Zambia Inc - August Issue 2020

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LAFARGE’S KHAN AND STANBIC’S GABARAANE TALK LIMESTONE AND CASH, CEMENT AND BANKING IN COVID-19 ERA

Lafarge Zambia Chief Executive officer Jimmy Khan (left) and Stanbic Bank Zambia Chief Executive Leina Gabaraane (right).

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afarge’s Khan and Stanbic’s Gabaraane talk limestone and cash, cement and banking in COVID era Disease pandemic has changed the business ecosystem in landscape and has revealed synergies, integrations and brought sectors closer than ever. On Friday, 17 July, the celebrated Anakazi banking online conversation hosted C- Suite leaders from the cement and banking industries – Jimmy Khan and Leina Gabaraane who serve as Chief Executive Officers of Lafarge Plc and Stanbic Bank Ltd in Africa’s second largest copper producer. One thing homogenous about the two executives in heterogeneous sectors is that they head the largest and most profitable entities in their respective sectors and have been impacted by the same pandemic in a similar fashion.

Stanbic is the largest bank by asset size and most profitable financial institution in the country while Lafarge has remained the top cement producer for over 70 years.

Jimmy Khan shared how investments in digital initiatives way before the COVID pandemic are now paying off in pandemic times.

“Digital initiatives, we undertook last year on how to serve our clients are now providing us with silver linings as we interface with clients,” Lafarge Chief Executive Officer Jimmy Khan said.

There are three areas that COVID19 has impacted significantly namely operations, people and the clients side,

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Leina Gabaraane and Jimmy Khan shake hands file picture (pre-COVID era). he said. The operational side has impacted the supply side of Lafarge Zambia causing delays in parts required for maintenance for plants ordered from abroad which would ideally take 2-months. Working from home solutions has provided its own challenges as staff grapple with load shedding while the client side was addressed with innovation in usage of an App for retailers that which is being used for purchase of cement. Lafarge has partnered with Afri delivery a food delivery company to distribute cement in these disease pandemic times for which 1.2mln bags are being sold on a monthly basis as the company services its retail clientele.

“COVID19 is making us relearn our processes to the extent that Kiln Shut Downs – KSDs that took 6-months will now

take 18-months and as such will require 3 times more planning,� Khan said Stanbic Bank Zambia Ltd Head Office on Addis Ababa Drive in Lusaka the capital.

As for Stanbic Bank, enhanced health and safety protocols for staff have been implemented with 33% of its staff operating from home which does come with unique challenges homogenous to the ones Lafarge staff face such as cyber related security issues and power outages causing business disruption. Bandwidth for working from home solutions is a challenge to use the large amount of files of digital data that staff will need to transmit between points, Stanbic Bank Chief Executive Leina Gabaraane said.

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OPPORTUNITIES IN AND POST COVID ERA One of the opportunities that this period has revealed is effective utilization of floor space revealing the quantum of capital tied up in real estate which could be channeled to residential accommodation, Gabaraane revealed.

“Other opportunities for the bank include redistribution of capital towards new emerging industries such as in the public health sector and other related sections such as Personal Protective Equipment – PPEs and mask manufacture. Other sectors include telecommunications as they seek to expand their landscapes to accommodate rising demand,” he said.

Lafarge is still selling cement for real estate purposes.

Despite larger government funded projects slowing down, our analysts are seeing an uptick in demand for cement from individual homebuilders who are believed to have a bit more disposable income to channel to investment in personal construction which ideally serves as an effective hedge for inflation.

Lafarge Zambia cements plant on Kafue road in Lusaka the capital.

“Retail demand has in fact doubled in this period which is a sustainable business opportunity for Lafarge. Infact we will soon be launching Wall Crete (mortar) which is specifically structured for finishes and is much cheaper and is of lower cost nature for the end users which will reduce the financial burden on construction projects,” Khan said. COVID19 is forcing us to be client centric, he said.

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“

Retail demand has in fact doubled in this period which is a sustainable business opportunity for Lafarge

“

“One of the biggest challenges we face as a bank is customers struggling to trust technology because even with digitized solutions most will still want physical interface. They still will not trust cash deposit machines, Automated Teller Machines – ATMs and as such will prefer queuing up,” Gabaraane said.

We have invested in innovation and digitization but to push transactions through a digital network requires stability of systems. Our clients are stressed as business activity continues to decline, he said. The bank continues to explore effective ways of contacting clients in a contactless environment.

Retailing!

Why African countries are reluctant to take up Covid-19 debt relief

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BY: MISHECK MUTIZE

ebt service relief package has been approved by some of the world’s biggest lenders for more than 25 African countries. The arrangement includes the World Bank, the International Monetary Fund, the G20, the African Development Bank, and all Paris Club creditors.

IMF managing director Kristalina Georgieva and World Bank group president David Malpass have offered debt relief to developing countries.

IMF managing director Kristalina Georgieva and World Bank group president David Malpass have offered debt relief to developing countries.

The goal was to free up more than $20bn that governments could use to buttress their health services.

Some have called for outright debt cancellation to lessen the debt burden on African countries as they emerge from the crisis of the Covid-19 pandemic.

Most African states will have high public debt

as they use all available lines of credit to secure resources to fight the pandemic.

But private creditors that hold commercial debt have not been willing to participate in debt relief.

They have criticised the G20’s call for freezing all debt repayments. Countries have also been priced out of the Eurobond market by high interest rates.

Bond yields have spiked to over double the cost for most countries intending to issue Eurobonds.

