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By Dave Mohr (Chief Investment Strategist) &amp; Izak Odendaal (Investment Strategist), Old Mutual Multi-Managers
&nbsp;
Political concerns have dominated markets in recent months. It has mostly been US President Donald Trump throwing his weight around (tariffs, Iran, North Korea), but in the past week Italy has been the source of market unease. The attempt by Italy’s two populist parties to form a government including an anti-euro finance minister was blocked by the Italian president. The issue is not the instability of Italy’s governments. After all, the country has on average changed government once a year since the end of World War 2. The issue is that Italy is now a key part of the Eurozone (its third largest economy, in fact), and any hint that a new government might pull out of the single currency will cause chaos. Unlike ‘Brexit’, where the UK will continue to use the pound once the UK exits the European Union, an ‘Italeave’ or ‘Quitaly’ event would result in the redenomination of all debts, assets and contracts into a new, probably weaker currency.
We saw this movie with Greece between 2011 and 2014, but Italy is much bigger and systemically more important than Greece. It is too big to fail, but also too big to bail out, as often noted. However, this also means that Italy is much less likely to take the painful choice of leaving the euro (Greece bit the bullet of painful austerity instead of leaving). By Friday, markets breathed a sigh of relief after a second attempt at forming a government succeeded, this time with a less controversial choice of finance minister and a more technocratic cabinet overall. This might not be the last time these concerns bubble to the surface, given that the Italian people are right to feel aggrieved. Italy’s economic performance has been dismal over the past decade, and real per capita incomes never recovered to pre-crisis (2008) levels.
&nbsp;
Returns under pressure
The more pressing issue for investors is that returns from the main asset classes (with the notable exception of local fixed interest) have been disappointing over the past three years. The largest component of a typical Regulation 28 compliant balanced fund is local equities. The annual return including dividends over three years on the FTSE/JSE All Share Index was 5.4% at the end of May. Year-to-date returns are -4.3%, with May itself having been a deeply negative month (-3.5%). The FTSE/JSE Capped SWIX, our preferred local equity benchmark since it limits concentration risk, returned 3.5% per year over three years due to a more realistic and responsible weighting to Naspers, which returned 19% per year over the three years.
If we just focus on more recent returns, the underperformance is fairly widespread across sectors. Financials and Industrials were deeply negative in the first five months of 2018, while Resources have returned 8%. However, within the latter sector, gold and platinum miners have lost in excess of 20% this year while the heavyweight diversified miners have gained 17%. While Naspers enjoyed an incredible run over the past few years, 2018 has not been great, with a 12% decline to end May. British American Tobacco, the other mega-cap Industrial stock, is down 20% year-to-date.
&nbsp;
Local is global
It seems ironic that the local market is struggling so much at a time when optimism about the local economy has increased sharply. But the JSE no longer reflects the local economy, now that its largest constituents are global firms. It is also true that optimism in the local economy has probably increased faster than activity. This week’s first quarter GDP release is likely to be disappointing, but the overall economic outlook is still an improvement on the previous few years.
In fact, it is increasingly the case that major equity markets do not closely reflect their domestic economies anymore, being dominated instead by multinational firms that sell their wares across the globe, instead of focusing on a single market. Therefore, when thinking about investments, we need to take the health of the global economy into account. The OECD (a think-tank representing the world’s most advanced economies) stated in its latest economic outlook that, “trade and financial integration since the mid-1990s has made economies more dependent on developments abroad…Integration is particularly apparent in financial markets, with a common global factor increasingly determining domestic equity and government bond prices.”
What makes it tricky is that the global revenues of multinational firms are translated into their home currencies at prevailing exchange rates. In the case of South Africa, the rand ended May 5% stronger than the 2017 average rand-dollar exchange rate (of R13.30). The stronger currency not only reduces the rand returns from global markets, but also the rand earnings of global companies. With South African balanced funds now allowed up to 30% exposure to offshore assets (more if Africa is included), the typical South African balanced fund probably has direct and indirect global exposure in excess of 50%. If the rand’s strong run since January 2016 is running out of steam, it will be beneficial to local returns.
The OECD’s latest global growth forecast confirms the view that the underlying economic picture remains healthy, despite a sluggish first quarter, especially in Europe. Global growth of close to 4% is expected over the next two years, in line with the long-term average. In other words, not historically strong growth, but the best patch in several years. There are risks to this optimistic outlook – there always are. These include the increased protectionist stance of the US and the risk of a surging dollar if the Federal Reserve (Fed) hikes rates too aggressively. But with inflation still subdued, the Fed need not be in a hurry. The first inflation indication from May, the average hourly wages of workers, increased 2.7% year-on-year. This is still remarkably low given that unemployment declined to 3.8%.
&nbsp;
Valuations reasonable
Global equities (MSCI All Countries Word Index) were marginally positive in May and also year- to-date in US dollar terms. Over the past 12 months, global equity returns are a decent 12% and 8% over three years annualised. Given the recent weakness in price and strong earnings growth, equity markets are reasonably valued based on traditional valuation methods such as forward price: earnings (PE) ratios. These PE ratios across the major markets are somewhat above long-term averages, but not dramatically so, as long as expected earnings growth materialises. While global growth is solid and valuations reasonable, there is no reason to believe that the return outlook from equities has fundamentally deteriorated. One simply has to be patient.
&nbsp;
Fat years and lean years
The valuation of the local market is skewed by the size and rating of Naspers, which trades at a forward PE ratio of 24 due to its exposure to the Chinese internet giant, Tencent. Excluding Naspers, the local market is not expensive.
Chart 1 shows the rolling three-year annualised returns of the local and global equity markets (both in rand and with dividends reinvested) over the past 40 years. Equity returns have been trending lower since 2015, and this is clearly a source of concern for investors. However, the chart clearly shows that returns are cyclical, with fat years followed by lean years. Over time, there are more fat years than lean ones, and the average annual growth over this entire period is 20%. Staying out of the market means betting against this strong upward trend. You might get it right for a while, but over time the odds are stacked against you.
&nbsp;
Diversification helps
The impact of equity volatility can of course be cushioned by diversifying across other classes. Taking the other major asset classes in turn, developed market bonds are not attractive despite recent rate rises (though the knee-jerk sell-off in Italian debt created a terrific opportunity for the brave). Local bonds have stood out, delivering 5% year-to-date, 11% over 12 months and 8% per year over three years. But it remains an attractive asset class given high yields and low inflation. The Reserve Bank’s conservative stance of maintaining positive real interest rates also supports local fixed interest returns. Local property, for so long the darling asset class of local investors, slumped 19% this year, largely due to corporate governance and sustainability concerns over the Resilient stable of companies. It means that listed property is barely positive over three years. This too is a sector that has internationalised dramatically over the past decade, with 40% to 50% of revenue generated outside South Africa (depending on the choice of benchmark). The sell-off has created a much more attractive entry level, but the tough operating environment is likely to put downward pressure on distribution growth.
Unfortunately, nobody can manufacture returns (except through running a Ponzi scheme). We have to work with what the market gives us and then attempt to add some value through valuation-based active asset allocation and selecting the right fund managers within each asset class to do security selection. The market has not been giving us much. However, the return outlook from a diversified portfolio has not dramatically and permanently declined.

