Ca issue 63 digital edition

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Africa

Quarter I 2014 Quarter I 2016 Issue 59 Vol 1 Number 888 Issue 63 Vol 1 Number 888

CORPORATE CORPORATE

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HOW TO INVEST IN NIGERIA

Africa’s Most Exciting Investment Destination

REDEFINING ADDIS ABABA TRANSPORT

Ethiopia Launches Africa’s first Light Rail Transit Network


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INDUSTRY

CONTENTS FEATURES

6

PUBLIC PARKS FOR BETTER URBAN LIFE Addis Ababa Ethiopia’s bus tling metropolis falls short in recreation by Tsegaye Girma

10 LUXURIOUS RIDE Myles Udeh, CEO at Unity Global Ventures, speaks about the car rental business in Nigeria

LAGOS MEGA-CITY Lagos Metropolitan Area Transport Authority, promotes the benefits of the LRMT Blue Line Project and how it will benefit Lagos. Dr Dayo Mobereola, Managing Director

28

INFRASTRUCTURE DEVELOP- MENT IS KEY TO GROWTH According to Dr Francis O. Alaneme Ministry of Industry, Trade and Investment, increas ing development in the indus trial sector is part of efforts to diversify the economy

36

BANKING AFRICA’S UN BANKED – TIME FOR A REALITY CHECK Vahid Monadjem, CEO of Nomanini, challenges prevail ing opinions about the success of mobile money in Africa

46

SPECIAL REPORT - NIGERIA 2015

24

TELECOM IMPACT UPON AFRICA’S ECONOMIES Expanding ICT infrastructure and liberalization has led to increasedbenefits, which is a direct impact of ICT on economies.By Abdoulkarim Soumaila, Secretary General of the ATU

STRIVING FOR BETTER ENVIRONMENT FOR MINERS Chamber of Mines of South Africa plays a major role in the country’s mining industry creating conducive environ ment for investors in mining, writes Vusi Mabena

Eng Henok Bogale, General Manager of the LRT Operation Office, speaks with Corporate Africa about the benefits the rails system will bring for residents and investors.

66

AFRICAN PORTS Dr John E. Tambi, Transport Infrastructure Expert at NEPAD, discusses the Agency’s program to bridge the infrastructure gap in the continent

70 MOMBASSA-NAIROBI ADDIS CORRIDOR Ethiopia and Kenya are work ing on a major AfDB funded highway project which has been dubbed ‘a game changer’. By Mohammed Abdurahman, Roads Authority, Ethiopia.

40 GHANA TRANSPORT LOGISTICS Corporate Africa reports that travel infrastructure is a key driver underlying progress in Ghana’s growing economy

14 AROUND THE AFRICAN UNION Tsegaye Girma, profiles the African Union and surrounding facilities catering for delegates and visitors

18 HOW TO INVEST IN NIGERIA Merlin Linehan, Trade Con sultant at Frontier Market Strategy, explores Nigeria’s investment landscape.

32

INFRASTRUCTURE 62 REDEFINING ADDIS ABABA INFRASTRUCTURE

ARTS AND CULTURE

MARKETS 74 SOMALILAND DIASPORA APPEAL Mohamed Guled Harun Ibra him, CEO of the Guul Group in Somaliland, says that there is increasing investor interests in the country

50

FILM AFRICA 2015 African film productions now enjoy wider appeal in and out side Africa due to growing con sumption of mobile devices and rising appetites for African content. By Nadia Denton

76 ON THE BRINK OF ECONOMIC TRANSFORMATION Corporate Africa reports on the UK-Somaliland Trade and Investment Forum, speaking exclusively with the Ministers of Government, Dr. Musa Qassim Omar, and Eng. Hussein Abdi Dualeh,

54

COMRADES MARATHON Cheryl Winn, Vice Chairperson of Comrades Marathon As sociation, looks at the evolution of the race into what it is today an international event

80 Spurring investments to drive Agriculture There has never been a more opportune time to invest in African agribusiness. By Dr Agnes Kalibata

58

SOUTH AFRICAN BOOK FAIR The South African Book Fair has been an occasion that brings together writers, publishers and the audience. By Mpuk Radinku

EVENTS 83

EVENTS

Published By Times Publications Group Ltd Publisher James Norris Managing Editor Shan Bertelli Content Editor Tsegaye Girma Graphic Designer Robert Ellerbeck Conference Coordinator Aisha Aingal Special Project Director Jian Ping Sun Administration Assistant Adam Parker Project Managers Milkyas Getachew, Clementine Lacroix, Charles Chauvin, Larissa Doval Corporate Africa (ISSN 1358-5789) is published quarterly. Subscription details can be obtained from Times Publications Group at principal commercial office: 30-32 Tabard Street, London SE1 4JU; Tel: +44 (0) 20 37446260 or Fax: +44 (0) 20 74032183. Email administration@times-publications.com or visit our website at www.corporate-africa.com. © Times Publications Group Ltd. 2015 — all rights reserved. First Published in 1994. Distributors in Africa: Shama PLC Tel: +251 11 554 5290, MCS/Caxton International Press Tel: +27 11 807 9599, Print Excellence Ltd.Tel: +233 243 213 881, Dominion Bookshop, +233 240 695 791, Publisher’s Distribution Services Tel: +254 20 3222 901, PDS Accountant Tel: +254 20 3222 903, Newsstand Nigeria Tel: +234 8023382788. Photograph compliments of CEO, Dangote Industries Limited, Aliko Dangote; President of VDMA (The German Engineering Federation) Dr. Reinhold Festge


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Africa’s Economic Transformation will stem the flow of migrants to Europe Kenneth Snyders: The ‘Legacy Freeway’ a free trade zone and waterway, linking Cape Town , Johannesburg, Lagos and Cairo has been conceptualized by a South African think tank to ‘transform the economy’ of the continent and to turn back the flood of migrants to Europe.

T

he flood of migrants fleeing

FTA (CFTA) , which with a market

in makeshift vessels from

of over 1-billion people and a GDP of

Africa to Europe now pose

$2-trillion.The landmark arrangements

a new challenge for Europe

will be underpinned by robust

and Africa to seek a multi-continental,

infrastructural development programs

holistic, commercially and mega scale

designed to catalyze the regional

solution.

market through interconnectivity – facilitated by all modes of transport and

A think tank of the Johannesburg

telecommunications.

Metro and COFESA, the South African Employers Confederation, explored

The study group conceptualized a

‘economic transformation’ and concluded

waterway, the ‘Trans-Africa Legacy

that an Afro –Europe strategy is needed

Freeway’, a free trade zone from Cape

to meet international crisis and appealed

Town via Johannesburg to Lagos and

to the European Union Representative

Cairo to link the trading hubs of the

to consider a strategy of ‘trade, not aid’

continent, pipe oil and much needed

to resolve the migrant- refugee problem

water to the dry regions of Africa,

which cause socio-economic problems

ferry tourists, freight and generating

at their new destinations.

hydropower while South Africa‟s

South Africa’ water crisis: Only a third of South Africa’s

financial, mining, manufacturing,

large rivers are in a good state while 84% of its ecosys-

Cape to Cairo - Their study coincided

educational, medical and agricultural

tems are seriously endangered. Since the 1960’s studies

with the announcement in Egypt on June

skills benefit the continent.

identified the need to source water from the rivers from

10, 2015 of the Africa’s Tripartite Free

the north and projected 2017 as the time when shortages

Trade Area (TFTA) which embraces 26

“We have named the proposed

countries with a combined population

waterway the ‘Legacy Freeway’ in

of up to 600-million people and a

memory of Mr Nelson Mandela’s

“With the Johannesburg Metro and Gauteng Province

total gross domestic product (GDP) of

passion for economic transformation

we are in the process to establish a private-public part-

$1-trillion. The FTA will be followed

of Africa; his ‘African dream” the

nership (PPP)” says Mr Snyders who can be reached at

by the establishment of a Continental

study leader, Mr Kenny Snyders says.

kenneth@cofesa.co.za or hein@cofesa.co.za

will cripple the economy.


Features

PUBLIC PARKS FOR BETTER URBAN LIFE Corporate Africa’s Tsegaye Girma discusses one area where the success of Ethiopia’s bustling metropolis falls short.

E

thiopia’s capital, Addis Ababa, is among the

ple arriving from rural areas in search of better op-

fastest-growing cities on the African conti-

portunities.

nent in terms of infrastructure development. The past two decades are testimony to this

In 2015, Addis Ababa will also usher in its first ever light

fact as Addis benefited from massive construction of

rail transit system, which has been under construction

roads, public housing, and commercial centers in most

since 2011 at a cost of US$ 475 million. The Chinese

parts of the city.

EXIM Bank provided 85 per cent of the finance as a long-term soft loan while the Ethiopian government

The feat in road construction is particularly impres-

covered the balance. When it goes operational, the rail

sive with the city getting its first ever ring road sys-

system is expected to have significant contribution in

tem during this period; the road network expansion in

alleviating the chronic public transportation problems

the city also leapt from six per cent in 1998 to 15.5

Addis Ababa has been grappling with for some years.

per cent last year, according to Addis Ababa Roads

6

Authority. The ever-expanding road networks means

These massive infrastructure projects, along with the

better mobility for a city of over three million people, a

ever-increasing number of high-rise buildings popping

figure that keeps increasing with more and more peo-

up on every corner of the city, have been nothing but

Corporate Africa 2016


Features

world’s leading travel publisher, Lonely Planet’s ‘2013 Top

Ethiopia’s capital is obviously making significant strides when it comes to putting in place some of the basic urban infrastructure, but it still has a long way to go to live up to its status as a metropolis and its important place on the African continent.

10 Cities to Visit’ list. Ethiopia’s capital is obviously making significant strides when it comes to putting in place some of the basic urban infrastructure, but it still has a long way to go to live up to its status as a metropolis and its important place on the African continent. Public parks are perhaps one of the major features of a metropolis that are missing from Addis Ababa’s landscape. Unfortunately, Addis has yet to embrace the culture of building and proper management of public parks. The city’s major venues are obviously de-

impressive to many. So much so that some dubbed Addis

void of anything that looks like a well-planned park.

‘a city of reconstruction’. Well-planned and managed public parks make urban The surge in infrastructural activities shouldn’t come as

life conducive to its citizens in many ways. In addition to

a surprise though, given Addis Ababa’s important place

their aesthetic value, they help maintain the biodiversity

in the political life of the African continent; the city hosts

of their surrounding areas and reduce carbon emissions

the African Union’s headquarters, the office of the United

there by cooling down the heat of the city during the dry

Nations Economic Community for Africa (UN-ECA), and

season, according to a study conducted by Dr. Lumlachew

major regional and global organizations. Addis Ababa’s

Yeshitila, an urban ecologist teaching at the Addis Ababa

significance in Africa, along with other attractions, have

University. The research which was presented at a public

obviously played a favorable role in putting the city on the

debate held in 2013 in Addis on ‘Urban Public Services’

Corporate Africa 2016

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Features points out that the benefits of parks also

green parks. Upon his return from the

Most of the small green spaces and

extend to the health of residents as well,

US, where he lived for decades, he was

parks in Addis are fenced with stone

in terms of reducing respiratory diseases

moved by the sight of piles of rubbish in

walls and hardly match the features

which emerge in cities because of pollution

different spots in the city. That’s when he

of public parks in major metropolises

and increases in heat levels.

set out to achieve his popular campaign.

across the world. The major park in

Sileshi’s vision to change the ugly face of

Addis with better facilities is the iron-

The study also uncovered an unsettling

Addis Ababa was largely successful as the

fenced Africa Park located along the

mismatch between UN World Health Or-

city’s residents followed suit and took ac-

premises of the United Nations Eco-

ganization (WHO) standards on the dis-

tion to clean their neighborhoods and dis-

nomic Commission for Africa on Minilik

tribution of green areas in Africa’s urban

tricts. Many dutifully planted flowers and

II Avenue.

centers and how much green area Addis

grass along their fence and tended them

has at the moment. Though WHO sug-

well. Some even went the extra mile and put

The park is a special place in that it

gests a per capita distribution of 7 square

hosts trees planted by the founding

meters of green areas and parks in urban

fathers of the Organization of African

centers across Africa, what is available in Ethiopia’s capital is a mere 0.3 square meter access to green areas and parks. The city needs 2,700 hectares of accessible green areas and parks to meet the minimum requirement, according to the research. Though the administration of Addis Ababa bears the major responsibility of setting up

These massive infrastructure projects, along with the everincreasing number of highrise buildings popping up on every corner of the city, have been nothing but impressive to many.

and managing green areas and parks, the

Unity, now the African Union, including Ethiopia’s last Emperor, Haileselassie I. The facility is built on a traffic median on a hill and has benches, fountains, and playground equipment for children. However, only a third of the place is open to the public. There have been encouraging efforts

virtue of environmental protection has yet

from the Addis Ababa city adminis-

to sink in the psyche of the city’s average

together different decorations with recy-

tration in recent years to build parks

resident so as to create fertile ground to ad-

cled materials. Unfortunately, the enthusi-

across the city though they don’t

vance the cause. This is perhaps the main

asm was short-lived and the campaign died

match the needed scale and pace. Last

reason why spaces set aside for green areas

away over time. Most places have now gone

year, the city administration built a

in different districts and neighborhoods are

back to what they were.

12,000 sqm public park near a condo-

usually neglected and ultimately turn into

The efforts to keep major green areas in the

minium site in Lideta District at a cost

desolate areas covered with weeds.

city, including roundabouts and road medi-

of 26 million Birr (US$1.2 million).

ans, green and clean were taken up by an

8

Addis has had the taste of a clean and

agency under the Addis Ababa city admin-

There are also efforts to relocate Ad-

green environment when Shileshi Demissie,

istration from where Sileshi left off. But the

dis Ababa’s famous Lion Zoo to Shalla

a well-known Ethiopian singer, initiated

city’s administration has yet to set up ad-

Park in the bustling Bole district. The

a campaign about a decade ago to clear

equate public parks that fit the stature of

park is currently under reconstruction

up waste areas in the city into clean and

Addis among its counterparts across Africa.

to accommodate different recreational

Corporate Africa 2016


from attractive for people who want to en-

Project’, will see the establishment of a

the-art-zoo.

joy themselves in a natural setting. This is

park on a 200,000 square meters of land

why residents of the city and foreigners in

which is at the AU’s disposal, according to

It’s about time that Addis Ababa wakes up to the demand of modern city life and learns lessons from its neighbors. There is a lot the city’s administration can take from the experiences of Nairobi in neighboring Kenya. They could draw inspiration from Nairobi’s famed Uhuru Park with its expansive lawns, shade trees, and well-tended gardens. The park even offers boat riding services on an artificial lake making the place one of the

Features

and other facilities along with a state-of-

an expression of interest announcement the

Devoid of major green areas and parks for recreational purposes, Addis Ababa is far from attractive for people who want to enjoy themselves in a natural setting.

most popular attractions of Nairobi. The

organization posted on its website. The facility will have a business and recreational center area as well as a cultural area where African artworks and cultural works of AU member states will be showcased. The village will also have an exhibition hall, convention center, restaurants, and sport facilities including a mini-golf field, to mention but a few. When completed, it could set an example for such facilities in the city.

Central Park, located near Uhuru Park, could also set a model to Addis for its lawns and

the country move to towns like Hawassa,

For a city of Addis Ababa’s stature, con-

well-maintained gardens, but also a wide

Bahirdar, and Bishoftu which have better

struction of buildings and roads alone is not

range of facilities for children to play on.

natural recreational spaces including gar-

good enough unless the development in-

The authorities administering Addis should

dens and lakes.

cludes well-planned public parks and green

think seriously about the parks that the city desperately needs.

areas which add much value to the qualThe African Union (AU), headquartered in

ity of life of the city. Such facilities should

Addis Ababa, has now taken its own initia-

not be exotic to the residents of Addis, but

Devoid of major green areas and parks for

tive to set up a village unlike any in Addis.

rather a common sight at every corner of

recreational purposes, Addis Ababa is far

The initiative, dubbed the ‘African Village

the metropolis.

Corporate Africa 2016

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Features

Luxurious Ride Myles Udeh, CEO at Unity Global Ventures, the leading leisure car rental company in Lagos, speaks about the car rental business in Nigeria and the company’s expansion plans.

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Corporate Africa 2016


Features

U

nity Global Ventures is a car hire transport company founded on a need in the marketplace to provide reasonable, safe and reliable car hire service for business and leisure travelers. Our goal is to minimize our clients’ travel risks and headaches by providing them with trusted and safe car hire transportation service that affords them an opportunity to travel in and around Lagos, Nigeria in clean and comfortable air-conditioned chauffeur driven SUV Jeep. We recognize that most travelers are on a budget; therefore we provide superior service for less money.

them as a precautionary measure due to heightened fears caused by the news media with regard to how security conditions in

Nigeria is often portrayed. It must also be mentioned that Nigerians are very warm and welcoming to foreigners. In addition, Nigeria is a holy ground for businesses and Lagos is the business center of West Africa. Credit must also be given to the governor of Lagos State, Governor Babatunde Fashola, for his efforts in the transformation of Lagos State, increasing the State’s business friendly atmosphere. All the company’s vehicles have added security measures in place. Furthermore,

We take pride in being the best at providing impeccable customer service to our clients and in 2014, we were nominated at the World Travels Awards as one of Africa’s Leading Leisure Car Rental Companies. There is not one most popular hired luxury car because the majority of clients often choose vehicles based upon their budget. However, clients frequently request Japanese and German brand vehicles. Given that we provide SUV Jeeps, it eliminates many of the clients’ concerns related to poor road conditions in certain areas of Lagos and surrounding states. Vehicle selection is consistent with local and international clients. However, it must be said that most foreign executives frequently elect to have protocol services (arm security personnel added security) provided to

all chauffers’ undergo rigorous scrutiny and training before they are hired. With regard to the durability of the vehicles, and given road conditions, we believe Japanese brands have been more durable. Safety is a major concern and obtaining safe and reliable transportation is paramount.

We recognize that most travelers are on a budget; therefore we provide superior service for less money.

