Japan commits 32.1 Billion Yen for Projects in Africa
According to news from the World Bank, Japan has decided to provide up to 32.1 billion yen in yen loans to the African Development Bank, with the Japan Bank for International Cooperation signing a document recently in Tunis.
The aid is part of up to $4 billion, or about 430 billion yen, in soft loans the Japanese government has pledged to provide over the next five years partly to help improve infrastructure in Africa. The loans of 32.1 billion yen are aimed at providing business funds for private firms operating in Africa through the African Development Bank.
Possible projects to be covered by the loans include the establishment of a microfinance institution for poor people in Tanzania and construction of a hydraulic power plant in Uganda.
Source: World Bank Press Review, 15 September 2008.
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Ground Breaking European Climate Policy
Threatens UK Power Project
Reported by Miles Shepherd in London, UK
The Environment Committee of the European Parliament (ENVI) has approved three measures to support emission trading, reduce greenhouse gas emissions and boost research into carbon capture and storage.
According to recent reports ENVI has decided to toughen up on emission trading and invest in carbon capture and storage technology development. However the new decisions, "effectively prevent the building of new coal-fired power plants from 2015 unless equipped with CCS," said Chris Davies, the MEP responsible for guiding the legislation within the European Parliament.
The Times Online reports that the decision could cost the power industry €30 billion (£23 billion) a year and trigger a steep rise in electricity bills, represents a huge boost for Europe’s renewable energy industry. It also casts fresh doubt over the likelihood of a £1.5 billion coal-fired power plant being built at Kingsnorth, Kent, by E.ON, the German power group. In addition, it flies in the face of British government policy. Last month, John Hutton, the former business secretary, told the Labour Party conference that “no coal ... equals no lights. No power. No future.”
With the British power industry largely in French, German and Spanish hands, the outlook is bleak with British firms already paying 4 times the price for energy then their French competitors. The only viable alternative to coal is nuclear and that is viewed with deep suspicion by many. With the sale of British Energy, Britain’s only nuclear generator to French Government owned EDF, and the shortage of qualified scientists, engineers and technicians in France as well as UK, the short term ability to build new efficient and clean power generators is severely limited.
Some 500 million euros has been made available to help member states achieve compliance. The committee also agreed to increase spending on the development of CCS technology and start the development of 12 demonstration projects by November 2009. The demonstration projects could receive around from the Emission Trading System, with other funding being supplied by member states.
The final decision depends on a final vote in the European Parliament – expected to take place in December. Opposition is expected from coal dependent countries such as Poland and from centre-right MEPs, who said that they would inhibit European businesses while not having an impact on global CO2 emissions.
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IMF Managing Director Strauss-Kahn Suggests Actions
To Tackle Global Economic Crisis and Recommends
Adding Brazil, China and India to G8
The world must act quickly, forcefully and cooperatively to contain the ongoing financial and economic downturn, Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), said in an address at the Peterson Institute for International Economics on 10 October.
Mr. Strauss-Kahn (pictured) was speaking at the institute's "The Euro At 10: the Next Global Currency?" conference in Washington, DC. Mr. Strauss-Kahn noted that turmoil in financial markets has become a crisis of confidence, requiring decisive government intervention. "What will restore confidence is government intervention which is clear, comprehensive and cooperative among countries," he said. "The private sector cannot restore confidence on its own. Macroeconomic policy measures by governments will not restore confidence on their own. Piecemeal measures on financial markets will not restore confidence on their own."
To help the financial markets stabilize and confidence return, Mr. Strauss-Kahn highlighted four sets of actions:
Explicit public guarantees of financial system liabilities: The fragility of public confidence has reached a point where explicit public guarantees of financial system liabilities, which will be temporary and with safeguards measures, is unavoidable. This would cover not only retail bank deposits but probably interbank and money market deposits, so that activity may restart in these key markets.
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Government purchases of troubled assets to force loss recognition: Governments need to eliminate troubled assets by purchasing them at fair value. This will force the recognition of losses by the financial institutions.
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Capital injections by governments: As private money is scarce in today's environment, government support is needed. One strategy that has worked in past crises is to match new private capital subscriptions with government capital, which imposes a market test for the use of public funds.
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A high degree of international cooperation: During the past week the collapse in confidence in the markets has been almost matched by a collapse in confidence between countries. This has promoted a trend toward unilateral measures taken with national interests in mind, and with unintended "beggar-thy-neighbor" consequences for others.