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Justina Crabtree
Source: <a href="https://www.cnbc.com/2018/06/01/south-africa-minimum-wage-the-beginning-of-a-difficult-process-finance-minister-nene.html">South Africa&#8217;s new minimum wage is the &#8216;beginning of a long, difficult process&#8217;: Finance minister</a>
<ul>
<li>South Africa&#8217;s introduction of a minimum wage marks &#8220;the beginning of a long, difficult process,&#8221; Minster of Finance Nhlanhla Nene has told CNBC.</li>
<li>Africa&#8217;s most industrialized economy introduced a minimum wage of 20 rand ($1.58) per hour earlier this week. The change was originally intended for May 1 but was delayed over adjustments made to the legislation.</li>
<li>South Africa is one of the most unequal societies in the world, and infamously suffers from high unemployment. This was 26.7 percent in the first quarter of 2018.</li>
</ul>
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/04/30103531/105165163-GettyImages-951075784.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Rodger Bosch | AFP | Getty Images"/>

 The introduction of South Africa&#8217;s new minimum wage is the start of a &#8220;long, difficult process,&#8221; the country&#8217;s minister of finance said Thursday.
South Africa&#8217;s parliament passed a minimum wage bill by a large majority on Tuesday, meaning that millions of workers will now earn 20 rand ($1.58) per hour. This is equivalent to 3,500 rand ($277) per month.
&#8220;It&#8217;s the beginning of a long, difficult process, because at the end of the day we&#8217;ve never had (a minimum wage),&#8221; Nhlanhla Nene told CNBC on Thursday at the OECD conference in Paris.
The minimum wage was due to be introduced on May 1 but was delayed due to government bodies redrafting legislation. South Africa&#8217;s main opposition party, the Democratic Alliance, opposed the bill. The country&#8217;s second-largest trade union, unhappy with the proposed wage, 
organized a strike in April 
 calling for a higher figure.
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/06/10125923/105244966-GettyImages-931267604.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Simon Dawson | Bloomberg | Getty Images"/>
South Africa is one of the most unequal societies in the world. According to the 
World Bank 
, the poorest 20 percent of South Africans consume less than 3 percent of the country&#8217;s total expenditure. Meanwhile, the wealthiest 20 percent account for 65 percent.
Introducing a minimum wage could help alleviate this, and also stimulate much-needed economic growth by boosting consumer spending. South Africa&#8217;s consumer price inflation has been on a largely downwards trajectory since early 2016, hitting a seven-year low of 3.8 percent in March. But, in April it rebounded to 4.5 percent as a result of price rises in product groups that are specifically taxed, according to Statistics South Africa.
But, some fear that a minimum wage could lead to a rise in unemployment, already at 26.7 percent for the first quarter of this year.
While Nene acknowledged that laying off workers could be an &#8220;unintended consequence,&#8221; he argued that the new legislation has provisions to &#8220;protect&#8221; jobs, allowing for businesses struggling to pay their workers to submit to the government for an exception.
Establishing a minimum wage has been a key proposal of South African President Cyril Ramaphosa since he took power in February. Appeasing the country&#8217;s electorate may be on his mind as he faces election in 2019.
Mixed reaction from major trade unions
South Africa&#8217;s largest trade union group, the Congress of South African Trade Unions (COSATU), welcomed the news.
The minimum wage means that the incomes of 6.4 million South Africans will rise, Matthew Parks, COSATU&#8217;s parliamentary coordinator, said in a statement reported by Reuters. &#8220;This is equal to 47 percent of workers and will directly benefit half the nation.&#8221;
But the second largest trade union bloc, the South African Federation of Trade Unionists, said that it was &#8220;disgusted&#8221; by the news, adding that the government had bowed down to &#8220;white monopoly capitalists.&#8221;
It is pushing a living wage of 12,500 rand and has said that more protests are planned.

