From Resource Curse to Blessing
August 15, 2012 | 0 Comments
By Joseph E. Stiglitz*
New discoveries of natural resources in several African countries—including Ghana, Uganda, Tanzania, and Mozambique—raise an important question: Will these windfalls be a blessing that brings prosperity and hope, or a political and economic curse, as has been the case in so many countries?
On average, resource-rich countries have done even more poorly than countries without resources. They have grown more slowly and with greater inequality—just the opposite of what one would expect. After all, taxing natural resources at high rates will not cause them to disappear, which means that countries whose major source of revenue is natural resources can use them to finance education, health care, development, and redistribution.
A large literature in economics and political science has developed to explain this “resource curse,” and civil-society groups (such as Revenue Watch and the Extractive Industries Transparency Initiative) have been established to try to counter it. Three of the curse’s economic ingredients are well known:
Resource-rich countries tend to have strong currencies, which impede other exports;
Because resource extraction often entails little job creation, unemployment rises;
Volatile resource prices cause growth to be unstable, aided by international banks that rush in when commodity prices are high and rush out in the downturns (reflecting the time-honored principle that bankers lend only to those who do not need their money).
Moreover, resource-rich countries often do not pursue sustainable growth strategies. They fail to recognize that if they do not reinvest their resource wealth into productive investments above ground, they are actually becoming poorer. Political dysfunction exacerbates the problem, as conflict over access to resource rents gives rise to corrupt and undemocratic governments.
There are well known antidotes to each of these problems: a low exchange rate, a stabilization fund, careful investment of resource revenues (including in the country’s people), a ban on borrowing, and transparency (so citizens can at least see the money coming in and going out). But there is a growing consensus that these measures, while necessary, are insufficient. Newly enriched countries need to take several more steps in order to increase the likelihood of a “resource blessing.”
First, these countries must do more to ensure that their citizens get the full value of the resources. There is an unavoidable conflict of interest between (usually foreign) natural-resource companies and host countries: The former want to minimize what they pay, while the latter need to maximize it. Well-designed, competitive, transparent auctions can generate much more revenue than sweetheart deals. Contracts, too, should be transparent, and should ensure that if prices soar—as they have repeatedly—the windfall gain does not go only to the company.
Unfortunately, many countries have already signed bad contracts that give a disproportionate share of the resources’ value to private foreign companies. But there is a simple answer: renegotiate; if that is impossible, impose a windfall-profit tax.
All over the world, countries have been doing this. Of course, natural-resource companies will push back, emphasize the sanctity of contracts, and threaten to leave. But the outcome is typically otherwise. A fair renegotiation can be the basis of a better long-term relationship.
Botswana’s renegotiations of such contracts laid the foundations of its remarkable growth for the last four decades. Moreover, it is not only developing countries, such as Bolivia and Venezuela, that renegotiate; developed countries like Israel and Australia have done so as well. Even the United States has imposed a windfall-profits tax.
Equally important, the money gained through natural resources must be used to promote development. The old colonial powers regarded Africa simply as a place from which to extract resources. Some of the new purchasers have a similar attitude.
Infrastructure (roads, railroads, and ports) has been built with one goal in mind: getting the resources out of the country at as low a price as possible, with no effort to process the resources in the country, let alone to develop local industries based on them.
Real development requires exploring all possible linkages: training local workers, developing small and medium-size enterprises to provide inputs for mining operations and oil and gas companies, domestic processing, and integrating the natural resources into the country’s economic structure. Of course, today, these countries may not have a comparative advantage in many of these activities, and some will argue that countries should stick to their strengths. From this perspective, these countries’ comparative advantage is having other countries exploit their resources.
That is wrong. What matters is dynamic comparative advantage, or comparative advantage in the long run, which can be shaped. Forty years ago, South Korea had a comparative advantage in growing rice. Had it stuck to that strength, it would not be the industrial giant that it is today. It might be the world’s most efficient rice grower, but it would still be poor.
Companies will tell Ghana, Uganda, Tanzania, and Mozambique to act quickly, but there is good reason for them to move more deliberately. The resources will not disappear, and commodity prices have been rising. In the meantime, these countries can put in place the institutions, policies, and laws needed to ensure that the resources benefit all of their citizens.
