Why cities, not countries, should drive investment decisions in Africa
July 13, 2012 | 0 Comments
By Claude Harding*
Africa is urbanising at a rapid pace. It is estimated that around 40% of Africans currently live in urban areas, making Africa more urbanised than India, and slightly less urbanised than China.
According to Standard Bank analyst Simon Freemantle “2030 will be the tipping point whereby more Africans will reside in urban than rural areas for the first time in the continent’s history”. By 2050 it is expected that more than 60% of Africans will be urbanised.
This urbanisation is likely to lead to a growing demand for consumer goods, presenting an array of business opportunities for companies looking to tap into the African market.
In a new report, entitled Urban world: Cities and the rise of the consuming class, consulting firm McKinsey notes that “most companies are still not looking at cities as they calibrate strategy”. The firm has found that “less than one in five executives is making location and resource decisions at the city, rather than the country level”.
“Companies that understand the shifting urban marketplaces relevant to their businesses and build an early presence with sufficient scale are likely to benefit from being the incumbent with better market access and higher margins. Looking at cities rather than countries can be eye-opening. Take laundry care products as an example. We expect to see more sales growth of these products in São Paulo than in either France or Malaysia over the next decade,” notes the report.
During this year’s World Economic Forum of Africa, Martyn Davies, CEO of South African-based Frontier Advisory, noted that in the future African cities will compete for investment.
McKinsey says that a large chunk of the world’s urban growth will come from a group of developing market cities, dubbed the Emerging 440. It is expected that these emerging market cities will account for 47% of global GDP growth between 2010 and 2025. Africa and the Middle East together contribute 39 cities to this group, of which 37 are classified as ‘middleweights’ – cities that have populations of between 200,000 and 10 million.
Middleweight cities in Africa include Angola’s capital Luanda, the third-largest Portuguese speaking city in the world; and resource-rich cities as Kumasi, which produces almost half of Ghana’s timber; and Port Harcourt, the centre of Nigeria’s oil industry.
Young, entry-level consumers
Although emerging market cities will experience an increase in demand for consumer goods, the level of adoption for specific products will differ from city to city. Demographic differences will play a large role. Companies that are targeting the African consumer should therefore take note of Africa’s relatively young population.
For example, in “Nigerian cities, one-third of the entire population is aged below 16 and sales of baby food are running at more than twice the global average at similar income levels.”
Of the top 20 cities that McKinsey has identified as growth hot spots for companies targeting young, entry level consumers, 15 are in Africa. The list includes urban centres such as Lagos, Dar es Salaam, Ouagadougou, Kampala, Lusaka and Ibadan.
Urbanisation in Africa will also lead to an increase in demand for buildings, container capacity at ports, and municipal water. This creates a huge challenge for governments, but is also an opportunity for the private sector.
“The world’s new urban consumers will have an impact far beyond sales of goods and services. To cater to their needs, cities will need to invest heavily in infrastructure,” notes McKinsey.
*Culled from http://www.howwemadeitinafrica.com
Zambia – the new bread basket of Africa?
July 13, 2012 | 0 Comments
A recent Reuters article reports that Zambia has enough maize stocks to help partly fill a regional gap as a supply crunch looms in southern Africa, pushing up futures prices for the staple and accelerating food inflation.
It is exporting to South Africa, Zimbabwe, Democratic Republic of Congo, Kenya, Mozambique, Botswana, Burundi and Namibia. “We are monitoring the situation very carefully to ensure that we don’t end up importing maize. I think we are standing on very firm ground in terms of food security,” Zambia’s agriculture minister Emmanuel Chenda said, striking a rather cautionary tone. “We had more than one million tonnes of surplus maize. We decided to export 600,000 tonnes because we didn’t have storage space and so far we have sold 200,000 tonnes,” he said.
Analysts are, however, concerned about Lusaka’s costly spend on maize purchases from farmers, done via the Food Reserve Agency. Brian Tembo, an Economics Association of Zambia analyst, said the government was buying the maize at above market prices and selling it at reduced prices. He said this meant the government was effectively using “treasury funds to subsidise the region”.
Zambia harvested 3m tonnes of maize in the 2010/11 season, from 2.8m tonnes the previous season. Zambia’s maize season runs from October to August. The country’s big yields have been attributed to government subsidies to peasant farmers in the form of fertiliser and seeds. However, the crop ultimately depends on rain and the agriculture minister has said the 2011/12 season had gotten off to a bad start because of erratic weather.
South African maize prices are around record highs as stocks remain tight until the next marketing season starts in May. South Africa has so far imported from Zambia and Romania and producers say the country may need to import about 700,000 tonnes of white and yellow maize to make up for shortfalls. “There are some people that are getting desperate to try and find some maize … On the white maize side, we are definitely in for a very tough time between now and May,” Jannie de Villiers, Grain SA’s chief executive, said.
South Africa previously had a surplus, but new demand came from outside of the region and so the market overcommitted itself.
Over in Malawi, maize exports have been suspended after reports that 10 of its 28 districts faced food shortages. “We want to make sure that we have enough in stock for distribution to the affected families. We have set aside 400,000 tonnes to distribute to an estimated 200,000 families,” said Erica Maganga, principal secretary in ministry of agriculture.
Malawi’s maize harvest fell to 3.2m tonnes in the 2010/11 season from 3.5m tonnes the season before. Maize prices have jumped by almost 50% to USD 18 per 50 kg bag.
It is clear that food security remains a challenge that sub-Saharan African governments need to address. Zambia’s effort towards increasing yields by subsidising small-scale farmers is commendable and perhaps other regional governments should follow suit. However, bumper harvests should also be managed well to ensure consistent food supply in future periods.
In a presentation by MACO MLF-Zambia in January 2010, they highlighted Zambia’s agricultural potential, stating that only 14% of arable land was being utilised. Moreover, the country has abundant water resources to ensure all-year round agricultural production. We believe the country should develop the agricultural sector further so as to reduce its dependence on copper mining.
*Imara is an investment banking and asset management group renowned for its knowledge of African markets.Courtesy of http://www.howwemadeitinafrica.com
Five reasons why Africa should take off
July 13, 2012 | 0 Comments
By Wolfgang Fengler*
A week hardly goes by without one or more international investors announcing major investment interests in Nairobi, or other African capital cities.
