A NEW TYPE OF STRATEGIC PARTNERSHIP BETWEEN CHINA AND AFRICA
July 14, 2012 | 0 Comments
By André Thomashausen*, UNISA 13/7/12
At a recent public occasion at the University of the Witwatersrand, China’s new Ambassador to South Africa, Mr Tian Xuejun, announced that the fifth FOCAC Ministerial Conference in Beijing on 19 and 20 July will mark the commencement of a “new type of strategic partnership” between China and Africa.
With undertones from a long past Maoist era, Ambassador Tian Xuejin echoed the currently fashionable hostility of his government against the free media, stating that “people … with … Cold War mentality … have disturbed the sound and stable development momentum of China- Africa cooperation.” He explained: “Some western politicians and media also tend to make irresponsible remarks on China-Africa relations, attempting to mess up with our cooperation.”
The honeymoon of the much praised Chinese – African friendship is over. The steel wheels of Chinese locomotives in Namibia have cracked under their first load, and cannot be repaired. Angola, as a result, preferred to recondition its rusted 1960ies locomotives from General Electrics. And the Angolan government is openly worried about an official figure of just over
270.000 Chinese workers in that country. Chinese companies do not hire locals.
The light delivery vans imported under the name of Chana are referred to by their users as the “rolling coffins”. Their archaic 1950ies design turns them in death-traps, in case of an even minor accident. African farmers and artisans no longer buy tools, batteries or tyres imported from China. The quality of the products shipped to the African markets is simply too bad.
In Mozambique, the government had to intervene to stop a spreading practice of Chinese supervisors to use long and painful whips in their communication with African construction workers. In Zambia, relations became strained, after Chinese mine managers shot Zambian workers in a labour dispute.
In South Africa, a total of 60 bilateral agreements with China prevent us from protecting our ferrochrome steel industry by introducing an export tax on our ferrochrome ore which feeds Chinese steel mills. Dozens of these fairly new mills turn South African ore into high value steel. They operate with capital and labour costs that are a mere 20% of our local South African input costs.
The promise by Ambassador Tian Xuejin that the “new type of strategic partnership” would finally create jobs and stimulate manufacturing in Africa is difficult to understand. The highest paid skilled workers in private sector Chinese factories earn 340 Euros (3.400 Rand) per month, on the basis of an eleven hour working day, with 5 days leave per year. How could any Chinese assembly or manufacturing in South Africa be competitive, where our skilled workers will earn at least 4 times the Chinese wage, working 8 hours a day, under what we consider minimally human working conditions?
No doubt, and as I argued 2 years ago in my piece entitled “China is filling the gap left by Nepad’s failure”, Chinese African Cooperation has achieved an all-important leap in the rebuilding of essential infrastructures throughout Africa. China’s direct investment in public works in Africa is impressive. Most new railways, roads, airports, convention centres, parliament and government buildings, hospitals and countless schools are the tangible and foundational results of Chinese credit lines, serviced with African raw materials, to pay Chinese state owned construction companies.
33 bi-lateral Chinese – African investment treaties have laid a solid foundation for future trade and industrial co-operation. Most recently, China’s Sinopec has outbid KBR from the USA for the building of South Africa’s first mega refinery in Coega, to nearly double our current refining capacity.
However, enforcing legitimate local content policies in our cooperation with Chinese industries will become the principal challenge. China’s latest five year plan places great emphasis on advancing a more scientific and rational, rather than ideological or merely pragmatic approach to leadership and the making of decisions. A rational and long term vision of economic cooperation with Africa must begin to promote sustainable development on this continent.
Sustainable development in Africa cannot be achieved by continuing to push for an exchange of raw materials against sub-standard industrial products as a means to support the ailing state owned Chinese industries, effectively subsidizing them with the proceeds from the discounting of African minerals. Africa has no interest in being treated like China was treated by Russia in the 1950ies.
The scientific reformulation of Chinese-African Cooperation must integrate a strategy for the growth of manufacturing and beneficiation in Africa. Only by investing in African employment, will China be able to develop the future markets for its products. Just like Toyota eventually had to accept to build its cars in the USA, so will GWM, or Suntech, for instance, be wise to consider manufacturing in Africa.
A rational policy formulation will seek consultation and inputs from many sources of knowledge. This is why Chinese scientific and academic cooperation with Africa should grow into a 2way process. Offering African students bursaries to study in China, and supporting Chinese language tuition in Africa, is a paternalistic type of friendship. Chinese-African friendship will be able to benefit in many ways, if the Chinese decision making process would listen to and understand the concerns and voices Out of Africa.
*Prof. Dr. Thomashausen is manager of the Centre of Foreign and Comparative Law at Unisa
East Africa: More Oil Found in Kenya
July 11, 2012 | 0 Comments
By Humphrey Liloba*
Nairobi — Kenya could be on the brink of joining the league of endowed oil producers with the striking of further oil deposits in the remote Turkana County.
