EasyJet founder to launch low-cost airline in Africa
July 26, 2012 | 0 Comments
By Teo Kermeliotis*
London, England (CNN) — A new budget airline backed by easyJet founder Stelios Haji-Ioannou will soon take to the African skies, promising to bring low-cost flights to millions of people in the continent.
Dubbed Fastjet, the no-frills carrier is expected to launch in three to four months, aiming to cash in on Africa’s robust economic growth and a growing appetite for travel by its burgeoning middle class.
The move comes after Haji-Ioannou’s easyGroup teamed up earlier this month with pan-African conglomerate Lonrho to create the low-cost carrier. Lonhro, owner of budget airline Fly540, has agreed to sell its aviation business to investment firm Rubicon Diversified Investments, in which easyGroup will hold a 5% stake.
The new business will start operations using Lonrho existing network in Ghana, Kenya, Tanzania and Angola, before expanding to more markets in the future.
“These four countries are currently experiencing great GDP growth, along with oil and gas discoveries and developments,” says Ed Winter, chief executive of Fastjet.
“We believe that the time is absolutely right to change Fly540 into a much bigger airline based on the low-cost model which has been successful in every other part of the world,” adds Winter, who is easyJet’s former chief operating officer.
The business, which will still be majority-owned by Lonrho, has set a target of carrying around 12 million passengers per year, “which creates an airline of roughly 40 aircraft,” according to Richard Blakesley, Fastjet’s finance director.
The low-cost carrier expects to offer average fares of $70-80 before tax, which could fall to as much as $15-20 when booked early.
“That price will absolutely democratize air travel, totally changing the way people are traveling in Africa,” says Winter.
Fastjet executives say they hope to tap Africa’s rather underdeveloped aviation network, offering an affordable alternative in a transport environment largely dominated by difficult terrains, long bus journeys and poor infrastructure.
“Past experience shows by halving fares, a successful low-cost carrier can encourage those people, who have never previously traveled by air, to fly. For Africa, with its densely populated cities separated by great distances — this means a potential new market of millions,” he said after the reverse takeover by Lonhro.
In 2011, low-cost carriers occupied 9% of the African market, suggesting that there is a large potential for further development and growth, says aviation expert Linden Birns.
He notes, however, that the big challenge for airlines is breaking into cross-border flights and launching intra-African routes.
“At the moment access to markets on a transnational basis is governed by a set of bilateral air transport agreements,” says Birns, founder of South Africa-based aviation consultancy Plane Talking.
“Under those agreements, governments stipulate who’s allowed to fly and how many flights. That really keeps a lid on things — if you can break through those barriers and introduce competition then we should see some pretty rapid growth happening in the market.”
Aircraft manufacturer Airbus has forecast Africa traffic to expand by about 6.5% per annum between 2011-2020 and by 4.9% between 2021-2030, for a 20-year growth rate of 5.7%. This compares with a 4.8% increase in demand on a worldwide basis over the next 20 years.
“It’s no secret that Africa represents a massively untapped market,” says Birns. “If we look at where growth is happening in the world, Africa is certainly up there.”
Birns says that as Africa’s cities get more populated and as demand for business is growing, the expansion of the low-cost model should revolutionize the continent’s air transport in the same way that it did in North America, Europe and now in Asia.
“More people will be able to trade, more people will be able to do their tourism and it should be a good economic driver,” he says.
Fastjet’s foray into the African market comes amid a tumultuous time for aviation industry in the continent — earlier this month, a plane crash in Lagos, Nigeria, killed all 153 people aboard.
Winter says Fastjet will raise the bar on safety and security, operating “as though it was an European airline.”
“There’s no reason why Africans shouldn’t be just as safe and secure as in an European airline and we will follow those sort of procedures,” he says. “Now, that adds a bit cost to our operation but to my mind all of those costs are actually worthwhile to provide a safe and secure airline.”
Looking ahead, Winter says the biggest challenge for Fastjet is dealing with lack of airport infrastructure, as well as high taxes imposed by governments and rocketing fuel duties.
“What we’re hoping is that governments will realize that by allowing these tax levels to come down to more normal levels, we will be able to do most markets and their total revenue will actually increase,” he says.
But despite the challenges, Winter says he is “incredibly excited” about the venture, saying that there isn’t a better time to enter the African market.
“Five years ago it just wasn’t that level of GDP growth, the spread of wealth amongst the population and the level of investment,” he says, “Whereas now I think all those factors come to play and now it’s exactly the right time to do this.”
