Finance & Investment Proposal for Zenotopea

FINANCE & INVESTMENT STRATEGY PROPOSAL FOR ZENOTOPEA, A HYPOTHETICAL AFRICAN COUNTRY FROM THE POINT OF VIEW OF AN ASSUMED GOVERNMENT OFFICIAL Africa can develop and must develop. The growth and development of a country give an idea of an increase in that particular country’s socio-economic and political situation. However, much emphasis is placed on the economy when people think of growth and development. I think it is a question of “achieve economic development first & the other things will be added.” A look at the countries in Africa shows that there is an abundance of natural resources and basic human resources. There are problems such as illiteracy, poverty, disease just to mention a few. The situation is not different from the economy of Zenotopea, a hypothetical African country with an emerging economy. This write-up is a proposal that spells out the strategy for identifying and mobilizing the sources of funding for the development of Zenotopea. The strategy is aimed at helping the new government of the country over the next five years. The economic health of a country is usually measured by examining its economic growth and development. Economic growth may be defined as an increase in the production of primary goods and services of a country over a specific period. Economic growth is conventionally measured as the percent rate of increase in real Gross Domestic Product (GDP). On the other hand, economic development may be defined as the process by which emerging economies with low living standards become highly industrialize & advanced economies with high living standards. A country's economic development is usually indicated by an increase in the quality of life of its citizens. . The 'Quality of life' is often measured using the Human Development Index, which is an economic model that considers factors like literacy rates, life expectancy and poverty rates. The priority development projects the government of Zenotopea has identified are in the areas of education, health and power. But this proposal will be based on only power. The financing needs are critical for providing infrastructure for renewable energy with emphasis on solar energy. There will be the need for funding of solar panels, training and development of staff and general education of the citizens on the importance of renewal energy. An estimated amount of $5.6 billion will be needed as funding. An amount of $1.6 billion is estimated to be spent in year 1 and $1 billion each year for the next four years. The country has a challenge of debt sustainability with a current record of 50% Debt to GDP ratio. However, some sources of finance have been identified from international, domestic, public and private areas. There will be a mass education of all citizens for six months across the country using Government Information Services Vans about the importance of solar energy. Technocrats who are experienced in negotiations should be selected fairly to engage financiers from international, local, public and private sources. The country should work with a development partner like the World Bank Group for support. This support could be in the form of structuring a Public Private Partnership (PPP) with some international companies or asked to provide funding and risk mitigation instruments. There should be bidding for the selection of two or three efficient international solar power companies for the project. The sources of finance can be accessed as follows: The government should computerize many systems so as to get proper account of revenue; taxes should be reduced and more people encouraged to pay taxes; the treasury bill rate should be raised to at least 20% to mobilize funds and foreign investors should be encouraged and attracted to come and invest in the country. There may be barriers in accessing the sources of finance that have been identified. There may be issues of inflation, currency fluctuation, risk, transparency, inclusiveness, access and stability. The government of Zenotopea should ensure that there is adequate regulation and policies to mitigate all financial systemic risks. As much as possible the state should collaborate with multilateral Development Banks (MDBs) to address barriers connected with accessing the sources of finance. There should be measures put in place to check leakages of funds through corrupt practices. In conclusion, one can say that the conditions in Zenotopea are similar to most of the African countries. This strategy will be useful and applicable to many countries in Africa. It is my viewpoint that Africa can and must develop.