMEA Finance African Banking Awards on 5th December. The Banker is the most prestigious global financial publication and EMEA Finance is widely read by the international banking community.

Ade Ayeyemi, Group CEO of Ecobank said: “We are pleased to be recognised as ‘Bank of the Year’ and ‘Best Bank’ in two distinguished award ceremonies in London. This confirms the strength of our brand in multiple countries across Africa, our unique pan-African platform and innovative banking products and solutions. Indeed, our One Bank strategy is providing the desired banking excellence for our consumer, commercial and corporate customers across the 33 countries in which we operate on the continent.”

The judging panels were impressed by Ecobank’s sound management, business model and strategic initiatives as well as its pioneering technology. They highlighted the bank’s recent innovations, including digitalised trade finance products, Ecobank Online & Omni Lite, digital payment solution, Ecobank Pay, and cross-border remittance solution, Rapidtransfer. These products are transforming the banking sector and empowering African businesses by providing accessibility and affordability.

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Dangote Honours 160 Staff at Long Service Award Ceremony

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Dangote Industries Limited recently presented 160 employees with long service award in recognition of their commitment, loyalty, exceptional service and invaluable contribution to the growth of Africa’s most admired brand over a period of 10 to 30 years and above. Post-humous awards were also given to ex-employees who lost their lives during their time of service at the organization.

At the Dangote Long Service Award, hosted by the Group Managing Director, Dangote Industries Limited Mr. Olakunle Alake, celebrated members of staff were each given a certificate of recognition, an award plaque, financial reward and ovation from other members of staff, family members and friends of the awardees.

During the ceremony, 29 staff were awarded with 10 – 14 years’ of service awards; 85 employees  with 15 – 19 years’ of service; 29 employees with 20 – 24 years’ of service; 13 employees with 25 – 29 years’ of service and 4 employees were also honored with 30 years’ of service awards.

Remarkably, 12 staff who had passed on while in active duty to DIL, were eulogized and post-humous awards were given to their families for their dedicated service ranging from 10 to 39 years.

The Group Executive Director, Logistics and Distribution, Dangote Industries Limited, Alhaji Abdu Dantata, emerged the highest living awardee for his 36 years of service, while the Group Managing Director, Mr. Olakunle Alake, who gave the welcome remarks, was given an outstanding ovation for his 29 years of loyalty in service to the organization.

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In his keynote address, the Group President/CE of Dangote Industries Limited, Aliko Dangote, commended all the awardees for their loyalty, commitment and dedicated service over the years; all of which had contributed to elevate the company from a trading concern founded in 1981 to one of the largest manufacturing conglomerates in Africa today, with a household name in Nigeria and a global brand to boot. He noted that employees, especially the awardees, were crucial part of the global success story which Dangote Industries has become today.

According to him, “I want to say a very big thank you to all of us here tonight. Indeed, loyalty is royalty and the successful growth of our company is a direct result of your excellent service. Your loyalty upholds our core principles and our continuous growth is based on a culture of resilience and loyalty.

“Today, we celebrate your individual and collective successes and our breakthrough was due to your investment of many years of loyal service. I encourage you to remain dedicated and committed. We deeply appreciate you and your efforts. Thank you very much”, Dangote added.

Africa’s wealthiest and foremost philanthropist, who personally presented the awards to all the awardees that have served DIL for 25 years and more and to the families of all the post-humous awardees, was likewise presented with a surprise gift of a framed picture of himself with the names of all the 160 awardees embedded by the organizing committee led by the Group Managing Director, Mr. Olakunle Alake.

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Their overall gratitude at the award, gift and honor was aptly captured by a staff in the security department, Mr. Samanja Umaru, who was rewarded for his 20 years of service to the company. Samanja, who effusively narrated how Dangote has transformed his life and family, pledged his undying loyalty to the organization which has given him so much.

According to Samanja, “Dangote is a blessed man and Dangote (DIL) is a good company. I began working with Dangote way back in 1981 at the warehouse where we were paid N10 daily. God bless Alhaji Dangote. He carries everybody along, whether Hausa, Yoruba, Ibo, anyone. Alhaji Dangote changed my life. He is a blessed man”

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FG Links Rise In Food Inflation To Border Closure

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The recent border closure drill has been attributed to the rise in headline inflation which is currently at 11.61 per cent as of October 2019.

Mrs. Zainab Ahmed, who is the Minister of Finance, Budget and National Planning, briefed Journalists on Wednesday after the Federal Executive Council (FEC) meeting in Abuja, adding that recent figures from the Nigeria Bureau of Statistics (NBS) were noticed since September.

The Minister informed that the increase in food inflation witnessed in September and October is linked to the increase in prices of food, propelled by the border closure.

“Headline inflation declined for several months before we noticed an uptake in the last two months and now headline inflation is at 11.61 percent as at the end of October.

“The slight increase between September and October is due to increases in food inflation ascribed to increase in prices of cereals, rice, and fish.

“Part of the reason is the border closure; the closure is very short and temporary and the increase is just by 2 basis points,” she explained.

Mrs. Ahmed pointed out that discussions with neighbouring countries on the border closure have advanced and the Federal Government is expecting every party to respect the protocols they are all committed to.

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She stressed that the government is making sure that the economy does not suffer once the African Continental Free Trade Area Agreement (AfCFTA) comes into effect.

“The border closure is temporary; we have really advanced on the discussion between ourselves and our neighbours and we expect that the outcomes of those discussions and agreement are that each party will respect the protocols that we all committed to and then the borders will be open again.

“What we are doing is important for our economy as we signed on to the AfCFTA, we have to make sure that we put in place, checks to make sure that our economy is not overrun as a result of the coming into effect of the AfCFTA and that’s why we have this border closure to return to the discipline of respecting the protocols that we are all committed to.”

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