Just a few months after oil explorer Tullow announced a huge find of the precious commodity around Ngamia 1 in the county, its partner Africa Oil came out last week to announce that it has stumbled on a further 43 metres of potential oil in a different block in the same area.
The firm announced that though it had intended to drill to depths of 2700 metres, it had suspended the search as at 2300 metres since there were all indications of oil in the block. Its officials said the firm wills now contrite efforts on determining the commercial viability of the oil.
In March, Tullow announced it had discovered over 100 metres of oil throwing the East African country into celebration even before confirmation on the commercial viability of the find. This was after drilling only 1,000 metres of the intended 3,000.
According to Africa Oil CEO Keith Hill, the company is optimistic on the commercial viability of the find.
“We anticipate high quality oil from this find. All indications are that the standards are higher than what we have achieved in most countries,” said Hill in a statement sent to media outlets in Kenya.
Most of Turkana is currently a beehive of activity as companies rush for a share of the oil fields that were once neglected and marginalized county.
“Testing equipment including downhole pumps is being mobilized and the intention is to test a number of the zones in the Upper and Lower Lokhone Sands in the near future to confirm the full potential of this discovery,” read the statement in part.
In East Africa, Kenya now joins Uganda which has also announced huge oil deposits in areas around its border with the mineral concentrated DR Congo.
* courtesy of East Africa Business Week,Kampala
Africa: The infrastructure that actually drives growth
July 11, 2012 | 0 Comments
By Claude Sassoulas*
Africa has made its way centre stage in today’s global economy.
The region’s collective economy of more than 50 individual countries barely grew during the last two decades of the 20th Century – but in the late 1990s, the continent began to stir.
Gross domestic product (GDP) growth picked up and then bounded ahead, rising faster and faster through 2008.
A May 2012 International Monetary Fund regional economic outlook report for sub-Saharan Africa refers to “solid trend growth” in the region, noting that regional output rose by 5% in 2011, with a further increase expected by 2012.
The telecom, banking, retail, construction and oil and gas industries are now booming, bringing about a dramatic surge in foreign investment into the region.
Africa received its largest-ever share of global foreign direct investment (FDI) in 2011, according to the 2012 attractiveness survey on Africa conducted by Ernst & Young.
According to the survey, FDI projects in Africa grew 27% from 2010 to 2011, and have grown at a compound rate of nearly 20% since 2007.
Key to Africa’s future economic growth in all sectors will be increasingly the quantity and quality of the continent’s infrastructure.
We estimate that today African governments and private sources combined are investing about $72bn (£46bn) a year in new infrastructure across the continent, out of which telecom-related infrastructure accounts for $21bn (£13bn).
A recent study entitled Connected World highlights the growing influence of developing markets in the global economy, and shows how critical a robust telecommunications infrastructure is for any country that wants to compete internationally or attract foreign direct investment.
The study revealed that a reliable communications infrastructure is a prerequisite for businesses considering a move into a new emerging market. Four in 10 business leaders globally stated that a lack of a secure communications backbone would prevent them from entering a new market.
The Ernst & Young survey notes for example that the Kenyan communications sector benefited from FDI, while FDI opportunities exist in communications for Nigeria.
These trends underpin the high level of interest in building broadband capacity in the region.
There has been rapid build-up of fibre-optic submarine cables over a short space of time in Africa – such as Seacom in 2009 – connecting South Africa, Mozambique, Tanzania and Kenya to international routes to Europe and Asia.
The Eastern Africa Submarine cable system (Eassy) was completed in 2010, and the West Africa cable system (Wacs) launched May 2012.
April 2012 also saw the launch of a major private sector initiative to build a new Brics cable to link Brazil, Russia, India, China and South Africa to the US.
Each new cable helps to bring more African communities into the age of high-speed internet, making e-commerce, cloud, real-time video and IP-based voice a reliable reality and allowing African companies to conduct business more competitively on the global stage.
There is an increasing need for both international and intra-Africa connectivity via submarine cables and cross-border fibre routes, linking businesses in South Africa, Kenya and Nigeria, for example.
The cables enable the high-speed communications infrastructure that is essential for various economic initiatives, lower telecommunications costs between connection points, and offer more secure communications from point to point that would be impossible with third-party cables.
To illustrate, they play an increasingly critical role in Africa’s oil and gas industry, enabling companies in Angola and Nigeria, for example, to bring high-speed Internet to oil rigs and adopt more innovative and connected ways of working.
There is no doubt about the growth potential for broadband in Africa – this is the area to watch given the fact that African governments and private sector are already working to develop the necessary infrastructure to extend connectivity beyond coastal urban centres.
