Latest news with #capitalflows
Zawya
05-06-2025
- Business
- Zawya
Future of business in Africa will be shaped by partnerships
Across Sub-Saharan Africa, businesses are navigating an economic environment shaped by evolving global and regional forces. Currency movements, changing capital flows, and shifts in trade dynamics continue to influence strategic decisions across industries. While these conditions introduce complexity, they also present opportunities for businesses and institutions to adapt, reposition, and grow. Recent years have seen notable adjustments in capital flows, particularly as global financial conditions tighten. According to data from the African Development Bank (AFDB), net financial flows to developing countries declined significantly in 2022, a trend reflected across multiple emerging markets. In 2023, many African currencies, including those in East Africa, came under pressure. Policymakers and financial institutions responded with targeted interventions aimed at preserving economic stability and curbing inflation. While each country's response has been tailored to its context, a common thread is the increasingly proactive role of monetary authorities in managing volatility. This coordination has been vital in restoring investor confidence and facilitating a more predictable operating environment for businesses that rely on cross-border trade, capital access, and foreign currency exposure management. These efforts are beginning to lay a foundation for more sustainable and balanced growth. Amid these developments, corporate and institutional clients are reassessing their operating models. There is a clear shift toward greater financial agility, with firms placing increased focus on liquidity management and more adaptive funding strategies. Shorter-tenor financing, particularly in trade and working capital, has gained traction as businesses seek flexibility in managing both cost and timing of capital. At the same time, currency risk mitigation, through hedging and structured treasury solutions has become a more central component of financial planning. We are also observing a shift in boardroom conversations away from purely cost-of-capital considerations toward more strategic thinking about capital structure, portfolio diversification, and risk-adjusted returns. Many clients are re-evaluating capital expenditure pipelines, not as a retreat from investment, but as a recalibration aligned to macro cycles and evolving market demand. This is particularly evident in infrastructure, manufacturing, and services sectors, where financing decisions are increasingly tied to operational agility and scenario-based planning. These trends are also redefining the role of financial institutions. The traditional transaction-driven model of banking is no longer sufficient in today's operating environment. Clients expect more: timely insights, sectoral understanding, and a partnership approach that goes beyond credit. In response, we have sharpened our focus on integrated client engagement, embedding ourselves in the realities of each business and designing financial solutions that align with both immediate needs and long-term strategy. As part of this effort, we recently hosted a regional economic forum convening clients, investors, and policymakers. The dialogue centred on practical strategies for navigating uncertainty, enhancing yield in a moderating interest rate cycle, and optimising financing structures in capital-constrained markets. The conversations underscored the importance of data-driven decision-making, and of building institutional resilience through a better understanding of both macro trends and operational risks. This form of engagement reflects a broader principle: our role must extend beyond capital provision. It includes strategic advisory, cross-market insight, and the ability to structure solutions that enable growth across varied and often complex environments. With a pan-African presence, Absa is well positioned to support clients operating across jurisdictions — whether through access to capital markets, foreign exchange and risk management capabilities, or bespoke structuring for regional and cross-border transactions. As businesses scale across the continent, there is growing demand for solutions that are both locally relevant and regionally harmonised. The emergence of initiatives such as the African Continental Free Trade Area (AfCFTA) underscores the need for financial partners who can navigate regulatory diversity while supporting seamless cross-border execution. Looking ahead, the future of business in Sub-Saharan Africa will be shaped by the partnerships we forge today. Long-term value creation will depend on how well we understand our clients' objectives, their constraints, and the environment in which they operate. Resilience, in this context, is not simply the ability to withstand disruption. It is the capacity to recognise opportunity in changing conditions and to respond with clarity, foresight, and the right support. That is the kind of partnership we should commit to, one grounded in trust, informed by insight, and designed to endure. The writer is the Corporate and Investment Banking Managing Principal at Absa Bank Kenya Plc. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
CNA
20-05-2025
- Business
- CNA
Stablecoins stoke volatility in Brazil capital flows, says central banker
LONDON :The surge in popularity of U.S. dollar-backed stablecoins as a way of transferring money abroad is increasing the volatility of Brazilian capital flows, Brazil's central bank deputy governor said on Tuesday. Brazilians' crypto asset usage has surged over the past two to three years, with around 90 per cent of the flow linked to stablecoins - digital money pegged to leading currencies like the U.S. dollar - its central bank estimates. Deputy Governor Renato Gomes said one of the "worrisome" issues was that they can be a way to bypass the normal checks and balances for converting Brazilian real into dollars and transferring it in and out the country. "They offer a bypass instance," Gomes said at a conference in London hosted by monetary policy think-tank OMFIF. "You can get the stablecoins, and when you get to the United States or anywhere else, you can cash out the stablecoin and essentially use an account in dollars without all the usual regulation." It is a route being "heavily used" for remittances he added. One straightforward example is that some traditional ATMs in parts of the U.S. now allow dollars to be withdrawn from some stablecoin wallets. "Capital flows become more volatile," Gomes said, "essentially because almost anyone can use stablecoins to send money in and out of the country." There are regulatory issues too. The largest issuer of Brazilian real-backed stablecoins was based in Switzerland, for example, Gomes said. "We don't have reach on these issuers," he said. "So in a sense, regulating the issuers of stablecoins is something that's going to require a lot of international cooperation."
