Invest In Africa by rellish

The brakes are off

Momentum is building behind regional transport corridors and free trade areas

Africa An official publication of the African Union

Invest in

Spotlight on equality

Making 2016 the African Year of Human Rights, with particular focus on the Rights of Women

Future-proof farming The new techniques and technologies bringing productivity gains

2016

Agenda

POWER

2063 Infrastructure

Gender Equality

Make the World you Love Weâ&#x20AC;&#x2122;re setting new standards in sustainable building design in South Africa. Providing multidisciplinary services for the development of the Department of Environmental Affairs head office, 70% of construction waste was diverted from landfill and lighting energy use was cut by 40%. Our engineering, management and development teams combine the power of ingenuity with personal aspiration to change our world for good â&#x20AC;&#x201C; for our clients, for everyone touched by their projects, even generations to come.

mottmac.com @MottMacDonald

Mott MacDonald_placed.indd 4

14/12/2015 14:17

Contents

Forewords and introductions

HE Dr Nkosazana Dlamini Zuma,

Chairperson, African Union Commission (AUC)

HE Erastus Mwencha

Deputy Chairperson, AUC

HE Fatima Haram Acyl

Stephen Hayes

Commissioner for Trade & Industry, AUC

President, Corporate Council on Africa

Silver linings: the pension sector

The Year of Human Rights

Regional integration

The new path

Africa is working to realise the goals outlined in Agenda 2063. Successful implementation will partly depend on female empowerment and effective international partnerships and investment

18 22

The road to Agenda 2063

Common aims: Agenda 2063 and the UNâ&#x20AC;&#x2122;s Sustainable Development Goals

Making women mainstream agents of peaceful change

32 37

The US and Africa: business partners

Investing in change

Finance and banking

Paying up: the project finance landscape and infrastructure development

Lifting critical barriers to trade finance

Africa is moving towards greater integration, with new free trade zones in the pipeline and better connected transport links

52 56

Intra-African trade

Transport corridors: the brakes are off

Africaâ&#x20AC;&#x2122;s sustainable development requires financing. From business transactions to project finance, innovation is increasingly unlocking opportunities for foreign investors and African stakeholders alike, and the rise of pan-African banks is improving the quality of services

Foundations for financial inclusion

Power pools: a beacon of light

Invest in Africa 2016 | 3

the new path

62 63

Africa’s first continent-wide business network

Spurring economic activity: the Horn of Africa Initiative

Ending energy poverty

Some areas in Africa remain desperately short of electricity, despite abudant reserves of fossil fuels and even greater renewable energy potential. Will Africa lead the way to a low-carbon future, while providing much-needed energy to hundreds of millions of people? And, with reliable and equal power distribution central to Africa’s energy ambitions, can it address the dual challenge of storage and transmission?

Unleashing Africa’s renewable potential

The energy sector is heating up, with public and private momentum building

75 76

The delivery conundrum

Q&A: Mahama Kappiah, Executive Director, ECOWAS Centre for Renewable Energy and Energy Efficiency, discusses gender mainstreaming in energy

The development of infrastructure, from transport links to water and sanitation facilities, is key to releasing populations from poverty and unleashing economic potential. But the infrastructure gap remains huge. To bridge this gap, now more than ever the public and private sectors need to work together

86 92 93

Infrastructure for inclusive growth

Africa’s rail sector gets on track

Commodity markets

Momentum remains in Africa’s commodity markets, despite lower oil prices behind a slowdown in investment. Work in oil and gas, as well as mining and minerals, is occurring continent-wide

78 82

Lure of African oil riches sustains investor interest

Glimmers of hope in the mining sector 4 | Invest in Africa 2016

Infrastructure opportunities

Ports: keeping up with demand

94 97 98 100 103

Driving development

Africa’s low-cost airlines take to the skies

The water challenge

Inside Africa: the next global tech hub

Case Study: Rwanda’s ICT success

104

Reaping rewards from investment in agriculture

The African consumer

Levels of disposable income are rising in Africa’s major cities, with the African Development Bank projecting a growth rate of 5.6% a year until 2030. What impact will this have on African economies, and what investment opportunities does it create?

126 129

An open field in fastmoving consumer goods

Food and agriculture

New techniques and technological developments are driving productivity in Africa’s agriculture sector. For both public and private entities, there are innovative new investment models from which to draw inspiration

110

Bukar Tijani, Assistant Director-General and Regional Representative for Africa, Food and Agriculture Organization of the United Nations, discusses agriculture in Africa with a focus on youth

108 109

Innovation in irrigation: the power of data

Grow Africa: how patience is helping to avert risk

Africa’s human wealth

Building capacity in Africa’s healthcare and education systems is crucial to the continent’s development. The recent Ebola crisis highlighted underinvestment in health, and with demand rising for competitive education centres, private-sector investment models could hold the key to growth

118 120 123

Seizing Africa’s retail opportunities

130 Home brand: the value of ‘Brand Africa’

Healthcare: a comprehensive treatment plan

Excellence in demand: thriving higher education institutes

114

Case Study: cash from cassava

The centres of excellence spurring R&D

132 134 Engaging the diaspora

Index of advertisers

Invest in Africa 2016 | 5

Africa Invest in

2016

Editorial

Design and production

Managing Editor Jane Douglas

Art Director Ross Ellis

AU Editorial Consultant Tarek Ben Youssef

Designer Morwenna Smith

AU Editorial Liaison Josepha Mushabe Musabyemariya

Production and Distribution Manager Elizabeth Heuchan

Assistant Editor Emily Eastman

Management

Sales

Chief Executive Officer Richard Linn

Sales Manager James Johnston

Newsdesk Media publishes a wide range of business and customer publications. For more information please contact Richard Linn, Chief Executive Officer.

Subscribe now at investinafrica.media Contributing authors Wendy Atkins is a contributing editor of The Banker and fDi Magazine. She is also a correspondent for This is Africa. Jeremy Bowden is a freelance journalist and researcher specialising in energy, commodities and financial markets. He has written for Utility Week and Renewable Energy World, and has reported on energy for Dow Jones. Michael Cassell is a freelance journalist with expertise in finance and energy. He has 30 years’ experience working for the Financial Times. Emilie Dock is an editorial contributor for Newsdesk Media, with a specialism in regional investment. Dominic Dudley is a freelance journalist, writer and editor. He has written for The Economist and Bloomberg Businessweek.

Printed by Masar Printing & Publishing.

Stefanie Durbin is a freelance analyst, writer and editor specialising in economics, as well as the performance of business sectors in countries around the world.

An official publication of the African Union African Union Representational Mission to the United States of America 1640 Wisconsin Ave NW Washington DC 20007 United States

Martin Morris is a financial journalist with particular knowledge of Africa and the Middle East. Martin has worked for titles including the Daily Telegraph and Arabian Business.

Tel: +1 (202) 342 1100 | Fax: +1 (202) 342 1114 Email: au-washington@africa-union.org Web: www.au.int

Published by www.newsdeskmedia.com Twitter: @newsdeskmedia 62-68 Rosebery Avenue, London, EC1R 4RR, UK Tel: +44 (0) 20 7650 1600

Sarah Rundell is a business journalist with a decade of experience that includes organisations such as the BBC. Pamela Whitby is an experienced reporter, writer and editor, specialising in African business. Pamela has contributed to The Economist, Focus on Africa and Investors Chronicle. Sally White is a freelance mining journalist and consultant. Her work has been published by the Independent, Telegraph, Evening Standard and BBC.

© 2016. The entire contents of this publication are protected by copyright. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means: electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. The views and opinions expressed by independent authors and contributors in this publication are provided in the writers’ personal capacities and are their sole responsibility. Their publication does not imply that they represent the views or opinions of the African Union or Newsdesk Media and must neither be regarded as constituting advice on any matter whatsoever, nor be interpreted as such. The reproduction of advertisements in this publication does not in any way imply endorsement by the African Union or Newsdesk Media of products or services referred to therein.

6 | Invest in Africa 2016

SHARING THE VALUE WE CREATE Randgold Resources is committed to the principle that the countries and communities in which we operate should benefit fully from our activities. By putting this partnership philosophy into practice, we not only contribute substantially to our host gover nments’ revenues through taxes and royalties, but also create jobs and develop skills, open up economic opportunities, build infrastructure and improve the quality of life in regions which are remote and often deprived.

LSE : RRS • NASDAQ : GOLD

www.randgoldresources.com

Randgold Resources is an Africa-focused gold mining group with mines and projects in Mali, Côte d’Ivoire, the Democratic Republic of Congo and Senegal.

dPA 5915

Rangold_placed.indd 7

14/12/2015 14:16

This is where we add value To naTural resources For over six decades we’ve beneficiated natural resources by converting coal, and more recently natural gas, into liquid fuels, high-value chemicals and low-carbon electricity. Adding value to precious resources, is just one way we’re investing in South Africa’s success.

www.sasol.com

Saslo_Contents_placed.indd 1

26/09/2014 11:42

foreword

HE Dr Nkosazana Dlamini Zuma Chairperson of the African Union Commission

t is my distinct pleasure to welcome you to the 2016 edition of Invest in Africa, in which we follow Africa’s growth trajectory, looking at developments across the continent and identifying the myriad opportunities available to be seized by domestic and foreign investors. 2016 is an important milestone that reflects Africa’s paradigm shift, as embodied in the African Union’s Agenda 2063, which we adopted in 2015, along with its first 10-year implementation plan. This strategic framework for the transformation of the continent strives towards “an integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena”. Governments are integrating this framework into their national development plans in line with previous initiatives, such as the New Partnership for Africa’s Development. These roadmaps offer both a vision and a policy framework through which we can tackle the critical challenges facing Africa. As we celebrate the important political, social and economic strides achieved by Africa and its increasing instrumental and critical role in the international arena, we recognise that claiming the 21st century as the African century is our end goal.

Africa’s Agenda 2063 and the SDGs

The 20 goals of our Agenda 2063 align with the United Nations’ 17 Sustainable Development Goals, launched at the end of last year. They replace the Millennium Development Goals, on which many African countries made significant progress. Ending poverty, achieving food security and improved nutrition, and 8 | Invest in Africa 2016

promoting peaceful and inclusive societies are just a few of the key areas that reflect the synergy with our development goals for Africa. To achieve our goals by 2063, we have laid out a 10-year implementation plan that allows us to review progress in the short, medium and long term. As well as a holistic strategy for growth and development, the African Union is also tackling topical issues each year. We declared 2015 the Year of Women’s Empowerment for the Realisation of the African Union Agenda 2063, and various initiatives were launched to increase women’s economic participation and bring broad gains to African societies. We have dedicated 2016 to the promotion of human rights in Africa with particular focus on the rights of women.

The Africa we want

Economically, Africa remains a continent of huge opportunities. We welcome foreign partners to participate in our favourable business environment, and we are focused on creating valuable work that empowers our citizens – women and youth in particular – and brings broad-based benefits to African economies. Reducing unemployment is a core facet of our growth plans, in which we have committed to halving the underemployment rate over the next decade. Africa is on an irreversible path towards sustainable and equitable development, and with that comes peace, prosperity and opportunity for all. The commitment to our aspirations is strong and the vision of our union is ambitious, but achievable, and I am confident that we will gain the Africa we want. •

claiming the 21st century as the African century is our end goal

TRAVEL THE WORLD IN STYLE. Rejuvenate on a 2m fully flat bed, dine on Belgian Star Chef gourmet cuisine, and watch your favorite stars on a 15.3â&#x20AC;? touchscreen monitor. brusselsairlines.com

bair-africa-magazine-invest-dec15.indd 1 Brussels Airlines_placed.indd 8

06/01/16 10:39 06/01/2016 10:05

Foreword

HE Erastus Mwencha Deputy Chairperson, African Union Commission

elcome to Invest in Africa 2016, an important resource that gives a unique insight into African markets, highlighting key opportunities for foreign investors while also assessing the continent’s development progress. We are in the early stages of Agenda 2063, a comprehensive 50-year framework that emphasises the importance of pan-Africanism. Fostering unity, solidarity and economic independence are central to Africa’s long-term development plans, and we must overcome hurdles where they appear to ensure their success. We are currently working within the African Union Commission’s Strategic Plan 2014-17, which seeks to place Africa on a positive development trajectory. Specifically, the plan targets accelerated continental integration; strengthened intra-African trade; enhanced agricultural productivity to improve food security; the development of human capital; and strengthened economic and political governance systems. Fostering a secure environment for all Africans is crucial to achieving prosperous and competitive economies. We live in uncertain times, and political stability must be realised everywhere before we can begin to grow our markets equitably and see the benefits felt by all. Delivering pan-African socio-economic development is central to our 2063 vision, and under the New Partnership for Africa’s Development, the African Union is addressing critical challenges facing the continent. In the area of agriculture and food security we have launched the Comprehensive Africa Agriculture Development Programme, which aims to eliminate hunger and reduce poverty through agriculture. We are also working in the areas of climate change and the environment, and are channelling efforts in regional integration and infrastructure towards ICT and transport development. The importance of education for all, research for health and the empowerment of women cannot be overstated, and we will continue to align our work with that of our partners to achieve the best results possible. African countries and their premier continental organisation, the African Union, play a dynamic role on the global stage, as we scale up our markets and our economies become increasingly competitive. Greater regional integration will enable Africa to build upon its competitive advantage, and with all our efforts, I am confident that our 2063 vision can become a reality. •

p52

For more on regional integration

Invest in Africa 2016 | 9

First Standard Information Technologies Limited www.firststandardit.com | info@firststandardit.com First Standard Information Technologies (FSIT) Limited is a full-service technology company. The companyâ&#x20AC;&#x2122;s trained and experienced professionals are certified to deliver consulting, infrastructure and software development solutions that increase productivity and competitiveness and reduce expenditure. Services offered include hardware and software procurement and support; software design; website development; ICT facilities management; and infrastructure setup, among others. FSIT plans and executes countrywide projects and implements turnkey ICT solutions under tight schedules and within budget. It has the capability to plan, install, implement and manage all kinds of installations and has the financial capacity to undertake any ICT project. FSIT also provides 24-hour customer support and continuously updates its clients on the latest technology.

ABC Human Development Consultants

Management Consultants

ABC Human Development Consultants Limited www.abchdconsultants.com | info@abchdconsultants.com ABC Human Development Consultants Limited is a leading provider of corporate training in management, leadership, marketing, accounting and public relations. The company provides creative leadership and management solutions to give its clients a competitive edge. ABC Human Development Consultants Limited partners with its clients to deliver a variety of services that extend, but are not limited, to learning and human capital development; corporate re-engineering and restructuring; organisational due diligence and audit; and headhunting and business advisory. ABC Human Development Consultants Limited is a Certified Management Organisation (CMO) by The Nigerian Institute of Management (NIM). We are also an Accredited Management and Training Institution by The Centre for Management Development (CMD). Over the years, we have been a Corporate member of both the Nigerian Institute of Management (NIM) as well as the Nigerian Institute of Training and Development (NITAD) in Nigeria and also an Accredited Learning Partner of the prestigious International Institute of Leadership Studies (IILS).

LAGOS Standard Group House 130A, Association Road, Dolphin Estate Ikoyi, Lagos T: + 234 1 792 9108 | +234 805 655 4455

IBADAN Standard Villa, Forest Hill, Mahogany Estate, New Jericho GRA, Jericho, Ibadan, Oyo State T: +234 807 589 4032

ABUJA Standard Suite, Stallion Estate Block C, Flat 5, Lobito Crescent Wuse 2, Abuja T: +234 803 643 0643

PORT HARCOURT 11B, Circular Road Presidential Estate Port Harcourt, Rivers State T: +234 807 589 4035

LONDON (CORRESPONDENCE) E333, New Providence Wharf, 1, Fairmount Avenue London E14 9PX T: + 44 745 927 7741 | +44 7939 616 827

UAE Oxford Tower, Suite 904, Business Bay, Dubai, UAE T: +971 55965 9416

Standard Group_placed_opp_pres_page.indd 58

14/12/2015 14:20

Introduction

HE Fatima Haram Acyl Commissioner for Trade and Industry, African Union Commission

uilding the future we want for Africa is at the heart of Agenda 2063 – the African Union’s continent-wide development framework that targets sustainable economic and social transformation. Our shared vision for Africa is that of a prosperous, integrated and thriving continent, with trade development being central to this noble endeavour. In June 2015, 26 African countries signed the Tripartite Free Trade Area Agreement, which aims to eliminate tariff and non-tariff barriers among the signatory nations. Benefits of the agreement include liberalised intra-regional trade, which will likely boost the flow of goods and services. Last June also saw our heads of state and government launch the negotiations towards the establishment of the Continental Free Trade Area (CFTA) by 2017. The CFTA is an important milestone of Agenda 2063, and it will contribute to dismantling barriers to intraAfrican trade while boosting productivity and competitiveness.

SMEs comprise around 90% of all businesses across the continent... and are key to economic development

Advancing industrialisation

Investment is crucial to achieving the various goals of Agenda 2063. Africa’s gross domestic product is expected to grow to 5% this year, reflecting sustained and increasing confidence in African markets and products. One area of particular importance to Africa’s development pathway is industrialisation, which is partly occurring through the beneficiation and value addition of natural resources. This aligns with the United Nations Sustainable Development Goal to “build resilient infrastructure, promote inclusive and sustainable

industrialisation and foster innovation”, and it is vital that we mobilise leaders and international organisations to champion the development of industry. Financing domestic industries, developing agro-industry and encouraging small and medium-sized enterprises (SMEs) are areas of major focus for us at the African Union Commission (AUC).

SMEs: key engines of growth and jobs

Private-sector involvement is closely tied to the success of SMEs, which are a vital engine of poverty eradication and job creation, especially for women and youth. SMEs comprise around 90% of all businesses across the continent, contribute to poverty reduction and are key to economic development, as they diversify incomes and allow marginalised groups to enter national, regional and international value chains. They are an important component of economic transformation and so it is crucial that we unleash their power. Development of SMEs is a priority for the AUC, which encourages member states to implement policy instruments and measures that support them. The AUC is currently building the Continental SMEs strategy, which will define the priority intervention areas where there is a need to support Africa’s regional economic communities and AU Member States over the next five years. Africa’s economic transformation will result in more shared growth and better employment opportunities. Establishing institutions to improve productive capacity and market access, addressing deficiencies in the business environment and filling the gaps in infrastructure will all contribute to achieving the AU’s vision for Africa: an integrated, peaceful and prosperous continent, driven by its own citizens and representing a dynamic force in the global arena. • Invest in Africa 2016 | 11

Nissan_placed.indd 5

14/12/2015 13:30

360ยบ

Nissan_placed.indd 6

14/12/2015 13:30

This is where we Transform gas inTo elecTriciTy Through South Africa’s first stand-alone gas-to-power plant, that converts natural gas into low-carbon electricity, we’re reducing pressure on the country’s power grid. Being able to self-generate up to 70% of our own electricity requirements, is just one way we’re investing in South Africa’s success.

www.sasol.com

Sasol_Oli_Gas_placed.indd 1

26/09/2014 11:43

Introduction

Stephen Hayes President, Corporate Council on Africa

s Man has attempted to find ways to make life easier, to make the pace of development faster, we have ironically created a far more complex world, where change moves faster than many can adapt. Information technology makes it easier to communicate and, at the same time, makes information and the accompanying chaos more accessible as well. Education raises whole villages and societies. We find ways to produce more food, but yet we have hunger and threaten to displace those who have been married to the soil for centuries. We have created a world so complex that greater, not less government is required. Leadership for the future is essential, perhaps more than it has ever been. If an institution like the African Union (AU) did not exist, its invention would be immediately necessary. Because it does exist in an increasingly complex world, it must be reinvented daily to adapt to the changes that swirl like a Saharan sirocco.

The continent holds economic promise, not only for those who inhabit it, but also for investors

Adapting to change

Evolving trends in the economic, political and social space create new environments that governments and organisations like the AU must adapt to. It is easy to forget that the AU is a microcosm of the continent it represents, an organisation filled with different cultures, different religious beliefs, different competing interests, and it is its diversity that is behind its success. The organisation is a meeting ground for leadership. It is Africa’s house for communication and the foundation for developing strong and lasting

relationships among nations. Because it is not a governing body its power is limited, but without it, African unity on key issues such as peacekeeping and economic development would be almost impossible. Whether the issue be the ending of conflict or the development of economies – issues that are closely tied to one another – regional and continental cooperation is essential for positive, sustainable development. We all are aware of the enormous potential of Africa. The continent holds significant economic promise, not only for those who inhabit it, but also for investors the world over who recognise the benefits of doing business in Africa’s increasingly prosperous economies.

Africa is our best hope for the future

Africa has vast potential to overcome current development challenges – potential that will grow in tandem with new business partnerships and economic relations, which will in turn enhance the trade and investment environment. Investment in agriculture will underline the continent’s ability to feed the world’s growing population, while innovations in technology and communications will deliver globalisation and all its benefits to even the most remote corners of Africa. Africa has also seen the mistakes of development, the divisions of rich and poor, the environmental damage we have brought upon ourselves, and it has the potential to show the rest of the world how to get it right for the future. To achieve these goals, we need the AU. We must strive to support the organisation’s effectiveness, and that of all our other institutions intended to bring us together and solve the pressing national, regional and global challenges of today. • Invest in Africa 2016 | 15

ENERGY + opportunity

The Virunga Alliance is creating a new model for sustainable development through investment in the Eastern Democratic Republic of the Congo. Emphasizing transparency and equitable distribution of returns, it’s a compelling opportunity for principled investors to help bring about peace, initiate economic growth, and support conservation in one of the world’s most beautiful, yet challenging regions. BY HOWARD G. BUFFETT Just a few months ago, I stood on a hilltop overlooking an extraordinary ecosystem that I first visited in 1997 in nearby Uganda. This time I was in Virunga National Park in the Democratic Republic of the Congo. Virunga is a World Heritage site and home to a third of the world’s nearly 900 remaining mountain gorillas. It contains spectacular volcanoes and lush jungle. But within an hour’s walk of Virunga’s borders live four million of the poorest and most marginalized people on the planet. An estimated six million Congolese have died since 1994 due to the effects of persistent conflict. Only 26 percent of the population has access to safe drinking water and the vast majority has no electricity and minimal educational and healthcare resources. Fifteen years ago we began supporting conservation efforts to protect the Great Lakes Region. In 2012 when conflict erupted again in Eastern DRC, we partnered with Virunga’s Chief Warden Emmanuel de Merode. We changed our investment strategy to include the needs of the surrounding communities. Emmanuel and I agree on a fundamental philosophy: to preserve fragile ecosystems, we must first ensure the people living nearby have viable livelihood options. As a friend once told me, “No one will starve to save a tree.” Behind where Emmanuel and I stood overlooking the Rutshuru River was a hillside full of construction equipment and local workers welding giant pipes and setting huge generators in place. That activity signaled something very different and very exciting—the engine of economic opportunity. In December 2015, we will flip the switch on a 12.6 MW hydroelectric plant here at Matebe, funded with a $20 million investment from our Foundation.

Howard_Buffett_Foundation_placed.indd 2

That milestone could push the region into a new economic era. For the first time, 30,000 local people will have access to electricity. The plant has already created hundreds of construction and maintenance jobs but promises to create thousands more by using plentiful, renewable hydro power to attract agroprocessing plants and other businesses. Onsite worker facilities will be converted to vocational training schools. Profits generated by the power plant will fund park operations and community development. A smaller pilot plant in the nearby village of Mutwanga is already providing free electricity to hospitals and schools. Based on the Mutwanga pilot, we estimate that we will generate 800 to 1,000 jobs per megawatt–or up to 12,600 jobs at Matebe. The long term plan is to generate nearly 100 MW from Virunga’s water resources by building a total of eight power plants by 2022. It’s a big idea based on investment, not charity. It is the kind of investment that 15 years of intense work in Africa and Latin America has convinced me is the only way to have impact. It is also the kind of approach that we want to encourage all stakeholders, including provincial and national governments, the private sector, the philanthropic community, and for-profit investors to join us in supporting. We believe the Virunga Alliance will be a new model for development in the DRC because it addresses a reality that is often lacking in conservation: local populations bear the opportunity cost of conserving ecosystems for the world’s benefit. Any sustainable solution must compensate and include them. At two million acres, the Alliance estimates that preserving the Virunga ecosystem from extractive industries and agricultural development costs $500 per month per acre—or $1 billion a year. That’s not an opportunity cost hungry people can afford.

14/12/2015 13:28

The Foundation has funded feasibility studies for nearly 100 MW of hydropower at eight locations from rivers originating in Virunga National Park. The Virunga Alliance, with financing provided by the Howard G. Buffett Foundation, has completed one pilot site at Mutwanga, is nearing completion of a second site at Matebe and is beginning work at Lubero and Talya Nord.

As Emmanuel explains, “The two most underutilized resources in the park are water and people.” Unemployment exceeds 75 percent and contributes to conflict when young men cannot find work and instead join armed groups. Congolese farmers work very hard, but today they are limited to selling crops locally for low prices. Electricity-enabled processing capacity can help move them up the value chain and increase prices for crops. The Virunga Alliance has brought together more than 127 local institutions committed to the development of the park’s resources through tourism, rural electrification, sustainable fisheries, and agriculture. Alliance members have pledged to operate in a transparent way while respecting the ecosystems in which they are working. The Alliance has vowed to return profits to benefit local people. The Virunga Alliance is a permanent commitment among stakeholders whose futures depend on its success. This has been a challenging and at times even dangerous journey. When the project broke ground in late 2013 amidst active conflict, our worksite was shelled, but our investment commitment never wavered. We could not afford to wait for an uncertain peace so we proceeded with the faith that jobs are an attractive alternative to violence. In fact a key element of the plan is to use five to eight percent of the jobs generated to reintegrate former combatants into the legal workforce. Our foundation is committed to investing where others may see the risks as too high. We are already cofinancing two additional hydro plants and other public works projects to create immediate jobs while the longterm development takes hold. Our investments in the Great Lakes Region are on track to exceed $700 million by 2018. We hope these investments will lower the risks for others to invest. Watching the workers complete the final stages of this landmark hydroelectric plant was a humbling experience. Much is happening; much is at stake. The ultimate objective of our investments and of the Virunga Alliance is to bring peace and stability to a part of the world that is tired of conflict. THE

HOWARD

BUFFETT FOUN DATION

about the author This 12.6MW hydroplant at Matebe in Rutshuru, North Kivu, DRC will be inaugurated in December 2015. It will generate power for 30,000 local residents and encourage investment in agroprocessing to create an estimated 800 to 1,000 local jobs per MW.

Howard_Buffett_Foundation_placed.indd 3

Howard G. Buffett is Chairman and CEO of the Howard G. Buffett Foundation. The Foundation invests in food security, water security and conflict mitigation efforts, with experience working in 44 countries in Africa. Mr. Buffett is a permanent resident of South Africa and has traveled to all 54 countries on the continent.

14/12/2015 13:28

the new path

The road to Agenda

the new path

2063 Investment in Africaâ&#x20AC;&#x2122;s transport links is partly behind greater regional integration and new economic opportunities across Africa

Carl De Souza/AFP/Getty Images

18 | Invest in Africa 2016

the new path

Having set out a comprehensive plan for positive socio-economic transformation, Africa now faces the challenge of implementation, as Sarah Rundell reports

frica’s latest high-speed railway line links the Ethiopian capital Addis Ababa with the Red Sea state of Djibouti. The Chinese-built, $3 billion track runs parallel to the old Ethio-Djibouti railway and is one of many new lines under construction across the continent, from Nigeria to East Africa. The investment that is beginning to transform Africa’s railways is a cause of celebration for the architects of Agenda 2063. The African Union’s (AU) 2063 roadmap was adopted in 2015 to drive the continent’s socio-economic transformation over the next 50 years, in conjunction with parallel initiatives, such as the New Partnership for Africa’s Development (NEPAD). And it highlights infrastructure as crucial for development and continental integration. High-speed train services criss-crossing Africa can be combined with information and communication technologies, oil and gas pipelines and adjacent highways to boost intra-regional trade and travel, accelerating growth. The AU has set waymarkers for its journey to 2063 through short, medium and long-term goals that range from creating a continent wide e-Network to introducing an African Invest in Africa 2016 | 19

the new path passport. Now in its first 10-Year Implementation Plan, 2013-23, important milestones are already within reach, such as the completion of flagships projects that will impact on socio-economic development. Agenda 2063 injected fresh dynamism into another cherished African dream when it pledged to double intra-African trade by 2022, encouraging member states to reduce trade barriers and waive visa requirements. Leaders have long aspired for goods and people to travel freely within the continent, boosting development and job creation. Yet, trade between the continent’s 54 countries remains stubbornly low, accounting for just 12% of Africa’s total trade, according to the United Nations Conference on Trade and Development (UNCTAD). Trade is still characterised by raw material exports and imports of finished products, mostly from China. Africa’s smaller countries still seek to protect their economies from competition with tariffs and duties.

Taking a long-term view

Agenda 2063 has been a catalyst for recent progress, including the launch of a Tripartite Free Trade Area (TFTA) between Africa’s biggest trading blocs, the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC) and the East African Community (EAC). By 2017, the TFTA will create Africa’s largest free trade zone, stretching from Cape Town to Cairo. This step, it is hoped, will lead to the realisation of other, longer-term goals, such as the establishment of new pan-African financial institutions. In its bid to nurture an African economic community, the AU plans for an African Investment Bank, an African Stock Exchange, an African Monetary Fund tasked with a mandate that mirrors the International Monetary Fund and an African Central Bank. In keeping with Agenda 2063’s central ethos that Africa should take responsibility for its own development, much of the financing for its ambitious projects must come from within the continent. With this in mind, the AU is working with the continent’s own financial institutions and markets to encourage investment, exploring sources such as diaspora-linked bonds, improved tax collection, as well as working to halt illicit capital flows. Another potential source of investment is Africa’s growing pension funds, which have assets estimated at $310 billion. Those assets are forecast to grow in the six largest subSaharan African markets to $622 billion by 2020 and $7.3 trillion by 2050, according to Renaissance Capital. Achieving Agenda 2063’s flagship projects will not be easy. But, if Africa continues to build on its success, the dream of an integrated, prosperous and peaceful continent looks to be increasingly within reach. •

The Tripartite Free Trade Area will create the continent’s largest free trade zone

20 | Invest in Africa 2016

Flagship projects under Agenda 2063 grand inga dam Project Agenda 2063 has cast the spotlight back on one of Africa’s most ambitious infrastructure projects. The hydropower scheme at Inga Falls, on the mighty River Congo in the far west of the Democratic Republic of the Congo (DRC), lies undeveloped decades on from its original promise. At its most ambitious, the Grand Inga Hydroelectric Project will comprise seven hydroelectric power plants with the potential to produce 42,000MW of power. The entire project could one day transform Africa’s existing electricity production capacity, put at just 147GW by the African Development Bank, and solve rolling blackouts caused by power shortages in markets such as Nigeria and South Africa through power exports. To date, the dam still consists of Inga 1 and 2, built decades ago and in a state of disrepair. Development of the project’s first-stage 4,800MW Inga 3 got a boost last year after South Africa said it would buy much of the power produced, therefore making the Inga 3 project financially viable. In 2014, the World Bank also approved $73 million to support the third dam, where construction is now slated for 2017.

High-speed rail network The AU’s Africa Integrated High-Speed Train initiative will connect all African capitals and commercial centres with a vast network of rail linkages. Projects that will form part of Africa’s comprehensive rail network include the East African Railway Master Plan, which hopes to revive existing lines in Kenya, Uganda and Tanzania, eventually extending them to Rwanda, Burundi, South Sudan and Ethiopia. Meanwhile, China Railway Construction Corp last year signed a $3.5 billion contract to build an intercity rail line in Nigeria, following on from a $12 billion contract for another Nigerian rail line planned to run 1,400km along the Nigerian coast.

the new path

the african passport and free movement The introduction of an African passport is a flagship initiative of Agenda 2063, as the AU seeks to transform Africa’s laws to lift current restrictions on the movement of people. A number of member states of the AU have made commitments that align with the union’s plans to create “a continent with seamless borders”, and Rwanda and Mauritius are already implementing the plan. The African passport will enable the free movement of people across the continent by abolishing visa requirements for all African citizens in all African countries by 2018, according to the African Development Bank (AfDB). It is hoped that the project will also ease the movement of domestic goods between AU member states and improve intra-African trade. The plans come at a time when the AfDB has released its first Africa Visa Openness Index, which ranks countries based on their level of openness and how restrictive their visa regimes are. Its aim is to highlight barriers to movement and trade and enable people to become more mobile within the continent. The AfDB says there are huge potential gains to be had for African countries and regions that adopt open visa policies for their African neighbours. The plans mirror open-border policies elsewhere, such as the Schengen Area, where 26 European countries lifted border controls (although some are reinstating them after recent terror attacks). As well as boosting trade, the application of a similar policy in Africa is expected to enhance integration and better connect African countries – core targets of Agenda 2063.

Pan-African virtual university Agenda 2063 promises to tackle Africa’s education deficit by boosting open and distant learning through an African-wide e-university. It is a model pioneered by the Nairobi-based African Virtual University (AVU) partnering with the AU. Through its open and distant education programmes, the AVU has trained more than 43,000 students and established the largest network of distance and e-learning institutions in 29 African countries since opening in 1997. Other Agenda 2063 goals include improving access to space technology to boost agriculture, provide better disaster management and counter the effects of climate change.

African commodities strategy

Plans under the Agenda 2063 commodities strategy include implementing the African Mining Vision and supporting countries as they diversify their commodities and integrate into global value chains.

annual african forum

Africa’s political leaders, the private sector, academia and civil society will be represented at this annual meeting, where they will discuss how to move towards the goals of Agenda 2063.

continental free trade area

This flagship project will establish a free trade area by 2017, aiming to double intra- African trade by 2022. It will strengthen Africa’s role in global trade negotiations and enable the smoother flow of goods and services across the continent and beyond.

the pan-african e-network

A wide range of stakeholders will develop policies and strategies for Africa’s e-services sector, as the continent moves towards becoming an e-society. Internet infrastructure and cybersecurity are key areas of focus in Africa’s information revolution.

silencing the guns

Progress made on the AU’s stated goals of ending all wars, civil conflicts, gender-based violence and violent conflicts will be monitored using the new African Human Security Index.

