Jersey's value to Africa

Jersey’s Value to Africa

Jersey Finance has commissioned respected independent research firm, Capital Economics, to identify what contribution Jersey can make to Africa and whether international finance centres can be a catalyst for growth in developing countries.

Many African countries are known for their endemic poverty and weak economic performance. Despite making up 15% of the world’s population, the entire continent accounts for just 4% of the global economy.

However there are signs that this is changing. Over the last decade, Africa’s economy has grown by an average 5.2% each year making it one of the fastest growing regions in the world. But, for this growth to continue, by 2040, a cumulative investment of $85 trillion, which is the equivalent of one year’s global GDP, must be generated into infrastructure, machinery, buildings and homes.

This investment cannot be plugged locally alone. This report looks at how international finance centres, and Jersey in particular, can play a fundamental role in filling that gap and putting Africa on track to fulfil its economic potential.

The full report together with a summary report and associated press release are available below:

 

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Jersey's Value to Africa

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Gross domestic product, 2013
US$ 295,396,925

Investments as a share of gross domestic product, 2013
32.94 %

Population, 2013
39,208 

Gross domestic product, 2040 (in 2013 prices)
US$  756,305,791

Population, 2040
51,810

Algeria, combined with South Africa, Nigeria, Egypt and Angola, accounts for nearly two-thirds of total African gross domestic product.

Its recent economic performance has been mixed although real output expanded 3% in 2013, which was driven mainly by domestic demand, including public investment. However the country’s economic ills are most evident in the hydrocarbon sector, with levels of oil production at the start of 2014 20% below its peak in 2008. This is largely because foreign energy companies have refrained from investing due to the poor business environment and security concerns as highlighted by 2013’s hostage situation in the Tigantourine gas facility. The near future is not without its challenges, with little hope of immediate progress in improving the business environment and raising investment. Any efforts at reforms are also likely to fall at the first hurdle due to significant vested interests in the country. Nevertheless, a modestly growing working population, a sound external position, and an expected recovery in oil and gas offer the potential for the economy to expand by almost 4% each year.

Gross domestic product, 2013
US$ 134,139,102

Investments as a share of gross domestic product, 2013
13.28 %

Population, 2013
21,472 

Gross domestic product, 2040 (in 2013 prices)
US$  410,990,541

Population, 2040
44,245

Angola combined with South Africa, Nigeria, Algeria and Egypt, accounts for nearly two-thirds of total African gross domestic product.

After its economy was destroyed by almost three decades of civil war, Angola has grown rapidly recently, at a rate of more than 10% per year, on the back of close links to China’s demand for oil and other natural resources. However, after a crash in oil prices in 2009 and 2010, which it has yet to fully recover, accompanied by China’s slowing economy, Angola will be unlikely to maintain this high level of growth. A radical change in economic policy in the short term seems unlikely under the current government, which will remain in power until 2017 following their victory in 2012. Strong demographic prospects should help to alleviate this (about 60% of the country’s 21 million people are under 25 years of age) and, along with more investment needed in skills and infrastructure, Angola could grow just over 4% each year in the coming years.