Reuters
20-05-2025
- Business
- Reuters
Stablecoins stoke volatility in Brazil capital flows, says central banker
LONDON, May 20 (Reuters) - The surge in popularity of U.S. dollar-backed stablecoins as a way of transferring money abroad is increasing the volatility of Brazilian capital flows, Brazil's central bank deputy governor said on Tuesday. Brazilians' crypto asset usage has surged over the past two to three years, with around 90% of the flow linked to stablecoins - digital money pegged to leading currencies like the U.S. dollar - its central bank estimates. Deputy Governor Renato Gomes said one of the "worrisome" issues was that they can be a way to bypass the normal checks and balances for converting Brazilian real into dollars and transferring it in and out the country. "They offer a bypass instance," Gomes said at a conference in London hosted by monetary policy think-tank OMFIF. "You can get the stablecoins, and when you get to the United States or anywhere else, you can cash out the stablecoin and essentially use an account in dollars without all the usual regulation." It is a route being "heavily used" for remittances he added. One straightforward example is that some traditional ATMs in parts of the U.S. now allow dollars to be withdrawn from some stablecoin wallets. "Capital flows become more volatile," Gomes said, "essentially because almost anyone can use stablecoins to send money in and out of the country." There are regulatory issues too. The largest issuer of Brazilian real-backed stablecoins was based in Switzerland, for example, Gomes said. "We don't have reach on these issuers," he said. "So in a sense, regulating the issuers of stablecoins is something that's going to require a lot of international cooperation."
Zawya
15-05-2025
- Business
- Zawya
Calling the 'Global South', your time is ... now?: McGeever
(The opinions expressed here are those of the author, a columnist for Reuters.) ORLANDO, Florida - The era of 'U.S. exceptionalism' may be over – and with it the Washington-led world economic and financial order of the last 50 years. This leaves investors with a big question, how will this reshape capital flows? The most obvious destination is Europe, home to the world's second-largest economy and second-biggest reserve currency, where markets are deep and liquid and the rule of law reigns supreme. The so-called 'Global South' may seem less attractive. Its 100-plus disparate countries, excluding China, carry the typical smorgasbord of emerging market risks, including political instability, legal concerns and policymaking credibility. But the global economic and investment landscape is changing rapidly and perhaps irrevocably, and investors may be skittish about once again finding themselves over-concentrated in any one region. Investors with long-term horizons and high risk thresholds may therefore increasingly consider boosting their allocations to this enormous and varied 'bloc'. These countries have long punched below their financial market weight. But could they be poised to benefit from a global capital reallocation shift? That's among the findings in a report published last week by Deutsche Bank strategists, 'The Global South: A strategic approach to the world's fourth bloc'. "The time for the Global South is now," states the report, which broadly defines the bloc as the 134 member countries of the G77 group of nations, excluding China, Russia, Singapore and a few others, adding in Mexico, Turkey and some central Asian countries. Some numbers here are worth noting. The group is home to almost two-thirds of the world's working age population, produces 40% of the world's energy and key transition metals, accounts for a quarter of global trade, and has attracted nearly a quarter of all inward FDI over the past decade. Indeed, the Boston Consulting Group says foreign direct investment in the Global South in 2023 totaled $525 billion, surpassing FDI into advanced economies of $464 billion. And while it is far too early to say how countries will align politically, economically, or militarily in the years ahead, there are already signs of rotation of capital into the Global South and away from China. Deutsche Bank's report notes that foreign investment into the Global South has held relatively steady in recent years while flows into China have collapsed to near zero. DIVERSIFICATION AND VALUE GENERATION China's economic rise in recent decades has been one of the most astonishing in human history. In 1990, China accounted for only 2% of developed economies' GDP. By 2021 that figure had reached 33%, almost matching the Global South's then share. But China's growth rates have stalled, especially since the pandemic. The International Monetary Fund forecasts China's share of advanced economies' GDP will end this decade around 35%, while the Global South's share will rise to a new high of 40%. "In the event the U.S. trade war remains concentrated against China, the Global South could evolve into ... a source of diversification and value generation for investors," Deutsche Bank's analysts argue. From an equity allocation perspective, there is a lot of space to grow. The Global South made up a mere 11% of global market capitalization at the end of last year, with two countries - India and Saudi Arabia - accounting for more than half this share. If the dominance of U.S. equities wanes - they currently make up more than 70% of global market cap - even a tiny reallocation to this group could have a big impact on valuations in these countries. The risks, however, are manifold and many were on display during the market turbulence sparked by U.S. President Donald Trump's tariffs. Figures released by the Institute of International Finance last week showed that portfolio flows to emerging markets came to a "standstill" in April. While the Trump administration is rolling back its initial plan to slap enormous tariffs on much of South East Asia, investors may still be anxious about plowing too much capital into countries that could yet get caught in the U.S. crosshairs. "The current environment differs fundamentally from past episodes. This is not an exogenous shock but a deliberate policy action with structural objectives. As a result, the scope for rapid normalization is limited," the IIF said. But what really matters here are not "rapid" moves, but the structural changes in the global economy that the U.S. administration's unorthodox policies may have catalyzed. It's good to remember that Chinese exports to 'conductor economies' in the Global South have doubled since the Trump's first trade war in 2018. Given how unreliable the US now appears, it is reasonable to assume that both China and Europe may be seeking to further diversify their export markets. So perhaps the time is not 'now' for the Global South, but it could be coming soon. (The opinions expressed here are those of the author, a columnist for Reuters)