Why does cargo spend weeks in African ports?
July 20, 2012 | 0 Comments
By Gael Raballand*
Containers spend, on average, several weeks in ports in Africa. In fact, over 50% of total land transport time from port to hinterland cities in landlocked countries is spent in ports.
Our recent study demonstrates that, excluding Durban and Mombasa, average cargo dwell time in most ports in sub-Saharan Africa is close to 20 days whereas it is close to 4 days in most large ports in East Asia or in Europe. In this setting, the main response has been to push for: (a) concession of terminal operators to the private sector, (b) investments in infrastructure (such as quays and container yards) and (c) investments in super-structures such as cranes and handling equipment.
What has been the result on cargo dwell time? Not much. On average, it is extremely difficult to reduce cargo dwell time. In Douala (Cameroon), for example, planners set an objective of seven days at the end of the 1990s, but the dwell time remains over 18 days (despite real improvements for some shippers).
How can this be explained? A common assumption is that the private sector (terminal operator, customs broker, owner of container depots, shipper) has an interest in reducing dwell time. But this is not always true.
Poor handling and operational dwell time generally add no more than two days. The bulk of the delay comes from transaction and storage time.
And firm surveys demonstrate that low logistics skills and cash constraints explain why most importers have no reason to reduce cargo dwell time; in most cases, it would increase their input costs. In addition, collusion of interests may reinforce rent-seeking behaviors among shippers, intermediaries and controlling agencies. Some terminal operators earn large revenues from storage. Customs brokers do not fight to reduce dwell time since the inefficiency is charged to the importer and eventually to the consumer.
Firm surveys also show that companies may use long dwell times as a strategic tool to prevent competition, similar to a predatory pricing mechanism. Incumbent traders and importers see a benefit to long cargo dwell time (2-3 weeks), which acts as a strong barrier to entry for international traders and manufacturers. Delays at port also may be considered a means to sustain rent generation for some shippers.
These findings may help explain why many trade facilitation measures have faced difficulties in sub-Saharan Africa. Market incentives are too weak for supply-side measures to drive radical changes. An implication is that governments and donors need to re-think intervention strategies. One of the worst options is to invest in additional storage and off-dock yards where congestion occurs. Structural issues that lead to long dwell times, including demand characteristics, need to be tackled before undertaking costly physical extensions.
The effective solutions to high dwell times in sub-Saharan Africa ports will revolve around the challenging task of breaking the private sector’s short-term collusive strategies and providing incentives for public authorities, intermediaries and shippers to reduce delays. In this regard, what has been done in Cameroon customs goes in the right direction in order to give advantages to the most compliant and professional shippers and better sanction non-compliant and rent-seeking shippers.
*Gaël Raballand is a senior economist for Africa at the World Bank.
The business case for greater integration in Africa
July 20, 2012 | 0 Comments
By Denis Worrall*
The case for investing in Africa has never been easy, and it is not an easy case now. But the fact is that there is a much better understanding of Africa’s diversity and Africa’s circumstances. It is not just seen as one homogenous continent.
There are after all 54 independent countries in Africa and all of them are different, all of them aspire for recognition, all of them want to attract foreign investment, foreign tourists and foreign business. And one further observation. Whereas ten years ago South Africa was the gateway to Africa, with Johannesburg as the equivalent of “the big apple” that New York is to the US, that has changed. Nairobi, Lagos, and Abidjan are as important as Johannesburg in coming into Africa.
Africa’s overall expected growth this year at 5.5% is obviously very impressive compared to the sickly European economy and even the US. The main reasons for Africa’s growth is that it is a source of natural resources and that the price and demand for natural resources has been strongly driven by China and other major developing countries’ phenomenal growth.
The second reason is the quality of Africa’s macro-economic management – which has improved dramatically, as has the quality of economic leadership in African governments. And another explanation for this sustained growth has been that debt levels have been low in Africa.
But for all these reasons, there is no doubt that perceptions of Africa have changed, and with those perceptions is an increasing investment and business appetite. To quote Donald Gips, US ambassador to South Africa: “This rising prosperity in Africa will open new markets for American goods and create jobs in both regions. More and more people understand that the 21st century will be the African century.”