Of the 25 countries eligible for the debt relief, only four have requested assistance – Cameroon, Côte d’Ivoire, Ethiopia and Senegal. The majority have either refused to apply, or have not yet requested a debt moratorium.

The reasons for this are understandable. Poor countries know that the debt markets are not largely favourable to them. And they acknowledge the risk of being punished by existing creditors, prospective investors and rating agencies if they seek a debt

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moratorium.

Risk of rating downgrade A number of countries haven’t openly rejected the offer to participate in the debt moratorium.

For its part Kenya has openly indicated its lack of interest.

Here are the reasons why most African countries are opting against participating in the multilateral debt suspension.

First, there is an implication that countries that are requesting debt suspension have borrowed irresponsibly. They will be viewed as high-risk and irresponsible borrowers in the future.

Second, countries will be in breach of the terms of Eurobond contracts that they currently hold.

The Eurobond prospectuses and contract terms prohibit countries from seeking a suspension of debt payments under multilateral initiatives.

Eurobond default clauses indicate that non-payment of external debt, including seeking a moratorium, would be considered as defaulting. This would automatically trigger an immediate demand for countries to pay the entire value of outstanding Eurobonds.

Third, governments fear that the debt moratorium would lead to credit rating downgrades because of the Eurobond terms of defaulting. Moody’s placed Cameroon, Côte d’Ivoire and Senegal under rating review for

downgrade and have downgraded Ethiopia precisely because of their participation in the G20 Debt Service Suspension Initiative.

A rating downgrade would erode the benefits accrued from the debt relief as countries would have to pay more interest on the same volume of debt. The United Nations has criticised rating agencies for worsening debt sustainability in poor countries.

The debt relief was expected to free up about $20bn in total, about the same amount that is due in interest and principal repayment within six months to private creditors.

It will further hinder countries’ ability to finance budget deficits in the medium term through access to global capital markets.

Given that the pandemic will increase public spending when tax collection and revenue generation are being foregone, budget deficits will swell. Access to global capital will be key in financing the post Covid-19 economic recovery of African countries.

Lastly, there are concerns that the terms of the multilateral debt relief and loan packages will restrict future policy direction.

The debt moratorium is being granted on condition that the funds are spent only on critical public services. Other conditions include adhering to existing policies, reporting requirements, multilateral oversight and transparency. Countries under Zambia Inc. Magazine

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the debt relief programme are not allowed to incur debt from any other creditors during this time and they should use savings only to address shocks from the pandemic.

The World Bank has devised customised fiscal policy responses that support weathering the crisis in the short term and economic recovery in the medium term for countries receiving the relief.

The IMF loans and the G20’s debt suspension funds will not be used to pay high interest to private lenders. These conditions constrain both a country’s fiscal space and policy flexibility.

Solutions The main purpose of maintaining a good credit rating is to access international funds at relatively low interest rates. For African countries, the Eurobond issuance is a more attractive option than the traditional multilateral borrowing, whose conditionalities are usually restrictive.

In all current Eurobond contracts, countries are deemed to have defaulted if they cease to be members of the IMF or if they are no longer eligible to use resources of the Bretton Woods institution.

When terms of Eurobond contracts become equally restrictive and bond yields more expensive, it defeats the purpose of diversifying from multilateral loans.

This is what African countries should do.

First, countries that have the capacity to forego debt relief should do so to avoid losing investor confidence in the future. The net benefit of a low borrowing cost will accrue in the long term.

Private creditors should not be pressured to accept the blanket debt relief agreement for commercial debt that was incurred through market conditions and fundamentals. Current Eurobond covenants should be honored to maintain the credibility and integrity of African sovereign borrowers.

Second, countries that are facing challenges to fund their repayments should approach negotiations with their commercial creditors with caution. Specifically, they should ensure that they safeguard their sovereign credit ratings and avoid defaulting.

Lastly, this episode should provide lessons for African governments to bargain for competitive interest rates and accept only favorable bids during Eurobond issuing. The oversubscription of African Eurobonds is not an absolute sign of attractiveness. It also reflects the overpricing of issued instruments.

Governments should take control of the bond issuance process to structure bonds with favorable terms. This process should not be entirely entrusted to syndicates of investment bankers who have a profit motive and get huge bonuses for oversubscriptions. This will lessen the policy restrictive terms and high interest burden in the future.

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Zambia HEMP Association to commence Cannabis farming in October

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reen Party president Peter Sinkamba registered an association for Zambian hemp growers with the patents and companies registration agency (PACRA).

Zambia legalised the production and export of cannabis for economic and medicinal purposes in December 2019. At the time, Mr Sinkamba said the market for hemp could earn Zambia up to US$36 billion a year in revenue.

The Zambian Hemp Growers and Industries Association (Zam Hemp) was set up with the principle aim of promoting the cultivation, production, manufacturing and distribution of hemp in Zambia, as well as protecting and upholding the rights and interests of hemp businesses.

“Depending on how properly this is done, this could just change the face of Zambia’s economy,” Sinkamba told Reuters. “This could be a blessing or a curse, like diamonds and gold, depending on the policy direction.”

In a statement to the media, Mr Sinkamba said that Zam Hemp would become a market leader for industry news, events, markets and training, and that it would become a strategic link between investors and cannabis related businesses.

The statement went on to urge hemp growers to Sign up for membership of Zam Hemp, in order to improve the opportunities available to their businesses.