Nokia, Nestle, and IBM are some of the companies which intend to position themselves more strongly in (East) Africa. True, their investments may still be low by international standards, but they are increasingly becoming noticeable.
On a macroeconomic level, the new Africa momentum has also been evident. Africa has weathered both the global financial crisis, and the turbulence in the eurozone. According to the World Bank, sub-Saharan Africa is projected to grow above 5% in 2012 and 2013. This would be higher than the average of developing countries (excluding China), and substantially, above growth in high-income countries.
This means that at some point in this decade, Africa could grow above the levels of Asia. A few years ago, it would not have been possible for economic observers to consider such a scenario. Once Africa becomes the fastest growing continent in the world; this will also be the true turning point for Africa’s global perception.
There are five reasons why Africa can become an emerging region over the next decade, and Kenya provides a good illustration of this. The first reason is external, while the others are domestic.
First, Asia is growing richer and is becoming more expensive. With an aging and more affluent population, Asia, especially China, will need to expand domestic demand and balance its economy away from exports. This will further raise the costs for production, which will lead to “the end of the China price”, a term used by Pamela Cox, World Bank vice president for East Asia. Other poorer countries can benefit from the end of the China price, mainly due to the fact that more than 85 million manufacturing jobs are expected to leave China in the coming decade. Will Africa get a big share it? Will Kenya be part of it?
Second, Africa will be the new demographic powerhouse of the world. All continents will grow older, and many economies will have a shrinking working population. Africa on the other hand is still young (as a matter of fact, it is also growing older, but from a very low base), and the working age population is rapidly expanding. As family sizes shrink and populations grow older, countries will experience a “demographic dividend”, which occurs when the working age population exceeds the number of dependants, and continues to broaden.
For example, Kenya adds more than one million people per year to its population, and will reach an estimated 85 million by 2050. However, the number of youth (age 0-14) is expected to increase from 20 to 25 million, while that of adults from 22 million today, to 55 million in 2050. This is why rapid population growth is good for Africa, since fast growth is taking place for fundamentally different reasons, compared to the past; it is because people now live longer – not because they have more children.
Third is the geographic transition which is also connected to demography. Most African cities are still small, but growing rapidly; not least because rapid population growth by definition increases the density of countries. Studies show that doubling city size is associated with a productivity increase of an average of 6%. The key issue will be the management of these growing cities. Today, 30% of Kenya’s population lives in cities. But going forward, this share will increase by about 1% per year, over the next several decades, which means that by 2033, half of Kenya’s population will be urban. Geography should also work to Africa’s advantage, because it is not far from key markets. The port of Mombasa is relatively close to India and Europe. In addition, Nairobi has already emerged as the region’s transport and service hub.
Fourth, the expansion in education is paying off. Africans are better educated today than they were twenty years ago. Among the Millennium Development Goals, education is likely to be achieved. Kenya speaks the world’s leading language – English – and the business community largely benefits from a good labour force. Since the introduction of free primary education, most Kenyan children are now going to school. Most of them know how to read and write, but the quality of education still needs improvement.
Fifth, economic policies have substantially improved. The 1990s was the decade of controversial structural adjustment. When I was traveling through Africa during that period, black markets were everywhere. Today they are exceptional. Compared to Europe, Africa’s macroeconomic policies look excellent! For example, Kenya’s debt level of around 45% of GDP would propel it to one of the top performers in the European Union.
Is this picture of an emerging Kenya and Africa too optimistic? Aren’t the challenges still enormous? Isn’t Africa still embroiled by war, drought, climate change, corruption … you name it? Yes, the challenges remain enormous. But look back ten to twenty years, and compare it to the present day. In countries like Kenya, Tanzania, Uganda or Rwanda almost all social and economic indicators are now better than in the 1990s. Even globally, think about it: A few years ago, who would have thought that it would be possible for someone in Kenya to have a face-to-face conversation with someone in another part of the world – for free! Thanks to modern communication, it is now possible.
There are still many local and global problems which need urgent solutions. Between now and 2050, an additional 2 billion people will join the world population, who can help to solve these problems; of these, every second person will be an African. There will also be 45 million more Kenyans. This new generation will grow up in a new world, and be better equipped to solve future challenges.
*Wolfgang Fengler is a World Bank economist based in Nairobi. This is the second part of a speech he delivered at the Annual Gala of to the Petroleum Institute of East Africa.
Young African Invents Touch Screen Medical Tablet
July 13, 2012 | 0 Comments
By Mfonobong Nsehe*
Here’s an example of African innovation at its finest.
Arthur Zang, a 24 year-old Cameroonian engineer, has invented the Cardiopad,a touch screen medical tablet that enables heart examinations such as the electrocardiogram
(ECG) to be performed at remote, rural locations while the results of the test are transferred wirelessly to specialists who can interpret them. The device spares African patients living in remote areas the trouble of having to travel to urban centers to seek medical examinations.
According to Zang, the Cardiopad is “the first fully touch screen medical tablet made in Cameroon and in Africa.” He believes it is an invention that could save numerous human lives, and says the reliability of the pad device is as high as 97.5%. Zang says he invented the device in order to facilitate the treatment of patients with heart disease across Cameroon and the rest of Africa. So far, several medical tests have been carried out with the Cardiopad which have been validated by the Cameroonian scientific community.
According to Radio Netherlands, which broke the story of the Cardiopad earlier this week,
“the tablet is used as a classical electrocardiograph device: electrodes are placed on the patient and connected to a module that, in turn, connects to the tablet. When a medical examination is performed on a patient in a remote village, for example, the results are transmitted from the nurse’s tablet to that of the doctor who then interprets them.”
According to Zang, “software built into the device allows the doctor to give computer assisted diagnosis.”
Cameroon, a Central African country with a population of some 20 million people, lays claim to only 30 heart surgeons. To make matters worse, these heart surgeons are mainly concentrated in Douala or Yaoundé, the country’s two most important economic hubs. This severe deficit of medical personnel means that patients with heart ailments usually have to travel long distances to undergo heart examinations and consult with doctors. Even at that, it is still not easy. On some occasions, patients must make appointments months in advance, and some even die in the process of waiting for their appointment.
Zang believes his invention will cut down the cost of heart examinations. The Cardiopad is already generating a lot of interest in African tech and medical circles. The inventor is currently looking for venture capital to commercially produce the device.
Read the detailed report about the Cardiopad here.