South Africa’s new minimum wage is the ‘beginning of a long, difficult process’: Finance minister

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Justina Crabtree
Source: <a href="https://www.cnbc.com/2018/05/25/south-africa-ramaphosa-says-state-owned-firms-to-re-invest-billions.html">South Africa&#8217;s ailing state-owned firms set to invest billions in dramatic reform program</a>
<ul>
<li>South Africa&#8217;s President Cyril Ramaphosa has announced in a major speech that some of the country&#8217;s largest public companies will invest 420 billion South African rand back into the national economy over the next five years.</li>
<li>The news follows major upheaval this week on the boards of struggling state-owned enterprises including utilities firm Eskom and airline SA Express.</li>
<li>Since taking office Ramaphosa has tasked himself with attracting investments worth 1.2 trillion South African rand in an attempt to revive economic growth.</li>
</ul>
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/05/25180230/105231791-GettyImages-923088916.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Marco Longari | AFP | Getty Images"/>
South Africa&#8217;s President Cyril Ramaphosa has announced that some of the country&#8217;s largest public companies will return billions to the economy, potentially reviving industries that are renowned for their financial troubles.
In a major speech this week, the country&#8217;s president claimed that they are expected to invest a total of 420 billion South African rand ($33.7 billion) over the next five years. He said that after &#8220;several meetings with the CEOs of some of this country&#8217;s larger state owned companies &#8230; they have given us an indication of their investment plans over the coming years.&#8221;

&#8220;They have informed us that over the next five years, they expect to invest a total of 420 billion (South African rand) into the South African economy,&#8221; he said Thursday in Cape Town.
Ramaphosa added that his government was &#8220;seeking investment that expands the industrial capacity of our economy,&#8221; as well as creating jobs to help address South Africa&#8217;s rampant unemployment.
&#8220;Investment in itself is not a guarantor of growth, nor of job creation,&#8221; he warned. &#8220;But without investment, neither of these will be possible.&#8221;
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/05/25180235/105231795-GettyImages-960128424.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Rajesh Jantilal | AFP | Getty Images"/>
According to Ben Payton, head of Africa at risk analysis firm Verisk Maplecroft, the speech signified Ramaphosa&#8217;s most important parliamentary appearance since his State of the Nation address in February. &#8220;It came just before the president&#8217;s 100th day in office, with Ramaphosa eager to demonstrate momentum in his drive to implement badly-needed reforms,&#8221; Payton added.
In the State of the Nation speech, Ramaphosa spoke of the need to &#8220;confront the reality&#8221; that South Africa&#8217;s state-owned enterprises simply were not making enough money to cover their costs.
Ramaphosa was sworn in as South African president in February after former leader Jacob Zuma stepped down amidst political pressure. He has pushed a pro-business agenda.
Land reform and implementing a national minimum wage are among the economic issues on Ramaphosa&#8217;s agenda as South Africa, the continent&#8217;s most industrialized economy, struggles with below-average economic growth ahead of elections in 2019. Ramaphosa has tasked himself with attracting investments worth 1.2 trillion South African rand.
Major investment from public companies is not unexpected, Payton explained, given South Africa&#8217;s need to upgrade its infrastructure. &#8220;But Ramaphosa provided very little detail around SOEs&#8217; investment plans, suggesting that the headline figure has come before a credible plan to determine its realism.&#8221;
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/05/25180240/105231807-GettyImages-960049174.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Gulshan Khan | AFP | Getty Images"/>
Ramaphosa appointed two-time former finance minister and investor favorite Pravin Gordhan as chief of the Department of Public Enterprises, tasking him with cleaning up the country&#8217;s inefficient and loss-making state-owned firms.
Earlier this week, the South African cabinet approved new boards for several public companies including SA Express, an airline which saw all of its flights suspended by the aviation authority just hours afterwards on safety concerns. Gordhan described the grounding as &#8220;a classic example of the impact of corruption.&#8221;
Eskom, the state-owned utilities company which holds a monopoly over South Africa&#8217;s energy market despite its heavy indebtedness, also saw a new chief executive appointed this week.
Credit ratings agency S&amp;P Global is to publish its rating of South Africa after the market close on Friday. It is currently a middling &#8220;BB&#8221; with a &#8220;stable&#8221; outlook. In March, S&amp;P Global said that South Africa would only be upgraded if Ramaphosa could push through meaningful reforms. In November last year, the ratings agency downgraded South Africa&#8217;s local currency debt to &#8220;junk&#8221; status.

South Africa’s ailing state-owned firms set to invest billions in dramatic reform program

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Justina Crabtree
Source: <a href="http://https://www.cnbc.com/2018/05/24/zimbabwe-mugabe-misses-diamond-loss-parliament-hearing.html">Mugabe misses Zimbabwean parliamentary hearing on $15 billion diamond loss</a>
<ul>
<li>Former Zimbabwean President Robert Mugabe did not attend a parliamentary hearing on Wednesday investigating a claim that he made in 2016 that the country had lost $15 billion in diamond revenue.</li>
<li>At the time, Mugabe blamed corruption and foreign involvement for the missing billions, but has since dismissed the figure as &#8220;urban legend.&#8221;</li>
<li>The lawmaker leading the inquiry tweeted that Mugabe has now been summoned to appear on May 28.</li>
</ul>
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/05/24220230/105228529-GettyImages-141692761.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Jekesai Njikizana | AFP | Getty Images"/>
Former Zimbabwean President Robert Mugabe failed to attend a parliamentary hearing on Wednesday that is investigating his claim that $15 billion of the country&#8217;s diamond wealth is missing.
Temba Mliswa, the Zimbabwean lawmaker leading the inquiry, tweeted later on Wednesday that, &#8220;We&#8217;ve considered that 9 a.m. may be rather early for Mr. Mugabe to appear,&#8221; adding that the investigatory body had written to the former leader asking him to appear on May 28 at 2 p.m. instead.
Mugabe&#8217;s appearance in front of lawmakers has been postponed multiple times, and would mark his first public appearance since losing power in a coup in November last year. His then-deputy Emmerson Mnangagwa has since become president of Zimbabwe. Mugabe, 94, is understood to be in frail health.
&#8220;This isn&#8217;t a witch hunt or to seek to cause embarrassment,&#8221; Mlisawa wrote. He described the summons as a &#8220;quest for answers,&#8221; adding that &#8220;We remain respectful whilst we exhaust all options.&#8221;
The inquiry reflects a claim made by Mugabe in 2016 that Zimbabwe has lost $15 billion in diamond revenue. Mugabe blamed corruption and foreign involvement for this. But, he has since dismissed the figure as &#8220;urban legend.&#8221;
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/05/24220235/105228564-GettyImages-954653724.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Jekesai Njikizana | AFP | Getty Images"/>
In March 2016, Mugabe announced that the Zimbabwean state would take control of all diamond operations in the country. &#8220;Companies that have been mining diamonds have robbed us of our wealth. That is why we have now said the state must have a monopoly,&#8221; Mugabe said at the time, as reported by Reuters.
<h4>Mnangagwa&#8217;s &#8216;no-brainer populist strategy&#8217;</h4>
The investigation is part of Mnangagwa&#8217;s broader political strategy, Charles Laurie, director and head of politics at consultancy Verisk Maplecroft, told CNBC via email.
&#8220;Mnangagwa&#8217;s efforts to reign in off-the-books practices are another strong signal to Western governments that he is serious about engendering a credible and plausible investment environment,&#8221; Laurie said. &#8220;The move is also a risk-free political objective supported by all Zimbabweans and international observers, a no-brainer populist strategy in the run-up to the election.&#8221;
Laurie also noted that Mnangagwa stood to gain should Mugabe&#8217;s authority be further discredited. This important for the current president, &#8220;who wants to snuff out lingering claims by Mugabe that he was removed from power improperly.&#8221;
Zimbabwe&#8217;s Marange diamond fields, located in the east of the country, are thought to be among the biggest reserves in the world. But their discovery has served as a poisoned chalice for the nation.
In 2006, upwards of 20,000 illegal diamond diggers descended on the Marange fields. Reports have since surfaced of atrocities committed by the army and police in their crackdown on the smuggling.
Ahead of elections expected in July or August of this year, Mugabe has backed a splinter group of his original ZANU PF party. The New Patriotic Front was formed in March, and represents lawmakers and voters &#8220;outraged by the unconstitutional and humiliating manner in which President Mugabe was criminally ousted from leadership.&#8221;
Mnangagwa&#8217;s tenure so far has been characterized by his promotion of a pro-business agenda in an attempt to resurrect Zimbabwe&#8217;s basket case economy.
Following months of speculation, it was announced earlier this week that Zimbabwe had applied to rejoin the Commonwealth, a 53-nation bloc comprising of the U.K. and its former colonies. Mugabe withdrew Zimbabwe from the group in 2003 in a row over sanctions.
At the ZANU PF manifesto launch on May 4, Mnangagwa said that Zimbabwe had secured $11 billion in investment commitments. &#8220;We need FDI (foreign direct investment) to catapult our economy. We will continue to create a conducive environment for investors in our country,&#8221; he said.