African outer space strategy

Agenda 2063 aims to strengthen Africa’s space capabilities to support development in areas such as agriculture, climate forecasting and defence and security. Satellite developments have made the technology accessible to African countries.

single air transport market

Africa’s aviation industry is growing, with passenger numbers continuing to rise. This project aims to transform the sector, enabling more people to reach new destinations.

african financial institutions Agenda 2063 will oversee the establishment of important new financial institutions in Africa, including the African Investment Bank and Pan-Africa Stock Exchange, the African Monetary Fund and the African Central Bank.

Invest in Africa 2016 | 21

the new path The Seven Aspirations of Agenda 2063

1 2

A prosperous Africa based on inclusive growth and sustainable development An integrated continent, politically united, based on the ideals of pan-Africanism, focusing on liberation, and political and economic independence

3 4 5 6

An Africa of good governance, democracy, respect for human rights, justice and the rule of law A peaceful and secure Africa

An Africa with a strong cultural identity, common heritage, values and ethics An Africa whose development is people driven, relying on the potential offered by African people, especially its women and youth, and caring for young children

An Africa as a strong, united and influential global player and partner

22 | Invest in Africa 2016

Correlation between targets set in Africa’s Agenda 2063 and the United Nations 2030 Sustainable Development Goals will drive momentum for both roadmaps

Common goals

he transformative goals enshrined in the African Union’s Agenda 2063 (see page 24) got a boost in 2015 from the announcement of the United Nations Sustainable Development Goals (SDGs). The world’s new development agenda, drawn up in 2015 to replace the expired Millennium Development Goals, aligns with and focuses on the majority of Agenda 2063’s key goals in a way that will ultimately drive both agendas. The two agendas differ in a few areas. Agenda 2063 is Africa’s own strategy for development, characterised by specific African targets in areas including education and water provision. For all members of the United Nations, the SDGs have broader, global aims. However, both development blueprints share broad outcomes, ranging from working to eradicate poverty and inequality by fostering economic growth through the full participation of women and youth, to tackling climate change and building resilient infrastructure. This synergy should provide an encouraging crossover that will lead to real progress for both development agendas. Obvious similarities include their joint pledges to improve governance, now considered a central pillar of global development. Agenda 2063 stresses the importance of good governance, peace and justice in one of its seven ‘aspirations’ (see left) and the SDGs aim to foster peaceful and inclusive societies by 2030. Leaders say good governance is best achieved by working with Africa’s own

institutions. Regional economic communities (RECs) will play a key role in the effective implementation of good governance at a country level, offering structured planning for policy and financing via responsible and capable organisations. RECs could also provide support around governance by ensuring that influential countries set good examples for the small countries within their communities.

Peace, conflict and development

Another aim of the SDGs, also in tune with Agenda 2063, is the grouping of peace and security issues under the development banner. The negative impact of conflict on development, ranging from falls in education provision to plunging private investment flows, is a central theme in both agendas. A spotlight – all the brighter for its presence in both agendas – on the role of peace and security in development will help direct more attention to conflict-preventing factors such as equity, inclusiveness and the rule of law. The Common African Position (CAP) – a consensus among African leaders, civil society and the private sector that emerged during the post-2015 development agenda consultation process – reinforced the synergy between the two agendas. Via CAP, African nations have raised their own particular concerns within the SDGs around key areas, including the financing mechanisms available to accelerate progress. Both Agenda 2063 and the SDGs reflect on the importance of increased

the thenew newpath path

The United Nations headquarters in New York. The UN SDGs align closely with the African Union’s Agenda 2063

foreign direct investment to finance development as official aid flows into Africa continue to decline. Africa, a long-standing recipient of official development assistance (ODA) is expected to see less incoming aid going forward, and it already receives less ODA than private investment.

UN Photo/Cia Pak

Resource mobilisation

According to the Organisation for Economic Co-operation and Development, official bilateral aid to Africa fell by 10% in real terms in 2012, and by about 5% in 2013, despite an increase in ODA to all developing countries. And according to a paper on private capital flows from the Brookings Institute, in 2012, ODA accounted for about 22% of external flows to Africa, remittances accounted for 24%, but gross private capital flows accounted for 54%. With these trends in mind, CAP has highlighted a blend of financial sources to help the continent fulfil its aims. It is a strategy that prioritises domestic resource mobilisation at a challenging time when global oil and commodity prices are low. Sources include improving traditionally low domestic tax collection rates, staunching the flow of illicit flight capital and recovering stolen assets. African leaders should tap global financial

Like Agenda 2063, the SDGs renew focus on equality, women’s development and the fight against diseases

markets as well as Africa’s own markets for finance. Efforts are also required to step up intra-African trade, SouthSouth cooperation and public-private partnerships, as opposed to handouts. Like Agenda 2063, the SDGs renew focus on equality, women’s development and the fight against diseases. HIV/AIDS, malaria, tuberculosis and other tropical diseases continue to set back wealth accumulation and development. “Fifteen countries, mainly in sub-Saharan Africa, accounted for 80% of malaria cases and 78% of deaths globally in 2015,” says the World Health Organization. In addition to the human cost, the Ebola epidemic, which hit Guinea, Liberia and Sierra Leone from early 2014, could cost the West African region Ebolarelated losses of $3.6 billion per year between 2014 and 2017, due to a decrease in foreign direct investment, border closures and flight cancellations, according to the United Nations Development Programme. The synergy between Africa’s 2063 strategic framework and the SDGs will help drive both agendas. Both require greater support from Africa’s population and the international community to tackle the continent’s most enduring challenges. However, thanks to this alignment of goals, and the active mobilisation of international support for Agenda 2063, Africa will achieve its vision of becoming “an integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena.” •

15 80% African countries accounted for

of deaths globally from malaria in 2015

An overview of how the goals converge

Invest in Africa 2016 | 23

the new path

Agenda 2063 goals

and the

SDGs 24 | Invest in Africa 2016

Priority areas

High standard of living, • Incomes, jobs and decent work • Poverty, inequality and hunger quality of life and wellbeing for all citizens • Social security and protection, including persons with disabilities • Modern, affordable and liveable habitats and quality basic services

Well-educated citizens and a skills revolution, underpinned by science technology and innovation

• Education and science, technology and innovation driven skills revolution

03 04

Healthy and well-nourished citizens

• Health and nutrition

05 06

Modern agriculture for increased productivity and production

• Agricultural productivity and production

Blue (ocean) economy for accelerated economic growth

• Marine resources and energy • Port operations and marine transport

Environmentally sustainable and climate resilient economies and communities

• Sustainable natural resource management • Biodiversity conservation, genetic resources and ecosystems • Sustainable consumption and production patterns • Water security • Climate resilience and natural disasters preparedness and prevention • Renewable energy

08 09

A united Africa (federal or confederate)

• Frameworks and institutions for a united Africa

Continental financial and monetary institutions, established and functional

• Financial and monetary institutions

World-class infrastructure criss-crossing Africa

• Communications and infrastructure connectivity

2063

Convergence of Agenda

Transformed economies • Sustainable and inclusive economic growth • Technology and innovation driven manufacturing, industrialisation and value addition • Economic diversification and resilience • Tourism/hospitality

SDGs 1

3 8

2 7

13 15

the new path

Agenda 2063 goals

Priority areas

SDGs

Democratic values, practices, universal principles of human rights, justice and the rule of law entrenched

• Democracy and good governance • Human rights, justice and rule of law

Capable institutions and transformative leadership in place

• Institutions and leadership • Participatory development and local governance

Peace, security and stability is preserved

• Maintenance and preservation of peace and security

A stable and peaceful Africa

• Institutional structure for AU instruments on peace and security • Defence, security and peace

12 13 14 15 16 17 18 19 20

A functional and operational APSA

• Fully operational and functional African peace and security architecture all pillars

African cultural renaissance is pre-eminent

• Values and ideals of pan-Africanism • Cultural values and African renaissance • Cultural heritage, creative arts and businesses

Full gender equality in all spheres of life

• Women and girls empowerment • Eradication violence and discrimination against women and girls

Engaged and empowered youth and children

• Youth empowerment and children’s rights

Africa as a major partner in global affairs and peaceful co-existence

• Africa’s place in global affairs • Partnerships

Africa takes full responsibility for financing her development

• African capital markets • Fiscal systems and public-sector revenue • Development assistance

p116

The sustainable development goals

16 16

5 4

end poverty

Zero Hunger

ood health G and well being

Quality education for all

Gender Equality

clean water and sanitation

Affordable and clean energy

Decent work and economic growth

Industry, Innovation and INfrastructure

REduced inequalities

Sustainable cities and communities

REsponsible consumption and production

Climate action

onserve life C below water

10 17

onserve Life C on land

Peace, justice and strong institutions

Partnership for the goals

responding to Africa’s healthcare challenges

Invest in Africa 2016 | 25

british american tobacco perspective

Building partnerships across East and Central Africa British American Tobacco (BAT) has been present in Africa from north to south and east to west for more than a century â&#x20AC;&#x201C; an operation existed in Mombasa as early as 1907. Since then, the company has established operations in most countries across Africa including Uganda, Tanzania, Democratic Republic of Congo, Ethiopia, Mauritius, Eritrea, Somalia, Somaliland, Rwanda, South Sudan and in the islands of the Indian Ocean. We are a global company with a global vision and a global strategy. Our vision is to be the best tobacco company, while our strategy is built on growing productively and yet sustainably with a winning organisation. Each individual operating companyâ&#x20AC;&#x2122;s strategy is localised to ensure domestic relevance, cultivating national pride and supporting local endeavour. This strategy, combined with world-class people and brands, have made BAT the most successful tobacco company in the African region, enjoying leadership positions in most of the East African Community markets.

British American Tobacco placed.indd 80

We inspire the next generation

At BAT, we have a long and proud history of agriculture, working directly with farmers around the world and advancing agricultural practices. Today, we continue to provide on-the-ground advice and support to our contracted farmers, develop new technologies and conduct cutting-edge research. The farmers we work with are valued business partners. We want them to feel confident about their future and to be self-sufficient and prosperous. This is not philanthropy; it is a pragmatic, commercial approach to securing our supply chain and ensuring the integrity and quality of our products to satisfy our consumers. We contract and support more than 5,000 small-scale local farmers in tobacco growing, providing expert technicians out in the field. We provide agronomy support and engage with farming communities on matters beyond tobacco farming, such as environmental protection and agricultural practices that might otherwise be beyond their reach. This

helps improve their quality and yields of food crops, making them more self-sufficient. We guarantee to buy a certain amount of tobacco from them each year. This gives them a regular income, enabling them to invest in their farms and build successful businesses. In Kenya, for instance, we pay more than $13 million annually directly to farmers. We work with farmers to mitigate and address the environmental impacts of tobacco growing. For example, our afforestation programmes, which have existed for more than 35 years, provides sustainable sources of the wood that is used in tobacco curing. We also work to source locally available alternative fuels, such as briquettes made of waste sugar bagasse.

Promoting entrepreneurship

Core to our culture at BAT is the principle of an enterprising spirit. We value enterprise from all of our employees and partners, giving us a great breadth of ideas and viewpoints to enhance the way we do business. This is the cornerstone of our success.

11/01/2016 14:08

british american tobacco perspective

Building businesses that last We work as partners with hundreds of thousands of retailers, wholesalers and distributors offering advice, support, inputs and training to help them run successful, profitable and high-yielding enterprises. As we grow our business, we want our partners to do the same. We actively conduct front line business training programmes and provide small business with access to tools, such as kiosks, sourced from local enterprises to secure and grow their enterprise. There are quite a number of examples of partners who we have grown with over the years. Many of them started off as single employees of their own enterprises, and have expanded these into respectable businesses that employ a multitude of staff. We have been able to achieve this through the right form of partnerships with entrepreneurs who are keen on developing their businesses.

Turning waste into enterprise Some of our local partners are transforming solid waste such as paper, plastic and wooden pallets from our factory in Nairobi into recycled hard solid board. This board can be used as a substitute for plywood, and its application varies from making furniture – such as school desks and chairs – and as a partition material in construction, as well as a decorative artefact. Other partners have initiatives to turn our waste, such as plastic straps and cotton twines, which were previously sent to the landfill, into colourful and functional everyday tools such as cleaning mops and woven baskets. This has enabled our factory to recycle more than 95% of its solid waste using these small enterprise businesses, which have innovated ways of turning the waste into ingredients or raw materials for producing their products. This provides our partners with a decent source of income.

We develop local expertise Our expertise has been developed through decades of sharing skills and knowledge across multiple cultures and ethnicities. Our research programmes are extensive and our investment is the highest in Africa.

British American Tobacco placed.indd 81

We are dedicated to developing the best products and understanding consumer needs. Central to our strategy is sustainable people development. We champion the enthusiasm of local talent and passionately encourage individuals to stretch their goals, challenging the status quo and finding their own limits – if they dare. We understand that to be industry leaders we must continue to demonstrate that we are a responsible tobacco group with outstanding people and superior brands that satisfy the needs of our consumers. We search the world for inspiration, harnessing the energy of the African spirit of innovation to deliver consumer satisfaction. Our desire is to create products that not only satisfy needs, but do so safely. We are proud to be the first global tobacco company to develop and market our own electronic cigarettes and publish extensive reports on our research internationally. This is what we do. This is what makes BAT a great company – a company with whom you can do business. For further information, please contact Simukai Munjanganja Head of Legal and External Affairs E: Simukai_Munjanganja@bat.com T: +254 (0) 20 285 8000 British American Tobacco East and Central Africa Area Likoni Road Industrial Area PO Box 30000-00100 GPO Nairobi, Kenya T: +254 (0) 20 285 8000 www.bat.com @BATPress www.youtube.com/welcometobat

Nyakana Tobacco Stores The story of Nyakana Tobacco Stores business began in 1964 when the founder, Ezra Nyakana, ventured into the cigarette business. After Uganda gained independence, the government decided to localise businesses to give the nationals a chance to develop financially. By that time, Nyakana had accumulated some capital – enough to take on the cigarette distribution business when the opportunity arose. Nyakana moved to take on distribution in the Rwenzori region, including in Kabarole, Bundibudyo and Kasese. The first tools of distribution were one Toyota Stout and a bicycle. The business remained resilient, surviving political turmoil, including the Idi Amin regime, largely due to the virtues of hard work, shrewd financial management and support from BAT. In 1980, Ezra appointed his daughter Beatrice Nyakana as managing director of the business. To date, the business is still thriving and has expanded its operations from the Rwenzoris to other parts of the country. Areas of operation include Hoima, Mubende, Masindi, Mityana and Wobulenzi.

11/01/2016 14:08

The new Path

2016: African year of Human Rights The African Union is focused on fostering peace, security and prosperity. In 2016, it is placing emphasis on promoting equal rights for all across the continent

30 | Invest in Africa 2016

he Year of Human rights is part of the African Unionâ&#x20AC;&#x2122;s (AU) promise to improve human rights throughout Africa, with particular emphasis on the rights on girls and women, building on gains from the 2015 Year of Womenâ&#x20AC;&#x2122;s Empowerment. Though 2016 has been dedicated to the human rights cause, work in this area has been ongoing. For the past two years, the AU has been working with partners across Africa in an initiative to help end child marriage. In a strategy that joins with governments to prioritise legal reform, improve education and economic opportunities for young women, as well as push for cultural changes within communities, the campaign is the first of its kind to try and end a practice that still blights development across the continent. According to global non-governmental organisation Human Rights Watch, 40% of girls marry before the age of 18 in sub-Saharan Africa, and African countries

40% of girls in sub-Saharan Africa marry before the age of 18

Lower child marriage rates result in better education and increased labour force participation for women iStock Images

account for 15 of the 20 countries around the globe most affected by child marriage. The United Nations agency UNICEF predicts the number of child brides in Africa will increase from 125 million to 310 million by 2050. Yet statistics show that once the rate of child marriage drops, so does violence against women and girls. Girls stay in school for longer, access health services and participate in the labour force. African governments are already signatories to many multilateral frameworks designed to improve gender equality, yet progress has been slow. Many societies have patriarchal cultures, and a lack of resources has also prevented real progress. Now, gender experts are seizing on Agenda 2063 to inject fresh vigour into the debate, arguing that “an integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena” will never be achieved without female empowerment.

Throughout 2015, women’s leaders pushed for better enforcement of current policies, a shift of mindset and the allocation of more resources to improve equality. Leaders focused on areas where there has been the least progress in gender equality, including agriculture, economic empowerment, health, peace and security. The focus ranged from working to enhance land ownership for women, to improving access to green technology, and enabling women and young girls to access venture finance. Efforts also centred on encouraging female inclusion in formulating and implementing public health policy, as well as building the role of women in conflict prevention, resolution and post-conflict peacebuilding.

Greater female participation

While experiences across Africa vary dramatically, there are signs of progress. Afrobarometer, an African-led research project that measures citizens’ attitudes to democracy, governance and other issues, found that in 15 surveyed countries, support for equality has increased. In a continent where customs often carry as much weight as constitutional laws, particularly in remote regions, three quarters of women believe they should have the same rights as men rather than being subject to traditional law. The research group also found that although women are less likely to vote or engage in forms of political participation, they are more politically active than men at grassroots level. The fact that Africa has a growing number of women in leadership roles will also encourage greater equality. Within the last decade, Africa has elected two female heads of state: Ellen Johnson Sirleaf in Liberia and Joyce Banda in Malawi. In Rwanda, 64% of parliamentary seats are held by women, and gender rights are enshrined in the constitution because women demanded to be included in solving their country’s challenges •

Xinhua/Alamy Stock Photo

the new path

The Tunisian National Dialogue Quartet won the Nobel Peace Prize last year

Achieving peace in tunisia

The Tunisian National Dialogue Quartet, a coalition of employers, human rights activists, unionists and lawyers, won the 2015 Nobel Peace Prize. It received the prestigious prize for its role in bringing Tunisia back from the brink of civil war during the Jasmine Revolution. Noting “its decisive contribution to the building of a pluralistic democracy in Tunisia in the wake of the Jasmine Revolution of 2011”, the prize celebrated the pursuit of dialogue instead of conflict.” Tunisia’s prize is an irreversible milestone on Africa’s road to promote, defend and protect rights and liberties in a year during which the African Union has prioritised human rights, with particular focus on the rights of women.

The African Union’s theme for 2016 calls for greater efforts towards achieving gender equality Invest in Africa 2016 | 31

The new Path Gender equality and women’s empowerment are now anchored in Africa’s agenda, but there is still work to be done, particularly in relation to peacekeeping operations, says Pamela Whitby

Making women mainstream agents of peaceful change 2015 milestones African Union leaders declared 2015 the Year of Women’s Empowerment & Development towards Africa’s Agenda 2063 The UN set 17 Sustainable Development Goals, one specifically dedicated to women’s rights, to replace the Millennium Development Goals Five years into the AU’s African Women’s Decade (2010-2020) 10 years since the AU’s Declaration on Gender Equality 15 years since the adoption of UN Security Council Resolution 1325 on Women, Peace and Security 20 years since 189 governments signed the UN Beijing Declaration and Platform for Action 29 since the proclamation of the African Charter on Human and Peoples’ Rights 30 | Invest in Africa 2016

n Africa, around 70% of crops are produced by women, yet they still own just 2% of the land. Typically, women’s wages are 30% lower than those of their male counterparts; two-thirds of African women are functionally illiterate; and one in three will experience violence during their lifetime. Though there are some success stories – four of the world’s top 10 countries for the representation of women in parliament are in Africa – the average across the continent is just one in five. These are among the reasons for the frustration of Phumzile Mlambo-Ngcuka, Executive Director of UN Women, a global body dedicated to gender equality, at the “painfully slow and uneven progress” made since Beijing in 1995, when a historic roadmap was set for women’s rights. For the South African activist who was speaking to UN magazine Africa Renewal in an interview last year, however, today where the need for a focus on women’s equality is most pressing is in Africa’s conflict zones. “This is where women are in the eye of the storm. The rise of fundamentalism and its hatred of girls is a major setback for women’s advancement,” Mlambo-Ngcuka said. The abduction of the so-called ‘Chibok’ girls by the militant Islamist group Boko Haram from their secondary school in Nigeria in 2014 throws the point into sharp relief, and is part of a wider

problem. In fact, Amnesty International estimates that at least 2,000 women and girls have been abducted by Boko Haram since early 2014.

Women and peace

Over the past few decades, it has been recognised that women’s participation in peace processes is crucial to their advancement. Yet today, according to non-governmental conflict resolution firm Accord, the African Centre for the Constructive Resolution of Disputes, African women remain largely marginalised from participating in the mediation process. This point is backed up by a 2011 study by UN Women that looked at 31 major peace processes spanning two decades; it found that only 4% of signatories were women. More recent data from one major UN mission in Africa named MINUSCA – Multidimensional Integrated Stabilization Mission in the Central African Republic – shows that in October last year, of the 11,096 UN peacekeepers deployed that month, fewer than 3% were women. It is a similar story across other UN missions in Africa. According to Accord, while it is increasingly the norm for planners to include gender dimensions in peacekeeping operations whether civilian, military or police, more work is needed to include women at higher levels of the process.

70%

of crops in Africa are produced by women, yet they still own just

2% of the land

Godong/UIG via Getty Images

the new path

Gender mainstreaming in the regions

One strategy that the African Union (AU) is pursuing to address how women experience conflict is gender mainstreaming. This is defined as the process of assessing the implications for women and men of any planned action, including legislation, policies or programmes, in any area and at all levels. The ultimate aim is gender equality for both men and women across all areas of society.

Increasing effectiveness

Recognising that women’s equal participation leads to governments being more representative and accountable, the AU has put in place several policies, such as the Constitutive Act and the Women, Gender & Development Directorate to support gender mainstreaming. It has also developed a Gender Training Manual for peace support operations. However, Braude argues that there is a “need for further reflection on the central role of gender mainstreaming in peacekeeping operations in Africa to increase operational effectiveness”. •

Recent years have seen greater acknowledgement of the role of women in peace processes

Within Africa’s regional economic communities, the principle of gender mainstreaming and the systematic integration of women into all areas of society is acknowledged, at least in principle. With 2015 being the year that new UN Sustainable Development Goals replace the Millennium Development Goals, targets towards gender equality are being revisited. Within the South African Development Community (SADC), for example, a review of its Protocol on Gender and Development, which is yet to be adopted by Botswana and Mauritius, is under way. COMESA (the Common Market for Eastern and Southern Africa) is also in the process of reviewing its gender policy and gender mainstreaming strategic plan. The regional body, comprising 19 countries, views agriculture as the engine of economic growth in the region and recognises the important role women play in the sector. Speaking to the African Green Revolution Forum in September 2015, COMESA Secretary-General Sindiso Ngwenya acknowledged that women and youth are “drivers of the region’s economy through agriculture”. As such, “the cost to society of not investing in gender equality and female empowerment can be heavy”. Access to finance is another challenge for women and on this score the Economic Community of West African States (ECOWAS) is making some progress in the energy space. The ECOWAS Centre for Renewable Energy and Energy Efficiency has teamed up with UN Women to establish a €5 million small grant facility. Coined ECOW-GEN, the facility will aim to promote gender-responsive investments and business development “by transforming women-led business ideas in energy into real, commercially viable enterprises”. However, in the East African Community (EAC) women activists are dissatisfied with the slow adoption of a Gender Equality Bill. At a meeting last year in Kampala, Marren Akatsa Bukachi, Executive Director of the Eastern African Subregional Support Initiative for the Advancement of Women (EASSI) said: “Eight years is a long time to pursue a bill.” Marren Akatsa Bukachi – Executive Director, EASSI Invest in Africa 2016 | 31

The new path

The US and Africa: business partners

US President Barack Obama has visited Africa more than any of his predecessors and overseen strong growth in trade ties, writes Dominic Dudley

32 | Invest in Africa 2016

rade between Africa and the US is worth around $63 billion a year, with a healthy $15 billion trade surplus in Africa’s favour, according to data from the US Government. The US bought $39 billion worth of goods from Africa in 2013, 50% more than in 2003. In return, African countries spent some $24 billion on US goods. These numbers are large, but the potential is surely larger still. US trade with Africa accounted for just 1.7% of all US imports in 2013, and 1.5% of all exports. When you consider that most of the trade is with just a few countries, led by South Africa, the potential for further growth seems even more apparent. US President Barack Obama made a similar argument in his speech to the

African Union (AU) in Addis Ababa in late July 2015. “Most US trade with the region is with just three countries – South Africa, Nigeria and Angola – and much of that is in the form of energy. I want Africans and Americans doing more business together in more sectors, in more countries,” he told the audience in the Ethiopian capital. “So we’re increasing trade missions to places like Tanzania, Ethiopia Mozambique. We’re working to help more Africans get their goods to market.” Obama’s visit to Ethiopia was his fifth trip to the continent since taking office in 2009, more than any previous US president. Those trips have also taken him to Egypt, Ghana, Senegal, South Africa, Tanzania and Kenya. A theme common to many of the visits has been the push to develop economic ties.

Saul Loeb/AFP/Getty Images

Evan Vucci/AP Photo/Press Association Images

The new path

US engagement with the continent is framed by its strategy towards sub-Saharan Africa, which was released in June 2012. The strategy is based around four pillars: strengthening democratic institutions; supporting economic growth and development; advancing peace and security; and promoting opportunity and development. There is inevitably a lot of overlap between these areas. In terms of promoting economic growth, the strategy commits the US to supporting improved economic governance across the continent, along with greater regional integration, an expansion of Africa’s links to global markets and encouraging US companies to invest in and trade with Africa.

Close links

All this is supported by a number of other policies and initiatives, such as Power Africa, a US programme to add 60 million new electricity connections across the continent, and Trade Africa, which seeks to increase trade within Africa and expand economic ties between Africa and other markets. In 2010, Obama also launched the Young African Leaders Initiative, to provide mentoring and training to the next generation of business and political leaders.

Perhaps the most important initiative of all, though, in terms of trade links, is the African Growth and Opportunity Act (AGOA), which was enacted in May 2000. This measure allows duty-free entry for almost 98% of imports from around 40 African countries into the US. It sits alongside a dozen trade and investment framework agreements and nine bilateral investment treaties the US has signed with African countries or regional blocs. Currently, African exports to the US are dominated by oil and other petroleum products, which account for 86% of all exports from Africa under the AGOA programme. However, non-oil exports such as precious stones, vehicles and cocoa have been growing quickly, reaching $4.8 billion in 2013, more than triple the amount in 2001. In June 2015, the act was extended for 10 years, giving governments and businesses on both sides of the Atlantic the chance to make some strategic choices for the future. This could provide an opportunity for more non-oil goods to be traded, such as textiles and clothing. That fact was noted by Amadou Sy, Director of the Africa Growth Initiative at US think tank the Brookings Institution, at the time of Obama’s visit to Kenya in July. “In 2014, roughly 70% of Kenya’s exports to the US were textile and

US President Barack Obama and AUC Chairperson Dr Nkosazana Dlamini Zuma meet in 2015 during Obama’s trip to the AU headquarters, where he discussed US-Africa trade relations and economic opportunities

garment-based, in which the African Growth and Opportunity Act has played a key role,” he noted at the time. “The recent extension of AGOA for another decade opens up further opportunities for growth and revival of the textile and apparel industry in Kenya.”

Expanding trade ties

There are clear potential benefits for Africa from the US decision to extend the act. Indeed, many aspects of the US strategy towards Africa chime with the priorities of the AU and its member governments, who are keen to expand trade ties both within the continent and beyond in pursuit of economic development. In June, the AU launched negotiations for a Continental Free Trade Area, to boost trade within Africa and make the continent more attractive for foreign investment. In a speech to mark Obama’s visit to the AU in July, Dr Nkosazana Dlamini-Zuma, Chairperson of the AU Commission, noted the role that the US can play in the sustainable development of the continent’s economies. “We do require the cooperation of our partners and the USA, through technology transfer and investments in infrastructure development, renewable energy and our blue and green economies so that we develop without destroying the planet.” Invest in Africa 2016 | 33

The benefits are also being felt in the jobs market. Trade between Africa and the US since AGOA was introduced supports an estimated 300,000 direct jobs in Africa and 120,000 in the US, according to Linda Thomas-Greenfield, Assistant Secretary of State for the Bureau of African Affairs in the US State Department. The extension of the AGOA deal will help to secure these jobs and hopefully lead to the creation of more. Some countries are likely to benefit more than others, but the extension will help to underpin economic activity across Africa. According to a 2013 study by the Brookings Institution and the UN Economic Commission for Africa, if the deal had been allowed to lapse in 2015, it would have led to a 9% fall in exports from Mauritius and a 15% fall for the rest of the Southern African Customs Union, including countries such as Lesotho, Namibia and Swaziland. Others would not have been so badly hit, but overall the continent’s exports would have fallen by 2%, according to the study.

Trade between Africa and the US since AGOA was introduced supports an estimated 300,000 direct jobs in Africa and 120,000 in the US

In March 2015, Ben Leo, a senior fellow at the Centre for Global Development, testified before a Senate Foreign Relations Committee about the potential for greater US trade with sub-Saharan Africa. Among his suggestions were more bilateral investment treaties with African countries and the creation of a US Development Finance Corporation. “None of these actions entail additional budgetary outlays,” said Leo. “Instead, they are strategic, results-based policy tools that would give a significant boost to US-Africa relations.” Further momentum could also come from the upcoming US-Africa Business Forum, due to take place in the US in 2016. In his speech to the AU, Obama said this would “mobilise billions of dollars in new trade and investment, so we’re buying more of each other’s products and all growing together.” Ultimately, there will be two key measures of success of the trade policies that the US and African governments are pursuing. The first is a general growth in the value of trade, but perhaps more important will be greater diversity in that trade, both in terms of the range of goods that are bought and sold and the number of African countries that are able to access the US market in a meaningful way. The potential is certainly there for these additional developments to be realised. •

2015 : US trade in goods with Africa Month

Exports

Imports

Balance

January

2,214.5

2,148.1

66.4

February

2,001.9

1,753.2

248.7

March

2,190.4

2,057.6

132.7

April

2,370.3

2,339.8

30.5

May

2,914.6

2,065.4

849.1

June

2,422.0

2,126.7

295.3

July

2,175.8

2,412.2

-236.5

August

2,154.1

2,031.0

123.0

September

2,233.5

2,421.2

-187.7

TOTAL 2015

20,677.0

19,355.4

1,321.7

NOTE: All figures are in millions of US dollars on a nominal basis, not seasonally adjusted unless otherwise specified. Details may not equal totals due to rounding

34 | Invest in Africa 2016

Source: US Census Bureau

$39 billion

The new path

worth of goods were bought by the US from Africa in 2013, 50% more than in 2003

Deals involving coal, oil and natural gas made the African energy sector the most valuable for foreign investment in 2014

Foreign investment in Africa continues to grow, despite the weak global environment, which could spur some important economic changes, explains Dominic Dudley

Investing in change

f the reality has matched expectations, 2015 will have seen more than $55 billion in foreign direct investment (FDI) coming into Africa, making it the most lucrative year for such deals since the economic crisis of 2008/09. If you include other portfolio investments, the amount of money coming in should reach close to $74 billion, according to the most recent African Economic Outlook (AEO) report produced by the African Development Bank and others. At a time when there are so many concerns about slowing global economic growth, such investments should help to underpin the economic performance of countries across the continent, generating income and jobs in the process. The nature of the investments also highlight some important themes in terms of the strengths of African economies and the direction they are heading in. FDI flows are still heavily weighted towards a few industries, most notably the energy sector. According to The Africa Investment Report, produced by research company fDi Intelligence, deals involving coal, oil and natural gas were worth $32.5 billion in 2014, making it by far the most valuable sector for foreign investment.

Hybrid Images/Getty Images

the new path

Almost half of that figure – $16 billion – comes from an investment by the French oil major Total in the Kaombo offshore oil field in Angola, announced in April 2014. That was a particularly large deal, but it is a sector that tends to be capital intensive. The $32.5 billion in energy investments announced in 2014 were spread out between just 25 projects. The figures compiled by fDi include investments that have been announced but may not yet have started, so not all of that money will have made its way into Africa yet. Even so, the deals that have been announced offer a clear sign of the priorities that investors have, where they are coming from and what they find most attractive. Despite the amount of attention paid to Chinese money coming into the continent, Western Europe continues to be Africa’s largest source of investment. In 2014, it accounted for $47.6 billion of the $87 billion in deals tracked by fDi in 2014, followed by North America with $13 billion, Africa with $10 billion and the Asia Pacific region with $9.6 billion, of which $6.1 billion was Chinese money. The momentum for investment appears to be strongest in North Africa, particularly Egypt, where there was a 42% rise in the number of FDI Invest in Africa 2016 | 37

Henrique NDR Martins/iStock Images

the new path

Johannesburg was voted the 21st best outsourcing center in the world, according to international consultancy firm Tholons

Top five FDI destinations, 2014

1 2 3 4 5

South Africa q31.2% Congo q16.3% Mozambique q20.6% Egypt p14.1% Nigeria p16.3%

38 | Invest in Africa 2016

5.7bn $ $ 5.5bn $ $ 4.9bn $ $ 4.8bn $ $ 4.7bn $ $

Source: UNCTAD

projects in 2014. The 51 schemes attracted a total of $17.9 billion, making it the largest single market for FDI on the continent. In other parts of Africa the picture is very mixed. South Africa attracted the most FDI deals, but the number was down 15% in 2014 compared with the previous year, and their value declined by 31%. Kenya, Ghana, Tanzania and Zambia all saw significant falls in the number of deals, while Mozambique and Ethiopia bucked the trend in that respect. In terms of the value of deals, however, Ethiopia and Kenya both saw falls while Ghana and Zambia posted healthy increases. Natural resources have long been the main draw for international investors, but if the continentâ&#x20AC;&#x2122;s economies are to keep growing and developing they need to attract more investment into other areas too. There are some positive signs here, although the investments made in areas such as business services, software and IT, and financial services tend to be more numerous but smaller in scale than the big energy deals. In terms of the number of projects attracting investment, the financial services sector was the best performer in 2014 with 133 projects, around a fifth of the total. Communications projects accounted for a further 62 deals and there were 55 business services investments and 40 in software and IT services. In many of these areas, South Africa is in a leading position, which explains why it attracted the largest number of deals in 2014. Its cities perform strongly in terms of business process outsourcing, for

example. However, it is facing competition from around the continent in this area.