Ghana Struggles To Cash In ‘Black Gold’ Dreams Of Oil Riches
July 12, 2012 | 0 Comments
Five years after discovery of a major offshore oilfield, people in Ghana are still banking on better times ahead. But foreign companies — notably those from China — are also poised to cash in. A visit to rapidly expanding city of Sekondi-Takoradi, at the center of it all.
By Christian Putsch with K. Owusu Peprah
SEKONDI-TAKORADI – The route to the training center is a crumbling asphalt road losing its battle with encroaching vegetation. The guards sitting in a wooden hut to our right barely look up as we drive past. Ebow Haizel-Ferguson is the director of the training center where we are heading; officially called “Sigma Base Technical Services,” it is Ghana’s largest “oil school.”
Steering the car to the left and through the thicket, a view suddenly opens up on to a railway graveyard. Haizel-Ferguson says proudly: “You’d be surprised what we’ve achieved out of nothing.”
Rust is eating its way through scrapped cars surrounding a large hangar. Through the dusty windows of the building, alignments of long work-tables can be seen. This is where in recent months Haizel-Ferguson and his team have taught 2,000 young people welding, pipefitting and other skills — but not for the rail sector: they’re only renting the premises in the Ghanaian coastal city Sekondi-Takoradi from the train company.
Since the 2007 discovery of the Jubilee offshore oilfield — one of the largest oil deposits ever found in Africa — only one thing has mattered in Ghana: black gold. For the country’s people it means the hope of better economic times. Investments in oil-drilling infrastructure have boosted growth by over 13%. And the rapidly expanding city of Sekondi-Takoradi is at the center of it all.
So is Haizel-Ferguson, who worked at Nigeria’s oil metropolis Port Harcourt for 22 years. The tall Ghanaian entrepreneur says he knows everything there is to know about oil: “I’ve breathed it, drunk it, and puked it.”
But Nigeria’s path is unfortunately one that Ghana is in danger of following. After decades of pollution by oil companies, oil thieves, and rebels, the Niger Delta is one of those places on the planet that look as if it’s straight from of an apocalyptic science fiction set. And while western oil companies lure employees to Nigeria with the highest bonuses in the world — a senior manager can earn 320,000 euros a year — Nigerian government figures say local firms account for only 18% of the value-creation process.
Very few Nigerians benefit from the commodity, and the oil boom has cost countless fishermen and farmers their livelihood. It is only in the last few years that laws relevant to granting supplier contracts have been tightened with the intent that two-thirds of them will go to Nigerian companies.
What happened in a country only some 100 km away is a cautionary tale — and Haizel-Ferguson wants to make sure the story doesn’t repeat itself in Ghana.
Expectations here are high indeed. Although so far the oilfields have produced less than expected, the Ghana Oil and Gas Service Providers Association (GOGSPA) says that the industry could create 100,000 jobs for Ghanaians. Two years ago, the Ministry of Energy promised a more cautious 10,000 new jobs — and in early June 2012 announced that only 813 jobs have opened up so far. Meanwhile, as oil infrastructure is being built up, Ghanaian companies complain about how few of the contracts they obtain.
Others are benefitting instead. China, for example, which gave Ghana a 2.4 billion euro loan to construct oil infrastructure, is being paid back with 13,000 barrels per day. That’s a cheap price for the Asians who have also stipulated that a significant number of contracts be awarded to Chinese companies.
What clearly has little bearing is that five years ago the Ghanaian government drafted laws stipulating that companies like Tullow Oil (USA) and Kosmos Energy (Great Britain) had to award 90% of contracts to local firms. In any case, these laws have yet to come into force.
But all of this has not dimmed the hopes of many Ghanaians for well-paid jobs. And it’s why Haizel-Ferguson is schooling young men and women in oil industry skills at the old railway training center. “They are now qualified to apply for jobs. Bear in mind that the construction of oil industry infrastructure will be going on for another 20 years at least,” he says. “But so far they’ve not been giving the work to Ghanaians.”
If it is the largest, Haizel-Ferguson’s “Oil and Gas Skills Training Workshop” is by no means the only oil industry training center in Ghana. On the streets of Sekondi-Takoradi you see hundreds of posters advertising such institutes. All of them promise that a certificate from their school guarantees a job in the industry.
The offer is seductive to many. It didn’t take long to persuade Emmanuel Opoku-Agyeman, for example, who quit his job in the marketing department of a newspaper to pursue training. “It isn’t just Ghana that’s got oil, they’re discovering new fields all over Africa,” says the 31-year-old. “With a certificate, you can apply for jobs anywhere.”
Opoku-Agyeman earned 500 Ghana Cedi — about 200 euros — a month at his old job. In Takoradi, the “oil schools” hand out documents stating that the minimum monthly salary for a job on an oil rig is the equivalent of 2,800 euros – 14 times what Opoku-Agyeman was making. With prospects like that, it didn’t seem to him that what the Harvard Marine Petroleum Training Institute (HMPTI) was asking for a three-month course — $3000 (2,394 euros) — was excessive.
On the job market
The HMPTI’s Australian investors have made over an old office building where experienced oil industry engineers give the courses. Proudly, Opoku-Agyeman takes me on a tour of the premises and tells me about the packed days of learning, the great equipment the facility offers, the competent teachers. As one of the first 200 graduates, he’s now on the job market. He says he’s only going to start getting nervous if he hasn’t found something within the next few months — and he shouldn’t even be thinking that way, he says, there are no grounds for it, he has received excellent training “as you would expect from a Harvard school.”
No, there is no connection to Harvard University in the United States, school director Ron McGrath concedes. “The important thing is that we are qualifying young Ghanaians to work in the oil sector,” he says. The focus is not on the jobs requiring very high-level qualifications, but on occupations on the supplier side: “Future international regulations will require workers in the sector to have attended courses such as ours.”
McGrath doesn’t believe Ghanaian black gold expectations are too high, nor is the price charged by his institution. “Training in this field just is expensive, you need a lot of equipment and the teachers have to have top qualifications.”
Along with the government, schools like the HMPTI urge people to be patient. Coming up for reelection in December, President John Atta Mills has promised that oil revenues will be used to build up the infrastructure of the entire nation. And all you need to do is travel through Ghana for a few days to see the huge expectations such promises unleash in a country that is still one of the world’s poorest.