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TRAVEL & TOURISM

UNLOCKING ZAMBIAS TOURISM POTENTIAL

Lumangwe Falls KALUNGWISHI RIVER / CHIPEMPE, LUAPULA PROVINCE / NORTHERN PROVINCE, ZAMBIA

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umangwe Falls was like a miniature Victoria Falls except this one was no slouch in its own right. It appeared to be roughly 30-40m tall and spanning a width of around 160m making it a classic block-type waterfall that we found to be one of the more memorable waterfalls we saw in the remote Northern Zambia.

Apparently, Lumangwe Falls was one of several waterfalls on the Kalungwishi River. Each waterfall on the river were attractions themselves with

separate names as we were aware of Chipempe Falls, Kabwelume Falls, and Kundabwika Falls).

We definitely earned our view of this waterfall because it seemed that this part of the country (the Luapula Province) didn’t see many tourists.

So consequently, the tourist infrastructure (e.g. road conditions, signage, etc) were either lacking or they were very basic.

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Even one of the signs indicating the turnoff to this falls was stolen!

It also felt like we were one of the first and few to actually come out to see this waterfall when we did it in late May 2008.

Looking across the brink of Lumangwe Falls Yet despite all the hardships and inconveniences, the strange irony was that in hindsight, this turned out to be one of the easiest waterfalls to reach (see directions below).

Once we made it to the car park, we noticed that there were a couple of main areas to view the Lumangwe Falls.

The second main lookout we saw was right by the brink of the waterfall, which was a short walk from the first lookout point mentioned above.

From here, we got profile views and we really had to watch where we were standing in order that to avoid getting swept into the rushing Kalungwishi River.

The rope-assisted descending towards the base of Lumangwe Fallls.

At least from this vantage point, we weren’t at all bothered by spray from the waterfall, but the view was only limited to a small fraction of the overall width

The first one we saw was a very misty lookout providing a very wide view of the entirety of the waterfall (see photo at the top of this page).

the falls.

After seeing the falls from its brink, our guides Chanda, Joseph, and Chester took us down a very steep, ropeassisted descent down to the wide and misty plunge pool within the gorge.

It was from here that we could totally see why this might be thought of as a miniature Victoria Falls.

The area down here appeared to be flooded as we probably happened to catch the Lumangwe Falls in

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high flow.

Falls

Given the state of the plunge pool, we couldn’t go very far to even get a clean look at the waterfall from down here.

Of course, we could’ve easily spent much more time here, especially if there might have been less water so access to the base of Lumangwe Falls would have been more feasible than during our visit.

The mistiness also ensured that there would be no way to photograph what it was like from this vantage point.

Lumangwe Falls resides in the Luapula Province near Kawambwa, Zambia. It is administered by the Kawambwa District

Just to give you an idea of the time commitment if you’re planning a trip here, we spent about 35 minutes away from the car.

Too much mist and flooded ensured that we wouldn’t get any clean looks from the bottom of Lumangwe Falls Too much mist and flooded ensured that we wouldn’t get any clean looks from the bottom of Lumangwe

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ZAMBIA SEED COMPANY (ZAMSEED) HAS ATTRACTED K91 MILLION OF INVESTMENT FROM SILVER STREET CAPITAL TO REVAMP THE PROCESSING PLANT

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espite

over

Silverlands Zambian Grains Farms are situated in

coronavirus and a difficult economic

optimal locations, in particular for wheat and barley.

environment, Zambia Seed Company

High yields, alongside premium wheat prices, are

(Zamseed) has attracted K91 million

achievable in the region.

of

global

investment

uncertainty

from

SilverStreet

Capital to revamp the processing plant. Part of the

The relatively high altitude (1,400m) and better soils

resources will also be used to expand the research

produce wheat yields that are around 10-15% higher

capability, vegetable seed product line and meet its

than other farms in the region.

strategic goal of becoming a regional seed company headquartered in Zambia.

The Kakushi Dam on Silverlands Agriculture Services was completed in mid-2016 and spilled in March 2017. This is the only dam on the Kakushi River, with a catchment that performs better than surrounding areas due to its higher altitude. In addition to providing water for the farm, water users up to 45Km downstream report that more water is available in the river during the dry season since the dam was built.

Zambian Grains benefits from an optimal location: high altitudes, premium prices and secure water supplies

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Our Zambian Grains operations produce hybrid seed for smallholder farmers We aim to improve smallholder farmers’ yields and meet the needs of an expanding population, through the development and production of high-quality hybrid seed. Hybrid seeds can increase yields, increase incomes, improve drought tolerance and counter some diseases.

In Zambia our improved seed was planted on over 17,500 hectares.

This represents an economic benefit to an estimated 14,000 smallholder farmers, and a total income improvement of $2.8m p.a.In addition to our extensive community impact, the businesses provide employment to over 400 people.

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Providing access to conservation farming demonstration plots in partnership with NGO Foundation for Farming

yields of 9 t/ha compared to 1.7 t/ha in the same area. This clearly indicates substantial scope for boosting yields and increasing smallholder incomes.

For the second season Silverlands Zambia Ltd and Silverlands Agriculture Services Ltd have run demonstration plots with help from the NGO Foundations for Farming. These plots trial different varieties of maize, soya, sugar/dry beans and groundnuts – useful knowledge for both commercial farms and smallholders. These plots serve as a ‘classroom’ for training sessions with smallholder farmers.

New communities are invited to the Silverlands’ training days, and if they are enthusiastic then they are encouraged to form a group.