Gross domestic product, 2013
US$ 16,750,982

Investments as a share of gross domestic product, 2013
25.61 %

Population, 2013
10,323 

Gross domestic product, 2040 (in 2013 prices)
US$  76,977,285

Population, 2040
18,838

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 33,099,668

Investments as a share of gross domestic product, 2013
39.09 %

Population, 2013
2,021 

Gross domestic product, 2040 (in 2013 prices)
US$  81,343,714

Population, 2040
 2,564

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 26,841,906

Investments as a share of gross domestic product, 2013
22.57 %

Population, 2013
16,935

Gross domestic product, 2040 (in 2013 prices)
US$  133,609,331

Population, 2040
33,472

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 6521418

Investments as a share of gross domestic product, 2013
19.57 %

Population, 2013
10,163 

Gross domestic product, 2040 (in 2013 prices)
US$  38,805,827

Population, 2040
 21,082

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 53,916,647

Investments as a share of gross domestic product, 2013
20.61 %

Population, 2013
22,254 

Gross domestic product, 2040 (in 2013 prices)
US$ 146,197,690

Population, 2040
40,584

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 2,164,070

Investments as a share of gross domestic product, 2013
36.50 %

Population, 2013
499 

Gross domestic product, 2040 (in 2013 prices)
US$  7,623,168

Population, 2040
 613

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 2,501,774

Investments as a share of gross domestic product, 2013
8.67 %

Population, 2013
4,616

Gross domestic product, 2040 (in 2013 prices)
US$ 11,502,162

Population, 2040
7,399

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 32,569,666

Investments as a share of gross domestic product, 2013
26.46 %

Population, 2013
12,825 

Gross domestic product, 2040 (in 2013 prices)
US$ 132,301,083

Population, 2040
26,888

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 945,962

Investments as a share of gross domestic product, 2013
19.66 %

Population, 2013
735

Gross domestic product, 2040 (in 2013 prices)
US$  4,729,535

Population, 2040
 1,281

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 43,732,254

Investments as a share of gross domestic product, 2013
21.06 %

Population, 2013
67,514 

Gross domestic product, 2040 (in 2013 prices)
US$  272,314,072

Population, 2040
128,755

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 2,396,793

Investments as a share of gross domestic product, 2013
29.55 %

Population, 2013
873

Gross domestic product, 2040 (in 2013 prices)
US$  8,076,740

Population, 2040
 1,168

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 539,808,210

Investments as a share of gross domestic product, 2013
14.18 %

Population, 2013
82,056

Gross domestic product, 2040 (in 2013 prices)
US$  1,440,339,180

Population, 2040
113,001

Share of African Funds in Jersey
6.7 %

Egypt combined with South Africa, Nigeria, Algeria and Angola, accounts for nearly two-thirds of total African gross domestic product.

The volatile political situation has caused the Egyptian economy to struggle since 2011. Although we expect growth to strengthen over the next couple of years, the recovery is likely to be slow going unless there is a dramatic shift in stability. For the time being, it looks like the economy will continue to be driven by domestic demand, supported by two Gulf-funded stimulus packages. Gulf financing has also eased strains in the balance of payments. However, little progress has been made on tackling deeper-seated problems such as the dire fiscal position and poor business environment. Growth in the near-term is likely to remain below the rate of 4.5% or so that is needed to reduce the unemployment rate (which currently stands at 13.4%). A positive demographic outlook means there is the potential for decent rates of growth, if the volatile politics abate and necessary reforms can be made.

Egypt currently has a 25.2% share of the total African fund business in Jersey by location of assets.