Outsourcing hubs

According to rankings by international consultancy firm Tholons, three South African cities are among the top 100 outsourcing centres globally, led by Johannesburg in 21st place, followed by Cape Town in 57th and Durban in 100th. Among the raft of challengers are Accra, Ghana (42nd), Cairo, Egypt (76th), Port Louis, Mauritius (90th) and Nairobi, Kenya (97th). Johannesburg, Casablanca and Mauritius also all make it into the rankings of the Global Financial Centres Index, developed by research firm Z/Yen Group, placed in 33rd, 44th and 64th respectively. Competition between these hubs rests on a number of factors, including political stability, the regulatory environment, the strength of IT and communications networks, and a ready pool of well-educated employees with the right language and technical skills. All these factors clearly offer benefits for the wider private sector too. The importance of encouraging such activity lies not just in the contribution it can make to gross domestic product (GDP) growth, but also the jobs it can generate. Industries such as oil and gas provide relatively little employment while consuming large amounts of capital. With the services sector the reverse is true, which is an important consideration given the age profile of the continentâ&#x20AC;&#x2122;s population. According to the World Bank,

the new path 43% of sub-Saharan Africans are aged 14 and under, and they will be entering the workforce in the coming years. At a time when commodity prices are low, the need for such investments becomes ever more important for many countries. In its latest economic report on the continent, published in March, the United Nations Economic Commission for Africa (UNECA) said low oil prices had had only a marginal impact on African countries, with slight gains for oil importers and losses for oil exporters. However, the longer oil prices stay low, the greater the effect on big oil producers such as Nigeria and Angola will be.

Impact of low oil prices

Botswana-listed Imara Asset Management points out that Nigeria’s non-oil revenues amounted to just 4.5% of GDP, which leaves it particularly exposed. The current economic environment could yet be the spur the country needs to diversify its economy, but in a research note published in November, Jonathan Chew, Chief Investment Officer of Imara, wrote “It is hard to escape the fact that external sentiment towards Nigeria is extremely poor.” It is not just Nigeria that investors have concerns about. Governments across the continent are under pressure to make more efforts to improve the business environment. While there are some bright spots, such as Mauritius, overall the continent still lags behind most parts of the world when it comes to ease of doing business. In some instances, the situation appears to be getting worse not better. South Africa, for example, was downgraded by Fitch Ratings in early December. Explaining its move, the credit ratings agency said that the country’s prospects for growth were declining and that a number of government policies had weakened business confidence. There are other signs of investor concerns. According to the latest Africa Attractiveness Survey by consultancy firm EY, the proportion of investors who think the continent’s attractiveness has improved over the past year has declined to 53%, compared to 60% in the previous survey. At the same time, the number who thought Africa’s attractiveness had deteriorated climbed from 17% to 19%. The top three barriers to investment in Africa, according to the survey, are unstable political environments, corruption and weak security. Other

factors cited by respondents included poor basic infrastructure and a lack of highly skilled labour. “Africa’s future will not take care of itself,” says Ajen Sita, Chief Executive Officer of EY Africa. “Our view is that, although tremendous progress has been made over the past 15 years, Africa and its leaders are poised at an inflection point: deliberate and urgent choices are required to raise levels of productivity and competitiveness, accelerate structural transformation and make the shift toward an inclusive, sustainable growth path.” If governments manage that process well, then investment could rise further, supporting more exports and economic activity in general. All this could also provide a path towards greater industrialisation across the continent, which is sorely needed. Indeed, a number of regional blocs have recently developed industrialisation strategies with that very aim in mind, including the Southern Africa Development Community and the East African Community. These strategies emphasise the need for improvements to infrastructure, greater support for manufacturing industries, more investment and more trade. They also recognise that it is not simply a matter of boosting trade with partners in Europe, Asia and the Americas. Increasing trade between countries within Africa would help too, although that will require reforms to remove some of the many barriers to cross-border commerce. That message is also being advanced by UNECA, which titled its latest economic report on the continent Industrializing through trade. “Trade reforms have the potential to more than double the share of formal intra-African trade over the next 10 years,” said Adam Elhiraika, Director of the Macroeconomic Policy Division at UNECA, at the launch of the report in Addis Ababa on 30 November 2015. “When reforms are successful, this means a higher trade volume. Boosting the proportion of industrial products offers bright perspective for Africa’s industrialisation.” Until now, Africa has performed poorly in terms of industrialisation, due in part to the emphasis placed on exploiting its natural resources, but with the need to create jobs for a growing and increasingly urbanised population, that will have to change. If it is successful, then it should go hand-in-hand with further increases in foreign investment in the continent. •

32.5BN

of FDI deals involving coal, oil and natural gas were made in 2014

$ BN

of the above figure comes from an investment by French oil major Total in the Kaombo offshore oil field in Angola

trade reforms have the potential to more than double the share of formal intra-african trade Adam Elhiraika Director, UNECA Macroeconomic Policy Division Invest in Africa 2016 | 39

Finance and banking

Foundations for financial inclusion

40 | Invest in Africa 2016

Africa’s underdeveloped formal banking sector is giving rise to more modern methods of accessing financial services, says Martin Morris

inancial systems in sub-Saharan Africa remain, with some exceptions, underdeveloped, with the region’s banking sectors typically inefficient at financial intermediation. Yet despite being constrained by their relative lack of size, competition, while still limited, is increasing nonetheless. Given that only 34% of adults in the 48-nation region held a bank account in 2014 (up from 24% back in 2011), according to the World Bank’s Financial Inclusiveness database, lack of available access to finance has been a major obstacle – not only to business growth at both micro and SME levels, but also to consumer empowerment. However, the emergence of pan-African banking groups (PABs) in the general business and mobile banking spaces should deepen sub-Saharan African markets in the long term through competition, and improve consumer access to banking facilities. The region already leads the world in mobile money account uptake, at 12% in 2014 against 2% worldwide, according to the World Bank. While these figures are still unsatisfactory, they reflect more limited consumer access to bank branches and ATM networks than elsewhere. Given the desire of PABs to add scale and reflecting global banks cutting back their regional operations post-2008 in response to more stringent

Mobile money service M-Pesa has taken off in Kenya and beyond

Benedicte Desrus/Alamy Stock Photo

Finance and banking

34%

of adults in sub-Saharan Africa held a bank account in 2014, up from 24% in 2011

compliance requirements, PABs have sought to fill the gap in sub-Saharan Africa’s financial markets. Yet, despite the number of PABs steadily increasing, just seven banking groups still dominate when it comes to geographical dispersion, according to the International Monetary Fund (IMF).

Regional dynamics at play

Ecobank, based in Togo, is the biggest player in terms of geographical presence, operating in 33 countries in the region, while South Africa’s Standard Bank Group is the largest by assets, worth $184.52 billion according to Africa Ranking. Like other PABs, Ecobank has sought longer-term funding for corporate clients as well as investment in local infrastructure – its Nigerian unit recently secured a $170 million syndicated loan earmarked for clients in the oil and gas industry. Elsewhere, Kenya Power Company recently confirmed a $10 million loan facility from Nigeria’s United Bank for Africa to upgrade its infrastructure to distribute 5,000MW by 2017. However, global factors continue to impact regional credit dynamics. Oil-rich countries, such

as Nigeria and Angola, which historically have been beneficiaries, have been taking hits more recently as oil prices have tumbled. Indeed, the European Investment Bank in a July 2015 report noted the total value of loans to these two states plummeted 64% and 47% respectively in 2014 against 2013 figures. This has had a knock-on effect. Total new syndicated or large bilateral loans for infrastructure in sub-Saharan Africa slumped in 2014 to $3.8 billion, compared with $9.1 billion in 2013, with the number of African lenders falling too, according to Dealogic Analytics and IMF calculations. However, countries seen as having attractive business environments, such as Botswana and Mauritius, have continued to benefit. Among the PABs a distinction needs to be drawn, however, with the IMF noting that 40-60% of the subsidiaries of Morocco’s Attijariwafa Bank, Bank of Africa, Ecobank and Standard Bank are systemically important in their host countries, for example. This contrasts with United Bank for Africa, which, while also having a widespread presence, mostly has subsidiaries playing small local market roles, largely due to its relatively recent expansion. Invest in Africa 2016 | 41

THE ECOWAS BANK LA BANQUE DE LA CEDEAO O BANCO DA CEDEAO

Financing The ECOWAS of People Pour le Financement de la CEDEAO des Peuples Para o Financiamento da CEDEAO dos Povos

• EBID belongs to the 15 ECOWAS Member States • Created in 1975 at the same time as the ECOWAS Commission • Started operations in 1979 as ECOWAS Fund Financing Strategy • Building a Diversified and Competitive Industrial Base • Development of the Public Sector • Promotion of the Private Sector • Enhancement of Dynamic Intra Regional Trade • Strengthening the Levers of Sustainable Development

Achievements Infrastructure (Basic and Modern), Industry, Energy (Production and Transmission of Conventional and Renewable Energy), Mining, ICT, Financial Services (Banks and Private Equity Funds), Other Services (Tourism and Transport)

Instruments • Debenture Loans • Direct Loans (Financing and Partial Financing Initiatives) • Equity Participation • Financial Engineering • Guarantees • Leasing • Lines of Credit • Management of Special Funds • Trade and Commodities Finance

128 Boulevard du 13 Janvier BP: 2704 Lome TOGO Tel.: (+228) 22 21 68 64 / Fax: (+228) 22 21 86 84 www.bidc-ebid.org © EBID

INSERT BIDC-LA ABNQUE_placed.indd 1

07/01/2016 11:06

$655.8 million

Finance and banking

The estimated revenues earned by the mobile money market in sub-Saharan Africa in 2014

42 | Invest in Africa 2016

Lower down the rung meanwhile are groups operating in sub-regions, including Nigerian banks such as Guaranty Trust Bank and Skye Bank, which focus their operations more towards anglophone countries. There is also the rise of mobile banking, which, given the long-standing issue of underdeveloped physical branch presence and ATM networks, has unsuprisingly been making inroads. Just as this so-called ‘branchless banking’ can provide vital services for the region’s unbanked, so the banks can justify rolling out business models on the basis of cheaper delivery costs versus conventional banking. Historically, these models have ranged from banks providing additional mobile services to existing customers, utilising networks of banking and mobile agents in lieu of branches, or telecommunications companies providing payment services without bank participation. The remittances market is one example. As mobile infrastructure has expanded and smart devices become more affordable, making it easier for consumers to gain access to banking services where branch networks are less prevalent, so growing competition or collaboration between banks and telecommunications will likely ensure rapid growth longer term. In its January 2015 report, Analysis of the Mobile Money Market in Sub-Saharan Africa – Selected Countries, consultants Frost & Sullivan estimated that the market earned revenues of $655.8 million in 2014. This is forecast to reach $1.320 billion by 2019. Covering mobile payments and mobile money transfers, it noted how mobile money systems such as M-Pesa in Kenya and EcoCash in Zimbabwe have taken off and are projected to mature beyond simple person-to-person transactions. Launched in 2007 by Vodafone for Vodacom and Safaricom, the two largest mobile network operators in Tanzania and Kenya respectively, M-Pesa has subsequently been rolled out to South Africa and India, among other countries. As in similar platforms it allows users to deposit, withdraw and transfer money, and pay for goods and services easily using a mobile device. Also making inroads in the sector is dopay, through its Ghana branch of the UK-headquartered solutions provider. It offers simpler payroll solutions for companies and allows bankless employees to receive their salaries in an account. This comes with a prepaid card, allowing them to manage their finances via a mobile app. This gives users instant real-time access to balances and lets them top-up their prepaid mobile to send money anywhere and at anytime.

More generally, the volume of mobile money transactions is likely to face some limitations in the short to medium term, pending the resolution of issues such as lack of interoperability between operators’ solutions and restrictions on cross-border transactions. Concerns regarding the security and reliability of mobile money solutions, especially in markets with intermittent network access, will also present challenges. Given the number of Africans living in the diaspora, the remittances market has long been vital. Yet major players such as Western Union and MoneyGram are now coming under increasing threat as local companies look to build market share and disrupt the old status quo; especially on charges.

Digital currencies

Local players such as BitX, BitPesa and igot, for example, have seen mileage in promoting the use of bitcoins. Their business models are seeking to undercut traditional operators that charge an average of 12% commission by charging 1-3%. Yet the road ahead for the digital currency is set to be a rocky one, at least in the medium term. In August 2015, Ghana’s Beam – a service where users can pay for the delivery of goods and services within Ghana – confirmed that it would no longer use bitcoin. The start-up, which launched a ‘bitcoins for Ebola’ hub for charity donations to Sierra Leone in November 2014, cited the lack of local bitcoin adoption, price volatility against major currencies and the high cost of exchanging it against the Ghanaian cedi. Despite noting the positive long-term prognosis for bitcoin, it said it wasn’t something it was prepared to continue incorporating now. More worrying for bitcoin are the European Union’s plans to increase controls on pre-paid cards, money remittances and bitcoin in a bid to curb money laundering and terrorism funding, following the recent attacks in Paris. EU interior and justice ministers have urged the European Commission to “strengthen controls of non-banking payment methods such as electronic/ anonymous payments, money remittances, cashcarriers, virtual currencies, transfers of gold or precious metals and pre-paid cards in line with the risk they present”. In its April 2015 Migration and Development Brief, the World Bank projected that growth of remittances in sub-Saharan Africa would slow to 0.9% in 2015, amounting to $33 billion, with Nigeria accounting for an estimated two thirds of inflows to the region. However, flows to the region are expected to pick up to $34 billion in 2016 and $36 billion in 2017. In the meantime, general competition is likely to intensify as local operators attempt to chip away at the dominant market shares of the traditional money operators. •

the road ahead for bitcoins is set to be a rocky one, at least in the medium term

BOAD PERSPECTIVE

Advancing sustainable development The West African Development Bank (BOAD) is the common development finance institution of the member countries of the West African Economic and Monetary Union (WAEMU). It was established by an Agreement signed on 14 November 1973 as an international public institution with eight member countries, namely: Benin, Burkina Faso, Ivory Coast, Guinea Bissau, Mali, Niger, Senegal and Togo. The Bank headquarters in located in Lomé, Togo. The purpose of the bank is to promote the balanced development of its member countries and foster economic integration within West Africa. It also has a mission, as directed by the WAEMU Conference of Heads of State and Government, to contribute effectively to the fight against poverty and, more generally, the attainment of international development goals, namely the Millennium Development Goals (MDGs) and the Sustainable Development Goals (SDGs).

BOAD_placed.indd 80

Equity capital and shareholding The Bank’s authorized capital is XOF1,155 billion. Its shareholding is made up of Category A shareholders (or regional shareholders) comprising the eight WAEMU member countries and the Central Bank of West African States (BCEAO), and Category B shareholders (or non-regional shareholders) including France, Germany, Belgium, European Investment Bank, African Development Bank, India, People’s Republic of China and Morocco.

Organisation and governance The Bank is managed and administered by a President, assisted by a Vice-President. Its governance system is built around four decision-making organs: the WAEMU Conference of Heads of State and Government, the WAEMU Council of Ministers, the Board of Directors and the Credit Committee, which is a statutory organ of the board facilitating decision-making on bank management.

BOAD has adopted principles of corporate governance based on transparent operations and accounts, a rigorous control system, an independent external audit system and efficient decision-making processes based on staff participation and accountability.

Areas of operation, forms of intervention and financing windows BOAD’s operations cover both the commercial and non-commercial sectors. These operations are funded through two windows: a concessional window known as the Development and Cohesion Fund (FDC) and a non-concessional window called the bank window. Areas of intervention include agriculture and food security, infrastructure (energy, transport and telecommunications), industry, finance (through local banks and decentralised financial systems), hospitality and other services. These areas are aligned with the major development needs of its member countries.

11/01/2016 14:04

BOAD PERSPECTIVE

The West African Development Bank promotes development and fosters economic integration in its member states

Operations take different forms, the most important of which include i) medium and long-term loans, ii) financing arrangements, iii) short-term credit facilities, iv) refinancing facilities to national financial institutions, v) equity investments, and vi) advisory services.

Achievements and role of BOAD in the regional economy As the financial arm of WAEMU, BOAD is a key partner of member countries and contributes significantly to their economies. At the end of September 2015, cumulative medium and long-term loans granted to member countries stood at 3,356.9 billion West African Francs (XOF) ($5.6 billion) for total disbursements of XOF2,082.9 billion ($3.5 billion). Financing provided by BOAD to WAEMU member countries resulted in the implementation of about 750 projects, representing an investment programme totalling over XOF12,000 billion ($20 billion) exclusive of taxes.

BOAD_placed.indd 81

The bank has also contributed significantly to the strengthening of the banking sector and the emergence and further development of the regional capital market, where, as a reference issuer, it is active in the recapitalisation of local banks and the creation of the Regional Stock Exchange (BRVM). It also supports private businesses, including a private equity company (CAURIS), a regional guarantee fund (GARI Fund), a regional asset management company (SOAGA), a regional mortgage refinancing house (CRRH-UEMOA) and a securitization management company (BOAD Titrisation). Moreover, the bank, alongside other WAEMU organs and institutions, has contributed to the implementation of major regional strategies and programmes, including PER II, IRED and PCD. BOAD is recognised today as a key player in the region with a great capacity for reflection and proven expertise in development finance. The institution is currently working to promote public-private partnerships (PPP) with the creation at the bank of a regional PPP development unit, which will provide advisory services to countries as part of development and financing of PPP projects. BOAD has already supported several PPP investment projects, including the construction of the third bridge in Abidjan, Pont Henri Konan Bédié, Ivory Coast; the Dakar-Diass toll motorway in Senegal; power plants such as the hydropower plant at Manantali in Mali; and AZITO and CIPREL power plants in Ivory Coast.

Strengthening the international position of BOAD BOAD is constantly striving to adapt its operations to the needs of its member countries, and increase its competitiveness, productivity and creditworthiness at the regional and international level. On two different projects, the bank recorded significant progress, which reinforces its positioning on the international scene. The bank is rated investment grade by Moody’s (Baa1) and Fitch (BBB), which corresponds to quality risk for international

investors. With these ratings, BOAD ranks among the best institutions in Africa rated by these two agencies, whether from the public or private sector. BOAD is thus ranked behind the African Development Bank (AAA) (AfDB), Botswana (A2) and the Africa Finance Corporation (AFC) (A3). Moreover, the bank has since June 2015 received accreditation from the Global Environment Facility (GEF) as an implementing agency. The accreditation will enable the bank, alongside institutions such as UNDP, FAO, IFAD and AfDB, to mobilise grants for the co-financing of environmental projects.

The way forward BOAD seeks to be a solid development bank for economic integration and transformation in West Africa. As part of this vision, it has been implementing the guidelines of its 2015-19 strategic plan, which aims to contribute more to the financing of ambitious investment programmes of its member countries hoping to become emerging economies. Given the scale of investments needed and the inadequacy of the financial resources available to it, the bank is seeking to strengthen its role as a catalyst by developing strategic partnerships with the view to channelling more resources or technical assistance towards the WAEMU region. In this respect, project co-financing will be further promoted. Contact us: 68 Avenue de la Libération, Lomé, Togo T: (228) 22 21 59 06 E: boadsiege@boad.org www.boad.org

11/01/2016 14:04

Finance and banking

The ‘bank payment obligation’, designed to limit risk and reduce cost, stands to boost African trade partnerships

Lifting critical barriers to trade finance 48 | Invest in Africa 2016

n its December 2014 report Trade Finance in Africa, the African Development Bank (AfDB) estimated the value of bank-intermediated trade finance on the continent at $330-350 billion over the 2011-12 period, or roughly equal to one third of total African trade at the time. Of this, 68% were off-balance sheet transactions (for example, letters of credit (LCs), while 32% were on-balance sheet transactions, such as short-term loans. However, it also noted – based on questionnaire responses from 276 banks across 45 countries – that the value of unmet demand for trade finance had risen to $110-120 billion, from an earlier estimate of just $25 billion. The problem, unsurprisingly, was found to be more acute in fragile and low-income countries. While trade finance is seen as relatively low risk and consumes less capital when compared with other

Finance and banking

Echo/ Getty mages

Cargo being unloaded at Cape Town port. Africa’s trade finance industry is experiencing profound changes lending activities, the default rate in Africa – though still low at 4% on average historically – has stubbornly remained significantly higher than the global rate of under 1%. While LCs account for 50% of the total value of global trade finance, according to 2014 data from the Bank for International Settlements, and virtually all banks in Africa employ them, local banks have continued to face constraints when it comes to meeting trade finance demand. A number of factors have been at work, including African banks almost universally requiring a third-party confirmation or guarantee; global confirming banks having limited risk appetite for African banks; and the requirement (sometimes) that cash collateral be provided by African banks. In addition, in many cases small balance sheets limited US dollar (the preferred currency of choice in international trade) availability, which, along with an often lack of centralised credit information in individual economies, has merely added to the negative backdrop.

A profound change

Despite these impediments, the trade finance industry in Africa is undergoing profound change, not least as a result of alternative funding arrangements being employed, coupled with the growing adoption of technology. While this can only work if undertaken in conjunction with stronger supply chains – based on additional investment in existing infrastructure to improve productivity and reduce risk – the increasing use of technology with the emergence of the bank payment obligation (BPO) as a way of settling trade digitally will likely become extremely important. On the face of it, BPOs are similar to LCs in that in both cases payment

4% 1% The trade finance default rate in Africa

The default rate globally

is guaranteed by the buyer’s bank, so long as documentary evidence is provided and met. The crucial difference is that in the case of BPOs, payment is triggered when electronic XML data is provided and matched, as opposed to paper documentation such as invoices, as is the case with LCs. BPOs are Championed by SWIFT – the global secure messaging solutions provider – and the International Chamber of Commerce as a means to move towards a standardised global electronic framework for trade finance. Standard Chartered was the first bank (in 2012) to perform a fully automated electronic BPO transaction, with BP Aromatics and Octal in Singapore and Oman. The BPO may be used as a LC substitute, but it is also designed to be an alternative to other open account risk mitigation and financing mechanisms, such as credit insurance and factoring. While not removing risk entirely, the BPO can significantly limit it, given that it is an undertaking between banks requiring payment to be made on a specified date once data has been electronically matched on SWIFT’s Trade Services Utility (TSU) or similar facility. Proponents argue that the fully automated trade transactions under BPO are not only quicker, they are also more reliable. In addition, costs for both buyer and seller are reduced. For importers, so-called ‘open account’ trade, where goods are delivered before payment is due, has long been viewed as attractive. For exporters, who carry a significant amount of the risk, the reverse has often been true. BPOs are designed to overcome this.

In the meantime, global entities such as the International Finance Corporation and continental organisations such as the AfDB and the African Export-Import Bank (Afreximbank), will remain vital in terms of providing support to local banks in the trade finance space.

Supporting local banks

Yet, even in the case of Afreximbank the road hasn’t been entirely smooth. While the bank’s non-performing loan ratio fell to 1.3% of total loans in the first half of 2015, the large increase in write-offs it experienced in 2014 “underscored the increasingly difficult operating environment”, according to an announcement by ratings agency Moody’s in December 2014. “Africa as a region is exposed to several concomitant shocks, including lower commodity prices, the slowdown in China and the prospect of tighter US monetary policy,” it added. On a positive note, in June 2015 the United States Congress renewed the African Growth and Opportunity Act (AGOA) for the next decade. And while four-fifths of African exports to the US in 2013 came from oil, the corresponding knock-on effects of slumping crude prices have not hit everyone equally. Indeed, countries aiming to benefit from AGOA, such as non-oil or mining reliant Kenya and Ethiopia, have every incentive to diversify into economic sectors such as footwear and textile exports. Ethiopia, with the aid of Chinese and Indian investment, is looking to position itself as a manufacturing hub. For those states still heavily reliant on commodities exports, the question then becomes whether the political will is in place to diversify accordingly. •

while not removing risk entirely, the bpo can significantly limit it

Invest in Africa 2016 | 49

STANDARD INTERNATIONAL INSURANCE BROKERS

Standard Insurance Consultants Limited Welcome to true partnership www.sicl.standardinsgroup.com | info@standardinsgroup.com Incorporated in 1980, Standard Insurance Consultants Limited (SICL) is a client-focused and secure international insurance and reinsurance broking firm with offices in Lagos, Ibadan, Abuja, Port Harcourt, the United Arab Emirates and London. As a member of the Nigerian Council of Registered Insurance Brokers (NCRIB), SICL is fully licensed by the National Insurance Commission (NAICOM) to transact an extensive list of classes of insurance business, including special risks such as oil and gas, aviation, marine, life insurance and reinsurance broking. SICL places a premium on claims servicing and closely monitors industry developments to ensure that its clientsâ&#x20AC;&#x2122; risks are positioned with secure and solvent carriers.

LAGOS Standard Group House 130A, Association Road, Dolphin Estate Ikoyi, Lagos T: + 234 1 792 9108 | +234 805 655 4455

IBADAN Standard Villa, Forest Hill, Mahogany Estate, New Jericho GRA, Jericho, Ibadan, Oyo State T: +234 807 589 4032

ABUJA Standard Suite, Stallion Estate Block C, Flat 5, Lobito Crescent Wuse 2, Abuja T: +234 803 643 0643

PORT HARCOURT 11B, Circular Road Presidential Estate Port Harcourt, Rivers State T: +234 807 589 4035

LONDON (CORRESPONDENCE) E333, New Providence Wharf, 1, Fairmount Avenue London E14 9PX T: + 44 745 927 7741 | +44 7939 616 827

UAE Oxford Tower, Suite 904, Business Bay, Dubai, UAE T: +971 55965 9416

Standard Group_placed_2.indd 58

14/12/2015 14:18

Finance and banking

Silver linings c

Africa’s pension sector is flourishing, but to what degree can pension funds contribute to infrastructure financing?

avid Ashiagbor of the Making Finance Work for Africa (MFW4A) Secretariat says in Africa’s Abundant Treasury that recent reforms across the continent have witnessed the creation of private pension funds that are rapidly accumulating assets under management in line with the continent’s explosive demographics. He adds that assets under management by the Nigerian pension industry, for example, grew more than threefold between December 2008 and October 2014 from $7 billion to $27 billion, while Ghana’s pension industry is forecast to have expanded by up to 400% between 2014 and 2018.

Embracing private equity

$ Bn was raised by Africa-focused private equity funds in 2014 – almost twice the previous record of $2.2 billion set in 2008

These metrics not only indicate growing incomes, they also provide an opportunity for the sector to step into a breach caused by constrained public finances and falling overseas development-assistance budgets. Ashiagbor’s wider-ranging 2014 MFW4A paper Pension Funds and Private Equity: Unlocking Africa’s Potential – published in conjunction with the Emerging Markets Private Equity Association (EMPEA) – estimated in its study of the pension fund industries in 10 African states that total assets under management (AUM) were $380 billion. South Africa dominated with AUM of $322 billion.

EMPEA also estimated that a record $4 billion was raised by Africa-focused private equity funds in 2014 – almost twice the previous record of $2.2 billion set in 2008 and more than half the $7 billion raised over the five years to 2014. Based on relevant local investment regulations or, where unclear, assuming a 5% allocation by funds, the report added that $35 billion would be immediately available for private equity from the pension systems of these countries. Of course, putting these numbers into action requires the necessary political intent and recognition of asset diversification as a necessary investment tool. Pension funds geared towards investing in stocks and bonds, for example, need to diversify into other areas, including infrastructure investment, if only to reduce their overall risk exposure. Even where local infrastructure investments are not necessarily available locally, that should not preclude pension funds from committing resources to projects elsewhere on the continent, for example. Regulators and fund managers have already recognised this, hence longer-term cross-border investment is likely to continue increasing as pension funds expand beyond national borders, seek similarly strong investment opportunities elsewhere and delimit their risk strategies by not keeping all of their assets at home. Africa is likely to benefit accordingly. •

Invest in Africa 2016 | 51

Regional integration

Jake Lyell/Alamy Stock Photo

52 | Invest in Africa 2016

Regional integration

p18

For more on Agenda 2063

With the signing of the Tripartite Free Trade Area agreement in 2015, Africa is edging closer towards establishing a continental free trade area

Intra-African trade: cornerstone of Agenda 2063

I Coffee beans being prepared for export in Uganda. The East African country is part of the new Tripartite Free Trade Area

n 2012, the African Union (AU) began drumming up support for intra-African trade. The AU Summit of that year, which fell under the theme of “boosting intra-African trade”, endorsed a plan to establish a continental free trade area (CFTA) by 2017. The stated aim of the plan was to increase trade by 25-30% within the decade. According to the World Trade Organization, in 2012, total intra-African trade stood at 12%, versus 60% in Europe, 40% in North America and 30% in ASEAN. In the past three years, this figure has risen to around 16% and the goals set in 2012 have not been forgotten. If anything, the momentum seems to be building. Indeed, 2015 was a milestone year for trade in Africa. In June, most of the 26 member and partner states in the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC) inked an agreement to create the Tripartite Free Trade Area (TFTA) – viewed as a launch pad for continental integration. Steps towards regional integration have already paid off. Since 1994, trade between the 26 member countries of these three regional economic communities has grown well ahead of non-member counterparts. According

to data from the World Bank, the overall share of intra-regional trade in total exports rose from 7% to 25% in 20 years. With the introduction of a broader free trade area that represents 48% of AU members, 51% of continental GDP and has a combined population of 632 million, this trend is expected to accelerate. Later in 2015, the AU adopted an action plan called Boosting Intra-African Trade (BIAT). It is comprised of the following pillars: trade policy, trade facilitation, infrastructure, finance, information, factor market integration and productive capacity. With 54 member states and eight regional economic communities to negotiate with, implementation of the CFTA won’t be easy. But lessons are expected to come from how the TFTA addresses the concerns and needs of its very heterogeneous member states. How the TFTA manages tariff liberalisation, for example, will be closely watched. When the agreement was launched, not all member countries had finalised their tariff offers and they have until June 2016 to do so. Lessons could also come from the Economic Community of West African States (ECOWAS), where the Common External Tariff (CET) came into effect in January 2015. Technical difficulties have meant that some member states, such as Gambia, have been

The share of intra-regional trade in total African exports rose from

7% 25% to

in 20 years

Invest in Africa 2016 | 53

B D D I I C B B D E D I I B B D E I C B D I D E I C B B D D I E I C B D B D I I E C B B D D I I C B B D D E I I C B D D I I B DC - IDC - EB B D E I B D E I C B B D D I E I C B D B D I I E C B B D D I I C B B D D E I I B B D E D I C I B D B D I E I C B B ID D E I C B THE ECOWAS BANK B D I E C B B D I E C BANQUE DE LA CEDEAO B D EBID LA D I I C B B D D E I I O BANCO DA CEDEAO B B D BIDC EBID- BIDC - E DC - EBI - EBID - BID - BI I E C B D D I I E C B D D I I - EB C B B D D E I I B B D E I C B D B D I E I C B B D I D E I C B B D I E C B D D I I Bashir M. IFO C of EBID C B B D E D I I President B B D D E I C I B B D E I C B D ID E I C B B D I D E I C B D B D I E C B D D I I C B B D E D I I C B B D D E I I B DC B D E I C B D D I E I C B B D I D E I C B D B D I I E C B B D D I I C B B D E D I I C B D D I I B DC - IDC - EB B D E I B D E I C B B D I D E I C B D B D I I E C B B D D I I C B B D E D I I B B D D E I C I B D B I D E I C B B D D I E I C B B D I E C EBID - EBID - B ID - BID - BIDC - IDC - EB B B D E I C I B Benin Gambia Liberia D B I D E I Senegal B Burkina FasoBIDCGhana DC B Sierra Leone D Mali E I B I E CNiger B Cabo Verde Guinea-Bissau D D I I E Togo C B B D D E I Côte d’Ivoire Guinea Conakry Nigeria I C B B D E D I I B B D E I C B D B I D E I C B B D D I E I C B B D I 128 Boulevard du 13 JanvierC E B D D I I BP: 2704 LomeB TOGO C B D D E I I C B Tel.: (+228) 22 21 68 64 / Fax: (+228) 22 21 86 84 B D E D I C I B B D www.bidc-ebid.org E I C B D I D E I C B B D D I E I C B D B D I E C B D D I DC EB ID - BI belongs to the 15 ECOWAS Member States Created in 1975 at the same time as the ECOWAS Commission Started operations in 1979 as ECOWAS Fund Gateway of choice into the economies of the 15 Member States and market of 330 million ECOWAS Citizens Founding major shareholder in Ecobank Transnational Inc (ETI) Initiator of the African Biofuels and Renewable Energy Fund (ABREF) now ABREC Founding Shareholder in ASKY Airlines Decades of experience in project financing within and among ECOWAS Member States Major partner for Regional Integration Programmes and implementation of public-private sector partnerships in Member States Corporate Social Responsibility Initiatives

Abidjan

Togo-Benin-Nigeria

Iron Ore Mine (Tonkolili)

"Our aim is to make EBID the leading regional investment and development bank in West Africa and an effective instrument for achieving the Community’s Vision 2020 of an ECOWAS of people"

Praia Airport

Kumasi

AIMES-AFRIQUE

Sokodé

EBID Saves 25 Acute Hernia Patients

Tchifama

The ECOWAS Bank

Images courtesy of EBID Archives, Emmanuel PITA, ABREC, AIMES-AFRIQUE, ASKY, Google Image

INSERT BIDC-INTEGRATION 2_placed.indd 1

07/01/2016 11:08

Regional integration

Xinhua/Alamy Stock Photo

African leaders sign an agreement to launch the Tripartite Free Trade Area

slower than others in adopting the CET, which would harmonise customs and tariff bands across the region.