Wireless technology also has a breakthrough role to play in extending broadband coverage to rural areas, boosting service provider revenues while increasing global competitiveness as more people subscribe to broadband at home and at the office while adding another subscription for mobile services.
Positioned for success
The proliferation in mobile devices will provide ever more platforms to deliver viable broadband services to customers in developing regions – in Africa, there have been 316 million new mobile phone subscribers since 2000!
Mobile broadband has had an established role in Africa’s infrastructure, with social applications driving the development of broadband services across the continent – the potential for providing everything from education, primary healthcare and banking services using mobile technology is being actively developed across Africa.
If recent trends continue, businesses will position themselves for success through helping to build the Africa of the future.
Global executives and investors cannot afford to ignore the continent’s immense potential and a strategy for Africa must be part of their long-term planning.
By 2040, Africa will be home to one in five of the planet’s young people and will have the world’s largest working-age population.
The rate of returns on foreign investment in Africa is already higher than that for any other developing region.
Early entry into this market provides opportunities to create markets, establish brands, and shape industry structure.
Wherever your business is in the world, it pays to be ready.
*Claude Sassoulas is the managing director – for Europe and Africa – of Tata Communications, a leading global provider of communications in developing economies, including one of the world’s largest submarine cabling networks.Article culled from BBC Africa Viewpoints
Jonathan unfolds economic diversification plan
July 11, 2012 | 0 Comments
By Roseline Okere*
Lays foundation stone of Procter and Gambles’ N43bn plant
THE Federal Government yesterday, unveiled plans to develop the country as an outsourcing destination with the aim of enhancing Gross Domestic Product (GDP), domestic industrialisation and structural diversification of the economy.
President Goodluck Jonathan made this known at the foundation stone laying ceremony for the construction of a N43 billion Procter and Gamble (P&G) baby-care factory in Agbara, Ogun State.
The President, at the occasion, renewed government’s commitment to tackling the challenges militating against the growth of the country’s industrial sector.
Jonathan, who was represented by the Minister of Trade and Investment, Dr. Olusegun Aganga, said that government has opened up the key sectors of the economy to enable the participation of more indigenous and foreign investors, especially in areas where the country has competitive and comparative advantage.
He stated: “We are working on reducing bureaucratic obstacles to private sector investment and developing a strong public and private sector partnership with government as the enabler.
“The government has invested heavily in education, health, technology and infrastructure and also promoted entrepreneurship and competition within the ambit of fair, equitable and enforceable laws.
“We have opened up the key sectors of the economy to participation by more indigenous and foreign investors, especially in areas where we have competitive and comparative advantage. This is to ensure that such investments provide good returns on investment, maximum impact on the local economy through job creation, value chain enhancement and capacity development.
“It is also to develop the country as an outsourcing destination with the aim of enhancing GDP growth, domestic industrialisation and structural diversification of the economy. In this regard, we have kicked off a National Industrial Revolution Plan, working painstakingly with all stakeholders in the public and private sectors to ensure success. For the first time, we are linking industries where we have competitive and comparative advantage to innovation and skills development”.
Jonathan disclosed that the One-Stop Investment Centre (OSIC) in the Nigerian Investment Promotion Commission (NIPC) has been strengthened to achieve efficient coordination of investment facilitation between relevant government agencies and achieve a 48-hour response target for all enquiries. Businesses can also be registered within 24 hours now, he assured.
President of P&G), Laurent Philippe, stated that the company, which has been in the country for 19 years now remains committed to becoming the leading Fast Moving Commercial Goods (FMCG,) social and economic investor in the country by growing Nigeria’s economy in synergy with the President’s Transformation Agenda.
He disclosed that P&G employs over 3,000 direct and indirect employees through its offices, distributors and suppliers and has also created over 200 small to medium enterprises (SME’s) with cumulative investments of over $100 million.
He noted that the $250 million baby care plant, which is planned to occupy a land area of 16 hectares with additional 24 hectares for expansion will on completion provide 250 jobs directly and will create 300 SMEs.
“P&G has established significant investment foot-prints in Nigeria in its 20 years of operations in the country. Nigeria remains a focus area for P&G and our investments continue contributing to strong inclusive economic growth,” he said.
*Courtesy of http:www.ngrguardiannews.com
Africa Rising: when will the West join Africa?
July 6, 2012 | 0 Comments
By Eliot Pence & Bright Simons*
Discussions about Africa’s evolution tend to measure the continent’s ‘gradual’ assimilation into the global mainstream. This may have been understandable in the mid-1980s when by every indicator African economies were seen as hopelessly distorted and needed to be salvaged with what became known as ‘structural adjustment’. But African countries today appear more aligned with the Washington Consensus and Globalization’s ‘best practices’ than the West. On many of the macroeconomic indicators
used to judge conformity with the mainstream – debt to GDP ratio, current account balance, fiscal balance, inflation – Africa is situated closer to the mainstream, while key OECD countries drift away. Data tracking other kinds of flows – in cultural, innovation, and labour flows – point to a continent becoming a key player in the Global South – not just assimilating into the global mainstream, but helping to shape it.