Five hours away from Sekondi-Takoradi is the village of Awukuguanyensi. Most of its population of 130 work as farmers. As you enter the village you pass a wooden sign that reads: “No electricity, no votes.” It’s a pretty empty threat, born of desperation — one way or the other, the village is likely to have to wait a long time for power lines to be put in.
On the day of my visit, the children of Awukuguanyensi are being vaccinated against Pneumococci and rotavirus for free. In Ghana, these two fatal diseases account for 20% of child mortality. Thanks to the GAVI Alliance’s mission to provide free vaccines to children in developing countries, 87% of the children in this area have been vaccinated — although overall the situation in the country is far away indeed from one of the major UN Millennium Development Goals, which is to reduce, by 2015, child mortality by two-thirds from what it was in 1990.
In this village, many families have lost a child to illness brought on by the miserable living conditions. And those who do make it past childhood face bleak perspectives. Isaac Kwasi, 25, says all he ever wanted was to be a farmer, but you can’t make a living from it. So many of his friends have moved to Sekondi-Takoradi. He sometimes gets text messages from them saying they still don’t have full-time jobs. But that’s not holding him back. Next year, he says, he’s moving too — to Takoradi, and its promise of black gold.
Read the original article in German.
Photo – Ben Sutherland
Africa: The infrastructure that actually drives growth
July 11, 2012 | 0 Comments
By Claude Sassoulas*
Africa has made its way centre stage in today’s global economy.
The region’s collective economy of more than 50 individual countries barely grew during the last two decades of the 20th Century – but in the late 1990s, the continent began to stir.
Gross domestic product (GDP) growth picked up and then bounded ahead, rising faster and faster through 2008.
A May 2012 International Monetary Fund regional economic outlook report for sub-Saharan Africa refers to “solid trend growth” in the region, noting that regional output rose by 5% in 2011, with a further increase expected by 2012.
The telecom, banking, retail, construction and oil and gas industries are now booming, bringing about a dramatic surge in foreign investment into the region.
Africa received its largest-ever share of global foreign direct investment (FDI) in 2011, according to the 2012 attractiveness survey on Africa conducted by Ernst & Young.
According to the survey, FDI projects in Africa grew 27% from 2010 to 2011, and have grown at a compound rate of nearly 20% since 2007.
Key to Africa’s future economic growth in all sectors will be increasingly the quantity and quality of the continent’s infrastructure.
We estimate that today African governments and private sources combined are investing about $72bn (£46bn) a year in new infrastructure across the continent, out of which telecom-related infrastructure accounts for $21bn (£13bn).
A recent study entitled Connected World highlights the growing influence of developing markets in the global economy, and shows how critical a robust telecommunications infrastructure is for any country that wants to compete internationally or attract foreign direct investment.
The study revealed that a reliable communications infrastructure is a prerequisite for businesses considering a move into a new emerging market. Four in 10 business leaders globally stated that a lack of a secure communications backbone would prevent them from entering a new market.
The Ernst & Young survey notes for example that the Kenyan communications sector benefited from FDI, while FDI opportunities exist in communications for Nigeria.
These trends underpin the high level of interest in building broadband capacity in the region.
There has been rapid build-up of fibre-optic submarine cables over a short space of time in Africa – such as Seacom in 2009 – connecting South Africa, Mozambique, Tanzania and Kenya to international routes to Europe and Asia.
The Eastern Africa Submarine cable system (Eassy) was completed in 2010, and the West Africa cable system (Wacs) launched May 2012.
April 2012 also saw the launch of a major private sector initiative to build a new Brics cable to link Brazil, Russia, India, China and South Africa to the US.
Each new cable helps to bring more African communities into the age of high-speed internet, making e-commerce, cloud, real-time video and IP-based voice a reliable reality and allowing African companies to conduct business more competitively on the global stage.
There is an increasing need for both international and intra-Africa connectivity via submarine cables and cross-border fibre routes, linking businesses in South Africa, Kenya and Nigeria, for example.
The cables enable the high-speed communications infrastructure that is essential for various economic initiatives, lower telecommunications costs between connection points, and offer more secure communications from point to point that would be impossible with third-party cables.
To illustrate, they play an increasingly critical role in Africa’s oil and gas industry, enabling companies in Angola and Nigeria, for example, to bring high-speed Internet to oil rigs and adopt more innovative and connected ways of working.
There is no doubt about the growth potential for broadband in Africa – this is the area to watch given the fact that African governments and private sector are already working to develop the necessary infrastructure to extend connectivity beyond coastal urban centres.
Wireless technology also has a breakthrough role to play in extending broadband coverage to rural areas, boosting service provider revenues while increasing global competitiveness as more people subscribe to broadband at home and at the office while adding another subscription for mobile services.
Positioned for success
The proliferation in mobile devices will provide ever more platforms to deliver viable broadband services to customers in developing regions – in Africa, there have been 316 million new mobile phone subscribers since 2000!
Mobile broadband has had an established role in Africa’s infrastructure, with social applications driving the development of broadband services across the continent – the potential for providing everything from education, primary healthcare and banking services using mobile technology is being actively developed across Africa.
If recent trends continue, businesses will position themselves for success through helping to build the Africa of the future.
Global executives and investors cannot afford to ignore the continent’s immense potential and a strategy for Africa must be part of their long-term planning.
By 2040, Africa will be home to one in five of the planet’s young people and will have the world’s largest working-age population.
The rate of returns on foreign investment in Africa is already higher than that for any other developing region.
Early entry into this market provides opportunities to create markets, establish brands, and shape industry structure.
Wherever your business is in the world, it pays to be ready.
*Claude Sassoulas is the managing director – for Europe and Africa – of Tata Communications, a leading global provider of communications in developing economies, including one of the world’s largest submarine cabling networks.Article culled from BBC Africa Viewpoints
Jonathan unfolds economic diversification plan
July 11, 2012 | 0 Comments
By Roseline Okere*
Lays foundation stone of Procter and Gambles’ N43bn plant
THE Federal Government yesterday, unveiled plans to develop the country as an outsourcing destination with the aim of enhancing Gross Domestic Product (GDP), domestic industrialisation and structural diversification of the economy.
President Goodluck Jonathan made this known at the foundation stone laying ceremony for the construction of a N43 billion Procter and Gamble (P&G) baby-care factory in Agbara, Ogun State.
The President, at the occasion, renewed government’s commitment to tackling the challenges militating against the growth of the country’s industrial sector.
