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ANC Premier of troubled province defends BEE Tullow Oil fortunes rise in Africa Destination Namibia Controlled Distribution UK & RSA Issue 12 \ June 2013


Business | Entrepreneurship | Innovation | Investment | Lifestyle

4 \ Contents \ June 2013



6 News and analysis



Anglo reaffirms commitment to South Africa

South Africa’s road map to electric vehicles

Recent developments from Sub-Saharan Africa.

30 Destination: Namibia This month our researcher, Grant Mowatt, takes a closer look at South Africa’s Atlantic Coast neighbour, Namibia.


Brett Petzer, our man in Cape Town, examines why now might be the right time for South Africa’s efforts to become a global leader in electric car production and innovation.


Invest in Africa! Umbrella group looks to Africa’s future GTA looks at Invest in Africa, probably the newest high-profile business group that is actively looking for African partners to work with.


China wins battle for African hearts and minds Our Nairobi correspondent Washington Gikunju takes a closer look at China, the new power in Africa and examines why the People’s Republic is taking a big leap forward in Africa.

Business Life 10 Anglo reaffirms commitment to South Africa

“Fifty per cent of our business remains in South Africa...There is no sense that we are in any way trying to turn our back on South Africa” - Richard Morgan, International Government Relations Advisor, Anglo American

Final word 25 ANC Premier of troubled province defends BEE

ANC Premier of South Africa’s troubled North West Province speaks to GTA about BEE, the Secrecy Bill and why land redistribution in South Africa needs to be tackled.

Richard Morgan, Anglo American’s International Government Relations Advisor, speaks to GTA about diamonds, platinum and engaging with grass roots communities.


Invest in Africa! Umbrella group looks to Africa’s future “Part of our job is to demonstrate Africa as a credible business destination to the outside world, in a balanced way.” William Pollen, director of Invest in Africa


ANC Premier of troubled province defends BEE

16 Tullow Oil fortunes rise in Africa

We have farmers in the North West white farmers - who volunteer to help people who are acquiring land, whether they’re buying land out of their own pockets or the land has been restituted. - Thandi Modise, ANC Premier of NW

Washington Gikunju speaks to Tullow Oil to discover why the British company sees Africa as its heartland.

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June 2013 \ Contents \ 5 is a multi-platform title for businesses looking to take part in expansion opportunities in Sub-Saharan Africa Editor: Jeremy Kuper Publisher: Gordon Glyn-Jones Art Director: Jackie Lampard Sub Editor: Brett Petzer Contributors: Paula Baranowska, Washington Gikunju, Grant Mowatt, Brett Petzer, Medha Prakasam Illustrator: Jackie Lampard Directors: P Atherton, J Durrant, N Durrant and R Phillips

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SA investment opportunities on the African continent Jacqueline Chimhanzi senior strategist in South Africa’s Industrial Development Corporation and a Forbes Africa Young Power Woman, discusses South African investment opportunities on the African continent.

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6 \ News \ June 2013


NEWS IN BRIEF Recent developments from Sub-Saharan Africa

Google helps to launch the First TabletCafé Launches in Senegal

Tanzania opens up for licensing of oil and gas exploratory bids

A new concept that seeks to give cybercafés a new look while providing users with a novel experience is being experimented thanks to Google’s support in Senegal. Google has sponsored a cybercafé to replace desktops with tablets. This experiment, the first of its kind, is with the Equinox cybercafé, a typical cybercafé located in Dakar’s vibrant Medina neighbourhood. Because they are so easy to use, tablets can be a great way of introducing new users to the internet; however they’re still expensive for the majority of people in Africa. So how about making them available in cybercafés? Cybercafés would not only attract new customers interested in a more simple and interactive way of going online, but also make significant savings on their number one operating expense: electricity. Tablets consume much less power than desktops or laptops, and don’t require ventilation. Among other things, these savings can be reinvested in faster connectivity.