Resources should be a blessing, not a curse. They can be, but it will not happen on its own. And it will not happen easily.
*Source www.project-syndicate.org .Joseph E. Stiglitz, a Nobel laureate in economics, has pioneered path breaking theories in the fields of economic information, taxation, development, trade, and technical change. As a policymaker, he served on and later chaired President Bill Clinton’s Council of Economic Advisers, and was Senior Vice President and Chief Economist of the World Bank. He is currently a professor at Columbia University, and has taught at Stanford, Yale, Princeton, and Oxford.He is the author of The Price of Inequality: How Today’s Divided Society Endangers our Future.
Ex-Im Bank Approves Record $1.5 Billion in Financing of U.S. Exports to Sub-Saharan Africa in First Three Quarters of FY 2012
August 10, 2012 | 0 Comments
Ex-Im Bank Expands Cover Policy in Cameroon, Ethiopia, Tanzania and Angola
WASHINGTON, D.C. – In the first three quarters of FY 2012, the Export-Import Bank of the United States (Ex-Im Bank) approved a historic $1.5 billion in financing to support U.S. exports to sub-Saharan Africa, surpassing the previous record of $1.4 billion for the entire year in FY 2011.
The increase was driven by export growth in several sectors, including machinery, vehicles and parts, commodities and aircraft. Two of the top markets for U.S. exports in the region are South Africa and Nigeria, which are among Ex-Im Bank’s nine key country markets.
“Proportionately, Ex-Im Bank supports more U.S. exports to sub-Saharan Africa than it does to the world at large. Last year, we financed 6.7 percent of U.S. exports to this region. With this new record in sub-Saharan authorizations already achieved in FY 2011, we are on target to increase that percentage,” said Ex-Im Bank Chairman and President Fred P. Hochberg.
“Sub-Saharan Africa is a priority region because many countries have strong prospects for long-term economic growth and infrastructure development. We want to help more U.S. exporters increase their sales to this emerging region,” he added.
In 2012, Ex-Im Bank expanded its cover policies in four sub-Saharan African countries: Cameroon (opened for long-term in the public sector), Ethiopia (opened for short-term and medium-term in both the public and private sectors), Tanzania (opened for long-term in the public sector) and Angola (opened for long-term in the private sector). The cover policies changes were approved by the Bank’s board of directors, following upon country-risk upgrades determined through an interagency country-risk review process.
Ex-Im Bank Chairman Hochberg, Vice Chair Wanda Felton and Bank staff conducted a business-development mission in sub-Saharan Africa from August 6 – 10, visiting South Africa and Mozambique. The trip included participation in the U.S.-South Africa Strategic Dialogue with U.S. Secretary of State Hillary Rodham Clinton in Pretoria on August 7.
On August 7, Chairman Hochberg signed a Declaration of Intent with the Industrial Development Corp. of South Africa Ltd. (IDC), indicating Ex-Im Bank’s interest in financing up to $2 billion of U.S. technologies, products and services to South Africa’s energy sector, with an emphasis on clean-energy technologies.
Recent Ex-Im Bank success stories in sub-Saharan Africa:
In April, Ex-Im Bank authorized a $37.2 million loan guarantee to support the export of U.S. road-construction equipment and related services by Hoffman International Inc. in Piscataway, N.J., to the Republic of Cameroon. Ex-Im Bank is guaranteeing a medium-term loan from Societe Generale in New York, N.Y., to Cameroon’s Ministry of Economy, Planning and Regional Development. The financing will support the purchase of 150 new and used machines produced by U.S. manufacturers that include Mack Trucks Inc., Terex Corp., Caterpillar Inc. and Grove US LLC.
In June, Ex-Im Bank approved a $7 million loan guarantee supporting the export of dredging equipment and spare parts from Dredging Supply Co., in Reserve. La., to Japaul Oil and Maritime Services PLC in Port Harcourt, Nigeria. Ex-Im Bank is guaranteeing a medium-term loan from RB International Finance (USA) LLC in Bethel, Conn., to Japaul Oil and Maritime Services for the purchase of the equipment. The foreign buyer’s primary business is oil and maritime services in the upstream segment of Nigeria’s oil and gas industry.
