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Africa to Propel World Population Growth

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In mid-November 2022 the eight billionth person will be born, according to the United Nations. In its analysis of this milestone, the UN makes two key observations. The first is that the global population has been expanding at its slowest rate since 1950. The growth rate dropped below 1% in 2020, a trend that is likely to continue. The second is that the growth in population has been due to the gradual increase in human lifespan owing to improvements in public health, nutrition, personal hygiene and medicine. It’s also the result of high and persistent levels of fertility in some countries. According to the UN, just eight countries are expected to be behind 50% of the population growth over the next 30 years. Five are in Africa: the Democratic Republic of Congo, Egypt, Ethiopia, Nigeria and Tanzania. Demographers Akanni Akinyemi, Jacques Emina and Esther Dungumaro unpack these dynamics.

What’s the significance of the eight billionth birth?

It raises concerns – scientists estimate that Earth’s maximum carrying capacity is between nine billion and 10 billion people. Appreciating these numbers requires an understanding of the distribution and demographic structure of the population. Where are these people across regions, countries, and rural and urban geographies?

There is a potential upside to growing populations. It’s known as a demographic dividend. Population growth can be a blessing, spurring economic growth from shifts in a population’s age structure. This is a prospect if working-age people have good health, quality education, decent employment and a lower proportion of young dependents. But realizing this dividend depends on a host of things. They include the structure of the population by age, level of education and skills, and living conditions, as well as the distribution of available resources.

The consequences of population growth are socioeconomic, political and environmental. Some of them can be negative. How these unfold is determined by the characteristics of the population and its distribution.

Why are birth rates so high in five African countries?

The major factors driving population growth in these countries include low contraceptive use, high adolescent fertility rates and a prevalence of polygamous marriages. There’s also the low education status of women, low to poor investment in children’s education, and factors related to religion and ideas. The use of modern contraceptives is generally low across sub-Saharan Africa. The overall prevalence is 22%. In the Democratic Republic of Congo, however, the uptake of short-acting contraceptives is at 8.1%. In Nigeria, it is at 10.5%. The uptake in Ethiopia is 25%, in Tanzania it’s 27.1% and in Egypt 43%.

For long-acting family planning methods, apart from Egypt with over 20% uptake, the other four countries driving population growth in the region recorded very poor uptake. This low uptake will logically lead to a population explosion.  Some of the factors associated with high contraceptive use in Africa are women’s education, exposure to news and mass media, good economic status and urban residency.

The adolescent fertility rate in sub-Saharan Africa – while showing a downward trend – is still relatively high. The adolescent fertility rate captures the number of births per 1,000 girls aged 15 to 19. In sub-Saharan Africa, it stands at an average of 98 births per 1,000 girls. There is a wide variation in this rate across the five countries: from 52 in Egypt and 62 in Ethiopia to 102 in Nigeria, 114 in Tanzania and 119 in the DRC.

Outside the continent, the adolescent fertility rate is 21 in Asia and the Pacific, and 26 in Eastern Europe and Central Asia. In the US, it’s at 15, five in France and 42 globally. The adolescent fertility rate has huge implications for population growth because of the number of years between the start of childbearing and the end of a woman’s reproductive age. A high fertility rate in this age group also has a negative influence on the health, economic and educational potential of women and their children.

Another factor driving population growth in these five African countries is polygamous marriage. Women in polygamous unions living in rural areas with low socio-economic status are likely to have higher fertility rates than women in other areas. Polygamy is illegal in the DRC. Nevertheless, it’s common. About 36% of married women in Nigeria, one-quarter of married women in rural Tanzania and 11% of those in Ethiopia are in polygamous marriages. Finally, a woman’s education status has a significant impact on fertility. For instance, in Tanzania, women with no formal education have as many as 3.3 more children than women with secondary or tertiary education.

Are rising populations a cause for major concern in these countries?

Yes. One of the biggest concerns is the scale of these countries’ development. The World Bank classifies the DRC among the five poorest nations in the world, with nearly 64% of the population living on less than US$2.15 a day. One in six of sub-Saharan Africa’s poorest people is found in the DRC.  In Nigeria, about 40% of the population lives below the poverty line. The west African nation also faces issues of insecurity, poor infrastructure and high unemployment. Steady population growth in these five countries will exert further stress on already inadequate infrastructure and services.

Also, the age structure of the populations of these five countries reflects high levels of dependency. The population of young people who aren’t in the labour force and that of older people is far higher than of those in their prime ages (18 to 64) who are gainfully employed. There is also a potential shortage of working-age people with high skills compared with the population of those who depend on them for survival in these five countries. This is because these countries have a very youthful population. The median age ranges from 17 in the DRC to 17.7 in Tanzania and 18.8 in Nigeria. There is also the prospect of many young people living in unfavourable socioeconomic realities and poverty.