Jonathan, who was represented by the Minister of Trade and Investment, Dr. Olusegun Aganga, said that government has opened up the key sectors of the economy to enable the participation of more indigenous and foreign investors, especially in areas where the country has competitive and comparative advantage.
He stated: “We are working on reducing bureaucratic obstacles to private sector investment and developing a strong public and private sector partnership with government as the enabler.
“The government has invested heavily in education, health, technology and infrastructure and also promoted entrepreneurship and competition within the ambit of fair, equitable and enforceable laws.
“We have opened up the key sectors of the economy to participation by more indigenous and foreign investors, especially in areas where we have competitive and comparative advantage. This is to ensure that such investments provide good returns on investment, maximum impact on the local economy through job creation, value chain enhancement and capacity development.
“It is also to develop the country as an outsourcing destination with the aim of enhancing GDP growth, domestic industrialisation and structural diversification of the economy. In this regard, we have kicked off a National Industrial Revolution Plan, working painstakingly with all stakeholders in the public and private sectors to ensure success. For the first time, we are linking industries where we have competitive and comparative advantage to innovation and skills development”.
Jonathan disclosed that the One-Stop Investment Centre (OSIC) in the Nigerian Investment Promotion Commission (NIPC) has been strengthened to achieve efficient coordination of investment facilitation between relevant government agencies and achieve a 48-hour response target for all enquiries. Businesses can also be registered within 24 hours now, he assured.
President of P&G), Laurent Philippe, stated that the company, which has been in the country for 19 years now remains committed to becoming the leading Fast Moving Commercial Goods (FMCG,) social and economic investor in the country by growing Nigeria’s economy in synergy with the President’s Transformation Agenda.
He disclosed that P&G employs over 3,000 direct and indirect employees through its offices, distributors and suppliers and has also created over 200 small to medium enterprises (SME’s) with cumulative investments of over $100 million.
He noted that the $250 million baby care plant, which is planned to occupy a land area of 16 hectares with additional 24 hectares for expansion will on completion provide 250 jobs directly and will create 300 SMEs.
“P&G has established significant investment foot-prints in Nigeria in its 20 years of operations in the country. Nigeria remains a focus area for P&G and our investments continue contributing to strong inclusive economic growth,” he said.
*Courtesy of http:www.ngrguardiannews.com
Botswana’s ‘Stunning Achievement’ Against AIDS
July 10, 2012 | 0 Comments
July 9, 2012
The southern African nation of Botswana has one of the highest rates of HIV in the world. Nearly 25 percent of all adults in the country are infected with the virus. Only the nearby kingdom of Swaziland has a higher rate.
But Botswana is also remarkable for its response to the epidemic. It has one of the most comprehensive and effective HIV treatment programs in Africa. Transmission of HIV from infected mothers to their fetuses and newborn babies has been brought down to just 4 percent.
A decade ago, Botswana was facing a national crisis as AIDS appeared on the verge of decimating the country’s adult population. Now, Botswana provides free, life-saving AIDS drugs to almost all of its citizens who need them.
From Funerals Every Weekend
In the dusty village of Kachikau, near Botswana’s northern border with Namibia, the chief of the village, Kgosi Mmualefhe, says the national government has gained control of what was a raging epidemic.
Mmualefhe says there used to be AIDS funerals almost every weekend.
“Nowadays, ever since the drugs were brought in here, the situation is getting better and better and better,” he says.
The burden of AIDS in villages like this one wasn’t just the deaths and the funerals, but the large number of people who were extremely sick.
“Most of the people who were very, very down, now they’re starting to pick up and being able to assist themselves,” Mmualefhe says. “Some who couldn’t even walk, now they’re even walking around the village.”
And this is happening across the country.
Pioneering The Battle Against AIDS
Part of the reason Botswana’s HIV treatment program has been effective is that the country moved relatively quickly to address the epidemic.
In 2002, Botswana became the first nation in Africa to launch a program to try to provide access to HIV drug treatment nationwide. Now, roughly 95 percent of Botswana citizens who need the medications are on them.
From the beginning of the epidemic, there’s been tremendous leadership on the part of the government of Botswana to address the epidemic head on.
– Kathleen Toomey, head of the CDC’s office in Botswana
Kathleen Toomey, the head of the U.S. Centers for Disease Control and Prevention office in Botswana, says this was a remarkable achievement.
“From the beginning of the epidemic, there’s been tremendous leadership on the part of the government of Botswana to address the epidemic head on,” she says.
That leadership started with Festus Mogae, who became president in 1998. Mogae made tackling HIV one of the top priorities of his administration. While in neighboring South Africa, President Thabo Mbeki was questioning whether HIV causes AIDS, Mogae allocated money and resources toward fighting the epidemic.
In the early days of Mogae’s administration, roughly 40 percent of babies born to HIV-positive mothers also ended up infected with the virus.
Toomey, at the CDC, says the government set out to stop this.
“They aggressively addressed that through the treatment of mothers, treatment of babies, and brought the rates of mother-to-child transmission down to rates that we see in the industrialized world,” she says. “Stunning achievement.”
A Treatment Program That’s Saving Lives
Botswana has had advantages in addressing HIV that many other countries haven’t.
It’s a small nation of only 2 million people. It’s richer than most in Africa because of large diamond deposits.
It also got help from international donors and research institutions. The U.S. government was involved through both the CDC and PEPFAR, the President’s Emergency Plan for AIDS Relief, which was launched by President George W. Bush.
But over the course of the epidemic, Botswana has steadily increased its own spending on HIV. The Botswana government now spends more on health care per capita than any other country in Africa.
Farmer Johane Setlhare started taking the drugs in 2007.
“I would have been dead nowadays if I hadn’t taken the treatment,” Setlhare says.
Just two years after going on the drugs, Setlhare built a new house for himself with his own hands.
“I was surprised seeing myself going on top of the roof of the house and making some bricks for the house,” he says.
Setlhare gets his anti-AIDS drugs every month from the public health clinic in the center of the village. He credits the Botswana government AIDS treatment program with giving him back his strength and his life.
*Culled from http://www.npr.org
Up and Coming in Kampala Africa’s Growing Middle Class Drives Development
July 9, 2012 | 0 Comments
By Horand Knaup and Jan Puhl*
Africa’s growing middle class is fueling development across the continent. Ambitious entrepreneurs are creating growth with companies focusing on everything from fashion to pharmaceuticals. But poor infrastructure, corruption and political conflict are hampering their efforts.