While a strong case can be made for Africa’s changing perceptions in the world and its enhanced economic performance, the fact is that one critical need in Africa is for greater regional integration. In fact Ernst & Young in their excellent Africa report for 2012 Reaching Out concluded that the single biggest priority as far as Africa is concerned over the next decade should be the acceleration of the regional integration process. It goes on to say that: “Simply put, if this process does not intensify, Africa will remain structurally marginalised in the global economy and African countries will struggle to attract a greater share of foreign investment.”
African integration is needed for some obvious reasons:
- To foster inter-African regional trade and manufacturing.
- To encourage infrastructural projects of scale between different countries.
- To facilitate investment of scale across borders; and
- Generally to project a more inviting image to the world and to international investors.
In building regionalism it is not a case of starting from scratch. A regional integration process has been on the agenda for many years. The 1991 Abuja Treaty divided the continent into five regional areas. North Africa, West Africa, Southern Africa, East Africa and Central Africa. This was in preparation for establishing the combined African Economic Community (AEC) in six phases over thirty-four years. The ultimate result ambitiously envisaged would be an economic union with a common currency, full mobility of factors of production and free trade among all countries on the continent. Achieving something like the EU was obviously very ambitious; and while some progress has been made in creating regional blocs, much more needs to be done.
Incidentally, the most advanced regional economic community is the East African Community, which includes Kenya, Tanzania and Uganda, with Burundi and Rwanda joining in 2007 to complete its current membership of five countries. The East African Community has established its own customs union, a common market, and according to reports good progress has been made towards implementing the free movement of labour, capital goods and services. This therefore is a market of close to 150 million people, with a combined GDP approaching US$100 billion and an economic growth rate in excess of 6% over the past decades.
The East African Community therefore sets a standard that challenges other regions in Africa. But much more can be done with bilateral agreements between different countries. In this way, the foreign investor interest in Africa will significantly increase.
* http://www.howwemadeitinafrica.com .Source Denis Worrall is the chairman of Omega Investment Research. He can be contacted at: email@example.com
Infrastructure, resources and consumer demand – Africa’s three main opportunities
July 20, 2012 | 0 Comments
By Dapo Okubadejo *
According to various reputable forecasters, the African economy is expected to grow by more than 5% during 2012/13, while its total Gross Domestic Product (GDP) is expected to reach US$2.6 trillion by the year 2020.
In addition, the continent also has the fastest-expanding labour force in the world. Today, there are more than 500 million people of working age (15 to 64) in Africa, and that number is expected to pass 1.1 billion by 2040 – to be larger than China and India.
The rest of the world is taking note of the fact that African countries are trying to improve their business environment as a strategy to attract more foreign direct investment (FDI). One of the key investment drivers is the increasing prevalence of peace, democratic elections and improved governance.
The World Bank ‘Doing Business In’ Survey for 2012 – seen as a benchmark for rating the world’s business environments – tracked Morocco as the top reformer globally during the survey period, with Sao Tome and Principe, Cape Verde, Sierra Leone and Burundi also among the top 10 reformers. Changes in domestic policy in these countries improved the process of dealing with construction permits, protecting investors and paying taxes, among other areas.
The African Development Bank (AfDB), International Monetary Fund (IMF) and other multilateral institutions have done their share by working with investors and recipient governments to improve Africa’s business climate.
Rapid urbanisation on the continent demands that governments and cities become globally competitive. The biggest need for infrastructure exists in power, transportation (roads, rail, ports, etc), hospitals and schools. The current spend on infrastructure in Africa is about US$45 billion a year. About US$90 to US$100 billion a year is needed, which is a huge funding deficit. This means there are substantial opportunities for the private sector to either invest alone or in partnership with government.
Africa’s resources are in demand! This is not only restricted to the extractive industries such as mining, and oil and gas. Agriculture is a dominant economic sector in Africa, and concerns around global food security make the continent’s fertile, uncultivated land an enormously important resource.
Through the phenomenal rate of urbanisation, Africa has a growing population of very young, ambitious, often well-educated, globally minded people who are increasingly moving into middle-income brackets.
Internet users have increased, while the telecommunications sector has seen the number of cellphone users on the continent grow from 11 million in 2000 to almost 400 million today. Undersea data cables are currently being laid at an unprecedented rate, providing exponential bandwidth growth which will drive communications and internet access, particularly through mobile devices.
The banking industry is expanding with growing income levels, increased urbanisation and imperatives of financial inclusion.
