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Africa money calculating africas natural capital


May 24 Capital in Africa remains scarce by any traditional measure of the term. But conservationists say the continent is rich in "natural capital" and argue that if this was properly harnessed, the region would reap dividends and grow its economy and more orthodox forms of capital. Calculating Africa's natural capital is the focus of a 2-day conference, organised by green group Conservation International (CI), that began on Thursday in Botswana's capital Gaborone. The traditional measurement of gross domestic product, or GDP - the value of all the goods and services produced by an economy - has long been in the sights of critics who feel it is one-sided or misleading. Alternatives range from Bhutan's Gross National Happiness index to the U. N.'s annual Human Development Index, which includes life expectancy and education as well as income. There have been various stabs at "greening GDP" and much of the debate centers on natural capital and how it is valued. For example, the World Bank last year estimated around one third of the wealth of low-income countries stemmed from their natural capital, which it said included forests, protected habitat, farmland, energy and minerals. It said diamond-rich Botswana, host of the current conference, had translated its "natural capital" into other wealth by reinvesting the returns in human capital. The result was a 35 percent rise in per capita GDP between 1995 and 2005.

RENEWABLE DEBATE Some environmentalists feel it is useful to put more weight on renewable natural capital such as wildlife, forests or fisheries, instead of commodities such as oil and minerals, which have often proven a curse for African economies."It's important to measure the value of renewable natural capital because this data gives a more true picture of the economic benefits of these services to supply chains and people, or alternately, the economic costs if these services are lost and need to somehow be replaced," said Frank Hawkins, Senior Vice President for CI's Africa and Madagascar Division.

"In accounting for and valuing renewable natural capital, we don't include nonrenewable capital such as extracted minerals or oil because we can't replenish these," he said. According to CI, Botswana's natural capital in 2000 was worth almost $3.2 billion, of which over 50 percent was "non-timber forest resources" which would include wildlife and nature-based tourism. Botswana is certainly rich in wildlife: it has around 150,000 elephants or one for every 14 people, the highest elephant-to-people ration in Africa. There would be some problems working out a valuation. For example, while elephants are a major tourist draw, some ecologists say there are too many in Botswana and they are damaging other forest resources by eating themselves out of house and home.

And while diamonds in the ground may not be forever, the value of non-renewable resources still trump the renewable ones for now by most reckonings. In 2010, Citigroup estimated South Africa was sitting on $2.5 trillion worth of non-energy mineral reserves, the richest in the world. This was mostly because of its vast platinum group metal resources which it valued at $2.2 trillion. That would clearly dwarf its 20,000 or so elephants. Still, the greens are on to something here. Resources such as clean, fresh water are becoming more valuable because of scarcity while the importance of forests, and their price tag, is rising because of their role in carbon storage. The limits of the traditional measure of GDP were recently highlighted by Nigeria's rebasing of its number, a move that will inflate the size of its economy by 40 percent and put it on track to soon overtake South Africa. Nigeria would not contend with South Africa on many other fronts and while it remains rich in oil reserves it is seen as poor in natural capital."The national value of Nigeria's renewable natural capital would be relatively low because they're already spent most of this natural wealth in converting landscapes and ecosystems," said Hawkins.

Bank of china eyes usd7bn bond issue for silk road plan


HONG KONG, June 19 (IFR) - Bank of China is planning to raise as much as USD6-7bn from a multi-currency bond offering to support a USD40bn Silk Road Fund that will improve Asia's links to Europe. The Chinese bank is to issue senior unsecured bonds in US dollars, Singapore dollars and renminbi, according to sources close to the deal. The financing may be announced as early as next week. Barclays, Citigroup, DBS, HSBC and Bank of China's own underwriting team are the lead banks working on the deal, the sources said. President Xi Jinping announced a USD40bn commitment to set up a Silk Road infrastructure fund last November, and the fund began operations earlier this year. The fund's initial USD10bn capital came from China's foreign exchange reserves and state-owned policy institutions. Under the so-called "One Belt, One Road" initiative, China aims to create a modern Silk Road Economic Belt and a 21st Century Maritime Silk Road to boost trade and extend its global influence. Projects under the plan include a network of railways, highways, oil and gas pipelines, power grids, Internet networks, maritime and other infrastructure links across Central, West and South Asia to as far as Greece, Russia and Oman, increasing China's connections to Europe and Africa. (Reporting By Frances Yoon; Editing By Steve Garton)

Booz allen readies $225b dividend recap loan


July 11 - Booz Allen & Hamilton Inc will launch $2.25 billion in credit facilities at a bank meeting on Thursday, sources told Thomson Reuters LPC. The company will use the proceeds to refinance existing debt and fund a $1 billion dividend to shareholders. The bank loan will consist of a $500 million secured revolving credit facility, a $500 million secured term loan A and a $1.25 billion term loan B, sources said. Bank of America Merrill Lynch is leading the loan along with Credit Suisse. Barclays Capital, Citi, HSBC, JP Morgan, Morgan Stanley and Sumitomo Mitsui are also arranging the loan.

The revolving credit and term loan A will be priced at 275bp over LIBOR, subject to a leveraged-based pricing grid. Price talk on the term loan B has not yet been disclosed. The TLB will carry a 1 percent LIBOR floor and carry soft call protection for one year.

The revolver and TLA will mature in December 2017 while the TLB will mature in 2019. Covenants will include a maximum consolidated net total leverage ratio and a minimum consolidated interest coverage ratio.

The TLA will amortize at a rate of 5 percent the first year, 7.5 percent the second year, 10 percent the third year, 12.5 percent the fourth year and 65 percent in the fifth year. The TLB will amortize at 1 percent per year. Corporate family ratings and facility ratings are expected to be Ba3/BB. Headquartered in McLean, Virginia, Booz Allen is a provider of management and technology consulting services to the U.S. government in defense, intelligence, and civil markets, and to corporations, institutions and not-for-profit organizations.

Britain backs push for alternative small firm funding sources


LONDON May 20 British firms should look for funding outside the banking sector, Business Secretary Vince Cable said on Monday, marking the latest effort to generate growth among small- and medium-sized businesses (SMEs). Faced with a barely growing economy, the government has targeted smaller companies as a major source of growth and has introduced reforms to encourage start-ups and make it easier for existing businesses to expand."Britain's businesses cannot grow, export and innovate without proper access to bank credit. But they also need alternatives when looking for finance," Cable said. "The government wants to see a shift in the market structure towards non-bank lending."

Bank funding for SMEs has shrivelled in the wake of a global banking crisis, which has made traditional lenders more cautious and, according to a recent UK study, created a cash-flow crisis that is stifling small firms.

Cable's comments coincided with the launch of a guide to alternative sources of financing, published by business lobby group the Confederation of British Industry (CBI).

The CBI said high-growth, medium-sized businesses could be worth an additional 20 billion pounds ($30.4 billion) to the British economy over the next seven years if they can gain access to finance through alternative channels. The CBI highlighted traditional but underused funding options, such as the retail bond market and private debt placements, but also promoted more innovative approaches such as online "crowd-funding" platforms which enable individuals and businesses to back specific projects.