This blog post summarizes the key findings of the new book Energy in Africa: Challenges and Opportunities, co-authored by Manfred Hafner, Simone Tagliapietra and Lucia de Strasser of the Italian think-tank, Fondazione Eni Enrico Mattei. The book, published by Springer, is freely available online.
TEARS OF JOY CHANGED INTO THOSE OF PAIN
January 28, 1986. It was just another day in the whirlpool of news and speculations of a new Foreign Correspondent to be assigned to the White House. Shivering on his way to the most important political center of the Western World, resisting arctic cold and snow on the way to work, hardly ever seeing the President himself. Instead, he found himself on this fateful day in a rendez-vous with Tom Foley, majority leader in the House of Representatives, a classic and classy democrat, honest and liberal, stamped by dignity and selected language and never close to the gutter as some politicians in the US capital these days.
This blog is based on remarks delivered at the Think-Tank Summit in Buenos Aires on 18 September 2018 held under the G-20’s Argentine Presidency.
Africa has an enormous infrastructure gap that impedes its development. The Compact with Africa (CwA) is an international policy initiative sponsored under the German presidency of the G-20 in 2017 designed to bridge that gap. Intended to draw in the private sector in developing Africa’s infrastructure through a combination of Private-Public Partnerships (PPP) and blended finance, the CwA involves the public sector of a dozen African countries have volunteered to join the initiative, and international organizations such as the African Development Bank and various donor agencies. Though the initiative has built up momentum among policy-makers since its launch, the participation of the private sector has been noticeably weak.
If I were to synthesize the current situation of the Brazilian economy in one sentence, I would say: “it is suffering from a combination of ‘productivity anemia’1 and ‘public sector obesity2’". On the one hand, the mediocre performance of productivity in Brazil in recent decades has limited its GDP growth potential. On the other, the gluttony for expanding public spending has become increasingly incompatible with such limits in the potential expansion of GDP, particularly since the former has not been achieving socioeconomic results that match such appetite.
As the world is shifting away from conventional fossil fuels towards renewable energy sources, the power industry is starting to invest more in sustainable clean energy installations rather than the traditional large-scale infrastructures, which rely mainly on oil and coal.
Besides its environmental benefits, this shift to renewables is very likely to benefit economic growth as well. A recent study of the International Renewable Energy Agency shows that, indeed, doubling the share of renewables in the energy mix by 2030 would lead to a rise of global Gross Domestic Product (GDP) up to 1.1 percent. It would also improve global welfare by 3.7 per cent and support the creation of over 24 million jobs in the sector all over the world.
The agreement establishing the African Continental Free Trade Area (AfCFTA) is a framework to create a free trade area across the region, bringing together the 55 members of the African Union into a continental market with a cumulative Gross Domestic Product (GDP) exceeding US$2.2 trillion and a total population of over one billion people. When concluded and successfully implemented, it will become the largest free trade area in the world in terms of membership, opening up significant opportunities for people and firms from the region and beyond. In signing the AfCFTA, African leaders have taken a very bold step. To convert their vision and political will into a full-fledged agreement that delivers on its promise will require hard work and tough decisions, in particular to maximize impact, bring many Africans to benefit and make the agreement work.
Latin America is up against a momentous year on multiple fronts. On one hand, game-changing national elections in six countries, including three of its largest – Brazil, Mexico and Colombia – are poised to reshape the political scenario in the region. In parallel, the economic agenda is front and center of countries’ efforts to overcome imbalances, implement reforms and accelerate growth. As a backdrop to all this, an important feminist movement is unfolding on the heels of a year marked by discussions on gender equality, with critical implications on both the political and economic spheres.
The Brazilian economy pays a price in terms of productivity foregone because of its lack of trade openness. A trade opening process would bring an adjustment impact that could nonetheless be mitigated with public policies that facilitate labor mobility and job migration. Benefits from trade opening would also hinge on policy improvements in complementary areas, such as infrastructure investments, business environment and others.
Garbage, at times, stinks of gold. E-waste, toxic, or nuclear trash, is making the Mafia wealthy, allowing crime syndicates to perfume their bank accounts, or fill their safes with cash. Waste management is extremely lucrative. The EU’s trash business has an estimated turnover of over 100 billion yearly. The largest 25 European waste management firms employ 130,000 people. Now, multiply on the global scale—much of it illegal, and therefore often in cash. Welcome to the Godfather. It is well known to movie fans, who admired Marlon Brando as Don Vito Corleone in “The Godfather,” that Southern Italian Mafia groups like Ndrangheta , Camorra, Cosa Nostra, have been for decades cashing in on a variety of activities. Brutal and powerful, from Rome to New York, London, Rio and beyond, these mafia groups cash in on construction sites, protection scheme’s, kidnapping, drug deals, boxing promoters, unions, film production, and even control part of the trash hauling business in Manhattan. One of my friends, managing director of a famous hotel near Madison Avenue, told me about one of his recent meetings with a representative of daily trash haulers based in Brooklyn. The mafia had raised its price by 25 percent and made it clear to the hotel manager how they would react to a refusal: “Until you agree we will empty a full garbage truck each day in front of your hotel lobby. Your guest(s) will enjoy the smell.”
The IMF released last July 24 its latest assessments of the current account balances for the 30 largest economies in its External Sector Report 2018 (ESR). There was no major change in 2017 relative to previous years and the reconfiguration of surpluses and deficits that has prevailed since 2013 was essentially extended. However, there are reasons to expect more abrupt alterations ahead, as the U.S. fiscal easing under high employment conditions unfolds. Given the context of ongoing U.S.-led trade wars, as well as the recent bout of Chinese exchange rate depreciation, one may wonder about the prospects of currencies also becoming subject to war or rather to what Citi has called “currency bullying”.