To demonstrate that successful projects can be undertaken in African countries, the AfDB has raised its capacity to finance private enterprises and public-private partnerships (PPPs).
*Culled from http://www.howwemadeitinafrica.com
Gulf African Bank to expand to Tanzania and Uganda
July 20, 2012 | 0 Comments
By Dinfin Mulupi*
Speaking during the opening of the Second Gulf African Bank Annual East and Central Africa Islamic conference in Nairobi, GAB chairman Suleiman Shahbal said the bank is pursuing licences that will see it start operations in the two East African nations.
Representatives from Bank of Uganda and Bank of Tanzania attended the conference and were expected to give advice on how GAB can successfully enter the two markets.
Shahbal said the growth of Islamic banking in Kenya in the past two years has proved its huge potential the world over.
“Countries in the region are leaning towards East African Community (EAC) integration and we want to be part of that expansion. Our strategy was to expand to East Africa after launching in Kenya, however, [those] plans were delayed by the financial crisis but now is the time to do [it],” said Shahbal.
GAB CEO Najmul Hassan said the increase in new accounts opened by both Muslims and non-Muslims has shown that the market is embracing the concept of Islamic banking.
GAB was launched in Kenya two years ago and has over 30,000 deposit accounts.
The bank is also seeking to invest in Islamic insurance, investment banking and microfinance.
“Islamic insurance is based on the principle of profit and loss sharing and should be in the market by the end of the year. Microfinance is even much more important since it is our obligation to support those who cannot access banking services. Talks and frameworks to achieve these projects are at advanced stage[s],” said Shahbal.
*Culled from http://www.howwemadeitinafrica.com
Indian firm to establish cement plant in East Africa
July 20, 2012 | 0 Comments
By Dinfin Mulupi*
Cemtech Sanghi Group, a subsidiary of the India-based cement giant, Sanghi Group, will this month begin construction of a Ksh.14 billion (US$180 million) cement project in the West Pokot district in the Rift Valley Province of Kenya.
A statement from the firm said it will also establish a 64 megawatts (MW) power plant of which 50 MW shall be sold to the national grid. Discussions are currently ongoing between the firm and the Ministry of Energy on a 25-year power purchase agreement.
The firm acquired all necessary permits and licences, which include permission from the Ministry of Industrialisation and 99 years of mining rights covering all limestone deposits in Pokot.
A delegation from the Indian firm visited the country in January 2010 and was assured of the government’s support in the completion of the Pokot cement facility as well as the power plant.
The firm paid Ksh.120 million ($1.5 million) to about 100 pastoral families to pave the way for the establishment of the plant with a production capacity of 120,000 metric tonnes of cement per year.
The group expects to directly employ more than 1,700 people and over 5,000 people indirectly.
Rwanda best place to do business in East Africa – report
July 20, 2012 | 0 Comments
By Dinfin Mulupi*
The report states that despite Kenya enjoying a business-friendly environment, doing business in Kenya is more challenging for investors compared to Rwanda. Rwanda emerged as the global top reformer in 2008/09 for carrying out seven out of the nine reforms enacted in the region over the review period. Reforms include:
- facilitating trade across borders;
- property registration;
- commercial laws and institutions; and
- access to credit.
According to the report (covering up to June 2009), Kenya only carried out minimal reforms during the review period compared to Rwanda, which undertook a wide range of changes.
Kenya’s Permanent Secretary in the East African Community (EAC) Ministry, David Nalo, said although Rwanda was rated the best in the region, Kenya may have overtaken Rwanda due to many reforms carried out in recent months.
“The cost of doing business in Kenya has reduced and we expect the situation will continue to improve as more reforms continue to be implemented,” he said. He identified poor infrastructure, for example the Mombasa-Nairobi–Kigali road, as challenges to doing business in the region.
Sylvia Solf of the World Bank said none of the East African countries made it into the global top 30. The average ranking for East African countries stood at 116 out of 183 economies overall.
Solf, who co-authored the report, said Kenya is performing well but should endorse reforms in all the economic sectors to attract more investments and maximise opportunities that come with its strategic position in the region by reducing the cost of doing business.
Investing in East Africa 101: Eight things investors should know
July 20, 2012 | 0 Comments
By Dinfin Mulupi*
East Africa’s profile as an investment destination has improved significantly in recent years with many foreign investors and multinational companies setting up base in the region. How we made it in Africa has in the past reported on many of these investments, including Google, advertising agency TBWA, private equity funds like Actis, and many others that are reinforcing their presence in the region.