- Population flows – Stories of African migrants struggling to find a route to Europe contrast with recent reports that Europeans are struggling to find working permits in Africa. According to NYU’s Development Research Institute, between 2006 and 2009 the number of visas issued for Portuguese entering Angola increased from 156 to 23,000. In 2012, there were nearly 100,000 Portuguese living in Angola, more than triple the number of Angolans living in Portugal. Spaniards, too, have fled high unemployment looking for work in Algeria, where many Spanish companies have relocated. No longer seeing the US as their best opportunity for professional development, waves of Nigerian-Americans (the most educated Diaspora group in the country), vie for top spots in the new Lagos offices of JPMorgan, McKinsey and Blackrock.
- Innovation and information flows – Reverse innovation, a concept describing inventions that are adopted first in the developing world, is creeping into western corporate board rooms (and publishing houses). Plans to develop a ‘Silicon Savannah‘ in East Africa build on widely successful innovations emerging out of the banking and telecom sectors and now being rolled out in US and European markets. Images of Joseph Conrad’s Dark Continent are receding as the broadband industry turns to Africa for global growth and sustained demand. African policy innovations, too, offer lessons to Europe’s troubled economic union. A recent review of the health of the West African Economic Union by the IMF suggested Europe might learn something from how Africa’s economic unions have faired.
- Financial flows – Though largely still the recipient of foreign direct investment, Africa is gobbling up distressed assets in the West. Gatwick, the United Kingdom’s second largest airport, was recently purchased by a Nigerian and Africa’s richest woman, Isabel dos Santos (daughter of Angolan President Jose Eduardo dos Santos), is the new majority shareholder in Portugal’s leading pay-TV and Internet provider Zon Multimedia. More traditional financial flows, such as remittances from Africans working abroad, are also changing. Already larger than official development assistance by a substantial margin, reports suggest remittances are now flowing to Europe from Africa. Underscoring these trends is reduced dependency on multilaterals (China alone lends more to Africa than the World Bank) and research by Standard Bank estimates that BRIC-Africa trade increased from $20bn to more than $250bn in the past 10 years.
- Cultural flows – A Financial Times editorial recently warned that the West would lose out on Africa’s ‘wave of creativity’ if it doesn’t reorient itself. To be sure, Africa’s cultural place in the larger world has always been evident, even if its recent recognition suggests it hasn’t. Nollywood, Nigeria’s answer to Hollywood, is a half billion dollar a year business and, according to UNESCO, puts out twice as many movies as Hollywood. Its growth also belies assumptions about the importance of intellectual property rights — something it largely exists without — in development. The continent’s cinematic creativity is paralleled by the emergence of its fashion industry, which is increasing in vogue — literally; an entire issue of the magazine was devoted to the continent recently. African-inspired cuisine also stands at the cusp. The “African Food Inevitability Thesis,” a phrase coined by a recent Wall St. Journal article, called Africa the foodies’ frontier and predicted a thriving commercial future for continental cuisine.
Even as a major western newspaper openly wonders how Africa will ‘join the larger world on its own terms,’ across virtually all indicators, evidence suggests it’s doing so largely on its own terms. If the West is stuck in low-growth and political paralysis, while Africa enjoys an economic renaissance, a more pressing question for Western observers might be: When will the West join Africa?
*Eliot Pence is a director at the Whitaker Group, a corporate strategy firm focused on sub-Saharan Africa. Bright Simons is the founder of the mPedigree Network (www.mPedigree.Net), and a Senior Fellow at think tank, IMANI.Previously published in African Arguments
How mobile puts business at the tip of Africa’s fingers
July 5, 2012 | 0 Comments
By Meredith Baker BBC News, Johannesburg
Across the African continent, internet penetration is low, computers are often too expensive to purchase, and online business transactions can be logistically complicated to execute.
But the surge in mobile phone use – there are currently 695 million mobile phone subscribers in Africa – has given Africans a simple and pervasive means of sharing
information and conducting business.
In recent years, a few innovative African companies have found ways to harness the e-potential of mobile commerce and information sharing, changing the way in which Africans communicate and conduct business
SlimTrader, founded by Nigerian-American Femi Akinde, is an e-commerce firm that is meant to ease the exchange of goods and widen the online markets for Africans.
Mr Akinde and the SlimTrader team created Mobiashara, a mobile technology that allows users to search for and purchase products via text message.
This technology provides retailer’s information and inventory, and also partners with mobile payment providers such as M-PESA and MTN so someone can make a purchase with a press of a button on their mobile device.