These ‘Foundation Groups’ plant their own plots of maize, soya and groundnuts and are regularly visited by Foundations for Farming. Training sessions held within communities makes the training accessible to the whole community. This is particularly important for women, who tend to have domestic duties Silverlands assisted with the that restrict their travel yet who construction of the Foundations are heavily involved in farming for Farming training center activities. to facilitate their work, and Silverlands’ employees attend Zambian Grains benefits from an training sessions to improve optimal location: high altitudes, skills in the labour force. premium prices and secure water supplies Foundations for Farming has also been commissioned to Silverlands Zambian Grains Farms run training sessions at the are situated in optimal locations, Silverlands’ demonstration plots in particular for wheat and barley. and surrounding areas.

High yields, alongside premium wheat prices, are achievable in Foundation for Farming have the region. demonstrated extraordinary results on their plots near one of The relatively high altitude the Silverlands farms using the (1,400m) and better soils produce same implements as smallholder wheat yields that are around 10farmers.

15% higher than other farms in the region.

Soya yields of 4 t/ha have been achieved, compared with an The Kakushi Dam on Silverlands average of 1 t/ha achieved by Agriculture Services was smallholder farmers, and maize completed in mid-2016 and Zambia Inc. Magazine

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spilled in March 2017. This is the only dam on the Kakushi River, with a catchment that performs better than surrounding areas due to its higher altitude. In addition to providing water for the farm, water users up to 45Km downstream report that more water is available in the river during the dry season since the dam was built.

WHY WIND AND SOLAR WOULD OFFER THE DRC AND SOUTH AFRICA BETTER ENERGY DEALS THAN INGA 3

BY: GRACE C WU & RANJIT DESHMUKH

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even years ago the Democratic Republic of Congo (DRC) proposed the Inga 3 - a 4.8GW hydropower project on the Congo River - with great fanfare. Third in a series of dams that would form the Grand Inga complex on the Congo river, the project was touted as a solution to southern Africa’s energy deficit woes and a way for the DRC to participate in regional economic

development.

The hydropower potential at the Grand Inga site on the Congo River, the largest remaining untapped hydropower potential in the world.

The hydropower potential at the Grand Inga site on the Congo River, the largest remaining untapped hydropower potential in the world.

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?

E S N E S E K A M 3 A G N I S E DO Seven years later, development of Inga 3 has yet to begin. The project continues to be stymied by conflicts. For example, earlier this year, one of the partners, a Spanish company, pulled out of the consortium but DRC president Félix Tshisekedi continues to push to revive the plans.

According to South Africa’s Integrated Resource Plan (IRP 2019), the country plans to import at least 2.5GW of electric power from Inga 3 (or more than half of the original 4.8GW design), a commitment reiterated recently by South African president Cyril Ramaphosa. The largest remaining fractions of Inga 3’s electricity generation would be purchased by the mining industry in the DRC. Less than 10% of the electricity from Inga 3 is expected to supply the DRC’s residential electricity needs. Currently 90% of the population in the DRC lacks electricity access.

We set out to answer this question in our research paper. We concluded that pursuing large hydropower dams in the DRC is financially risky for South Africa. We assessed the feasibility and cost-effectiveness of renewable energy alternatives to Inga 3 to serve the energy needs of both the host country, the DRC, and the main buyer, South Africa.

BETTER ALTERNATIVES The hydropower potential at the Grand Inga site on the Congo River, the largest remaining untapped hydropower potential in the world, has drawn the interest and attention of development banks and regional governments for the past several decades. But there’s been dramatic change in the energy sector in the past five years. In particular, the cost of alternative energy sources like wind and solar has changed the game for cost-competitive and sustainable energy generation that can be rapidly scaled up.

There are more efficient ways to address severe energy deficits quickly and cost-efficiently. For example, wind projects take only one to three years to build and most solar photovoltaic projects take a year. Both incur lower costs than similar-sized hydropower projects, which take five to 10 years to build. The latest construction time estimate for the Inga 3 is eight years.

Longer build times lead to greater costs due to interest on capital. And analysis of data from past large hydropower dams shows that these projects cost twice the amount they quoted before the start of the project.

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We found that, even without considering the large environmental and social impacts, the dam is an unsound investment based on plain economics.

OPTIONS FOR SOUTH AFRICA In our study we compared alternative energy sources for South Africa, the largest potential buyer of Inga 3 electricity.

We found that a mix of wind, solar photovoltaics, and some natural gas would be more cost-effective than Inga 3 to meet future demand.

We reached this conclusion after examining the impact of several uncertain factors that could change overall costs. These included: Inga 3 performance, Inga 3 cost overruns, wind and solar performance, and the demand for electricity in the future.

The only scenarios in which Inga 3 was more cost-effective were those that assumed significantly lower than average wind energy performance.

In the case of the DRC, we found that wind and solar generated electricity would be cheaper than the World Bank-estimated price of electricity from Inga 3 for both retail customers in Kinshasa and mining

customers in the Katanga province.

These renewable energy technologies are more suitable for providing decentralized and off-grid access to electricity to DRC’s geographically dispersed population.

of fisheries upstream of the dam, threats to freshwater diversity and mangroves in the Congo delta, and reduced carbon sequestration through reduced organic sediment transport downstream to the ocean.

CHOOSING A BETTER COURSE

The DRC has since proposed to more than double the initial capacity examined in our study. This would obviously change the economics described here, though President Tshisekedi has expressed preference for the original smaller 4.8GW proposal.