The East African Community (EAC) is made up of Kenya, Uganda, Tanzania, Rwanda and Burundi, and has a combined population of around 132 million, with vast resources that has proved to be lucrative to many foreign investors. But where should one begin?
1. Political risk
All the five EAC member states have witnessed increased democratic space in the last few years and are pro-foreign investment. Although there have been incidents of violence, tribal clashes and terrorism attacks in the region, overall stability has improved.
2. Tech savvy
East Africa has made great strides in technology since the launch of mobile money transfer service M-Pesa five years ago. The region boasts of several open innovation spaces like the iHub in Kenya, kLab in Rwanda and Hive Colab in Uganda, which have fuelled innovation among young people.
“East Africa is at the cusp of a technology-driven inflection point,” says Ben Lyon, a US expat who co-founded KopoKopo, a web based mobile payment gateway that helps businesses process mobile payments.
The wide adoption of new technologies presents opportunities for foreign investors across various sectors like education, health, communication and media.
The region is well on its way to become one of the most attractive destinations for mining, oil, and gas activities. Uganda has made discoveries of around 2.5 billion barrels of oil, while Tanzania has large natural gas deposits. Earlier this year the discovery of crude in Kenya’s northern Turkana region also created a lot of excitement. Although the commercially viability of the find still needs be confirmed, large corporations like Petrobras, Total and Apache Corporation have reportedly expressed interest in Turkana. In addition, East Africa also boasts other resources such as gemstones, gold, coal, diamonds and limestone.
“East Africa is the next frontier for mining in Africa … East Africa is in the stage of discovery. This is the place to invest in,” says Monica Gichuhi, executive officer of the Kenya Chamber of Mines, a body whose mandate is to lobby for favourable legislation and showcase Kenya as a viable mining destination.
4. Improving infrastructure
Poor infrastructure has been a big impediment to investment, although in recent years several new projects have been announced, with some nearing completion. These include the multi-billion dollar Lamu Port-South Sudan-Ethiopia Transport Corridor (LAPSSET), a road, port and oil refinery project that will link Kenya to South Sudan and Ethiopia. The project is expected to ease the transportation of minerals and equipment within the region.
Rift Valley Railways (RVR) is on pace with the rehabilitation of the regional railway line linking Kenya and Uganda and is expected to ease congestion at the port of Mombasa. Another large project is Kenya’s Nairobi-Thika highway, a KSh. 27 billion (US$322 million) new road, which has recently inspired numerous new property developments.
Africa’s under-40 millionaires share their secrets to success By Claude Harding*
July 20, 2012 | 0 Comments
Forbes this week published a list of ten African millionaires in their 20s and 30s. Prior to the publication of the Forbes list, How we made it in Africa had already featured interviews with many of the mentioned entrepreneurs. In this article, a selection of Africa’s under-40 millionaires share their secrets to success and give advice to other budding entrepreneurs.
Jason Njoku | Age: 31 | Founder/CEO, Iroko Partners
Iroko Partners is the world’s largest online distributor of Nigerian films. In an earlier interview with How we made it in Africa, Njoku described the company’s iROKOtv platform as the “Netflix of Africa”. Iroko recently received an US$8 million investment from Tiger Global Management, a New York-based venture capital and private equity fund.
Njoku says the idea for the business was born from the difficulty his family had in finding Nigerian films in London. “Coming from a Nigerian family, I have always had a sense of the power of Nollywood films. I had difficulties when my mother asked me to get her some. Other family members also struggled to get their hands on their favourite films. I soon realised that there was a gap in the market since the films were only available on DVDs, which were quite difficult to find in the West. I bought the online licences for as much Nollywood content as I could and started to distribute them online,” he says.
Njoku’s first job was selling fruit and vegetables at a market in London. “It was cold and I had to get up really early,” he remembers.
These days Njoku’s biggest worry is to keep his team motivated. “I want them all to be engaged with the company and excited about where we are heading. We’ve seen rapid [staff] expansion in the last 12 months, from 18 to almost 100. I spend a lot of time thinking about getting the right people for the team, that they are happy in their roles and that they have a clear vision set in front of them.”
He says his tenacity is the biggest reason for his achievements.
Njoku’s advice to other African entrepreneurs? “Spot an opportunity, make a plan and run with it. I definitely had the right idea, in the right place, at the right time and I knew I could do it. I learnt from my mistakes, but still kept true to my own vision. You need to have that kind of confidence to make these things work. Don’t hang around waiting for things to happen.”