Corporate Africa 2016

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Features Unity Global Ventures Car Hire provides

equate to increases in crime for survival.

clients with safe and reliable transportation

We also contribute to the national economy

including a professional chauffeur with extensive knowledge of Lagos and surrounding western states. All of our rental fees are inclusive of mileage, insurance and chauffeur for service provided

We also contribute to the national economy through taxes and the purchasing power that we provide in the form of salary to our staff.

within Lagos. For service outside of Lagos,

through taxes and the purchasing power that we provide in the form of salary to our staff. Their ability to buy food and other commodities within the community trickles down to enhancing the lives of the local market including men, women and informal trades.

additional fees would apply depending on the location. For example, a business class

choice must be respected and that no one

We started out very small to see if there

vehicle in our fleet at our current rates for

is above the law; not even the president.

truly was a market for our type of car hire

service in Lagos would cost Naira 13,500

service in the marketplace, and today we are

($67 US) per day without fuel and not

External factors impacting business includes

proud to say that we provide transportation

including VAT. The rate could be further

inconsistency with fuel availability. Refinereis

services to several major companies in

reduced by any on-going promotions that

should be a priority and developed. I think

Lagos. It’s been very rewarding to see how

might be in effect.

that it is

embarrassing to know that

quickly we have grown including the honor

Nigeria export crude oil and import refined

we received last year for being nominated

During the months leading up to the

petroleum products instead of refining the

at the World Travel Awards as one of Africa’s

national elections last February, there were

crude oil that our nation has been blessed

Leading Leisure Car Rental Companies.

heightened fear of violence. As a result, many

with at home. One can’t help but question

people elected to delay travel to Nigeria,

the causes for this.

which for us translated into less business.

provide extended stay luxury condos and Unity Global Ventues is an important

12

We are excited about our current project to penthouses for our executive clients.

Gladly, President Goodluck Jonathan

contributor to the local economy. We

was able to show a high level of maturity

provide job opportunities to the local people,

The plan is to provide them a home away

in his understanding of democracy.

which directly and indirectly help Nigeria’s

from home without the feel of a hotel, yet

economy and also reduces crime. Most

with all the services hotels provide. We also

I hope all other African leaders can follow suit

would agree that any environment where

plan to expand our car hire service to Abuja

by understanding that the people’s voice or

there is a high rate of joblessness, could

and Ghana in the near future.

Corporate Africa 2016



Features

AROUND THE

AFRICAN UNION The Organization of African Unity was established back in the 1960s in Ethiopia’s capital Addis Ababa, which now hosts the headquarters of the AU. Tsegaye Girma Corporate Africa Editor, looks at the role of the AU and facilities around its headquarters.

The African Union (AU) is an organization of

its own citizens and representing a dynamic

African states that issued from the Organization

force in the global arena.” All African countries

of African Unity (OAU) established in 1963.

subscribe to the AU as members states except

The organization was primarily a platform

Morocco.

for concerted struggle against European domination controlling the continent at the time. Having fulfilled its primary mission over subsequent decades with the end of colonial rule in the continent, the OAU evolved into the African Union (AU) in 2002 shifting its focus towards achieving development and better integration among African countries. The AU’s stated vision is to create “an integrated, prosperous and peaceful Africa, driven by

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Corporate Africa 2016

Having fulfilled its primary mission over subsequent decades with the end of colonial rule in the continent, the OAU evolved into the African Union (AU) in 2002.


Features

How does the AU Work?

manages the AU’s budget and resources.

African States (ECOWAS), and Southern

OAU’s transition into the AU has brought

African Development Community (SADC).

The AU has various organs tasked with

integration and development to the top

Countries in all regions of the continent

different sets of responsibilities, with

of Africa’s agenda. The AU adopted the

through these structures address issues of

the Assembly of Heads of State and

New Partnership for Africa’s Development

common interests and advance integration

Government at its head. The Assembly

(NEPAD) in 2002 as an instrument to

and development agendas.

comprises leaders from all member

facilitate rapid growth across the continent.

states and convenes twice a year to pass

NEPAD is a strategic framework to

The AU raises funds for its annual budget

resolutions and monitor the implementation

coordinate Africa’s development in today’s

both from member states and foreign

of the Union’s programs. It is also responsible

world. The framework is implemented

partners. A large portion of the budget is

for setting policies and priorities. Those

primarily through Regional Economic

sourced from international partners like

policies and programs are implemented by

Communities (RECs) including the Common

China, European Union and the US. Out

the AU Commission which is the Union’s

Market for Eastern and Southern Africa

of the AU’s total budget of some US$522

executive arm. The Commission also

(COMESA), Economic Community of West

million for 2015, only US$131 million comes

Corporate Africa 2016

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Features

from member states’ contribution while

rooms in the immediate vicinity of the AU,

ballroom with 3,500 seating capacity for

international partners fund US$ 226

with rates between US$50 and US$85 per

conference and other event.

million, with a funding gap balance of

night.

US$149 million. The AU says it is keen on

Away from the immediate vicinity of the

reducing its dependence on donors for a

Delegates with a taste for high quality

AUCC there is a dense concentration of

substantial portion of its budget, and is

accommodation should visit the Diplomat

hotels in surrounding areas like Kasanchis,

working to ensure the financial autonomy

Luxury Apartment, situated on Seychelles

15 minutes’ drive north-east of the AU. It

of the Union through innovative financing

Street to the right of Sarbet Roundabout

boasts some of the finest hotels in Addis

alternatives.

driving in an east-west direction. The hotel

Ababa including Radisson Blu, one of the

offers well furnished guest rooms including

few internationally branded hotels in town

The AU is headquartered in Addis Ababa,

self-catering kitchens, Internet and

and the renowned Sheraton Hotel a few

the very city where the idea of establishing

gymnasium. Room rates are more expensive,

miles away. Addis Ababa Bole area, where

a continental body was conceived back

the lowest at US$80 per night.

the International Airport is located, also has

in the 1960s. The modern AU Conference

a number of good hotels.

Centre (AUCC) and office complex, inaugurated in January 2012, was built with a US$200m grant from the Chinese government as a symbol of the growing cooperation between the two regions. Standing nearly 100 meters high, the office complex is the tallest building in

MIDROC Ethiopia Investment Group will soon inaugurate the African Union Grand Hotel next door to the AUCC.

The distribution of eating places around the AUCC is similar to that of the hotels. A few quality eating places are available within walking distance from the AU. On

Addis Ababa dominating the city’s skyline.

the left of Sarbet roundabout driving in the

The entire facility sits on 11.3 hectares

north-south direction on Roosevelt Street is

of land and comprises a 2,500 seat

Garden’s Paradise, a neat restaurant on the

conference centre, VIP lounges, seven

The Sarbet area will soon boast the

3rd floor of Adams Pavilion. The restaurant

conference halls and 31 caucus rooms.

Grand Hotel, soon to be inaugurated by

has both local and foreign dishes on its

Before the new facility was built, the AU

MIDROC Ethiopia Investment Group next

menu, with the price of meals starting from

held high-level meetings at the United

to the AUCC. The US$200 million project is

80 ETB (US$4.00).

Nations Conference Centre (UNCC) not

designed to provide quality accommodation

far from its current headquarter.

and services for heads of states,

Turning right at the roundabout is Fun Key

governments and delegates on the doorstep

Bar & Restaurant, an appealing place on the

of the conference centre. It will have 27

first floor of a building near Diplomat Luxury

Presidential Suites, 31 Ministerial Suites

Apartment. The restaurant offers a variety

A good mix of hotels exists around the

and a variety of Deluxe rooms, 8 medium

of dishes including spaghetti, chicken, fish

AU in Addis Ababa Sarbet District. To the

size meeting rooms and a multipurpose

and local cuisine. Meal costs starts from 90

Around the AU

south-east enroute to Kera is the fourstar Adam’s Hotel; a small hotel with 30 guest rooms equipped with basic facilities including free Internet access and fixed telephone lines. Room rates range between US$65 and US$85 per night. The four-star Kings Hotel on Roosevelt Street offers cheaper room rates starting from US$55 upwards. Five minutes’ drive from the AU Conference Centre (AUCC) is Hotel de France, a threestar hotel in the area. The hotel’s room rates start from $60. Dessie Hotel, which lies within similar proximity to the north west of AUCC, offers the lowest priced

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Eateries around the AU

Corporate Africa 2016


Features

ETB (US$ 4.50). Some fifty meters away, on the left of the left is Dody Restaurant which has an inviting compound for diners who want exposure to the sun. Burgers and pizzas are its speciality starting from 120 ETB (US$6.00). Visitors who want to try typical Ethiopian cuisine should pay a visit to Yod Abyssinia, a cultural restaurant next to Dody, popular among tourists for its excellent menu of local dishes and its live traditional Ethiopian cultural musical performances. The restaurant serves a wide variety of dishes including chicken stew (Doro Wot), mildly cooked or raw minced meat (kitfo) as well as mutton and beef, roasted or raw. Meal prices range from 100 to 284 ETB

photos of Emperor Minilik II, the city’s

(US$5.00 to US$14.20) during the day

founder, members of his administration

time, while dinner rates are higher as they are accompanied by live bands. More quality restaurants around the AUCC are found in Gabriel district a kilometre south of Karl roundabout at the end of Seychelles street. Africana, Samet,

The AU is headquartered in Addis Ababa, the very city where the idea of establishing a continental body was conceived back in the 1960s.

and the past mayors of Addis Ababa. Merkato, arguably the largest open air market in Africa, is also worth a visit. A few minutes’ stroll through the market gives visitors a sense of the traditional trading style in the country. Almost anything is traded in Merkato in stores and open

Chicken Hut, Tivoli and Aba Guben are

spaces. However, the typical landscape

some of the eateries in the vicinity worth

of the market is changing slowly as more

visiting.

and more commercial buildings continue

Cultural Attractions

The Ethnographical Museum is hosted in

to spring up as part of redevelopment

the main campus of Addis Ababa University

programs of the local administration. At

which also used to be the first palace of

the heart of the market are the famous

Ethiopia is rich in culture and history

Ethiopia’s last emperor, Haileselassie I.

Adarash, a handful of old malls where

with lots to offer visitors. A visit to the

Diverse artefacts and handicrafts from

traditional Ethiopian costumes, artefacts

museums in Addis will give guests a

across the different ethnic groups in

and jewellery are sold. A special bazaar

good sense of the country’s heritage. The

Ethiopia are displayed in the two-floor

dedicated to traditional outfits and

Ethiopian National Museum which houses

museum. Other attractions in the museum

artefacts is found in Shiro Meda area, off

Lucy, the famous hominid fossil believed to

include Emperor Haileselassie’s bedroom

Intoto Street, about a kilometre north of

have lived 3.2 million years ago in eastern

and bath room with their intact furniture

the US Embassy.

Ethiopia, is a good place for starters.

as well as a large collection of icons and

Situated around Amist Kilo area on King

magic scrolls.

George VI Street about 1.5 km north of the

Guests interested in Ethiopia’s rich ecclesiastical heritage should visit Holy

National Palace, the museum also has a

Addis Ababa Museum is another interesting

Trinity Cathedral behind the Ethiopian

wide variety of archaeological collections

place for visitors interested in the city’s

Parliament around Arat Kilo district and St

and artefats used by the country’s past

past and how it came to be the country’s

George Church in the bustling Piassa area.

rulers.

capital more than 125 years ago. The museum is located next to the Exhibition

The museums there have good collections

Visitors will gain even deeper insight into

Centre at the edge of Meskel Square

of religious artefacts, ceremonial attires

Ethiopia’s diverse attractions by visiting

in the city centre, and houses cultural

as well as objects that once belonged to

the Ethnographical Museum just two

items that were used before modernity

past Christian kings who ruled Ethiopia

kilometres north of the National Museum.

came to Addis Ababa. It also contains

during past eras.

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Special Report

How to invest in Nigeria Africa’s most Exciting and Innovative Market Merlin Linehan, Trade Consultant at Frontier Market Strategy, explores the investment landscape of Nigeria, Africa’s biggest economy.

N

igeria has in recent years developed as a major investment destination. Its economy has enjoyed sustained growth and dependence on oil has steadily declined. And despite the decline in oil prices, falling national revenues and ongoing in-

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Corporate Africa 2016

surgency, international investors’ interest remain fixed on Africa’s biggest economy, while opportunities spring up across a multitude of sometimes surprising sectors. Leading emerging markets investor Mark Mobius is bullish on the country as are other observers and speculators. I was also


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lucky enough to chat with Barakat Balmelli the director of a leading West African focused investment firm Sana Elias, who gave me the inside track on investing in Nigeria. In this article I cover: The country’s most promising sectors? The best strategy for investing in Nigeria Risks faced by investors and how to mitigate against them And as ever I would like to pay special attention to the “China factor”; for while China is not yet the biggest external influence on Nigeria, it could very soon become so.

The Rise of a West African Dynamo Sana Elias is one of a number of ventures which have emerged in recent years fusing expertise from international banks along with local knowledge. It has created a new breed of African focused investment firms which are raising capital and advising others on how best to enter the market. While some big names like Carlyle are now investing heavily in the continent many global banks have avoided Sub-Saharan Africa, leaving the field open for new players. At the time of writing, Nigeria is facing a period of economic uncertainty and major cuts in government revenues caused by the dramatic drop in global oil prices and the subsequent fall in value of the Naira. All of which might make this feel like a terrible time to consider investing, but it is always worth remembering the maxim to buy when everyone else is selling, which is certainly the case at present. While these risks have to be taken into consideration, it is the Nigerian government that is heavily dependent on oil revenue; the rest of economy is more diverse and has seen recent growth driven by sectors like telecommunications, entertainment and agriculture. My own feeling is that it is an exciting, formative time to be investing in Nigeria. The country has

enjoyed sustained growth and optimism is in the air, but there will be headwinds and scares like the collapse in the oil price and US interest rate hikes. At junctures like this, there will be the temptation to flee, but those who hold their nerve and stay the course will benefit in the long term.

Private Investing verse Stock Markets

The country has enjoyed sustained growth and optimism is in the air, but there will be headwinds and scares like collapses in the oil price and US interest rate hikes.

There is a substantial if illiquid stock exchange in Lagos, but Barakat’s preferred angle was investing privately, in particular taking stakes directly into local companies with strong track records. Nigeria’s bustling entrepreneurial outlook make it a sweet spot for high growth companies, which are often the prime targets for private equity firms. Of course private versus stock market investing is an on-going business debate. In Nigeria’s case it is preferable to look for fast growing private businesses in select sectors which have a mixture of strong management and impressive financials. Often this will mean a blend of international and local talent along with a healthy cash flow and balance sheet. But how do you source these opportunities? Well you need to be talking to local companies or discussing options with an investment firm like Sana Elias who have access to numerous ventures in need of capital. As with any investment it is handy to have co-investors to spread the risk exposure. Organizations like Homestrings are a good

Corporate Africa 2016

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place to meet investors who have placed funds in Africa or are thinking of doing so. But a word of warning, do not expect to turn up with funds and expect a high return for no risk on your part, there are always problems, but also ways to mitigate against loss which is covered below. If you are still interested, the next step is thinking about which sectors have the most potential in this market.

Power Hungry The first area that until recently was perhaps worth avoiding is the power sector. Power or lack of it has been a major bottleneck in the Nigerian economy for a long time. Quite simply an energy rich country has faced shocking electricity shortages for decades and it goes without saying that absence of regular power makes businesses and households suffer. This problem has been partly offset by generator usage, but remains an expensive and polluting option. Now the time is ripe to back investment in power plants, these projects are capital heavy, but over time the payoff is expected to be well worth the effort. The country is rich with energy, it just needs the means to utilize it correctly. Investing in the oil industry is a massive subject worth an article or book on its own, but it is generally a closed shop unless you are multinational oil firm or bank. However there is a related sector worth considering, which is auxiliary services - investing in companies that supply the needs of the oil companies, food, materials, equipment, specialized services. Identifying and filling a niche can be highly lucrative when you consider the clients are some of the largest, most powerful companies in the world such as Shell, Exxon etc. There is a major opportunity to supply these corporations’ needs locally, rather than having to bring in supplies and equipment from Europe and North America.

The Rise of the Nigerian Consumer? Fast moving consumer goods FMCG is a sector which has become almost mythical in its potential; strategists look at African middle class / population growth / growing

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Corporate Africa 2016

Nigeria’s bustling entrepreneurial outlook make it a sweet spot for high growth companies, which are the often the prime target for private equity firms.

demand /massive revenue for all the items you would find in a typical supermarket. I remember talking about this to a Unilever executive five years ago, who said that he rarely spoke about the African market, simply because they were making so much profit there they didn’t want others muscling in. While the African middle classes may not match up to the income levels seen in Europe, the amount of discretionary spending available to consumers in the Nigeria and

other countries is rising and converging with two other trends; urbanization and a youthful population, all of which has the ingredients of a consumer boom. This is well covered in the ground breaking McKinsey report: Lions on the Move.

Sensible Finance, Insurance and Mortgages The financial sector is another to consider looking at, perhaps not the big four banks (who are now performing well following restructuring after near collapse a few years ago), but instead the often overlooked nonbank financial institutions, insurance companies and mortgage firms. Nigeria’s middle class is demanding better housing, which is being built, but the availability to finance them is yet to catch up and should enjoy strong growth in years to come. Mortgages along with the pent up demand for financial security that insurance affords will see these two products rapidly develop in the next few years. Above I have focused on sectors which have



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the most unrealized potential, beyond these there are still plenty of opportunities in established and take off sectors such as telecommunications, hospitality, agriculture, logistics and real estate.

But in the South (the richer part of the country) this communal violence is unlikely to affect you.

The Dawn of a New Era or a Powder Keg? Risks and Mitigants

Nigeria’s middle class is demanding better housing, which is being built, but the availability to finance these new homes is yet to catch up and should enjoy strong growth in years to come.

As we have seen Nigeria has potentially lucrative sectors, but what are the biggest risks and how can you mitigate against them? Firstly there is a massive difference between the coverage in the press and the reality on the ground, but there is no avoiding the subject: Nigeria is renowned for corruption, the Boko Haram threat and political instability; this along with government dependence on oil for revenue and the difficulties of doing business. Corruption, bureaucracy and general business headaches all add up to a tarnished business reputation. While these are all real risks, they have to be put into context to get a rounded picture of the country. It is important to remember the vast majority of the country is peaceful and business continues as normal. In regard to Boko Haram and political violence, certain states in the North – Borno, Adamawa and Yobe – are certainly worth avoiding.

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Corporate Africa 2016

Falling Oil Price, Falling Naira Assuming that the price of oil remains low government revenues and exports will suffer and the Naira will fall in value. This will undoubtedly cut government expenditure and services with negative economic impact, shaving off some growth. In the longer term cutting dependence on oil can only be a good thing for the economy, perhaps providing impetus to the industrial sector and forcing the government away from its addiction to “black gold”, which as so many have pointed out causes multiple economic problems for emerging economies. The


Special Report

falling Naira is a headache for those wanting to exit Nigeria, but for those looking to put money into the country or encourage non-oil exports it is a real boon. Nigeria remains a frontier market and it will continue to face economic shocks in the future, but these predicaments always present opportunities to the cool headed investor. With cheaper Naira and a government forced to further restructure the economy, this could be the ideal time to invest in Nigeria.