Time and resources wasted over the last decade entertaining a high-risk mega project that may not even be realized could have been fruitfully spent pursuing opportunities like wind and solar technologies that are cost-effective today.

Of course, economics should be only one of many factors to weigh when choosing energy technologies.

Like many other mega hydropower projects, the Inga 3 has been fraught with potential severe social and environmental impacts. At least 35,000 people would be displaced by Inga 3 alone.

The potential ecosystem impacts include the decline

The DRC government and international financial institutions like the Africa Development Bank backing the Inga 3 can still change course to choose more sustainable and lower risk avenues to provide cost-effective access to energy and spur economic development.

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IDC pours funds to facelift Mununshi Banana Estate

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he Corporation for Industrial Development – IDC has announced that it would spend K17 million (about US$ 1 million) to facelift the Mununshi Banana Estate in Mwense, Luapula province.

The land was privatized shortly after a local businessman who was said to have little management experience with agro companies. Zambia currently has an estimated banana deficit of about 11,000 tonnes/year, giving the local production immediate advantages.

IDC Chief Executive Officer – CEO Mateyo Kaluba has announced that the company is in the process of planting the first 50 hectares of bananas and has

so far directly employed some 40 people who are currently on the ground to carry out their work.

He said that IDC had decided to undertake this project as a result of the country’s serious deficit in banana production of about 10,800 metric tons per year and therefore considered it appropriate to invest in bananas as part of the company ‘s agricultural portfolio. Banana being a perennial crop has another advantage in that it takes an average of 9 to 12 months from sowing to harvesting.

He added that expected production target per year for the revamp estate is 6,500 tons and that the corporation intends to push the hectares of bananas cultivation to 330 hectares and reach 730 ha in the

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next 3 years. The revamp Mununshi scheme will also offer an out-grower scheme for people in the surrounding areas to enable the company to be selfreliant and expand production creating business and employment opportunities for the local community.

“We are also going to take advantage of the export market particularly the Democratic Republic of Congo – DRC which is nearby and we are in the process of recruiting a qualified management team for what will now be called the Mununshi Fruit Company that will in the near future, see the company diversify into production of other fruits like Avocados. So, once the company is up and running, the new management team will begin to identify other fruits with high demand for both the local and export markets given that management skill, expertise and infrastructure will already be provided,” He said.

When asked whether the Mununshi Fruit Company will not take away the market from existing private banana farmers, Mateyo said the corporation will instead complement what local farmers are already doing for both commercial and small and emerging farmers. The Mununshi Fruit Company will initially focus on plugging the deficit and intends to grow and contribute to making the country become selfsufficient and later pursue export markets.

“We intend to export to the DRC especially that it has new entry routes and roads around the area to facilitate foreign trade, we have roads now between Luapula province and the Northern Province from Kasama, so we expect that it will open up a serious export market for us and bring in additional foreign exchange,” He added.

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Let your BUSINESS soar

Reduced Demand for Oil & Oil Products to Last for

6 MONTHS

Absa Corporate and Investment Banking (CIB) Head of Natural Resources Shirley Webber has predicted that the current reduced demand for oil and refined products as a result of national lockdowns in South Africa and across sub-Sahara Africa could last at least six months. “We expect that this reduced demand scenario will persist for some time with pre-Covid consumption levels being reached at the back end of 2021. How oil companies and traders will survive during this period will largely depend on their operating models,� says Webber says.

Webber says national shutdowns have affected and reduced demand for both fuel and refined products, primarily because of less traffic on the roads, and no passenger flights being allowed following the closure of many international borders. Oil companies have not been able to make up for this reduced demand by selling to customers operating in essential services as large sectors of economies were shut down because of the lockdowns.

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Managing risk She says the cash flow of oil companies has as a result been affected by reduced capacity at refineries because people have been buying less fuel and oil products due to restrictions on travel in many countries. In response, the oil majors have had to reduce refinery their capacity to save costs and preserve cash flow by between 25% and 40%. Some had also slashed their capital expenditure budgets by as much as 30%.

Webber says one of the key learning lessons of the Covid-19 induced shutdowns for oil and mining companies is the importance of risk management, especially when it comes to hedging strategies to protect their balance sheets against currency and commodity price volatility.

engaging with its clients to understand their liquidity requirements and how they are managing under the current stressed economic conditions. She says reduced demand can put pressure on cash flows and balance sheets, which emphasizes the importance of a company having ready access to a standing facility which can be used during times of trouble.

“What is important is that the terms of such facilities have to be favorable and not too onerous on the business because there is balance you need to strike in order to preserve both the business and your ability to operate under stressed scenarios such as these we are witnessing globally,” she says.

“For example, we have seen the oil sector hedging their production at between US$60US$90 a barrel in some instances. Had they not done that, they would have been in serious trouble with the current price which has fallen significantly and unlikely to recover for a while based on current trends and developments,” she says.

Ensuring accessibility Webber says another important lesson is to ensure access to adequate liquidity facilities on the right commercial terms, such as tenor.

Absa has been

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Minerals Council elaborates on support for B4SA initiative

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he Minerals Council South Africa today hosted an online media briefing to share its position in support of the accelerated economic strategy developed under the Business for South Africa (B4SA), which is aimed at achieving higher levels of inclusive economic growth to recover from the Covid-19 crisis, and the economic crisis that preceded it.

• What if energy supply was reliable and affordable?