Prof Sospeter Muhungo, the Minister for Energy and Minerals in Tanzania, has revealed that the country will open bids for gas and oil exploratory licences in May 2014. The tentative date has been set as May, 09, 2014, when the government is expected to have ratified the Natural Gas Policy and legislation. The announcement was made by the Minister in parliament in order to dispel the fears of some of the sector’s leaders that the government had already planned to allocate eight blocks – one onshore and seven offshore, in October before the policy had been approved. This would mean that there would have been no legislation to oversee the sector. Prof Muhongo insists that it is imperative to advertise for blocks in Tanzania as it was in competition for investors with other countries such as Mozambique. He was quoted as saying: “So if we say we should not advertise for blocks today, we will only invite them at a time when they have had enough of it somewhere else”.

Tanzanian government asks ICT operators to work together

Dakar, Senegal

Current information and Communication Technologies (ICT) operators in Tanzania have been asked to cooperate with upcoming firms by sharing their existing infrastructure in order to avoid congestion. Prof Makame Mbarawa, Minister for Communication, Science and Technology said that the government has planned an infrastructure sharing policy to ensure that towers aren’t required to be constructed every time a new business enterprise entered the sector. He was quoted as saying: “Allow me to take this opportunity to urge all stakeholders already existing to cooperate and support Smile Communications Tanzania by allowing them usage of your infrastructure for them to operate smoothly”. The launching of the 4G LTE (Long Term Evolution) technology is considered an official milestone in the technology sector of the country. He is insistent that “once the fibre optic cables have been rolled out to towns and cities, internet connectivity will be on people’s doorsteps and will even benefit landlocked countries neighbouring us”. He cited that the price of the internet had also dropped drastically, from Tanzania Shillings 30,000 for 1GB in 2009 to 9,000 Shillings for 1GB in 2013.

June 2013 \ News \ 7

Africa in numbers

35 countries

Are ahead of China on the Economic Intelligence Unit’s democracy index. (Ernst and Young; Africa in Numbers 2012)

17 countries

Are ahead of India on the World Bank’s Doing Business Index. (Ernst and Young; Africa in Numbers 2012)


African infrastructure received US$ 85bn worth of funding in 2010. (Ernst and Young; Africa in Numbers 2012)

7% inflation

The inflation rate in Africa has dropped from 10.6% in 2007 to 7% in 2011. (African Economic Outlook)

84% access to water

In 2010, 84% of the urban African population had access to water and 52% of the rural African population has access to water. (African Economic Outlook)

US$116bn FDI

Nigeria has been the largest recipient of FDI in Africa over the last decade with announcements totalling almost US$116bn in 2003–11. (African Economic Outlook)

South Africa tries to bring in more investment from Japan Ahead of the Tokyo International Conference on African Development (TICAD), which started on 1 June 2013, a series of investment seminars were been held in Yokohoma, which try to encourage Japanese businesses to invest more in South Africa In February 2013, South Africa’s Department of Trade and Industry, and the Bank of Tokyo-Mitsubishi, Mitsubishi UFJ Financial Group (MUFG) signed a memorandum of understanding. These investment seminars are a part of the plan envisaged by that agreement. Japan already has 108 companies in the country and has created more than 150 000 jobs in South Africa

Google Invests $12 million in Northern Cape Solar Project Google announced today its first renewable energy investment in Africa: $12 million USD (103 million Rand) investment in the Jasper Power Project, a 96 megawatt solar photovoltaic plant in the Northern Cape province of South Africa. Upon completion, Jasper will be one of the largest solar installations on the continent, capable of generating enough electricity to power 30,000 South African homes. The project, developed and funded by SolarReserve, Intikon Energy and the Kensani Group, is also backed by the Public Investment Corporation, Development Bank of South Africa and the PEACE Humansrus Trust, with senior debt and preference share funding being provided by Rand Merchant Bank. Since 2008, when the country experienced severe energy shortages, the South African government has been actively supporting the growth of new sources of electricity to power the nation. Whilst South Africa is primarily dependent on fossil fuels, there is significant potential for renewable energy based on abundant wind and solar resources. The government has set an ambitious goal of generating 18 gigawatts of renewable energy by 2030 – the entire South African grid is currently 44 gigawatts. Tokyo, Japan