The U.S. exporter, Dredging Supply Co., specializes in manufacturing custom-designed, portable dredges for a variety of uses. The company has a total of approximately 125 employees at its facilities in Reserve, La.; Poplarville, Miss.; Greenbush, Mich.; and Stoneboro, Pa.
About Ex-Im Bank:
Ex-Im Bank is an independent federal agency that helps create and maintain U.S. jobs by filling gaps in private export financing at no cost to American taxpayers. In the past five years, Ex-Im Bank has earned for U.S. taxpayers $1.9 billion above the cost of operations. The Bank provides a variety of financing mechanisms, including working capital guarantees, export-credit insurance and financing to help foreign buyers purchase U.S. goods and services.
Ex-Im Bank approved $32.7 billion in total authorizations in FY 2011 — an all-time Ex-Im record. This total includes more than $6 billion directly supporting small-business export sales — also an Ex-Im record. Ex-Im Bank’s total authorizations are supporting an estimated $41 billion in U.S. export sales and approximately 290,000 American jobs in communities across the country. For more information, visit www.exim.gov.
The golden leaf: boom time in Zimbabwe
August 4, 2012 | 0 Comments
By Ian Scoones*
Zimbabwe’s tobacco industry is booming once again. From the low point in 2008, at the peak of hyperinflation, when only 48m kg was sold, optimistic estimates for 2012 suggest that around 150m kg will be sold, with prices early in the selling season around 30% higher than last year. Production levels are not back to the peak level in 2000 of 236m kg, but the trend is ever upwards, with sales rising from 65m to 123m to 132m kg between 2009 and 2011. In 2011, the sales generated around US$360m, helping to fuel the dramatic 34% growth in the agricultural sector in the past year. With the season not yet concluded over US$440m has been sold in 2012.
Once the almost exclusive preserve of around 3000 large-scale white farmers, tobacco is now being produced and sold by around 60000 black farmers from the new A1 and A2 resettlement areas. With average sales of around 10 bales per farmer, this will result in an income of around US$5000 – no mean sum in Zimbabwean terms. And of course tobacco creates employment along the value chain, as well as tax revenues.
This is one of the really unexpected success stories of the land reform. While many accepted that small-scale A1 farmers with larger areas of land could engage in successful staple production and ‘accumulate from below’, as we described across our sample areas in Masvingo, for new farmers to participate so successfully in the high value export industry of tobacco farming was seen as unlikely. Most had written off the industry, expecting it to atrophy and die.
But contrary to expectations, the tobacco industry has been transformed, from the farms to the auction floors. A whole new set of people are involved. It is not only the farmers who have changed, but also the labourers, the buyers and the financiers. Women are increasingly involved, particularly in the processing, sorting and auction-floor activities. White farmers are still involved too in the high quality/high cost end of the industry, in a few farms remaining under their control, but also in lease arrangements with A2 farmers, who needed the skills and expertise for the production of top quality flue cured Virginia.
New contracting arrangements have emerged to support smaller scale farmers grow tobacco. Contracting reputedly resulted in the production of 34m kg in 2011, out of the total of 132m. Some major new entrants have emerged in the market, notably those with Chinese connections. Tianze, for example, has around 250 growers linked to it. Overall there are around 13 contract companies operating, as well as multiple smaller scale leasing and other arrangements.
It is this financing aspect that has been critical for the dramatic growth of the small-scale sector. This has allowed farmers to invest in inputs, and the rate of refusal has declined, and overall quality has increased. Chinese contract companies, loan facilities and other forms of finance have transformed the system. More traditional players, from the western based companies and other commercial lenders, are now re-engaging knowing that there is money to be made.
There are downsides of the tobacco economy, of course. Curing is largely carried out using local fuelwood sources, and the impact on forests and woodland resources has been high. A more sustainable source of fuel will clearly be necessary. Equally, the high labour demands have resulted in accusations of child labour on the farms, flouting labour laws and undermining child rights. These of course were core issues when white farms took on tobacco as a core crop some decades ago, and will hopefully only be transitional challenges.