The Minerals Council has been actively involved in the development of the strategy and has identified eight critical areas for the mining sector that need to be addressed urgently if the recovery is to occur and output and jobs saved and expanded in the next four years.

• What if exploration was encouraged and increased?

In its presentation, the Minerals Council asked eight critical questions:

• What if the policy and regulatory environment was clear and workable?

• What if the industry was modernized?

• What if rail and port infrastructure was adequate and reliable, and able to meet the demands of a growing economy?

• What if there was greater collaboration between the government and industry to support communities?

• What if government and industry collaborated more to fast track key projects?

• What if South Africa mining was to attract more investors?

Minerals Council CEO Roger Baxter noted that: “If the right actions are taken in answering all these questions, it could result in an additional $3.6 billion in mineral sales, R300m additional tax revenues, 70,000 jobs saved and an additional 26,000 mining jobs and 47,000 indirect jobs created by 2024. These steps require a co-operative and united approach by

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all industry stakeholders if we are to succeed.

“Never before have all industry sectors worked together, with such focus, on revitalizing the South African economy. Never before have detailed practical steps been identified, where all role players can play a part, and where demonstrable and measurable progress can be achieved.

“Covid-19 could not have come at a worse time for South Africa, but in many ways it has created the burning platform around which we can all unite – business, government, labor and civil society – to achieve a better outcome for the future.”

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Food giants appointing teams to focus on plant-based products

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orty percent of “leading” food firms, including Kroger, Tesco, Nestle and Unilever, now have dedicated teams focused on plant-based products, according to new research from collaborative investor network the FAIRR Initiative.

The figures were published following a four-year investor engagement programme between the FAIRR Initiative and 25 large food retailers and manufacturers.

FAIRR’s Sustainable Proteins Engagement network includes a coalition of 88 investors, which work with 15 retailers and 10 food manufacturers including Nestlé, M&S, Sainsbury’s, Carrefour, Costco, Amazon and Walmart. The network aims to encourage major food firms to diversify their protein sources to drive growth following the surge in demand for plantbased products.

FAIRR’s research found that two in five global food giants with combined annual revenues of $459bn now have dedicated teams to develop and sell plantbased alternatives to meat and dairy, with Tesco and Unilever ranked top.

Tesco and Unilever were praised by investors for their commitment to shift food portfolios to more sustainable protein sources, demonstrating boardlevel support for a climate-aligned protein transition (the shift away from animal proteins towards plantbased and new protein sources), and completing a climate ‘scenario analysis’ on their commodity supply chains.

Costco and Kraft Heinz were said to be “falling behind”

their rivals, while Amazon, which continues to expand its presence in the grocery market, remains silent on its approach to enabling a climate-aligned protein transition.

In total seven of the 15 retailers now sell, or plan to sell, plant-based meat alternatives “on the meat aisle”.

Watershed year for plant-based market capitalisation The data comes from the new online Sustainable Proteins Hub for investors and ‘Appetite for Disruption: A Second Serving’ report, launched recently by FAIRR. The report highlights new research that shows over $1.1bn of venture investment has flowed into alternative proteins in the first half of 2020, more than double last year’s total investment ($534m). The alternative protein market is expected to grow to $17.9bn by 2025.

According to FAIRR, global food giants are responding to alternative protein growth by growing specialist teams to accelerate the development of plant-based technologies and products: •

Kroger, Coles, Marks & Spencer, Sainsbury’s and Tesco all have dedicated human resources focused on plant-based product development.

•

Half of the engaged manufacturers (Conagra Brands, Kerry Group, Nestle, Saputo, Unilever) said they have dedicated individuals or teams focused on alternative protein development, such as new

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product development or new protein sources.

• 10% of all Nestlé’s R&D employees are now dedicated solely to the development of plant-based products, while Unilever has invested $94m in a new innovation Centre housing 500 employees with a focus on plant-based innovation for brands like Knorr and Hellmann’s.

Investors also welcomed a 57% increase from 2019 to 2020 in food companies with Scope 3 emissions targets including emissions from animal agriculture. Despite agriculture accounting for around 30% of global greenhouse gas emissions along with forestry and other land-use, corporate targets have historically failed to address the emissions footprints of animal agriculture and its supply chains.

Jeremy Coller, founder of FAIRR and chief investment officer at Coller Capital, said that big food brands are vying for their slice of the plant-based pie.

“They are drastically scaling-up and skilling-up their capacity to research and develop plant-based alternatives to meat and dairy. Tangible goals for a protein transition are being put in place. The post-Covid landscape has made 2020 a watershed year for the sustainable protein market: the sector has attracted double the investment of last year in just six months,” Coller said.

Pandemic exposes fragility of supply chains Amidst public concern over the link between meat production and the ongoing Covid-19 and African Swine Fever crises, retailers and manufacturers are facing a surge in demand for plant-based products, said FAIRR. This has been felt most acutely in China where pork consumption is estimated to drop by 35% this year, while plant-based pork brand OmniFoods saw record growth across China and other Asian markets. Brands like Impossible Foods and Oatly have set their sights on the region and Nestlé is to build a $100m plant-based centre in China.

“The Covid-19 crisis has exposed the fragility of supply chains, and illuminates the need for innovative and alternative proteins to be explored as a potentially more resilient solution to the issue of soaring global protein demand,” said Julia Kochetygova, head of EMEA Stewardship at Northern Trust Asset Management.