With partners such as Aero Airlines, SlimTrader even facilitates once complicated transactions such as buying plane tickets.
Umuntu Media is another African-based host website that caters to the mobile world. Umuntu was founded only one and a half years ago by Johan Nel, a native of Namibia.
The idea of Umuntu, Mr Nel explains, is to “close the local content gap, to provide users with information that is useful to them.”
Umuntu provides local news, job listings, and directories specific to each country and region in which it operates.
After only 18 months of operation, Umuntu has portals in nine countries, and its Namibia portal, iNamibia, is already the largest local website in Namibia.
After Umuntu took off in web and mobile form, Mr Nel had a vision to use it as a springboard to further tap into mobile e-commerce with the creation of the mobile site, Mimiboard, which has been live for a month.
Mimiboard (‘mimi’ means ‘I’ in Swahili) is Mr Nel’s brainchild to deliver hyper-local content in the form of a traditional notice board.
First, a mimiboard is created for a specific area. People in each community can post a notice to Mimiboard about wanting to buy or sell something, and then someone else can purchase the service posted through mimiboard.
“For example,” Mr Nel explains, “a fisherman in Mombasa can post about his catch of the day to mimiboard, then other users in the area can go buy the fish.”
It uses the same technology that radio and TV stations use to feed live streams of texts from listeners and viewers and can be accessed through text, android phones, and online.
Not only is mimiboard linked to the Umuntu sites of each country, but students from four big universities in Kenya have already started using Mimiboard as a platform to buy and sell textbooks – and a university dean in Canada has also inquired about using the product.
Mimiboard is creating a space for local mobile notices while also creating new ways for users to earn money.
The Mimiboard team has created its own currency, mimibucks, which incentivizes mobile transactions for users.
In Mr Nel’s words: “If someone wants to sell their car through a specific mimiboard, the person who created that mimiboard will receive a micropayment for the transaction.”
He anticipates that Mimiboard will have a million users in the next ten months with the help of mobile bank and mobile advertising collaborations.
One such collaboration of Umuntu/Mimiboard is the relationship the company has with Primedia Online, which represents Umuntu in the digital ad business.
Primedia Online supplies tailored news content in portals across the southern continent, in addition to providing technology and ad business to local publishers wanting to tap into the mobile market.
Primedia business development manager Susan Hansford explains that advertising on mobile phones is more competitive now amongst companies.
“E-commerce shouldn’t be in desktop form for Africa, I think the focused efforts on the mobile side of e-commerce will change the way business is done in this continent,” she says.
“It should be noted however that the mobile demographic is a little different than e-commerce on computers, which would be more middle and upper class.”
The mobile demographic is expanded to consist of people in small villages, and so it wouldn’t make financial sense for an advertiser of high-priced consumer goods to advertise to this demographic.
Ms Hansford notes that the mobile environments in Africa are better suited to financial services, citing cheap funeral insurance and student loans as some of the top mobile advertisers.
Although problems arise in the mobile e-commerce world such as product delivery, Africa has made great strides in conducting business online and on handhelds.
Companies like Umuntu and SlimTrader have seen the opportunity for Africa on mobiles, an opportunity unique to Africa because of the importance of business at the micro-level, and the lack of other forms of technology.
As Mr Nel puts it: “This type of technology we are working to develop is one that we hope will solve African problems while putting Africa on the map for innovative solutions.”
*Courtesy of BBC Africa
Kenya cancels Iran oil imports over sanctions threat
July 5, 2012 | 0 Comments
Kenya has cancelled plans to import crude oil from Iran following threats of sanctions, an official at the Kenyan energy ministry has said.
The outline deal signed last month was to import about 4m tonnes of oil from the Iranian National Oil Company.
But the US embassy in Nairobi had warned it was important to cut revenue to the Iranian government.
The US and the European Union have just tightened sanctions on Iran over concerns about its nuclear programme.
“Because of international pressure, we have withdrawn that understanding,” AFP news agency quotes Patrick Nyoik, the energy ministry’s permanent secretary, as saying.
On Sunday, a complete European Union oil embargo on Iran came into effect – in response to US legislation, which sanctions any entity that deals with Iran’s Central Bank.
“There are sanctions that are in place for people that are buying oil and products from Iran – there would be repercussions,” outgoing US ambassador to Kenya Scott Gration warned earlier on Wednesday about Kenya’s oil importation plans.
Last month, Kenya’s only refinery said that it would start buying its own crude oil, Reuters news agency reported.
According to Kenya’s Business Daily newspaper, under the proposed contract Tehran had been offering Kenya an extended credit facility of 90 days.
*Courtesy of BBC Africa
Nigeria Teams Up with US Firm to Build Six Oil Refineries
July 4, 2012 | 0 Comments
By Ricci Shryock*
Nigerian officials announced a $4.5 billion deal that will see the country partner with US company Vulcan Petroleum Resources to build six oil refineries in Nigeria, Africa’s biggest oil producer.
