1. 1
BACKGROUND & APPROACH TO ASSIGNMENT
THE FOLLOWING PACK IS TO BE PRESENTED TO ‘INFOTECH’S’ BOARD IN FY Q1 2019/2020.
WHO IS INFOTECH?
• Infotech is a multinational professional services company that provides services centred around technology. These include strategy,
consulting, digital and technology operations management. It is a fortune global 500 company predominantly working in developed
economies across North America and Europe.
WHO IS PRESENTING THIS PACK?
• This pack is to be presented by the CIO ‘John Smith’ of Infotech who has been handed the mandate to continue Infotech’s strong
growth projections.
For the WBG’s week 4 assignment I have chosen to write from the perspective of a private direct investor (Infotech a
fictional company) who is looking to develop and execute a finance and investment strategy for an EMDE country
3. 3
WHAT IS INFOTECH’S CURRENT CONTEXT?
We continue to deliver strong market differentiation which is reflected in our increased total revenues to $41.0 B (USD).
We delivered outstanding, broad-based financial results in fiscal 2018, driving superior shareholder value.
HOWEVER: INFOTECH’S YEAR ON YEAR GROWTH HAS SLOWED …
4. 4
INFOTECH MUST INVEST IN NEW & EMERGING
MARKETS
While reporting revenues of 41.0 B (USD), to reach it’s promised 8% growth targets for FY 2019/2020 must invest
heavily to grow in a competitive landscape. New & emerging markets make the perfect investment for Infotech because:
1. Throughout
emerging and developing
economies mobile
handsets and digital
devices are exploding
2. In its 2018 World
Economic Outlook, the
International Monetary
Fund forecasts growth in
emerging markets to be at
least two percentage
points faster than in the
developed world.
+2% GROWTH
3. Infotech’s strong
financial position and
experience operating in
40+ countries gives it the
perfect expertise to
execute in developing
economies
5. VISION & MISSION
Infotech’s vision is to the largest professional services firm in the world, connecting the people in the world who need
help doing business with the best possible service. Infotech sees itself as a key enabler in providing the services to
improve everyone in the world’s living standards and plans to do this at no expense to the planet itself.
To achieve its vision, Infotech must make considerable strategic greenfield investments in Africa for a number of reasons.
First stop Nigeria…
There’s only one thing…..
Infotech while currently having a large presence in the developing regions of South East Asia and Latin America,
has little or no presence in the developing economies of Africa.
1. To break into the
fastest growing talent
market in the world
ABOUT 65% OF THE
NIGERIAN POPULATION IS
YOUNGER THAN 25 YEARS.
Source: Embassy of Ireland Nigeria
2. Open its
own Infotech
branded offices to
maintain its
superior look and
feel for the offices
and look to attract
top talent
3. Nigeria has looked to
implement a number of initiatives
to diversify its economy, including
investment in technology which
Infotech is primed to capitalise on.
FOREIGN DIRECT INVESTMENT IS
ONE OF THE TOP 3 DESTINATIONS
IN AFRICA OVER THE PAST DECADE
UNTIL 2014
Source: Embassy of Ireland Nigeria
6. KEY OBSTACLES TO OVERCOME FOR INFOTECH
Moving into new markets will present many nee obstacles and risks for Infotech to overcome. Below is an analysis of a
few of the most likely and some proposed initiatives which can be taken up to overcome the said obstacle.
OBSTACLES (RISKS/ISSUES) DESCRIPTION PROPOSED INITIATIVES
Our results of operations could be materially adversely
affected by fluctuations in foreign currency exchange
Although we report our results of operations in U.S. dollars as we
invest in new markets (such as Nigeria) a majority of our net
revenues is denominated in currencies other than the U.S. dollar.
Unfavourable fluctuations in foreign currency exchange rates may
impact the financial returns.
Complete an analysis of partner firms to help hedge our
foriegn currency risk. An example of a partner firm could
be the World Bank Treasury who has deep relationships
with major financial institutionsand leverages the World
Bank’s (IDA and IBRD) AAA credit rating, market
presence, and convening power.
Changes in our level of taxes, as well as audits,
investigations and tax proceedings, or changes in tax
laws or in their interpretation or enforcement, could
have a material adverse effect on Infotech's cash flows
and financial condition.
Tax rates in developing market may change materially as a result of
shifting economic conditions and tax policies. Especially as
economies mature.
Build a governmental liason team to lobby for our rights
and analyse potential tax changes at the country and
continent level.
Our operations could be adversely affected by volatile,
negative or uncertain economic and
political conditions and the effects of these conditions
on our clients’ businesses.
Global macroeconomic and geopolitical conditions affect our
clients’ businesses and the markets they serve. Volatile, negative
or uncertain economic and political conditions in new growth
markets are more likely than in developed economies.
Complete an analysis of partner firms to take insurance
out with for example the Multilateal Investment
Guarantee Agency (MIGA) which provides political risk
insurance which helps to mitigate against the risks
outlined,
7. HOW WILL INFOTECH DELIVER ON ITS VISION
Infotech will look to incorporate the sustainable development goals in its investment decision framework to ensure all
investments are aligned to its vision of ‘providing the services to improve everyone in the world’s living standards and
plans to do this at no expense to the planet itself’.
Infotech will incorporate the sustainable development goals into its
financing decision making process:
Every financing decision will be evaluated on the SDG’s 17 core
principles to determine a real-world impact which will then be evaluated in
association with risk and return (see figure 1).
Figure 1
Source: ASSET OWNER
STRATEGY GUIDE:
HOW TO CRAFT AN INVESTMENT
STRATEGY
https://www.unpri.org/download?ac=4336