The Cost of Doing Business Like many emerging economies Nigeria faces serious reputational issues around corruption, red tape and mismanagement. One of the biggest fears faced by outside investors (and locals) is that as soon as they start investing or doing business they will have to pay huge bribes; basic infrastructure such as electricity will not operate and the government will make your life hell through crazy and expensive regulations, so instead of making the business grow you will be sorting out basic problems. These fears are well founded and obviously the stress of doing business in frontier markets is not for everyone. But what can you do to mitigate? Hands off approach, if you have enough financial firepower, you can get experienced hires to do the hard on the ground work, while you act as a silent, distant or hands off partner, just providing funds and minimal supervision. This is great until things go wrong and you have missing key issues and developments only to realize too late your investment has been squandered or the firm’s strategy has failed. Realistically you will have to put in time and effort to monitor your investments, but there are plenty who will take your money and put it to work while you take a back seat. If you want to be involved on a day to day basis, taking on a strong local partner is an absolute must. If you

put the effort to build relations and trust a Nigerian businessman or woman or someone with considerable in country experience, you can lean on their know how to guide you through the inevitable problems you will face.

The China Factor China has become a major trading and now investment partner with Nigeria, first attracted by the oil supplies. But with Nigeria’s developing market and consumers needing low cost products, the country like so many others quickly became a market for Chinese goods. This relationship is set to develop further as Nigeria is forced to pivot away from the USA as that country is no longer reliant on energy imports. Abuja will instead look increasingly to Asian markets to make up the shortfall. Nigeria is a major investment destination for Chinese firms, which are willing and able to put money into railways, infrastructure and many other projects across Africa. Chinese firms have been active in developing the Lekki Free Trade zone – an interesting new development in Lagos which promises to replicate the success of places like the Shenzhen free trade zone which helped to kick start China’s development. Chinese businessmen have also flocked to Nigeria (like the rest of Africa), to set up shops, small businesses and other ventures as well as working on the big Chinese sponsored infrastructure projects. There is no question that Nigeria faces major economic challenges, which have been compounded by the recent fall in oil price. But having discussed and analyzed the market in depth, I’m firmly bullish on what is surely Africa’s most innovative and exciting country: for anyone interested in frontier and emerging markets, it merits serious consideration.

Corporate Africa 2016

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Special Report

LAGOS

MEGA CITY Lagos, Nigeria, will inaugurate the Blue Line rail system in 2016. Dr Dayo Mobereola, Managing Director of Lagos Metropolitan Area Transport Authority, explains the benefits the rail system will bring to a city that has been suffering from congested transport infrastructure.

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Corporate Africa 2016


Special Report

L

agos is a rapidly growing megacity with more than 20 million residents. Lagos metropolis has the largest population in Nigeria with unprecedented growth of 6 per cent annually. Population projections estimate that in little time, Lagos will

become the world’s third largest urban agglomeration. The city’s existing road infrastructure has reached breaking point; inundated with intolerable levels of articulated vehicles, poorly maintained cars, and private buses making for infrastructure that results in commuters spending up to 6 hours of their working day in gridlock. This situation hampers economic development and negatively impacts on the quality of life residents. While urbanization require adequate infrastructure, it is physically and economically unrealistic to significantly reduce congestion by building roads in densely populated cities. Broader structural approaches like de-concentration are therefore required, however, such de-concentration is difficult to achieve by applying only general planning strategies. To address some of these problems the Lagos State Government (LASG) in 2009, via its transportation Agency the Lagos Metropolitan Area Transport Authority (LAMATA), has developed a Strategic Transportation Master Plan (STMP) for the State; a number of Rail Mass Transit (RMT), Bus Rapid Transit (BRT) and ferry routes were proposed for implementation in phases. The STMP vision is to develop a plan for Lagos metropolis focused on transportation and land use integration, identification of major transportation corridors, proposal for appropriate public transportation schemes and the development of an action plan and the implementation of its content. The Blue Line is one of the identified rail line corridors presented in the STMP. The line will provide passengers the ability to interchange between future RMT, BRT and ferry lines for better inter-modality. There are approximately 10.5 million daily passenger movements in the Lagos Metropolitan Area, increasing at a rate of 6 per cent annually. Lagos existing metropolitan highway infrastructure is severely constrained and a single journey from home to the office by inhabitants can exceed 3 hours. Past studies conducted on vehicle registration confirmed that an additional 200,000 vehicles are registered in Lagos State annually. Furthermore, there are 222 vehicles per km. of road in Lagos, which by far, outweighs the national average of only 11 vehicles per km. of road. These vehicles are estimated to contribute more than 70 per cent of the ambient air pollution in the city.

LRMT Blue Line Project To address and eliminate the challenges, LAMATA has commenced the

It is important to note that for a community to develop, people need to spend time with one another and not hours each day in traffic.

construction of the Lagos Rail Mass Transit (LRMT) Blue Line railway project; a 27km railway line with 11 stations, along the eastern- western corridor of the state from Okokomaiko in the west to Marina. This railway project is currently being constructed in the centre of Lagos Badagry Expressway – an international highway connecting the west coast of Africa. This 60km. expressway is currently being upgraded and expanded from a dual carriageway road to a ten lane expressway, thereby providing a 600km. stretch of upgraded

Corporate Africa 2016

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road network. Due to budgetary constraints, the 27km. Blue line rail project is being developed in phases with operations rolled out in stages with the initial stage scheduled for December 2016. When the Blue Line becomes fully operational, it is estimated that over 400,000 passengers would be conveyed daily. The project is being developed adopting a Public Private Partnership (PPP) approach whereby the state government is providing the infrastructure and the rolling stock while the private sector would operate and maintain the system

Social, economic and environmental benefits of the Blue Line system As in many transportation projects there are numerous benefits that would be provided by the Blue Line. These include but are not limited to social, economic and environmental benefits. Once the Blue Line project becomes operational, travel time by commuters would be reduced drastically as the system would provide a fast, reliable and efficient mode of mass transportation; there would also be an increased passenger traffic flow. This would be possible by complementing existing transit systems and modes, with the Blue Line marginally easing existing traffic congestion. The

There are approximately 10.5 million daily passenger movements in the Lagos Metropolitan Area and this number is increasing at a rate of 6 per cent annually.

Blue Line rail project will lead to decreased fuel consumption because through increased passenger traffic flow, all vehicles would realize decreased fuel consumption. Another benefit of the Blue line is that the railways would provide a possible reduction, standardization and regulation in transportation fares for commuters. The Blue Line would offer increased social cohesion and community development. It is important to note that for a community to develop, people need to spend time with one another and not hours in traffic.

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system in the state and the Blue Line will contribute

associated with long commutes, it is logical

significantly to this goal.

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By decreasing travel times and the stress to assume increased social cohesion amongst community members. This would also lead to

Through the development of the Blue Line rail

improvement in the quality of life for citizens.

project, there has already been an increase in construction sector employment in the short term.

The city of Lagos will experience increased

Additional employment opportunities would be

tax receipts via transit-oriented development

available during the Operations and Maintenance

when the Blue Line becomes operational along

phase in the short and long term.

designated corridor. The presence of the Blue Line project along

The city of Lagos will experience increased tax receipts via transitoriented development when the Blue Line becomes operational along designated corridor.

This implies that there would be new transit hubs

with the major trade between Nigeria and its

which would become positive attractors for real

neighboring West African countries would

estate, commercial and business developments.

improve trade across Africa considering that

The Blue Line stations would stimulate business

the location of the Blue Line is an international

and real estate development within their

gateway corridor that leads to Western African

surrounding environ, furthermore, should such

countries.

stimulation occur, an increase in property tax receipts due to property value uplift would occur.

Considering the urban transportation system,

The Blue Line project would harmonize the

the rapid population growth as well as high

Government’s existing transport plans within

population densities in Lagos State, creates an

Lagos State. As specified in the STMP, there is

attractive market for investors in transportation

a global plan to develop a multi-modal transit

infrastructure.

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Infrastructure

Development is key to Growth in Nigeria Nigeria finds itself in challenging times with the drop in oil prices and a weak Naira. Dr Francis O. Alaneme from the Nigerian Ministry of Industry, Trade & Investment explains Nigeria’s push in the industrial sector as part of the efforts to diversify the country’s economy.

T

hese are interesting times. There is

driving opportunities across Nigeria and West

global economic downturn, the fall

Africa. It is the central city for investment in

in the price of oil in the international

West Africa. This has to do with the recent

market and businesses confidence

serious industrial reforms in Nigeria.

has stagnated recently coupled with security issues,

yet Africa remains the investment

destination of choice particularly, Nigeria.

Nigeria is a big country with big dreams and huge potentials. All the thinking is to be the big country in Africa. The great desire is to be the

28

Nigeria has become the favorite investment

first in Africa and among the top twenty most

destination and one of Africa’s fastest growing

developed countries in the world by the year

economies. Nigeria is the most populous

2020. The fall of the oil price was not a surprise

African country with a population of 170 million

to Nigeria rather it has presented itself as a

and made of many cities including Lagos with

blessing in disguise. Nigeria has been working

a population of more than 21 million. Lagos is

on the diversification of the economy.

Corporate Africa 2016


Special Report

The measure of a great nation cannot be

administration. It is a comprehensive

detached from the dependability of the

and integrated road map for accelerated

economy. So a great economy must be

industrialization of the country. The plan

based on a solid industrial sector with well

is home grown; it is industry specific and

diversified lines and sources of revenues

is tailored in line with the peculiarities. In

and a vibrant MSME sector to create jobs

putting together this plan, Nigeria took

and provide logistics.

into account the areas of comparative advantage, relative to the rest of the world in terms of natural endowment and

To transform the economy and restore the business confidence and sustain it, requires that Nigeria must believe in its potentials.

hope to leverage on these to create world class industrial cities and parks across the country in the shortest time possible with necessary support structures and enablers to make the industrial sector globally competitive. The initiative is for Nigerians to believe in

Over these past few years, Nigeria’s

their own, patronize its own for companies

economy has registered moderate growth

to gain experience and increase production,

rates enough to rank it as one of the

employ more people, improve products

fastest growing economies in Africa and

and service, expand operations, compete

indeed the world. It has progressed from

better and eventually become strong

the third largest economy to become

global player. Manufacturing industry in

the largest economy in Africa and in all

any country requires basic enablers – such

of these advances the massive industrial

as infrastructure, finance, skill, etc – to

potentials of Nigeria have remained largely

promote competitiveness and ensure long

untapped. The present Administration has

term sustainability. Those inputs have cross

taken giant strides aimed at unlocking the

cutting effects within the real sectors of

industrial potentials with the launch of the

the economy.

Nigeria Industrial Revolution Plan (NIRP) by His Excellency President Goodluck

As part of NIRP, the numerous challenges

Jonathan in February 2014.

or constraints that have held back Nigeria’s non-oil sector and hence

The NIRP is part of the Transformation

economic development for years, are

Agenda

these enablers that need to be addressed:

of

Goodluck

Jonathan’s

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I. The high cost of funding and lack of long term finance in Nigeria II. Providing industrial skills III. Linking innovation and industry IV. Improving investment climate V. Strengthening product standards VI. Support local patronage and VII. Building up industrial infrastructure (power, rail, road, water, port, etc). Lagos state is one of the investment destinations in Nigeria. It has the relevant resource base, the population, the market, a modern city. It has the key into the integrated approach pursued under NIRP, which allows better coordination, synergy,

streamlined regulations available in the world-class

effectiveness and more utilization of resources.

manufacturing hubs anywhere else in the world. The

To transform the economy and restore business

Infrastructure master plan in Nigeria is under the

confidence and sustain it, requires that Nigeria

custody of Infrastructure Concession Regulatory

believes in its potentials.

Commission (ICRC). Meanwhile the inland freight costs in Nigeria are high

The soon-to-be-completed Eko Light rail will decongest traffic in Lagos city, and provide workers with an easier alternative to roads.

due to inadequate rail and road infrastructure in the country. Nigeria currently has 3,500km of narrow guage rail and 329 km of standard guage rail. In view of NIRP, rehabilitation of key lines like LagosKano line has commenced. It is important to note that the high cost of domestic transportation leads to high product distribution cost and has resulted in manufacturing plants being located as close as possible to their consumers and at large markets.

Examining these identified support structures and enablers and the steps taken by the central

The soon-to-be-completed Eko Light rail will

government to ensure that the enabling environment

decongest traffic in Lagos city, and provide workers

is there to grow the economy, we have to dwell on

with an easier alternative to roads. It will also ease

the impact of industrial infrastructure and keep the

distribution of goods and products; keep the business

discussion of other enablers for another day.

activities busy as a mega city as well as bring Nigeria closer to achieving its goal of industrialization faster

30

The Infrastructure gap in Africa in 2014 was

than anticipated. This will lead to the growth of

estimated to be US$93 billion annually (40 per cent

internal trade as well as industrial competitiveness.

in power) while in Nigeria the gap is believed to be

Contribution of Lagos State to the economy will be

US$350 billion aggregated (AfDB 2014). To achieve

very encouraging and better for the GDP of the country.

industrial and inclusive growth, industries must have

The power sector have been fundamentally re-

access to reliable and affordable infrastructure. The

organized for improved performance by privatizing

NIRP has provisions to ameliorate the constraints of

11 distribution and four generating companies and

infrastructure by ensuring strategic incentives and

bringing in private sector capital and expertise.

Corporate Africa 2016


modernization and assembly in Nigeria. General

upgraded to standard. The Nigerian road networks

Electric of USA (GE) has entered into agreement

have received unprecedented attention and

with FGN to deliver locomotives and refurbish

improvements in the last four years. Meanwhile,

old locomotives for rail transportation. This is to

Nigeria restarted rail services that had been

enhance the acceleration of the modernization

dormant for over 20 years. The NIRP reform will be

of rail transport network in Nigeria. The Standard

a major additive to these landmark achievements.

Organization of Nigeria has established two

Special Report

The facilities in the aviation sector have been

international standard laboratories where goods

The measure of a great nation cannot be detached from the dependability of the economy.

and products for export could undergo test. In conclusion, it is obvious that infrastructure development in Nigeria has serious implications for manufacturing and other businesses; high cost of production that leads to un-competitiveness of

Through the NIRP, the cost of business

local products would have been reduced drastically

incorporation and doing business in Nigeria has

to pave way for products competitiveness in

significantly reduced. The investment climate

Nigeria. There will be high inventory of finished

has improved so much that serious landmarks

goods

in different sectors have been achieved, like in

improvement in standard of living, higher per

auto industry development program, international

capita, reduction in poverty and increase in

car manufacturers such as Nissan and Hyundai

capacity utilization. Generally, the aim of Nigeria

have shown interest. In rail transport, Locomotive

to be in the top 20 in the global economy would

policy is being put in place to ensure locomotive

have been achieved.

resulting

in

massive

job

creation,

DQS-UL offices

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Industry

TELECOM

IMPACT UPON AFRICAN ECONOMIES Over the years, many African countries have achieved impressive progress expanding their ICT infrastructure and liberalizing the sector. This has led to increased benefits including rising revenues and job creation, a direct impact of ICT on economies according to Abdoulkarim Soumaila, Secretary General of the African Telecommunications Union (ATU).

W

ith increased recognition of

The national policy environments in which ICTs are

the contribution of ICTs to

expected to flourish are paramount. With an attractive

economic growths, countries

investment environment, for instance private capital

are putting in place the enabling

inflows will quickly see a rapid growth and expansion

legal and regulatory structures by developing

of ICT infrastructure. ICT development in any country

national ICT policies and strategies to enhance the

cannot be successful without well-structured policy

contribution of ICTs to national economic growth.

and implementation. Such policies and legislations generally cover aspects such as electronic transactions

Since the launch of the African Information Society

and digital signatures, intellectual property rights

Initiative (AISI) in 1996 spearheaded by the Economic

and data security protection which are essential

Commission for Africa (ECA) and following the outcome of the World Summit on the Information Society (WSIS) in 2003 in Geneva, and in Tunis IN 2005, a majority of African countries made ICTs a national priority through the formulation and implementation of national ICT policies and e-strategies. As a result, the number of countries with a national policy increased from 27 in 2005 to 48 by the end of 2011 (ECA WSIS survey, 2011).

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Corporate Africa 2016

With an attractive investment environment, for instance private capital inflows will quickly see a rapid growth and expansion of ICT infrastructure.


Industry

for creating an environment that can facilitate the contribution of ICTs to economic growth.

Apart from national ICT policies and strategies, African countries are also developing sectorial ICT strategies such as e-government, e-commerce, e-health etc. The WSIS survey carried out in 2011 shows that about 80 per cent of the countries have e-government strategies in place. This will inevitably increase the efficiency of public service delivery thereby enhancing the contribution of ICTs to economic growth. Similarly, this favourable policy environment has prompted considerable private sector investment and innovation. Although infrastructure is getting a lot better in recent years, many countries were unable to implement their policies due to lack of resources and the inability to articulate the key programs that stimulate their ICT sectors.

Telecommunications were one of the principal drivers of economic growth in Senegal supplanting financial services in 1996 and construction in 2002. Over the past 20 years, an analysis on the general overview of the current status of ICT legislation in Africa shows that a number of African countries have been engaged in structural and regulatory reforms in various degrees. They have privatized national historical telecommunications operators, introduced and managed competition in the cellular market, free competition in the value added services, and separated regulatory function from policy-making

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Industry

FACTS

With regard to the contribution of telecommunications to GDP, this has steadily increased mainly as a result of mobile and internet service provision from 1.3 per cent in 1987 to 13 per cent in 2013 (ANSD).

During the period 2004-2010, mobiles contributed 13.6 per cent to growth in the economy of Senegal (Katz, 2014).

Between 2000 and 2011, growth in the number of companies in the telecommunications sub-sector (471 per cent) was stronger than national growth (270 per cent).

in the perspective to attract more private

growth in the number of companies in the

of the economy. By way of comparison, the

and foreign investment in order to finance

telecommunications sub-sector (471 per

contribution of telecommunications to GDP

both the development of the sector as well as

cent) was stronger than national growth

rose to 8.19 per cent in Cote d’Ivoire and 5.71

to foster economic and social development.