Vulcan said its goal is to build the first two facilities within one year and complete all six within the next 30 months. It said the various refineries will be located at different sites
throughout the country.
Umaru Dembo, a former Nigerian energy minister, said the announcement was a welcome development for the country.
“It means quite a lot…because, up to now, we seem to be dependent on refined oil from somewhere else…the three or four refineries that we have now do not supply the needs of refined products that Nigeria needs at the moment,” Dembo said.
Though Nigeria produces more crude oil than any other nation on the continent, it relies heavily on oil that is refined abroad in order to fulfill domestic energy demands. Nigeria exports more than two million barrels of crude oil a day.
Dembo added that the current refineries in the country produce more than 400,000 barrels of oil a day, and the reported 180,000 barrels a day that the six new refineries would produce is a surprisingly low number. But, he added, it was better than the alternative.
“It is better to get the refineries and have them working then have no refineries at all…than [to have to] depend upon refineries outside Nigeria,” he said.
According to Dembo, the new refineries, which are slated to all be finished in about two and a half years, could have additional benefits for the local economy.
“Definitely, it will mean more jobs for Nigerians if this comes to fruition,” he said. “There’ll be very many things that will be available for the people…we hope there will actually be electricity.”
In January, mass protests were staged throughout the country when the government said it was going to remove the oil subsidy, which was the only benefit many Nigerians said they enjoyed from the nation’s oil wealth.
After a nationwide strike and continued protests, the government later announced a partial rollback of the price hikes.
President Goodluck Jonathan has said Nigeria can no longer afford the $8 billion fuel subsidy. He promised to use the money saved for needed infrastructure and social programs.
*Courtesy of VOA Africa
Apps4Africa: Winners in Southern Africa Contest
July 4, 2012 | 0 Comments
The U.S. Department of State is pleased to announce the Southern Africa winners of the Apps4Africa: Climate Challenge, a regional competition to address local climate change challenges through the development of web-based and mobile applications. Marieme Jamme, CEO of private sector partner SpotOne Global Solutions, announced the winners on June 15 at the annual Africa Gathering event in London, England.
First place was awarded to MyHealth, a mobile application developed by a team from Botswana. MyHealth provides climate information, early warning alerts, and health monitoring features to its users to help them adapt to shifting patterns of disease and other health emergencies as the climate changes. Second place was awarded to Service Anti-Cyclone, which alerts users in Madagascar to pending cyclones, and collects data on cyclone patterns and impacts, including injuries, deaths, and property damage caused by storms. The application will also provide information to help communities prepare for future cyclones. Third place was awarded to unsApp, a web forum for improving food security in Zimbabwe where users can access climate change information and adaptive management techniques that match the needs and customs of their communities.
Through programs such as Apps4Africa and the global Adaptation Partnership, the United States is working with partners to bring together practitioners, policy-makers, and African technology innovators in order to highlight country-driven solutions to climate change adaptation in Africa.
The Apps4Africa: Climate Challenge consisted of three African regional competitions. Winners from the West and Central Africa contest were announced in December, and winners from the East Africa competition were announced in January. These contests built on the outcomes of regional climate change adaptation workshops organized by the Adaptation Partnership, which includes the United States and more than 20 other countries.
Winners will receive cash prizes. Private partners, including TED and Indigo Trust, are contributing follow-on support.
For more information please visit http://apps4africa.org.
U.S. Committed to Expanding Trade and Investment with Africa
July 4, 2012 | 0 Comments
By MacKenzie C. Babb*
Washington — The United States is committed to continuing to expand trade and investment in sub-Saharan Africa, a region that “represents the next global economic frontier,” according to Assistant Secretary of State for African Affairs Johnnie Carson.
“In addition to hosting six of the 10 fastest growing economies in the world, a recent McKinsey study documented that Africa offers the highest rate of return on foreign investment of any developing region, and has for some time,” Carson said in testimony before the Senate Foreign Relations subcommittee on Africa June 28.
He said consumer spending also continues to rise, and 43 percent of Africans currently have discretionary income, or could be considered middle-class consumers.
“Over the past decade, Africa’s growth was widespread across sectors including wholesale and retail trade, transportation, telecommunications and including manufacturing,” Carson said. “Foreign direct investment, or FDI, in Africa has also seen tremendous growth.” FDI projects in Africa have more than doubled from 339 in 2003 to 857 in 2011, according to Carson, with inter-African investment growing sharply from 27 projects in 2003 to 145 in 2011.
Combined with natural resource exports that have continued to generate significant revenues, Carson said, this steady growth has helped Africa to weather the global economic crisis more successfully than any other region in the world.