Staying on track

Successful implementation of the CFTA is at the heart of Africa’s Agenda 2063 and, if achieved, the benefits are clear. According to research by the United Nations Economic Commission for Africa (UNECA), a successful CFTA agreement coupled with continued efforts to improve trade-related infrastructure and customs procedures could lead to a 52% increase in intra-African trade by 2022. As Dr Rob Davies, South Africa’s Minister of Trade and Industry, puts it: “Continental integration is viewed as a critical component of advancing Africa’s growth and development objectives.” Not only will it stimulate industrialisation, employment and income generation and reduce poverty, it could also help to build economies of scale and improve efficiency, thus boosting Africa’s competitiveness, both in its own markets and globally. This is viewed as crucial given the growing number of so-called mega-regional trade agreements (MRTAs) that Africa is not party to, which are expected to have a negative impact on its exports. An effective CFTA could help to offset this and keep Africa on track towards becoming a united, prosperous and peaceful continent by 2063. •

Breaking the bottlenecks While continental integration is crucial, real action often happens at a regional level, says Symerre Grey-Johnson, Head of NEPAD’s Infrastructure Strategic Business Unit and Partnerships and Mobilisation Division. In Zambia’s capital city, Lusaka, the Tripartite Free Trade Area is establishing a project preparation and implementation unit (PPIU). The unit will coordinate, manage and monitor infrastructure projects in the Southern and Eastern African region. By addressing some of the difficulties expected to arise in getting projects to a bankable stage, the unit could help speed up project implementation. One of the big issues will be funding these projects and, to this end, a grant-funded Tripartite Trust Account has been established, which is to be managed by the Development Bank of South Africa. PPIU objectives include: • establishing an infrastructure pipeline; • helping to develop the Tripartite Infrastructure Master Plan; • building relationships with various project preparation facilities • developing fundable projects

Invest in Africa 2016 | 54

Regional integration

Transport for Africa: the brakes are off West Africa

Mauritania MAli

The Gambia Guinea Bissau

56,683Km 56 | Invest in Africa 2016

Niger

Dakar Senegal

Burkina Faso

Bamako

Ouagadougou

Guinea

Liberia

Togo

Sierra Leone Ivory Coast

Ghana

benin

geing colonial transport systems, poor investment and maintenance and complex geopolitical landscapes have long put the brakes on fully realising an integrated transport network for Africa. But the vision â&#x20AC;&#x201C; for a transport infrastructure that enables free movement of goods and passengers efficiently, safely, affordably, and in an economically and environmentally sustainable way â&#x20AC;&#x201C; is beginning to take shape. The African Union brainchild, the Programme for Infrastructure Development in Africa (PIDA), is leading the way in this area with transport as one its three main pillars, alongside energy and communications. Although PIDA has identified 24 priority transport projects, it had to start somewhere. The Dakar Financing Summit convened in 2014 to engage the private sector in infrastructure investment related to PIDA projects. Of the 16 priority projects singled out, nine were in transport. Those projects are discussed in the following pages.

Nigeria

Lagos

Abidjan

Total length of the nine Trans-African Highways

$9.1Bn

Estimated cost of maintaining the North-South Corridor (NSC)

Regional integration

Abidjan-Lagos Coastal Corridor

Central Africa

The most travelled corridor in West Africa needs modernisation to keep pace with regional integration. In January 2014, ECOWAS allocated $50 million to fund a feasibility study into the building of a six-lane highway between the Nigerian city of Lagos and the Ivory Coast port of Abidjan. By linking oil-rich Nigeria, Africa’s biggest economy and most populous country, with Benin, Togo, Ghana and Ivory Coast, West Africa as a whole (and its poorer neighbours) stands to gain. In the long term, the aim is to extend the road to Dakar in Senegal through Liberia, Sierra Leone, Guinea, Guinea Bissau and the Gambia. Additional funds will be required for construction and the World Bank appears interested. The European Union and African Development Bank are also involved.

N’Djamena Chad

Central African Republic

CAmeroon Equatorial guinea

Garoua-Boulai

Gabon Congo

democratic Republic of the COngo

Angola

Estimated project cost:

$50.4M (one-stop border posts) $17.2m (highway)

Abidjan Ouagadougou Road-Rail Projects

This multi-modal project involves the upgrading of 500km of highway and the modernisation of 1,200km of existing railway line that suffered during Ivory Coast’s civil war. It will also include the construction of two one-stop border posts. Ivory Coast and Burkina Faso stand to benefit from increased trade, as well the wider region of the West African Economic and Monetary Union and ECOWAS member countries. Estimated project cost:

$600m

Dakar-Bamako Modernisation

Douala Bangui Ndjamena Corridor Road-Rail Project A bridge, road and railway line linking Cameroon, Central African Republic and Chad will help speed up regional integration. The Economic Community of Central African States (ECCAS) will play a key role in the implementation of the project. Trade between Cameroon and the other two countries looks set to rise. Estimated project cost:

$356m

Brazzaville-Kinshasa Road Rail Bridge Project and the Kinshasa-Ilebo Railways

Upgrading the 1,250km Dakar-Bamako railway will improve connectivity between Senegal’s port of Dakar and Bamako in Mali. China International Railways, China Railways Corporation Construction and India’s Sahara Mining have all expressed interest in financing a section of the railway.

This project of the Republic of the Congo and Democratic Republic of the Congo will see to a combined road-railway bridge over the Congo River to connect the two countries’ capital cities of Kinshasa and Brazzaville. Another key part of the project will be to extend the rundown Kinshasa-Ilebo railway line, as well as building a one-stop border post. The two West African states are working with ECCAS, which submitted a request for financing to the African Development Bank.

Estimated project cost:

$3.1bn

$1.65Bn Invest in Africa 2016 | 57

Regional integration

East Africa

South Sudan

Ethiopia

Juba

Kapoeta Torit

Nadapal

Uganda Kampala Jinja Rwanda

Kenya

Burundi

Somalia

Isaka

7 Tanzania Nakonde

Dar-es-Salaam

Serenje Zambia

Malawi

Zimbabwe

2040 58 | Invest in Africa 2016

By this year, transport volumes are expected to rise 6-8 times

amb oz

$800m

Estimated cost of upgrading the 600km-long NSC

2bn

Regional integration

Kampala-Jinja Road Upgrade

A road corridor that is a vital link connecting the town of Jinja with Kampala, Uganda, will improve traffic capacity in greater Kampala. The project involves an improvement in road capacity and the development of a two-lane 75km dual carriageway. Public-private partnerships are being considered. National output achieved during construction could reach $1.5 million.

The 365-km Nadapal-Juba Road, a national and international corridor and the gateway to South Sudan, needs an upgrade. The key objective is to enhance interstate and regional connectivity and help to integrate the relatively newly formed independent nation of South Sudan into regional markets. Aside from reducing transport costs and travel time, it could add $330 million to national output during the construction phase, and has the potential to create 1.7 million permanent jobs.

Estimated project cost:

$74m

Juba-Torit-KapoetaNadapal-Eldoret Road Project

estimated project cost:

$420m

Dar es Salaam Port Expansion As the second largest port in East Africa, the port of Dar es Salaam needs to be efficient. With ships regularly forced to queue, transit of goods through the port is slow and costs are high; as much as 60% higher between Tanzania and China than between Brazil and China, according to the World Bank. The modernisation and expansion project will double the portâ&#x20AC;&#x2122;s capacity to 28 million tonnes by 2020, and more than triple it to 34 million tonnes by 2025. Multilateral finance development institutions including the African Development Bank, Development Bank of Southern Africa and the World Bank have expressed interest in funding the project. Aside from the port modernisation, a recent agreement to give the railway known as the Central Line a makeover will help Tanzaniaâ&#x20AC;&#x2122;s landlocked neighbours reach Dar es Salaam.

Serenje-Nakonde Road Link Constructed in the late 1970s, the Serenje-Nakonde road corridor took a hammering until 1995, when it received maintenance for the first time. The African Development Bank has expressed interest in funding the Chinsali-Nakonde leg of the corridor, which spans 611.5km, to the tune of $252 million. The project is part of a push to reduce costs along the North-South Corridor and Dar es Salaam corridor and to improve the competitiveness of the eight countries it serves. Among the bodies supporting the project are the COMESA-EAC-SADC Tripartite Project Preparation and Implementation Unit (PPIU), TradeMark Southern Africa (TMSA), the European Development Fund and UKAid.

Estimated project cost:

$384m

$674m

tonnes expected port throughput in Africa by 2040

p88

For more on infrastructure

8,599Km

The length of roads in the NSC, passing through Botswana, Democratic Republic of the Congo, Malawi, Mozambique, South Africa, Tanzania, Zambia and Zimbabwe

Invest in Africa 2016 | 59

Regional integration Greater regionalisation of power in Africa will help deliver affordable electricity to those who currently live without it, writes Pamela Whitby

Sub-Saharan Africa’s four power pools SAPP

Thermally driven, though with a growing focus on hydropower, the Southern African Power Pool coordinates the activities of power utilities in SADC. Holding 82% of installed capacity in the pool, South Africa is the dominant player here. With bilateral agreements signed between 28 countries, SAPP has done better on the trade front (7.5% in 2010). In 2014, SAPP received World Bank financing towards the cost of a programme to accelerate transformational energy projects in the region covering the period up to 2040.

WAPP

Founded in 2000, the West African Power Pool, an ECOWAS institution, is made up of 26 public and private generation, transmission and distribution companies. Hydro accounts for 30% of existing capacity. In late 2015, WAPP’s general secretariat considered studies that included the 450MW Maria Gleta and Domunli regional thermal plants and the Souapiti Hydropower Project.

EAPP

Electricity trade in the East African Power Pool, where Egypt holds the dominant position, was just 0.4% in 2008. Within this power pool the present share of hydro is 24%. In both WAPP and EAPP, future generation investments are mainly in hydropower.

CAPP

In Central Africa, where hydropower dominates (86%), less than 1% of electricity crosses international borders. 60 | Invest in Africa 2016

Power pools: a beacon of light

n Africa, where more than 600 million people are still living in the dark and electricity is among the most expensive and unreliable in the world, solving the continent’s energy crisis has never been more pressing. Energy resources in sub-Saharan Africa are by no means in short supply. Consultancy firm McKinsey & Company estimates that, including solar, Africa has a “staggering” 10 terawatts (TW) of potential power generation capacity, of which 1.2TW could come from gas, hydro, geothermal, wind and coal. However, a major challenge in Africa is that, despite abundant energy sources, they are not homogenously distributed across the continent. For example, of the 400 gigawatts (GW) of estimated gas potential, 60% is found in just three countries: Mozambique, Tanzania and Nigeria. Meanwhile, 50% of the continent’s potential hydropower is concentrated in the Democratic Republic of the Congo.

Demand dilemmas

Little wonder then that power pooling, a concept that allows resource-rich countries to export to those with limited capacity, has emerged as a solution to the problem. In principle, power pools are a great idea and they have been promoted by both regional and global institutions as a way to meet the continent’s energy needs. Take a country such as Zambia, where the great Zambezi River rises to power 94% of the country’s energy mix and is the major hydropower resource in Southern Africa. If it has a very wet year and a neighbouring country experiences a power deficit, power pools enable sharing of that excess capacity. The big challenge right now is this: few countries in sub-Saharan Africa run surpluses

and, aside from bilateral trade on long-term contracts, there is very little trade through these pools. In fact, less than 8% of electricity currently crosses borders in any region.

Cross-border power trade

The Southern African Power Pool (SAPP) – created by the Southern African Development Community (SADC) and the first to launch in 1995 – has been most successful, with 7.5% of its power crossing international borders. The majority of this figure is made up of an electricity exchange between Cahora Bassa in Mozambique to South Africa and the return from South Africa to Mozal, an aluminium smelter joint project. Within the Central African and East African power pools (CAPP and EAPP) less than 1% crosses borders. What is clear is that Africa’s power pools have been proactive in getting transmission links built, often with loans from donors, and building the necessary skills base. In general though, the expansion of generating capacity has lagged growth in demand. One consultancy, active in work on the region’s power pools, warns that unless countries develop more capacity than they need, even just for seasonal periods, there is little scope for trade. This makes the case for investment a risky one. But continued investment is what is required. In its 2015 Powering Africa report McKinsey argues that: “If every country builds what it needs, the region would require about $490 billion of capital for new generating capacity, plus another $345 billion for transmission and distribution.” Effective regionalisation, however, would result in 9% savings on capital expenditures in sub-Saharan Africa and would reduce the levelised cost of energy by 8%. •

Regional integration © Xinhua / Alamy Stock Photo

Numbers to know

48%

of all people without access to electricity live in Africa

150KWh

per capita is the average electricity consumption in sub-Saharan Africa, excluding South Africa

1,600tWh

of electricity consumption is projected for Africa by 2040

70-80% 40%

iStock Images

An energetic blend

The Zambezi river in Zambia provides 94% of the country’s energy mix. Zambia signed the first ever power pool agreement in Africa with DRC in the 1950s

Ghana 1000, a gas-to-power project, is viewed as a turning point in power generation in West Africa. In a project involving private sector expertise, but backed by strong government support, the One Energy consortium is expected to deliver 1300MW of generation capacity. International firms include US-based Endeavor Energy and General Electric, and France-based Eranove, but the deal also has a strong local flavour in the form of Ghana’s Sage Petroleum. The consortium says it is committed to engaging with local companies to subcontract with the primary engineering procurement construction contractor. Aside from bringing power to Ghana, it could become an export hub to help unlock neighbouring economies.

of new electricity capacity could come from gas from 2020 onwards (more than 25% from renewable resources)

$800bn

in capital is required for new generating capacity, transmission and distribution

$40bn

of savings are expected to come from a significant increase in regional integration

Invest in Africa 2016 | 61

Source: McKinsey – Brighter Africa: The growth potential of the sub-Saharan electricity sector

anticipated electrification levels by 2040

Regional integration

Africa’s first ever continent-wide business network began work last year with a focus on a Senegalese hydropower project

The Katse Dam in Lesotho. The CBN will focus initially on energy projects

Fast-tracking infrastructure projects in Africa

aunched in June 2015, the Continental Business Network (CBN) was established to facilitate dialogue between highlevel government officials and senior African and global business leaders. Its aim: to fast-track Africa’s major infrastructure projects, specifically the 16 prioritised at the Dakar Financing Summit in 2014. Symerre Grey-Johnson, Head of Infrastructure, Partnerships and Resource Mobilisation Division at the New Partnership for Africa’s Development (NEPAD), says: “As of right now, the council has decided they will really focus on energy projects.” This decision was taken in New York in October, when the 21-strong CBN council met to identify and endorse a work plan for 2016. Singled out as the first energy project is Sambangalou, a hydropower development that spans four West African countries – Senegal, Guinea, Guinea Bissau and The Gambia. Although

62 | Invest in Africa 2016

implementation. It will meet four times this West African project falls sixth on a year and identify relevant projects to the Dakar list, Grey-Johnson says it is be tabled for discussion. viewed as “low-hanging fruit”. Hard infrastructure projects, such The project, to be executed over a as those on the Dakar list, or any of period of five years, will include the the 433 Programme for Infrastructure development of a 128MW dam with an Development in Africa (PIDA) projects, annual output of 402GWh into the grid. are one way in which “It’s a huge the CBN will be applied. infrastructure project However, it will also be in terms of energy and used as a platform to one that the [CBN] tackle some of the softer council has decided issues, such as policy they are really going reform, regulation, to focus on,” he says. customs and so on. The structure of of power will be generated On governance, CBN is split in three by the Sambangalou dam Grey-Johnson says that ways: a general as this is the first-ever network, including continental business umbrella, in the chief executives, government officials, conceptualisation phase the focus was patrons of NEPAD and other multilateral on getting buy-in and support. institutions; a council of 21 personalities; This has been achieved, and while and a secretariat. there will be hiccups along the way, The focus of the council, which acts the fact that a continental dialogue to a bit like a company board, is to address support regional projects is now under project preparation issues such as way can only be a good thing. • design, financing, structuring and

402gw

Regional integration Transport, energy and water lie at the heart of the Horn of Africa Initiative, which aims to reduce poverty and spur economic activity in this complex and conflicted region

Grabb i n develo g econom p i m e the ho nt by c rns

he Horn of Africa Initiative (HoAI) gathered momentum in April 2007, when IGAD, the Intergovernmental Authority on Development in Eastern Africa, and the European Union (EU) launched an implementation strategy for developmwent in the region. IGAD, a body comprising eight countries – Djibouti, Eritrea, Ethiopia, Kenya, Somalia, Sudan, South Sudan and Uganda – believed that the initial conception, which originated out of the impact of the region’s troubles on the EU, had ignored underlying causes such as abject poverty, poor physical infrastructure communications and institutionalised dependency on food aid. The initial step in implementation, the first so-called joint assessment mission (JAM1), was to identify a long-term vision for the region. This took place in October 2007 and included linking major ports and trading hubs through a ‘ring corridor’ with feeder links. Other areas of joint interest, such as migration, terrorism and climate change were also identified. In 2009, the so-called Mombasa Roadmap (JAM2) was defined with a focus on projects that would

the World Bank agreed to provide $500 million for the construction of a road linking Eldoret in Kenya to Juba in South Sudan

provide interconnectivity in transport and energy and deliver on the objective of better managing water resources and food security. Data from the Infrastructure Consortium for Africa suggests that by 2011, a number of priority projects had been identified with costs totalling around $5.9 billion. Among the major projects first to be implemented were the Nairobi-Addis Ababa corridor, which received funding of $506 million from the African Development Bank; the EU’s $116 million Djibouti-Addis railway rehabilitation; and a $16 million water platform for the region funded by EDF Energy. Investor interest in the fast-growing Horn of Africa region continues and, in 2014, the HoAI once again garnered the attention of leaders from global and regional institutions, including the World Bank, United Nations and African Development Bank. Together, they pledged to commit $8 billion to projects in the region over the next few years. One major road infrastructure project was announced in 2015, when the World Bank agreed to provide $500 million for the construction of a road linking Eldoret in Kenya to Juba in South Sudan. The total cost of the project is estimated to be $676 million and, according to the Kenyan Ministry of Transport, construction will start this year, taking six years to complete. The African Development Bank is also expected to play its part in funding the construction. • Invest in Africa 2016 | 63

Ending energy poverty

The energy sector is heating up

64 | Invest in Africa 2016

espite some grounds for optimism, energy poverty remains one of the biggest single obstacles in the fight to improve living conditions for hundreds of millions of Africans. The figures are stark. With 12% of the world’s population, sub-Sahara accounts for less than 2% of global generating capacity. Installed grid capacity in sub-Saharan Africa – up to one third of which can be non-operational – is estimated in the latest report from the Africa Progress Panel (APP) to be around 90 gigawatts. That is less than the capacity of the whole of South Korea, and half the capacity is accounted for by South Africa alone. Despite 15 years of sustained economic growth, the energy gap between Africa and the rest of the world has been widening. Regionally, two in three people – around 621 million – have no access to electricity; in some countries the figure is fewer

Despite abundant reserves of fossil fuels and even greater renewable energy resources, Africa remains desperately short of electricity, but public and private sector momentum is building, as Michael Cassell reports

China International Water & Electric Corp, which operates the Kaleta dam (pictured) in Guinea, is in talks with the country to build a $2 billion dam that would double Guinea’s energy output

than one in 10, and only 10 nations have achieved access rates greater than 40%. Demand for electricity is rising rapidly. Urbanisation, population and economic growth are all driving increases in power demand, and African governments need to respond with ambitious electricity generation and distribution plans. The International Energy Agency (IEA) says the region, consequently, is the only one in which the absolute number of people without access to modern energy supplies is set to rise up until 2030. Africa’s total share of the global population without electricity is forecast to increase over the same period from just over 47% to almost 67%. Based on those trends, it will be 2080 before the continent achieves universal access to power. In the meantime, the APP estimates that 138 million of pic thecaption pooresthere households across Africa that live on less than $2.50 a day are now spending $10 billion a year on energy-related products, such as charcoal, candles, kerosene and firewood. It describes as “indefensible” the fact that Africa’s poorest are also paying among the world’s highest prices for energy; cutting these by half would create sufficient savings to take as many as 26 million people directly out of poverty. The challenge to make modern energy supplies available on such a scale is enormous. But what will it take to achieve? Current estimates suggest that investment in the African energy sector is running at around $8 billion annually, but the APP says that it needs to rise to $55 billion a year in order to provide universal electricity access. The better news, however, is that African governments now fully recognise that inadequate energy systems are proving to be a huge barrier to the development of dynamic, mixed economies and fairer, more inclusive societies. Most notably, this acknowledgement has been reflected in the creation of the Programme for Infrastructure Development in Africa, the African Union-led initiative committed to encouraging integrated, regional and continental infrastructure networks in energy, transport and communications. International cooperation has also moved into a higher gear. In 2013, United States President Barack Obama announced a $7 billion commitment to the region’s energy sector, aimed at increasing electricity access by 60 million households and businesses by 2018. Alongside this ambitious programme, the EU-Africa Energy Partnership intends to bring sustainable energy to an extra 100 million Africans by 2020. In addition, Chinese direct investment into the African energy sector has risen at a rate that makes it the largest single source of external finance for power generation investment. The

Waldo Swiegers/Bloomberg via Getty Images

Ending energy poverty

Invest in Africa 2016 | 65

World Power Holdings-placed.indd 9

14/12/2015 14:15

Ending energy poverty APP estimates that Chinese funding into African energy markets hit $16 billion between 2000 and 2012, and is still rising. The increasing availability of funds from a widening variety of sources means some nations have already been making impressive advances, raising the level of net electricity generation by 7% year-on-year over the past decade, while others are meeting or exceeding the 4% per annum growth projected as necessary up until 2040 by the IEA. Since 2000, net electricity generation has risen by 4% or more in 33 countries, with many of them planning to at least double generating capacity by 2020. For example, Rwanda has embarked on an accelerated programme to see 70% of its population having access to electricity by the end of 2017, up from only 12% in 2012. In Ethiopia, where electricity demand has risen sharply, plans are under way to achieve a fivefold increase in power output. Increasingly, governments unable to fund their ambitions from within their own resources are transforming their energy sectors – unbundling power generation, transmission and distribution networks – and opening the door to private investors. Huge amounts of capital need to be mobilised for energy infrastructure development; private African and international equity investors, for whom the market would once have been a ‘no go’ zone, are seizing new market opportunities arising from energy market reforms. South Africa’s liberalisation programme, in which over 100 different investors have so far injected in excess of $14 billion, is being closely followed by other countries. One of the most striking examples of reforms so far is Nigeria, which has now successfully attracted some of the new generation of private investors.

the power purchase agreements they sign have been heavily skewed in favour of investor interests. Such agreements are crucial for the success of investment and governments increasingly realise that an established regulatory and legislative framework, along with financial transparency, is fundamental to success. The critical factor, however, is the tariff, which has to be cost-reflective, but which governments will invariably try to keep low for political reasons. Regulators will play a pivotal role in getting the balance right. Governments will also have to end inefficient and inequitable energy subsidies that, according to the APP, cost upwards of $21 billion a year – funds that could be diverted to the provision of cleaner, cheaper energy. Much of the investment needed across Africa is being raised domestically. Countries such as Cameroon, Ethiopia, Ghana, Kenya, Mali and Uganda have in recent years more than doubled budget allocations for energy-related projects. Recourse to sovereign debt financing is also making available new funds with, for example, Kenya issuing infrastructure bonds on Eurobond markets. Pension funds are being harnessed in some countries for energy financing, such as in Ghana and Botswana. At the same time, a new generation of investment funds is emerging. US-based Carlyle Group, which raised $591 million on its first African Fund, is now expanding energy investments in East Africa. Africafocused private investment firm Helios Investment Partners has been raising funds for energy infrastructure projects, while emerging markets equity firm Actis this year formed a renewable energy joint-venture with Mainstream Renewable Power to build between 700-900MW of wind and solar power across Africa by 2018. Recently, the Norwegian Investment Fund for Developing Countries and the UK’s Commonwealth Development Corporation injected funds into Globaleq, one of the largest foreign equity investors and power sector operators in Africa. Blackstone, another of the world’s largest private equity companies in infrastructure, is partnering with Nigerian company Dangote Industries to invest up to $5 billion in energy infrastructure projects throughout the sub-Saharan region. There is, undeniably, much more to be done; the energy deficit across Africa remains deep and could yet widen before it narrows again. But after decades of neglect, new thinking combined with fundamental energy market reforms are attracting new and varied forms of investment on a scale that offers hope for the future. In the words of the APP: “There is a long way to go and the record is mixed. But the potential for a breakthrough in energy is increasingly evident.” •

Huge amounts of capital need to be mobilised for energy infrastructure development

‘Hybrid’ energy markets

Few governments have, however, embraced wholesale liberalisation, and what has emerged are ‘hybrid’ markets in which state-owned utilities continue to occupy a key role alongside a new generation of independent power providers (IPPs) able to generate and attract investment. The independent providers in Ghana, Kenya, Nigeria and Tanzania all include some degree of government financing; across the continent, the APP calculates that around one third of all IPPs include equity stakes from African governments. There are now around 130 independent power producers operating across sub-Saharan Africa, accounting between them for about $8 billion of investment. Their creation has not been without difficulty, with critics claiming that the terms of

Vital statistics

621M

people living in sub-Saharan Africa have no access to electricity

$7bn

has been pledged by the United States to the region’s energy sector

100m

Africans should gain access to sustainable energy by 2020 through the EU-Africa Energy Partnership

$16bN

is estimated to have been injected by Chinese investors into African energy markets between 2000 and 2012

2017

is the year by which Rwanda aims to give 70% of its population access to electricity

Invest in Africa 2016 | 83

Solektra international PERSPECTIVE

A micro solution to Africa’s massive energy crisis It is a privilege to contribute to the 2016 publication of Invest in Africa and add to the meaningful exchange of ideas this platform was created to foster. This opportunity marks an important milestone for Solektra International, the company we established in early 2014 to offer solutions to the African energy and water challenges and our main programme, Akon Lighting Africa, which aims to provide clean and affordable energy in Africa’s rural and off-grid areas. We have never wavered in the belief that – with the right investments – renewable energy can bring 622 million Africans out of darkness. The spotlight on solar and other forms of renewable energy at COP21 and the 2016 US-Africa Business Summit only confirms the need and growth in clean energy solutions. Yet much remains to be done, and public-private

Akon Lighting Africa_placed.indd 80

partnerships will play a major role in the future solutions to this crisis.

Africa’s energy crisis can be addressed As we all know, broad-based access to electricity is fundamental to Africa’s growth. Businesses cannot grow without a steady, reliable source of energy. Children cannot study, read or do their homework at night. Men and women cannot provide for their families past sunset. We created Solektra International to not only increase access to renewable energy in Africa, but also invest in economic growth and employment on the continent. Our core commitment is to African development through a model of self-empowerment. In the 15 countries where we now work, and the 40 that we plan to reach by 2020, we have created and will continue to create jobs and

equip Africans with the tools needed to meet the energy crisis. Charity and aid are not enough. In order to provide two thirds of the African population with access to electricity, we must employ a more sustainable and holistic approach.

Looking for a holistic approach through micro-grids Our vision for Africa’s electrification is built on the promise of green micro-grids, a solution that provides clean, low-cost energy to remote communities too often overlooked. Green micro-grids are decentralised electrical power generation and distribution systems that rely heavily on renewable energy, such as solar, wind, small-scale hydro or various forms of biomass. This solution will support African populations, which are often scattered.

11/01/2016 13:58

Solektra international PERSPECTIVE

DAGENCY - David Monfort

Solektra International is pioneering green micro-grids as a solution to the African energy challenge

Often, the cost of a main electrical grid is too high, so green micro-grids provide a cost effective, clean energy alternative for small, rural communities. One day, green micro-grids could even create hubs of economic and social activity between communities, by transmitting surplus energy from one village to another. With a sharp decline in the price of solar technology (the price of solar panels has sharply decreased from $5/watt to less than $1/watt over the past few years), there has never been a better time to invest in green micro-grid systems throughout Africa. Our next step is to develop 150,000 green micro-grids, relying primarily on solar energy, to provide 60 million Africans with electricity (based on 40 kilowatts per person). We have a strong infrastructure and network of partners in place, but we cannot carry out such an ambitious goal alone.

More innovative public-private partnerships for a bigger impact We invite a wide range of groups and individuals, across public, private and non-profit sectors, to join us. Like most problems facing the

Akon Lighting Africa_placed.indd 81

developing world, the challenge of generating enough electricity to meet Africa’s demand – and ensuring broad-based access to this resource – cannot be solved in isolation. Governments, private financial institutions, multilateral organisations, NGOs and business leaders must come together, join forces, and acknowledge the unique role they each play. For the public sector, there is much to be done. Few African nations have adopted progressive energy policies, where bold renewable energy investments are combined with market-based approaches that incentivise renewable energy use. Growth in the renewable energy sector also relies upon smart fiscal policies, as well as clear and consistent legal and regulatory structures. While these governmental reforms are under way, innovation within the private sector must continue on a parallel track. From massive wind turbines to solar trackers, Africa’s energy needs cannot be met without greater technical innovation and creative financial models. Much of the technology and know-how needed to power Africa already exists. The most promising research projects and pilot programmes cannot be scaled or replicated without significant financial investments. Yet it is inadequate funding and collaboration that exists at the core of what is keeping Africa off the grid. Multinational banks and financial institutions therefore also play a critical role in this process in order to support micro-grid projects and make them attractive to private investors. We have to think out of the box and consider models other than the traditional bilateral approach with one banking institution and one or a few states. For such projects, we need as many actors as possible who can commit over the long term, as we need to tap into all possible sources of financing, loans, supplier credits, export credits and project finance. If we can direct all these

available funds into one direction through an innovative financial structure, then we are sure to be successful. As an investor, a foundation, a government representative, or an expert in project financing, you can have a positive contribution to this effort, whether you wish to be part of these projects and get involved in micro-grid coalitions that we are setting up, or whether you wish to spread the word around you and explain to others why it makes sense. Please join us and help us to narrow the gap between Africa’s current growth and the continent’s vast potential. Maintaining the status quo is no longer a viable option. After centuries of darkness, micro-grids offer a long-awaited solution to the energy crisis that many have deemed too massive to conquer. By Akon, Samba Bathily and Thione Niang, Co-founders of Solektra International and initiators of the Akon Lighting Africa initiative Solektra International Africa Headquarters - Zone industrielle Porte 17 rue 935 BP 2337 Bamako REPUBLIQUE DU MALI + 1 202 322 07 22 solektra-international.com twitter.com/solektra_int akonlightingafrica.com twitter.com/akonlighting

11/01/2016 13:58

Ending Endingenergy energypoverty poverty Africa has the opportunity to show the way to a low-carbon future that can also deliver affordable power to hundreds of millions of people across the continent, but renewables are not an energy panacea

Unleashing Africaâ&#x20AC;&#x2122;s renewable potential

Tom Gilks/Alamy Stock Photo

7070 | Invest | Invest in in Africa Africa 2016 2016

Ending energy poverty

Solar power could prove to be the most transformative renewable energy option in Africa, with projects under way across the continent

The benefits of these alternative sources of ast swathes of Africa may still be energy are even more wide-ranging in sub-Saharan without access to electricity, but Africa than in many other parts of the world. the continent is incredibly rich in Non-hydro renewable resources can be scaled up potential generating capacity from far more quickly than traditional thermal energy a variety of renewable resources. systems and they can be deployed for both on-grid Utilising those resources offers not only the potential to slash greenhouse gas emissions, and off-grid supplies. They also offer the opportunity for foreign exchange savings for those nations forced but also the opportunity to lead internationally when to pay hard currency for energy imports. In addition, it comes to sustainable energy innovation. key sources of renewable energy have, in less than a More than half of sub-Saharan African nations decade, gone from being prohibitively costly to being have now conducted detailed renewable energy cost-competitive. assessments to gauge their own potential. And Wind and solar have become increasingly though it may not attract the attention it deserves, the region is registering some of the most remarkable competitive with fossil-fuel-fired generating systems and, in many circumstances, the cost of producing advances in solar, geothermal and wind power. electricity from biomass, geothermal sources, The Africa Progress Panel in 2015 again hydropower, onshore wind and solar photovoltaic highlighted sub-Saharan Africa’s potential for power can now be lower than the traditional generating renewable energy, with the trend alternative. Solar photovoltaic power generating continuing away from coal and towards natural costs have, for example, fallen by half in little gas, hydropower and other low-carbon alternatives. more than five years. Hydropower, for all the controversy surrounding The pace of transition is also accelerating. its environmental impact, continues to dominate The development of new technology, a rapidly the sustainable energy investment landscape – rising learning curve and the rise in available the Democratic Republic of the Congo, Uganda, generating capacity are combining to drive down Ethiopia, Mozambique and Guinea are among costs even further. But although a ‘renewables its current champions. Best estimates suggest only’ policy may remain unrealistic, or even the region could ultimately generate around undesirable, for many African nations, it is at 350GW of hydroelectricity. least sensible for governments to engage with Sub-Saharan Africa is also deemed to be capable a wide range of potential investors to develop of producing more than 100GW of wind-generated manufacturing capacity in solar panels, wind electricity. Deployment so far remains limited, turbines and other renewable technologies but a few countries – such as South Africa, Chad alongside more traditional fuel sources. and Mauritania – have zones with wind speed and reliability levels sufficient to efficiently generate large volumes of electricity. Ethiopia has one of Ensuring equitable energy provision Africa’s largest wind farms and Kenya is also South Africa continues to offer a leading example developing utility-scale wind power, while Angola, of what can be done. Since 2010, it has registered Mozambique, Namibia and Tanzania have potentially one of the fastest rates of growth in the world for large offshore wind resources. renewable energy investment. The country, which is The region also has an estimated 15GW of now preparing its fifth round of bids from investors geothermal power, concentrated in East Africa. keen to add to the 79 projects already awarded The Rift Valley’s potential is already being exploited by the government, has demonstrated that its by Kenya – where geothermal now contributes renewables procurement policy, which has been more than half of the total energy mix – and adapted in the light of experience, has attracted developed by Ethiopia. badly needed investment while driving down costs. But, of all the renewable energy options, solar But despite South Africa’s experience, the limits power could prove to be the most transformative. of renewable energy development in Africa have to It is Africa’s most abundant but least utilised be recognised. Many countries continue to struggle source of energy and potential capacity has been to attract investment, and while renewables have put as high as 10TW. Most of the region enjoys the potential to help the continent’s poorest, there more than 300 days of bright sunshine and high is no automatic link between their development irradiance levels; by 2030, solar photovoltaics could and equity of provision among consumers. be generating up to 62GW for distribution. Kenya’s national grid, for example, is Nigeria is rapidly scaling up solar capacity, transmitting more geothermal and with agreements already signed that wind power but it is principally serving will take the country across the 5GW wealthier urban centres and larger threshold. The world’s fourth-largest solar businesses. The danger is that new facility is under construction in western sources of electricity will bypass the Ghana, while in Mauritania solar energy rural poor and leave them no better off. now accounts for around one third of Governments must not only create new days of sunshine energy use in the capital Nouakchott energy sources but ensure they reach a year in suband 10% of the national grid. those most in need. • Saharan Africa

300

Invest in Africa 2016 | 71

Schneider electric PERSPECTIVE

A continent full of energy

“Africa is capable of unrivalled technological leaps. Some African people have never had a fixed landline, but today own two mobile phones. In the same way, each city must benefit from state-of-the-art technologies like Smart Grid. And each rural village must have access to renewable off-grid energy without waiting for classical solutions to be implemented,’’ says Mohamed Saad.