For the longer term, the tobacco story in the last five years has some important lessons for the wider agrarian transition. While tobacco is not a crop appropriate everywhere (and is not significant in our study areas in Masvingo, for instance), there are some more generic insights worth noting. First, A2 farmers, who have really struggled elsewhere including in Masvingo with poor production due to low capitalisation and investment, can make it under the right circumstances. Second, markets are key, but so is support to engage in markets. It is not just price levels, demand and supply, but up-front investment, skill development and knowledge building about quality control and market niches. Third, finance is vital; and that’s where Chinese finance and contracting arrangements become critical. Fourth, there are definitely roles for white farmers with skills and capacities in a particular commodity area, but probably involving engagement in different ways, at the high end of the market.
Hopefully the lessons from the tobacco transition can be applied to other aspects of the agricultural economy, leveraging finance, expertise and market access for the benefits of a larger group of people than the previously narrow, privileged large-farm sector.
*This blog was originally posted on the zimbabweland blog. For more go to:http://zimbabweland.wordpress.com/.
‘Virtual lectures’ to help cope with Zimbabwean brain drain
July 31, 2012 | 0 Comments
By By Andrew Mambondiyani*
HARARE – A virtual lecture hall, enabling lectures to be streamed to university campuses from around the world, aims to plug the gap in scientific teaching staff at the University of Zimbabwe (UZ), which has suffered years of brain drain.
The Virtual Lecture Hall (VLH) was launched last month (29 June) at UZ’s College of Health Sciences (UZ-CHS) and Faculties of Science and Veterinary Science, by the UK-based Council for Assisting Refugee Academics (CARA) and Econet Wireless, the mobile communications company funding the project.
The VLH initiative will support academic disciplines suffering from low teaching numbers. It will also foster engagement with the Zimbabwean diaspora and help develop international partnerships, according to Laura Broadhurst, CARA’s Zimbabwe programme manager.
“The brain drain of academic staff [from Zimbabwe] is a critical issue, and CARA was encouraged by a broad section of stakeholders […] to alleviate some of the problems around this issue,” Broadhurst told SciDev.Net.
She added that Zimbabwean university science departments have been hardest hit by the brain drain, — mainly the result of low salaries — with skilled staff leaving the country, often for Australia, Canada, South Africa, the United Kingdom, and the United States.
The VLH will provide a projection screen and adequate bandwidth for students and lecturers to view ‘virtual’ lectures and accompanying slides clearly.
“It is hoped that this project will not only enable members of Zimbabwe’s academic diaspora to re-engage with the university’s future, but will improve standards of teaching and research, and facilitate increased networking and collaboration with universities outside Zimbabwe,” Broadhurst said.
Successful trial lectures have already been streamed, Broadhurst says. “In the new academic year, King’s College, London, will stream the lectures required by the UZ-CHS — such as anatomy and physiology — from a large lecture hall in the centre of London.”
CARA plans to replicate the model in other universities, although subject to funding, according to Broadhurst.
Morris Mtisi, a Harare-based educational consultant, said the VLH concept was a clear acknowledgement of the severe impact of brain drain over recent years.
“It is a brain drain management strategy that will help the country tap [into] intellectuals in the diaspora”, Mtisi toldSciDev.Net. “This will obviously add lots of value to Zimbabwean intellectual or academic development”.
Midion Mapfumo Chidzonga, an oral health professor and dean of UZ-CHS, said: “This is the great moment we all have been waiting for, turning the virtual into reality”.
*Source– SciDev Net
Bharti Airtel reinforces commitment to developing talent in Africa
July 27, 2012 | 0 Comments
NAIROBI, Kenya, July 25, 2012/ – Leading global telecommunications company, Bharti Airtel (‘Airtel’) today announced a partnership with the largest e-learning provider in Africa – The Learning Resources Management Group – to provide an extensive e-learning program for Airtel employees across 17 African countries.