“In short, Africa is a trade and investment destination that cannot be ignored,” the assistant secretary said. “This is a continent on the move, and there are enormous opportunities for U.S. companies to enter the market, make money and create jobs” for both Americans and Africans.
“Greater U.S.-Africa trade is in the interests of both America and Africa, and we are determined to work to strengthen it,” Carson said.
Earl Gast, the U.S. Agency for International Development (USAID) assistant administrator for Africa, said in testimony following Carson that foreign direct investment is approaching $80 billion a year and trade figures have tripled during the past decade.
“This fortune is not the result of good luck,” he said. “It’s the result of years of hard work and better management, governance, capital inflows and business climate.”
To translate this growth into transformational development in poverty reduction, Gast said, President Obama’s recently unveiled strategy for engaging with Africa promotes opportunity and development while spurring economic growth, trade and investment.
The cornerstone of U.S. engagement with Africa will continue to be the African Growth and Opportunity Act (AGOA), he said.
“Since 2001, exports under AGOA have increased more than 500 percent, and the African Coalition on Trade estimates that as many as 1.3 million jobs have been created indirectly by AGOA, supporting upwards of 10 million persons throughout the continent,” Gast said. He added that many of these jobs are held by women, “a vital building block for development given that African women are more likely to invest job-related income into food security, health and education of their families.”
Assistant U.S. Trade Representative for Africa Florizelle Liser said Obama’s new strategy intends to “encourage economic growth, enhance trade and investment, support more jobs in the United States and help realize the full potential of the U.S.-sub-Saharan African economic partnership.”
The strategy was unveiled at the start of the June 14–15 AGOA Forum in Washington.
The 2012 forum brought together more than 600 participants, including top U.S. and African government officials, private-sector leaders and civil society representatives. It was preceded by a two-day civil society program June 12–13 in Washington and complemented by the African Women’s Entrepreneurship Program. The Corporate Council on Africa hosted its infrastructure conference June 18–20 in Washington, and the U.S.-Africa Business Conference was held in Cincinnati June 21–22.
AGOA, signed into law by then-President Bill Clinton in 2000, was designed to promote U.S. trade and investment ties with sub-Saharan Africa. It provides trade preferences to the 40 participating African countries through the removal of nearly all tariffs on their exports. It has broken down many trade and customs barriers in an effort to stimulate economic growth, encourage economic integration and help bring sub-Saharan Africa into the global economy.
Carson, Gast and Liser each emphasized the importance of the pivotal economic development program, and said Obama’s new Africa strategy keeps AGOA at the heart of U.S. engagement with Africa.
What Goldman Sachs thinks about investment in Africa
June 30, 2012 | 0 Comments
BY Kate Douglas*
American investment banking and securities firm Goldman Sachs believes that Africa is the place to invest, according to their Fortnightly Thoughts research report released earlier this year.
“We believe meaningful opportunities for Western consumer companies exist as Africa’s household consumption grows rapidly (it is already greater than some of the BRICs) and that failure to invest now will see others rush in,” said the editor of Goldman Sachs’ Fortnightly Thoughts, Hugo Scott-Gall.
But why should investors consider the opportunities in Africa and what are the challenges?
Africa has fallen behind in its development and has some troubling problems such as immense poverty, political instability, corruption and poor infrastructure. For this reason, Africa is often painted as one homogeneous continent. The truth is that African countries – despite having many similar problems – are considerably diverse with different resources contributing to different economies. It is because of this that investment potential varies from one African country to the next, and so do the challenges. However, a common limitation that cannot be ignored is the poor infrastructure that increases the cost and risk of investing in Africa, impeding economic growth.
Scott-Gall acknowledges the developmental movement and growth we are now seeing in Africa and describes it as a “logical sequencing in the world’s economic evolution”. Africa is swimming with precious minerals, and currently supplies 11% of the world’s fuel and mining resources. “Resources have become more scarce, and hence valuable, as more of the world is industrialised and there are more people alive than ever before,” said Scott-Gall. In this sense, the world needs Africa to succeed and Africa needs world investment to do this.
Africa is also being revolutionised by an extraordinary growth in internet and mobile communication. “Important to the speed of consumption growth is the adoption of technology, which is helping Africans skip ahead on the consumer curve, doing so without established public infrastructure in several cases,” said Scott-Gall.
Technological development has also led to the improvement of the banking system and the development of mobile and internet banking. “As the banking system matures credit growth can enable faster consumption growth as well,” continued Scott-Gall.
With improvements in governmental competence, political stability and wealth being distributed more evenly than before, Africa is heading in the right direction, and an educated investment today could yield momentous revenue over the next few decades.
So why invest in Africa? Because tomorrow’s Africa is going to be an economic force, according to Goldman Sachs. But what are the reasons for this optimism?