Kamal Budhabhatti | Age: 36 | Founder/CEO, Craft Silicon
Craft Silicon is one of Kenya’s leading software exporters, offering solutions to financial institutions around the world.
Budhabhatti started Craft Silicon after being deported from Kenya. “After I completed my studies I moved to Kenya [from India] and worked for a company in the polythene sector for a while doing data entry. Five months later a friend of mine approached me to write software for a local bank. Of course my boss found out about this and was not very pleased. He had me deported back to India. On my flight all I could think about was the great opportunities in Kenya. I moved back to Kenya and began writing software for banks full time. This eventually gave birth to what Craft Silicon is today,” he explains.
When starting the business, Budhabhatti worked without a salary for six years. “I concentrated on growing the company. We want to continue growing the company so that one day we can hire 10,000 people and sell our software all over the world. Today the company is valued at about $30 million. I am not very happy with that. There is still one zero missing at the end. My vision is that by the year 2020 we will have a valuation of $500 million.”
What parts of his job keep him awake at night? “The market is very competitive and therefore we have to be innovative to remain relevant. This is what I think about a lot, how to stay ahead and innovation is the key to this.”
He believes that Kenya’s tech entrepreneurs should come up with more unique ideas and that the country should stop focusing on the success of the M-Pesa mobile money platform. “I don’t see any unique ideas. I have not seen something that can genuinely be the next big thing. I am just not convinced. M-Pesa was invented five years ago, but everywhere you go, every other technology conference, the only thing we talk about is M-Pesa. We must come up with something new.”
Budhabhatti says that African entrepreneurs should concentrate on delivering high-quality products, and not on becoming overnight millionaires. “They should stay focused and deliver value for money and success will come as a by-product. They should not look at short term goals and ditch the ‘get rich quick’ mentality. To be successful, a long term strategy is inevitable.”
Ladi Delano | Age: 30 | CEO, Bakrie Delano Africa
Ladi Delano reportedly made his first fortune from a liquor company in China. These days the British-Nigerian entrepreneur is the CEO of Bakrie Delano Africa, a joint-venture between Delano and one of Indonesia’s biggest conglomerates, Bakrie Group. The company plans to invest $1 billion in Nigeria over the next five years.
“I have been an entrepreneur in emerging markets, generally south-east Asia and China. During this time, I have been involved in a variety of sectors and also natural resources M&A and structured finance,” says Delano.
So why is he now focusing on Nigeria? “Nigeria is attractive to the Bakrie Group as an investment destination for several reasons. It is experiencing excellent rates of economic growth, approximately 8% per year, which is forecast by a wide cross-section of respected economic commentators to continue over the medium to long term. Indeed, Nigeria is widely predicted to overtake South Africa as the African continent’s largest economy within three to four years. Within the context of this strong overall economic growth, there are individual sub-sectors where rates of growth exceed 8%.”
According to Delano, there is no shortage of entrepreneurial spirit among Nigerians. “We are a nation of businessmen.”
Delano explains that there is a perception among foreign investors that the Nigerian market has political and security risks. However, he says infrastructure is the country’s biggest challenge. “Investors could be hampered by infrastructure not keeping pace with economic growth. That challenge, however, is a function of success and a growing pain, which has been an issue for all rapidly growing and industrialising nations over many decades.”
He attributes his success to hard work and learning from mistakes. “It’s an old saying but the phrase ‘Show me a man who has never failed and I’ll show you a man who has never succeeded’ really resonates with me,” says Delano.
“All entrepreneurs suffer periodic ups and downs and running a successful, profitable business isn’t easy. If it was, everybody would be doing it. But this is Africa’s time and the demand levels within our own continent’s domestic economy needs satisfying. This is a huge opportunity for entrepreneurial, hard working individuals,” he adds.
*Culled from http://www.howwemadeitinafrica.com
Zuma warns on Africa’s trade ties to China
July 20, 2012 | 0 Comments
By Leslie Hook*
BEIJING — South African President Jacob Zuma warned Thursday that the unbalanced nature of Africa’s burgeoning trade ties with China is “unsustainable” in the long term.
The South African leader was addressing the China-Africa Forum in Beijing just after China’s president pledged $20 billion in loans to Africa, doubling the amount Beijing agreed to give the continent three years ago at the same forum.