Mugabe misses Zimbabwean parliamentary hearing on $15 billion diamond loss

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Justina Crabtree
Source: <a href="http://https://www.cnbc.com/2018/05/21/china-state-led-growth-wont-work-in-africa-former-nigeria-finance-minister.html">China-style state-led growth won&#8217;t work in Africa, former Nigeria finance minister warns</a>
<ul>
<li>As ties between China and African countries continue to strengthen, former Nigerian Finance Minister Ngozi Okonjo-Iweala has warned that Beijing-style economic governance will not work for Africa.</li>
<li>Corruption could result from increased government intervention in business, she said.</li>
<li>In her view, Nigeria&#8217;s &#8220;vibrant private sector&#8221; does not lend itself to state-led development.</li>
<li>But Ethiopia, an East African country with high percentage economic growth, has echoed Beijing&#8217;s state-led approach.</li>
</ul>
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/05/14170224/105205401-GettyImages-511145528.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="George Osodi | Bloomberg"/>
China has funneled billions of dollars into aid, loans and business deals on the African continent in recent years.
But as ties continue to strengthen, a former Nigerian finance minister has warned that Beijing-style economic governance will not work for Africa.
&#8220;China has been very helpful,&#8221; particularly with building much-needed infrastructure in Africa, Ngozi Okonjo-Iweala, a two-time former finance minister in Nigeria, told CNBC on Wednesday.
But while less economically advanced countries may wish to emulate China&#8217;s economic success, the Chinese approach of state-led development would prove unsuccessful for the majority of Africa, she said.
&#8220;In most African countries, it has been shown that state-led growth — pure state-led growth — has really not worked,&#8221; Okonjo-Iweala said, citing the example of Nigeria&#8217;s &#8220;vibrant private sector.&#8221;
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/05/21210213/105217648-GettyImages-607950242.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Michael Nagle | Bloomberg | Getty Images"/>
In her view, the Nigerian government, through state-owned enterprises, has not shown itself capable of managing its manufacturing and heavier industries, for example.
Corruption could result from increased government intervention in business, Okonjo-Iweala said. &#8220;Some of our governments, when they get into direct provision of jobs and services — that&#8217;s where corruption creeps in because it&#8217;s not well-handled, the institutions of state are not strong enough, the checks and balances are not strong.&#8221;
Okonjo-Iweala served as Nigeria&#8217;s finance minister twice, from 2003-2006 and most recently during 2011-2015 under previous President Goodluck Jonathan. She is a former director at the <a href="http://www.cnbc.com/id/10000939?__source=cnbcafrica|inline|story|&amp;par=cnbcafrica &amp;doc="> 
World Bank 
</a> and is currently an adviser at the Asian Infrastructure Development Bank.
<h4>Where China-style economic management has worked</h4>
Nonetheless, one African country known for its economic partnership with China is <a href="http://www.cnbc.com/id/105025472?__source=cnbcafrica|inline|story|&amp;par=cnbcafrica &amp;doc="> 
Ethiopia 
</a>. Infrastructure, as well as industrial parks to boost the manufacturing sector, have been built as part of Beijing&#8217;s Belt and Road Initiative, a multi-billion dollar spending plan to resurrect ancient trading routes centered on China.
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/05/21210218/105114303-GettyImages-144865686.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Jenny Vaughan | AFP | Getty Images"/>
Ethiopia, an East African country that has seen double-digit gross domestic product (GDP) growth as recently as 2017, has echoed China&#8217;s state-led development style.
This approach &#8220;will only work in countries where the power is highly centralized,&#8221; Anna Rosenberg, research director at emerging market advisory firm Frontier Strategy Group, told CNBC on Friday. Besides Ethiopia, she cited Mozambique and Rwanda as suitable examples. Nigeria&#8217;s entrepreneurial society was less conducive to China-style economic management, she said.
History could also play a role, Rosenberg suggested. While Cold War allegiances to the Soviet Union may be present in some African countries, Nigeria, by contrast, is a former British colony and therefore more espoused to a free market system.
<h4>China&#8217;s strategic partner</h4>
&#8220;I think China sees Africa as a strategic continent that it wants to be a partner with,&#8221; Okonjo-Iweala said. &#8220;Africa does have the natural resources that China lacks in many ways.&#8221;
But, she added that in her view, this partnership extends beyond pure economic deals. &#8220;I believe strongly there is overarching political and soft power that is involved.&#8221;
For Okonjo-Iweala, it is important to demonstrate the fruits of African business deals with China to the public. She described Beijing-funded new airport terminals in the Nigerian capital Abuja as an example of this because &#8220;people will be able to see them, and witness them, and know that the money went into something concrete.&#8221;
Last week, China&#8217;s state-run news agency Xinhua reported that <a href="http://www.xinhuanet.com/english/2018-05/16/c_137181714.htm">Nigeria had signed a deal with the China Civil Engineering Construction Corporation</a> to build a railway from its economic hub Lagos to Kano, a commercial hotspot in the north of the country.
African countries must enter business deals with China &#8220;with our eyes open,&#8221; Okonjo-Iweala said, to capitalize on its manufacturing expertise and technological development.
Africa is in the process of expanding its manufacturing sector in an attempt to bolster economic development. Nigeria, as part of an attempt to wean itself off oil dependence, has grown its manufacturing base from just 2.5 percent of value added to GDP in 2009 to 8.8 percent in 2016, according to the World Bank.
But with regards to regulating Africa-China business deals, &#8220;we are absolutely not there,&#8221; Okonjo-Iweala said, although she added that this varied between African countries. Providing that fair and transparent agreements are drawn up, &#8220;we can work with China – why not?&#8221;
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/05/21210223/103003792-GettyImages-466898688.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Pius Utomi Ekpei | AFP | Getty Images"/>