(270 per cent) reflecting the dynamism in the

per cent in Niger (Katz, 2013).

sub-sector. This strong growth in the number A case in point is that of Senegal where the

of companies in the telecommunications

In relation to the growth in GDP, the

contribution of the ICT sector in general

sector has had a positive effect on national

contribution of telecommunications has

and of the telecommunications sector

productivity. With regard to the contribution

increased considerably , for example rising

in particular, to the national economy

of telecommunications to GDP, this has

from 11 per cent between 1996 to 18.9 per

is analyzed according to the difference

steadily increased mainly as a result of

cent between 2001 and 2005. During the

between its direct and indirect effect.

mobile and internet service provision from 1.3

period 2004-2010, mobiles contributed 13.6

per cent in 1987 to 13 per cent in 2013 (ANSD).

per cent to growth in the economy of Senegal

The direct contribution is seen in terms

This made Senegal one of the countries in

(Katz, 2014). Telecommunications were one

of production, GDP, investment and

which the sector had attained a high level

of the principal drivers of economic growth

employment. Between 2000 and 2011,

of development in relation to other sectors

in Senegal supplanting financial services

34

Corporate Africa 2016


Industry

in 1996 and construction in 2002. Among

expanding the infrastructure to enhance

the clusters with activities targeted by

access and use, but also in ensuring the

the strategy for accelerated growth, only telecommunications has demonstrated such strong growth over the past fifteen years. The contribution of the internet to GDP (iGDP) is at a record level of 3.3 per cent,

Telecommunications were one of the principal drivers of economic growth in Senegal supplanting financial services in 1996 and construction in 2002.

exploitation of the opportunities that the telecommunications and ICT services can offer on top of infrastructure. It is noted that countries need to develop systematic mechanisms for maintaining ICT data and statistics for policy analysis and informed decision making.

which places it in ninth position in the world rankings, but in the first place in the continent (McKinsey, 2012).

Given the evident correlation between to provide an analysis of the economic

economic growth and the use of ICTs,

impact of ICTs. One of the reasons for

many African countries and working as a

In addition, to the direct contribution

the lack of economic research on ICTs in

regional and as a continental block, are

from its offer of goods and services,

Senegal is the paucity of data relating to

pushing for establishment for national

the ICT sector contributes indirectly to

the sector. Estimates of indirect impact

legislations in their respective countries

economic growth in many ways.

of ICTs on growth and in particular work

in order to effectively contribute to

on econometrics, are based on more or

the economy. It is hoped that with the

economic

less sophisticated models that have

renewed drive, infrastructure will soon

that

the

been difficult to apply in Senegal and

be at appreciable levels for even greater

telecommunications

further afield, in many African countries

economic growth and inclusion.

A

body

literature

of has

development

international highlighted of

networks in general and in particular the

due to lack of sufficient or reliable data.

penetration rates and more specifically

The African Telecommunications Union

those of mobile telephony and high

Despite the above outlined impact of

(ATU) as the continental body in the

speed internet have impacted positively

ICTs as a crucial driver for economic

area of telecommunications, continues

on economic growth. In Senegal, despite

growth, evidently, the challenges are in

to play a vital role in the integration of

the importance of ICTs for the economy,

the offing and more needs to be done.

regional markets by fostering policy and

and the importance accorded to the

Some challenges include the need to

regulatory harmonization to create larger

sector by the public authorities, very few

improve the capacity of the policy makers

common markets from ICT based on

studies have been carried out to date

on legal and regulatory issues not only in

regional economic communities.

Corporate Africa 2016

35


Industry

BANKING AFRICA’S

UNBANKED TIME FOR A REALITY CHECK Vahid Monadjem, CEO of Nomanini, challenges the emphasis given to the progress mobile money has made in Africa.

P

lenty of progress has been made

2011 that figure was 51 per cent. In three years,

on increasing the size of Africa’s

700 million people became “banked” in some

banked population. The trouble is,

way, and the number of “unbanked” individuals

from the amount of noise that is

dropped 20 per cent to two billion adults. Much

made about the topic, you would be forgiven for

of this progress was attributed to mobile money.

thinking we had fixed the problem when we really haven’t.

Mobile money is clearly a great story, and a tale of African success, but it has perhaps been

36

According to the World Bank, today, 62 per cent

overemphasised when it comes to its ability to

of the world’s population has a bank account. In

bank the unbanked. Things are further behind

Corporate Africa 2016


Industry

than people think, but too often it feels like those of us that say so are yelling against a wind of “we have arrived” when really we haven’t yet.

Africa’s unbanked majority McKinsey projects around 80 per cent of the con-

Mobile money is clearly a great story, and a tale of African success, but it has perhaps been overemphasised when it comes to its ability to bank the unbanked.

tinent’s population is not connected to formal financial services. MasterCard says only two per cent of retail transactions in Africa are electronic, with the rest taking place using cash. And this on

retail, where the bulk of the unbanked shop,

the “continent of mobile money”. Is this a huge

overwhelmingly using cash. For people who

surprise? Not really. Even in the United Kingdom

are living much closer to the breadline this is

electronic retail transactions have only recently

the bulk of their spend. We work on the basis

overtaken cash. Cash is still king in the United

that people transact with people, often face-

States. We must not overemphasise the progress

to-face. And if we are to come up with a way

we have made in Africa.

of getting more people involved in formal financial services we need to look at those

Mobile money has been an exceptional develop-

people and work out what they want and need.

ment for the continent. In a couple of use cases mobile money has cracked it, and it really has

Energy and time

raised the bar in terms of being a proven electronic means of transaction and storage. Yet in terms of

Cost is driven by factors: energy and time. To really

“banking the unbanked”, it has yet to really figure

allow electronic transactions to take off, we need

out its role. The average transaction value on M-

to tackle these two factors. Electronic transac-

Pesa is US$29, which is a lot if you are earning

tions fix the energy issue, but thus far has it actu-

US$2 per day. Mobile money has a ways to go

ally tackled the problems of time and cost? Mo-

to banking those at the bottom of the pyramid.

bile money agents need to be paid for their time.

At Nomanini, our technology is used in informal

We need to provide lower friction transactions.

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Industry

Breaking out of the trap There are ways of breaking out, however, and they involve consolidation, different stakeholders working in their areas of expertise, and building on what we have already. Safaricom’s success with M-Pesa was down to its ability to use its pre-existing merchant network as a means of pushing electronic payments. If we can figure out clever ways of using existing networks we can break out of the chicken and egg trap. It needs all hands on deck, whether the private or public sector, the more the better. There is a lot more need for consolidation in the industry. Regulators are now helping, forcing people to play together nicely. The next level of consolidation is creating spe-

The continuing popularity of scratch-

fall. This is the challenge faced by elec-

cards gives the lie to the idea that Afri-

tronic means of storing and transacting

ca is transacting in an ever more hi-tech

wealth. Customers will only use elec-

manner. For the last three years we have

tronic means if they can spend their

looked with admiration at scratchcards.

money in their local area. Merchants

At any informal outlet across Africa,

will only accept electronic means if they

mobile Point of Sale service for facilitating

they are successful. They have values

believe customers will use these means.

cash transactions in emerging markets. He is

of less than a single dollar, but create

These two factors go hand in hand, and

passionate about working at the intersection

US$70 billion of revenues for mobile

represent a chicken and egg trap that

of technology and design in informal markets,

phone companies. They are the lifeblood

is difficult to break out of.

of the oft-cited mobile revolution, and

Scratchcards’ success is down to their ability to convince both customers and merchants of their worth. The cost, energy and time issues are solved for customers, and merchants like them because they result in increased foot-

38

Corporate Africa 2016

Vahid Monadjem is the co-founder and CEO of Nomanini, a South African-based

where Nomanini’s solutions can directly impact people’s lives. Vahid’s vision for Nomanini is to provide platforms for transactions in emerging

there are a lot of other industries looking at implementing them.

About Vahid Monadjem – CEO, Nomanini -----------------------------------

markets by empowering local partners to

At Nomanini, our technology is used in informal retail, where the bulk of the unbanked shop, overwhelmingly using cash.

create the tools that best suit their particular environment. He is a trained engineer with extensive innovation and product design experience. Before founding Nomanini, he was McKinsey & Company’s global fellow for Emerging Market Product Development.


Industry

cialist roles. From our perspective the focus is on the retail point of transition, of transactions and whatever physical logistics serve that point. We play a very narrow role in that, bringing together the main advances into our products and services without losing touch with the merchant. Other players need to find a niche where they can excel, and then we can all work together. Clearly, though, a move away from cash would be beneficial for all concerned, both customers and merchants. I lost my wallet recently while travelling, had no credit card, and was operating only with cash. It is amazing the level of risk you’re bearing. Now imagine if every cent you owned was on your person or in your bedroom. Mine was a small fraction of the worry that many unbanked people bear. Aside from the risk element, there are financial benefits too. If you sit on cash you are losing money, missing out on the ability to participate in the likes of shared savings schemes. Energy and time come into play here too. Merchants need to pay suppliers, and by eliminating time and energy expended in handling cash, they can improve their businesses. The benefits are clear, and we are on the road to realising them. Just perhaps not as far down the road as many think.

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Industry

GHANA

TRANSPORT LOGISTICS Corporate Africa Report

W

ith annual GDP growth averaging 10.3% between 2010 and 2012, and forecast to average 5.9% between 2012 and 2017, Ghana

is among the world’s fastest-growing countries and a rising star in Africa. Ghana’s investor attractiveness is buoyed by its political stability (one of Africa’s most stablegovernments), economic liberalism, abundant natural resources

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Corporate Africa 2016

Ghana is making major advancements and is an attractive investment.


Industry

Ghana is set to establish itself as an important hub in the West African region supported by abundant natural resources, economic liberalism, political stability and close proximity to Nigeria, Africa’s biggest economy.

Burkina Faso

Benin

Tamala Yendi

Togo

Cote d’Ivoire

burden, weak rule of law, and

direct investment inflows

the country’s growing fiscal

have flourished in recent

deficit.

years, especially since the

Kumasi To Lagos

To Abidjan

and diverse economy. Foreign

Nsawam Accra Tema Port of Tema Kotota Int. Airport Takoradi Port of Takoradi

commercialization of oil began

Ghana will, however con-

in 2007, which is a further

tinue to foster its reputation

factor contributing to Ghana’s

and position to be known as

investor attractiveness.

a safe gateway to West Af-

On the downside, limiting

rica and an ideal point of ar-

factors are the rising tax

rival for newcomers to Africa.

Corporate Africa 2016

41


Industry GROWING OPPORTUNITIES AND DEBT Trade represents a significant portion of Ghana’s economic growth, with exports and imports accounting for 44 per cent and 50 per cent of GDP respectively. The principal foreign exchange earning products are gold, oil, and cocoa. The main trading partners are led by developed European economies: the Netherlands, UK and France. The ongoing Eurozone crisis could negatively impact Ghana and in the longer term it should look to diversify its trade relationships. Intra-African trade is also very important. Bilateral trade between South Africa and Ghana, for example, has strengthened steadily since

Trade and economic factors favour growth, but Ghana’s high fiscal deficit presents uncertain danger.

day by 2019. Gas is produced as by-product in the production of oil, but is currently not commercially viable. The IMF predicts annual GDP growth of 5.9% between 2012

1994, as relations improved and expanded in light of

and 2017. This is more than robust and is expected to lead to a

the political and economic transformations in both

tangible increase in Ghana’s per capita GDP and thus to rising

countries. Ghana is now South Africa’s second-largest

demand in the retail sector. Still, the middle-class population,

trading partner in West Africa, behind Nigeria.

with per capita consumption levels of US$4-20 per day, presently constitutes only 19.8% of the total population.

Ghana is a member of several trading blocs, including the Economic Community of West African States

A key risk in Ghana is the growing fiscal deficit, which widened

(ECOWAS) and Africa Economic Community (AEC).

to 12% of GDP in 2012. Businesses should factor the risk of a

As part of its commitment to an open trade policy,

rising public debt burden into their longer-term business plan-

the Government has focused on harmonizing external

ning processes.

tariffs with the members of ECOWAS. It has progressively eliminated or reduced its import quotas, tariffs

BUSINESS ENVIRONMENT

and import licensing requirements over the last two decades. The Government has also ruled out the use

Ghana has a quite favourable business environment.

of high tariffs to protect domestic industries. Although Ghana might not have a demographic profile quite as Ghana is endowed with a number of natural resources,

favorable as some other African countries, it makes up for this

including arable land, forests and substantial deposits

by having a less restrictive business environment and better

of gold, diamonds, salt, manganese and bauxite. Ad-

macroeconomic policies. Civil

ditionally, the commercialization of oil since liberty improves Ghana’s investment attractiveness, as

42

2007 has broadened the scope of natural resources,

does its legal and regulatory framework, which the World

enabling Ghana to become a net oil exporter, with

Bank/IFC’s Doing Business Projects rates highly in sub-Sa-

production estimated to rise to 200 000 barrels per

haran Africa for protecting investors’ rights and interests.

Corporate Africa 2016


Industry

Ghana’s banking sector is well developed in the Afri-

(speed, simplicity and predictability of formalities) is

can context and it also has quite good labor market

not exceptional (103rd), it has improved consistently

efficiency. But even though the country’s laws make it

since 2007.

relatively easy to hire and fire workers, it can be quite It is now slightly better than average in the sub-Saharan

costly (in terms of severance packages).

region and better than its most competitive neighbor, There are other obstacles. Property rights are poorly

Cote d’Ivoire, where difficulties with activity, with a

protected and corruption persists due to overall weak-

greater density of transport, power, and information and

ness in the rule of law. Still, Ghana suffers less from

communications technology (ICT) infrastructure in the

corruption than other countries in the region.

south and southwest of the country than in the north.

LOGISTICS

“Ghana is making major advancements and is an attractive investment destination, benefitting from a strong rule of law and stable political environment combined with a strong economic outlook in both the broader economy and the oil and gas sector in particular. It is particularly attractive for Englishspeaking companies – language barriers need to be accounted for when operating in Africa.”

Logistics Performance Index Logistics Customs

Logistics Performance Index 5

4 3 Timeliness

2

Infrastructure

1

Tracking and tracing

International Shipment

Logistics quality and competence Ghana

Top Performer (South Africa)

Source: World Bank

Marco Raffinetti, Divisional Chief Executive – Capital Projects, Grindrod Freight Services TRANSPORT Ghana has an advanced infrastructure platform when compared with other low-income countries in Africa.

Ghana’s logistics performance and customs procedures are better than those of its regional peers.

But as it approaches the middle-income threshold, Ghana will need to focus on upgrading its infrastructure indicators in line with this benchmark. Like electricity, infrastructure presents a major constraint to growth. Following the successful commercialization of its oil reserves, Ghana is in a position to raise additional

Ghana is rated 108th out of 155 countries on the Logis-

public funding for infrastructure from its increased

tics Performance Index 2012. This is an overall improve-

fiscal receipts and thus to address the country’s in-

ment of nine places since the previous assessment, which

frastructure needs.

was driven by good rankings in international shipments and logistics quality and competence.

In addition, much of the transport investment is being funded and developed by Chinese com-

Important weaknesses remain in infrastructure,

panies and China will continue to be a ma-

timeliness and tracking and tracing. Although

jor player in the region, despite growing anti-

the efficiency of Ghana’s customs clearance procedures

China sentiment during Ghana’s 2012 election.

Corporate Africa 2016

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Industry Increasingly, the Government is also looking to partnerships with the private sector in the financing and delivery of infrastructure. Overall, Ghana’s infrastructure situation is hopeful.

Transport infrastructure needs to be upgraded to meet the needs of a middle-income country.

Unlike in many other African countries, Ghana’s infrastructure backbone covers the entire national territory and helps to integrate its different regions. However, the distribution of infrastructure networks generally reflects the spatial distribution of economic remain exposed to the potential of pirate attacks, are constant evidence of the capacity gap in maritime facilities. What’s more, cumbersome procedures in the clearance of goods have led shippers to call for the simplification of clearance procedures of goods at the country’s ports and borders to prevent delays. The Government is already trying to address these problems with expansion plans for the Tema and Takoradi harbours, but freight volumes will continue to rise too, suggesting that congestion problems will not go away. At present West Africa lacks a clear maritime hub. Abidjan had begun to play that role, but with the political crisis in Cote d’Ivoire, major shipping lines diverted their West African operations to Malaga (Spain) or Tangiers (Morocco). While Cote d’Ivoire has better port infrastructure at present, Ghana’s political stability, better economic policies and strong economic growth give it strong potential to become the regional gateway.

With growing incomes and more and more foreign companies establishing themselves in Ghana, the prospects for the air transport industry are good. And, just like in the ports sector, West Africa lacks a clear air transportation hub. Accra is still behind rivals Lagos, Dakar, and Abidjan and requires significant investment to make it the regional leader. RAIL Rail freight and passenger volumes are negligible. Ghana’s railways network is insignificant and appears to be largely neglected. It currently handles less than 2% of freight and passenger traffic. Rail infrastructure is concentrated in the south and was designed to transport export commodities. The network forms a triangle that links Accra-Kumasi-Takoradi, and currently only the Western line (Kumasi-Takoradi) is partially operational. The railway also connects the major mining areas to the sea ports. In recent years, the Ghana Railway Company (GRC) has been increasingly unable to carry the full volume of mining traffic and a growing share of minerals is being diverted to the road network. This is severely limiting development of the mining sector in the Western region and it will clearly not be able to support the development of the emerging oil and gas industry. There are big plans to upgrade and expand the railway network.

Low volumes in the air transport sector offer vast future potential.

AIR TRANSPORT Ghana’s air transport market is small in absolute terms and average in the African context. The country has eight airports, including one international airport (Kotoka) in Accra. A number of major international airlines fly there regularly. The bulk of the country’s air transport market is international and fairly evenly divided between intra-African and intercontinental flights. Despite Ghana continuing to face significant safety and security issues in air transport, domestic and international passenger numbers have grown massively in the past few years.

44

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In a collaborative project, six West African neighbours have agreed to invest and expand the Lagos-Abidjan highway, starting in 2014. The plan for the expanded highway is to provide a vital road link to the sea ports that are used by landlocked countries in the region such as Mali, Burkina Faso and Niger, but trade along the corridor could be hindered by customs barriers at each country’s border. ROADS Inland transport is happening on the roads, so road quality is essential to economic growth.


Industry

CONCLUSION Road transport is by far the most important means of moving freight in Ghana and is the sector that requires the greatest consideration. Roads carry 95% of passengers and 98% of the country’s freight. According to a World Bank report, Ghana’s road transport indicators are strong. By almost all measures, they are well ahead of those found among low-income peers and nearing the levels expected of a middle-income country.

Based on our analysis, we’ve assessed the investment potential for Ghana’s transportation and logistics sector as shown in the graphic below. Ghana - Investment potential assessment

But some challenges remain. Road conditions, particularly in the north of the country, are still problematic, as is rural connectivity. Although rural road quality is remarkably good, the physical extension of the rural network appears inadequate. Urban congestion remains a particular problem in the main centres. The Government is spending on average 1.5% of GDP on roads, one of the highest levels in West Africa. Projects include repaving and upgrading existing roads

as well as investing in the road network near the oil-rich south-west region of the country.