A formidable challenge In Africa, electricity demand is expected to double in the next 20 years, while 600 million people live without access to energy. How do we bring infrastructure in cities up to date and prepare them for the booming demographic? How do we provide rural access to electricity and enable economic development, food transformation and preserving, and access to education and healthcare?

Schneider Electric_placed.indd 80

The energy dilemma is technology-centric The world is entering what is already known as the fourth industrial revolution, with intelligent infrastructure connecting everyone and everything. As a technology company that invests €1 billion of revenues in research and development every year, we know that, to a very large extent, the solution to the energy dilemma in Africa is centred around technology.

Off-grid as a game changer Today, the access to energy rate is below 5% in rural areas. We estimate that 60% of additional power generation will need to come from off-grid installations (stand alone and mini-grids) if universal access is to be achieved by 2030. For the past six years, Schneider Electric has reinforced its Access to Energy programme. And

12/01/2016 11:55

Schneider electric PERSPECTIVE Mohamed Saad, President of Schneider Electric Africa & Caribbean, shares his perspective on how the company is addressing the continent’s energy challenges

Schneider Electric Access to Energy programme The worldwide lack of electricity affects 1.2 billion people, approximately 85 per cent of whom live in rural areas. Eighty-seven per cent of this population is concentrated in sub-Saharan Africa and South Asia. At Schneider Electric, we play an active role in promoting economic, social and sustainable development in places where we operate. This is why, in 2009, we launched our Access to Energy programme tackling the three major limiting factors to energy access: lack of investment, innovation and skills. Since its launch, the Access to Energy programme has: • provided energy to more than 3.1 million households with specific Schneider Electric equipements and sustainable business models; • invested in 13 SMEs; and • created almost 40 training programmes in energy management reaching more than 100,000 people. Explore our Access to Energy playbook: http://energy-access.schneider-electric.com/

Schneider Electric_placed.indd 81

we know that deploying technology is not enough. This is why at the core of our approach is the will to set up a sustainable model specific to each village. Our teams define the right combination of technologies (power, lighting, water pumping, among others), they study the business model (how much should it cost to recharge a phone, for example) and, more importantly, train people to operate and maintain equipment to make sure our solutions can last as long as possible.

Smart grids to strengthen utilities

Raising technical skills Counterfeits still represent the biggest share in electrical installations, new off-grid technologies need to be mastered and the ‘internet of things’ opens new applications. The challenges are high in the pursuit of universal and safe access to electricity and will only be achieved through developing the right skills. To answer these challenges, Schneider Electric trains thousands of professionnals and future electricians every year through its Access to Energy programme and training centres spread across the continent.

In the next 20 years, cities will become the economical and demographic motor of Africa. How do we power this motor when the cities’ grids are down 20% of the time? At Schneider Electric, we aim to make existing grids easier to monitor, manage and maintain, and make them capable of predicting demand. Furthermore, utilities need to produce more energy from sustainable sources, as only a fraction of the continent’s 150,000 gigawatts of solar energy potential is used today. But, every utility knows that the more solar energy you integrate, the harder it is to keep a stable grid. Intermittent energies are pushing the need even more for smart grids.

Revealing Africa’s entrepreneurial potential

Energy efficiency

Africa is a continent full of energy through its resources and its people’s willpower. Schneider Electric has been committed for decades to make the most of this energy and we are convinced the time for smart energy is now.

Of course, the best way to get more energy is by consuming less. Schneider Electric today offers equipment and automation solutions to save up to 30% electricity in offices, industrial buildings and data centres. Furthermore, more and more organisations trust Schneider Electric to manage their installations remotely, as an outsourced energy manager. With buildings representing almost two thirds of electricity consumption in Africa, the potential savings are tremendous, both at African company and utility level.

Countless African start-ups are currently tackling the energy challenge with original approaches. Schneider Electric has decided to support African entrepreneurs, who know what the relevant solutions are better than anyone else. In March 2015, with several institutional and private partners, Schneider Electric launched the Energy Access Venture Fund, securing commitments of €54.5 million to invest in five-year programmes for around 20 African small and medium-sized enterprises. The objective is to improve access to sustainable energy in sub-Saharan Africa for a million people by 2020.

www.schneider-electric.com

12/01/2016 11:55

The leading source of analysis, opinion and comment on the global agenda

Sub-Saharan Africaâ&#x20AC;&#x2122;s power-generation capacity is estimated at more than

10TW How will G20 leaders work with Africa to unleash the continentâ&#x20AC;&#x2122;s energy potential?

Find out more at

G7G20.com

@g7_g20 Published by

linkedin.com/company/g7g20

In partnership with G7 Research Group G20 Research Group

Ending energy poverty

The key element of how energy moves from generation to consumption has, too often, been overlooked, leaving most Africans with poor or non-existent power supplies

The delivery conundrum

connected. Utilities can, however, he pattern of unreliable and unequal reduce these costs by subsidising a power distribution has served rural so-called ‘lifeline tariff’, which initially areas particularly badly and, even in provides electricity supplies at much urban areas where connection costs lower rates. are much lower, the utilities have Several African nations have generally lacked incentive to expand demonstrated the potential for into low-income areas. expanding grid access in rural areas. Energy plans in many African countries still In Senegal, for example, a programme of concessions do not envisage universal access to electricity by operated through private operators who meet 2030, and many remain committed to centralised targets for new connections in poor and remote distribution systems, implying that large-scale areas has proved electricity generating successful. In Ghana, plants will continue to the country has dominate the energy registered one of the landscape. The African fastest growth rates Union’s New in Africa for rural Partnership for electrification. Around Africa’s Development two thirds of the (NEPAD) agency, for population now has example, plans to add is the amount of electricity NEPAD plans access to electricity. as much as 14,000MW to add to Africa’s energy grid by 2020 The Africa Progress to Africa’s energy grid by 2020. The initiative has 15 priority energy projects, Panel (APP), in calling on African governments to prioritise the development of an ‘Africa grid’, including hydroelectric power and transnational oil claim that investing $17 billion in transmission and gas pipelines that will improve energy lines could save around $40 billion in capital penetration across the continent. But while such spending on generation through efficiency gains. plans allow economies of scale, they still demand Meanwhile, the International Energy Agency transmission and distribution networks, the cost estimates that increased regional transmission of which rises with distance covered. integration could reduce electricity costs by an average 8%, with some countries achieving Overcoming cost barriers cuts of up to 60%. But the picture is starting to change. Utility reforms There are long-standing plans for an 8,000km that attach more weight to expanding access are emerging, together with new technologies for on-grid North-South Power Transmission Corridor and a West African Power Transmission Corridor, as well and off-grid provision that are demonstrating what as the Grand Inga Hydroelectric Project in the can be achieved. High connection charges remain a Democratic Republic of the Congo, seen as the major barrier to many potential consumers, but centrepiece for a continent-wide power network. these cost obstacles can be reduced in a variety of ways – mainly by spreading or subsidising payments. The APP insists that such essential projects “must be under way by 2020” if there is any chance of Ongoing tariff charges can also be inhibiting, with universal access to electricity being achieved. • many households unable to afford tariffs even if

14,000MW

Invest in Africa 2016 | 75

Midal Cables_placed.indd 2

14/12/2015 13:31

Midal Cables_placed.indd 3

14/12/2015 13:31

Ending energy poverty

Q&A

Q: The ECOWAS Policy for Gender Mainstreaming in Energy Access aligns energy interventions with gender equality. What are the perceived inequalities between men and women in the energy sector in (West) Africa? A: It is a known fact that energy poverty in the West African region is affecting both men and women, young and old. But it does so at varying degrees, as women suffer more as a result of the regionâ&#x20AC;&#x2122;s energy challenges. Women are not more affected because of their sex, as women, but we see that gender, which is the socially constructed roles and attributes assigned to women, makes them more vulnerable to the impact of energy poverty. For instance, we see that women do not have the same access to resources as the men in the society do, due to traditions and cultural norms. The Situation Analysis of Energy and Gender Issues in ECOWAS Member States report, which laid the groundwork for the policy, reveals that in Senegal and Mali women hold only about 10% and 5% of land titles respectively. It is important to note that throughout history, land has been recognised as a source of wealth, social status and power globally. The lack of equal access to resources leads to women not having the same opportunities as men. The report shows that women access finance much less frequently than men and this is explained by their lower wealth and income status. We also see a difference in the level of representation and participation in the decision-making processes that result in energy development. Whether as beneficiaries in communities where an energy project is being discussed, in public offices where energy programmes and projects are designed, or in the private sector where areas for investment in the energy sector are decided, there is generally a low representation of women. These gender inequalities, which hinder women from having the same investment power or voice as men when it comes to improving energy access, are issues that need to be addressed for the regionâ&#x20AC;&#x2122;s sustainable development and are issues the policy was developed to tackle. Image: UNIDO/ Gerhard Fally

Mahama Kappiah, Executive Director, ECOWAS Centre for Renewable Energy and Energy Efficiency discusses gender mainstreaming in the power sector

76 | Invest in Africa 2016

Q: Why will addressing these inequalities advance development objectives in Africa? A: The rationale for addressing these gender inequalities for the region and continentâ&#x20AC;&#x2122;s development is simple. For both human and economic development to occur, one of the critical issues we must address is energy poverty.

Ending energy poverty Bio • M ahama Kappiah was instrumental in establishing ECOWAS Centre for Renewable Energy and Energy Efficiency (ECREEE), which aims to ensure increased access to reliable, affordable and clean energy • U nder his leadership, ECREEE has attained international recognition as a pioneer of efficient renewable energy • K appiah was previously head of the ECOWAS energy division • H e is responsible for the creation of the West African Power Pool and the ECOWAS Regional Electricity Regulation Authority

If the ECOWAS region is to fight energy poverty and ensure universal access to energy for its populace, then we must have more people making both intellectual contributions and financial investments to improving access to energy services. Thus, barriers that hinder women from entering the energy sector (whether they are capacity related, financial or sociocultural, for example) would have to be addressed. It is also important that public and private financial resources, which are scarce, are used effectively. This means that investments are based on real needs, not perceived needs, of the beneficiaries. And for this to occur, women and men must be well represented at the decision-making tables. Q: What sort of measures does ECOWAS/ECREEE suggest to ensure that all energy policies are nondiscriminatory and gender inclusive, and how will it monitor progress? A: All of the member states generally have some sort of national energy policy or strategy in place. And with the adoption of the ECOWAS Regional Renewable Energy (RE) and Energy Efficiency (EE) policies, countries are developing their own national RE and EE policies. We envisage that in the years leading to 2020 and 2030, countries will review their national energy policies, develop RE and EE policies and other energy-related policies. ECREEE will therefore work closely with the member states to ensure that the policy formulation and review process is participatory, incorporating mechanisms for genderinclusive public consultation and feedback. Moreover, in partnership with the country actors and stakeholders, ECREEE and the member states will ensure that the policy measures are based on prior assessments of energy-gender interactions, specific to countries. At the national level, the implementation and monitoring of this objective of the ECOWAS Policy for Gender Mainstreaming in Energy Access will be executed through the gender focal points at the energy ministries, who also serve on the Technical Advisory Group of the ECOWAS Programme on Gender Mainstreaming in Energy Access.

female entrepreneurs will be given... financial support to establish energy businesses

Q: PGMEA hopes that by 2020, women will represent at least 25% of the public-sector energy workforce. How can more women be better integrated into the public energy industry? A: In energy ministries there is a large presence of women in secretarial, accounting, human resources and other administrative positions, but men hold most of the technical and managerial positions. Thus, the policy aims to increase the percentage of women in energy-related technical fields and decision-making positions to 25% by 2020, by increasing the number of women eligible for employment in technical and managerial positions and reducing the existing rate of men already working in these areas. Thus, in line with the policy, member states will implement gender-targeted recruitment; internship programmes targeting fresh graduates; and mentoring and support programmes for both young and senior female professionals, to achieve a representative balance of men and women in the public sector. ECREEE is already working towards this by ensuring that its regional training activities are gender balanced, equipping females working in the energy sector with sought-after technical skills to move up on the corporate ladder. Q: What can be done to encourage private energy-related businesses to employ more women? A: Like the public sector, women are seriously under-represented in the private sector. However, it is a known fact that companies with greater gender balance on the board and in leadership positions are more likely to outperform the market than those lacking gender diversity. Thus, under the framework of the policy, and led by the Ministries of Energy, awareness-raising and sensitisation activities will be implemented to inform business owners of the economic benefits of gender diversity as a growth strategy. On the other hand, to ensure that there is an availability of women with the skills needed, capacity building will be a core part of achieving this policy objective. Furthermore, through the ECOWAS Facility for Gender Mainstreaming in Energy Access (ECOW-GEN Facility), female entrepreneurs will be given technical and financial support to establish energy businesses throughout the region. • Invest in Africa 2016 | 77

Commodity markets

Oil and gas rig workers lift a pipe sub-connector at an onshore site in Gabon, where a major gas discovery was made in 2013

Greenshoots Communications/Alamy Stock Photo

78 | Invest in Africa 2016

Commodity markets Although lower oil prices have slowed investment in Africa’s oil and gas sector, momentum remains, and while a decade ago activity was restricted to a few parts of the continent, today it reaches into every corner, as Jeremy Bowden explains

Lure of African oil riches sustains investor interest

hile the oil and gas sector has expanded its presence in Africa, the continent is still relatively unexplored. It is the prospect of big discoveries that continues to be the key attraction for investors, along with rapidly rising domestic demand. Exploration success in 2013, when six of the top 10 global oil and gas discoveries were made in Africa, was followed in 2014 with finds by Statoil in Block 2 off Tanzania – bringing reserves there to 20 trillion cubic feet (Tcf) – and Eni, which made a major gas discovery in Gabon and a one billion barrel oil equivalent (boe) find in shallow water off the Congo. Eni was successful again in 2015, with the giant Zohr gas field discovery off the north coast of Egypt, which at 30Tcf has once again proven the continent has the potential for major discoveries. The huge find changes the energy dynamic for the whole of the eastern Mediterranean, and will draw considerable investment into Egypt at a critical time. The field is expected to serve both domestic Egyptian and south European markets, and makes development of other fields in the region more likely. Expected to come online by 2018, Eni’s latest analysis indicates that Zohr will yield an internal rate of return of 25%,

justifying fast-track development costing an estimated $7.69 billion. Eight wells will be brought on-stream annually from 2018 until 2026, when production is expected to reach a peak of more than three million cubic feet per day. The Zohr find increases Egypt’s 77Tcf of proven natural gas reserves – the fourth largest in Africa, after Nigeria, Algeria, and Mozambique – by almost half. Elsewhere across the continent projects continue to move forward. Recent oil and gas discoveries in Kenya, Uganda and Tanzania coupled with the region’s close proximity to Asia’s demand centres has stirred global explorer interest in East Africa. And West Africa’s oil and gas sector – dominated by deepwater finds – is expected to continue to grow in line with global deepwater expenditure, which is forecast to increase by 69% from 2015 to 2019 compared with the previous five-year period. After a rush of bidding rounds in 2014, licensing last year and in 2016 is expected to be relatively quiet, but acquisitions on the other hand are likely to increase, with companies looking for bargains as low oil prices depress asset prices. The biggest swap of ownership in 2015 came from Shell’s $86 billion acquisition of BG, which included assets in Madagascar, Tunisia, Kenya, Egypt and Tanzania. Companies actively expanding are typified by Bowleven, which Invest in Africa 2016 | 79

Commodity markets

Most significant offshore oil and gas discoveries in Africa, 2014 269.1m = Millions of barrels of oil equivalent = Global ranking of discovery 1 Angola

Senegal

Congo

Gabon

269.1m 4

258.1m 5

236.8m 6

224.8m 7

Tanzania

Angola

Senegal

Mozambique

194.1m 9

188.2m 10

188m 11

172.5m 13

Tanzania

153.9m 15

149m 16

125.7m 19

Source: Rystad Energy

Expected sources of foreign direct investment in African oil and gas, 2014 Middle East 8% Africa 9% China 22% Europe 25%

4% India 4% Asia 2% Oceania 26% North America

Source: PwC

80 | Invest in Africa 2016

champions a ‘counter-cyclical’ investment strategy. The company recently began exploration at the Bomono Permit onshore Cameroon, and at Block 11B onshore Kenya, as well as at Blocks 25, 28 and 29 in Zambia, which last saw exploration back in the 1980s. Bowleven’s application for two further blocks in Zambia is currently pending approval. Several major companies are also prioritising investment in Africa, including Eni and Chevron, which said it plans on “growing with Africa”. In Angola, where Chevron produces 121,000 boe per day, the company has begun oil and gas production from the Lianzi field, in the Block O concession, located in the unitized Cabinda offshore zone between Angola and the Congo. Further south in Angola, Chevron continued with the second stage of the Mafumeira field development in 2015, with first production on schedule for 2016. The company has also completed major repairs to the Angola LNG plant, with production set to resume at the end of 2015. Further north, Chevron is working on development plans for the Agbami Field in Nigeria, one of the country’s largest deepwater discoveries.

New frontiers

In West Africa, activity has spread well beyond the old focus of Nigeria, with a whole host of new frontiers being opened up by adventurous explorers. In Ghana, all projects are proceeding to plan, with leading independent Tullow Oil three quarters of the way to completing its triple-field deepwater TEN development, which remains on schedule and on budget for first oil in mid 2016. Tullow is also pushing ahead with its Greater Jubilee project in Ghana, with partners Kosmos and Anadarko. With 60% of Tullow’s 2015 oil entitlement volumes hedged at around $86 per barrel, and a similar picture in 2016, the Africa-focused explorer has

managed to significantly mitigate the impact of lower oil prices on cash flow, helping it to maintain investment. Altogether, Tullow spent a total of $1.9 billion capital expenditure (capex) in Africa in 2015, unchanged from 2014, of which Ghana’s Jubilee and TEN developments absorbed $1.21 billion. Nevertheless, 2016 capex guidance is down to $1.2-$1.4 billion, and the company, like many others, is also emphasising a strong focus on cost management to help cope with lower oil prices. Elsewhere in West Africa, Ophir Energy has finalised commercial terms for its Fortuna floating LNG project offshore Equatorial Guinea. And a little further south, offshore Congo, SOCO International is pushing ahead with plans to drill its Mer Profonde Sud commitment, targeting a potential resource estimated at 330 million barrels of oil, while it continues discussions with the Congo authorities over development options for the Marine XI field. In the neighbouring Congolese Marine XII block Eni discovered 250-350 million boe of gas and condensates in July, near its producing Nene Marine field. Eni plans further delineation wells, and is considering options for commercial development, taking in various oil and gas discoveries in the block, where it estimates combined resources at around 5.8 billion boe. Production from the block started at the end of December 2014, and by mid-2015 it was around 15,000 boe per day.

Eastern promise

Although only a small part of East Africa has been explored, with only 600 wells drilled across the region so far, reserve estimates have increased rapidly with the discovery of both oil and gas deposits over the past five years. Uganda and Kenya present opportunities for commercial oil production, while

Mozambique and Tanzania’s substantial offshore gas reserves and proximity to Asian demand centres offer the potential for a $15 billion LNG project by the end of the decade. Led by Anadarko, major contracts were awarded as planned in May, marking a significant step towards development. In Kenya, Tullow spent $100 million on exploration and appraisal in 2015, with resources estimated at around one billion barrels, and in Uganda – where reserves awaiting development amount to 6.5 billion barrels – it and partner Africa Oil have submitted field development plans. However, both countries need pipelines to the coast, and a new option for Uganda to send its production via Tanzania could delay the Kenyan project. Tullow estimates 2015 expenditure on all pre-development activities in the two countries at $225 million. The total oil and gas capex in the East African region was estimated at $4.19 billion in 2015. Of that, $482 million went to Kenya, where development of onshore and offshore prospects, along with pipelines, a refinery and a floating storage and regasification unit, will increase spending quickly up to $2.285 billion by 2020. Even landlocked Ethiopia is expected to see activity rise steadily, with oil and gas investment forecast to expand from $47 million in 2015 to $432 million in 10 years’ time. To help provide the capital required for development, the World Bank and other international institutions pledged a combined total of more than $8 billion in new financial assistance in late 2014. The money will support infrastructure projects including the development of oil and gas pipelines across all eight Horn of Africa countries. This should help facilitate development of oil fields and provide many opportunities for investors, as well as cushioning the blow to private financing from lower oil prices. •

The floating, storage and offloading vessel supplied for the development of Tullow Oil’s TEN development has set sail for Ghana. The project is on schedule to produce oil in mid 2016

$4.19 billion

Tullow Oil

Commodity markets

The estimated total oil and gas capital expenditure in the East African region in 2015

Invest in Africa 2016 | 81

Commodity markets

Sally White looks at the bright spots in the African metals and minerals sector

Glimmers of hope in mining sector

frican mining companies can be encouraged in 2016 by two positives, at least. Firstly, despite the scare stories, growth in China’s economy is not expected to fall off a cliff. Secondly, India, still a fast-growing economy, is showing signs of stepping into some of the resources space that other countries are vacating. In what was billed as its biggest gathering of foreign dignitaries since the 1983 Non-Aligned Summit, New Delhi hosted representatives from all 54 African states in October at an historic third India-Africa Forum Summit. Among its news was that coking coal in South Africa featured on India’s buy-list, according to a Reuters interview with India’s Coal Secretary Anil Swarup. State-owned Coal India was, he said, looking at acquiring assets. India is also, according to newspaper The Financial Express, exploring uranium mining opportunities in Niger and Namibia. India is

82 | Invest in Africa 2016

already interested in African gold and diamonds, although so far largely as a raw material buyer. However, it has invested in skill training in an important initiative instigated by the African Union. With experts from the Indian Diamond Institute, a training centre for gemology, trading and polishing was set up in Botswana, the world’s largest producer, near De Beers’ rough diamond sales centre. Setting the scene for the India-Africa summit, the Confederation of Indian Industry pointed to the importance of India-Africa trade in precious stones and metals. Not only is India the world’s major jewellery maker, but it is the world’s leading processor of diamonds (85% of the market) and a major buyer of Africa’s gold. India’s total Africa-bound investment over the past decade amounted to $30-$35 billion, a fraction of China’s. Its style is very different. Although some of India’s highest profile conglomerates are mining in Africa – notably Tata and Vedanta – most of India’s foreign direct

Commodity markets metals importer is just one of the headwinds Africa’s mining companies have been facing in a perfect storm. There was also the rising dollar, the huge drop in resources prices, tighter global financing conditions, investor retreat from emerging markets, share price collapses, mounting domestic security threats, energy shortages and the impact of Ebola. All of this is having a significant impact on African economic growth, as minerals and ores account for two thirds of merchandise exports.

Weathering the storm

Olivier Polet/Corbis

Botswana is known as the world’s largest diamond producer, in terms of the quality and grade of its diamonds

Amidst the uncertainty, production continues. mines have opened and the mining environment has been improving

investment (FDI) is greenfield and through joint ventures that are not in the headlines. However, Prime Minister Narendra Modi has been campaigning for a stronger presence in Africa, as China’s slowdown impacts, to boost India’s political and economic relations.

Chinese demand

Last autumn’s sharp rise in commodity and currency market volatility has increased the pressure on mining companies to downsize, mothball or sell mines and cut jobs in order to reduce debt and losses. This has come at a time of elections across a whole swathe of Africa – from the Congo to Uganda, Tanzania and South Africa – so tensions with governments have risen. Yet, amidst the uncertainty, production continues. Mines have opened, and while progress has not always been consistent across the continent, the mining environment has been improving. In-roads are being made on tackling electricity shortages – about 95 energy projects worth more than $50 million were under construction in Africa in 2014, according to consultants Deloitte. Legislation is being upgraded – for example, Kenya has called in international consultants McKinsey to help overhaul its mining laws, planning to increase revenue from an industry that currently represents just 1% of its GDP. Backed by billions in Chinese investment, Ethiopia has made enormous headway on building infrastructure in the form of 5,000km of new railway lines (one linking new potash mines to the Red Sea), new roads and hydro-electricity. Nigeria should be able to industrialise its gold mining because the Dubai Gold Refinery Company is establishing a refinery in Zamfara this year – the first refinery in the country. Cote d’Ivoire was in the World Bank Group’s Doing Business Report’s top 10 reformers in both 2014 and 2015 after upgrading both its infrastructure and mining codes. Recovery in markets, in prices anyway, is already being forecast, even in copper where African miners have felt some of the heaviest cutbacks (especially by Glencore in the Democratic Republic of Congo and Zambia). So much metal is being taken out of production that the industry body, the International Copper Study Group (ICSG), forecasts a 2016 global deficit. According to analysts at bankers Citigroup and research group Capital Economics, in that case prices should begin to rise. •

Bart van Ark, chief economist at The Conference Board, a US-based global research association, says in relation to China’s economy that the broad consensus is that China is having a “soft landing”. The US Conference Board forecast in The Long Soft Fall in Chinese Growth in 2014 that its growth rate will ease to around 5.5% over the next five years. The slowdown in economic growth of such a major

Invest in Africa 2016 | 83

AFRICAN UNION-AFRICAN MINERALS DEVELOPMENT CENTRE PERSPECTIVE

The Africa Mining Vision after the boom Mineral-rich Africa confronts its strongest ever headwind since adopting the Africa Mining Vision (AMV) in 2009. A prolonged fall in commodity prices presents a challenging environment for implementing the forward-looking continental framework to promote broad-based linkages from the minerals sector into the wider economy in ways that will diversify economies. Demand-driven factors underpinned by a slowdown of growth in China – which consumes more than 50% of all metals – as well as industry-specific forces have significantly weakened mineral prices since their recent high in 2011. This depressing volatility is hardly a new phenomenon. Commodity price peaks and troughs repeat themselves, often in harmful patterns of vulnerability, risk and crisis. The targeting of revenue, while important, is not decisive for transforming the sector. The slump in prices therefore reveals fundamental cracks in the revenue-first model, whose unrealistic assumption of sustained high commodity prices dominates extractive-led development. But the

African Mininig Centre_ placed_v2.indd 80

adoption of the continentally owned strategy aims to do business differently – better integrating the extractive industry into the local, national, regional and global value chains. Central to the AMV is the goal to unleash broad-based value beyond maximising revenues, by aligning in a forward-looking manner mineral development projects with infrastructure, industrial and trade policies. After the boom, it is imperative for countries to get down to the hard work of implementing the development agenda embodied in the vision for the sustained structural transformation of economies.

Climbing the ladder It remains unclear how low things may go before they get better. Prices have declined steadily over the past couple of years in varying degrees across all metal and mineral classes. But they have not collapsed entirely. Depending on the macroeconomic situation, governments have been affected in different ways, and poorly diversified economies and mineral-revenue dependent countries have been worst hit.

Investors have responded in different ways too, including spending cuts and layoffs by some of the world’s biggest mining companies in Africa. For the first time since 2009, the market value of the global mining industry dropped below $1 trillion, compared to $2.5 trillion just over four years ago, according to Industry Monitor’s October 2015 report. Africa’s growth projection by the International Monetary Fund remains downbeat: even though it is finishing 2015 at less than 4%, the continent continues to perform above the global average. Beyond the mixed picture, the failure of manufacturing to take hold during the boom remains worrisome. Very few countries have achieved high and sustainable standards of living without developing a significant manufacturing sector. Yet the continued focus on exporting commodities in their raw forms crowded out opportunities to upgrade within value chains, creating more jobs through leveraging comparative advantages of mineral endowments. The Economic Commission for Africa (ECA) estimates that continental output from manufacturing during

11/01/2016 14:13

AFRICAN UNION-AFRICAN MINERALS DEVELOPMENT CENTRE PERSPECTIVE this period dropped from 12% to 11%, the smallest share of any developing region. Dependence on exporting minerals in their raw form increased, while the mining sector’s share of employment contracted from 1.5% in 1975 to 0.9% in 2010. This revenue model not only exported potential jobs, but also stability. The ECA estimates that annual fluctuation in prices for ores averages 23% against 13% for minimally processed ores. Some subsectors are bucking the stagnating manufacturing trend. And here is where the AMV focus on optimising the full potential of all minerals becomes truly developmental. The low-value minerals, including limestone and sand (often neglected because of their low commodity value), are not only demonstrating strong resilience during the bust, but hold remarkable transformative potential for economies. Cement manufactured in the continent from limestone is witnessing spectacular growth at 5% annual consumption, correlating strongly with Africa’s GDP as well as suggesting the potential of minerals-based structural transformation.

Equitable and sustainable development Central to the AMV is the goal to unleash broad-based value beyond maximising revenues, by aligning in a forward-looking manner mineral development projects with infrastructure, industrial and trade policies. After the boom, it is imperative for countries to get down to the hard work of implementing the development agenda embodied in the vision for the sustained structural transformation of economies across Africa.

Norms-establishment The same old medicine will rarely transform Africa, even by doubling the dosage. Stakeholders have responded differently to the changed context, with implications for implementing the AMV. Some African governments have fallen back to a short-term revenue-view of the sector, reviewing their mining policies in ways that may misalign with the development orientations of the AMV. Mining companies are encouraged to take a long-term view, seizing the opportunity presented by falling prices to reverse some of the initial progress made by countries in implementing local content and value-addition strategies that are aligned with the AMV. At the same time, opportunities are emerging for the AMV to establish itself as Africa’s own norms. The newly adopted Sustainable Development Goals commit the global community – including businesses – to work towards the greater participation of African countries in value chains by encouraging investment in value additions and processing of their natural resources and productive diversification. In fact, structural transformation through commodity-based industrialisation is at the heart of Agenda 2063, the continent’s long-term development framework.

implementation. Mining investments are capital intensive and beyond the efforts of governments alone, and aligning them with industrial and trade policies requires collaborative efforts between investors, governments and communities, in a spirit of shared value and benefits. The AMV therefore aims to make sense for businesses, through facilitating the emergence of competitive mining economies. As a long-term framework, the AMV provides a stable institutional framework for partnerships with the private sector. The development priorities of infrastructure, innovations and local content present profitable opportunities for public-private partnerships. And where governments have applied AMV-compliant policies in a smart manner, the outcomes have been transformative. For example, the spectacular emergence of Nigeria as a net exporter of cement has been attributed to focused local content policies for encouraging domestic manufacturing. Consequently, Africa has seen its first world-class industrial conglomerate of continental reach. And strikingly, in a downbeat moment when other mining companies are revisiting their strategies,

the multibillion-dollar Dangote Cement Group is betting on Africa’s future like never before, tripling its expansion across the continent. Formulating a sustainable future for the extractive industry in Africa requires looking beyond the super cycles. Creating an environment for permanent and strategic dialogue is crucial for achieving a win-win outcome, particularly in times of depressed markets. The AMV, through the Country Mining Vision, provides the tools needed for stakeholders to reflect on the long-term future, taking into consideration unique country contexts, business opportunities and challenges, as well as creating an enabling environment for transforming the mining sector. Success certainly requires a balancing act, trade-offs, pragmatism and ambition. The Africa Minerals Development Centre and the African Union Commission are finalising a contract for greater participation of the private sector in implementing the AMV. After the boom, a sense of perspective remains imperative. African Minerals Development Centre www.africaminingvision.org T: +251 11 544 3094

Towards a compact The AMV will only sustain itself as a truly transformative framework by incorporating the interests of all stakeholders. While it has been adopted by all 54 African countries, the role of the private sector remains crucial for the AMV’s

African Mininig Centre_ placed_v2.indd 81

11/01/2016 14:13

Illustrations: Andrea Manzati - synergyart.co.uk

infrastructure opportunities

86 | Invest in Africa 2016

infrastructure opportunities Infrastructure development is central to sustainable and socially inclusive growth across Africa. Wendy Atkins outlines investment activity in Africa’s rail, roads, airlines and ports

Projects submitted to the Dakar Financing Conference

Infrastructure for inclusive growth

Abidjan-Ouagadougou- Bamako Multimodal Transport Corridor

frica faces an enormous infrastructure gap that a variety of investors, governments and multilateral organisations are looking to bridge. According to figures from the African Development Bank (AfDB) and the African Union Commission (AUC), the continent’s economic growth as a whole is expected to average 6% per annum for the next 30 years, with annual per capita incomes rising to $10,000, driven by an expanding population, increasing educational levels and greater technology adoption. The two organisations estimate that energy demand will leap from 590 terawatt hours (TWh) in 2010, to more than 3,100TWh by 2040; transport volumes will grow 6-14 times, with port throughput rising from 265 million tonnes in 2009 to more than 2 billion tonnes in 2040; and ICT demand for bandwidth will increase by a factor of 20 before 2020. Demand of 300 gigabits in 2009 will reach 6,000 gigabits by 2018; and the demand for irrigated agricultural land will double. The AfDB estimates that the continent needs an annual $95 billion to fund infrastructure development. At present, it is receiving less than half of this amount, leaving a gap of $50 billion. Financing for Africa’s ambitious – but necessary – infrastructure programmes comes from a number of sources. Some is provided by domestic sources – both public and private – while official

development assistance (ODA) also plays a role, along with increasing foreign private investment. Innovative financing approaches are being deployed to mobilise additional resources. Infrastructure bonds have been used for projects such as financing toll roads in South Africa and energy projects in Kenya. Loan guarantees have been used in public-private partnerships (PPPs), such as the Maputo Development Corridor. Community levies, such as ECOWAS 0.25%, have been applied to some projects in West Africa. New financing partnerships with other emerging economies, particularly China, are also taking off. In addition to finance, these partners may also provide technology and skills transfer through business partnerships. Institutional investors including pension (see page 51), insurance and sovereign wealth funds (SWFs) are also looking at opportunities to invest in infrastructure schemes in Africa.