On global macroeconomic conditions, Mr. Strauss-Kahn warned of the longer-term effects that the current market crisis will have. In the United States, households and businesses may have a healthier attitude to risk, but there may be a need for macroeconomic policies to support the economy if both private investment and consumption weaken in the near term. With regard to Western Europe, which has also been hit hard, Mr. Strauss-Kahn pointed out that the region has not encountered a major foreign exchange crisis owing to the success of the euro, but that European countries still face significant challenges in dealing with the current financial crisis.
On the emerging economies, Mr. Strauss-Kahn said that although many emerging economies are in a better position than in the past, they are still at risk due to high external financing needs and in some cases banking system fragilities. He said that the IMF will be ready to provide timely financial support for emerging economies, if needed.
"We will activate emergency procedures to respond quickly to urgent requests, with high access financial programs based on conditionality that focuses on crisis response priorities."
Mr. Strauss-Kahn also underlined the impact of high food and fuel prices on the developing countries. "In many developing countries, the most urgent crisis is not what is happening in financial markets but what has happened in commodity markets. We must not forget this other crisis," he said. While the authorities have policy options to consider to mitigate the impact, Mr. Strauss-Kahn emphasized that the IMF and the World Bank are ready to help with policy advice, technical assistance and financial support. He also urged donor countries under fiscal constraints not to cut foreign aid for the most vulnerable in the world.
Lessons to be drawn from the crisis, according to Mr. Strauss-Kahn, include the need to strengthen the regulation and supervision of the financial sector, and to press ahead with reform of the international financial architecture.
"The crisis is the result of three failures: a regulatory and supervisory failure in advanced economies; a failure in risk management in the private financial institutions; and a failure in market discipline," he said. To help in remedying these shortcomings, he added "I think the IMF can help to coordinate this effort, drawing on the expertise of others."
Reform of the international architecture will call for enhancing the legitimacy and effectiveness of the system. "Legitimacy must be conferred by reliance of broader groups. One very simple change that could be made is to extend the G8 to at least China, India and Brazil, and perhaps others. But I think this needs to be accompanied by greater reliance on multilateral institutions with near universal membership, so that no country that wants to participate in the international system is left out." Effectiveness, he added, can be achieved by better coordination between international organizations and better follow up on international agreements.
Source: IMF press release, 10 October 2008
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U.S - Africa Infrastructure Conference Held in Washington D.C
Reported by Getachew Teklemariam Alemu in Washington D.C.
More that 400 participants from the private and public sector of USA and Africa were in Washington D.C., from October 6-8, 2008 for a U.S.-Africa Infrastructure Conference, with a theme: Connecting the Continent. The corporate council on Africa (CCA) was the organizer of the conference with other governmental and private partners.
As indicated by the president and CEO of CCA, Stephan Hayes, "the conference will provide US companies with a blueprint on how to get highest return on infrastructure investment in Africa"
The discussions sessions, which were led by leading experts from the private and public sectors, were mainly focused on the potential growth and development dimensions within the infrastructure sector of Africa. They include potential investment opportunities in energy, transportation, construction, power, and ICT (Information Communication Technology) sectors while issues like safety, security, and social responsibility were focal points.
"By the time that the global capital market is getting tightened, Africa has seen significant increase in funding and economic growth" said Stephan Hayes of CCA. Hence, the orientation of U.S companies towards investing in Africa shall be re-structured in a way that they shall focus on partnership and sustainable development.
According to Getachew Teklemariam, an Infrastructure Projects Expert in Ministry of Finance and Economic Development of Ethiopia “ This is a critical time for U.S. companies to just sit down and thoroughly look into their policies towards the African infrastructure sector. As a reflection to the change in orientation of the global political economy, the Chinese companies are heaving the African infrastructure sector with their relatively generous investment, which left the internal politics aside. Even in the case where the risk factor for the investment is high enough to push other companies away, the Chinese companies do invest. In addition to the Chinese firms, the Indian and Japanese firms are also taking multi-million dollar infrastructure investments in Africa. The U.S companies are in fierce competition. Hence, they shall try to re-invent the wheel, and increase their presence in Africa if the intend to play their own part towards the political influence of the U.S. in Africa"
The conference also discussed the upcoming presidential election in the U.S. and its potential policy implications on Africa. For more on the conference have a look at www.africacncl.org
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50 More Countries Considering Nuclear Power
More than 50 countries have alerted the International Atomic Energy Agency (IAEA) in Vienna that they are considering utilizing nuclear power, the head of the United Nations body said on 16 October.