China-style state-led growth won’t work in Africa, former Nigeria finance minister warns

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Audiences across the world watching Meghan Markle marry Prince Harry on Saturday are expecting romance and pageantry, including <a class="inline_asset" title="http://www.tv3.ie/xpose/article/weddings/266644/From-overthetop-opulence-to-trendsetting-styles-memorable-royal-wedding-dresses-through-the-ages" href="http://www.tv3.ie/xpose/article/weddings/266644/From-overthetop-opulence-to-trendsetting-styles-memorable-royal-wedding-dresses-through-the-ages">diamond-studded tiaras and 21-foot-long dress trains</a>. But such memorable opulence doesn&#8217;t come cheap.
While the <a class="inline_asset" title="https://www.independent.co.uk/life-style/average-british-wedding-cost-uk-27000-hitched-venue-honeymoon-food-london-midlands-a7937551.html" href="https://www.independent.co.uk/life-style/average-british-wedding-cost-uk-27000-hitched-venue-honeymoon-food-london-midlands-a7937551.html">average U.K. wedding costs</a> about $37,000 (£27,000), a considerable figure in and of itself, England-based luxury wedding planner <a class="inline_asset" title="http://aimeedunne.com/" href="http://aimeedunne.com/">Aimee Dunne</a> tells <a href="https://www.cnbc.com/make-it/">CNBC Make It</a> she estimates that, before security, the wedding of Prince Harry and Meghan Markle will cost $2.7 million (£2 million). A whopping $40.1 million (£30 million) more will be dished out on keeping the betrothed and their guests safe, reports U.K. wedding site <a class="inline_asset" title="https://bridebook.co.uk/article/harry-and-meghan-royal-wedding-cost" href="https://bridebook.co.uk/article/harry-and-meghan-royal-wedding-cost">Bridebook</a>.
Here&#8217;s how the expenses break down.
<div id="inline_movable_ad">Food and beverage: $680,000</div>
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<a class="inline_asset" title="https://www.royal.uk/inside-royal-kitchens-windsor-castle" href="https://www.royal.uk/inside-royal-kitchens-windsor-castle">Head chef Mark Flanagan</a> probably won&#8217;t be serving <a href="https://www.cnbc.com/2018/05/04/real-story-about-the-illegal-ortolan-delicacy-eaten-on-billions.html">ortolans</a> on the big day, but there will be no shortage of classy hors d&#8217;œuvre and desserts, including a much-anticipated <a class="inline_asset" title="https://www.townandcountrymag.com/leisure/dining/a14533020/prince-harry-meghan-markle-wedding-menu-food/" href="https://www.townandcountrymag.com/leisure/dining/a14533020/prince-harry-meghan-markle-wedding-menu-food/">lemon elderflower cake</a>.
With 600 guests attending both the lunch and dinner receptions, plus 2,640 guests from the public who will be provided with tea and a hot snack on the grounds of Windsor Castle, Dunne expects the food and beverage to amount to a quarter of the total budget.
&#8220;There will be lots of champagne and whiskey, I&#8217;m sure, for Harry,&#8221; she says.
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<h4 class="subtitle">Glass marquee: $400,000</h4>
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While the prince and soon-to-be duchess don&#8217;t have to pay to rent out St. George&#8217;s Chapel or the Great Hall, there are rumors that the royals are building a glass marquee for the reception. The construction and delivery could cost as much as $400,000, according to Dunne.
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<h4 class="subtitle">Dress: $270,000</h4>
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The latest front-runner in the question of what Markle will wear on Saturday is a dress from <a class="inline_asset" title="https://www.telegraph.co.uk/fashion/people/meghan-markles-wedding-dress-ralph-russo-everything-know-far/" href="https://www.telegraph.co.uk/fashion/people/meghan-markles-wedding-dress-ralph-russo-everything-know-far/">Ralph &amp; Russo</a>, London haute couture designers which have previously prepared outfits for stars such as <a class="inline_asset" title="http://www.businessinsider.com/meghan-markle-ralph-and-russo-wedding-gowns-2018-5#model-shanina-shaik-recently-wore-a-ralph-and-russo-wedding-gown-at-her-wedding-2" href="http://www.businessinsider.com/meghan-markle-ralph-and-russo-wedding-gowns-2018-5#model-shanina-shaik-recently-wore-a-ralph-and-russo-wedding-gown-at-her-wedding-2">Gwyneth Paltrow, Angelina Jolie and Beyonce</a>. Ralph &amp; Russo supplied Markle with the dress she wore during her official engagement photo shoot.
<blockquote class="twitter-tweet" data-lang="en">
Prince Harry and Ms. Meghan Markle have chosen to release official photographs to mark their engagement.
— Kensington Palace (@KensingtonRoyal) <a href="https://twitter.com/KensingtonRoyal/status/943812985650167808?ref_src=twsrc%5Etfw">December 21, 2017</a></blockquote>
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<div id="bx-group-775624-Oz51CS3" class="bx-group bx-group-default bx-group-775624-Oz51CS3 bx-group-Oz51CS3">The <a class="inline_asset" title="https://www.telegraph.co.uk/fashion/people/meghan-markles-wedding-dress-ralph-russo-everything-know-far/" href="https://www.telegraph.co.uk/fashion/people/meghan-markles-wedding-dress-ralph-russo-everything-know-far/">Telegraph</a> reports that the dress will cost in the ballpark of $135,000, but Dunne expects it to be as much as $270,000. That&#8217;s <a href="https://www.cnbc.com/2018/05/15/meghan-markles-wedding-dress-may-cost-3-times-an-average-us-salary.html">standard for royal weddings</a>. It is rumored that Harry will wear something more &#8220;<a class="inline_asset" href="https://www.washingtonpost.com/graphics/2018/lifestyle/amp-stories/the-royal-wedding-and-what-to-expect/?tid=sm_tw">low-key</a>.&#8221;</div>
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Markle is also expected to change her outfit in the evening. Kate Middleton, the Duchess of Cambridge, wore an ivory satin gown with a diamante belt and matching bolero after her reception, reports <a class="inline_asset" title="Middleton" href="http://middleton/">The New York Times.</a>
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<h4 class="subtitle">Flowers: $130,000</h4>
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Given the size and scale of the wedding, hiring a team of florists to decorate Windsor Castle will be costly. &#8220;It will be tasteful. I don&#8217;t think it&#8217;s going to be overly kind of glam and wasteful in terms of what they spend,&#8221; says Dunne, &#8220;but even in that case &#8230; they could easily spend £100,000 on flowers.&#8221;