The implementation of this program signals a new dawn of staff development, reinforcing the telco’s commitment to nurture and develop local talent and groom its employees for leadership positions within the company.
“Our people are our main source of competitive advantage,” explains David Ssegawa, Chief Human Resources Officer at Airtel Africa. “We are committed in investing and providing our employees with opportunities to learn and grow within the organization. This latest initiative is in line with our commitment to nurture local talent and develop the capabilities of the workforce. We firmly believe that this initiative will bring in benefits of ‘flexibility and convenience’ which will allow the employees to have access to their chosen courses anytime, anywhere.
He further added, “In addition to the practical benefits it offers, the program will also build a culture of learning and community amongst Airtel employees by facilitating and sharing knowledge and expertise between peers. In the long run, I am confident this will increase both the capabilities and the productivity of our employees.”
Airtel has invested in a comprehensive suite of 500 courses from the Learning Resources Management Group touching on a range of subjects including – Accounting, IT, HR, Customer Service, Leadership and Management skills, amongst others.
In Zimbabwe Land Takeover, a Golden Lining
July 23, 2012 | 0 Comments
By LYDIA POLGREEN*
HARARE, Zimbabwe — When Roger Boka started his auction business in the 1990s, this city’s tobacco trading floors were hushed places, save the mellifluous patter of the auctioneer. A handful of white farmers, each selling hundreds of bales of tobacco, arrived in sport utility vehicles, checking into the city’s best hotels while waiting for their big checks to be cut.
During this year’s auction season, a very different scene unfolded underneath the cavernous roof of the Bock Tobacco Auction Floors. Each day, hundreds of farmers arrived in minibuses and on the backs of pickup trucks, many with wives and children in tow. They camped in open fields nearby and swarmed to the cacophonous floor to sell their crop. The place was lively and crowded; two women gave birth on the auction floor. The most obvious difference, though, was the color of their faces: every single one of them was black.
“You used to only see white faces here,” said Rudo Boka, Mr. Boka’s daughter, who now runs the family business. “Now it is for everybody. It is a beautiful sight.”
Before Zimbabwe’s government began the violent and chaotic seizure of white-owned farms in 2000, fewer than 2,000 farmers were growing tobacco, the country’s most lucrative crop, and most were white. Today, 60,000 farmers grow tobacco here, the vast majority of them black and many of them working small plots that were allotted to them in the land upheavals. Most had no tobacco farming experience yet managed to produce a hefty crop, rebounding from a low of 105 million pounds in 2008 to more than 330 million pounds this year.
The success of these small-scale farmers has led some experts to reassess the legacy of Zimbabwe’s forced land redistribution, even as they condemn its violence and destruction.
The takeover of white commercial farms was a disaster for Zimbabwe on many levels. It undermined one of Africa’s sturdiest economies, and as growth contracted and its currency became worthless because of hyperinflation, joblessness and hunger grew. Large chunks of land were handed to cronies of President Robert Mugabe, many of whom did not farm them. It spurred a political crisis and violent reprisals by the security forces that have killed hundreds of people. Yields on food and cash crops plummeted.
But amid that pain, tens of thousands of people got small farm plots under land reform, and in recent years many of these new farmers overcame early struggles to fare pretty well. With little choice but to work the land, the small-scale farmers have made a go of it, producing yields that do not match those of the white farmers whose land they were given, but are far from the disaster many anticipated, some analysts and scholars say.
“We cannot make excuses for the way it was carried out,” said Ian Scoones, an expert on farming at the University of Sussex who has been intensively studying land reform in Zimbabwe for the past decade. “But there are many myths that have taken hold — that land reform has been an unmitigated disaster, that all the land has been taken over by cronies in the ruling party, that the whole thing has been a huge mess. It has not. Nor has it been a roaring success.”
The result has been a broad, if painful, shift of wealth in agriculture from white commercial growers on huge farms to black farmers on much smaller plots of land. Last year, these farmers shared $400 million worth of tobacco, according to the African Institute for Agrarian Studies, earning on average $6,000 each, a vast sum to most Zimbabweans.