In most countries, population growth is the slowest since 1950. Why?

Most countries, particularly in America, Asia, Europe, Oceania and North Africa, have completed the fertility transition. In other words, they are experiencing below-replacement fertility levels – fewer than two children are being born per woman. The main drivers of low fertility include the increased use of modern contraceptives, increased age at first marriage and higher numbers of educated women.

What should the next steps be for African countries with high fertility rates?

Government policies and programs need to take into account population growth and align interventions with sustainable use and access to resources. Governments at regional, national and sub-national levels also need to invest in infrastructure and education. They need to create employment if they are to benefit from a growing population. There is also need to continue investing in family planning.

The age structure of the population is also of concern. The expected growth in population numbers is likely to increase the concentration of young people and those of prime ages. With limited socio-economic opportunities for young people, countries are more likely to be subject to the forces of international migration.

The proportion of older people is also likely to increase in the five countries in focus. This increases the need for investment in social security, infrastructure and innovative support for older people. Unfortunately, issues around older people have not gained prominence on the continent.

Courtesy: The Conversation


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A Labour Government Should not Frighten the Horses

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The UK general election is likely to mean changes, but Gulf citizens need not be too worried.

By James Drummond

If the tension was killing you, now you know. If it wasn’t, then be aware that a general election in the United Kingdom will be held on July 4 – less than six weeks away.

For the hapless Rishi Sunak, it looks like a case of “If it were done when ’tis done, then ’twere well it were done quickly.” Polls indicate that after 14 years of conservatism, real or imagined, voters are likely to elect a new Labour government.

What does this mean for us here in the Gulf?

The six Gulf states are certainly exposed to Britain. The extent of GCC holdings in the UK is enormous, ranging from Qatari ownership of the Shard building in London, stakes in the Sainsburys supermarket chain and Barclays bank, to Sheikh Mohammed bin Rashid’s Godolphin stables in Suffolk.

Manchester City and Newcastle United football clubs are owned by Emirati and Saudi interests, respectively. Kuwait’s wealth is managed by the Kuwait Investment Office near St Pauls Cathedral.

Labour has been careful to detail very few policies (or hostages to fortune, as its strategists may see it), but last week, David Lammy, the likely new foreign secretary, outlined a further campaign against dirty money.

Britain is a “corruption services centre”, while London is a “hotbed of kleptocracy”, Mr Lammy said. He said that he wanted to reward whistleblowers and clamp down on “enablers” of financial crime.

Given the paucity of public announcements, Lammy’s speech is significant, because it implies that the incoming government is likely to act. Fighting financial crime is relatively uncontroversial and attracts cross-party support – although in the UK’s case with limited success.

British politicians have made similarly grandiose statements before. But after Russia’s invasion of Ukraine, London has moved particularly against Russian dirty money, and sanctioned individuals. It finally introduced an obligation mandating the disclosure of beneficial owners of property.

Overseas trusts are also now required to disclose their ultimate beneficial owners, and there is now greater transparency when registering entities at Companies House.

This seems to have had only limited effect, however. Last week Andrew Mitchell, the deputy foreign secretary, cited estimates that 40 percent of the world’s dirty money still passes through London.

Spotlight on Corruption, a non-governmental organisation, wrote in October last year that “major reform is needed to how lawyers and accountants, the property sector and company formation agents are regulated for money laundering.” Lammy may choose to take further action against these and other professionals.

Other so-called enablers include retired politicians, some of them in the House of Lords, who work as advisors to unsavoury actors. Labour could move to tighten disclosure, although several of its senior former members are likely to lobby against further transparency.

It is also possible that Labour will go further in taxing expatriates. In its limited public commitments, the party has promised to clamp down on “tax dodgers”.

Those with property in the UK already pay tax on rental income they receive, and worldwide assets are subject to Britain’s inheritance tax. Some Gulf Arab families with UK property have been caught by inheritance tax.

A government led by Sir Keir Starmer, the Labour leader, could go further, as the US does, in taxing worldwide income of its citizens, more than 200,000 of whom live in the UAE alone. The argument is that if you have the privilege of carrying the passport, you have an obligation to pay tax.

Another question surrounds nationalisation. Labour is committed to re-nationalising the railways for one, although the infrastructure is already under central government control.

But another target may – may – be England’s water supply network, which was privatised in 1989. Shareholders in various of the rump companies include the Qatar Investment Authority and Adia of the UAE.

