The US military will withdraw hundreds of troops focused on counterterrorism operations in Africa over the next several years to support the Pentagon’s increased focus on countering threats from China and Russia, a US official said on Thursday.
Earlier this year, the US military put countering China and Russia at the centre of a new national defence strategy, the latest sign of shifting priorities after more than a decade and a half of focusing on the fight against Islamist militants.
“The reduction of military personnel is projected to be less than 10 percent of the 7,200 total military forces and will take place over the next several years,” Commander Candice Tresch, a Pentagon spokeswoman, told Reuters.
Ms Tresch said the cuts would leave “counter-violent extremist organization” activities largely untouched in several countries, including Somalia, Djibouti and Libya.
In other parts of the region, including West Africa, the emphasis would shift from “tactical assistance to advising, assisting, liaising, and sharing intelligence.”
A US official, speaking on condition of anonymity, said the reduction of troops would likely take place over three years and could include countries like Kenya, Cameroon, and Mali.
The United States’ military role on the African continent has received increased attention after an ambush last year in Niger, carried out by a local Islamic State affiliate, which killed four US soldiers.
The Pentagon move comes as China and Russia look to increase their influence in Africa.
During the Cold War, the Soviet Union forged close military and diplomatic ties with many African countries. Russia is now trying to revive some of the relationships that lapsed after the Soviet Union’s collapse.
Since Western nations sanctioned Russia for annexing Crimea in 2014, Moscow has signed 19 military cooperation deals in sub-Saharan Africa, including with Ethiopia, Nigeria and Zimbabwe, according to its foreign and defense ministries and state media.
China has long had a major economic presence in Africa but has shied away from military involvement. However, last year, it went a step further, opening its first military base outside China in Djibouti.
A congressionally mandated report by former US officials released earlier this week said that the military did not have sufficient resources to fund the military’s needs and the goals set out by US Defense Secretary Jim Mattis earlier this year.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”