Building momentum

A raft of initiatives has been launched with the aim of filling the infrastructure gap. These projects cover every aspect, from the creation of new roads and revitalisation of railways, to building new ports, improving water and sanitation and creating a new digital economy. The Infrastructure Consortium for Africa (ICA) is a major G8 initiative designed to accelerate progress in

2 3 4

Abidjan-Lagos Coastal Corridor Batoka Gorge Hydropower project

Brazzaville-Kinshasa Road and Rail project and Railway Line to Ilebo

Dakar-Bamako Rail Revitalisation and Signalling

6 7

Dar es Salam Port Expansion

Douala-N’Gaoundéré- N’Djamena Corridor Project

8 9 10 11 12 13 14 15 16

Juba-Torit-Kapoeta Nadapal Road Jinja-Kampala Road Upgrading Lusaka-Lilongwe ICT

Nigeria-Algeria Gas Pipeline North African Power Transmission Corridor Ruzizi III Hydropower Project Sambangalou Hydropower project

Serenje-Nakonde Road Zambia-Tanzania-Kenya Power Transmission Line

p56

For more on PIDA transport projects

Invest in Africa 2016 | 87

infrastructure opportunities A funding alliance dedicated to infrastructure The Project Preparation Facilities Network (PPFN) is an alliance of funding facilities committed to the sustainable development of infrastructure. It is managed by the Infrastructure Consortium for Africa and was officially launched at a 2014 meeting in Tunisia, where representatives from the EU-Africa Infrastructure Trust Fund, the IFCInfraventure, the Development Bank of South Africa, the NEPAD Business Foundation, COMESA-PPIU, ECOWAS-PPDU, NEPAD-IPPF, PPIAF, Sustainable Energy for All, the African Water Facility, the Fund for African Private Sector Assistance and the AfDB voted to cooperate. The organisations agreed to: • Work together by exchanging data and information and sharing case studies and best practices; • Share project pipelines with the aim of co-financing them; and • Push for more financial resources for Project Preparation. The PPFN aims to enhance collaboration among its members and share resources. This will boost co-financing to deliver more integrated projects, which are more likely to attract financing and to achieve the desired development impact.

meeting the continent’s infrastructure needs. It addresses both national and regional constraints to development, with an emphasis on regional infrastructure integration. It focuses on the water, energy, transport and ICT sectors, and is supporting projects along the Eastern and Central transport corridors, the Horn of Africa, the north-south corridor and in the West African Power Pool countries. The ICA does not provide financing, but serves as a platform to broker increased donor investment in infrastructure programmes in Africa. It also helps its members to provide more effective support for schemes by pooling efforts in selected areas, such as information sharing, project development and good practice. The consortium encourages, supports and promotes increased public- and private-sector infrastructure investment. It facilitates infrastructure development in the water, transport, energy and ICT sectors, through regional and countryspecific initiatives. Other areas of interest include working to overcome technical and political challenges to infrastructure development, and providing information about needs to improve understanding.

Plugging the finance gap

The AfDB is behind Africa50, an infrastructure investment platform designed to significantly narrow the finance gap in Africa. This focuses on high-impact national and regional private and PPP projects in the energy, transport, mining, ICT and water sectors. Africa50 aims to shorten the time between project idea and financial close, from a current average of seven years to fewer than three, to deliver a critical mass of infrastructure in the short to medium term. It builds on the AfDB’s recent successes in overcoming earlystage bottlenecks in infrastructure projects, mobilising political support for reforms and deploying experts to work alongside governments. The commercial sustainability of Africa50 investments is the subject of an extensive due diligence exercise; looking at market and contractual arrangements, technical, environmental and social aspects, and providing an in-depth financial analysis. Another important initiative is the Programme for Infrastructure Development in Africa (PIDA). This was developed by the AU, the NEPAD Planning and Coordinating Agency, the AfDB, UNECA and Africa’s Regional

Economic Communities (RECs). PIDA provides the strategic framework for priority infrastructure projects to transform Africa. According to the AU Department of Infrastructure and Energy, 83 priority projects were identified, of which 16 were presented to potential investors at the Dakar Financing Conference in June 2014 (see page 87). The 16 projects were selected due to their strategic, political and economic importance as flagship regional projects. Once implemented, they will significantly transform the way Africa does business. These 16 schemes are further grouped into two main categories: the ‘first eight’ high-impact projects, which are deemed relatively advanced in terms of readiness; and a ‘second eight’, which are at a relatively early stage of the project development cycle.

Three types of project

There are three broad categories of projects: Powering Africa, Moving Africa Forward and Connecting Africa. Powering Africa projects seek to address the underdeveloped electricity generation, transmission and distribution infrastructure, which is hindering the continent’s broad-based economic growth. The Moving Africa Forward initiative focuses on improving connectivity by supporting the construction of good quality roads, railways, ports and airports, something that is vital to the long-term success of the continent’s agriculture, industry, mining and tourism sectors. Connecting Africa schemes aim to drive its digital economy and help connect it to the rest of the world on an openaccess basis, thus allowing a gradual reduction in bandwidth cost and long-distance tariffs. •

Infrastructure commitments from public and private sources in 2014 $m 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0

Transport

Water

Energy

ICT

Multi- Unallocated sector

Source: Infrastructure Consortium for Africa

88 | Invest in Africa 2016

mott macdonald perspective

Building a prosperous and thriving continent Recognising that gaps in Africa’s infrastructure present a significant barrier to economic development, engineering, management and development giant Mott Macdonald is meeting the continent’s infrastructure deficit head on

Extensive studies by the likes of the World Bank, the African Development Bank (AfDB) and the European Investment Bank (EIB) have all highlighted that what hampers economic development across Africa is its infrastructure deficit. While developing the continent’s infrastructure presents a massive challenge, investors are seizing the opportunity to get involved in projects aimed at upgrading its energy, transport, water, sanitation, housing and schools. One of the firms that is meeting the challenge head on is Mott MacDonald, which has a long history in the region dating back to the creation of the first Aswan Dam. The engineering, management and development giant was involved in a series of projects in 44 African countries in 2014, focused on evaluating the options, and providing feasibility studies, construction supervision and funding expertise.

Strong growth performance Paulo Fernandes, Division Director of the Africa Advisory Division at Mott MacDonald, reports that there are huge opportunities in countries such as Mozambique. He says that although starting from a low base, the nation has performed strongly, expanding it economy by 7.6% in 2014, and is expecting to record similar growth levels in 2015 and 2016. Dr Fernandes adds: “East Africa, Kenya and Tanzania are also providing growth opportunities. Ethiopia has come to the fore in the last year or two thanks to a more stabilised business and political environment. One cannot ignore Nigeria or Ghana, either. We are also starting to penetrate Francophone Africa, and in North Africa, countries such as Egypt – in spite of recent political turmoil – have interesting projects on the horizon.” The company is involved in a number of road and rail projects in Southern Africa, including Transnet’s heavy haul rail network, the

Mott MacDonald_placed.indd 89

Manganese Line. It is also involved in major power projects, from conventional means such as coal to the development of renewable energy, an area in which it is a leading player. Mott MacDonald is working on cross-border schemes including the regional power distribution project for the Southern African Power Pool (SAPPP). “This project aims to move power from where it was created to where it is needed,” says Dr Fernandes. “Cross-border projects like these

Investors are seizing the opportunity to get involved in projects aimed at upgrading Africa’s energy, transport, water, sanitation, housing and schools are still very challenging because efforts have to be made to homogenize technical procedures, standards, policies and regulations, but significant efforts have been made by multilateral organisations such as the World Bank and AfDB to overcome these challenges.”

Dr Paulo Fernandes Business Development Director, sub-Saharan Africa www.mottmac.com

Developing local expertise Another major difficulty within the infrastructure sector is the lack of technical competence locally. Governments and project owners often lack the necessary expertise to commission and oversee schemes, which results in very long lead times. “Stability and security are still an issue,” says Dr Fernandes. “Although some countries have definitely improved in this area, others have gone backwards.”

11/01/2016 14:10

infrastructure opportunities

Rail

Africa’s rail sector gets on track

any of Africa’s railway lines were built during the colonial era to link mines and natural resources to ports. The challenge for African leaders today is to continue to fund and maintain these creaking networks and build new facilities to transport passengers and resources. Although the continent’s rail infrastructure has numerous shortcomings, such as low speed, small-scale, undercapitalised national networks, significant efforts are being made to beef up Africa’s railways. One of the most ambitious is set out in the African Union’s Agenda 2063: the creation of a Pan-African High Speed Rail network that will connect all the major cities of the continent by 2063.

Chinese influence

China is making its mark in Africa’s rail sector. For example, Chinese construction companies are funding the building of the rail network in the Democratic Republic of Congo (DRC). China is also behind an infrastructure-for-oil trade agreement with Angola, while Chinese investment is backing major projects in a number of other countries, including Kenya and Nigeria. And, in 2015, China and the African Union signed a Memorandum of Understanding on the development of the continent’s rail network, including the Pan-African High Speed Rail Project. 90 | Invest in Africa 2016

Africa is building up an impressive list of railway projects. In South Africa, for example, a number of major schemes have either been completed recently or are in the pipeline. These include the Gautrain Rapid Rail Link, which has been built to reduce congestion in the Johannesburg-Pretoria traffic corridor, plus plans to start the biggest rail recapitalisation programme in the country’s history and to accommodate the fifth largest freight railway system in the world by 2019 are also under way. In Kenya, construction of the Mombasa-Nairobi standard gauge railway (SGR) is under way. This aims to cut freight journeys to under eight hours and shorten passenger travel time from the port of Mombasa to the Kenyan capital to just over four hours instead of more than 10. The new line is seen as the first step in a project that could eventually link Rwanda, Uganda, Kenya and South Sudan. Also in East Africa, the shortlist for a PPP contract to develop and implement a 1,672km railway linking Dar es Salaam in Tanzania with Kigali in Rwanda and Musongati in Burundi was announced in November 2015. In West Africa, construction projects that have attracted attention include the Lagos Rail Mass Transit System in Nigeria. A PPP model is being used to finance the building of this network, which will eventually have seven lines. The country completed the 190km Abuja-Kaduna SGR modernisation project in 2014, with the aim of speeding up the movement of passengers and goods between the two cities. •

infrastructure opportunities

Ports

2 billion

Keeping up with demand

tonnes of port throughput forecast for 2040

frica’s ports provide the continent and its nations with important links to the rest of the world. But with its many economies growing on the back of increased imports and exports, its ports are struggling under ever greater pressure. Investments are now being made to boost the capacity and efficiency of these ports as well as to improve rail and road links to the countries beyond. The improved macro environment has driven port traffic throughout the continent. According to the World Bank, Angola has seen container port traffic increase from 676,493 TEU (20 foot equivalent units) in 2011 to 913,000 TEU in 2013. In Nigeria, the picture has been similar, with 839,907 TEU recorded in 2011, compared with 1,010,836 TEU in 2013. The picture is also promising in southern Africa, with the Southern African Development Community (SADC) projecting that traffic through its primary seaport at Durban, South Africa, and other burgeoning ports along the eastern and western seaboards will expand more than fivefold, from 92 million tonnes in 2009 to 500 million tones in 2027. The African Development Bank is equally bullish about port throughput, forecasting that it will rise from 265 million tonnes in 2009 to more than 2 billion tonnes in 2040.

Under pressure

Rising container volumes are putting pressure on the continent’s ports, and authorities need to urgently deal with challenges such as incorrect handling of materials; ineffective customs procedures that delay freight; poor access infrastructure; and insufficient berths and draft.

There are plans to resolve these issues in locations such as Africa’s largest city of Lagos, in Nigeria; Dakar, the capital city of Senegal; Dar es Salaam, Tanzania; the coastal city of Mombasa, Kenya; Maputo, capital of Mozambique; Libreville, Gabon’s capital city; Tema, Ghana; Walvis Bay, Namibia; Luanda, capital of Angola; Abidjan, the economic capital of Ivory Coast; Djibouti, capital city of Djibouti; and Durban and Cape Town in South Africa. In the SADC region alone, member states are reportedly developing 64 maritime and inland waterway transport projects.

Increasing port capacity

Among the long list of schemes is the development in Lamu, Kenya, which has the potential to serve as a gateway connecting Southern Sudan and the DRC with the Middle East and Asia. In Mauritius, Port Louis is being upgraded to accommodate expanding container traffic. In Nigeria, Lekki port is being developed to bridge the gap between container demand and capacity in Lagos. It is also being widely promoted as kick-starting economic development around the Lekki sub-region and the wider Lagos state through rapid industrialisation. Construction of a new port in the Tanzanian coastal resort of Bagamoyo began in 2015. It aims eventually to have double the capacity of the existing one in Dar es Salaam. Also in 2015, the Port of Djibouti unveiled expansion plans, which aimed to make it a trans-shipment hub for the whole of Africa. And in South Africa, Transnet Port Terminals (TPT) has been upgrading the country’s ports, including the Cape Town Container Terminal (CTCT), the Richards Bay Coal Terminal in KwaZulu-Natal and the principle port of Durban. • Invest in Africa 2016 | 91

Nissan perspective

Driving investment the Nissan way Africa has been described as the last frontier of the automobile sector. Nissan is making headway on the continent through a combination of long-term thinking and a commitment to sustainability

The combination of a growing middle class and the expansion of Africa’s road networks is generating new opportunities for the continent’s automotive firms. Nissan has established a strong presence across Africa, with sales and service representation in most of the markets, and operational hubs and factories in Egypt, Nigeria and South Africa. Over the past three years, the company has focused its investment on countries with a high volume of vehicles, such as Nigeria, Ghana, Angola and Kenya. It is also expanding in locations to include Mozambique, Zimbabwe, Senegal, Cameroon and Gabon, and is set to open regional offices in Nigeria and Kenya during 2016.

Market evolution Jimmy Dando, Sales and Operations Director for Nissan in Sub-Saharan Africa says: “On the production front, Nissan has been engaged in the development of the Nigeria Automotive policy, and in 2014 we moved rapidly to start assembling vehicles in Nigeria – opening up many local employment opportunities, skills development initiatives and the development of the local supply chain.” The company’s reputation in Africa is built on its Nissan Patrol and pickup range, the Nissan NP300 Hardbody and the Navara. However, the market for cars is also showing signs of taking off. “We’re seeing the evolution of the vehicle industry, from commercial (pickups) to passenger vehicles, as the massive younger population of Africa starts to mature,” says Dando. “We’re expecting them to need affordable passenger models, and with the introduction of our Datsun brand we’re able to offer them the Nissan family entry model.” The Japanese manufacturer has been climbing the Brand Africa 100 ranking of top brands, and is now 26th in the Most-Admired Brand category and third in the Automotive category. “Nissan’s brand strategy in Africa is based on long-term thinking and a commitment

Nissan_placed.indd 89

to sustainability,” says Dando. “We embrace accessible innovation, new thinking and best practice, and we employ careful monitoring and measurement of performance against strategic goals, so we can constantly evaluate and adjust as we progress.” Dando adds: “Knowing that our African customers are tech savvy and want a sophisticated and convenient shopping experience, Nissan is committed to forwardthinking product planning, being more visible in the markets and providing easy access to outlets across the continent. Our AFCON,

“In terms of our market share, we are aiming to double it in sub-Saharan Africa... by 2019” UEFA and ICC sponsorship properties are valuable in building presence and connecting with local sport fans across the markets. At point of purchase, Nissan will provide not just cars with the specification and at the price customers expect, but also a sales and aftersales experience with tangible value. On a practical level, this means we’re committed to exploring with banks various financing options. We’re also focusing on offering full fleet packages and enhancing customer convenience, for example providing express and mobile services.” Although the macro environment has provided many positives for investors such as Nissan, economic challenges associated with the impact of low oil prices on foreign exchange remain a problem into 2016. “Since our commitment and view is long term, we’re working with local distributors to maximise opportunities and position the brand for better times,” says Dando. “In terms of our market share, we are aiming to double it in sub-Saharan Africa, from the current 10% to 20% by 2019.”

Jimmy Dando Sales and Operations Director Nissan, Sub-Saharan Africa www.nissanafrica.com

11/01/2016 14:12

infrastructure opportunities

Roads

Driving development

frica’s vastness is a challenge for anyone involved in transporting people and goods throughout the continent. Steps are being taken to improve road networks to drive regional integration, boost trade and improve socio-economic metrics, but these face numerous hurdles that need to be overcome. According to a 2014 World Bank report, the continent’s average road density is 204km of road per 1,000 square km of land area, compared with a world average of 944km per 1,000 square km. Governments, regional economic communities, multilateral organisations and private investors are focused on upgrading, expanding and connecting Africa’s road network by developing arteries that either cling to the coastline or strategically criss-cross the continent. An upgraded roads infrastructure is crucial to every area of the continent’s development – from small farmers looking for direct and shorter routes to market their products locally to major corporates needing a sophisticated supply route linking them to international buyers. And time is money: low road connectivity increases the cost of goods significantly; in the case of agricultural products, it can be the difference between being able to sell perishable goods and having to destroy them. Increased cost, though, is not the only problem associated with slow time to market. The safety of roads is also an issue and in many countries accounts for a couple of percentage points of GDP lost every year through deaths and damage to property. Improved road connectivity is key to driving regional integration, pushing cross-border trade

92 | Invest in Africa 2016

and connecting landlocked states with major population centres. Many road projects also have a clear socio-economic dynamic. For example, in 2014 the African Development Bank (AfDB) approved a loan to the Ugandan government to finance the Road Sector Support Project V, which aims to upgrade the Rukungiri-Kihihi-Ishasha/ Kanungu and Bumbobi-Lwakhakha roads from gravel to bitumen standard. In addition to helping reduce transport costs, the scheme aims to increase mobility; improve access to economic and social facilities; provide clean water to households; and increase the income of women vendors in the roadside markets.

Overcoming roadblocks

Although there are major road-building projects taking place across the continent, significant challenges remain. Insufficient financial resources are an issue. Road tolls have been implemented in locations such as Gauteng, South Africa, and the Lekki-Epe Express in Nigeria, but are proving unpopular with motorists. As transportation of natural resources is one of the driving factors for many projects, the continent is also at the mercy of commodity prices. Creating and expanding routes is dependent on dealing with Africa’s challenging topography as well as addressing the sustainability, environmental and wildlife issues associated with carving out newer and better paved roads. The road policies of governments are also an area of focus. For example, axle loads on the new roads need to be controlled and harmonised policies that work cross-border need to be created, agreed and implemented. •

Best Performing Institution in Transport 2014–2015

›› WE ARE THE REGULATOR OF CIVIL AVIATION SAFETY AND SECURITY KEEPING YOU SAFE IN THE SKY The South African Civil Aviation Authority (SACAA) is an agency of the Department of Transport, mandated with controlling, promoting, regulating, supporting, developing, enforcing and continuously improving the levels of safety and security throughout the civil aviation authority. We achieve this by complying with the Standards and Recommended Practices of the International Civil Aviation Organisation (ICAO), whilst considering the local context. Our oversight includes, but is not limited to the following areas: Aviation Security; Aviation Personnel Licensing and Examinations; Aviation Infrastructure and Air Safety Operations. The organisation was awarded the Best Performing Institution Award amongst all modes of Transport during the inaugural Transport Awards hosted by the Minister of Transport in 2014. This award came as a result of a continued culture of excellence which has yielded positive results in various aspects of our performance. ›› We have achieved another clean audit as confirmed by the Auditor General in its financial and performance information audit for the 2014/15 financial year. This is the

››

›› ››

››

third year in a row that the SACAA is recognised for this achievement and this demonstrates that the Regulator’s financial controls are in line with the PFMA. South Africa continues to perform well in the various safety and security ICAO audits and has over the years maintained its Category 1 Status with the Federal Aviation Administration (FAA). South Africa still boasts a zero fatal accident rate on South African soil in the commercial aviation sector. The appointment of South Africa as the Chairperson of ICAO’s Aviation Security Panel represented by the Director of Civil Aviation is a demonstration of trust and faith by the global community in South Africa’s capabilities in aviation matters, and specifically aviation security. The SACAA is one of the first entities globally to develop regulations for remotely piloted aircraft systems commonly known as “drones”. The SACAA has played a significant role in ensuring that the South African civil aviation industry is prepared for and capable of managing the outbreak of communicable diseases such as Ebola.

www.caa.co.za T: 0800 997 263

SACAA 275x210_Dec15.indd 1 SA Civil ad Aviation Authority_placed.indd 8

12/17/15 10:01 AM 04/01/2016 15:05

infrastructure opportunities

Aviation

Africa’s low-cost airlines take to the skies

he combination of airport and runway expansions with the growth of new airlines is opening up opportunities for businesses to operate cross-border. It is also providing a welcome means for members of the continent’s growing middle class to travel throughout the region. Liberalisation through the Open Skies policy, known as the Yamoussoukro Decision, has – in theory – helped drive the growth of new airlines since it was agreed in 1999. In reality, according to a report for aviation industry group IATA, implementation of the agreement has been slow and the full benefits have not been realised. Insiders report that other challenges faced by low-cost providers include high taxes on fuel and tickets, higher insurance premiums, higher leasing costs than in other parts of the world and government protectionism. And, just as in Europe, where quite a few low-cost carriers have fallen by the wayside, Africa has suffered its fair share of casualties, with names such as South Africa’s Velvet Sky and 1time going out of business. In spite of the challenges, carriers are still being attracted to operate on the continent. Leading names providing services in the region include South Africa’s kulula.com. Well known for its quirky safety announcements, kulula.com serves major South African cities such as Johannesburg and Cape Town plus Nairobi, Mauritius, Harare and Windhoek. Another South African low-cost provider is Johannesburg-based flyafrica.com, which flies

to locations such as Lusaka, Victoria Falls, Windhoek and Harare. Mango Airlines started operations in 2006 and serves South Africa and Zanzibar. FlySafair bills itself as South Africa’s ‘oldest newest’ airline and focuses on cities such as Johannesburg and Cape Town. Another operator is Tanzania-based Fastjet, which serves cities including Harare, Dar es Salaam and Johannesburg, and has ambitions to become the first discount airline to span sub-Saharan Africa. Fly540 has been successful in East Africa, with flights to locations such as Nairobi, Kisumu, Malindi and Zanzibar. Kenya’s Jambojet is the low-cost arm of Kenya Airways. Since its inception in April 2014, about 30% of the carrier’s passengers have been first-time flyers. Nigeria-based Dana Air flies to locations including Lagos, Abuja and Port Harcourt.

Perks for frequent flyers

In 2015, two new South African carriers took to the skies. Domestic airline Blue Crane is positioning itself between a low-cost and a full-service airline. And Skywise has unveiled a new business model for frequent flyers, who can choose either to buy individual tickets or pay a standard monthly subscription to fly as often as they want between Johannesburg and Cape Town. Another low-cost airline operating in the region is flydubai.com. Although its service often requires passengers to connect in Dubai, the carrier links cities such as Addis Ababa, Alexandria, Dar es Salaam, Khartoum, Kigali and Zanzibar. •

Invest in Africa 2016 | 94

infrastructure opportunities

Safe drinking water is now affordable for millions of rural Africans, thanks to a prize-winning invention by a Tanzanian chemical engineer. Dr Askwar Hilonga’s invention is a water filter system that integrates nanotechnology with sand-based filtration to decontaminate water. In an interview with online magazine Technology4Change, Hilonga explained that its underlying technology enables the removal of specific heavy metals (such as copper and arsenic) and bacteria. It can also absorb pesticides and viruses. Backed by a £25,000 prize and the six months of business training that went with it, Dr Hilonga is now commercialising his invention. He has started in his home country, Tanzania, where 70% of a population of nine billion drink untreated water. Local entrepreneurs are renting filters and selling the water in their communities. The prize, which is for engineering innovation, was created by the United Kingdom’s Royal Academy of Engineering with support from Shell, Consolidated Contractors, ConocoPhillips and the Mo Ibrahim Foundation. 98 | Invest in Africa 2016

Nearly half of the people globally without access to improved drinking water live in sub-Saharan Africa. Sally White explores one of the initiatives tackling this shortfall head on

$50 billion

RAEng/Georgina Goodwin

Filtering water with sand

The water challenge

ater as a sector has been largely neglected in Africa, with the continent attracting investment for only a small number of is needed between industries, such as telecommunications. 2013 and 2023 for This is no longer the case. Set up within water projects to the African Development Bank (AfDB) meet demand to bring solutions to Africa’s water challenges, the African Water Facility (AWF) has made significant headway in bringing in funding, although a sizeable gap remains. The AWF was tasked with attracting the finance necessary to revitalise development efforts in the sector and it has successfully created several bankable projects. “Most AWF project preparation activities have effectively led to securing large investments from a wide range of financial institutions,” says the AfDB. On average, each €1 ($1.08) contributed by the AWF in funding and technical assistance has attracted €35 in additional follow-up investments. Since 2006, AWF projects have brought drinking water and sanitation to communities, improved water management for farmers, created energy from Each euro hydropower and contributed from the AWF has attracted to the development of transport, industry and tourism. The AWF has been party to programmes such in follow-up as those created by the investments Cooperation in International Waters in Africa, a World Bank fund designed to improve

€35

cooperative trans-boundary water management and development. The challenges are considerable. According to the AfDB, urbanisation, rapid population growth and the development of water-dependent industries mean that over $50 billion per year is needed between 2013 and 2023 for water projects to meet demand.

Protecting pastoralists

“These challenges are exacerbated by limited water storage and management capacity... and increasing climate variability...” says the World Bank. Needs encompass everything from damns, to pipelines for water and sanitation, and waste treatment plants. Sanitation is also of major concern, since Africa is lagging the world, with the United Nations estimating that about 565 million lack adequate access. Ending open defecation is a vital focus of many AWF projects. The AfDB estimates that inadequate sanitation drains an average 1.5% of gross domestic product in African countries. Every hour 115 people die from linked diseases. The AWF programme responds to the water sector’s widespread needs. In drought-damaged Somaliland, a €3 million AWF grant supported a multipart project building resilience to climate change. The grant will go towards improved water supply for the rural population and livestock, rural sanitation and hygiene, urban water supply and small-scale high-value irrigated crop production. About 3.5 million rural and urban people stand to benefit from the project, as well as two million nomadic farmers.

iStock Images

infrastructure opportunities

“This project is a critical step in Somalia’s efforts to protect its pastoralists and a large section of its population from the impacts of climate change, since they are so dependent on the availability of water for their livelihood. It is also a key step in attracting the kind of future investments in water resources management needed to make catastrophic droughts a thing of the past,” noted Dr Akissa Bahri, Coordinator of the AWF. The AWF-backed Saday dam in Djibouti, completed in early 2015, has provided water for drinking, irrigation and livestock for more than 100,000 people. The dam irrigates 225 hectares of land, enabling between 1,000 and 2,000 pastoralists to plan a long-term future and expand their herds. A cross-border project in the Nile Equatorial Lakes in the Nyimur region of Uganda and South Sudan also received a €1.97 million grant from AWF. It will bring water to farmers and fishermen, improve food and electricity production and sanitation as well as help prevent floods and droughts. Finally, Africa is waking up to the demands being made on its aquifers. Given the continent’s reliance on ground water and the potential for conflict arising from their locations across borders, Africa has just been mapped by the International Water Management Institute. The hope is that the map will become an information tool that can help bring harmony to decision-making and water governance. •

The African Water Facility has developed a portfolio of grants covering 84 projects

Invest in Africa 2016 | 99

infrastructure opportunities

Innovation hubs Africaâ&#x20AC;&#x2122;s inventory of tech hubs is growing, providing reliable and creative spaces for African entrepreneurs. According to the World Bank, there are 177 hubs in Africa, of which 79 are civil-society led, 10 are government led, nine are academic-institution led and 19 are hybrid. Nairobi in Kenya is home to iHub, a technology centre created to provide a permanent community workspace for start-ups, coders and freelancers. Since 2010, more than 150 companies have formed out of iHub and as a result of its success, the Nigerian government has committed to establishing a tech hub in each of its 47 counties. Based in Lagos, Co-Creation Hub (CCHub) was established to boost skills development, professional networking and innovation in Nigeriaâ&#x20AC;&#x2122;s technology industry. It is a pre-incubation space that facilitates creative thinking and problem solving among Nigeriaâ&#x20AC;&#x2122;s tech experts, social entrepreneurs and investors. A number of projects have emerged from CCHub, including Wecyclers, which offers a household recycling service and sells the collected materials to the local recycling industry. In Kampala, Uganda, tech entrepreneurs gather in Hive Colab. Membership, which provides access to a reliable internet connection, a back-up power source and a conference space, is open to all and is free, so long as the applicant is developing a workable project. Successful companies that have emerged from Hive Colab include Wash Reporter, a water and sanitation crisis reporting tool; Clinic Master International, an integrated new-generation healthcare information-management medical billing software provider; and BrainShare, an education platform that encourages students to test themselves and share notes. 100 | Invest in Africa 2016

The iHub innovation centre in Nairobi provides workspace for entrepreneurs and aims to boost technology innovation

infrastructure opportunities

Africa’s ICT ecosystem is thriving, bolstered by firm government commitments to increase technology uptake and a young generation of entrepreneurs eager to develop e-solutions, explains Emilie Dock

Inside Africa: the next global tech hub

Bloomberg/Getty Images

frica, a continent that has long relied on technological advances from developed economies, is increasingly innovating for itself. This is opening up markets that were previously too difficult or costly to enter and creating entirely new ones to explore. The mobile phone is Africa’s leading communication device in the consumer market, and vast mobile uptake, even in the most remote parts of Africa, presents previously unforeseen opportunities. In June 2014, technology company Ericsson estimated that there would be around 930 million mobile subscriptions by the end of 2019. And the spread of relatively low-cost smartphones is likely to raise internet penetration to 50% within the next decade. Mobile money in particular is big business, and it has provided lower-to-middle-class consumers with cheaper access to financial services. Back in 2007, Kenyan telecommunications company Safaricom launched M-Pesa – a mobile money transfer service. M-Pesa has experienced explosive growth since its inception: the service has 13 million active monthly users and more than 40% of Kenya’s GDP reportedly flowed through it in 2013.

Other companies hoping to capitalise on the ubiquity of the mobile phone are following suit. These include Nigerian mobile payment start-up Paga, which has about 3.4 million users and 3,600 small and medium-sized enterprise (SME) clients across Nigeria. The company has attracted investment from Omidyar Network, Goodwell West Africa, Acumen Fund and Capricorn Investment Group, among others.

Mobile payments

Banks are also entering the mobile money space. In Nigeria, GT Bank partnered with Etisalat Nigera, the country’s third largest mobile operator, to launch GTEasySavers, a savings account that can be opened and managed through mobile phones. Moreover, Equity bank recently acquired a licence to operate a mobile phone service in conjunction with Airtel. Equitel is aiming for five million users by the end of 2015. Beyond mobile banking, the transformative impact of technology is widespread. In 2014, a joint partnership between the United States Agency for International Development (USAID), Vodaphone and TechnoServe was formed to increase the productivity, incomes and resilience of smallholder farmers in East Africa. Under the Alliance’s first Invest in Africa 2016 | 101

commercial agreement, a mobileenabled supply chain was built between 30,000 coffee, cotton and cocoa farmers in Tanzania and Singapore-based agribusiness Olam International. The system is also delivering agronomic advice to farmers via text message, as well as real-time information about changes in market prices, notifications about upcoming training session and events, and mobile money transfer services using M-Pesa. In the education sector, smartphone and iPad apps have the potential to improve learning outcomes for families faced with prohibitive school attendance fees. Bridge International Academies (BIA), a large-scale chain of low-cost private schools, is using technology to extend education to 100,000 students in Kenya. Teachers are given scripts and instructions through data-enabled tablets that are synced back to BIA headquarters so that progress, attendance and scores can be monitored. Pupils pay about $5 a month to attend these schools.

apps have the potential to improve learning outcomes for families faced with prohibitive school fees

Financing Africa’s ICT ecosystem

Access to capital remains a key constraint to the growth and success of tech start-ups, but more and more financing is making its way into Africa. Innovation hubs have been receiving grants from foundations for some time. In 2011, Co-Creating Hub (CCHub) in Nigeria received a $200,000 grant from the Omidyar Network – an active impact investor that supports entrepreneurs who advance social good. Zambia’s BongoHive received $50,000 from the University of Alabama’s Sparkman Center for Global Health and continues to receive grants from the United Kingdom’s Indigo Trust. Africa’s ICT ecosystem is also receiving financial support from aid agencies, competition prizes and governments. Contributions from foreign 102 | Invest in Africa 2016

donors are helping too; Belgium’s VVOB development authority provides funds to BongoHive and Dutch non-profit Hivos has been a long-term financer of Kenya’s iHub. Mobile innovation incubator mLabs, which has offices in South Africa and Kenya, has received funding from the World Bank’s InfoDev fund and USAID.