Sylvia Owori is examining the photos for the summer collection, but she isn’t satisfied. “Much too much oil on the skin,” she says, pointing to a young woman. “We want to show off the dress, not her legs.” A click of the mouse, and the candidate is out of the running.
A new girl appears on the screen. She is wearing a yellow miniskirt, as she poses against a pale and misty backdrop of Lake Victoria. “This one is good,” says Owori, to an audible sigh of relief in her studio in the Ugandan capital Kampala. The photographers, designers and seamstresses surrounding her are relieved.
Owori is East Africa’s most successful fashion entrepreneur, the style icon of a growing middle class. She owns boutiques in Kampala and the Kenyan capital Nairobi, and the models in her agency can be seen on runways in Rome and Paris. She also publishes African Woman, a glossy magazine that showcases local fashion trends. “We want to celebrate Africa’s beautiful people,” says the designer.
Owori, who combines modern fashions with African colors, doesn’t shy away from making bold statements. “The fashion world currently has its eye on Africa,” she says. “This is our opportunity, and we should take advantage of it.”
Growing Domestic Demand
She is the epitome of a success story. And success stories are no longer a rarity in Africa, despite its reputation as a continent of poverty and suffering.
Africa’s economy is developing at a pace similar to that of Asian countries, including Japan. Five of the 10 faster growing countries in the world this year are south of the Sahara. Commodities like oil, natural gas, lumber, ores, gold and diamonds make up a shrinking share of economic output. In many up-and-coming countries, mineral resources no longer play the decisive role, as the service sector and manufacturing expand.
This growth is producing a middle class that’s growing from year to year. According to the African Development Bank, this middle class already includes 313 million people, or 34 percent of the total population.
Africa’s middle class lives in the cities, and its members are either salaried workers or, like Sylvia Owori, have their own firms. They are young and well-educated, and they want TV sets, cars and fashionable clothing. The continent now boasts 430 million mobile phone users. The growing domestic demand coming from the middle class served as a “buffer” when the West plunged into crisis in 2008, says Mthuli Ncube, chief economist of the African Development Bank.
Recycling What the West Throws Away
Owori has come a long way. She grew up in poor circumstances in Kampala, and she never knew her father. A relative eventually brought her to London, where she took fashion courses at the city’s Newham College. When she returned to Uganda in 1998, the country had fallen behind, even by African standards, after years of dictatorship and civil war.
She earned her starting capital by importing clothes from the West, but then she began designing her own collections, and soon “Sylvia Owori” was the most popular label among women in East Africa.
Owori has her collection produced by seamstresses in villages. She has trained 200 women and sponsors the purchase of their sewing machines. “When I receive a big order, I can deliver quickly and flexibly,” she says. On the other hand, she says, the women can stand on their own feet when she doesn’t happen to have any work for them.
Her latest creation is a denim laptop bag shaped like the map of Africa. “This bag was once a pair of jeans,” she says. “You threw it into a container for old clothing and sent it to Africa. We made something new out of it and will sell it back to you.” Swedish fashion giant H&M is interested in the bag, and two other Western fashion chains have asked Owori to meet with them in London.
It’s a question of finding new ways to stimulate economic growth. The corrupt oligarchies in many African countries have made money from the export of commodities, but only a fraction of the population has benefited from the proceeds. The growth being generated by Africa’s middle class is more sustainable, say development experts. Much of it is based on the processing of African fabrics, wood and fruits, and it creates jobs.
Small and mid-sized businesses need well-trained workers and political stability. Bureaucracy and corruption are obstructive, and civil wars are bad for business. Africa’s middle class is a “guardian of democracy,” says Ncube of the African Development Bank.
‘The Age of Entrepreneurs Has Begun’
Emmanuel Katongole is a typical representative of this middle class. He drives a shiny black Mercedes SUV and wears tailored suits. The African Development Bank awarded him a business prize for opening a pharmaceutical plant in Luzira, a suburb of Kampala. His company, Quality Chemical Industries, produces 6 million pills to treat HIV and malaria a day, half of which Katongole exports to neighboring countries.
Quality Chemical Industries is a joint venture with Indian manufacturer Cipla, which holds the license for the HIV and malaria drugs, and owns more than 40 percent of Katongole’s company. The company offers its 350 employees training, meals and medical care. “People like to work for us, and we have no disciplinary problems,” says Katongole.
“The age of entrepreneurs has begun in Africa,” says Katongole. When he began importing antiretroviral drugs in the 1990s, about 15 percent of the population in Uganda was infected with HIV. Today it’s only about 7 percent, a decline for which Katongole deserves some of the credit.
He convinced the Indians to come to Africa, and he won over both South African venture capitalists and the Ugandan government, which helped him start the project. President Yoweri Museveni, a mild autocrat by African standards, takes the fight against AIDS seriously — unlike other rulers on the continent.
The government had the ground cleared and leveled for the laboratories, installed the power supply and provided the company with tax incentives. “Quality Chemical Industries is a successful example of a partnership between the private and the public sector,” says Katongole. “Africa has to produce more finished products.” If the world wants to do the continent a favor, he adds, it should help companies like his with financing. “Classic development aid makes governments lazy,” says Katongole. In fact, the reputation of development aid has suffered considerably. African economists argue that it keeps millions of Africans trapped in poverty.
Richard Kimani, who lives in the Kenyan capital Nairobi, about 500 kilometers (about 300 miles) southeast of Kampala, is also banking on entrepreneurial freedom. His company, Kevian, earns about €25 million ($31 million) in annual revenues from the sale of fruit juice concentrates. His employees bottle 75,000 liters of concentrate a day, and about 30,000 small farmers supply Kevian with mangos and pineapple.
Kimani took out a low-interest loan worth millions with the Cologne-based German Investment Corporation (DEG), a state-owned institution that finances private-sector investments in developing countries. Kimani wants to expand Kevian, and new bottling equipment made by the Bavarian bottling machine manufacturer Krones is already on a ship bound for the Kenyan city of Mombasa. It could take a while for the equipment to arrive, however, because the customs agents at the port are corrupt and the roads in Kenya are miserable. “Shipping a container from Europe to Mombasa costs only a little more than transporting it by road from Mombasa to Nairobi,” a distance of 500 kilometers, says Kimani.