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<h4 class="subtitle">The rest of the budget</h4>
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Other considerable expenses include entertainment. &#8220;The music will be under the direction of James Vivian, director of music, St. George&#8217;s Chapel, including the Choir of St. George&#8217;s Chapel, and a selection of choral groups, soloists and musicians,&#8221; Kensington Palace announced.
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Prince Harry and Ms. Meghan Markle have shared some further details about the music for their wedding service at St George&#8217;s Chapel. <a href="https://t.co/CZ4PQH7wwz">pic.twitter.com/CZ4PQH7wwz</a>
— Kensington Palace (@KensingtonRoyal) <a href="https://twitter.com/KensingtonRoyal/status/988765256058134528?ref_src=twsrc%5Etfw">April 24, 2018</a></blockquote>
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<div>So far Karen Gibson and The Kingdom Choir and <a href="https://www.cnbc.com/2018/05/14/19-year-old-cellist-sheku-kanneh-mason-to-perform-at-the-royal-wedding.html">19-year-old cellist Sheku Kanneh-Mason</a> are confirmed performers for the wedding service. There are also rumors circulating that stars such as Elton John, the Spice Girls, Ed Sheeran and Adele could perform, <a class="inline_asset" title="http://www.gq-magazine.co.uk/gallery/royal-wedding-music" href="http://www.gq-magazine.co.uk/gallery/royal-wedding-music">reports GQ</a>.</div>
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As for the couple&#8217;s wedding rings, the bands are reportedly made out of their Welsh gold, reports Bridebook, and there is a chance that Prince Harry follows in his brother William&#8217;s footsteps and doesn&#8217;t wear one at all.
<a class="inline_asset" title="https://www.telegraph.co.uk/luxury/jewellery/meghan-markle-engagement-ring-designed-prince-harry-dianas-diamonds/" href="https://www.telegraph.co.uk/luxury/jewellery/meghan-markle-engagement-ring-designed-prince-harry-dianas-diamonds/">Markle&#8217;s engagement ring</a> was designed by Harry himself using a central diamond from Botswana and two flanking diamonds that belonged to his late mother, Diana, Princess of Wales. Experts estimate <a href="https://www.cnbc.com/2018/05/15/markles-ring-and-how-much-americans-spend-on-an-engagement-rings.html">the ring could be worth as much as $350,000</a>.
Finally, the cost of logistics can add up, says Dunne, especially for a high-profile wedding where many preparations are made under wraps. &#8220;Keeping things quiet — that has a cost associated with it,&#8221; she says, because secrecy tends to require extra people and more time.
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<h4 class="subtitle">Who&#8217;s paying?</h4>
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The royal family announced that it will pay for the &#8220;core aspects of the wedding,&#8221; which include the &#8220;church service, the associated music, flowers, decorations and the reception afterwards.&#8221;  Markle is reportedly expected to <a class="inline_asset" title="http://www.thisisinsider.com/do-royals-pay-for-meghan-markle-wedding-dress-2018-3" href="http://www.thisisinsider.com/do-royals-pay-for-meghan-markle-wedding-dress-2018-3">pay for her wedding dress herself</a>.
<blockquote class="twitter-tweet" data-lang="en">
Full statement from <a href="https://twitter.com/KensingtonRoyal?ref_src=twsrc%5Etfw">@KensingtonRoyal</a> about <a href="https://twitter.com/hashtag/princeharry?src=hash&amp;ref_src=twsrc%5Etfw">#princeharry</a> &amp; <a href="https://twitter.com/hashtag/meghanmarkle?src=hash&amp;ref_src=twsrc%5Etfw">#meghanmarkle</a>’s wedding next May. The Queen &amp; DoE will obviously be there, as will Meghan’s parents. The Royal Family will pay for the wedding. <a href="https://twitter.com/hashtag/RoyalWedding2018?src=hash&amp;ref_src=twsrc%5Etfw">#RoyalWedding2018</a> <a href="https://t.co/wzDh3wx1lx">pic.twitter.com/wzDh3wx1lx</a>
— Emily Andrews (@byEmilyAndrews) <a href="https://twitter.com/byEmilyAndrews/status/935549162157944834?ref_src=twsrc%5Etfw">November 28, 2017</a></blockquote>
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The cost of security, including snipers on rooftops and a counter-UAV system, will top $40 million, Bridebook estimates, and is expected to be borne largely by taxpayers. For the 2011 marriage of Prince William and the Duchess of Cambridge, <a class="inline_asset" title="https://www.independent.co.uk/royalwedding/prince-harry-meghan-markle-royal-wedding-petition-taxpayer-money-public-funding-a8257126.html" href="https://www.independent.co.uk/royalwedding/prince-harry-meghan-markle-royal-wedding-petition-taxpayer-money-public-funding-a8257126.html">the English public paid an estimated $27 million</a>, which allowed for thousands of extra police officers at the event.
That&#8217;s why the campaign group Republic, which calls for <a class="inline_asset" title="http://www.bbc.com/news/av/uk-politics-34191354/queen-republic-s-graham-smith-wants-end-of-monarchy" href="http://www.bbc.com/news/av/uk-politics-34191354/queen-republic-s-graham-smith-wants-end-of-monarchy">abolishing the monarchy</a>, garnered over 30,000 signatures for a <a class="inline_asset" title="https://www.republic.org.uk/petition/royal-wedding" href="https://www.republic.org.uk/petition/royal-wedding">petition</a> calling on the government to disclose how much taxpayer money will be spent on the wedding. &#8220;Taxpayers should not be funding a private wedding, no matter who is getting married,&#8221; the petition states.
Others argue that, considering the attention and tourism that the royal wedding attracts, the event will pay for itself. &#8220;I&#8217;ve certainly had more American couples this year who want to get married in castles,&#8221; says Dunne.
In any case, she believes the ceremony is worth its price tag. &#8220;The monarchy for this country is a great thing,&#8221; she says. &#8220;It has an awful lot of positive factors, more so than negative in terms of costs, for sure.&#8221;
The royal family did not respond to CNBC Make It&#8217;s request for comment.
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#Royalwedding: Here’s a break down of all the expenses