“The money that was shared between 1,500 large-scale growers is now shared with 58,000 growers, most of them small scale,” said Andrew Matibiri, the director of Zimbabwe’s Tobacco Industry and Marketing Board. “That is a major change in the country.”
The new farmers are receiving virtually no assistance from the government, which for years poured money into larger farms given to politically connected elites.
Instead, farmers are getting help from the tobacco industry, in the form of loans, advances and training. It is in Ms. Boka’s interest to revive the industry, so the company has invested heavily in helping farmers improve the yields and quality.
Tobacco is a tricky crop, requiring precise application of fertilizer and careful reaping. It must then be cured and graded properly to fetch a top price.
Recently, Alex Vokoto, head of public relations at the auction house, spotted several bales of desirable tobacco leaves cured to a honey color on the floor, and hustled the man who grew them, Stuart Mhavei, into the V.I.P. lounge for a cup of coffee and a chat.
“This man is growing top-quality tobacco, and he has only been at it for three years,” Mr. Vokoto said.
Mr. Mhavei, a 40-year-old tile layer, got a small piece of a tobacco farm several years ago in the town of Centenary in central Mashonaland, about 80 miles from Harare.
“All the big guys who got land, they are doing nothing,” Mr. Vokoto said. “But these small guys are working hard and really producing.”
Mr. Mhavei has steadily increased his yield, quality and income. So far this season, he has earned more than $10,000 on part of a vast farm that once belonged to a white family, investing the profits in a truck to transport his tobacco, as well as renting the truck to other farmers.
Mr. Mhavei said that like many of the other people who got land, he supports Mr. Mugabe and his party, ZANU-PF.
“Why should one white man have all this?” he asked, sweeping an arm across the lush, rolling farmland around his fields. “This is Zimbabwe. Black people must come first.”
Charles Taffs, president of the Commercial Farmers Union, said that the industry could have been transformed to include more black farmers in a much less destructive way.
“The tragedy with tobacco is that expansion, if they had the right policies, could have been done in the 1990s in conjunction with the commercial sector,” Mr. Taffs said. Instead, hundreds of thousands of workers have lost their jobs and the country has suffered huge economic losses as a result.
The personal cost for white commercial farmers has been immense. One white tobacco farmer in northern Zimbabwe whose family purchased its land after independence described the slow, painful erosion of his family’s livelihood.
“Now that we are down to less than 200 hectares, there isn’t enough income to support everyone,” said the farmer, who asked not to be identified because he feared seizure of even more land if he spoke out. A plot of 200 hectares is less than 500 acres.
His brother had to leave the farm to find work elsewhere, and his own future was deeply uncertain. The farm employs far fewer workers. Yields are down since critical investments in irrigation and other infrastructure have been put off, he said.
“We are Zimbabweans,” the farmer said. “We employ people, and take care of our workers. It is really painful to see this happening to our country.”
The tobacco yield is still below its peak in 2000, when the crop hit 522 million pounds. But Tendai Murisa, a researcher who has studied tobacco farming since land reform, said that judging the success of land reform by looking at production figures misses a crucial point.
“No one ever argued that this is a more productive form of farming,” Mr. Murisa said. “But does it share wealth more equitably? Does it give people a sense of dignity and ownership? Those things have value, too.”
*Source www.nytimes.com. A version of this article appeared in print on July 21, 2012, on page A1 of the New York edition with the headline: In Zimbabwe Land Takeover, a Golden Lining.
Nigeria’s low-cost tablet computer
July 21, 2012 | 0 Comments
BBC 20 July 2012
© Encipher Group | BBC Sport
Nigeria’s Saheed Adepoju is a young man with big dreams. He is the inventor of the Inye, a tablet computer designed for the African market.
According to the 29-year-old entrepreneur, his machine’s key selling point is its price – $350 (£225) opposed to around $700 for an iPad.
He believes that, because of this, there is a big market for it in Nigeria and elsewhere in Africa, particularly amongst students.
He is also hoping to sell his tablet – which runs on the Google Android operating system – to the Nigerian government and plans to have at least one computer in each local government area.
“The Inye is a mobile internet device. It gives you access to the internet; it allows you to play media files and watch movies. What we have is an 8-inch device, a device that is half-way between a laptop and a mobile phone,” he told the BBC’s series African Dream.