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Industry

STRIVING FOR BETTER ENVIRONMENT FOR MINERS Since 1989, Chamber of Mines South Africa has played a major role in the country’s mining industry. Over the years, the Chamber has created conducive environment for investors engaged in mining, writes Vusi Mabena, Transformation & Stakeholder Relations, Senior Executive at the Chamber.

T

he Chamber of Mines is a member-based

Mining and Petroleum Resources Development Act, and

private sector employer association that

the Mining Charter and other Labor and Environmental

represents companies operating in the

Laws affecting the mining sector. The mining industry

mining industry. The Chamber exists

and in particular the members of the Chamber pride

primarily to represent its members in policy and

themselves for the positive contribution they have made

legislative matters of a collective interest. The Chamber

to the economy and social upliftment of communities.

also provides a forum for its members in certain

During the past two decades the Chamber has been

commodities. The advantage of being represented by

instrumental in seeing to it that the mining sector

the Chamber of Mines is that it reflects the collective

creates some 10 million jobs in the multi-faceted mining

thinking of all industry leaders on policy and legislative

sector. As the fly-wheel of the economy, the mining

matters, thereby presenting a coherent position on these

industry has contributed significantly to the Gross

issues when liaising with government and other

Domestic Product to about R2.5 trillion (US$198.4 billion)

stakeholders. Representation through the Chamber also

and earnings from export sales are in the region of R2.8

enable members to focus on their operational and

trillion (US$222.2 billion).

company specific matters, leaving the broader issues to be managed by the organization.

The South African mining industry has been a forerunner to many of the industries in South Africa: from financial services (as a dominant component of the JSE) to the

There are numerous opportunities for investing in mining and infrastructure projects in South Africa.

construction sector. We estimate that the mining industries account for 18 per cent of the South African GDP (8 per cent directly and 10 per cent indirectly), while providing employment for 1.35 million people (520 thousand directly, 830 thousand indirectly). Currently and into the future, the mining industry will play s significant role investing into South Africa’s national

The benefit for stakeholders is that, in dealing through

infrastructure programs, community development,

the Chamber of Mines, they do so with confidence that

transformation and economic growth and development.

any agreements reached reflect industry positions. This

46

gives the Chamber status of being an authoritative

The Chamber of Mines continues to work with gov-

voice of the South African mining industry.

ernment in promoting investment into the sector by

Since the advent of democracy, the Chamber has played

creating a stable operating environment, which off-

a critical role in influencing the development of the

sets the highly volatile commodity price environment

Corporate Africa 2016


Industry

that mining have to contend with. The Chamber believes that this will encourage investment and growth in the industry, especially where the government works in close partnership with industry. Input costs and regulatory risks also need to be maintained at levels that significantly erode margins and discourage in-

During the past two decades the Chamber has been instrumental in overseeing the creation of some 10 million jobs in the multi-faceted mining sector.

(coal for power station, gas to liquids), Equipment Manufacturers (machinery and materials employed in mining process), Engineering services (significant infrastructure development), Construction (through development of mines), Supplier industries (chemicals, timber and safety gear). All these industries have a high investment prospective

vestment in the industry. The following are amongst key constraints that need to be

regulatory and infrastructure paths leading

coupled with the fact that South Africa

addressed in order to spur growth: Recov-

towards growth.

is endowed with mineral wealth that still needs to be explored and mined for many

ery in commodity prices; modernization

years to come.

and innovation to ensure efficiencies are

Over the past 130 years, the mining indus-

optimised; an enabling labour relations

try has provided the critical mass for the

environment; and seamless partnership

development of a number of industries

The regulatory framework and mining

with government which unlocks critical

including; Financial Services, Energy sector

cadastre put in place by the South

Corporate Africa 2016

47


Industry

African government makes South Africa an ideal investment destination. This is strengthened by the tripartite philosophy and co-operative spirit that exists between

the

industry,

labor

and

government. As a link between its member companies and key stakeholders, the Chamber is able to play this critical role because of the expertise of its staff in the legislative and policy areas affecting the mining industry. The professionals who work in the Chamber have years of experience in various areas encompassing political, social, economic, occupational health and safety, environmental, sustainable development, employee relations, skills development, communications, and legal matters. Through the expertise of its staff the Chamber can address changing legal, social, economic, and environmental issues and engage with appropriate stakeholders to achieve beneficial and long-term outcomes for its members. In serving its members as the most

Vusi Mabena, Transformation &

relevant and highly respected advocacy

Stakeholder Relations Senior Executive

organization in South Africa and the

at the Chamber

recognized authoritative voice of mining in the country, the Chamber of Mines fulfills its vision of achieving a policy,

legislative, and governance framework

Nadia Denton, African Film Specialist and Author

which is widely supported. This allows the mining industry to convert a significant part of South Africa’s abundant mineral resources into wealth for the benefit of all people living inside South Africa. There are numerous opportunities for investing in mining and infrastructure projects in South Africa. The South African government has created state owned developments, including finance institutions like the Development Bank of Southern Africa (DBSA) and the Industrial Development

Corporation

(IDC) to facilitate and co-invest in 48

Corporate Africa 2016

As a link between its member companies and key stakeholders, the Chamber is able to play this critical role because of the expertise of its staff in the legislative and policy areas affecting the mining industry.


Industry

The regulatory framework and mining cadastre put in place by the South African government puts South Africa as an ideal investment destination.

mining and Infrastructure projects. The IDC has set aside R3.6bn (US$ 285.7 million) to support investors with viable projects in mining; and the DBSA is also ready to support infrastructure projects in collaboration with provincial and local governments. Although the commodity prices remain depressed across the board, this is an opportunity for investors to explore projects in coal, iron ore, platinum, copper and ferrochrome which are definitely going to be in demand once the boom cycle starts in the near future.

Corporate Africa 2016

49


Culture & Society Nadia Denton, African Film Specialist and Author

50

Corporate Africa 2016


Culture & Society

Film Africa

Snapshot of a Burgeoning Film Sector African film productions have been enjoying wider acceptance in recent times both locally and globally. Nadia Denton, African Film Specialist and Author of ’The Nigerian Filmmaker’s Guide to Success: Beyond Nollywood’, looks at the continent’s emerging film industry and the acclaim it has been receiving internationally.

A

cross the African continent, content

across 23 African countries.

creators are bringing to life new film making practices to suit increasingly engaged local

Film Africa has historically featured strong content from

and global audiences. From Nollywood to

Nigeria and South Africa, Africa’s two leading film

animation, the African audio-visual sector is receiving

economies. The festival has engaged in discourse about

unprecedented international recognition and success. It

the development of the Nigerian film industry as well as

is not just in the area of economic growth that the ‘Africa

hosting a number of Nollywood’s leading lights; Obi

rising’ narrative is of interest. In the creative space African

Emelonye (The Mirror Boy, Last Flight to Abuja, They Will

filmmakers are also rising, speaking with collective

Be Done) the first Nollywood Director to have a theatrical

confidence about their culture, society and polity. Soaring

release in the UK; Michelle Bello whose film Flower Girl

mobile phone consumption has also meant that the film

was a box office hit in Nigeria; and Kunle Afolayan, Director

industry is starting to engage with the tech scene, aiding

of the multi-award winning period piece October 1, a film

the development of a burgeoning film sector.

that has set a new precedent for Nigerian film productions.

In the UK, The Royal African Society has dedicated itself

These filmmakers have enjoyed international acclaim and

to promoting Africa in the spheres of business, politics,

their productions are now available to audiences across

academia, arts and culture. Their flagship festival Film

the globe on Netflix.

Africa has been celebrating the best in African cinema Film Africa has also been mindful of developments in the

The intersection of digital technology and mobile phones have started to have an impact on the sector.

South African cinematic space producing South Africa at Twenty together with the 4 other African film festivals in the UK; Africa in Motion Film Festival, Afrika Eye, WatchAfrica, and the Cambridge African Film Festival. The Freedom Tour is a seven month UK wide travelling program of South African films that started in the autumn

for the past 4 years, bringing London audiences a wide-

of 2014 to mark 20 years of freedom and democracy in

ranging film program accompanied by events, director

South Africa. The tour enjoyed over 100 screenings during

Q&As, talks and discussions; professional workshops and

its run featuring the Oscar submitted Four Corners,

masterclasses, and school screenings and family activities.

directed by Ian Gabriel; South Africa’s first dance film

Last year, Film Africa screened more than 80 films from

Hear Me Move directed by Scottnes L. Smith and, the

Corporate Africa 2016

51


Culture & Society

controversial Miner’s Shot Down directed

South Africa remains a popular

by Rehad Desai. Film Africa has remained

destination for the shooting of ever

dedicated to ensuring the access of little

popular Nigerian Afro-beats videos, and

seen African content in an industry

South African actors have been featured

where such films have minimal visibility

in many Nollywood films.

consisting of less than 1 per cent of film exhibition worldwide.

Changes within Nollywood have perhaps made it more receptive to international

There is much to compare between the

collaborations and co-productions. The

Nigerian and South African film sectors.

foundations of the market trader led

While Nollywood is recognised as Africa’s

industry, established over 20 years ago

biggest industry in terms of output,

are being challenged by the emergence

South Africa has long been seen as the

of new class of content creator who are

continent’s most successful industry for

making documentaries, indie films,

film revenues and international acclaim.

animation and Nigerian diaspora films with very different aesthetic and budget

District 9, the most successful African

to traditional Nollywood. In the last two

blockbuster to date is made by the South

years alone several productions including

African-Canadian

Director

Neil

Half of a Yellow Sun (Director Biyi

Blomkamp.

Africa’s

well

Bandele), Oct 1 directed by Kunle

established cinema chains allow it to

Sou th

Afolayan, Invasion 1897 directed by

feature as a player on the international

Lancelot Oduwa Imasuen, and Black

film market. Nigeria, with comparatively

November directed by Jeta Amata, have

fewer cinemas (less than 20 in the

been made for over 1 million dollars, a

southern part of the country) and low transparency around film data is still regarded as an ‘informal film economy’. South Africa has also enjoyed Academy Award success having won an Oscar in the Best Foreign Language Film category for Tsotsi directed by Gavin Hood in

Film Africa has historically featured strong content from Africa’s two leading film economies – Nigeria and South Africa.

far cry from the average budget of US$20,000 that typically finances Nollywood films. Rather than have a straight to DVD release in local Nigerian markets as traditional Nollywood would dictate, these filmmakers are securing theatrical runs of their film and touring

2005, and regularly makes academy submissions. Nigeria is yet to make its mark on the academy though this looks set to change with the launch of the Nigerian Oscars Selection Committee in 2014. This is not to suggest that the variances between the two countries have prevented alliances. A South Africa and Nigeria Film Summit took place in Durban, South Africa earlier in 2015 ending with a resolution that the South African and Nigerian film industries should work together in the areas of development, production, co-production, distribution and financing. There already exists some cross cooperation between the industries.

52

Corporate Africa 2016

www.filmafrica.org.uk www.beyondnollywood.com


Culture & Society

international film festival circuits. This combined with the emergence of pay TV such as African Magic and Video on Demand platforms like Iroko TV has loosened

the

stranglehold

that

traditional Nollywood marketers once had and is offering more choice to the indigenous and diaspora consumers. On other parts of the continent a different picture of the film landscape emerges. In East Africa, Docubox an East African documentary film fund offers the factual film community in Kenya, Uganda and Tanzania opportunities to exchange and network with their industry colleagues. In addition to providing financial support for documentary projects Docubox also host monthly film screenings across the region. The Founder and Executive Director Judy Kibinge is also an active filmmaker, having directed a number of films including Something Necessary, a dramatic feature where the lives of two

The international picture is even more promising with African film reaching new heights and recognition in the mainstream.

(by a black African Director) in US box office history, making over 1 million dollars. Moreover, Ethiopian coming-ofage drama ‘Lamb’ directed by Yared Zeleke will feature as part of Cannes Film Festival 2015 official program - the very first for an Ethiopian film.

ordinary Kenyans collide against the backdrop of civil unrest. Yellow Fever,

application which promises to ‘bring

While Africa’s largest economies, Nigeria

the multi-award winning animation-

movies to your pocket’. Gaming is also

and South Africa dominate the Africa’s

documentary created by Royal College

developing a niche for itself with

film space, there are some interesting

of Art graduate Ng’endo Mukii, which

Gamsole, Africa’s leading game studio

and surprising developments from other

tackles the politics of skin colour and

having over 10 million downloads in 191

parts of the continent, East and

beauty amongst African women. The

different countries. In Uganda there is

Francophone Africa. The film industry is

work of these two Kenyan filmmakers is

a hub of young, local Ugandan animators

starting to be identified by many African

an illustration of the politicized mantle

who have created ‘Katoto’ a popular

governments as a sector that has

that many a bold African filmmaker are

cartoon show. It is clear that cultural

massive potential for the wholesale skills

upholding as fundamental to their work

specific content for both big and small

development and employment of rising

and creative practice.

screens is creating a new discourse both

youth populations. Indeed, emerging

at home and abroad.

filmmakers are creating a whole new

The intersection of digital technology

niche for themselves in areas such as

and mobile phones has started to have

The international picture is even more

documentary making, animation, music

an impact on the sector. With more than

promising with African film reaching

videos and technology. Africa continues

635 million mobile subscriptions

new heights and recognition in the

to rise not just economically but also in

continent wide, digitally savvy, young

mainstream. In recent months the anti-

terms of its creative output.

African audiences (65 per cent are under

Jihadist film Timbuktu, directed by

35s) are consuming audio-visual content

Abderrahmane Sissako swept the Cesar

It is in light of such rapid changes that

on their mobile phones like never before.

Awards (French equivalent of the

Film Africa remains committed to keeping

Oscars) winning 7 out of the 8 categories

UK audiences abreast of developments

The tech scene has started to merge

in which it was nominated, including

across the African film landscape. This

with filmmaking practice and we have

Best Film, Best Original Screenplay and

year’s festival will take place from Friday

seen the growth of entertainment

Best Director. The film has also gone on

30 October to Sunday 8 November at

content apps such as Afrinolly, an

to become the top grossing African film

venues across London.

Corporate Africa 2016

53


Culture & Society

COMRADES BECOME COMMERCIAL AND PROFESSIONAL Comrades Marathon attracts tens of thousands of participants each year from South Africa, where the race is held, and from across the world. Cheryl Winn, Vice Chairperson of Comrades Marathon Association, looks at the evolution of the race into what it is today.

I

n its 90th year the Comrades Marathon is

tens of thousands of live spectators, and television

generally regarded as a vibrant successful

stations clamour for multi-million dollar television

sporting event. It is certainly one which has

rights. Sport has joined the multi-million dollar

stood the test of time despite deep-seated

entertainment industry, and throughout the world

origins in the amateur sporting era when sportsmen

businesses and governments pump megabucks

and women competed for nothing greater than the

into sport. Consequently the people involved in the

love of the game. And the men and women who

business of sport today need to be well qualified,

coached, officiated and administered the game

competitive, creative and skillful managers.

were none other than enthusiastic volunteers. The Comrades Marathon began as the dream of For decades sport (and in particular athletics) was

a humble war veteran and railway man, as a living

largely administered after hours by educators, civil servants and businessmen on the basis of handouts and the occasional generosity of “donors� rather than sponsors, because few of them expected or ever received much of a return on their investment. A far cry from the big business that sport has become today, in which top sportsmen and women are professionals demanding incentives, endorsements and salaries. Multi-million dollar stadiums attract

54

Corporate Africa 2016

We also contribute to the national economy through taxes and the purchasing power that we provide in the form of salary to our staff.



Culture & Society memorial to the spirit of the soldiers he fought with in the Great War 1914 -1918. Vic Clapham was allocated a grant of just £1 by the League of the Comrades of the Great War as a refundable advance towards the expenses he would incur to organize the first go-as-you-please race between

were accommodated to physically wake-

We also contribute to the national economy through taxes and the purchasing power that we provide in the form of salary to our staff.

up every competitor. There is absolutely no doubt that the Comrades Marathon of today owes an enormous debt of gratitude to Vic Clapham. Equally, he was succeeded by a long line of

the cities of Pietermaritzburg and Durban

other dedicated amateur administrators

in South Africa.

whose contribution kept the race going. He not only organised the race. He, and a

Vic Clapham, the founder of Comrades,

few of the cronies he managed to rope in,

Although winning times improved

epitomised the amateur administrator.

also made up the rules of the race. And

considerably, in terms of administration

despite the fact that he himself never ran the

not a lot changed during the first 50 years

As the organizing secretary of the race

Comrades Marathon, nor is there any record

of Comrades. It took 38 years for the race

for the first 17 years he was personally

of his having had any competitive athletic

to grow from 34 competitors in 1921, to

involved in every aspect of its organization,

background, he also offered training advice

100 in 1959, having dipped to as few as 8

from finance (or rather lack thereof),

to competitors.

finishers in 1946. It then took another 12

personal correspondence with every single

56

years (1959 – 1971) to grow from 100 to

competitor, negotiation with the cities of

One of the other services Vic Clapham

Pietermaritzburg, Durban and the various

offered was to arrange accommodation

municipalities in between, as well as with

mostly in private homes for each and every

But while the popularity of the race

farmers, merchants, etc, not to mention his

runner, and not only that but a wake-up call

increased, it remained incredibly amateur

tireless efforts in promoting the race through

on the morning of the race. It was the job of

in every respect. There were no prizes

the Natal Witness, Natal Mercury and even

one of his sons to go out on his bicycle at 4.

or financial incentives. There was no

the African Mirror cinema news, to keep the

AM on the morning of the race on a round

advertising and there was no sponsorship

race alive in the minds of the general public.

trip to all of the homes in which runners

whatsoever. The first formal “sponsorship”

Corporate Africa 2016

1000 competitors.


They demand slick organisation and so too,

Race Organising Committee consists of

was in the form of product provided at

do the customers - the 20,000-odd runners

20 portfolios and on race day relies on over

runners’ refreshment stations by Coca-

who participate in the event.

6000 volunteers, comprised of start, route

Cola in 1970. Advertising in the form of race

and finish officials, marshals, refreshment

numbers emblazoned with a sponsor’s logo

station manpower, doctors, nurses,

came into being in 1976. Between 1971 and 1985 the race grew from 1000 to 10,000 competitors. Live television coverage of the race was introduced in 1983 by which time the Comrades Marathon had already been established as a South African institution, and throughout this

We also contribute to the national economy through taxes and the purchasing power that we provide in the form of salary to our staff.

phenomenal period of growth it continued

physiotherapists, community marshals and taxi organisations who provide the runners rescue services. Apart from the full-time staff, a few additional temps and interns are put in place at peak time, all of them offering their time and energy for free. The magnitude of the race, the demands of its sponsors, administration and education

to be administered by 100 per cent volunteer

The CMA has a board consisting of 13

of runners, marketing, media liaison, project

administrators.

individuals (including the presidents of

management, strategic planning and all

With the advent of television in the 1980’s, so

KZNA and ASA) as well as a full-time

the other aspects which demand attention

too came the advent of commercialisation.

staff contingent of 13 which includes a

in today’s dynamic environment, simply

And hard on the heels of commercialisation

General Manager, Race Director, Media

cannot be fulfilled and exploited to their

came professionalization – it became a

& Communications Officer, Marketing

full-time potential after hours by part-

totally new ball game.