Ashley Turner
Source: <a href="http://https://www.cnbc.com/2018/05/17/after-us-embassy-move-to-jerusalem-more-countries-follow-its-lead.html">After US embassy makes controversial move to Jerusalem, more countries follow its lead</a>
<ul>
<li>The United States on Monday celebrated the opening of its embassy in Jerusalem, making it the first country to make the &#8220;provocative&#8221; move from Tel Aviv.</li>
<li>On Wednesday, Guatemala moved its embassy to the Israeli city. Other countries including Paraguay and Romania are considering the move as well, in spite of the controversy surrounding such decisions. </li>
</ul>
<img loading="lazy" decoding="async" src="http://cnbc.africa/wp-content/uploads/2018/05/105214617-GettyImages-959051118.1910x1000.jpg" alt="(L to R) Sara Netanyahu and her husband Israeli Prime Minister Benjamin applaud as Guatemalan President Jimmy Morales and his wife Hilda Patricia Marroquin cut the ribbon during the inauguration ceremony of the Guatemalan embassy in Jerusalem on May 16, 20" height="1000" width="1910" data-licensor-name="Ronen Zvulun | AFP | Getty Images"/>
The United States received intense international criticism on Monday when it celebrated the opening of its embassy in Jerusalem. It was the first country to make the <a href="https://news.un.org/en/story/2018/05/1009792">&#8220;provocative&#8221;</a> move from Tel Aviv.
But on Wednesday, Guatemala joined the U.S. in moving its embassy to Jerusalem.
More countries are preparing to make the leap. Paraguay&#8216;s Foreign Ministry announced that its embassy will also <a href="http://www.cnbc.com/id/105211378?__source=cnbcafrica|inline|story|&amp;par=cnbcafrica &amp;doc="> 
relocate to Jerusalem 
</a>, while the Czech Republic, Romania and Honduras reportedly considering the move. 
These smaller countries, especially those in Latin America, may be looking to cement good relations with the U.S. in hopes of preserving foreign aid and trading status. Some are also enhancing relationships with Israel, which has courted some of them with aid and even arms sales.
Jonathan Cristol, a fellow at the World Policy Institute, said that he doesn&#8217;t believe the U.S. pressured countries like Guatemala into moving, but the U.S. embassy opening did make it possible for these countries to do so without &#8220;bearing the political cost.&#8221;
The U.S. took a political hit in December when the <a href="http://www.cnbc.com/id/10000938?__source=cnbcafrica|inline|story|&amp;par=cnbcafrica &amp;doc="> 
United Nations 
</a> voted to condemn President Donald Trump&#8216;s decision to recognize Jerusalem as Israel&#8217;s capital, which <a href="http://www.cnbc.com/id/104884012?__source=cnbcafrica|inline|story|&amp;par=cnbcafrica &amp;doc="> 
angered leaders throughout the Middle East. 
</a>