Gross domestic product, 2013
US$ 17,691,242

Investments as a share of gross domestic product, 2013
58.42 %

Population, 2013
757

Gross domestic product, 2040 (in 2013 prices)
US$ 47,880,778

Population, 2040
 1,378

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 4,477,089

Investments as a share of gross domestic product, 2013
8.77 %

Population, 2013
6,333

Gross domestic product, 2040 (in 2013 prices)
US$  12,654,883

Population, 2040
 12,040

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 128,537,868

Investments as a share of gross domestic product, 2013
28.30 %

Population, 2013
94,101

Gross domestic product, 2040 (in 2013 prices)
US$  640,826,064

Population, 2040
163,553

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 32,562,069

Investments as a share of gross domestic product, 2013
30.64 %

Population, 2013
1,672

Gross domestic product, 2040 (in 2013 prices)
US$  107,175,338

Population, 2040
2,840

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 3,628,691

Investments as a share of gross domestic product, 2013
18.02 %

Population, 2013
1,849 

Gross domestic product, 2040 (in 2013 prices)
US$  19,433,544

Population, 2040
 3,933

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 89,657,471

Investments as a share of gross domestic product, 2013
33.45 %

Population, 2013
25,905 

Gross domestic product, 2040 (in 2013 prices)
US$  273,033,618

Population, 2040
40,715

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 13,215,028

Investments as a share of gross domestic product, 2013
19.15 %

Population, 2013
11,745

Gross domestic product, 2040 (in 2013 prices)
US$ 76,772,147

Population, 2040
 20,898

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 2,054,753

Investments as a share of gross domestic product, 2013
5.46 %

Population, 2013
1,704

Gross domestic product, 2040 (in 2013 prices)
US$ 10,308,073

Population, 2040
 2,981

Share of African Funds in Jersey
$item.Share %

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 80,367,823

Investments as a share of gross domestic product, 2013
20.48 %

Population, 2013
44,354

Gross domestic product, 2040 (in 2013 prices)
US$ 371,238,538

Population, 2040
81,354

Share of African Funds in Jersey
12.7 %

Gross domestic product, 2013
US$ 4,678,412

Investments as a share of gross domestic product, 2013
33.03 %

Population, 2013
2,074

Gross domestic product, 2040 (in 2013 prices)
US$ 19,231,784

Population, 2040
 2,612

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 3,016,705

Investments as a share of gross domestic product, 2013
- %

Population, 2013
4,294

Gross domestic product, 2040 (in 2013 prices)
US$  18,031,927

Population, 2040
 7,861

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 71,304,406

Investments as a share of gross domestic product, 2013
21.12 %

Population, 2013
6,202

Gross domestic product, 2040 (in 2013 prices)
US$ 136,393,835

Population, 2040
7,978

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 22,328,343

Investments as a share of gross domestic product, 2013
25.19 %

Population, 2013
22,925 

Gross domestic product, 2040 (in 2013 prices)
US$  126,019,078

Population, 2040
45,289

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 14,378,507

Investments as a share of gross domestic product, 2013
20.42 %

Population, 2013
16,363

Gross domestic product, 2040 (in 2013 prices)
US$  108,083,546

Population, 2040
33,115

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 16,883,412

Investments as a share of gross domestic product, 2013
18.23 %

Population, 2013
15,302

Gross domestic product, 2040 (in 2013 prices)
US$  125,508,576

Population, 2040
34,838

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 8,628,208

Investments as a share of gross domestic product, 2013
35.77 %

Population, 2013
3,890

Gross domestic product, 2040 (in 2013 prices)
US$ 49,076,015

Population, 2040
 6,776

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 19,980,212

Investments as a share of gross domestic product, 2013
23.23 %

Population, 2013
1,244

Gross domestic product, 2040 (in 2013 prices)
US$  58,555,808

Population, 2040
 1,271

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 180,086,491

Investments as a share of gross domestic product, 2013
48.74 %

Population, 2013
33,008

Gross domestic product, 2040 (in 2013 prices)
US$  437,684,698

Population, 2040
41,404

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 28,154,372

Investments as a share of gross domestic product, 2013
48.74 %

Population, 2013
25,834

Gross domestic product, 2040 (in 2013 prices)
US$ 173,868,038

Population, 2040
48,861

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 18,866,789

Investments as a share of gross domestic product, 2013
24.69 %

Population, 2013
2,303

Gross domestic product, 2040 (in 2013 prices)
US$  54,283,099

Population, 2040
 3,420

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 14,781,177

Investments as a share of gross domestic product, 2013
34.21 %

Population, 2013
17,831

Gross domestic product, 2040 (in 2013 prices)
US$ 118,309,514

Population, 2040
49,756

Share of African Funds in Jersey
$item.Share %

 

Gross domestic product, 2013
US$ 849,865,252

Investments as a share of gross domestic product, 2013
24.57 %

Population, 2013
173,615

Gross domestic product, 2040 (in 2013 prices)
US$  4,924,561,076

Population, 2040
350,720

Share of African Funds in Jersey
4.4 %

Nigeria combined with South Africa, Angola, Algeria and Egypt, accounts for nearly two-thirds of total African gross domestic product and is the largest economy on the continent.

Recent revisions to historic gross domestic product data confirmed Nigeria as the largest economy in Africa with nominal gross domestic product of over US$500 billion in 2013, surpassing that of South Africa. However, with a population three times as large, Nigeria is still underperforming on a per-capita basis.

Looking ahead, a positive growth outlook means that Nigeria should extend its lead over the region and, as has been the case over the past few years, growth is likely to be driven by consumer-facing sectors such as the retail and wholesale trade industry, and telecoms. While oil accounts for 70% of government revenue, its share of the economy has decreased in recent years, which may dampen the positive outlook slightly.

According to the United Nations, Nigeria is projected to have the third largest population in the world next century, after China and India. While this rapidly expanding labour force has the potential to lead to high rates of growth, it comes with challenges. The rate of unemployment in Nigeria rose to 27.4% in 2012 from 12.7% in 2007, which is largely attributed to population growth.

The rapidly expanding labour force, coupled with ongoing structural reforms point to high rates of potential growth and the economy could expand at an average rate of 6.7% each year to 2040. Nigeria’s political instability and concerns over security in the country remain the key domestic risk.

Nigeria currently accounts for 2.3% of the African fund business in Jersey.