Behind technology growth

Global tech companies are also turning their attention to Africa. In 2014, German multinational software company SAP SE committed approximately $500 million to introduce some of its newest technologies in South Africa, Nigeria, Kenya and Angola. Meanwhile, Facebook has opened its first headquarters on the continent and has appointed a new head of Africa. Global tech companies are also supporting tech growth through Africa-specific programmes. Launched in 2013, Microsoft’s 4Afrika has sponsored several initiatives that have empowered 273,000 SMEs. Finally, data collected by CrunchBase and TechCrunch estimates that more than $400 million in venture capital (VC) was raised for African start-ups in 2014. VC4Africa, the continent’s largest online community of entrepreneurs, venture capitalists and angel investors, is dedicated to building businesses in Africa. Most companies listed on the site are in the early stages of development and require less than $1 million. The platform has members from more than 200 countries and it has raised more than $27 million. As the socio-economic impact of ICT becomes clear, governments of countries including Kenya, Rwanda (see opposite), Nigeria and Ghana are fleshing out comprehensive plans to develop ICT infrastructure. Buoyed by this commitment to ICT and a new generation of African ‘techies’ eager to enter the digital economy, tech ventures are developing solutions to just about every business problem and online portals are offering all kinds of commercial services. It is now only a matter of time before commercially driven technologies created in Africa generate big enough revenues to support VC exits, acquisitions and initial public offerings (IPOs). •

930 million

infrastructure opportunities

mobile phone subscriptions are expected in Africa by the end of 2019

infrastructure opportunities

Case Study Rwanda’s ICT success technology adding up

first

out of 143 countries for government success in ICT promotion

4,500km

of fibre optic cable connects Rwanda’s 30 districts

95%

of population to have access to mobile internet by 2017

5,000

Rwandan domain names expected to register under ‘.rw’ by 2016

overnment support for ICT in Rwanda is among the strongest in the world. The World Economic Forum’s Global Information Technology 2015 report ranked Rwanda first out of 143 countries for government success in ICT promotion. The index, which assesses factors that enable competitiveness, gave Rwanda a score of 6.2 out of seven. Rwanda’s ICT story took off with the launch of the National Information Communications Infrastructure policy, which outlines four five-year plans to transform Rwanda into a middle-income economy and achieve full digitisation by 2020. Now in the final five-year stage, the government is focusing on skills, privatesector and community development, as well as improving e-government services and cybersecurity. Part of Rwanda’s success can be attributed to the government’s continued commitment to improving the country’s ICT infrastructure. Rwanda has 4,500km of fibre optic cable connecting all 30 districts, which delivers access to broadband services, such as e-health e-governance and e-banking. And in 2014, the government partnered with Korean Telecom to roll out high-speed 4GLTE broadband, with the aim of extending mobile internet coverage to 95% of the population by 2017. Widespread access to the internet has fuelled progress across multiple sectors. For example, 100% of Rwanda’s healthcare facilities are connected to the national healthcare ministry and report monthly on all health indicators, and community health workers in rural areas report daily on maternal and child health. Technology is also being used to encourage greater youth participation

and inspire technological innovation. To this end, the Ministry of Youth and ICT has launched YouthConnekt Hangout, a platform that uses Google Hangout technology combined with other social media channels and mobile phone text messages to connect young people. Through YouthConnekt Hangout, Rwandan youth have access to support services, resources and mentors. Having developed connectivity and improved government services, Rwanda is now focusing on creating content. In Kigali, a handful of tech hubs exist for budding entrepreneurs to hone their skills and innovate. These include K-Lab, a youth innovation space; Think, run by Rwandan telecommunications company Tigo; and The Office, a communityfocused entrepreneurial ecosystem. A number of award-winning start-ups have grown out of these incubators, including TorQue, a Rwandan software development company that creates and sells software solutions, and FOYO, a pharmaceutical directory that provides basic healthcare information to mobile phone users. Furthermore, Kigali Innovation City, a flagship ICT park government project, is set to house ICT training centres, a research and development facility, software build and test labs, specialised institutions of higher learning and a business incubation centre. “You can do it online” has quickly become a Rwandan catchphrase. Today, the vast majority of government services are delivered through the internet and more than 5,00 domain names are expected to register online under ‘.rw’ by 2016. Rwanda has established itself as a pioneer of innovative technology services in Africa, and has laid the groundwork for a model that can be replicated across the continent. • Invest in Africa 2016 | 103

food and nutrition

New farming techniques and technological developments are behind productivity gains in Africa’s agriculture sector, writes Pamela Whitby

Food and nutrition

Reaping rewards

104 | Invest in Africa 2016

A Zacharias Abubeker/AFP/Getty Images

frica’s relationship with agriculture is ancient and deep-rooted, and the future of the continent depends on it. Without agriculture, poverty cannot be eradicated, food security is unachievable and education will falter. In short, without agriculture there can be no economic transformation or inclusive growth. Africa’s leaders recognise the importance of the sector, which today employs 65% of the continent’s workforce and contributes 32% to gross domestic product (GDP). They know too that with 65% of the world’s uncultivated arable land in Africa, the opportunities for a continent where one in four people still go hungry cannot be ignored. In 2003, the African Union (AU) and NEPAD set out a Comprehensive Africa Agriculture Development Programme (CAADP) to address the crisis in agriculture. It began by recommending that African governments increase investment in the sector by a minimum of 10%, and raise productivity by at least 6%. By 2010, 10 countries had met the 6% target and a further 19 had achieved between 3% and 6%.

food and nutrition

One example of the solid link between agriculture and development is Ethiopia. Through a combination of government commitment and private-sector investment, between 2003 and 2008 agricultural production in the East African nation grew at 9.3%. Today, the sector accounts for 45% of the country’s total GDP and employs 80% of its labour force. As a result, poverty has fallen from 44% in 2000 to 30% in 2011, according to a World Bank Poverty Assessment.

Food for thought

Though still predominantly subsistence driven, a favourable investment environment has seen a growing number of investments in commercial farming in Ethiopia since 2004. Africa Juice, a vertically integrated grower and processor of tropical fruit juice, mainly for export markets in Western Europe and the Middle East, is one company that has entered the market. It is running a so-called ‘outgrower’ programme, which involves working closely with smallholder farmers to feed its supply chain. A programme coordinator works with the outgrowers, providing training and advice and sharing knowledge in modern farming practices, including using the right fertilizer, technology and other inputs. In some instances, non-governmental organisations, such as Grow Africa and other concessional lending providers, also lend support with technical and financial assistance. Herman Marais, Co-Founder and Managing Partner of South African-based Agri-Vie, a food and agriculture-based private equity fund and partner of Africa Juice, believes that developing such symbiotic relationships between large and small-scale farmers is the most sustainable model for African agriculture. In sub-Saharan Africa, 80% of farmland is worked by smallholders. “This is a huge part of rural livelihoods and you can’t simply replace that with large-scale commercial farms. If you do, you disrupt the social fabric,” says Marais. For the model to succeed, however, supply chains need to be integrated. So in practice, commercial farms would supply a food or beverage processor with between 40% and 50% of the raw materials, and the balance would come from smallholders. The model is interesting for a number of reasons. By shifting from pure subsistence to cash cropping for sales into commercial supply chains, farmers can boost their incomes. In addition, smallholders working with organised outgrower schemes are required to supply to certain specifications, in the right quantities and at the right time. This helps in the drive

The agriculture sector has played a key role in Ethiopia’s development, and today accounts for 45% of its total GDP

Invest in Africa 2016 | 105

BTS

NEW HOLLAND T6000.

New Holland prefers

lubricants

TAILOR-MADE FOR YOUR FARMING REQUIREMENTS

QUALITY ON THE FIELD Flexible T6000 tractors satisfy the demands of many operations. They are a natural choice for livestock, arable, haulage or contracting applications. T6000 Series tractors offer wide model configurations ranging from 110 hp to 165 hp to match your applications. We deliver the product quality you and your business demand.

www.newholland.com africa.topservice@newholland.com middleEast.topservice@newholland.com

New Holland_placed.indd 94

14/12/2015 13:23

food and nutrition

Africa’s long overdue green revolution is under way, and 2016 will see renewed focus on agriculture Technology from India is delivering benefits to farmers in Africa, where the use of ‘direct paddy seeders’ has led to savings in time and money

towards modernisation, and productivity. “It’s not going to happen overnight,” says Marais, “but the potential for these two spheres of agricultural activity to exist is huge.” Once fully developed, he believes thousands of smallholders could be involved in outgrower programmes. There are, however, many logistical, technical, training and financing hurdles to overcome first.

Public-private partnerships

Grow Africa, a multi-stakeholder platform with the goal of accelerating investment in 12 CAAPD countries, is one organisation actively working to address some of these challenges (see page 109). It too believes in partnerships, and envisages publicprivate partnerships becoming the instrument of choice for many African governments to stimulate investment in agriculture and develop value chains. A case in point is a rice outgrower scheme that is being piloted in Ivory Coast, where supply of locally produced rice falls short of demand. There are a number of reasons for this, including the use of low yielding rain-fed seed varieties, and lack of inputs, mechnisation and irrigation. Post-harvest drying is another challenge. The pilot scheme, a 70/30% joint venture between agribusiness Intervalle (managed by local partner Yaanovel) and the District of Yamoussoukro in Ivory Coast, has resulted in productivity increases of smallholder paddy and rice seed farmers of up to 30% and 60% respectively. One major benefit of working with Yaanovel is its access to high-quality inputs such as seeds, which are very difficult to acquire locally. The firm also manages post-harvest processes, which has led to higher quality rice and, as a result, higher prices, which are pre-agreed with the farmer. The Alliance for a Green Revolution in Africa (AGRA), a partnership between the Rockefeller

Foundation and the Bill & Melinda Gates Foundation, also believes that smallholders hold the key to unlocking its stated vision of “helping Africa to feed itself and the world”. It is working on number of innovative programmes including improvements in soil health, the provision of higher-yielding seeds and developing access to markets. Though AGRA recognises the unique challenges facing African agriculture, it also looks to other parts of the world for practical solutions. Of India’s total arable land, 80% is farmed by smallholders. It is the world’s seventh largest agricultural exporter, and this success is attributed to the effective use of agricultural technologies and innovations. One of these is the ‘direct paddy seeder’, a simple machine that is now being piloted in several African countries. A trial in Senegal, where rice is traditionally sown by hand, has led to savings of $190 per hectare. As highlighted by AU Commissioner for Rural Economy and Agriculture Mrs Tumsiime Rhoda Peace on the sixth Africa Day for Food and Nutrition Security, women’s empowerment will also play a key role in improving food and nutrition security. “Under its commitment to reduce poverty by half by the year 2025, the Malabo Declaration categorically calls for supporting and facilitating women and youth in gainful and attractive agribusiness opportunities,” she observed. Other key areas identified on this occasion include investment in nutrition, advocacy, collaboration and climate resilience. It is clear then that Africa’s long overdue green revolution is under way, and 2016 will see renewed focus on agriculture. “While the technological developments of the 1950s that led to huge productivity gains elsewhere in the world may have bypassed Africa, it is catching up,” says Marais. Not a moment too soon. • Invest in Africa 2016 | 107

food and nutrition The information age is lending itself to smarter irrigation in Africa, and the market is awash with opportunity for both public and private entities

Innovation in irrigation: the power of data

50%

108 | Invest in Africa 2016

Christopher Scott/Alamy Stock Photo

productivity is not up to scratch. The idea is that ou only have to fly over the barren, going forward, the data will benefit farmers and parched hills of the usually lush policymakers at both the farm and country level. green province of Kwa-Zulu Natal to Private-sector companies are also working on know that irrigation in Africa is a big issue. But it’s not just in South Africa, innovative irrigation solutions. IBM, which has established the first industrial research facility in which in 2015 was in the grip of the Africa, has developed an innovative internet-of-things worst drought since 1982. Across an entire continent solution that is currently being piloted on two farms rainfall and water supply is unpredictable and in Kenya, a country that is home to 15 million variable, and how it is managed has a direct small-scale farmers. impact on the health of local economies. The International Food Policy Research Institute, for example, says irrigation has the potential to boost Private-sector solutions agricultural productivity in Africa by at least 50%. Also a remote monitoring tool, the IBM solution However, compared with elsewhere in the world, works via sensors installed on farms to capture irrigation is poorly practiced in sub-Saharan Africa. data on water tank levels, soil moisture and rates According to the Food & Agricultural Organization of of photosynthesis. This data is then streamed to the United Nations (FAO), in 2006 African countries the IBM IoT Foundation, where an analytics engine collectively irrigated just 5.4% of cultivated land, measures crop health and identifies patterns of compared with a global average of around 20%. water usage. These insights, which help farmers With concerns over global food security, however, understand how much water is actually needed, the continent’s unmet irrigation potential is are sent to farmers via a tablet or smartphone app. increasingly a focus of international attention. Dr Kala Fleming, Water, Agriculture and Health In continued collaboration with the FAO, the Dutch Manager at IBM Research Africa has been running Government, for one, recently donated $7 the product. She says the aim is to build a million to help countries in Africa and the database of information that helps Middle East better manage their water farmers better manage water supply and Irrigation has resource using a remote sensing understand growing conditions. the potential to technology. Taking the total Dutch This in turn will help aggregators, boost agricultural investment to $10 million, over a period which farmers rely on to get their productivity in of four years the project will harness crops to market, to better manage Africa by at least near real-time satellite data to help their investments. farmers take better decisions about IBM also says that it is uncovering what crops to plant and when. data-driven insights that will aid The data gathered will incorporate government policy on the issues inputs like rainfall and crop transpiration of subsidy distribution and to understand where water and land groundwater management. •

Global food security concerns are leading to greater focus on Africa’s unmet irrigation potential

Food and nutrition Agriculture is often perceived as a risky investment sector, but an innovative model for public-private investment from Grow Africa is changing perceptions

How patience is helping to avert risk

elped along by the launch of the Comprehensive Africa Agriculture Development Programme (CAAPD) in 2003, Grow Africa is working to forge multi-stakeholder partnerships throughout the entire agricultural value chain. Progress is being made on the ground. So far, 12 countries are working with Grow Africa to realise the opportunities for private-sector investment; to date 210 companies, two-thirds of which are African, have committed $10 billion to agriculture. As of 2013/14, $1.8 billion of that had been implemented, reaching an estimated 8.6 million smallholder farmers and creating 58,000 jobs along the way.

However, there is still work to do. One of the biggest challenges facing African smallholders is a lack of access to finance. Without it, farmers cannot invest in inputs such as seeds or fertilizer to improve crops, nor in training, equipment and so on, making it difficult for businesses to scale and risky for investors. Needless to say, this in turn has an impact on productivity and yields, as is shown by Tanzania’s smallholderdominated food value chain. While Tanzania may be Africa’s fourth-biggest maize producer, it lies 28th in the continent’s productivity stakes and is three times less productive than South Africa, the continent’s biggest producer. This made it a fitting test case for a pilot of the World Food Programme’s (WFP) Patient Procurement Programme (PPP), which was developed together with Grow Africa and Dutch cooperative bank, Rabobank. Arne Cartridge, Executive Director at Grow Africa , says the way in which PPP is being applied in Tanzania is a good example of a risk-reduction model. So what is PPP? According to Grow Africa, it is “a multi-partner platform that aims to create efficient value chains that enhance farmer incomes by establishing a stable demand-driven purchase system founded on forward

So far, 12 countries are working with Grow Africa to realise the opportunities for private-sector investment

contracts between producers and commercial actors”. In other words, it allows smallholder farmers to set contracts with buyers long before they plant their crops, helping them to secure loans or other financial services. Buyers of crops include the WFP and private-sector food purchasers.

Pilot schemes under way

According to Cartridge, in 2016 the Patient Procurement Platform is being piloted in Tanzania, Rwanda and Zambia with 75,000 tonnes of aggregated demand for maize and beans from more than 70,000 smallholder farmers. The first pilot got under way in Tanzania in early 2015, with the aim of reaching 5,000 farmers. Here, two models are being tested. The first involves one off-taker only being responsible for extension, input provision and aggregation. The second is an integrated model involving multiple stakeholders working together in the value chain. The programme has also kicked off in Rwanda and Zambia. According to the Rwanda News Agency, in the current planting season, PPP is helping 47 cooperatives with a combined membership of 17,000 farmers to set contracts to sell more than 8,000 metric tonnes of maize to the Rwanda Grain and Cereals Corporation. With greater security and increased productivity, PPP could help Africa realise the goal of feeding itself. • Invest in Africa 2016 | 109

food and nutrition

viewpoint Bukar Tijani

frica is one of the most affected regions by climate change, putting additional pressure on agricultural systems that are supported by a degraded natural resource base. It is therefore urgent to make production systems more sustainable, resilient and adapted to future changes in climate. Other sectors in the rural economy, including tourism and mining, also represent potential areas of economic growth within the African context. Africa is the world’s youngest region, with more than half of the population under 25 years of age. Unleashing the capacity of young women and men to effectively participate in the modernisation of the agricultural sector and rural economy is imperative for enhanced resilience, improved food 110 | Invest in Africa 2016

security, poverty eradication and sustained livelihoods. Indeed, rural youth employment has already been identified by most countries in the region as a major priority.

Agents of positive change

This is why one of the main objectives of our rural development programmes is to contribute to creating a conducive and enabling environment for the next generation of youth entrepreneurs and the creation of decent employment opportunities within the rural economy. Young people are key advocates of promoting positive change and adopting new technologies and are therefore a useful medium to achieve the needed transitions in rural communities. The Food and Agriculture Organization’s (FAO’s) comparative advantage lies in its role as the world’s

food and nutrition Left to right: Farmers at a grape production project; the FAO Director General at a regional food security meeting; an FAO presentation on the benefits of thick green forage

Bukar Tijani, Assistant Director-General and Regional Representative for Africa, Food and Agriculture Organization of the United Nations discusses efforts to create a hunger-free Africa

Agriculture in Africa: focus on youth agricultural knowledge agency, providing policy advice, analysis and technical assistance to member countries on rural and agricultural development. FAO has strong knowledge, networking and staff capacity in the promotion of decent rural employment and inclusive business models. However, we are not alone. FAO has shown commitment to partner with the African Union (AU) Commission in the implementation of the Post Malabo Declaration Implementation Strategy and Roadmap (launched following a joint session at the AU Summit, 26-27 June 2014, Malabo, Equatorial Guinea). Ending hunger by 2025 has been integrated into the Declaration of the African Union Summit in Malabo in 2014, which emanated from a high-level meeting organised in partnership with the AU, the New Partnership for Africa’s

Development (NEPAD) and the Lula Institute in Addis Ababa in July 2013. We collaborate in different areas, in particular, the implementation of the Comprehensive Africa Agriculture Development Programme (CAADP) – to be implemented over the next 10 years as stated in the Malabo Declaration on Accelerated Agricultural Growth and Transformation for Shared Prosperity and Improved Livelihoods – and on the commitment to halve poverty by the year 2025, through inclusive agricultural growth and transformation.

Engaging women

Women are key partners and players in all FAO’s mandated areas of work. In 2015, FAO played a key role in celebrating the AU Year of Women’s Empowerment and Development towards Africa’s Agenda 2063 and its follow-up processes.

We are determined to support and facilitate the participation of women and youth in gainful and attractive agribusiness opportunities through the development of sustainable small enterprises, because this will contribute to families’ improved nutrition, food security and livelihoods. By doing so, FAO will take part in the continent’s efforts to identify innovative approaches in food and agriculture and accelerate regional and inclusive growth towards sustainable development. We hope to create a hunger-free continent that supports women and youth, builds resilience, facilitates an increase in agricultural investments, steers policy and provides statistical data, and provides research and relevant technologies to better prepare Africa for the years to come, as it works towards delivering the AU’s Agenda 2063. • Invest in Africa 2016 | 111

AGRA PERSPECTIVE

Growing our future by investing in Africaâ&#x20AC;&#x2122;s farmers Do not underestimate the potential of the smallholder farmer. Give her access to high-quality seeds, nutrients for her soil, a place to safely store or process her harvest, credit to pay for inputs and a market that will provide a fair price for her surplus. Then watch what happens. In a couple of seasons, she can be running a financially and environmentally sustainable business that is providing food for her family along with a new source of income to pay for her childrenâ&#x20AC;&#x2122;s school fees and medical expenses. Multiply this kind of steady progress towards prosperity by several million family farmers and watch the transformative potential of agriculture spread across Africa.

AGRA_placed.indd 80

The Alliance for a Green Revolution in Africa (AGRA) is an African-led alliance focused on putting smallholder farmers at the centre of the continentâ&#x20AC;&#x2122;s growing economy by transforming agriculture from a solitary struggle to survive into farming as a business that thrives.

A new era for African agriculture Africa remains the one region in the world still seeking a sustainable agricultural transformation through smallholder farming. But change is already under way. AGRA began its work in 2006 with an intensive focus on the distinct problems related to seed production, soil health and agricultural markets that were so profound and had been

neglected for so long that they required a concentrated effort to resolve. Over the past nine years, our alliance, made up of partners in the public and private sector, has reached out to 15 million family farmers and thousands of local African-owned agriculture businesses to achieve impressive results. Together with our partners, we have developed locally adapted seeds and other technologies to enable a step change in yields, and by supporting the development of agro-dealers we have helped establish new delivery channels, giving farmers more choice and improved access to these and many other technologies. Our work has helped build stronger farmer organisations and markets,

11/01/2016 13:55

AGRA PERSPECTIVE

agriculture – the backbone of food production in Africa – from subsistence farming to farming as a business. This can power a new era of economic growth that delivers benefits to Africans at all income levels.

Unleashing agriculture’s potential

With AGRA’s support, farmers in Malawi and Rwanda have tripled their yields and established an extensive network of agro-dealers giving farmers a louder voice and improved market access. Together with our partners, we have worked to give farmers and businesses access to tools to help them manage their crops after harvest. And we have fostered the environment needed to facilitate the policy changes that enable the agricultural sector to flourish. African agriculture is now at an exciting moment. These changes are already having an impact on thousands of farmers’ fields. With many of the systems, tools, policies and partnerships now in place, the challenge is for countries and partners to take them to scale. By making the right policy decisions and investments, we can transform smallholder

AGRA_placed.indd 81

AGRA’s commitment to this mission remains as strong as ever, and we are now launching a more ambitious phase of work with countries and partners to deliver a full package of proven solutions simultaneously to farmers and local agriculture businesses across entire countries. We are prioritising countries where strong political will, excellent farming conditions and a healthy network of partners already on the ground make them ripe for rapid progress. The goal: to reach as many as 30 million farming households through a series of comprehensive, coordinated initiatives that could double yields and incomes by 2020. It is an approach based on evidence: in the past decade, we have seen that when the many challenges African farmers face are addressed at once – from getting seeds they need, to managing local conditions that are constantly changing, to finding new market opportunities for their produce – they quickly cross a threshold where they produce sufficient surplus and profit to cover future costs of inputs, diversify into other higher-value crops and livestock, and invest in family costs such as education and healthcare. AGRA’s focus is on this tipping point for sustainable agricultural transformation, recognising that closing the productivity gap and making markets work for smallholder farmers is the primary route to shared

prosperity, improved livelihoods, food security and better nutrition.

Growing our future with Africa’s farmers African economies are among the fastest growing in the world, but without a focus on agriculture, this growth is unlikely to change the narrative of poverty, hunger and conflict that has defined Africa for decades. Fortunately, Africa has seen the beginnings of a sustainable agricultural transformation, whether it is in the 20,000 farmers of the Southern Highlands of Tanzania that have tripled their yields from 1.5MT/ha to 5MT/ha in just two seasons, the smallholder farmers in Mozambique and Uganda that are now selling their cassava to breweries, or the farmers in Malawi and Rwanda who have been able to triple their yields after AGRA’s support to establish an extensive network of agro-dealers, which are helping deliver vital agricultural inputs. A major agricultural revolution based on the productive powers of millions of smallholder farmers is now within Africa’s grasp. We hope you will join AGRA and its partners in these efforts to build a new future that is African-led, farmer-centred, and creates new economic opportunities for all Africans. Alliance for a Green Revolution in Africa www.agra.org info@agra.org

Growing Africa’s Agriculture

11/01/2016 13:56

food and nutrition

Case Study

Cash from cassava cassava facts Cassava is a root vegetable native to Central and Latin America It is also known as manioc, manihot, tapioca and yuca There are two types of cassava: bitter and sweet. The former is toxic and must be treated before consumption It is the third most important source of calories in the tropics, after rice and maize Cassava is rich in minerals, including zinc, magnesium, copper, iron and manganese

114 | Invest in Africa 2016

erald Owachi, the CEO of Ugandan agribusiness Pamrone Investments, has spotted an opportunity to create a workable cassava value chain in the landlocked East African nation. Since the country received $30 million under the World Bank’s East Africa Agricultural Productivity Project (EAAPP) in 2010, cassava production, which was first introduced to Uganda in the second half of the 1800s, has been rising. According to the National Agricultural Research Organisation (NARO), since the EAAPP was implemented, production of the crop has increased from six million to 11.3 million metric tonnes a year. In fact, under EAAPP, Uganda is home to the Cassava Regional Centre of Excellence and serves all 11 countries situated between Ethiopia and Zambia. So far, however, sufficient demand for the crop has not been created. “Agro-processing of cassava presents a huge opportunity, as it is such a versatile crop,” says Owachi. “It is hardy, can survive difficult conditions like drought and has as many as a hundred uses – at both domestic and industrial level.” High-quality cassava flour (HQCF) is a substitute and compliment for cornstarch and wheat flour, which is used in many industrial products like beer, bread, sausages, and even paper boxes. It is also an ingredient in biodegradable plastics, in textiles and pharmaceuticals. A number of drugs, including anti-retroviral drugs, are now locally made and, with the entry of Indian multinational Cipla into Uganda, demand for cassava four, which is used as base material in a number of drugs, could grow. Production of ethanol is another opportunity and, in early 2015, the $1.8 million Kamtech Logistics plant was built in a joint venture between Ugandans, Saudi Arabians and Lebanese investors. Uganda currently imports huge quantities of cornstarch because no entity is capable of supplying the quantities and guaranteeing the required product quality. Typically, however, this important staple food crop has been grown mainly for subsistence purposes by more than 50% of Uganda’s farmers.

Working with a number of strategic partners, including NARO, PamRone’s first step was to establish a premium cassava seed line. In collaboration with the Cassava Unit at the National Crops Resources and Research Institute (NaCRRI), PamRone has now established the biggest certified cassava seed line in Uganda. “Our seed line is one of only three other places in Uganda where you will be guaranteed clean seed, traceable to the parent material,” explains Owachi. This is a factor that has held back production of cassava on a commercial scale. With planting material from its seed line, PamRone has now grown 240 acres of cassava in Nwoya district in Northern Uganda, the region where the country’s brutal armed conflict with the Lord’s Resistance Army (LRA) took place. The firm is now in the process of raising resources to acquire a plant to process cassava tubers into HQCF to feed the growing domestic and industrial demand for the product. “We would have been doing this by now, but securing finances for this is tough on our local market – so we are ploughing on slowly but steadily,” says Owachi. Owachi believes the north has the potential to regain its place as breadbasket of Uganda. One way to achieve this is through the creation and enhancement of agro-processing capability. With these capabilities, Owachi believes that local production of a variety of agro-commodities and products can begin to replace imported raw materials. A reduced import bill will earn Uganda massive foreign exchange savings. This transition will only become a reality if there are several incentives that enable local entities such as PamRone to enhance capacity to fill this gap. If you can build a viable value chain, he argues, that guarantees a steady source of supply, a certain level of quality and an enabling policy environment, then opportunities are rife for multiple players, including smallholders. Work in Uganda is under way nationally and cassava has already been identified as one of the

food and nutrition

Karen Kasmauski/Corbis

Nigeria: incentivising production The Nigerian Government has launched a series of policies to create an enabling environment for cassava production. These include: • subsidising investment capital to agricultural manufacturing companies at a 9% interest rate; • regulating the inclusion of a certain percentage of cassava into all wheat flour; • introducing import levies; and • creating incentives for locally produced crops. The policies, which include subsidising investment capital at an interest rate of 9%, have helped create demand for cassava flour and a market for the tubers that are supplied by smallholder farmers. Steps taken also provided the impetus for the opening of Thai Farm International (TFI) in 2006, the country’s biggest cassava milling company. Thanks to these policies, TFI is able to guarantee off-take for 3,000 cassava farmers’ produce. According to a Grow Africa report, TFI receives up to 150 metric tonnes of cassava tubers daily, a figure it intends to double and later triple in the next four years. This will be possible if the enabling environment is sustained. Steps taken by the Nigerian Government have had a direct impact on the livelihood of farmers. Louw Burger, TFI’s Chief Executive Officer, says it has led to a “dramatic” increase in monthly earnings from $25 to $1,500. While Nigeria is certainly a success story, challenges remain. According to Grow Africa, commercial banks have yet to respond to improvements in the regulatory environment. Lending rates for small to medium-sized enterprises remain between 20 and 30%. Other challenges include the land ownership system, which makes it difficult for companies to use land as collateral. Despite the challenges, companies such as TFI see significant opportunity in West Africa. The output of TFI, Nigeria’s biggest miller, is currently 20,000 metric tonnes, but the country’s need is 100,000. Burger expects that to grow to at least 200,000 within the next four years, creating the need for a further 10 factories.

Nigeria is the largest producer of cassava in the world

country’s eight strategic crops under the National Agricultural Sector Investment Plan. However, Owachi believes more debate and progress must be made at a regional level. “More may need to be done so that those at the lower end of society really benefit,” he says.

Lessons from Nigeria

Though Uganda has become the centre for cassava excellence under EAAPP, Owachi believes there are lessons to be taken from Nigeria. Nigeria is one of three countries (Ghana and Tanzania being the other two) where the Grow Africa Partnership, founded to boost private investment in agriculture, has launched platforms, following a market opportunities study. “The continent is certainly waking up to opportunities for cassava production,” explains Arne Cartridge, Executive Director, Grow Africa. Today, Nigeria is the world’s biggest cassava producing country and here demand for this widely cultivated crop has been driven from the top. In a presidential initiative, the Nigerian government implemented numerous policies to boost the agricultural and manufacturing sectors through, among others, the use of cassava. • Invest in Africa 2016 | 115

Africaâ&#x20AC;&#x2122;s human wealth

A child receives a vaccine. Child mortality rates in many African countries remain high

Randy Plett/Getty Images

116 | Invest in Africa 2016

Africaâ&#x20AC;&#x2122;s human wealth

Africa is facing complex health challenges. To cope with rising pressure on health services, both the public and private sector are tasked with delivering innovative responses, as Sarah Rundell explains

A comprehensive treatment plan

ne of the most exciting growth areas in Africaâ&#x20AC;&#x2122;s healthcare sector in recent years has been around telemedicine. The concept, which refers to the use of telecommunications to allow healthcare workers in rural or out-of the-way areas to diagnose patients remotely in conference with specialists, has been embraced by the African Union. As part of its Pan-African e-Network Project in cooperation with the Indian government, doctors based in India are helping to remotely diagnose patients in hospitals across Africa. Under the same project, students living and working in Africa are remotely studying medicine in lectures hosted at universities in India.

Devising healthcare strategies

The growth of telemedicine and the other technologies transforming the delivery of healthcare in Africa are welcome positives at a time when the Ebola epidemic harrowingly exposed the lack of capacity and underinvestment facing the sector. The virus also highlighted the absence of any cohesive African strategy to tackle the disease, which spread across shared boarders between Guinea, Liberia and Sierra Leone. It is not only infectious diseases that blight the health of Africans. The continent is Invest in Africa 2016 | 117

Africa’s human wealth

facing a rise in chronic, non-infectious conditions common in the developed world, such as heart disease and cancer: the World Health Organisation says non-communicable diseases now account for a third of African deaths, up from a quarter a decade ago. High rates of maternal and child mortality are still common and a skills shortage constrains the sector so that although Africa has a quarter of the world’s disease burden and 11% of the population, it only has 3% of its medical workers. The World Bank predicts an additional 90,000 doctors and 500,000 nurses will be needed in the next few years, estimating that the region commands less than 1% of global health expenditure.

African Center for Disease Control and Prevention

The continent’s ability to tackle diseases such as Ebola will be boosted by the new African Center for Disease Control and Prevention (CDC). The Ebola crisis hastened the creation of the long anticipated centre, charged with detecting and coordinating a Pan-African response to epidemics and crucially backed with technical and financial support from strategic development partners, inclusing the United States CDC. Its creation reflects a realisation that only a coordinated approach will contain future disease outbreaks and that Africa’s regional and sub-regional organisations must play a more significant role in combating the ongoing threat of Ebola, as well as in future health emergencies. With assistance from US Tulane University, the African Union (AU) is currently renovating old clinics to establish the African CDC Coordination Centre in Addis Ababa, Ethiopia. Operations are expected to commence in early 2016. Five regional collaborating centres are also being set up to help monitor disease activity across the continent. A recent report by the UN Development Programme found that a “regional perspective could have greatly enhanced the effectiveness of the response” to Ebola, and went on to recommend measures such as joint investigation missions and sharing of best practices. Strong leadership will mean that countries begin to share lessons from the crisis, an example being in how neighbouring Nigeria and Mali mounted an effective Ebola response. Public-private partnerships are also playing a part in strengthening Africa’s health systems. The Africa Against Ebola Solidarity Trust was set up by

With the greater ability to pay for healthcare, private investment has started to arrive in Africa

118 | Invest in Africa 2016

Africa’s leading entrepreneurs to help the AU fight the disease. Together with the Trust, the AU was able to deploy over 850 health workers to the most affected areas of Guinea, Liberia and Sierra Leone. In 2015, the Trust received a Global Leadership Award for its contribution at the annual Global Leadership Dinner, organised by the United Nations Foundation. When it comes to financing healthcare, insurance is now a proven model in Africa. It is typically offered through government-run national insurance schemes or via the private health insurance and medical companies that are growing in countries with larger, affluent populations and industries capable of funding large worker plans. Although health experts caution that Africa’s new insurance schemes still have a way to go – for example, many drugs and services are not included and are still covered by out-of-pocket payments – experts have long criticised direct payments at point of use. In poor countries in particular, expensive ailments push the poor into bankruptcy and high costs can dissuade people from seeking medical care. In Rwanda, 91% of the population now belongs to one of three health insurance schemes in a policy where the government, with donor support, matches members’ contributions. Health insurance, or Mutuelles de Sante, is nearly universal in community-rooted schemes on a sliding scale where the wealthiest pay the most. Ghana launched its National Health Insurance Scheme (NHIS) in December 2004. Since then, it has been mandatory for all residents to be members of a district mutual health scheme, a private commercial insurance scheme or a private mutual health scheme. Around nine million Ghanaians, almost 40% of the total population, are now covered, and the beneficial effects of the scheme on health have been evident, argues consultancy KPMG. In other initiatives to encourage the take up of insurance, governments are rolling out micro-insurance cover for poorer populations that do not have access to employment-related or other private schemes.