Coordinator, Accountant, Museum Curator,

time administrators. Today’s race demands

IT Coordinator, Procurement Officer and

a critical balance and coordination of the

support staff. The Comrades Marathon

efforts of professionals and volunteers.

Today the Comrades Marathon is big

Culture & Society

introduced into the Comrades Marathon

business and a major logistical operation. It has a multi-million rand budget, of which runners entry fees provide approximately 25 per cent of the income. Sponsorship, broadcast income, product endorsements, merchandising and licensing provide the rest. The total value of prizes and incentives offered for the 2015 Comrades Marathon was over R5.5 million (US$442,886). Major sponsors include major financial institutions, a medical fund and a multinational consumer-goods conglomerate - Bonitas, Fruttare, Nedbank, Old Mutual - with the next level of supplier sponsors featuring some of the most recognisable brands in the world - Coca-Cola, Energade, New Balance, Road Accident Fund and Toyota - as well as partnerships with the cities of Durban and Pietermaritzburg, the Province of KwaZulu-Natal and the SABC. Together they inject millions into the race, while dozens of other companies also contribute cash, goods, services and manpower in various aspects of the event. They do this for a perceived and measureable return on their investments.

Corporate Africa 2016

57


Culture & Society

South African

Book Fair 2015 Since its launch in 2006, the South African Book Fair has been an occasion that brings together writers, publishers and the audience. Mpuka Radinku, Executive Director of Publishers’ Association of South Africa gives an overview of this year’s Book Fair

T

he South African Book Fair,

Hall, 65 Ntemi Piliso Street, Newtown. We

previously known as Cape Town

expect authors, speakers, publishers, librar-

Book Fair, is an entity of the

ians, literary agents, bookshops, booksellers,

Publishers’ Association of South

book distributors and the general public to

Africa (PASA). PASA was established in 1994

attend. The 2015 SABF will have literary work-

and it is the largest body of independent

shops and forums, addresses and interviews

publishers in South Africa. It represents

by keynote authors, author panel discussions

book and journal publishers in South Africa

with commentators and academics, book

in the field of non-fiction, fiction, education,

launches, signings, innovative displays, the

academic and trade publishing.

children’s zone, a designated book sales area and many more. The first day of the program

PASA’s membership comprises the vast ma-

on Friday, 31 August 2015, will be dedicated

jority of South African publishing houses, for

to the education.

profit and non-profit, university presses, small and medium sized companies and multina-

A conversation based on an extract from An-

tional publishing enterprises. PASA is com-

dre Brink, “If we understood what was happen-

mitted to creativity, development of literacy

ing to us, we wouldn’t need stories” will focus

and the free flow of ideas and encourages a

on the power of stories in discovering South

culture of reading.

Africa’s Bookself. It is expected to feature novelists like Ekow Duker, Niq Mhlongo and

58

The South African Book Fair (SABF) in its

Rehanna Rossouw. In addition, there will be a

various guises was established in 2006. It will

focus on the various literary genres and styles

be the first time this year that the book fair

including the novel, blogs, selfies, plaasro-

is held in Johannesburg at The Forum Turbine

man, science fiction, fantasy, horror, women’s

Corporate Africa 2016


Culture & Society

kids’ zone, storytelling corner and many

PASA was established in 1994 and it is the largest body of independent publishers in South Africa.

other activities to provide variety and entertainment at the fair. Partnerships or collaborations have been very important for the SABF since its inception. Partners of the SABF 2015 who have made it possible that the 2015 book fair becomes a success

writing, poetry and detective writing.

are as follows:

There will also be topical themes like identity and xenophobia, key local and

The Fibre Processing and Manufac-

international political issues to be dis-

turing Sector Education and Train-

sected by nationally recognised com-

ing Authority (FP&M Seta), the Mail &

mentators and more. The state of the

Guardian newspaper with its Literary

economy will be discussed by the likes

Festival (Litfest), Bookslive, Goethe

of Herman Mashaba, Patrick Bond,

Institut and the South African Book

Songezo Zibi in conjunction with the

Development Council (SABDC). These

Mail & Guardian Literary Festival. The

partners provide the book fair with

program will also focus on the literary,

important aspects of the book fair that

visual and culinary experiences of the

visitors will find valuable. It is therefore

city of Johannesburg to expose visitors

important to clarify the role of each of

to a place also known as Egoli/Jozi.

these partners to give insight into what

Other program offerings include the

they bring to the book fair this year.

Corporate Africa 2016

59


Culture & Society The FP&M Seta, which falls under the De-

receives enough media and publicity profile

significant on-line role player and a source

partment of Higher Education and Training,

to promote the book fair in South Africa.

of information for the book sector.

is a key partner of the book fair. It is a statutory body for skills development to which publishers belong and it is committed to the development of the publishing industry and other sectors under its care. The Seta has sponsored over forty emerging and small publishers as well as authors to exhibit at the 2015 South African Book Fair and receive skills training suited to their

The partnership between the SABF and the

This year we expect another group of publishers from Ivory Coast, Cameroon, Ghana, Nigeria and Zimbabwe to display their products, build networks and share ideas.

needs. The support of the FP&M Seta ensures

as a whole. The SABF collaborates with the Goethe Institut on an invitation program that provides an opportunity for publishers in various parts of the African continent to exhibit at the South African Book Fair. The sponsorship of these publishers is critical to ensure a representation of several publishers from other African countries at the

that the book fair does not only focus on

60

Goethe Institut is very significant for Africa

book fair. In 2014, this partnership with the

established publishers and authors but also

This collaboration will add weight to the

Goethe Institut ensured that the South Af-

displays the talents of grassroots publishers

more political panel discussions at the

rican Book Fair welcomed publishers from

and up-and-coming authors in South Africa.

book fair through the newspaper’s Litfest

10 countries - Cameroon, Kenya, Namibia,

The initiative by the Seta will also ensure

project. The Litfest has been positioned

Nigeria, Tanzania, Togo, Uganda, Zambia

that the South African Book Fair represents

to become the repository for the ses-

and Zimbabwe. This year we expect an-

a wide spectrum of its publishing community.

sions on politics, economics, current af-

other group of publishers from Ivory Coast,

fairs and history at the book fair. It is also

Cameroon, Ghana, Nigeria and Zimbabwe

Another important partner of SABF 2015

expected to cover its traditional sessions

to display their products, build networks

is the reputable South African newspaper,

on fiction, short fiction and genre fiction.

and share ideas concerning the growth

the Mail & Guardian newspaper, through

Bookslive is also a partner of the 2015 book

of the publishing businesses. The Goethe

its Mail & Guardian Literary Festival 2015

fair. Bookslive is an online platform that

Institut remains a valuable partner of the

(“the Litfest”). The partnership with the Mail

will contribute marketing on social media

South African Book Fair and this partner-

& Guardian will ensure that the book fair

and do live feeds from the book fair. It is a

ship facilitates the networking and sharing

Corporate Africa 2016


is estimated at R4.6 billion (US$365 mil-

a significant growth of ebook sales even

grow the publishing industry.

lion) turnover and educational publishing ac-

though this is from a low base. The 2013

Culture & Society

of experiences among African publishers to

PASA survey indicates that the print book The SABF also collaborates with the South

sales for adult non-fiction turnover was the

African book sector through the umbrella

highest (57 per cent), followed by adult fic-

Council, the South African Book Development Council (SABDC). The SABDC is a Council that brings together organisations of publishers, authors, booksellers, librarians, printers, editors, translators, paper manufacturers and government depart-

Print books still remain the key driver of publishing in South Africa but there is a noticeable significant growth of digital products.

tion (17 per cent), then children’s fiction (14 per cent) with children’s non-fiction coming last (11 per cent). English language titles dominate the adult and children non-fiction categories while Afrikaans has the upper hand in adult and children’s fiction titles. The

ments. Government departments that wok

majority of indigenous African language ti-

with the book sector are the Department

tles feature more in the school education

of Arts and Culture, Department of Basic

market than in trade.

Education, Department of Trade and Indus-

counted for 79 per cent of the income while

try and Department of Higher Education

trade attained 8 per cent. The contribution

The growth of ebooks is significant and there

and Training. The collaboration with SABDC

of ebooks was very small (0.8 per cent) but

was a notable increase in sales in 2013 com-

makes it possible to cement the role of book

showed significant growth compared to the

pared to 2012. The increase was mainly in

sector members at the book fair and ensure

previous year. Print books still remain the key

Afrikaans adult fiction as English titles were

that the fair is representative and offers a

driver of publishing in South Africa but there

mostly imported. The sales of English non-

range of activities, products and services

is a noticeable significant growth of digital

fiction ebooks exceeded those of Afrikaans,

to visitors.

products. The South African Book Fair will

especially adult non-fiction. Signs are that

be able to display an array of print books/

this growth of ebook products will continue

ebooks that have been produced to date.

and this will create new opportunities for

It has already been mentioned that specific government departments are valuable

publishers. The option to grow ebook titles

partners of the SABF. Since the inception of

A focus on Trade publishing in South Africa

in indigenous African languages is in the

SABF in 2006, it has received great support

indicates that the print book is still the main

education market and it is a great oppor-

from the Department of Arts and Culture in

source of revenue while the ebook format

tunity for publishers.

South Africa. The support has always come

brings less income. As mentioned, there is

in the form of financial backing and the Department taking an exhibition stand to showcase the role of the Department in the cultural development of the country. Their focus has been on the promotion of reading and writing. The Department implements this program through three of its institutions the National Library of South Africa, Centre for the Book and Provincial libraries. The libraries serve an important function in that they disseminate information about new and old books and ensure that the South African public gain access to these materials. They also purchase new books and ensure that exhibitors get support for their products. It is vital to give the reader a glimpse into the South African publishing market to understand the context in which the book fair is happening. The South African publishing market as described in the survey of 2013

Corporate Africa 2016

61


Infrastructure

REDEFINING ADDIS ABABA’S TRANSPORT INFRASTRUCTURE Addis Ababa’s Light Rail Transit (LRT) system will go operational in a few months. Eng Henok Bogale, General Manager of the LRT Operation Office, speaks with Corporate Africa about the benefits the rails system will bring for residents and investors.

What remaining work is there on the light

works on the corridor have been completed including

rail transit system; when will it commence

the installation works for the power erection systems.

operation?

We are also finalizing installation of some 20 traction power and lighting substations, which are the feeder

62

Construction of the project has taken us about three

for our power system. But a railway by its very nature

years and we are finalizing the project. Almost all civil

is dynamic and complicated. The civil work is only one

Corporate Africa 2016


Infrastructure

measure the performance and certify it. We will start the operation by about September time.

What are the features of the project and its usage by residents of Addis Ababa? The LRT covers a length of over 31 km in the east-west and north-south corridor of Addis Ababa. The east-west rail line starts from Ayat and runs through CMC, Meganagna, Stadium and Lideta areas, and ends at Torhailoch. The north-south part starts from Kaliti and passes through Saris, Stadium and Merkato districts and ends around St George church in Piassa. A part of the rail line shares the sub-grade section with other vehicles and the other parts pass through bridges and tunnel systems. The LRT will have 39 stations along the corridor. Some of the stations on the bridge section will have elevators and escalators which will be used by disabled people, pregnant women, and others with specail needs. These facilities are put in place to make sure that the system is inclusive. The rail system also has two main depots: one around Aayat area and the other in Kaliti. The Kaliti depot will be the major one housing operation control centre rooms. Dispatchers in those rooms will control the entire situation using live feeds from the cameras along the rail corridor, and will part; the electro mechanical work is also under construction. There are also other remaining works including fencing and decorating the corridors. We have now started testing the system, especially the signalling and communication systems. All the systems must be tested based on standard procedures. The test must satisfy not just Chinese standards but also

communicate with rail operators to provide

Some of the stations on the bridge section will have elevators and escalators which will be used by disabled people, pregnant women, and others with special needs.

the best service possible to commuters. The depot will accommodate training and maintenance centres as well as power storage facilities. The entire rail system has a capacity to transport 60,000 people per hour per direction.

How will the rail system link into the transportation infrastructure of Addis Ababa?

the international standard. Once the contractor finishes the project and all

We have set up a committee comprising of

the test, our Swedish consulting firm will

different stakeholders to see how the rail

Corporate Africa 2016

63


Infrastructure corridor and roads should be integrated in the best way possible. There are concerns among some people that the rail corridor might not leave enough space for turnaround junctions to make U turns.

We hope that over the coming years, we will take over the operation and maintenance.

Of course we have to make the system compatible to our context and we should give accessibility and mobility for any kind

The rail system is powered by electricity

of road users. But if we put turnaround

which is green and far cheaper than fuel.

junctions here and there, the operation of

This will help us reduce the amount of

the light rail will be seriously affected. Light

fuel we import, and hence the foreign

rail systems need their own dedicated

currency we spend. On top of that, the

path because they are meant to provide

light rail system will help alleviate the

fast and reliable transport service for the

transportation infrastructure deficiency

mass. To solve this issue, we have been

in Addis. In terms of employment, the

holding consultations with the city’s roads

project has so far created opportunities

authority for two years now. Based on our

for more than 6,000 citizens. Once we

discussion, we have left some areas along

commence the operation, we will create

skilled manpower in railways construction.

the corridor for U turn junctions. There will

additional jobs. So the rail system will have

The same will happen in the operation,

also be flyovers that will be built by the

a huge impact on the economy directly

especially when it comes to managing the

roads authority.

and indirectly.

signalling and communication system as

How will this rail system impact the

Managing and operating the rail

Railways Corporation (ERC) has devised

local economy and also businesses

system with imported skills is not

a strategy to address that.

in Addis?

sustainable in the long run due to the

well as the power system. So the Ethiopian

high cost involved. What measures

So far we have trained more than 250

It will have a positive impact on the

are you taking to build local capacity

Ethiopians in China in different disciplines.

economy of the city. We plan to provide

so that the system can be managed

But because the training they took is not

up to 18 hours of service a day. So, for

and maintained by Ethiopians in the

enough to operate the system, they will

example, if I have a shop around Merkato

future?

work with two Chinese companies which will handle that responsibility for the first

and I live around Saris area, I can work for longer hours because the rail gives me

A system that depends on imported

three and half years. The contract we

better and faster transportation option.

knowledge cannot be sustainable.

signed with those companies includes human resource development package

Extended working hours mean better

64

chances of increasing people’s income. And

Since the start of this project, we have been

which will allow Ethiopian professionals

that will impact the economy positively.

facing serious challenges due to lack of

to acquire practical skills by working with

Corporate Africa 2016


Infrastructure

We will start the operation in about two months’ time. their Chinese counterparts. We hope that

systems are meant to provide affordable transport service for the public, they are not profitable. So the TOD is introduced to address that deficit. Under this scheme, different mixed use buildings will be built along the corridor to generate income. We will soon hire a consultant to review the TOD design.

over the coming years, we will take over the operation and maintenance.

I gather that you are working on a scheme called Transit Oriented Development (TOD) to finance the operation of rail system sustainably.

In addition to the TOD, we also plan to provide advertising spaces along the rail corridor for companies so that we can get additional revenue streams.

What opportunities does the rail system offer for foreign investors?

What will the TOD include? The cost of the LRT is $US475 million 85 per cent of which is sourced from the EXIM Bank of China. Sale of tickets is not enough to recover that cost. Because mass transit

As you know the Ethiopian government is keen to attract foreign investors into the country. The rail system and related investments will definitely offer opportunities for such investors. Once the design of the TOD is finalized, we will invite foreign investors to

take part in areas they are interested in. We welcome innovative ideas from any foreign investor so long as they add value to the system.

Presumably, you have also been working on Phase II of the light rail project which will most likely be included in the second phase of the Growth and Transformation Plan (GTP). Can you give us a glimpse of how the rail lines will be expanded in the next phase? In GTP I we have managed to construct the light rail system. Our Corporation has a plan to take the project to the next level which will see the expansion of the rail lines. The contractor of the LRT project has already prepared a kind of conceptual design for the next phase of the project. The full details will be unveiled in GTP II which is being drafted as we speak.

Corporate Africa 2016

65


Infrastructure

African Ports Inefficiencies in Africa’s transportation networks have cost the continent billions of dollars and have been hampering efficient intra-Africa trade. Dr John E. Tambi, Transport Infrastructure Expert at NEPAD, discusses the Agency’s program to bridge the infrastructure gap in the continent.

66

Corporate Africa 2016


Infrastructure

T

he Program for Infrastructure Develop-

1. Improving the connectivity of African capitals and

ment for Africa (PIDA) is the framework

major centres with modern paved roads and modern

for infrastructure development for the

rail system.

continent for regional and continental

projects for 2012 to 2040. Infrastructure in this con-

2. Satisfying demand on the ARTIN routes at the least

text is defined as; Transport (sea, rail, road, air and

economic costs, with priority for landlocked coun-

pipeline), Energy, ICT and Trans-boundary Water.

tries, while minimizing the environmental impacts of

The PIDA evaluation study of Africa’s transport sec-

transport infrastructure and services,

tor revealed that the total economic cost of African Regional Transport Infrastructure Network (ARTIN –

3. Developing modern ARTIN corridors, including

intended to link the largest commercial centres with

gateway ports and air transport services, to bring the

each other and with the rest of the world with modern

performance of ARTIN components up to best world

and efficient networks and gateways) inefficiencies

practices in efficiency, cost, reliability and safety.

to be US$172 billion. The PIDA Priority Action Plan (PIDA PAP) from 2012 to These inefficiencies include corridor and air transport

2020 has 24 transport projects at an estimated cost

costs, as well as suppressed transport and freight

of US$25.4 billion. Four of these 24 projects are ports

demands. Most importantly, the corridor costs include

projects; mainly the development of port capacity

ports congestion and delays, in addition to the costs

in the four sub-Sahara regions in order to meet the

of delays and inefficiencies along the major African

projected capacity. The focus will be on item 3 above

transport corridors connecting the ports, particularly

(specifically the development of modern ARTIN cor-

for land-locked countries. In addition, these costs

ridors including gateway ports).

are due to the negative impact of soft infrastructure failures, such as the non-implementation of trade facilitation measures and trade policies, ineffective and tangled bureaucracy at the ports and their facilities. Recognizing that over 90 per cent of goods imported and exported to and from Africa are through the

No matter what option of model is adopted, the need for human capacity development in every discipline of port management and operations must not be ignored.