Gross domestic product, 2013
US$ 21,307,283

Investments as a share of gross domestic product, 2013
33.51 %

Population, 2013
4,448

Gross domestic product, 2040 (in 2013 prices)
US$  60,947,002

Population, 2040
 8,556

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 18,114,869

Investments as a share of gross domestic product, 2013
23.02 %

Population, 2013
11,777

Gross domestic product, 2040 (in 2013 prices)
US$  83,679,905

Population, 2040
 21,601

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 423,512

Investments as a share of gross domestic product, 2013
41.86 %

Population, 2013
193

Gross domestic product, 2040 (in 2013 prices)
US$  1,850,005

Population, 2040
 335

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 27,675,944

Investments as a share of gross domestic product, 2013
26.82 %

Population, 2013
14,133

Gross domestic product, 2040 (in 2013 prices)
US$ 173,970,150

Population, 2040
27,209

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 2,459,471

Investments as a share of gross domestic product, 2013
36.36 %

Population, 2013
93

Gross domestic product, 2040 (in 2013 prices)
US$  7,590,567

Population, 2040
 100

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 9,392,523

Investments as a share of gross domestic product, 2013
14.83 %

Population, 2013
6,092 

Gross domestic product, 2040 (in 2013 prices)
US$ 40,768,052

Population, 2040
 9,218

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ n/a

Investments as a share of gross domestic product, 2013
n/a %

Population, 2013
n/a

Gross domestic product, 2040 (in 2013 prices)
US$ n/a

Population, 2040
n/a

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 594,213,730

Investments as a share of gross domestic product, 2013
19.36 %

Population, 2013
52,776

Gross domestic product, 2040 (in 2013 prices)
US$  1,329,374,853

Population, 2040
60,938

Share of African Funds in Jersey
55.2 %

South Africa combined with Nigeria, Angola, Algeria and Egypt, accounts for nearly two-thirds of total African gross domestic product. Over two-fifths of African wealth in Jersey trust structures comes from South Africa and the country accounts for a 26.3% share of the African fund business in Jersey.

In contrast to many of its peers, South Africa’s growth has disappointed over much of the last 20 years, despite it having a relatively stable economy, plentiful natural and labour resources, and developed financial markets. Between 1996 and 2008, its economy grew at an average 3.2%. Since the financial crisis, growth has slowed even further to just 1.9% in 2013. This reflects a sluggish external environment and domestic labour market troubles. Strikes have ravaged the mining sector, holding back output, with knock on effects to manufacturing industries. South Africa also suffers from high unemployment, and a combined current account and fiscal deficit of roughly 10% of GDP.

Working age population growth is set to be just 0.7% per annum through to 2040. Widespread supply-side measures are needed to increase medium-term growth, including raising investment levels and reforming the labour market. Although unlikely to be a star performer, the economy has the potential to grow above 3% each year, provided reform is not hampered.

Gross domestic product, 2013
US$ 15,252,725

Investments as a share of gross domestic product, 2013
11.22 %

Population, 2013
11,296 

Gross domestic product, 2040 (in 2013 prices)
US$  92,317,494

Population, 2040
 20,940

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 99,888,644

Investments as a share of gross domestic product, 2013
19.99 %

Population, 2013
37,964 

Gross domestic product, 2040 (in 2013 prices)
US$ 258,861,249

Population, 2040
66,169

Share of African Funds in Jersey
$item.Share %

 

Gross domestic product, 2013
US$ 7,769,510

Investments as a share of gross domestic product, 2013
9.98 %

Population, 2013
1,250

Gross domestic product, 2040 (in 2013 prices)
US$  20,046,558

Population, 2040
 1,664

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 84,493,589

Investments as a share of gross domestic product, 2013
34.19 %

Population, 2013
49,253

Gross domestic product, 2040 (in 2013 prices)
US$  443,631,802

Population, 2040
102,686

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 7,7389,574

Investments as a share of gross domestic product, 2013
18.77 %

Population, 2013
6,817

Gross domestic product, 2040 (in 2013 prices)
US$  37,917,390

Population, 2040
12,195

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 109,213,692

Investments as a share of gross domestic product, 2013
23.27 %

Population, 2013
10,997

Gross domestic product, 2040 (in 2013 prices)
US$ 249,564,467

Population, 2040
12,969

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 55,762,542

Investments as a share of gross domestic product, 2013
26.40 %

Population, 2013
37,579

Gross domestic product, 2040 (in 2013 prices)
US$  400,483,369

Population, 2040
82,659

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 25,500,425

Investments as a share of gross domestic product, 2013
25.50 %

Population, 2013
14,539

Gross domestic product, 2040 (in 2013 prices)
US$  168,803,515

Population, 2040
33,552

Share of African Funds in Jersey
$item.Share %

Gross domestic product, 2013
US$ 11,145,918

Investments as a share of gross domestic product, 2013
 14.01 %

Population, 2013
14,150

Gross domestic product, 2040 (in 2013 prices)
US$  52,676,387

Population, 2040
 23,313

Share of African Funds in Jersey
$item.Share %

The following report, entitled ‘Jersey’s Value to Africa’ has been prepared by the respected independent firm Capital Economics.

Published on 12 November 2014, it seeks to quantify Africa’s investment gap and identify how IFCs, in particular Jersey, can help plug that gap.

The full report together with a summary report and associated press release are available below:

The Jersey's Value to Africa report was launched at Chatham House in London on 12 November. Below are some of the highlights.