“You have the standard software applications that come pre-installed and then you have the ones that we are working with various local developers to bundle on,” he added.
Among those local apps there is one designed to raise awareness about HIV and others related to water and sanitation.
“We work with local developers that have expertise in particular areas so that we don’t end up doing so much work and we just have a collaborative way of doing things together,” he said.
‘Word of mouth’
Mr Adepoju has a background in software development and is a Sun-certified Java programmer.
Upon graduation in 2009, he returned to his home country and started working for a consulting firm.
“Within eight months I got fired, primarily because of differences in approach to doing business. In the middle of all this, the Apple iPad launched, back in January of 2010, which inspired us to actually look to build such [a] product within the African marketplace,” the entrepreneur told the BBC Africa’s Chris Ewokor.
He said that, with that goal in mind, he borrowed money from friends and family, raising a total of about $60,000.
According to him, all of that went on the devices and the logistics – there was no budget for marketing, so early advertising was “word of mouth” on social media.
The first 100 units of the Inye, which means One in Nigeria’s Igala language, were built in China and, after receiving feedback from its users, a second version was launched in May 2011.
Encipher Group, the company he cofounded with web developer Anibe Agamah, also offers customised IT services and products, including cloud computing, which are mostly based on open technology to keep costs down.
According to Mr Adepoju, the company and the apps it develops are focused on preserving local culture through technology and making products which are specific to the local market.
Another product that the firm has been working on is Encipher TV, a box where people can watch African television, plays and films.
However, he says that it has not been easy to raise capital in order to develop the business faster.
“Here venture capital (VC) is still in its infancy and most VC firms wound want to invest in tried and trusted companies that have gained some form of traction,” he said.
“We face the challenge of getting people to listen to the various propositions. We’ve been to a number of private investors and also to the government,” he explained.
Not surprisingly, his immediate plan is to “try and raise capital from whatever sources we can get – locally, internationally or privately – and to try and still to push the brand forward as much as we can”.
Will his tablet computer succeed in such a competitive environment? Only time will tell but Mr Adepoju and his colleagues are adamant that it will, not only in Nigeria but also in other African markets.
African Dream is broadcast on the BBC Network Africa programme every Monday morning, and on BBC World News throughout the day on Fridays
Every week, one successful business man or woman will explain how they started off and what others could learn from them.
InyeScreen: 8-inch capacitive touchscreen
Connectivity: WiFi, 3G, Bluetooth
I/O: USB, micro USB, SD card slot (up to 32Gb), 35mm sound jack, HDMI, SIM card for 3G
Storage: 8Gb internal, 16Gb in the box
Warranty: 12 months
App store: Google play store
Local apps: Spinlet for streaming local Nigerian music and many locally inclined applications
Source: Encipher Group
Vast aquifer found in Namibia could last for centuries
July 21, 2012 | 0 Comments
By Matt McGrath Science reporter*
A newly discovered water source in Namibia could have a major impact on development in the driest country in sub-Saharan Africa.
Estimates suggest the aquifer could supply the north of the country for 400 years at current rates of consumption.
Scientists say the water is up to 10,000 years old but is cleaner to drink than many modern sources.
However, there are concerns that unauthorised drilling could threaten the new supply.
For the people of northern Namibia water is something that they either have too much of or too little.
The 800,000 people who live in the area depend for their drinking water on a 40-year-old canal that brings the scarce resource across the border from Angola.
Over the past decade the Namibian government have been trying to tackle the lack of a sustainable supply in partnership with researchers from Germany and other EU countries.
They have now identified a new aquifer called Ohangwena II, which flows under the boundary between Angola and Namibia.
On the Namibian side of the border it covers an area roughly 70 km by 40 km (43 miles by 25 miles).
According to project manager Martin Quinger, from the German federal institute for geoscience and natural resources (BGR), it’s a substantial body of water.
“The amount of stored water would equal the current supply of this area in northern Namibia for 400 years, which has about 40 percent of the nation’s population.”