“Africa’s commitment to China’s development has been demonstrated by supply of raw materials, other products and technology transfer,” Zuma said. “This trade pattern is unsustainable in the long term. Africa’s past economic experience with Europe dictates a need to be cautious when entering into partnerships with other economies.”
Zuma appeared to be referring to the concerns of some African nations about the unbalanced nature of the trade relationship. Two-way trade between China and Africa hit $166 billion last year, with a trade surplus in Africa’s favor due to exports of raw materials such as crude oil and copper. China is a major exporter of cheap manufactured goods to Africa, such as electronics and clothes.
Critics have accused China of taking a neo-colonialist approach to the continent and of exploiting Africa’s natural resources. Many African nations want China to import more than just resources.
China sees Africa as a strategic ally and has pushed for expanded African roles at the United Nations, while encouraging Chinese infrastructure and resources companies to invest in the continent.
China’s investment in Africa — estimated at $15 billion over the past decade — is growing rapidly, and Chinese companies are building infrastructure across the continent, from dams and airports to mines and wind farms. On Wednesday, Nigeria announced the signing of a $1.5 billion railroad project to be built by the state-owned China Civil Engineering Construction Corp.
While he hinted at potential long-term trade issues, Zuma spent much of his speech, which was made in the presence of Hu Jintao, China’s president, praising China’s “steadfast” commitment to Africa. That commitment, he said, “has already been demonstrated with concrete and tangible results particularly in terms of human resources development, debt relief and investment.”
The two nations have close ties, and South Africa joined the “BRIC” group of developing countries — Brazil, Russia, India and China — last year. South Africa has also attracted significant Chinese investment as it seeks to market itself as the gateway to other African countries.
China introduced several measures this week to help rebalance trade ties, including zero tariffs for an expanded range of African products. Beijing also pledged to hold more trade expos to display African merchandise.
Although Chinese companies have invested heavily in Africa, they have not always had a smooth experience. One of the low points came in 2010 when a Chinese mining boss in Zambia shot nearly a dozen local miners during a riot.
Chinese companies have also been caught up in the recent maelstrom of political changes in North Africa, with more than $4 billion worth of projects suspended in Libya after the fall of Moammar Gaddafi and the kidnapping of 29 Chinese workers in Sudan earlier this year.
The triennial China-Africa Forum hosts heads of state and ministers from more than 40 African countries and is a “pageant of China-Africa friendship and unity,” as one Chinese state-run paper put it.
In addition to the $20 billion loan commitment over the next three years, China also vowed to focus on cooperation in agriculture, infrastructure, cultural exchanges and more scholarships for African students to study in China. Chinese scholars say China’s aid to Africa is not mercenary, but instead motivated by historic ties.
“China regained its seat in the United Nations with the help of African countries,” said Zhang Haibin, an Africa expert at the Shanghai Institute for African Studies. “We cannot forget our old friends.”
That certainly seemed to be the case on Thursday, judging from the pomp and ceremony on display at the Great Hall of the People in Beijing. The normally stoic Hu was effusive in his welcoming speech to the forum Thursday morning.
“Forever we will be the good friends, partners and brothers of Africa,” he said. “We deeply thank the men and women of Africa for their support of China in its development.”
Gwen Chen in Beijing and Andrew England in Johannesburg contributed to this report.
*Source Washington Post
Google launch SMS version of Gmail in Africa
July 19, 2012 | 0 Comments
Google has launched a text message-based version of its email service targeted at users in Africa.
Gmail SMS can run on so-called “dumb phones” which only have very basic features and no access to the internet.
The service has so far been made available in Ghana, Nigeria and Kenya.
Gmail SMS is the latest in a line of Google products aimed at the African market – the company is also running educational programmes in the region.
The search giant describes its efforts in improving computer science training as “an important goal for Google in 2012”.
It recently offered grants to 17 universities to expand its Computer Science for High School project.
However lack of access to affordable hardware is still seen as a critical barrier to technology adoption across the continent.
Geva Rechav, Google’s product manager for emerging markets, explained in a blog post how Gmail SMS was adapted to work by using simple text commands.
“Gmail SMS works on any phone, even the most basic ones which only support voice and SMS,” he wrote.
“Gmail SMS automatically forwards your emails as SMS text messages to your phone and you can respond by replying directly to the SMS.
“You can control the emails received by replying with commands such as MORE, PAUSE and RESUME.