<h4>Palestinian protests turn violent</h4>
On Tuesday, the UN Security Council held an emergency meeting that rebuked Israel after its forces killed more than 60 Palestine protesters on the Gaza border the same day the U.S. unveiled its new embassy. Monday also marked the 70th anniversary of Israel&#8217;s founding, a day the Palestinians call Nakba, or Day of Catastrophe. 
Palestinians have been protesting at the Gaza border since March, asserting that they also have a claim on Jerusalem, which has deep significance to the Jewish, Muslim and Christian faiths. 
With the U.S. bearing the brunt of the international blowback, smaller countries that have had historically close ties to Israel are able to consider making their moves, but Cristol said this does not signal a mass relocation of embassies to Jerusalem. 
Countries like Guatemala and Paraguay have something to gain by moving their embassies to Jerusalem. Jon Alterman, a senior vice president and director of the Middle East Program at the Center for Strategic and International Studies, said that Israel has long courted smaller countries. 
&#8220;It has conducted extensive outreach in Africa , for example, and it has ties throughout Latin America,&#8221; Alterman said in an email. 
Cristol said these smaller countries have received developmental assistance or arms sales, so &#8220;they&#8217;ll do better with a close relationship with Israel.&#8221; 
Cristol also noted that Latin American countries, including Guatemala, have Evangelical Christian heads of state, so it is a &#8220;natural inclination&#8221; for those countries to move their embassies to Jerusalem. 
<h4>Evangelical connection</h4>
Some evangelicals believe the transfer of the embassy and the recognition of Jerusalem as Israel&#8217;s capital <a href="https://www.independent.co.uk/voices/us-embassy-move-why-trump-jerusalem-tel-aviv-religious-right-christians-jews-evangelicals-rapture-a8352961.html">will help bring about the so-called Rapture</a>, an event in which they believe all Christians, living and dead, will join with God, the Independent wrote.
Evangelical Christians supported Trump&#8217;s decision to relocate the U.S. embassy, <a href="https://www.cnn.com/2017/12/06/politics/american-evangelicals-jerusalem/index.html">according to CNN</a>.
But would larger countries like Russia, China and Netherlands nations make the move? 
&#8220;I would be very surprised,&#8221; Cristol said. &#8220;I would be astounded, frankly, if the major Western European powers, with the possible exception of the United Kingdom, would move their embassies any time soon.&#8221;
Cristol mentioned the UK as a possibility because the current British government is more conservative than other European powers and it &#8220;has a fairly large, but often overlooked, Christian constituency that is highly supportive of Israel,&#8221; he said.
Cristol added that Russia and China are also unlikely candidates. Those countries will continue to do business with Israel regardless of where their embassies are located, he said, &#8220;so why take the risk?&#8221;
If any of them do make future moves to Israel, however, they will need to do what the Trump administration did not do, Alterman said, &#8220;which is to explicitly state that the embassy is located in West Jerusalem and endorse the idea of East Jerusalem becoming the capital of a future Palestinian state.&#8221;
Going forward, Israel will surely encourage more countries to move their embassies, Alterman said.
And for some countries &#8220;on a practical level, Jerusalem is the capitol of Israel,&#8221; Cristol added.
Most Israeli government officials and offices are located in Jerusalem, so countries with embassies in Tel Aviv have to travel to do business.
Relocating to Jerusalem is a smart money move for smaller states, making things more &#8220;effective and efficient,&#8221; Cristol said.
&#8220;Tel Aviv is only about an hour away,&#8221; he added, &#8220;but also sort of a world away.&#8221;
<h4>WATCH: Saudi diplomat on Jerusalem embassy opening</h4>

After US embassy makes controversial move to Jerusalem, more countries follow its lead

Karen Gilchrist
Source: <a href="http://https://www.cnbc.com/2018/05/17/billionaire-population-grows-faster-in-asia-than-us-europe-wealth-x.html">Asia is now home to more billionaires than North America</a>
<img loading="lazy" decoding="async" src="http://cnbc.africa/wp-content/uploads/2018/05/105213585-GettyImages-514475757_1.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="elwynn1130 | Getty"/>

Central Asia is now home to more billionaires than North America, according to the latest study from ultra high net worth research firm Wealth-X.
The region&#8217;s billionaire population shot up by almost a third last year (29.2 percent) to 784 individuals, <a href="https://www.wealthx.com/report/the-wealth-x-billionaire-census-2018/?utm_campaign=billionaire-census-2018&amp;utm_source=press&amp;utm_medium=referral&amp;utm_term=bc-2018-press&amp;utm_source=press&amp;utm_medium=referral"> Wealth-X&#8217;s Billionaire Census 2018</a> found. North America, meanwhile, experienced more modest gains of 11.2 percent, taking the number of billionaires who reside there to 727.
The uptick marks the first time Asia&#8217;s billionaire population has exceeded that of North America.
To be sure, <a href="http://www.cnbc.com/id/105209356?__source=cnbcafrica|inline|story|&amp;par=cnbcafrica &amp;doc="> 
 the U.S. remains the country with the greatest number of billionaires 
</a> – 680 individuals – but the increase in Asia marks a broader shift in regional wealth trends.
Asia is now home to 28.5 percent of the world&#8217;s 2,754 billionaires, slipping in just behind Europe , which is top with 29.8 percent.
North America now ranks as the world&#8217;s third most populous continent for billionaires — moving down from second place — staking claim to 26.4 percent.
The Middle East is home to the fourth largest proportion, with 6.9 percent, while Latin America and Caribbean house 5.7 percent. The number of billionaires in Africa and the Pacific both fall under 2 percent.
<h4>China leads the way</h4>
In the past year, the <a href="http://www.cnbc.com/id/105164386?__source=cnbcafrica|inline|story|&amp;par=cnbcafrica &amp;doc="> 
total amount of wealth in Asia 
</a> also shot up by a greater degree than any other region in the world.
Wealth in the region grew by 49.4 percent in 2017 to $2.3 trillion, well ahead of the gains of North America&#8217;s 22.8 percent and Europe&#8217;s 14.9 percent.
The sudden surge was led largely by China, which alone saw its billionaire wealth swell by 61 percent to $1.1 trillion.
However, India and Hong Kong, a special administrative region of China, also saw noticeable gains over the period.

 
 
 
 
 
 
 
 
 
 
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