“What we are aiming at is a sustainable water supply so we only extract the amount of water that is being recharged.
“What we can say is that the huge amount of stored water is will always be enough for a back up for an area that is currently supplied only by surface water.”
This region is dependent on two rivers for its water supply. But this has restricted agricultural development to areas close to these water sources. Mr Quinger says that the new aquifer has great potential to change the nature of farming in the area.
“For the rural water supply the water will be well suited for irrigation and stock watering, the possibilities that we open with this alternative resource are quite massive.” he explains.
As well as providing a new source for agriculture in a region the aquifer will augment existing potable supplies. Martin Quinger says the discovery may be up to 10,000 years old but it is still good to drink.
“If the water [has spent] 10,000 years underground, it means it was recharged at a time when environmental pollution was not yet an issue, so on average it can be a lot better than water that infiltrates in cycles of months or years.”
The natural pressure that the water is under means that it is easy and cheap to extract. But because a smaller salty aquifer sits on top of the new find it raises the possibility that unauthorised drilling could threaten the quality of the water.
Martin Quinger says that random drilling into the aquifer could be dangerous.
“If people don’t comply with our technical recommendations they might create a hydraulic shortcut between the two aquifers which might lead to the salty water from the upper one contaminating the deep one or vice versa.”
One of the biggest advantages of the new aquifer could be in helping people cope with climate change.
The researchers estimate that it could act as a natural buffer for up to 15 years of drought.
As well as identifying the new water source a key aim for the researchers involved is to develop the capacity among young Namibians to manage their country’s water resources before the funding from the EU runs out.
*Culled from BBC Africa
Building Systems That Change Lives in Rwanda
July 21, 2012 | 0 Comments
By Valerie Alexander *
I spent yesterday and today traveling with President Clinton through Rwanda, a country he first visited in 1998, as president. I was honored to join him on his fourth trip to the country, and to learn of the dramatic change that’s taken place here since that first visit 14 years ago. In Rwanda we see the good that can come when people are given the investment and opportunity they need to secure their own futures – when people’s hard work and good efforts are rewarded with strong systems that yield strong outcomes.
In 1998, Rwanda’s per-capita income was about $268 per year. Today it’s about $1,300 per year – almost a fivefold increase. The country is building stronger systems, and in turn, a culture around the predictability of good results for good efforts.
We can see the success of these efforts in the Clinton Foundation projects we visited yesterday and today, and in the people we’ve met whose lives have been measurably improved by the Foundation’s programs and by the work of our friends and partners.
At the new Butaro Cancer Center in Northern Rwanda, we met local doctors and staff who are not only the sole providers of cancer treatments in the region but also the most innovative. They are building the health infrastructure that’s needed to sustain quality care in the region long into the future. We also met mothers and children who will have futures because of this work – and who will return to their communities to lead healthy, productive lives. I can’t think of an experience more meaningful than meeting people whose lives have been saved or changed by the work we do.
Today we stopped in Kigali to learn about the Human Resources for Health (HRH) program – which is addressing a critical shortage of health workers in Rwanda not by staffing clinics and hospitals with foreign specialists, but by building a local, sustainable education system, in partnership with 13 top-ranked U.S. schools. Currently, Rwanda has only 633 physicians for a population of over 10 million people.
Also in Kigali, we visited the Mount Meru Soyco factory, which is currently under construction. We met with local farmers who will benefit from the agribusiness project through our Clinton Hunter Development Initiative. The lush green landscape – the backdrop to the newly erected steel beams – will become the permanent home for a fully
functioning processing facility soon. And that was an overwhelming sight. Through a translator, I asked a farmer who also serves as president of one of the local cooperatives, what this project means to him and to his family. His wide smile needed no translation. What is taking place is truly a game changer.
I see these projects in photo and video every day. I work alongside our local staff and write about the dramatic impact we’re having on the ground – yet none of that compares to seeing the work firsthand, or meeting the people whose lives have been impacted by our programs. In my official capacity on staff, I have the privilege of communicating the Foundation’s great work to people the world over. Yet over this past week, people have been communicating the Foundation’s great work to me.
* Source www.clintonfoundation.org
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.
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