Scaling up services

With this greater ability to pay for healthcare, private investment has started to arrive in Africa, improving services and extending their delivery. In cities, new private hospitals are providing outpatient services and the reassurance of quality emergency care to the new middle class. “It is clear that access to capital has the potential to transform the sector, particularly if it is invested in organisations that are already operating effectively and are meeting the needs of the community but face an excess demand, which can be met by scaling up services,” notes KPMG in a 2015 paper. Private companies now supply half of

Africa’s human wealth

healthcare in numbers all healthcare provision in Africa, according to the International Finance Corporation, the private-sector arm of the World Bank. Today’s fierce competition among global medical equipment suppliers and pharmaceutical groups chasing new African markets as growth in developed markets stagnates, illustrates the opportunity. A report by consultancy McKinsey entitled Africa: A continent of opportunity for pharma and patients puts the value of Africa’s pharmaceutical industry at $20.8 billion in 2013, from just $4.7 billion a decade earlier, predicting it will grow to between $40 billion to $65 billion by 2020. Development in the sector is complicated by the sometimes opposing objectives and priorities of Africa’s public and private sectors. While the public sector often lacks financial resources and strong governance frameworks, the private sector is often criticised for chasing profits. But increasingly private operators are working in partnership with donors and governments to provide better facilities and increase access to affordable medicine through public-private partnerships particularly. Botswana’s Comprehensive HIV/AIDS Partnership involves private partners, and Botswana’s government notes The Economist Intelligence Unit in its report into the future of healthcare in Africa. Elsewhere, the Private Sector Health Alliance of Nigeria has built a coalition of private-sector leaders and organisations to apply their capabilities and resources to help improve healthcare in Nigeria.

Increasing national health spending

A clutch of countries have emerged as African champions. Botswana has an increasingly sophisticated insurance market, and its government is one of the few in Africa spending more than 15% of its budget on healthcare, in line with the Abuja commitment. The AU-led Abuja commitment was made off the back of the Millennium Development Goals to encourage countries to spend 15% of their national budgets on healthcare. Rwanda’s progress has also been impressive. It has rolled out nationwide health insurance and managed to reduce mortality from AIDS, tuberculosis and malaria, as well as maternal mortality. In Ethiopia, improvements to primary healthcare in remote areas has made a huge difference to maternal and infant mortality. Global private equity investor The Abraaj Group, which has invested $350 million into healthcare businesses across Africa, and home-grown African groups such as South Africa’s Aspen, a major producer of generic antiretrovirals, are transforming the continent’s medical landscape. Coupled with real efforts to build pan-African responses to combat the continent’s biggest challenges, some of the worst ails of the sector could be cured. •

Africa has

25%

But it only has

of the global disease burden

of the world’s medical workers

500,000 extra nurses will be needed across the continent in the next few years

$40-65Bn The estimated value of Africa’s pharmaceutical industry by 2020

15%

The share of national budgets that the AU is encouraging countries to spend on healthcare

Invest in Africa 2016 | 119

Africa’s human wealth Stefanie Durbin on how a range of initiatives will increase access to higher education for Africa, helping it to thrive in the 21st century

Excellence in demand

roviding quality higher education is key to addressing the causes of poverty and underdevelopment in Africa, as is the case globally. Much depends on the skills and resources that a networked cadre of highly educated teachers, researchers, and government officials can offer. Yet the rate of access to higher education in Africa is only 7% – a discouragingly low percentage when compared with the West’s 76%. The growth of a thriving education sector is therefore imperative for the continent’s development and competitiveness. In this, tertiary education, research and development (R&D), and technical and vocational training (TVET) are the primary areas from which African Union (AU) member states’ continued economic development is expected to spring. In addition to advocating for education as a driver of sustainable socio-economic development, an important remit of the AU’s Department of Human Resources, Science, and Technology (HRST) is to support the management of the design and harmonisation of AU member countries’ education programmes. Harmonisation is a prime driver for the development of the continent’s national education systems. When degrees are recognised across borders and credits are weighted equally, a student from one African country can have her diploma recognised anywhere else on the continent. Harmonisation 120 | Invest in Africa 2016

also fosters partnerships among higher education institutions (HEIs), academic mobility and research collaboration among HEIs – all important ingredients if the continent’s education system is to meet the needs of its population.

Strategy for science

To review the progress made by the AU’s Second Decade of Education, a programme that came to an end in 2015, AU education and training ministers convened in February 2015 to formulate Africa’s post-2015 education agenda. The result, the Continental Education Strategy (CES) 2016-2025, was endorsed by the World Education Forum (WEF). Among the priority areas identified by CES were science, technology and skills development. The CES followed this assessment up with the Science, Technology, Innovation Strategy for Africa 2024, which identified HEIs as the ideal incubators for the development of the continent’s research centres. These centres will support sustainable growth and socio-economic development while also boosting competitiveness in R&D and entrepreneurship within African universities. This is important because humanities and the social sciences remain the dominant areas of study in most of Africa’s universities. The AU would like to see more students enrolled in science, technology, and engineering studies. Private education providers enrol about a quarter of all Africa’s students, and private HEIs and TVETs are in a good position to help accomplish this transition.

Africa’s post-2015 education agenda has prioritised science, technology and skills development to enhance competitiveness in R&D and entrepreneurship in universities

ACE

Indeed, the CES actively encourages private-sector investors to engage in and contribute to the implementation of its objectives by promoting an environment conducive to private investment in education, training, entrepreneurship, and job creation.

Private participation

Many of Africa’s national education sectors opened up to private participation in the 1990s. Since then, private HEI ownership has been enthusiastically received around the continent. In Nigeria, for instance, private institutions make up 33% of all HEIs, while in Kenya the proportion is 20%, and in Ghana and Ethiopia, 15%. Even so, enrolment numbers in private HEIs are comparatively small when contrasted with those of public HEIs.

33% of all higher education institutions in Nigeria are private

The most recent participant in Africa’s drive for educational excellence is the Africa Higher Education Centers of Excellence (ACE) Project, which is running from 2014 to 2018 and is funded by the World Bank. Supporting regional specialisation via 19 participating universities in seven West Africa countries, the ACE project aims to strengthen the HEIs’ ability to deliver quality training and conduct applied research. The project is expanding from West Africa to East and Southern Africa in a second phase, ACE II. Several multinational corporations, such as Microsoft, Total, and pharmaceutical companies, have reportedly expressed interest in participating in the ACE projects. Now and in the future, initiatives for growth and sustainable development in Africa’s higher education sector will have to continue to tackle tough issues. These range from opening up access to tertiary education to spurring research and innovation, making room for the immense number of students looking to enroll in tertiary education, delivering innovative teacher training, and keeping the lid on the rising cost of tertiary education itself. Invest in Africa 2016 | 121

EMMANUEL AREWA/AFP/Getty Images

Africa’s human wealth

Africa’s human wealth Christian Thompson/AP/Press Association Images

International HEI Branch Campuses in Africa (home country)

Ghanaian students at All Nations University College – Intelligent Space Systems Laboratory working on a test launch of a cokecan-sized satellite

Aberystwyth University Mauritius (United Kingdom) Business School Netherlands Nigeria (Netherlands) Carnegie Mellon University in Rwanda (United States)

Yet investors can expect demand for private tertiary education to climb higher. Enrollment rates in higher education have tripled since 2000, and in Nigeria, Ghana, Ethiopia and South Africa, it is not uncommon for 10 candidates to vie for one university space. In Kenya, South Africa, Ghana, Nigeria, Sierra Leone and Tanzania, technical institutions have been transformed into universities in order to increase the number of available spaces. The number of privately owned HEIs has also multiplied in these countries. British universities have been among the early movers in Africa’s HEI sector. The University of London’s International Programmes leverage distance study and flexible learning to allow students in nine African countries to study for a University of London qualification. To date, more than 3,400 Africa-based students have enrolled in these programmes, studying disciplines ranging from law and business to computing, economics, and petroleum geoscience. Indeed, Nelson Mandela was a student of the programme. The UK’s Lancaster University also operates an Africa branch campus, in Ghana’s capital, Accra. Lancaster University Ghana is a collaboration between Lancaster University and the Ghana-based company Trans National Education. Degrees are awarded by Lancaster University, and range from foundation to undergraduate and postgraduate programmes. Upon

investors can expect demand for private tertiary education to climb higher

122 | Invest in Africa 2016

graduation, students receive the same degree certificate as that granted to Lancaster’s UK-based students. In addition to HEIs, another prime area for investment is post-graduate and vocational education. In general, Africa’s universities function more as teaching institutions than research centres, while the existence of TVET remains obscure at best and such vocational institutes, where they exist, are underfunded. Malaysia’s Limkokwing University of Creative Technology in Botswana is one foreign HEI filling this gap in the continent’s educational system. Limkokwing University in Gaborone opened in 2007 with a focus on the creative economy. It grants Bachelor’s degrees in professional and industrial design, tourism and event management, interior architecture, entrepreneurship and international business, and communications. Its student body is encouraged to acquire knowledge economy skills to enable them to enter high-paying careers after graduation. In addition to Botswana, Limkokwing University also has campuses in Lesotho, Sierra Leone, and Swaziland. Limkokwing Gaborone students have won several awards, including for social media excellence and the Mercedes-Benz STYLO Fashion Awards. The progress made by integration schemes such as HRST’s harmonisation programme, combined with private-sector investment, is already bearing fruit that will help develop the continent’s abundant human talent, as well as advance the quality of the education system across the African continent. •

Dauphine Université Paris – Tunis (France) ESMOD Tunis (France) Lancaster University Ghana (United Kingdom) Limkokwing University of Creative Technology Botswana (Malaysia) Middlesex University Mauritius (United Kingdom) Monash South Africa (Australia) Stenden South Africa (Netherlands) Technical University of Berlin – El Gouna (Germany) Webster University Ghana (United States)

Africa’s human wealth

Dotted across Africa are higher education facilities that are driving research and development activities and lifting academic standards

The centres of excellence spurring R&D

A 15

African Institute for Mathematical Sciences centres are set to open by 2023

frica currently contributes approximately just 1% of global knowledge, and as a result very few African universities are listed in international rankings of higher education institutions (HEIs). To challenge these circumstances and to prepare the ground for increased foreign participation in the continent’s HEI sector, the African Quality Rating Mechanism (AQRM) was formulated during the African Union’s (AU) Second Decade of Education. AQRM compiles objective criteria to measure and compare the performance of Africa’s HEIs. In addition, the AQRM addresses quality improvements in Africa’s higher education sector. AQRM also supports the AU in identifying Centres of Excellence across the continent. In light of Africa’s limited institutional capacity for R&D, science and technology, the identification and networking of regional centres of excellence is crucial. Several such centres already exist. In 2008, the African Union Commission (AUC) created the Pan African University (PAU), a post-graduate training and research network within a select collection of flagship HEIs in five regions. PAU assists high-performing African students to pursue advanced graduate training and postgraduate research in vital areas such as life, water, energy and space science, as well as promoting academic mobility and harmonisation. In a similar vein, institutional collaboration on the national, regional and continental levels is the driving force behind the African Higher Education and Research Space (AHERS). Presided over by the Association for the Development of Education in Africa Working Group on Higher Education, partners of AHERS include the AUC, UNESCO

and the Association of African Universities, among others. AHERS aims to strengthen the capacity of Africa’s HEIs by fuelling collaboration in research and teaching, improving the quality of higher education and, like PAU, encouraging mobility and harmonisation.

Advanced learning

One of the oldest Centres of Excellence is Kenya’s International Centre for Insect Physiology and Ecology (ICIPE), which was established in 1970 and is now a globally leading institution for arthropod research. More recent entrants include South Africa’s African Institute for Mathematical Sciences (AIMS), which was founded in 2003 in partnership with foreign universities such as Oxford, Cambridge and Paris Sud XI to advance excellence in sciences and mathematics. AIMS intends to found 15 centres across the African continent by 2023. For its part, Burkina Faso’s International Institute for Water and Environmental Engineering (2IE), established in 2005, offers training for engineers in the areas of energy, environment, water and sanitation, mining and civil engineering, as well as management and entrepreneurship. Continuing the focus on scientific education, in 2007, the Carnegie Corporation launched the Regional Initiative for Science and Education (RISE) to help augment the number of highly trained African university faculty able to educate the next generation of African scientists and engineers. RISE functions as training nodes in a network of African HEIs of demonstrated excellence in specific disciplines. Also in 2007, Nigeria’s African University of Science and Technology, the first of the Nelson Mandela Institutions, opened in Abuja as a Centre of Excellence in science and technology. • Invest in Africa 2016 | 123

Ashinaga perspective

Turning adversity into opportunity “Ashinaga came to me in my last year of high school in Rwanda. They welcomed me with open arms.” – Angelique Uwabera, Ashinaga Scholar 2015. “I was only two years old when my parents were killed in a rebel attack during my country’s terrible civil war. The death of my parents was the turning point of love in my life, like a river having run dry forever. I had no control over my fate. Many people think that the most painful thing is losing someone you love, but I think it is even worse to lose yourself in the process. I lost my identity from the time I was told that I was an orphan. I saw myself not as a child but as a leftover. Growing up in a non-caring family made me think I would never be a priority to anyone,

Ashinaga-Japan placed.indd 80

and I was unnecessary in the world. There was no one in my childhood who cheered me up, and I grew up in an environment of struggle, blame and darkness. In spite of these difficulties, my education kept me going. I was driven by the hope that one day it would open the doors to new opportunities. Ashinaga came to me in my last year of high school in Rwanda. They welcomed me with open arms and prepared me for a world-class international education. In August, the unbelievable happened, I was accepted to study International Relations at American University in Washington DC. When I return home after graduation, it is my dream to create a business that connects graduating students with the job market in

Africa. I plan to begin with orphaned students in Rwanda, but hope to expand to help the rest of Africa. I will ensure that they do not waste their educations and will guide them to develop their careers and self-confidence. Together, we will lift Africa out of poverty. I never hesitate to treasure the fact that I am Rwandan; my identity fortifies my faith that we can rise from our ashes.”

Who we are Ashinaga is a Japanese NGO that recognises the inherent potential in orphaned young people such as Angelique who wish to bring about positive change in their community. We provide these talented students with mentoring and a full university scholarship to help realise their highest ambitions and become future leaders for positive change.

11/01/2016 14:01

Ashinaga perspective

Our firm belief is that the adversity these students have faced can become their greatest strength, forming the core human element of a life dedicated to helping others. With our scholarship, our students are able to study at top global universities, gaining the range of experiences, perspectives and ideas necessary to turn that dedication into an empowered reality.

Uganda and Senegal since 2014. We are also establishing offices in the US and Europe to expand our fundraising potential and form a strong network of support for our scholars. We have provided scholarships and support to students in 26 countries across sub-Saharan Africa. We hope to further extend that support to students from all 49 countries across the sub-continent within the next five years.

More about our work

Apply

Ashinaga has nearly 50 years of experience supporting orphaned students in our native Japan, helping more than 95,000 students gain access to higher education. Our founder, Yoshiomi Tamai, was awarded the Eleanor Roosevelt Val-Kill Medal in 2015 in recognition of the impact that Ashinaga has made so far. The past 15 years have been dedicated to providing that same opportunity to international students, and to sub-Saharan African students from our ‘Kokoro-Juku’ education centres in

If you feel you have the dedication to become an Ashinaga Scholar, then apply for our ‘100-Year Vision’ scholarship. Selected candidates from 35 countries in sub-Saharan Africa will be invited to attend our programme in either Senegal or Uganda, where they will be guided by staff and volunteers to study at universities in North America, Europe, Brazil and Japan. For more information, please visit: http://ashinaga100-yearvision.org/en/ The application deadline is 26 January 2016.

Ashinaga-Japan placed.indd 81

Support us If you wish to support our activities through forming a partnership, making a donation or offering your expertise, please contact our Tokyo Headquarters at info@ashinaga.org. Ashinaga, 1-6-8 Hirakawacho, Chiyoda-ku Tokyo 102-8639 Japan T: +81(3)3221-0888 F: +81(3)3221-7676 E: info@ashinaga.org www.ashinaga.org/en/ fb.com/ashinagaofficial

EDUCATIONAL SUPPORT FOR ORPHANED AND BEREAVED STUDENTS WORLDWIDE

11/01/2016 14:01

The African Consumer More buyers and rising demand for low-cost products has led to fertile ground for investment in Africa’s consumer goods sector, writes Stefanie Durbin

An open field for investors

The African Consumer

126 | Invest in Africa 2016

onditions in Africa have perhaps never before been so ideal for strategic investment in its retail consumer goods sector. With GDP per capita forecast to grow at 5% in 2016 and a growing urban middle class, Africans’ spending power is strengthening as its population soars. All this combines to make Africa a large – and, so far, largely untouched – green field for consumer product retailers. Indeed, the domestic market of 1.1 billion people is expected to double by 2050, and by 2030, Africa’s combined consumer spending is projected to reach $2.2 trillion, according to the African Development Bank. The retail category best suited to cater to this socio-economic profile is fast-moving consumer goods (FMCG). Comprising a wide array of mainly low-cost and non-durable items, FMCGs include foodstuffs, cleaning products, medicines, personal care products, paper and plastic products, consumer electronics, alcoholic and soft drinks, and tobacco products. Also called consumer packages goods, the FMCG retail sector is one of the largest in the world. Total household spending on FMCG in a sample of 39 African countries reached nearly $240 billion in a 2010 analysis of World Bank data. In early-stage markets such as most of Africa’s, the GDP per capita level acts as a good indicator of whether the FMCG sector is likely to experience growth. Lower-income consumers tend to make up the largest segment of FMCG buyers, but demand can and does reach across

income lines, especially when brand loyalty has been fostered. In addition, because of supply-chain and capacity issues, markets with high urbanisation rates are the most conducive for FMCG retailers. Africa ticks this box as well; it is urbanising quickly and is projected to become 56% urban by 2050. It is already home to 53 cities with populations of more than one million, according to the United Nations. Nigeria alone is set to see some of the world’s most intense urbanisation, with forecasts projecting it will add 212 million people to its cities by 2050. There is clearly substantial room for strategic domestic and foreign investment in Africa’s FMCG sector. Continuing high poverty levels, especially in sub-Saharan Africa, mean buying food and other low-cost consumer goods often takes priority over more expensive purchases. In fact, edible foodstuffs accounted for around 86% of total household expenditure on FMCG goods in the sample World Bank data. Of this, cereals, grains and wheat took the largest share, followed by vegetables and fruit, meat and fish, and other edibles.

Major market players

Nestlé, Unilever, Procter & Gamble, Johnson & Johnson, PepsiCo, Coca-Cola and JBS make up the world’s largest FMCG companies, and they all maintain a presence in Africa. Other foreign firms operating in Africa’s FMCG space include Holland’s Spar International and Australia’s Woolworths. Companies that are locally headquartered are Massmart, Shoprite, Pick n Pay, and Fruit & Veg City, all based in South Africa.

Customers browse for goods in Westgate Mall, Kenya. Across Africa, as in the rest of the world, the fast-moving consumer goods retail sector is growing rapidly

Trevor Snapp/Bloomberg via Getty Images

The African Consumer

Local preferences Each country in Africa has its own income and consumer preference profile. A best-selling product in Accra may be a washout in Lagos. Some success stories include: Massmart Holdings, which is majority owned by Walmart, is the continent’s third-largest distributor of consumer goods. Massmart relies on high volumes to drive its FMCG sales. These are made up of branded general merchandise, liquor and basic foods. The global grocery chain Spar International takes a slightly different approach. It partners with local retailers in each country it expands into in order to understand each market’s unique characteristics. The chain has recently opened new stores in Malawi, where it partnered with People’s Trading Centre, the country’s largest retailer.

The Unilever approach

When entering a market as diverse and substantial as Africa’s, foreign investors need a comprehensive strategy. Unilever’s strategy offers an instructive case in

point. It is based on expanding its distribution network, introducing new products, and lowering its cost structure. In 2012, it set a goal to double its revenue in Africa to nearly €6 billion by 2017. Because competitive pricing is key in FMCGs, Unilever has made some of its products more affordable by reducing product pack sizes, in a move to appeal to low-income households.

A profitable market

As the number of consumers and their spending power continues to rise in the coming decades, Africa will solidify its standing as a profitable market for FMCG retailers. FMCG companies that are able to create brand loyalty while maintaining low operational margins will find themselves the beneficiaries of a continent full of consumers looking to buy products such as shampoo, soft drinks and more. •

Beer in Ghana Alcoholic drinks recorded the highest sales of all FMCG categories in 2013, and tobacco is forecast to outgrow all other FMCG product categories in Ghana. Packaged food in Angola Sales in this category expanded by an average annual growth rate of 23% during the 2009-13 period, with a value of $1.8 billion in 2013. Ice cream in South Africa A tax allowance incentive scheme that runs until 2017 prompted Unilever to open its first African ice cream factory in South Africa in October 2015. Invest in Africa 2016 | 127

Africa Invest in

An official publication of the African Union

2016

Agenda

Sum Edit mit ion

2063

Subscribe for news and views from the 26th African Union Summit

POWER

Infrastructure

A special summit edition of Invest in Africa 2016, providing conclusions from the summit and exclusive remarks from African Union figureheads, will be available at www.investafrica.media.

Subscribe for free now at www.investafrica.media

The African Consumer

Open-air markets and street-corner sellers still thrive in Africa, but a formal retail sector is beginning to make inroads beyond the well-heeled neighbourhoods

Seizing Africa’s retail opportunities

etail industry analysts consider Africa to be remarkably lacking in formal retail options, such as supermarket chains and large malls. With GDP per capita on the upswing, a growing number of Africans have the means to shop in formal retail outlets, but for many, such an option is not available. As one South African analyst warned: “There is plenty of interest in Africa, so those companies that don’t make a move now will be left behind.” As a shopping culture develops in Africa and retailers’ supply chains solidify, consumer focus and demand is expected to shift from basics, such as dry goods and foodstuffs, to higher price-point products.

A shift in shopping culture

Ideally, this shift will occur in concert with the development of more retail mall stock, which is expanding at a rate of more than 20% a year, according to real estate firm Jones Lang LaSalle (JLL). Yet, despite ongoing large expansions in Nairobi, Cairo and Lagos, JLL cautions on a scarcity of high-quality retail space across Africa, with the exception of South Africa. Yet new retail developments are under way across the continent. A major enhancement to Nairobi’s already

Miles of malls: new and upcoming sites Botswana

Rail Park, Airport Junction, Mahalapye and Sebele

Nigeria

The Palms and the Ikeja City Mall in Lagos; the Jabi Lake Mall in Abuja

Ghana flourishing formal retail sector, the Two Rivers Mall is set to open in spring 2016. In addition to 62,000 square meters of retail space, Two Rivers will count Carrefour as an anchor tenant. The opening of the Carrefour Two Rivers supermarket will mark the beginning of an ambitious expansion into Africa for the French supermarket firm, an expansion being driven by the opportunity to meet pent-up demand from consumers. In the past, new retail market entrants to Africa – Walmart is a good example – have stumbled in the face of local competition, legal hurdles and unreliable supply chains, so having local partners is crucial. Through partnerships with local operators in Tunisia and Egypt, Carrefour has already increased its presence in North Africa. For its West and Central Africa stores, it has partnered with the continent’s biggest distributor of automobiles and pharmaceuticals, CFAO. This limits Carrefour’s exposure to the risk posed by the Africa’s difficult distribution channels, while leveraging CFAO’s knowledge of local markets and its relationships with governments. If Carrefour – and the other retail chains sure to follow in its footsteps – achieves success in its Africa expansion, shoppers across the continent could begin seeing display windows full of new retail options. •

The Accra Mall is Ghana’s largest shopping centre

Tanzania

The $300 million Oyster Bay City project in Dar es Salaam will include the country’s largest shopping mall

Egypt

The Mall of Egypt in Cairo will be home to up to 400 stores

Namibia

Located in Windhoek, The Grove Mall offers 126 shops

Gambia

The Mall of Gambia boasts 180 stores

Rwanda

The $34 million Kigali Heights mixed-use development features a retail component and is due to open in March 2016

South Africa

The Mall of Africa is due to open in April 2016 with 131,000 square metres of retail space

Kenya

Nairobi’s $250 million Garden City Mall opened in May 2015

Invest in Africa 2016 | 129

The African Consumer

The value of ‘Brand Africa’ is increasing, both on the continent and internationally, writes Stefanie Durbin

Home brand

he term ‘Brand Africa’ means different things to different people. In Tanzania, for instance, it might mean quality cashews; in Ghana, stylish clothes designs; and in South Africa, locally brewed beer and wine. So when marketing gurus talk about ‘Brand Africa,’ what they are referring to is the image the word ‘Africa’ conjures when it’s positioned next to, or on, a product. Unfortunately, for some, that image may have negative connotations. However, the many people who have been to Africa, and Africans themselves, know that the continent is much more than the most recent crisis in the headlines. And that’s what promoters of Brand Africa are trying to convey: the whole story of a huge, diverse continent. Communicating this story in the right way can change the entire narrative about, and perception of, what it means for a product or service to be made in Africa. Multinational corporations (MNCs) have been hard at work for many decades making inroads into Africa’s markets. For this reason, when the annual Brand Africa 100 list was published recently,

South Africa ranks seventh in overall production of wine

130 | Invest in Africa 2016

foreign brands – household names like Coca-Cola, Nike, Samsung and Apple – topped the list of companies that command a huge share of market demand in Africa. Indeed, according to the 2015 Brand Africa 100 list, non-African brands accounted for 77 of the top 100, and 99% of the total brand value of the list. Meanwhile, the number of African brands in the top 100 has remained stable, coming in at between 23% and 25% for the past three years. Nevertheless, according to the list, the most admired brand in Africa and the most valuable African brand is the South African telecommunications firm MTN Group. And this is not new – MTN has repeatedly trounced massive MNCs like McDonald’s and Shell in the competition for highest brand value in Africa every year since 2011, when the listing began. With nearly 170 million subscribers in 17 African countries, MTN is the only African company in the top 100 with a more than $1 billion valuation. In addition to its African operations, MTN also has partnerships or subsidiaries in Iran, Cyprus, Yemen, Afghanistan and Syria. One reason for MTN’s success lies in its pioneering grassroots distribution system. Recognising the unique needs of low-income consumers in rural areas, MTN put a network of local agents on motorbikes and sent them out to these customers, where they sold them MTN services from pop-up kiosks. South Africa’s alcoholic beverages industry has seen healthy overall export activity as well as acclaim over its growth

prospects. In 2015, Anheuser-Busch (AB) InBev announced it was acquiring South African beer producer SABMiller for $107 billion. AB InBev pursued SABMiller for the strong growth profile of its more than 40 African brands, its strong brand recognition among African’s expanding middle class and its 34% market share on the continent. Kilimanjaro Premium Lager, Hansa and Impala are among SABMiller’s popular brands. At the same time, South Africa’s wine industry has seen generally stable levels of its global wine exports. South Africa ranks seventh in overall volume production of wine globally, producing 4.2% of the world’s wine in 2014. Its leading export market in terms of volume is the United Kingdom, to which South Africa exported 110.8 million litres in 2013. Germany, Russia, France and Sweden were its other major export markets during the same period. Africa’s mines, farms and forests have long been places of origin for raw materials exported and processed for markets around the world. But a new trend is seeing African manufacturers turning that model around by producing and exporting high-quality finished goods from Africa.

Quality assured, ethically sourced

With the motto ‘Trade Not Aid,’ the ‘Proudly Made in Africa’ label is affixed only to authentic, ethically produced African products. Supported by several international NGOs and administered by Value-Added Africa (VAA), ‘Proudly Made in Africa’ products range from natural

food and beverages, to garments and textiles and beauty products. The label assures consumers they are buying quality-assured products manufactured in Africa from locally grown materials. In 2014, 56 million international tourists visited Africa, up from 26 million in 2000, according to the United Nations World Tourism Organisation. Receipts from these tourists totalled $36 billion, or 7% of all the continent’s exports. Developing the tourism sector represents a major opportunity to both introduce and foster a positive image of Brand Africa. The industry is one of Africa’s most promising for development, and success here can lead to big wins in terms of participating in the global economy, generating investment revenue and benefitting local economies. Whether it be wine, travel or telecoms, all these products profit from association with the ‘Brand Africa’ flag. A brand may seem like a simple word or phrase, but it can represent much more: value, quality and trustworthiness – all very much African standards. •

Impala, one of SABMiller’s best-known African brands, is produced using cassava from smallholder farmers in Mozambique

Invest in Africa 2016 | 131

Jason Alden/OneRedEye/SABMiller

The African Consumer

The African Consumer Efforts are under way to facilitate the flow of remittances into Africa to boost their contribution to socio-economic development, writes Stefanie Durbin

Engaging the diaspora

iaspora remittances – the money African emigrants send from their host countries back to their home countries – are a significant contributor to some of Africa’s economies. In fact, these payments have overtaken funds acquired via official development assistance and foreign direct investment to become the largest source of international financial inflows in some countries. In 2012, the Africa-EU Partnership estimated that 30 million African migrants sent remittances worth at least $60 billion to support more than 120 million family members in their home countries. These remittances were projected to reach $64.6 billion in 2015, according to official data. Continent-wide, the vast majority of remittances are sent to Nigeria and Egypt. Nigeria alone received $20.9 billion of West Africa’s $26 billion of remittances in 2014, with the total comprising 3.2% of the region’s gross domestic product that year.

Boon to development

Studies indicate that the majority of remittances go towards paying for consumer goods, housing and land, education and healthcare. In turn, this spending flows into the local and national economic systems, boosting economies along the way. Remittances can be considered a form of foreign exchange – a financial instrument that can both bolster a country’s financial sector and attract investment. But forex is susceptible to global financial fluctuations. If, for example, a significant portion of a country’s imports are paid for with remitted funds, any adjustment in exchange rates can affect the cost of imports to that country. A notable example of such a dynamic occurs in Nigeria, where remittances financed a third of imports in 2013, according to the World Bank. Remittance levels are also subject to fluctuations resulting from world events. Sierra Leone experienced 132 | Invest in Africa 2016

this in 2013 and 2014, when remittances jumped by over 50% as a result of the Ebola outbreak, as family members living outside the country sent supplementary funds home to help with the costs of healthcare and displacement. Yet, the sporadic nature of remittances makes it difficult to fully leverage the diaspora’s financial contributions as formal monetary instruments back home. Added to this is the high cost of money transfers from abroad – it costs more to send remittances to sub-Saharan Africa than to any other region in the world – which results in the dispersion of funds beyond their intended use. And, when remittances do make it back, it can be difficult for recipients to collect them. The limited number of payment networks available to African migrants to send remittances often means

The African Consumer that payment stations are situated at a distance from the beneficiaries – and this is especially true for rural dwellers, which is where up to 40% of all remittances are sent.

Getting some AIR

Helping to resolve such matters is the establishment of the African Institute for Remittances (AIR) Secretariat in Nairobi. The AIR marks a significant bid by African governments to not only improve the state of the remittance market, but to also funnel these funds towards development efforts in Africa. “The establishment of AIR, the first of its kind in the world, is a cornerstone in harnessing diaspora resources for social and economic development in Africa,” the African Union’s commissioner of social affairs, Mustapha Kaloko, said in a statement announcing AIR’s founding. AIR is a World Bank initiative in cooperation with the African Development Bank (AfDB), the European Commission and the International Organization for Migration to assist the African Union Commission and its member states deal with remittance issues. The Secretariat aims to improve the legal and regulatory environment affecting remittances. This extends to adopting innovative financial products and increasing competition to lower the cost of sending and receiving remittances. In addition, the Secretariat will craft policies to direct remittance funds towards projects and initiatives that function to empower Africans. AIR will likely review and support the best contenders among the financial tools used to distribute money sent to Africa from abroad. These include ‘bibancarisation’ (linked bank accounts, one in the country of origin and another in the country of residence), mobile financial services and diaspora bonds. Although members of the diaspora live outside Africa, it is possible to leverage their skills and wealth for the benefit of their home countries. This is important because the emigration of skilled labour from a country – ‘brain drain’ – compounds the problems that may prompt emigrants to leave home in the first place. This is another area where cooperation between institutions such as AIR and the AfDB could net benefits. Through encouraging circular migration, at-home recruitment and institutional capacity building within Africa, the contribution of the African diaspora could reach far beyond remittances to engagement with and investment in the economies and countries left behind, but not forgotten. •

Saving for home Diaspora bond issues are sovereign bonds designed to attract the savings of emigrants wishing to contribute to their home countries’ development. For members of the diaspora, purchasing these bonds carries with it both an emotional and a fiscal component: they enable emigrants to retain a connection to their home country, while also providing them with an opportunity to profit from their country’s bond market. Kenya, Ethiopia, Nigeria and Ghana have each explored issuing diaspora bonds. In 2008, Ghana’s Golden Jubilee Savings Bond raised nearly $50 million to fund infrastructure projects. African Union-wide institutions such as AIR and the AfDB are well-placed to assist African countries looking to launch diaspora bonds in the future.

Sunday Alamba/AP/Press Association Images

Remittances can be considered a form of foreign exchange

According to the World Bank, it costs a subSaharan migrant an average of 9.7 cents for every dollar remitted to Africa

Invest in Africa 2016 | 133

Index of advertisers Accion Microfinace Bank African Minerals Development Centre AGRA – Alliance for a Green Revolution in Africa AKON Lighting Africa – Solektra International Ashinaga

135 84 112 68 124

British American Tobacco (BAT)

Brussels Airlines

Bujagali Energy

Caterpillar ECOWAS Bank for Investment and Development

136 42 & 54

Howard G. Buffett Foundation

KEPSA – Kenya Private Sector Alliance

Midal Cables Ltd

Mott MacDonald

2 & 89

New Holland Nissan Group of Africa Randgold Resources Schneider Electric Standard Group of Companies Limited

106 12 & 95 7 72 10 & 50

The South African Civil Aviation Authority (SACAA)

The West African Development Bank (BOAD)

134 | Invest in Africa 2016

Accion_Placed.indd 1

07/01/2016 11:26

Road construction on National Route (N12) near Johannesburg, South Africa

THE ROAD TO PROGRESS BEGINS WITH A ROAD

Since 1926 Caterpillar has been working to make sustainable progress possible across Africa. Through a network of committed dealers in Africa with a combined workforce of more than 15,000, we play a significant role in the development of the continent. We advocate for policies that enhance Africa’s global competitiveness, and strongly believe that trade liberalization and regional integration can unlock investments in infrastructure that will drive transformational change. Caterpillar is committed to building Africa’s future, one road at a time. caterpillar.com © 2016 Caterpillar All Rights Reserved CAT, CATERPILLAR, their respective logos, “Caterpillar Yellow” and the “Power Edge” trade dress, BUILT FOR IT, as well as corporate and product identity used herein, are trademarks of Caterpillar and may not be used without permission.

Cat_ad_210x275.indd 7 1 caterpillar_placed.indd

1/6/16 9:01 AM 07/01/2016 09:29