Firstly, it is estimated by Goldman Sachs that Africa will have the largest workforce in the world by the middle of the century. “Demographics are becoming very favourable and will be the envy of the world in 20 years time,” predicts Scott-Gall.
Secondly, Africa has abundant land in a world running out of space, and this gives African countries great potential for agricultural exports. “Africa sits on vast tracts of the world’s uncultivated land and also has a lot of existing agricultural land,” said Scott-Gall. “The world needs Africa to substantially improve its agricultural yields, and we suspect it will require private capital to help it here, along with government support and sponsorship, as has been seen in the BRICs, with Brazil a very good example.”
Where to invest?
When it comes to investment, Goldman Sachs believes the best African country to invest in would have “a healthy reserve of diverse resources, and a stable government that not only fairly distributes resource wealth to a young population, but also encourages them to spend it, by investing in infrastructure”. While it may be difficult to find an African economy like this today, it is suggested that this is the direction most African economies are developing.
It is also suggested that investors should look at cities rather than countries as a means of targeting the African consumer. “This could start to make Africa attractive to businesses with more global sourcing, or those targeting the more premium consumer (higher-value categories such as luxury goods, spirits and to a lesser extent personal care),” stated Alexis Colombo, Goldman’s consumer staples analyst.
Africa – home to world’s leading entrepreneur
June 30, 2012 | 0 Comments
BY Kate Douglas*
CEO and managing director of Kenya’s Equity Bank, James Mwangi, was this month awarded the Ernst & Young World Entrepreneur of the Year for 2012.
Mwangi was picked from 59 finalists, each of whom had already been awarded the E&Y Entrepreneur of the Year in their home countries.
“This is a global recognition for Africans who are embracing the power of entrepreneurship to change the economic and social state of Africa,” said Mwangi.
With the Chinese finalist owning the largest ship building company in the world and the Canadian finalist from the biggest pharmaceutical firm, How we made it in Africa looks at why Kenya’s Mwangi walked away with the title of entrepreneur of the year.
Equity Bank – from insolvency to banking giant
Equity Bank is renowned for being the bank with the largest customer base in east Africa, and is based in Kenya with regional operations in South Sudan, Uganda, Rwanda and Tanzania. It is home to nearly 8 million accounts, with nearly 50% of all bank accounts in Kenya.
Mwangi has led the bank from a technically insolvent building society with an asset base of Ksh. 28 million in 1993 to become a leading all inclusive commercial bank with an asset base of over Ksh. 220 billion and listed on the Nairobi Securities Exchange and Uganda Securities Exchange.
In a conversation with students at Stanford Business School in 2007, Mwangi said that Equity Bank’s strong commitment to its mission statement was significant to its success. “Focus on your vision,” he advised students. “Most of us get distracted and make our core business reacting to competitors. Focus on the customers. Ultimately, the competition is about the customers. It is not about the technology.”
From 2009 to 2010 the bank’s turnover increased by 32%, with its assets increasing by 42%.
Through strategic capitalisation, Equity Bank also managed to attract the largest capital injection (US$180 million) in the history of eastern and central Africa from Helios EB, an Africa-focused private investment firm.
Mwangi and entrepreneurship in Africa
Ernst & Young are not the only ones to notice Mwangi’s entrepreneurship skills. In 2010, the Financial Times identified Mwangi as one of the top 50 emerging market business leaders.
“An entrepreneurial spirit is very important in the world,” said Mwangi. “Entrepreneurs create jobs, entrepreneurs create wealth and, consequently, entrepreneurs compliment the thoughts of government in creating order and prosperity in the world.”
One of Mwangi’s many achievements is Equity Bank’s investment in an IT platform that can accommodate 35 million accounts, including a level four data centre which is the only one of its kind in sub-Saharan Africa. This means that Equity Bank is at the forefront of creating synergy between banking and mobile telephones. Other innovations include M-Kesho, the world’s first mobile centric bank account; Orange Money, a mobile money transfer platform for Orange Telecom subscribers; and agency banking.
Mwangi hopes that being recognised as the E&Y World Entrepreneur of the Year will inspire young Africans to take up entrepreneurship and show the rest of the world that there are plenty of investment opportunities and potential in Africa. “Having won this award from Africa, I want to tell the international community that Africa is ready for investment,” stated Mwangi. “Africa has the opportunities and is the fastest growing continent and consequently the remaining frontier for those that want to succeed in entrepreneurship.”
“Over the past 26 years, entrepreneurs have done more than any other group to stimulate innovation, job creation and prosperity during both periods of growth and in challenging economic conditions,” said Jim Turley, global chairman and CEO of E&Y. “James epitomises the vision and determination that set entrepreneurs apart and is very worthy of the title Ernst & Young World Entrepreneur of the Year 2012.”
*Culled from http://www.howwemadeitinafrica.com