Nina Roth, director of responsible investment at BMO Global Asset Management, added: “Changing consumer attitudes, food tech innovation, environmental and health risks – also for workers – are set to reshape the protein production industry as we know it, with the alternative protein market expected to grow to $17.9bn by 2025. This brings sizable opportunities for companies that implement strategic goals for managing a robust protein transition.”

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Knight Frank launches 2020 Wealth Report revealing PIRI 100

K

night Frank has released its 2020 Wealth Report revealing the results of its Prime International Residential Index (PIRI 100) which tracks the movement of luxury residential prices in 100 city and second home markets globally for the 12-months.

•

London registered a fall of 2.6% in 2019.

However, the Conservatives’ decisive victory in December’s general election provided some much- needed political clarity and the market looks set to gain traction in 2020.

Highlights from the index include: • Cities dominate the fastest risers in Knight

Frank’s PIRI 100, as opposed to second home markets.

• European and Asian cities dominate the top

10 best performing locations. In Europe,

Frankfurt (10.3%), Lisbon (9.6%), Athens

(7.0%) and Berlin (6.5%). In Asia, Seoul (8.9%),

Taipei (7.6%), Manila (6.5%) and Guangzhou (6.3%).

• The 100 locations covered by PIRI recorded

average price rises of almost 2% - up

from 1.3% in 2018.

• Prices in Athens and Cyprus (4.3%) are now

rising, but from a low base, with prime prices

still around 35% below their 2008 peak.

• Gone are the days of 30% annual growth in

China’s metropolises, Seoul and Taipei

are now the region’s frontrunners with

annual growth of almost 9% and 8% respectively.

“Despite wealth growth and interest rates in most advanced economies remaining at record lows, the slowing global economy, rising property taxes and, in some cases, a surplus of luxury homes for sale, weighed on price growth.

“The results of our Prime International Residential Index reflect this slowdown. While growth ranged from double-digit hikes in some markets to significant falls in others, we saw a shift in the trend of moderating growth that has prevailed since 2013. In 2019, the 100 locations covered by PIRI recorded average price rises of almost 2% - up from 1.3% in 2018, but still some way off the 2.8% recorded in 2013,” says Kate EverettAllen, head of international residential research at Knight Frank.

Hong Kong prime price increases ended 2019 at 2.9%, with a mortgage cap reduction and three interest rate reductions mitigating some of the impact of the political volatility. Singapore (1.2%) is firmly back in

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the spotlight – the higher rates of stamp duty for overseas buyers are no longer considered draconian, rather a trade-off for stable politics and a secure currency in a city-state that applies no capital gains tax or estate duties.

Sydney leads in Australia Sydney leads the five Australian markets tracked by PIRI with price growth of 3.7% constrained supply and cheaper finance are underpinning prices. Mounting challenges, both economic, political and climatic, are curtailing prime price growth for our African cities. Prime sales in Cape Town held up but prices dipped (-1.5%) as longstanding vendors proved more flexible on price.

Dubai’s hosting of Expo 2020, the first to be held in the GCC region, along with an overhaul of investment visas - as well as greater powers for Dubai’s Real Estate and Regulation Authority (RERA), which empowers it to oversee the strategy for all future real estate projects - are together adding some optimism to the market. The annual rate of decline slowed to -0.7% in 2019.

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Monaco still most expensive

Monaco remains the world’s most expensive city.

Says Everett-Allen: “Monaco continues to be the most expensive city in which to buy luxury residential property. $1m buys just 16.4 square metres of accommodation here - the equivalent of a bedroom. This is followed by Hong Kong and London. New York slipped to fourth place in 2019 although the gap between London and New York is small with currency shifts also proving influential.”

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Top 10 Countries In Africa For A Safari Holiday Of Your Dreams

Dreaming of an African safari tour?

Wondering which country in Africa offers the best safari experience?

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There are 54 countries in Africa but there are 10 top destinations that dominate safari tourism on the continent. Each country offers something unique for wildlife travellers.

1. Botswana

migration of wildebeest, zebra and gazelle during the Great Migration. Without doubt, the Maasai Mara is at the top of every wildlife lover’s safari bucket list but it isn’t the only reason Kenya is regarded as the ultimate safari destinations in Africa.

Botswana is arguably one of the finest safari destinations in Africa, and also one of the most expensive. The country works on a low-density tourism model which ultimately comes with a high price tag. But it’s worth every cent. Botswana attracts adventure travellers with a yearning to escape to pristine wilderness regions that are unfenced, wild and unspoilt by safari crowds.

There’s Lake Nakuru, home to more than a million flamingoes in season; Amboseli National Park, lying in the shadow of the mighty Mount Kilimanjaro; Tsavo East National Park, one of the largest protected wilderness areas in East Africa… and so the list goes on and on. Kenya offers adventure travellers the quintessential safari experience in wilderness regions that are simply heavenly.

Botswana is endowed with incredible natural diversity and is home to a UNESCO World Heritage Site and one of the most famous safari destinations in Africa, the glorious Okavango Delta. It’s also home to the lesser known but equally spectacular Chobe National Park. If you can’t get to the Serengeti for the annual wildebeest migration, the zebra migration in Chobe is just as impressive. Read more about Botswana Safaris.

3. Mozambique

2. Kenya Kenya is home to the iconic Maasai Mara National Park; one of the 7 Natural Wonders of Africa and world-renowned for its breathtaking vistas, pristine wilderness and of course, its legendary mass

After decades of civil war which saw poaching escalate at an alarming rate and wildlife numbers decimated, Mozambique is back in contention as a premier safari destination in southern Africa. Government and international intervention is driving world-acclaimed wildlife conservation programmes and embattled wilderness regions have been restored to their former glory.