African ports, and over 80 per cent are transported via the road network, the inefficiencies alluded to above (US$172 billion) can be reduced tremendously by effectively addressing the current inefficiencies

Based on the capacity/demand driver, traditionally

at the African ports and their intermodal challeng-

port improvements on the continent have been

es. According to the PIDA study, Africa’s transport

focused on increasing or improving port capacity

volumes will increase 6-8 times, with a particularly

in order to meet projected demands. Invariably

strong increase of up to 14 times for some land-

these

locked countries. Port throughput will rise from the

infrastructure development, such as increasing the

265 million tons in 2009 to more than 2 billion tons in

number of berths, channel improvements, dredging,

2040. As a result of this, PIDA transportation vision

etc., and little or no attention is usually given to

is; to work towards an integrated continent where

the soft infrastructure issues, such as systems

the transport infrastructure and services will en-

and operational improvements, computerization,

able the free movement of goods and passengers by:

staff training, and human capacity improvements.

improvements

have

translated

to

ports

Corporate Africa 2016

67


Infrastructure

As a result of this approach to devel-

that over 90 per cent of all goods and

opment, such improvements have not

services in and out of the continent are

reflected the benefits in direct propor-

through the ports.

tion to the amount invested in terms of capacity improvements and efficiency gains, and most importantly it has not improved the movements of goods to / from African ports. For example, the processing times and delays are still challenging. While these could have been addressed to some extent at the ports, the overall effect on the supply chain is

Too much emphasis has been placed on developing the hard (physical) infrastructure in isolation for all transport modes, and the soft infrastructure issues have been relegated to the back burner.

minimal.

An

i n te g ra te d

i n f ra s t r u c t u re

development approach will ensure mode complementarities, effective use of intermodal systems, improve mode efficiencies, reduces travel cost amongst others. The integrated infrastructure development approach should address both the physical (hard) and soft infrastructure issues particularly, since the soft infrastructure issues cut across all modes.

The delays from the ports to the final

Most importantly, apart from improving

destination of the goods are still chal-

efficiency in the transport network, this

Africa has toyed with various models

lenging. In my opinion, one of the main

is one of the best ways to facilitate intra-

of ports development in the past. These

reasons for this minimal improvement

Africa trade, reduce transport costs and

include:

despite the huge capital investments at

increase port capacity with minimal cost. 1. The Management Concession model

the ports is the lack of an integrated approach to transport infrastructure devel-

The gateway ports in Africa south of the

where the private sector takes over the

opment as well as the lack of cognizance

Sahara for the purpose of this article

entire management and operations of

of the correlation and interrelationship

can be divided on a regional basis as

the port,

between the soft and hard infrastructure

follow: West Africa – Lagos (Nigeria),

development on the continent. Too much

Abidjan (Cote D’Ivoire), Tema (Ghana) and

2. The Port Service model, wherein

emphasis has been placed on develop-

Senegal, Southern Africa – Ports of Durban

the port authority is in charge of the

ing the hard (physical) infrastructure in

and Cape Town (South Africa), Maputo

frontline functions under a centralized

isolation for all transport modes, and the

(Mozambique), Walvis Bay (Namibia) and

organizational structure and the private

soft infrastructure issues have been rel-

Dar-es-Salaam (Tanzania), East Africa –

sector is assigned secondary services,

egated to the back burner as add-ons

Dar-es-Salaam (Tanzania – serves both

and also

to capacity improvements, when they

East and Southern Africa) and Mombasa

should form part and parcel of the entire

(Kenya). All these ports are supported by

3. The Landlord port Model that seems

infrastructure development paradigm.

major traffic corridors such as the Abidjan-

to be gaining prominence in Africa. The

Increasing the number of berths and

Lagos corridor in West Africa, the North-

public sector withdraws from the front

dredging will not translate to real effi-

South Corridor in Southern Africa, and the

line cargo handling operations, allowing

ciency gains in the supply chain of goods

Central and Northern corridors that serve

the services to be concessioned to the

movement if the other critical transport

(both Southern and Eastern Africa). These

private sector, while the port authority

and human capacity factors are not part

corridors are currently being developed

functioning as a corporatized autonomous

of the development equation.

without an integrated plan for the ports

basis and focuses on estate management,

that are serving them or affected by them.

navigation and planning.

The need for an integrated physical and

At the same time, the railway systems are

All these models have been practised

maximising inter-modal opportunities,

also being developed along these corridors

in Africa with mixed results and the

coupled with effectively addressing

with little or no integration with the road

jury is still out. I think these attempts

the soft infrastructure issues, such as

network or the ports. It appears like all these

in embracing the various models must

human capacity development, system

major transport modes; ports, rail and road,

also be viewed in the context of the

and operational improvements and

are being developed independently and in

railway systems concessions in Africa.

computerization (maximising the use of

isolation. If this is the case, this is certainly a

ICT) is now compelling. In my opinion, this is

missed opportunity. All these modes should

It is now common knowledge that most

the only way that we can effectively reduce

be developed on an integrated basis with

of the railway systems concession in

the inefficiencies cost of US$172 billion.

the ports as the anchor for the very reason

Africa has not been very successful.

infrastructure

68

development

Corporate Africa 2016


more so as an attempt to bring sanity

success are not necessarily the economic

to the unproductive and unnecessary

value but the loss of African expertise and

competition among ports and to improve

critical skills in railway systems operations

efficiencies in the overall port operations

and management that cannot be easily

on the continent. The example of the Port

replaced. During these concessions and

Authority of New York & New Jersey is

privatization or semi-privatization craze,

classic in terms of two states sharing

most of the skilled African railway experts

resources and operating an effective

were made redundant and in some cases,

and efficient ports system, as well as

entire railway systems were abandoned

airports, bridges and tunnels. Many of the

or discarded contributing to the loss of

African ports are too small, too close to

jobs and skills. The sad reality is the fact

each other and offer very limited or no

that these skills have not been replaced

competitive advantage to justify their

and most of the railways system are still

independent operations, and the capital

unprofitable and poorly managed, and have

investment incurred.

Infrastructure

The major consequences of the lack of

Dr. John E. Tambi Transport Infrastructure Expert and Coordinator For the Presidential Infrastructure Champion Initiative. NEPAD Planning and Co-ordinating Agency (NPCA)

D

r John E. Tambi is a transport infrastructure expert with more than 30 years of project management, planning, engineering, training, policy

development, and economic analysis experience, with specialization in air, road, sea and rail transport modes. He is currently the Transport

disconnected the continent.

Infrastructure Expert for the NEPAD Planning

Most importantly, the attractiveness of rail expertise or disciplines as a career options for young Africans has been severely compromised. Today, with the new drive to rehabilitate and improve Africa’s railway network system, securing African railway experts is proving to be very challenging

The PIDA Priority Action Plan (PIDA PAP) from 2012 to 2020 has 24 transport projects at an estimated cost of US$25.4 billion.

and Coordinating Agency, responsible for regional and continental transport programs and projects, as well as the Coordinator for the Presidential Infrastructure Champion Initiative (PICI). He has served in senior and executive positions with one of the world’s leaders in the management of airports, ports, rail and transportation facilities – the Port Authority of New York and New Jersey, and in major international consulting firms. He

to the extent that retired experts are being

has also served as an independent consultant

recalled and the sad reality is that with

to national governments, the United Nations and

almost all these new projects, rail skills and

international lending institutions. Dr Tambi was

expertise have to be imported.

This have resulted in exorbitant ports charges just to be sustainable. Apart

This is a lesson for the various port

from the negative impact on the cost

operating models that are being considered

of goods, the overall socio-economic

or being implemented on the continent.

development is negatively impacted

Finally, no matter what option of model

the Chairman and Transport Expert for the United Nations Monitoring Group for Somalia and the UN Panel of Experts for Somalia respectively (United Nations Security Council Resolutions: 1519, 1558 and 1474).

for their respective countries. The

Dr. Tambi is also registered aviation and

overarching objective of the African

transportation

expert

with

the

African

Development Bank, the International Civil Aviation

is adopted, the need for human capacity

Union’s 2004 vision statement, is to

development in every discipline of port

create “an integrated Africa, a prosperous

management and operations must not be

and peaceful Africa, driven by its own

ignored. Currently, this is an area of great

citizens and representing a dynamic force

challenge for most ports particularly the

in the international arena”. The major

He holds a PhD and MSc in Transportation

smaller ports on the continent. Resources

goal is to promote regional integration

Planning and Engineering from the Polytechnic

for the smaller ports are not adequate for

and intra-Africa trade, and if this is

them to embark on major human capacity

the case, Africa should start thinking

development, and this is understandable,

regionally instead of nationally. Against

Riddle Aeronautical University, Florida, USA, and

given the throughput capacity and level of

this backdrop the concept of regional

a BSc in Aerospace Technology from the Indiana

activities at most of these ports. While

ports development and operations must

State University, Indiana, USA. Dr. Tambi also has

recognizing the need for sovereignty, the

be seriously considered, and this should

operational experience as an airline pilot. He has

concept of regional port operations and

also include landlocked countries. Some

ownership must be seriously considered.

of these smaller ports can never be a

Organization, the United Nations Economic Commission for Africa, and the United Nations headquarters in New York.

University, Brooklyn, New York, USA, and an MBA and MAS (Masters of Business Administration and Masters of Aeronautical Science) from Embry-

a commercial pilot’s license with instrument and multi-engine ratings, having received his training at the Oxford Air Training School, Oxford, England.

dynamic force in the international arena,

Dr. Tambi is a Fellow of the African Scientific

This concept must be viewed as an attempt

but collectively working and operating as

Institute (ASI) and a Board member of South

to solve the human capacity issue and

a regional port system they could.

African Airways (SAA).

Corporate Africa 2016

69


Infrastructure

MOMBASA - NAIROBI - ADDIS CORRIDOR Ethiopia and Kenya are working on a major AfDB funded highway project which has been dubbed ‘a game changer’. Mohammed Abdurahman, Deputy Director General of Engineering Operation Department at the Ethiopian Roads Authority, spoke to Corporate Africa about the progress of the project and its impact on businesses.

70

Corporate Africa 2016


Infrastructure

E

thiopia is building part of the highway which stretches into Kenya. Could you explain what this project is all about and how the construction is going on?

A part of the project, Kenya and Ethiopia will also introduce a one stop border post in Moyale town. Kenya has such posts at its borders with Tanzania and Uganda; but the concept is new for Ethiopia. In addition to facilitating cross border transportation between Ethiopia and Kenya, the corridor will also improve trade between the two countries.

The Mombasa - Nairobi - Addis Corridor Project is going

The main aim is to reduce the travel time between the

on well on the Ethiopian side. Kenya builds the segment

two countries. Lack of advanced border facility is a major

that runs from Mombasa to the border town of Moyale

impediment in this regard. The one stop border post will

through Nairobi while Ethiopia builds the Addis-Moyale

go a long way towards alleviating that.

part which is 776 km long. The post will have offices for immigration and customs The section that connects Addis Ababa and Mojo [a

officials from both countries working together to create

town located 73 km east of Addis] has already been

an efficient border clearance system. This will help vehicles

completed. We are also finalising preparations to launch

travelling from one country to the other to get a one stop

the part that links Mojo and Hawassa towns. There is

service. Three service stations will also be built in Ethiopian

an existing road from Hawassa to the border town of

towns along the highway to cater for the service needs of

Moyale, which was built 40 years back and has been

the vehicles. Whether those stations will be managed by

repaired frequently over the years. In some parts, the

the government or private companies will be worked out in

road gets as narrow as five meters while the standard

the future. This project also has a trade and transport facil-

width for such roads is at least 10 meters. Therefore,

itation component which aims at harmonizing the ICT sys-

it should be upgraded to meet international standard.

tems used in customs clearance processes at the border.

Corporate Africa 2016

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Infrastructure

Is the road project part of the con-

Fund, the governments of Japan, China and

tinent wide Trans-African Highway

a host of other state led agencies. They all

project or the Lamu Port-Southern

provide us with loans. Seventy nine per cent

Sudan-Ethiopia Transport corridor

of the fund for road construction in Ethiopia

(LAPSSET) project led by the Kenyan

comes from the government while the rest is

government?

covered by those partners. The contribution of the African Development Bank accounts

It is mainly part of the Trans-African Highway

for 11 per cent of the total sum.

project and falls on its north-south route. The Mombasa-Addis corridor is just one of the

The governor of Marsabit, one of

missing links of the larger network. LAPSSET

Kenya’s regions crossed by the

is at its formative stage and is just taking

highway, said recently that the road

shape. So when it enters the implementation

will be a ‘game changer’ because it

phase, it should be aligned with and branch

will boost business activities there.

out from the corridor. Once Kenya puts in

How will the road impact businesses

place the port and other infrastructure on

in Ethiopia?

its coastal town of Lamu, it is a matter of linking it with the Trans-African Highway.

It will impact businesses on our side as well.

LAPSSET is sort of a subset of the continent

Twenty percent of Ethiopia’s cross-border

wide Trans-African Highway.

road traffic is done across the Ethio-Kenyan border. Currently, the average daily traffic

When will the project be completed on

along the route is some 300 to 400 vehicles

Ethiopia’s side?

per day with expected annual growth of 6 per cent. The new highway will boost the volume

The project on our side is divided into six

of traffic between the two neighbours. And

phases. Some parts were launched as

that, we believe, will encourage businesses

early as 2010 while the latest ones were

along the highway to flourish. On the Kenyan

started in 2013. The entire project is ex-

side, the section that extends to Marsabit

pected to be completed in 2016. Five

town was a gravel road. Now that it has

contractors from Egypt, Yemen, India

been upgraded to standard asphalt, the

and China are carrying out the project

impact is likely to be felt more in the area.

As it stands, the industry offers many

sharing different sections of the road.

This project will have significant impact

opportunities for private contractors. The

on our businesses and will also encourage

massive road projects we have been working

more trade between the two countries.

on have created a wide market for contractor

The African Development Bank (AfDB) is involved in financing the project.

firms.

What share of funds has the Bank

What opportunities are there in

provided?

Ethiopia’s road construction industry, which can be partnered by foreign

The African Development Bank is the major

investors and private financers?

financier. It has provided US$265 million, which accounts for 81 per cent of the total

We are working on a public-private-

cost of the project. The balance is covered

partnership framework with the Ministry of

by the Ethiopian government.

Finance and Economic Development as part

In addition to facilitating cross border transportation between Ethiopia and Kenya, the corridor will also improve trade between the two countries.

of the government’s efforts to attract foreign

Who are the major foreign financiers

investors into the sector. Such a framework

of road projects in Ethiopia other than

would lay out a favourable arrangement

What other road projects are you

the African Development Bank?

for public and private parties to partner in

looking at to better connect Ethiopia

financing and managing road projects jointly.

with countries in the Horn region?

jects from our development partners includ-

Our desire is to commercialize the

We’re building and upgrading our cross-

ing the World Bank, EU, Saudi Fund, Kuwait

industry and attract more investors.

border roads in almost all directions. In the

We source part of the finance for our pro-

72

Corporate Africa 2016


Infrastructure

east, we are building a 200km. long highway

How do you evaluate Ethiopia’s

the road networks in the second phase of

that links Diredawa town in eastern Ethiopia

performance in expanding its road

the Growth and Transformation Plan which

to Dewale on the border with Djibouti.

networks?

will be launched this year.

The road we are using currently crosses into

We measure our performance against

We also plan to modernize our roads and shift

Djibouti through the town of Galafi. The new

some indicators. Over the years we have

to express roads. The Addis-Adama Express

road will give us access to the port of Djibouti

been expanding the country’s road networks

Road, the first of its kind in the country, is a

cutting through the country’s south.

under the Road Sector Development Program

good start in this regard.

(RSDP) which was launched in 1997. When It will be an alternative access to Ethiopia’s

we started the first phase of the RSDP, we

main gateway to the outside world. We have

had only 26,500 km of roads in the country,

also upgraded a road that links Tigray region

including asphalt, gravel and low volume

in northern Ethiopia] to neighbouring Sudan.

roads. Now that figure has leapt to almost

In the west, we are building a road from Asosa

100,000 km., which means the network grew

town to Kurmuk on the border with Sudan.

by 275 per cent. We also have other indicators

Our desire is to commercialize the industry and attract more investors.

such as ‘Asphalt Roads in Good Condition’, We have also finalised another road that

‘Road Density’ and the like.

stretches from Gambella town to South Sudan. And in the southeast, we have built

We started from a level below the African

We want to build similar roads for all the

a highway that extends to Mogadishu,

average, but now we are achieving more

major routes linking Addis Ababa to the

Somalia through Hargeley and Dolo Ado.

than that average. We will further expand

different areas in the country.

Corporate Africa 2016

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Markets

SOMALILAND

DIASPORA APPEAL The unexpectedly large group who attended the UK-Somaliland Trade and Investment Forum last October is a testament to how much interest there is in the country. Mohamed Guled Harun Ibrahim, CEO of the Guul Group in Somaliland, spoke to Corporate Africa in London.

T

he Guul Group is a service company on one side:

In that time, I noticed that it was difficult to register, that

facilitation, consultancy, business start-ups, and

I had to have a network before I could start up here and

research are the sorts of services we provide. We

that’s how the idea of facilitation came about. I know a lot

also invest into local companies, so we’re currently

of people who have gone over to Somaliland trying to set up

investing in the Pontus Marine Group, agriculture projects

their businesses and have lost a lot of money because, for

on a small scale, and logistics. We’re like a holding company

one, they didn’t do their research; two, they didn’t have the

that provides complimentary services to these investment

network, the know-how; and obviously the other side of the

opportunities.

business, the investment opportunities themselves.

History of the Company

It is definitely difficult for the Diaspora to return and set up businesses

I’d been in the United Kingdom for about 20 years and I’ve always enjoyed business, worked in business and investments, and I’ve had my own company here exporting energy-saving light bulbs to

74

I realized there were opportunities back in Somaliland because I’ve been going back and forth since 2003.

in Somaliland. Unless you have the right elements, but for someone who’s got a bit of capital and wanting to move home, it may not be so easy. Things are getting better from a government perspective, but there were

about 34 different countries where

red tapes everywhere. And there’s a

just under 2 million units of light

matter of hard-earned credentials

bulbs were exported. Then I real-

and what you are able to bring to

ized there were opportunities back in Somaliland because

the country and what value you can add. Yes, it’s a mat-

I’ve been going back and forth since 2003. That’s when I

ter of getting there and there are companies like ours, pro-

noticed there were opportunities I could get involved in.

viding services, making it easier for companies to set up.