Mohamed ElBaradei told a meeting in Paris on the 50th anniversary of the Nuclear Energy Agency (NEA) of the Organization for Economic Cooperation and Development (OECD) that a decade ago, nuclear power’s popularity was in question.
"When we talked about transferring nuclear technology to developing countries, we generally meant applications in medicine and industry, not nuclear power," the IAEA Director General said. But the tides have turned and "change is in the air," he added, with many of the agency's Member States - mostly from the developing world - expressing interest in nuclear power.
One dozen countries, including Turkey and Viet Nam, are actively preparing nuclear programmes, while China is constructing six power reactors and Russia intends to build dozens of both large and small reactors by 2020.
Greater efforts are essential to ensure that nuclear power’s future is "safe, proliferation-resistant and cost-effective," Mr. ElBaradei said. "Every country has the right to develop nuclear power, but also a responsibility to do it properly."
But he cautioned that it is crucial to have realistic expectations of how quickly countries can have nuclear reactors online. "It can take a minimum of 10 years just to put the basic infrastructure in place. This is not an area where you can cut corners."
Source: UN Daily News Digest, 16 October 2008
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Accelerating Regulatory Approval for Resource Projects Could improve Canada's Competitiveness
Reported by Max Wideman in British Columbia
According to a new Conference Board of Canada report, reducing the time needed to approve a major resource project from its current four-year average would improve Canada's economic competitiveness. The report makes six recommendations to strengthen Canadian federal government regulation and improve federal-provincial coordination in approving resource projects.
"The goal of regulatory reform is to contribute to regulatory efficiency without compromising standards or sacrificing effectiveness of oversight. In its 2007 budget, the federal government set an objective of reducing the time required to review major resource projects to two years from four," said Len Coad, Director, Energy, Environment and Transportation Policy. "Some progress has already been made to improve coordination and to consolidate regulatory efforts, but more gains are possible."
The federal government created the Major Projects Management Office (MPMO) in 2007 to coordinate all aspects of federal regulation related to major projects. A new Conference Board report, Making Canada More Competitive: Improving Major Project Regulation in Canada, summarizes the current federal review process, federal-provincial regulatory relationships, and changes resulting from the implementation of the MPMO. The six recommendations are:
- Broaden and strengthen service standards;
- Extend the use of substitution provisions;
- Formalize coordination between the MPMO, the Canadian Environmental Assessment Agency, and Indian and Northern Affairs Canada;
- Conduct an independent assessment of the potential to consolidate regulation;
- Conduct an independent assessment of the regulatory models and their applicability; and
- Make better use of codes of practice to harmonize federal and provincial standards.
This report, which is publicly available at www.e-library.ca, is published as part of the Conference Board's Cancompete research project. Cancompete is a three-year program of research and dialogue designed to help leading decision makers advance Canada on a path of national competitiveness. For more information, visit http://sso.conferenceboard.ca/e-Library/LayoutAbstract.asp?DID=2755.
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IMF Announces US$2.1 Billion Loan to Iceland
Mr. Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), issued the following statement on Iceland on Friday, 24 October 2008:
"An IMF staff mission and the Iceland authorities have today reached an ad referendum agreement on an economic program supported by an SDR 1.4 billion (about US$2.1 billion) loan under a two-year Stand-By Arrangement. Following review by management, the agreement could be presented to the IMF Executive Board for approval in early November. Iceland would be able to draw SDR 560 million (US$833 million) immediately after Board approval.
"Iceland has put together an ambitious economic program, which aims to restore confidence to the banking system, to stabilize the krona through strong macroeconomic policies, and to help the country achieve medium-term fiscal consolidation following the collapse of its banking system. I believe these strong policies justify the high level of access to Fund resources—equivalent to 1,190 percent of Iceland's quota in the IMF—and deserve the support of the international community.
"The authorities' program is focused on the essential upfront measures needed to restore confidence and economic and financial stability. The overarching goal is to support Iceland's effort to adjust to the economic crisis in a more orderly and less painful way," Mr. Strauss-Kahn said.
Editor’s note: The project management community in Iceland is represented by the Project Management Association of Iceland (VSF) - http://www.vsf.is/. We at PMForum wish to express our support to VSF, and hope the recent economic and financial crisis has no long lasting negative impact on the PM profession in that country.
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