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Seychelles colors flying high

Mahe Publications  Jul 26, 2016

Against the background of Seychelles “a small country on the move” and “Seychelles a small country thinking tall,” the 23rd Annual General Meeting of the Afreximbank Business Forum was hosted last week, which was called to assess issues affecting trade on the African continent while urging the delegates to put Africa first. The conference ended with Seychelles’ colors flying high.

This was manifestly projected by the statement of Benedict O. Oramah, current President of the African Export-Import Bank in his address to shareholders of the bank and other distinguished guests attending the historic event. “In an archipelago of 115 islands right at the heart of the Indian Ocean, we find home, warmth and peace. As we begin our deliberation today, permit me to, on your behalf, thank the government of the Republic of Seychelles for affording us the privilege of meeting here in paradise.”

Mr. Oramah then went on to extend his appreciation to President James Michel for “the unparalleled hospitality we have enjoyed: the solidarity of the people of Seychelles with Afreximbank and above all the organizational flair and support that made the difficult task of hosting these events look so ordinary.”

“The African Export-Import Bank is headquartered in Cairo, Egypt with the primary objective of promoting and financing trade on the African continent and trade with other continents.”

“Anyone who has any doubts about the power of trade should read the history of Africa from cultures which we inherited; the wars of slavery; agonies of wars fought, ecosystems destroyed; to markets and civilizations revealed. Africa is today a product of trade influences. So as we stand at the frontiers of Africa, at the edge of Asia and in the mist of the mighty oceans, we reaffirm our commitment to the pursuits of development inched on the greater South-South Trade Corporations; we rest our faith on the promise of wealth founded on, among other things, the abundance of the waters – the Blue Economy,” President Oramah stated.

The focus on the Blue Economy must of course have been heartily received by the delegation representing the Seychelles at this forum. This included Vice President Danny Faure who was standing in for President James Michel, Minister Jean-Paul Adam, Minister for Finance Trade and the Blue Economy who was hosting the forum and who took over as Chairman of the Bank for one year as from now; the Governor of the Central Bank, Ms. Caroline Abel who was also hosting the forum; Minister Michael Benstrong, Minister for Investment, Entrepreneurship Development and Business Innovation and Minister Didier Dogley, Minister for Environment, Energy and Climate Change.

Of course the conference would not have been so manifestly successful without the dedication of the organizing committee and all members of the protocol department. Mr. Omarah’s address to the shareholders revealed the remarkable achievements made by the bank over recent months – “In the first six months of this year we have continued to make good progress, we have continued solid growth in assets, revenues, and equity capital. Only a few weeks ago the bank entered the euro bond market and raised an amount of US$750 million in a deal which was more than half times oversubscribed. On the strength of improved capitalization and performance, Moody’s and Fitch ratings revised the bank’s rating outlook from negative to stable in 2015. In the same year, the bank paid what was perhaps the largest syndicated loan issued by an African Bank raising an amount in excess of US$1 billion.”

Against this background it is not surprising to learn that in Seychelles both Pension Fund and Nouvobanq have become shareholders of the bank.

Seen against the unexpected decline of oil prices at some point, trading below US$30 per barrel from over US$110 in June 2014 – gold, copper, platinum, iron ore and other metals, as well as the decline of the price of certain agricultural commodities and a reduction in tourism receipt.

There is no doubt that the African Export-Import Bank have been able to navigate through well the turbulent financial waves and was able to announce that not all the news is bad news. Some good developments have emerged which hold strong prospect of defining Africa’s future:

(i) Dangote Industries are investing over US$9 billion in Nigeria to create some of the largest petroleum refinery and petrochemical facilities in the world;

(ii) Ethiopia has in recent years demonstrated that are source poor African country can become an important center for light manufacturing in the world;

(iii) Egypt’s El-Sewedy Electric have shown that an African heavy equipment manufacturer can compete globally, and in fact, be a source of power equipment Africa badly needs;

(iv) The Government of Côte d’Ivoire has demonstrated that a commodity-dependent economy, coming out of war, can achieve the enviable growth rate of more than 7% over the last 5 years;

(v) That the Export Trading Group (ETC) of Eastern and Southern Africa are single-handedly fostering viable supply chains hinged on agro-processing in Africa for exports and creating markets and wealth for millions of farmers.

The bad news maybe dominating the airwaves and creating uncertainties and concerns but one fact is indisputable.

“Africa is stronger and more resilient today than it was when similar crisis struck in the 1980s.