The top two safari destinations in Mozambique are Limpopo National Park in the south and Gorongosa National Park in the north. They are hidden gems that attract intrepid wildlife travellers happy to venture off the beaten path for an exceptional safari exZambia Inc. Magazine

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perience. Combine a safari tour of Mozambique with a magical holiday on the coast and you’ll have the best ‘bush and beach’ holiday.

4. Namibia Namibia offers ardent wildlife lovers and birders a unique safari experience in a country that’s renowned for its vast desert landscapes and fascinating biodiversity. Despite being covered by the oldest desert in the world, the Namib Desert, the wealth of animal and plant species in the country is remarkable.

The iconic Etosha National Park in Namibia is simply spectacular.

Other regions such as the mysterious Skeleton Coast and the breathtakingly-beautiful Sossusvlei and Damaraland are equally impressive. If you have a yearning to escape to one of the most remote and isolated corners of southern Africa where animals have adapted to the harshest environment on the continent, then a safari tour of Namibia is the perfect choice for you.

5. Rwanda Thirty years after Rwanda made international headlines for the horrific genocide that took place, the country has taken massive strides to boost its tourism and welcome wildlife travellers back to iconic rainforest regions such as Volcanoes National Park, acclaimed as the finest place on

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Earth for gorilla and chimpanzee trekking. However, Rwanda has a lot more to offer adventure travellers than its sought-after populations of primates.

Nyungwe National Park offers a safari experience of a different kind. Exploring the dense rainforest region, you’ll discover Rwanda’s unique collection of animal, plant and bird species.

For a more traditional Big 5 safari experience, you’ll love the little-known but quite spectacular Akagera National Park.

6. South Africa South Africa is the safari capital of southern Africa. The country offers wildlife and nature lovers a vast array of safari destinations; from the iconic Kruger National Park and world-famous private nature reserves such as Londolozi, MalaMala and Sabi Sands in the north to private game reserves like Pilanesberg and Madikwe located closer to the capital city and untouched wilderness areas in the Cape and the magnificent Garden Route. Read more about Kruger Park Tours and Safaris.

A safari tour to South Africa’s favourite reserves is highly affordable on the current exchange rate and less expensive generally because the national parks and game reserves are more accessible than those found in Botswana, Kenya and Tanzania.

Safari travellers also have a vast

choice of accommodation in South Africa; ranging from budget-friendly bush camps and self-catering bungalows and guest houses to ultra-luxury safari lodges and luxury safari tents.

The choice of places to stay and things to do on a safari holiday in South Africa are endless. View special rates for Kruger Park Safaris.

7. Tanzania Tanzania is without doubt one of the best safari destinations in Africa. The splendid Serengeti is world-famous not only for the Great Migration but also for its awe-inspiring beauty, natural diversity and iconic landmarks such as the Ngorongoro Crater and Mount Kilimanjaro. Combine a holiday in the magical Zanzibar Archipelago with a safari tour of Tanzania and you’ll have the ‘bush and beach’ holiday of your dreams.

The Serengeti is the gold standard of wildlife experiences and a safari destination on every traveller’s bucket list. However, don’t forget wilderness regions in Tanzania that are off the beaten track and a lot less crowded in season.

This includes the magnificent Tarangire, Lake Manyara, Mahale and Mikumi national parks.

8. Uganda Uganda is better known for gorilla and chimpanzee trekking but don’t make the mistake of Zambia Inc. Magazine

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dismissing it as an African safari destination. It boasts untouched wilderness regions that are simply spectacular and renowned for their outstanding biodiversity, unique animal species and prolific bird life.

The landlocked country in East Africa offers adventure travellers incredible places to explore such as the snow-capped Rwenzori Mountains, Lake Victoria and Murchison Falls as well as the iconic Bwindi Impenetrable National Forest. Uganda is home to four of the Big 5 (tragically rhino is extinct in Uganda) and the best place to see the famous four are at Queen Elizabeth National Park and Murchison Falls National Park. Read more about Uganda Tours and Safaris.

9. Zambia Zambia for a safari holiday will surprise and delight you. The country doesn’t attract the same attention as Botswana which can offer you the iconic Okavango Delta but wildlife travellers who know and love Zambia will tell you it’s a topnotch safari destination.

Wild, unfenced wilderness regions and outstanding wildlife sightings coupled with low tourist numbers and far more palatable price tags on accommodation make Zambia the new up-andcoming safari destination in Africa. The two most popular safari destinations in Zambia are South

Luangwa National Park and Lower Zambezi National Park; best explored on magical boat and canoe cruises.

10. Zimbabwe Despite political and economic turmoil in the country, you’ll find that the remote areas of Zimbabwe are still some of the best safari destinations in southern Africa. If you’re travelling with US Dollars or Pounds in your pocket, it’s the most affordable country to visit for the safari holiday of your dreams.

The best town to base yourself in is Victoria Falls for a combination of wildlife, birding, fishing, canoeing and the best adrenalin-packed activities in Africa. From there, you are a 10-minute walk from Victoria Falls National Park, a short drive from Stanley Livingstone Private Game Reserve and a scenic two-hour drive from the rejuvenated and now hugely-popular Hwange National Park. If that’s not enough, you can book a safari day or overnight tour to Chobe National Park in Botswana.

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