He got into the beverage business 20 years as a producer of mineral water. His Kevian bottled water, which comes from a well on the outskirts of Nairobi, filled a market niche. But there was a downside to his success. Kimani is a member of the Kikuyu ethnic group, but the country’s then president only supported members of his own tribe. Banks refused to lend him money, and hired thugs destroyed his plants. But Kimani was undaunted and moved his company farther away from the city. In 2002 he entered the fruit juice business, which had previously consisted of expensive imported products from South Africa and Israel.
Once again, his product was a success. In Tanzania, Rwanda, Burundi and Zambia, more and more health-conscious urban workers are drinking his Kevian juices. Now Kimani even wants to expand into Europe, where he hopes to supply the Heidelberg-based company Wild, which makes the Capri Sun juice drink, with pineapple and mango concentrate.
‘Voter’s Know What’s at Stake’
But the next potential problem is already on the horizon. Kenya holds elections next spring. During the last election, five years ago, politicians incited violence between gangs of thugs, fueling ethnic hatred. As a result, 1,300 people were killed, hundreds of thousands were driven from their homes, the tourism industry was shattered and many businesses were destroyed.
“It won’t be that bad this time,” says Kimani. “Voters know what’s at stake now.” The middle class in Kenya has a lot to lose, he says. It won’t tolerate the same kind of chaos that erupted five years ago.
Translated from the German by Christopher Sultan
*Culled from http://www.spiegel.de/international/
Sullivan Summit IX to Host the Global Youth Innovation Network Forum in Equatorial Guinea, Creating Economic Opportunities for Young Entrepreneurs and Leaders
July 7, 2012 | 0 Comments
Washington D.C., July 6th, 2012 – In response to the youth-led Arab Spring, African Heads of State have accelerated the 2009-2018 “Decade of Youth Action Plan” at the African Union 2011 Summit, which was held in Malabo, Equatorial Guinea. With high youth unemployment seen as an impending threat to stability in Africa (AU, 2011), solutions to create opportunity are highly regarded and welcomed by African Statesmen.
In that perspective, the Leon H. Sullivan Foundation in conjunction with Phelps Stokes, the global education and leadership advocacy organization, will host the Global Youth Innovation Network Forum during the 9th Sullivan Summit, from August 20-24, in Malabo, Equatorial Guinea.
The Forum, through the integration of the Global Youth Innovation Network (GYIN) will convene more than 60 young entrepreneurs and leaders from over 30 countries to share practices to develop evidence-based, sustainable, and cost-effective entrepreneurship and leadership programs and policies that address the root causes of African youth unemployment while increasing the opportunities of young people to obtain jobs and start successful businesses.
The Leon H. Sullivan Foundation and Phelps Stokes, in partnership with the Global Youth Innovation Network (GYIN) commit to lift 5000 youth from around the world out of poverty by 2015. The goal will be achieved through leadership and entrepreneurship training, workforce development, funding, and exposure to business prospects as well as small to medium-scale businesses.
“Investing in young people is key to enhancing agricultural productivity and food security, boosting economies and reducing rural-to-urban migration in Africa… youth have enormous potential for the innovation and risk-taking that is often at the core of growth and development, particularly in agriculture,” said Pape Samb, CEO of Phelps Stokes.
The 9th Leon H. Sullivan Summit will attract more than 4,000 participants from the United States, Africa, Europe, Asia and the Caribbean, and will address matters related to Food Security, Agricultural Sustainability, Human Rights, Trade and Regional Integration and Youth Employment. More than 150 organizations and governments are expected to attend the 9th Leon Sullivan Summit and invest in young entrepreneurs so that they can improve their lives, contribute to their communities, and become successful professionals..
“The continent’s youth are the leaders of tomorrow, and only by creating a platform in which they can adequately engage, inspire and enrich others, will they be able to create social and economic dynamism necessary for Africa to truly experience its rise as a global economic player,” stated Ms. Hope Sullivan Masters, President and CEO of the Leon H. Sullivan Foundation.
More information can be found at www.sullivansummit.org
Africa on the Rise
July 6, 2012 | 0 Comments
GENERATIONS of Americans have learned to pity Africa. It’s mainly seen as a quagmire of famine and genocide, a destination only for a sybaritic safari or a masochistic aid mission.
So here’s another way to think of Africa: an economic dynamo. Is it time to prepare for the African tiger economy? Six of the world’s 10 fastest-growing economies between 2001 and 2010 were in Africa, according to The Economist. The International Monetary Fund says that between 2011 and 2015, African countries will account for 7 of the top 10 spots.
Africa isn’t just a place for safaris or humanitarian aid. It’s also a place to make money. Global companies are expanding in Africa; vast deposits of oil, gas and minerals are being discovered; and Goldman Sachs recently issued a report, “Africa’s Turn,” comparing business opportunities in Africa with those in China in the early 1990s.
I’m writing this column in Lesotho, a mountainous kingdom (it was snowing the day I arrived!) in southern Africa, on my annual win-a-trip journey. The winner this year, Jordan Schermerhorn, an engineering student at Rice University, and I visited garment factories that make clothing for American stores. This country is Africa’s biggest apparel exporter to America.
One set of factories we visited, belonging to the Nien Hsing Textile Company, a giant Taiwanese corporation, employs 10,000 people in Lesotho, making this its biggest operation in the world. Workers turn out bluejeans for Levi’s and other American companies, and Alan Han, a senior company official, said quality is comparable to that of factories in Asia.
While America may largely misperceive Africa as a disaster zone, China does get the promise on the continent. Everywhere you turn in Africa these days there are Chinese businesspeople seeking to invest in raw materials and agriculture. But American businesses seem to be only beginning to wake up to the economic potential here.
Why does that matter? Because trade often benefits a country more than aid. I’m a strong supporter of foreign aid, but economic growth and jobs are ultimately the most sustainable way to raise living standards.
The American Congress has badly bungled the picture this year by delaying renewal of a provision of the Africa Growth and Opportunity Act, or AGOA. This promotes trade by providing duty-free access to the American market. It’s one of the best aid programs you’ve never heard of — except that it isn’t an aid program but an initiative to help Africa lift itself up and create jobs through exports.
Some 300,000 jobs in Africa have been created because of AGOA, according to the Brookings Institution, but, in the last few months, countless Africans have been laid off because of the delay in renewal. American importers don’t want to place orders unless they are sure that the provision will be renewed and the clothing can enter duty-free. In Lesotho alone, about 5,000 garment workers have lost their jobs because of this maddening Congressional delay.