The water companies have been the subject of a vociferous campaign, for allegedly paying their shareholders high dividends while neglecting maintenance and investment. It is possible that an incoming Labour government will nationalise the industry.

All that said, the primacy of the rule of law and respect for property rights remain strong in Britain.

Barratt, a mass housebuilder, reported earlier this week that London remains the top choice among world cities for UAE investors looking to buy overseas. The holdings of Gulf states and rights of Gulf citizens in the UK remain secure, even with a Labour government.

James Drummond is Editor-in-Chief of the AGBi

Courtesy: The AGBI.Com


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Kuwait’s Political Crisis Adds to Economic Uncertainty

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Kuwait’s latest standoff is deeply concerning for both the near and long term, writes Andrew Cunningham

The decision by Kuwaiti emir Sheikh Mishal Al-Ahmad to dissolve the country’s recently elected parliament just days before its inaugural session on May 14 presents overseas investors and Kuwaiti citizens with more uncertainty.

The situation raises concerns about the country’s economic prospects over both the short and long term.

Disputes and stand-offs between Kuwait’s emirs and its boisterous parliament are nothing new. Parliament has been dissolved, and the constitution suspended, numerous times over the past 40 years. The country has held four elections in the past four years.

Squabbling between the two sides is rooted in political disagreements and this most recent outbreak is no different.

A major factor behind the latest dissolution is believed to have been parliament’s objection to Sheikh Mishal’s choice of crown prince. Although the crown prince is nominated by the emir, the appointment has to be ratified by the parliament.

But these political, and sometimes personal, disputes have real consequences for Kuwait’s economy and financial system and, ultimately, for the long-term welfare of its citizens.

Kuwait is a prosperous country. If we take a snapshot today, we see it producing nearly 2.5 million barrels of oil per day (bpd), and there are plans under way to increase production capacity to 4 million bpd by 2035.

State foreign reserves are around $930 billion, according to National Bank of Kuwait, the country’s largest bank. With a population of a little over 4 million, its GDP per capita is one of the highest in the world.

Squabbling between the two sides is rooted in political disagreements and this most recent outbreak is no different.

A major factor behind the latest dissolution is believed to have been parliament’s objection to Sheikh Mishal’s choice of crown prince. Although the crown prince is nominated by the emir, the appointment has to be ratified by the parliament.

But these political, and sometimes personal, disputes have real consequences for Kuwait’s economy and financial system and, ultimately, for the long-term welfare of its citizens.

Kuwait is a prosperous country. If we take a snapshot today, we see it producing nearly 2.5 million barrels of oil per day (bpd), and there are plans under way to increase production capacity to 4 million bpd by 2035.

State foreign reserves are around $930 billion, according to National Bank of Kuwait, the country’s largest bank. With a population of a little over 4 million, its GDP per capita is one of the highest in the world.

In March this year, rating agency Fitch described Kuwait’s fiscal and external balance sheets as among the strongest of any of the governments it rates.

But when we look at long-term trends, the picture is more complex and less secure.

Kuwaiti government spending remains overwhelmingly dependent on oil and gas revenues. The government has made almost no progress, over many decades, in diversifying the economy away from oil, or in reducing the huge burden of government salaries and welfare payments.

Oil and gas revenues currently account for nearly 70 percent of total income and, according to IMF projections, will continue to do so for the rest of the decade.

These revenues have served the country well in the past, despite the volatility of oil prices, but such overwhelming dependence looks foolhardy when consumers worldwide are striving to reduce consumption of oil and gas and investors and energy firms have pivoted towards renewables.

Nearly all of the Kuwaiti government’s non-oil and gas revenue arises from overseas investments and from dividends from state-owned companies. Tax revenues account for less than 1 percent of total government income.

Looking beyond the fiscal imperative to diversify the economy is the need to provide employment opportunities for Kuwaiti citizens.

No less than 84 percent of the Kuwaiti workforce was employed by the government at the end of 2022. It is hardly surprising that nearly half of government expenditure is allocated to the salaries of public employees.

Pressure for social spending will increase in the years ahead. A World Bank report, published last year, showed that levels of obesity and Type 2 diabetes were higher in Kuwait than in any of the other GCC countries and nearly double the average in OECD countries.

Partly as a result of this, the World Bank estimated that Kuwait’s old age dependency ratio – the number of people over 65 years old in relation to those of working age – will be nearly double that of its neighbours by 2040.

Kuwait is also a country that is being significantly affected, even today, by climate change. Temperatures during the summer can exceed 50 degrees, making Kuwait one of the hottest places on earth.