We acknowledge the poverty of the commodity illusion the continent had been afflicted with over the last decades; we acknowledge the poverty of the euphoria of false wealth that lulls and disappears just like an opiate; we recognize the futility of the hope that is easily dashed just like a beautiful cake in the sky!

And we are doing something about these. Your Bank is responding forcefully to create the momentum that we hope would turn despair and fear into courage; lethargy into action; and problem into opportunity.

The actions so far taken have been bold, decisive, necessary and have short and medium term dimensions.

In the short term, the focus is on assisting countries to deal with the excess demand arising from the economic shocks and restoring access to trade finance.

In the medium term, concrete steps are being taken to help countries to begin the process of decommoditizing and industrializing.

With regard to the short term interventions, the Board of Directors of the Bank, in December 2015, approved a multi-billion US dollar special facility dubbed the ‘Countercycle Trade Liquidity Facility (COTRALF) aimed at assisting Afreximbank member countries to adjust in an orderly manner to the commodity price and terrorism-induced shocks that were threatening to cause so much economic dislocation.

The facility is intended to improve access to trade finance and reduce the likelihood of African banks defaulting on their trade payment obligations. Without such a support, the adjustment process necessary to manage the excess demand in the different economies would be more difficult. Offered on the back of support of the Central Banks of beneficiary countries, the facility has been very successful, such that as at the end of last month (June 2016), the Bank had disbursed an amount of about US$6.2 billion under the program, with another US$3 billion of request in the pipeline.

The consequence has been a rapid expansion of the Bank’s balance sheet from US$5.2 billion in December 2014, through US$7.1 billion in December 2015 – to US$11.2 billion as at June 2016,” President Oramah stated.

The overall level of debates on this four-day get-together in Seychelles was of the highest order and quality. Among those who freely shared their depths and knowledge with the 400+ delegates were such respected personalities like Olusegun Obasanjo – former President of Nigeria, who also served as Chairperson of the African Union (AU) from 2004 to 2006; Professor Steve Stiglitz – Economist and Professor at Columbia University; a recipient of the Nobel Memorial Prize in Economic Sciences (2001); a former Senior Vice President and Chief Economist of the World Bank and Professor Justin Li –Chief Economist and Senior Vice President of the World Bank from 2008 to 2012.

Of course a lot of discussions were focused on China’s increasing interest on the African continent. In this connection, it was revealed that the Exim Bank of China would be signing a Memorandum of Understanding (MoU) under which they hope to support this initiative with funding in an amount of US$1 billion. It was stated that this support is in demonstration of China’s commitment to Africa’s industrialization against the pledge given by President Xi Jinping, as China is planning to invest up to US$60 billion on the African continent.

Seychelles’ founding President Sir James R. Mancham, who was the recipient of the Africa Peace Award 2016, availed of the opportunity of this Forum of African bankers and entrepreneurs to offer his own perspective towards the future of Africa. He said that whilst he was impressed with Africa’s performance in the sphere of trade, finance and economy – Africa’s leading concern should be the creation of a situation of continental peace and stability.

Sir James said he was perturbed by wars and confrontations between neighboring countries in Africa which resulted into vast amount of money being invested in defense equipment rather than in human resource development. He stated that we cannot keep on just blaming the colonizers of yesterday as the responsibility today must entirely be a concern for the leaders of Africa.

Sir James related a story about an African family who lived in their village and was relatively happy. Every morning, he said, the family had to hunt for their meals and collect water from a well. In the evening, they slept to the setting sun against the background of the songs of birds and roars of lions. They were relatively contented until one day they saw a CNN film about the Rich and Famous and came to the conclusion that one would be living next to heaven if one was occupying the 50th floor of a New York apartment building. They failed to appreciate that in this skyscraper, they have to take a lift which may sometime not work. They have no common ground for their children to play on – and in New York instead of sleeping to the songs of birds and roars of lions, you sleep to the roars of fire engines and ambulances. The irony of this situation is that the American who have spent most of his life working around the clock and today owns the skyscraper and has all the money in the world – his ultimate dream it to end up on a distant island in an African countryside to live a simple life.

Sir James said that Africans are wrong to believe that the roads of Paris, London or New York are paved with gold. He said the gold is nowhere more abundant than on the African continent. He therefore called on the leaders of Africa not to ignore the ‘happiness’ factor when considering financial and economic development. “There is certainly a great value in peace of mind,” Sir James declared to wide applause.

Seychelles colors flying high
Sir James R. Mancham among guests and delegates in a souvenir photograph at the opening of the forum

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