Granted, African countries themselves have botched trade because of corruption, onerous rules and uncompetitive minimum wages. The minimum wage for garment workers is about $37 per month in Bangladesh, compared with about $120 in Lesotho.
Or consider infuriating red tape. In Swaziland, it takes 12 procedures and 56 days to start a company, according to the World Bank’s superb “Doing Business” report for 2012. In Niger, it takes 326 days to build a warehouse. In Senegal, it takes 43 procedures and more than two years to enforce a legal claim.
Some of the otherwise most impressive countries in Africa, like Rwanda, also undermine themselves with their political repression. Ethiopia’s dictator, Meles Zenawi, is doing an excellent job of raising health and living standards, but he also presides over a security service that kills and rapes with impunity — and imprisons journalists who report on abuses. Last week, a sham trial in Ethiopia found one such brave journalist, Eskinder Nega, guilty of terrorism.
All in all, though, Africa is becoming more democratic, more technocratic and more market-friendly. Yet Americans are largely oblivious to the idea of Africa as a success story.
One of the problems with journalism is that we focus on disasters. We cover planes that crash, not those that take off. In Africa, that means we cover famine in Somalia and genocide in Sudan, terrorism in Nigeria and warlords in Congo. Those are important stories — deserving more attention, not less — but they can also leave a casual reader convinced that all of Africa is lurching between genocide and famine.
So that’s why I decided to start this win-a-trip journey in a delightful country like Lesotho that just had a democratic change of power. Its streets are safe, and it is working on becoming one of the first countries in the world with an electric grid 100 percent reliant on renewable energy.
It’s a symbol of an Africa that is rising.
* comment on Kristof’s column on his blog, On the Ground. join him on Facebook and Google+, watch his YouTube videos and follow him on Twitter.A version of this op-ed appeared in print on July 1, 2012, on page SR11 of the New York edition with the headline: Africa On the Rise.
Africa Rising: when will the West join Africa?
July 6, 2012 | 0 Comments
By Eliot Pence & Bright Simons*
Discussions about Africa’s evolution tend to measure the continent’s ‘gradual’ assimilation into the global mainstream. This may have been understandable in the mid-1980s when by every indicator African economies were seen as hopelessly distorted and needed to be salvaged with what became known as ‘structural adjustment’. But African countries today appear more aligned with the Washington Consensus and Globalization’s ‘best practices’ than the West. On many of the macroeconomic indicators
used to judge conformity with the mainstream – debt to GDP ratio, current account balance, fiscal balance, inflation – Africa is situated closer to the mainstream, while key OECD countries drift away. Data tracking other kinds of flows – in cultural, innovation, and labour flows – point to a continent becoming a key player in the Global South – not just assimilating into the global mainstream, but helping to shape it.
- Population flows – Stories of African migrants struggling to find a route to Europe contrast with recent reports that Europeans are struggling to find working permits in Africa. According to NYU’s Development Research Institute, between 2006 and 2009 the number of visas issued for Portuguese entering Angola increased from 156 to 23,000. In 2012, there were nearly 100,000 Portuguese living in Angola, more than triple the number of Angolans living in Portugal. Spaniards, too, have fled high unemployment looking for work in Algeria, where many Spanish companies have relocated. No longer seeing the US as their best opportunity for professional development, waves of Nigerian-Americans (the most educated Diaspora group in the country), vie for top spots in the new Lagos offices of JPMorgan, McKinsey and Blackrock.
- Innovation and information flows – Reverse innovation, a concept describing inventions that are adopted first in the developing world, is creeping into western corporate board rooms (and publishing houses). Plans to develop a ‘Silicon Savannah‘ in East Africa build on widely successful innovations emerging out of the banking and telecom sectors and now being rolled out in US and European markets. Images of Joseph Conrad’s Dark Continent are receding as the broadband industry turns to Africa for global growth and sustained demand. African policy innovations, too, offer lessons to Europe’s troubled economic union. A recent review of the health of the West African Economic Union by the IMF suggested Europe might learn something from how Africa’s economic unions have faired.
- Financial flows – Though largely still the recipient of foreign direct investment, Africa is gobbling up distressed assets in the West. Gatwick, the United Kingdom’s second largest airport, was recently purchased by a Nigerian and Africa’s richest woman, Isabel dos Santos (daughter of Angolan President Jose Eduardo dos Santos), is the new majority shareholder in Portugal’s leading pay-TV and Internet provider Zon Multimedia. More traditional financial flows, such as remittances from Africans working abroad, are also changing. Already larger than official development assistance by a substantial margin, reports suggest remittances are now flowing to Europe from Africa. Underscoring these trends is reduced dependency on multilaterals (China alone lends more to Africa than the World Bank) and research by Standard Bank estimates that BRIC-Africa trade increased from $20bn to more than $250bn in the past 10 years.
- Cultural flows – A Financial Times editorial recently warned that the West would lose out on Africa’s ‘wave of creativity’ if it doesn’t reorient itself. To be sure, Africa’s cultural place in the larger world has always been evident, even if its recent recognition suggests it hasn’t. Nollywood, Nigeria’s answer to Hollywood, is a half billion dollar a year business and, according to UNESCO, puts out twice as many movies as Hollywood. Its growth also belies assumptions about the importance of intellectual property rights — something it largely exists without — in development. The continent’s cinematic creativity is paralleled by the emergence of its fashion industry, which is increasing in vogue — literally; an entire issue of the magazine was devoted to the continent recently. African-inspired cuisine also stands at the cusp. The “African Food Inevitability Thesis,” a phrase coined by a recent Wall St. Journal article, called Africa the foodies’ frontier and predicted a thriving commercial future for continental cuisine.
Even as a major western newspaper openly wonders how Africa will ‘join the larger world on its own terms,’ across virtually all indicators, evidence suggests it’s doing so largely on its own terms. If the West is stuck in low-growth and political paralysis, while Africa enjoys an economic renaissance, a more pressing question for Western observers might be: When will the West join Africa?
*Eliot Pence is a director at the Whitaker Group, a corporate strategy firm focused on sub-Saharan Africa. Bright Simons is the founder of the mPedigree Network (www.mPedigree.Net), and a Senior Fellow at think tank, IMANI.Previously published in African Arguments