These are difficult and complex challenges, both economic and social, but they are hardly unique to Kuwait. That they are, in some cases, more acute in Kuwait than elsewhere is due to decades’ long procrastination and political paralysis.

The government’s General Reserve Fund, which held most of its liquid assets, was entirely depleted in September 2020, according to Kuwait’s own ministry of finance. With AA ratings, the obvious solution was to borrow money – Kuwait’s debt-to-GDP ratio is less than 5 percent. Yet the parliament has still not passed a so-called ‘Liquidity Law‘ that would allow modest issuance of foreign currency debt.

The parliament also held up the introduction of Value Added Tax (VAT), making Kuwait one of two of the six GCC countries not to fulfil a joint commitment to implement a minimum VAT of 5 percent.

Over the past four years, all three of the big international credit rating agencies have downgraded the government of Kuwait.

In their rating reports, all agencies cited a dysfunctional and slow-moving political environment that was reducing the country’s financial flexibility and delaying much needed economic and financial reform.

Politics matters.

It is unrealistic to think that after decades of enmity the ruling family and the parliament will soon form a harmonious working relationship.

But they do need to find some common ground that will enable them to start addressing fundamental economic and social issues while the country still has large financial reserves and strong credit ratings.

Time is running out.

Andrew Cunningham writes and consults on risk and governance in Middle East and sharia-compliant banking systems


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ICD and JSC Ziraat Bank Collaborate to Boost Uzbekistan’s Private Sector

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At the 3rd Tashkent Investment Forum, the Islamic Corporation for the Development of the Private Sector (ICD) and JSC Ziraat Bank Uzbekistan took a significant step forward in their partnership to empower small and medium-sized enterprises (SMEs) and foster economic growth in Uzbekistan. The forum, held in the capital city of Uzbekistan, brought together key stakeholders from the public and private sectors to discuss investment opportunities and economic development strategies for the region. The collaboration between the Islamic Corporation for the Development of the Private Sector (ICD) and JSC Ziraat Bank Uzbekistan is aimed at boosting the private sector in Uzbekistan.

During the forum, ICD and JSC Ziraat Bank Uzbekistan formalized an expression of intent to collaborate on various initiatives aimed at supporting SMEs. One of the key elements of this collaboration is the provision of a Line of Financing (LoF) facility by ICD to JSC Ziraat Bank Uzbekistan. This LoF facility will enable the bank to fund private sector projects as an agent of ICD, thereby providing SMEs with access to the necessary capital to initiate and grow their businesses.

The partnership between ICD and JSC Ziraat Bank Uzbekistan is expected to have a significant impact on the SME landscape in Uzbekistan. By equipping entrepreneurs with the resources they need to succeed, this collaboration will not only support the growth of individual businesses but also contribute to the overall economic development of the country. SMEs play a crucial role in driving economic growth, creating jobs, and fostering innovation, and this partnership will help strengthen the SME ecosystem in Uzbekistan.

JSC Ziraat Bank Uzbekistan, as a strategic partner for ICD, brings a wealth of experience and expertise to the table. As a prominent commercial bank with foreign capital, JSC Ziraat Bank Uzbekistan has a strong track record of supporting SMEs and promoting economic development. The bank’s partnership with ICD further underscores its commitment to advancing the private sector in Uzbekistan and its dedication to supporting the country’s economic growth.

ICD, for its part, is a leading multilateral development financial institution that focuses on supporting the economic development of its member countries through the provision of finance and advisory services to private sector enterprises. By partnering with JSC Ziraat Bank Uzbekistan, ICD is furthering its mission of promoting economic development and fostering entrepreneurship in Uzbekistan and across the Islamic world.

The LoF facility provided by ICD to JSC Ziraat Bank Uzbekistan is just one example of the many initiatives that the two entities are undertaking to support SMEs in Uzbekistan. In addition to providing financial support, the partnership between ICD and JSC Ziraat Bank Uzbekistan will also include capacity-building initiatives and technical assistance programs to help SMEs succeed in today’s competitive business environment.

Overall, the partnership between ICD and JSC Ziraat Bank Uzbekistan represents a significant step forward in supporting SMEs and fostering economic growth in Uzbekistan. By working together, these two institutions are helping to create a more vibrant and dynamic private sector in Uzbekistan, which will ultimately benefit the country’s economy and its people. The collaboration between the Islamic Corporation for the Development of the Private Sector (ICD) and JSC Ziraat Bank Uzbekistan is expected to have a far-reaching impact on the private sector in Uzbekistan.


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