“Additionally, compose a new email as an SMS and send to any email address recipient – who will find your message in the right email conversation thread!”
It will be free to receive messages from the system, but any sent texts will be subject to standard network rates.
Across Africa, adoption of mobile services has been swift and widespread.
Mobile commerce offerings like microfinancing tool M-Pesa have in excess of 15 million users.
*Culled from BBC
iROKO Partners closes on $2m funding
July 17, 2012 | 0 Comments
– iROKO Partners, the world’s leading online distributor of Nigerian movies and music, announces today that it has closed on a final round of funding, totaling US$2m, from Swedish-based Kinnevik, an early investor in Groupon. The additional investment will be used to grow iROKO Partners’ operations in New York, London and Lagos, as well as for purchasing more content for its platforms iROKOtv (movies) and iROKING (music). The deal forms part of iROKO Partners’ second round of investment with US-based hedge fund, Tiger Global, in April 2012.
Jason Njoku, Founder & CEO of iROKO Partners commented: “We were already on our way towards becoming a world class company, but this investment is an awesome catalyst for us to increase our offering and solidify our market leadership.
“Kinnevik’s vast experience of working in emerging markets, combined with the momentum that iROKO Partners has gained in aggregating the African Diaspora is a winning combination. We’re extremely fortunate to have Kinnevik’s expertise on our board and we’re looking into new and innovative ways that we can bring incredible Nigerian entertainment to the world.”
Headquartered in Lagos, Nigeria and with offices in London and New York and a staff of almost 100, iROKO Partners was set up in December 2010 to bring Nigerian movies (Nollywood) and music to the African Diaspora. Its platform for showing Nollywood movies on demand, iROKOtv, has over 560,000 registered users and moved to a subscription-based model on 1 July 2012.
Mia Brunell Livfors, President and CEO of Investment AB Kinnevik, said: “We are impressed by the growth and entrepreneurship of iROKO Partners. In two years it has become one of Africa’s top tech companies and a global leader in the distribution of Nigerian movies and music, one of the largest and fastest content categories in the world. The predicted growth for the sector is exciting and iROKO is delivering this content to a global audience and building an online entertainment hub.”
iROKOtv, has been groundbreaking in bringing over 5,000 Nollywood films to the African Diaspora, with viewers logging on from over 178 countries across the world. To date, over 10 million hours of Nollywood movies have been watched on irokotv.com.
Launched in December 2011, iROKOtv is a subsidiary of iROKO Partners, Africa’s largest, legitimate distributor of Nigerian film and music entertainment with key partnerships with the likes of Facebook; iROKOtv viewers can login via their Facebook account, and is YouTube’s largest African partner. iROKO Partners is expected to increase its viewers to over 250 million in 2012 across its brands iROKOtv, iROKING (the “Spotify of Africa”), Nollywood Love and iROKtv, Africa’s answer to “E!”.
In April 2012 Tiger Global, a New York-based private equity and hedge fund run by an early investor in Facebook and Zynga, led two $4 million rounds of investment into iROKO Partners, in one of the largest ever fundraisings into a West African tech firm. The funding will continue to be used to build iROKOtv’s library and to continue working directly with Nollywood production houses to buy the higher prices for the online licenses to Nollywood films which enables them to better monetize their content and to reinvest in making more, higher quality productions.
In May 2012, iROKOtv announced that from 1 July 2012, subscribers across the world will have exclusive access to brand new and exclusive Nollywood releases, uploaded weekly for $5 per month and payable by SMS, PayPal or card.
Kinnevik was founded in 1936 and thus embodies seventy-five years of entrepreneurship under the same group of principal owners. Kinnevik’s objective is to increase shareholder value, primarily through net asset value growth. The company’s holdings of growth companies are focused around seven comprehensive business sectors; Telecom & Services, Online, Media, Micro financing, Paper & Packaging, Agriculture and Renewable energy. Kinnevik has a long history of investing in emerging markets which has resulted in a considerable exposure to consumer sectors in these markets. Kinnevik plays an active role on the Boards of its holdings.
Kinnevik’s class A and class B shares are listed on the NASDAQ OMX Stockholm’s list for large cap companies, within the financial and real estate sector. The ticker codes are KINV A and KINV B.
For further information please contact:
|+44 203 176 2808|
|Pelham Bell Pottinger|
|Victoria GeogheganElizabeth Snow||+44 20 7861 3821|