08/05/2014 World Business Report


08/05/2014

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President Assad. Those are the latest headlines from

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BBC World News. Now for the latest financial news

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with World Business Report. The rich and powerful of the business world

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gather in Nigeria but will terror fears derail Africa's Davos?

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Plus, rocketing real`estate ` the Bank of England meets amid growing

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warnings of a housing bubble. Can it do anything about it?

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Welcome to World Business Report. I'm Sally Bundock.

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Also in the programme: A surprise rise in Chinese trade figures boosts

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Asian markets. We begin in the Nigerian capital Abuja, where

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business leaders from around the world are gathered for the World

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Economic Forum on Africa. In a few hours' time, they will be hearing

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the keynote speech from China's Premier Li Keqiang. Threatening to

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overshadow the event, of course, are the growing concerns over the

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security and stability of the country after deadly bombings in the

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capital and the kidnapping of 200 schoolgirls by Islamist militants,

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as well as these latest attacks you have been hearing about in the last

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few hours. However, Nigeria wants the African

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Davos to be a showcase for its huge business potential.

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Nigeria is now Africa's biggest economy, with GDP last year

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estimated at $500 billion. That has tripled in just over a decade. In

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fact, it's predicted to have the world's fastest`growing economy by

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2050. Our Africa business correspondent Lerato Mbele is in

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Abuja talking to business leaders. This year 's World Economic Forum is

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being hosted by Afrika 's number one economy, Nigeria. A large contingent

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of business leaders and as many as 30 heads of state are in Nigeria to

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lend their support and also scout for investment opportunities that

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are said to exist here. But it is the militancy of Boko Haram, the

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recent bombings and the kidnapping of 200 schoolgirls in northern

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Nigeria that has cast a dark shadow over this World Economic Forum. We

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ask why business leaders believe Nigeria still holds promise in a

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situation of insecurity. There is a lot of negativity about Nigeria but

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if you look at the actual facts, there has been a lot of raw growth

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over the last 15 years. It is the largest country from GDP

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perspective. It is the most populous country. In Africa. Many challenges,

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let us be clear, but if you want to make money as an investor, you have

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to be in Nigeria. There is no question about it. We believe that

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there will be 160 million consumers in the middle`class by 2030. The

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consumer facing sectors are large. Manufacturing is starting to get

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bigger. We will see manufacturing take`off. Across a variety of

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sectors, we believe there is huge opportunity. We also spoke with the

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global vice president of General Electric about the opportunities

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that exist for international companies in Nigeria. Nigeria can

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play an important role in setting an example for our countries can

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facilitate the process by which public and private capital come

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together to solve problems associated with lack of electricity,

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water that is not clean, unavailability of basic forms of

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healthcare. A country like Nigeria should play a leadership role. While

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Nigeria is said to offer huge returns, fresh opportunities in the

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oil and gas, energy, real estate and banking sector, nobody can deny how

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tense the situation is in Abuja right now, with the activities of

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the Koran. But for now, investors are willing to overlook some of

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those issues, focusing on the returns, the growth, the large

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consumer market and the prospects that Nigeria has to offer. `` nobody

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can deny how tense the situation is in Abuja right now with the

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activities of Boko Haram. To the Bank of England now, where

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policy`makers are meeting amid increasing nerves over rising UK

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house prices, particularly in the capital.

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Last week the bank's deputy governor warned the surging property market

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could pose the biggest danger to the country's financial stability.

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Earlier this week a report by the OECD warned the bank to act to

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contain the housing bubble. House prices are currently rising at more

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than 10% a year and some economists fear some buyers are being forced to

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take on unsustainable levels of debt. So what is the Bank of England

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likely to do? Rob Wood worked there for 12 years. He is now with

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Berenberg Bank here in London. Interest rates today. I can only

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assume there will be no change today. No change today. They will go

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up later this year or early next year. The economy is growing quickly

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and interest rates don't need to be at these levels for much longer.

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Some would argue that interest rates going up could be something that

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could tame the housing, but it's a very blunt tool, isn't it? Yes, it

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is, but it also gets into the cracks. The Bank of England has

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other tools that it could use to deal with the housing market. It

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could mandate maximum loan to value ratios. It could mandate that

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affordability should be tested against a difficult benchmark for

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interest rates to make it harder for them to get a mortgage. But those

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things are quite specific and there are ways around them. Rising

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interest rates would be one way of getting into all the cracks and make

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sure in that you really do slow down house price inflation. Do you agree

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that there is a bubble waiting to burst and that it could be very

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damaging? I don't think we are in a bubble quite yet. London is a

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separate situation. But the main problem is that we don't build

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enough houses. That is driving up prices. A will always be expensive

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as long as we don't build enough. If we let this run for much longer, the

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chances of a bubble developing will increase. And the Bank of England

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has to act to prevent this from happening, which is why I think they

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have to take action on this very soon. Will Mark Carney take action?

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He started his time with the Bank of England being quite dismissive of

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housing... It has become more obvious that house price inflation

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is spreading out across the country and that it's not just the London

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only phenomenon. It is now quite likely that they will take action

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over the next few months or so, increasingly tightening the noose

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around the housing to slow down price increases. Thank you. And we

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will be keeping you up`to`date as and when we get the news on the

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rates decision today in the UK and anything else they say. Asian

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markets are getting a boost from some positive news from China. Let's

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speak to Rico Hizon in our Singapore bureau. Good news about China at

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last! That is right. Many investors were waiting for the numbers from

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the mainland and when you take a look at the data, export recovery

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was driven from demands from developing countries. The US and EU

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countries have been buying Chinese made goods with outgoing shipments

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rising by almost 1%, recovering from a decline in March. Imports gained

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0.8%, leaving the mainland with a trade surplus of $18.5 billion. This

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momentum going forward? Analysts say yes. But they do say not to expect a

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steep recovery, rather a slow and mild comeback. When China sneezes

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the whole world catches a cold. At least for today, nobody is sneezing.

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The reaction has been switched from investors. The decay widened its

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game and the Australian dollar hit a fresh two week high. `` the Nikkei

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widened its gains. Overall, good news for the markets. We are all

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struggling with hayfever in the UK, so no sneezing from China is very

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good news or us. `` for us. In other news: Barclays is expected to

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announce 15,000 job losses as part of a strategy review. Up to 70% of

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the cuts could be in Britain. According to media reports, around

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25% of investment banking staff could lose their jobs as the bank

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tries to retreat from more risky areas.

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The European Central Bank is expected to keep borrowing costs at

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their record low of 0.25%, despite calls for additional stimulus for

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the region's economy. Let's take a look at those markets. Janet Yellen

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was talking about... And of course, the trade news from China. Most of

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the markets headed higher, apart from the NASDAQ index, which was

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down by 0.3%. Thank you for joining us. We will be back for a look at

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the papers in a few minutes. Police in London have begun what is

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believed to be the world's largest trial of body`worn cameras, as they

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try to restore public trust. The pilot will assess whether the

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cameras are effective in cutting crime and reducing complaints

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against officers. Our home affairs correspondent Matt Prodger

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