Corporate Africa 2016


Markets

Risk and Reward in Somaliland

so fisheries has probably been the best so

time needs a lot of persistence, persever-

far: knowing where to catch fish to export.

ance, and prayer for me has worked a lot.

At the moment, setting up businesses in Somaliland has the potential for high risks and high rewards. For example: with real estate it’s pretty risky because of the war in the 90s and issues with land-grabbing. We’ve invested in real estate and haven’t had any problems because, obviously, we’ve done our research before doing so, putting the right people in the right places. There are others who’ve done it without the know-how and have lost money and land due to multiple licenses. From that perspective, it’s very highreward but risky at the same time, especially as Somaliland has not been recognized. There are procedures and processes in place to an extent. The banking system is completely set up, in that sense maybe it’s risky but the rewards are good because opportunities are untapped. It’s obviously a country that’s growing now and there’s the right structure in place for new foreign investment.

In the agricultural sector, we have a lot of

The government is easier to work with

land available to use for agricultural purpos-

now, ever since the investment guide was

es and we’re in touch with a few companies

launched a few months back. There’s more

because what we tend to do is work with the

information available online and they’re in

locals because there are companies that

the process of setting up a one-stop-shop

have been about for many years who are

so everyone has access to information local-

better than us with those specific perspec-

ly. It’s heading in the right direction, but prob-

tives. Local partnerships are important to us

ably slower than anticipated or expected.

as much as trying to partner with a foreign

At the moment, setting up businesses in Somaliland has the potential for high risks and high rewards.

company with the capital. If we don’t have

Industrial sectors and their potential The Guul Group is involved in many sectors

the know-how ourselves then we partner

Definitely that’s something I would advise, but

with locals or are in between a local and a

from a foreign investment perspective, I think

foreign investor.

I would suggest now is a good time to not necessarily invest immediately but make the

including agriculture and food processing, transport and logistics, livestock, construc-

Foreign Investment

right contacts with the government, within the business community, because there will

tion, fisheries, real estate, and travel and tourism. Fisheries is an interesting sector

A young individual as an entrepreneur

come a time when subscription to licenses

at the moment, as we’re working on it with

wanting to go back and set up would face

and business licenses will be oversubscribed

Pontus marine on a larger scale. For one,

a lot of challenges. There would be a lot of

so now will be a good time. Have the right

it’s a PLC so there are a lot of people in-

obstacles in the beginning. No one knows

network in place, do your research before

volved and risks are reduced in that sense,

you and gaining people’s trust a bit at a

going in and investing any money.

Corporate Africa 2016

75


Markets

ON THE BRINK OF ECONOMIC TRANSFORMATION:

The Somaliland Success Story Corporate Africa reports on the UK-Somaliland Trade and Investment Forum, speaking exclusively to the Minister for Trade and Investment, H.E. Dr. Musa Qassim Omar, and Hon. Eng. Hussein Abdi Dualeh, Minister of Minerals and Energy.

ognition, the turn out at the forum far

are still significant developmental chal-

exceeded expectations. Not only were

lenges such as the difficulty in accessing

high-level government representatives,

basic services like water and electricity in

executives, companies, financial institu-

many parts of Somaliland.

tions, and media co-operations (such as DFID, Moody’s, the BBC, and Bank of America Merrill Lynch) in attendance, but many proud Somalilanders were present

H.E. Dr. Musa Qassim Omar Minister for Trade and Investment “The most significant and underreported success story of the last two decades in the volatile Horn of Africa is, in fact, the emergence of Somaliland, which against many obstacles and stiff developmental challenges has established a system of democratic governance and embarked upon an ambitious National Development Plan.” - Moin Siddiqi, Economist.

to support their country in these eyeopening discussion. Speakers such as Dominique Lafont (President of Bollore Africa Logistics),

“The economy is heavily centered around

Gregory Bowes (CEO of Nubian Gold

one or two industries. According to the

Corporation, and Ibrahim Yousuf (the

World Bank survey in 2014, almost one-

Executive Director of the Horn of Africa

third of Somaliland’s GDP is derived from

Business Association) discussed Somali-

the livestock industry, followed by one-

land’s various industries and the potential

fifth from wholesale and retail trade; 8

in these sectors from the perspective of

per cent from crops, and 6 per cent from

companies that had already established

real-estate activities.”

In October, 2014, London played host to

or were planning to commence opera-

the first UK-Somaliland Trade and In-

tions in Somaliland.

vestment Forum and was attended by an unexpected number of delegates.

76

We do believe that the African Union and IGAD will eventually accept the fact that we’re better off separated from Somalia.

Furthermore, there remains the fact that, despite 23 years of peace and democrat-

While most of the discussions were posi-

ic governance, investors are still weary of

tive and there was much mention of how

the security risks posed by groups in So-

Considering that this is a country which

risk outweighed reward, British Ambassa-

malia as well as the problem of interna-

has not yet achieved international rec-

dor to Somaliland has stated that there

tional recognition.

Corporate Africa 2016


Markets

The Investment Landscape

“As we move forward into our third decade postconflict, Somaliland stands on the brink of an economic transformation.”

The Minister of Trade and Investment, H.E. Dr. Musa Qassim Omar discussed the issue of international recognition with Corporate Africa. “We don’t have recognition but we do have good relations with the international community. We are trying to do the best that we can to engage people to work with us in a stable, peaceful, democratic, developing Somaliland.

We do feel the situation will change soon. We are having talks with Somalia and have been

- H.E. Ahmed Mohamed Mohamoud, President of Somaliland

waiting for quite some time for a stable group we can talk to. Turkey is actually a country that has given us a platform to discuss this and the UK has been helpful in the process.” The subject of the UK’s pessimistic travel advice to Somaliland was mentioned frequently throughout the day. Currently, it has lifted the travel ban to Hargeisa and Berbera, but not throughout the country. “They have seen that it is an impediment to the development of Somaliland,” said the minister, “We’ve made it clear that this is really creating some problems for us. We work hand in hand with them and hope that the travel advice will change.” He also stressed that more cross-border collaboration and support was needed to help achieve regional success. “We have contacted IGAD and we also have some relationships with the African Union. We are trying to talk to as many African countries as possible like Kenya, Uganda, and Djibouti to explain the situation to them. Most of them are

H.E. Ahmed Mohamed Mohamoud , President of Somaliland

There are still significant developmental challenges such as the difficulty in accessing basic services like water and electricity in many parts of Somaliland.

Corporate Africa 2016

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Markets

aware of the situation, but the trouble is that

mirror image of what we have in Somaliland

the extractive sector and I was really able

the experience they’ve had in the past has

right now.”

to appeal and market Somaliland’s potential

been Sudan and South Sudan.

as a destination for hydrocarbon exploration After discussing hydrocarbon explora-

by attending all the relevant arenas. My aim

I’m trying to tell them that we’re different:

tion plays, he discussed the presence of

was to build up our name and get noticed.”

we’re stable and managing to be in contact

oil seeps at Dagah Shabel, Biyo Dad-

with the rest of the world. We do believe that

Noting the attendance in this particular

the African Union and IGAD will eventually

demonstration, it would see that Minister

accept the fact that we’re better off separated from Somalia.” The Energy Sector With many voices echoing Dr. Omar’s reassurances, executives and investors were able to focus on the forum’s most popu-

“Our geology and Yemen’s geology is almost identical. As you might know, Yemen is a country that has produced 9 billion barrels so far and is still producing.”

Dualeh had certainly achieved his goal. Other successes include the development of the Electricity Bill, passing the Energy Policy in 2010, and planning to pass the Electricity Act into law by 2015 which will invigorate the sector and attract investment flow. In an interview with Corporate Africa, he

lar topic, namely the Natural Resource

stated that the conference was a testa-

and Energy sector. Not only does Somali-

ment to the way that the UK investment

land show great potential, but the gov-

er, and many other locations. Accord-

ernment is keen to bring in investors as

ing to the Minister, oil had also shown on

they recognize how vital the energy sec-

most drilled wells, such as Dagah Shael,

“There are a number of notable international

tor is in further developing the economy.

Dab Qua, Bandar Harshau, and Nogal.

companies - such as Genel Energy, DNO, Rak

The talk was headed by Hon. Eng. Hussein

Eng. Dualeh also referenced the major dis-

Gas, and Ansan - are already involved with

Abdi Dualeh, the Minister of Energy and Min-

coveries made in East Africa over the previ-

Somaliland despite not having official rec-

erals. A former petroleum engineer, he went

ous decade including one of the biggest gas

ognition. It definitely bodes well for us. We’re

into great detail (which was later confirmed

finds in recent memory which was made in

not pushing the politics at this point, what

by Genel Energy’s Exploration Manager for

Mozambique. Tanzania, Uganda, Kenya, and

we’re saying is that we want good investment

Africa, Mike Adams) about the geological

Ethiopia are all East African countries that

opportunities. Politics aside, investors just

aspects of Somaliland and what they meant

have experienced success in this area.

need to look at the risk to reward ratio and

for potential investors. The Minister stressed the commercial sense of the logistics of this market. Berbera port is located close to major sedimentary basins and one of the busiest shipping lanes in the world: “It just so happens that the re-

community had embraced Somaliland.

if they think this is definitely a good risk then

My advice to investors is to get off the old part and go explore a new one: the rewards will be worth it.

sources on the mineral side run parallel along

they should come to Somaliland. think the reward would be much higher than following the same beaten path as everyone else than if you go to a frontier country. My advice to investors is to get off the old part and go explore a new one: the rewards will be worth it.”

the coastline. Logistically speaking, even a small discovery of minerals or hydrocarbons

“It’s a no-brainer,” he asserted, “Somaliland

While business was the order of the day, the

will make a viable proposition for Somaliland.”

has oil.”

loudest round of applause was reserved for

“We have many basins (such as the Guan-

Beyond petroleum, which is “the big prize”,

Executive of the Edna Hospital. Her moving

ban/Berbera basin, the Daban basin, the Las

the Minister also discussed the mining sec-

account of how she returned to establish a

Dureh basin, and the Raguda basin) which are

tor including a number of deposits of lead,

hospital and train staff in a country which

great potential areas for oil and gas.

zinc, tantalite-columbite, tin, and quartz

had near to no health infrastructure mirrored

crystals and a high potential for deposits

Somaliland’s own success story.

Edna Adan Ismail, the Chairman and Chief

Our geology and Yemen’s geology is almost

of iron ore, manganese, platinum and gold-

identical. As you might know, Yemen is a

breading veins.

country that has produced 9 billion barrels

78

Somaliland’s future certainly looks hopeful, but the budding nation has yet to face many

so far and is still producing. The basin that is

“When this current government took power

more challenges before it can truly begin to

producing in Yemen right now is basically a

in 2010, there was not much happening in

reflect the success of neighboring countriess.

Corporate Africa 2016



Markets I left Rwanda after six years as Minister of

Adesina, to head the African Development

cate at least 10 per cent of national budgets

Agriculture and Animal Resources and I am

Bank (AfDB), offer strong signals that Af-

to agriculture, double productivity on African

now heading the Alliance for a Green Revolu-

rican leaders are ready to walk the talk in

farms, and cut post-harvest losses in half.

tion in Africa, or AGRA, an institution that

prioritizing inclusive and profitable agricul-

views agriculture —the sector that employs

ture development in Africa. It is instructive

ing sustainable, equitable growth across the continent. I am excited by this work because agriculture in Africa today represents both an incredible development and a lucrative business opportunity. Growth in the agriculture sector is 11 times more effective at reducing

Key success factors for an African agricultural transformation

the majority of Africans — as the key to driv-

To fully unlock agriculture’s potential; the right infrastructure needs to be in place.

For the past nine years, AGRA has been seeking out public and private sector partners committed to triggering a uniquely African Green Revolution, one that revolves around the smallholder farmers who produce

poverty than growth in any other sector. The

the majority of what Africans eat. In that

World Bank projects that African agribusi-

time, we have had some successes and also

ness could be worth US$1 trillion by 2030.

to note that this new development comes

learnt some useful lessons along the way.

on the back of the African Union Summit

80

Recent developments such as the election

and Malabo Declaration which reaffirmed the

Recognizing that farmers need a ‘productivi-

of an agriculture minister, Nigeria’s Akinwumi

commitment of AU member states to allo-

ty’ package – comprising quality seeds, ferti-

Corporate Africa 2016


Markets

Spurring Investments to Drive Agricultural Transformation Dr Agnes Kalibata, President of Alliance for a Green Revolution in Africa (AGRA) and a former Minister of Agriculture and Animal Resources in Rwanda, outlines the efforts of the Alliance to help Africa’s smallholder farmers and opportunities in Africa’s agribusiness for both development and private sector partners.

lizers, and basic agronomy – AGRA has been

We are learning that innovative approaches

farmers and agribusinesses can increase the

working with a range of actors to develop

to the provision of finance for smallholder

scale and profitability of their operations.

500 locally-adapted crop varieties that are

farmers can yield significant results. For ex-

Kenya’s Equity Bank has been a pioneer in

just as competitive as anywhere in the world.

ample, credit guarantee schemes supported

this area, and initial successes are draw-

We have financed – either directly through grants or by leveraging private equity funds – more than 90 African seed companies that collectively constitute the largest producer of certified seeds in sub-Saharan Africa, and 80 fertilizer companies that can help blend, distribute, and sell fertilizers to small-

ing in newer players such as the Master-

We are learning that innovative approaches to the provision of finance for smallholder farmers can yield significant results.

holder farmers through market-led solutions

Card Foundation, who recently launched a campaign to expand financial services to rural areas of Africa through AGRA and other partners. Mobile money services such as Kenya’s m-pesa are revolutionizing the banking and financial services sector – making microloans and efficient payment

such as local agro-dealerships. Adoption of

options available to the majority who were

these new productivity-enhancing solutions

by AGRA and other development partners

previously considered to be unbankable.

at scale by Africa’s millions of smallhold-

have ensured that banks are more willing to

ers could transform their productivity and

lend to smallholder farmers since they be-

As farmers produce more, they increasingly

food security in just two planting seasons;

come less risky clients; and with more ac-

need access to storage facilities and links to

but without it, we will hardly get started.

cess to more operational credit, smallholder

market opportunities. For instance, in Tanza-

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81


Markets electrification, as well as market, cropstorage and agro-processing facilities. According to the 2015 Africa Progress Report, devoted to exploring Africa’s energy and climate potential, over 600 million Africans (68 per cent) still lack access to modern energy. Sub-Saharan Africa’s electricity consumption is less than that of Spain and on current trends it will take until 2080 for every African to have access to electricity. Furthermore, the African Development Bank estimates that Internet penetration is less than 10 per cent, and only 25 per cent of African roads are paved. Poor road, rail and port facilities add 30 per cent to 40 per cent to the costs of goods traded among African countries. These goods include farm inputs such as nia last year, we saw what was termed as ‘a

ers where growers can pool their harvests

mineral fertilizer. Together with high import

good year problem’: maize farmers had the

to meet the demands of large institutional

taxes, poor infrastructure leads to sub-Sa-

best season they have had in years, thanks

buyers. Often a lucrative and assured market

haran African farmers paying up to six times

to a combination of good soils, seeds, rains

is the missing incentive for smallholder farm-

more than farmers in other parts of the world.

and agronomy. For instance, in one remote

ers to produce more, but institutional buyers

village, the local warehouse, with a capacity

are increasingly stepping in. In West Africa,

Further, there is a need for “crowd-sourcing”

of 400 MT was overflowing, with an extra 500

a major rice miller and a large brewery have

infrastructure investments to increase cover-

MT being stored in the new hermetic storage

both seamlessly integrated smallholders into

age. Annual investments totaling US$55 bil-

bags and silos promoted by AGRA, and pur-

lion are required until 2030 to meet demand

chased with Rockefeller Foundation funding.

and achieve universal access to electricity.

Without these options, much of this grain would have rotted on the ground. So far, farmers who used these storage options confirm that they were able to save their harvests. AGRA is also promoting the use of warehouse receipt systems in Ghana and Kenya to provide safe and secure facilities to store grain while farmers negotiate with potential

Together with high import taxes, poor infrastructure leads to sub-Saharan African farmers paying up to six times more than farmers in other parts of the world.

Development finance agencies, the World Bank and donors should commit US$10 billion to the capitalization of the AfDB’s Africa ‘50’ Fund which has the potential to leverage up to US$100 billion in private finance. The Africa50 Fund aims to leverage an additional US$50 billion annually to close Africa’s infrastructure gap in electricity, roads, railway and port. Additionally, more

buyers. Across East Africa, a new initiative

African governments should draw on the

by the African Exchange Holdings (AFEX) is testing the potential benefits of combining

their network of suppliers. GrowAfrica and the

World Bank’s non-concessional borrowing

warehouse storage options with commod-

New Alliance initiative were set up to cata-

windows, taking advantage of low inter-

ity exchanges to profit smallholder farmers.

lyze agriculture growth through private sec-

est rates to finance energy infrastructure.

tor efforts and present a huge opportunity. My call to action is for all actors – both de-

Smallholder farmers working land holdings that typically average only a few hectares

Financing Africa’s rural agricultural

velopment and private sector partners – to

or less can seem like a poor match for large

infrastructure

embrace agriculture as an income opportunity for millions of Africans, one that can help

buyers. Yet, over the last few years, farmer

82

organizations in Ghana, Mali, Tanzania, Mo-

To fully unlock agriculture’s potential; the

smallholder farmers cross the chasm from

zambique, Kenya, Rwanda, Burkina Faso, and

right infrastructure needs to be in place.

farming as a struggle to survive to farming

Malawi have established aggregation cent-

This includes: paved rural roads, “last-mile”

as a business that thrives.

Corporate Africa 2016


EVENTS DIRECTORY

East Africa Com 2016 18 – 19 May 2016 Radisson Blu, Nairobi, Kenya http://eaafrica.comworldseries.com/ E: mailinglist.amendments@informa.com P: +44 (0)20 7017 7082

Power- Gen Asia 20 – 22 September 2016 Kintex, Seoul, South Korea http://www.asiapowerweek.com/ E: registration@pennwell.com P: +44 1992 656717

ITU TELECOM WORLD 2016 14 – 17 November 2016 Bangkok, Thailand http://telecomworld.itu.int/ E: participate.telecom@itu.int

Nigeria Oil & Gas Exhibition 2016 13 – 16 June 2016 Abuja, Nigeria http://cwcnog.com/ E: nogenq@thecwcgroup.com P: +44 20 7978 0000

FPSO WORLD CONGRESS 2016 20 – 21 September 2016 Singapore http://www.fpsoasia.com/ E: enquiry@fpsonetwork.com P: +65 6722 9399

Mozambique Gas Summit 2016 8 – 11 November 2016 Maputo, Mozambique http://www.mozambique-gas-summit.com/

Corporate Africa 2016

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Features 84

Corporate Africa 2016


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