Image by Christoffer Riemer

KPMG say clients demand more BBBEE compliance in South Africa Customers are putting more pressure on companies to comply with broad-based black economic empowerment (BBBEE), the seventh annual KPMG Black Economic Empowerment (BEE) Survey has shown. About 42 per cent of companies surveyed indicated that a BBBEEcontributor status of level four is what is expected of them by their customers. A further 51 per cent responded that their clients required them to have contributor levels of at least three or higher. Bonolo Sinobolo, the senior manager of KPMG’s BEE advisory services, said that while the expectation on compliance was mainly driven by customers, competitors and legislation were the additional drivers influencing businesses to aim for higher contributor levels.

8 \ News \ June 2013


China shows special interest in Ghana’s potential Leading BRICS member pledges to support the West African country by Medha Prakasam WITH CHINESE assistance Ghana is expected to rapidly meet its development objectives. The Chinese government places great importance on the West African country’s development agenda and has emphasised that it will do its best to help Ghana attain its economic goals.

This was the view according to H. E. Ma Biao, the Chinese government’s representative in Ghana yesterday and formed the basis of his interaction with Mr. Ebo Barton-Odro, First Deputy speaker of Ghana’s Parliament. The Chinese government has been consistently supporting Ghana’s economic and social development over the years. Mr. Biao has made this visit to deepen the

already strong bilateral relationship with the country and to get a feel for Ghana’s new leadership under President John Dramani Mahama. Mr. Biao stated that: “China has attached great important to friendly relationship with Ghana. We wish to deepen the understanding and mutual trust by this visit, pushing the bilateral relations and cooperation to a new high level”. Writing for Gateway to Africa, Washington Gikunji says: “The Chinese preferred method of winning African minds has been through construction of multi-billion dollar infrastructure projects. And Ghana appears to have particular strategic importance for the Chinese. As Gikunji points out, “a recent survey by the Center for Global Development found that Chine committed $75.4bn to Africa between 2000 and 2011, trailing the United States’ $90bn in the period. Ghana, a new oil exporter, was the largest beneficiary having received $11.4bn.” According to Ghana’s Vice president Kwesi Bekoe Amissah-Arthur, Ghana and China have enjoyed efficient cooperation in many sectors during the past few years, and there is a desire in both countries to enhance these exchanges and to commit to further the cooperation in the upcoming future.

Brazil’s strategic $900m debt relief for Africa South-South cooperation takes another step forward by Jeremy Kuper AMONGST THE many countries jostling for a greater share of the Africa’s mineral wealth, Brazil is emerging as a key player. As previously influential countries such as Britain see their stock diminishing, amid petty aid cuts to Africa, due to policies dictated by their austerity straightjacket – others such as China, India and Brazil are able to quickly fill that gap by making magnanimous gestures. Clearly there is more to it than simply

being a good Samaritan. But if Brazil wants to buy friends in Africa, their $900m African debt write-off is a good start. Brazil’s socialist President Dilma Rousseff announced the debt relief at the African Union Summit in Addis Ababa, during her third visit to Africa in three months. Twelve African countries are set to benefit from this debt relief. Thomas Traumann, President Rousseff ’s spokesman said: “To maintain a special relationship with Africa is strategic for Brazil’s foreign policy.” This move follows the establishment of a Brazilian government agency to support

industry and development in Africa and Latin America. Brazilian companies are involved in mining, oil, and major infrastructure projects in Africa. As one of the five Brics countries, this move shows that Brazil is serious about increasing trade with Africa as part of the South-South cooperation, which has seen trade between the two blocs increase five-fold since 2000, reaching $26.5bn last year. In 2012 Brazil had a GDP of $2.4tn and is the seventh largest economy in the world. It is set to grow a further 3.5 per cent this year.

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10 \ Business Life \ June 2013


Keeping a steady hand at the helm – Anglo American Richard Morgan, Anglo American’s International Government Relations advisor, speaks to GTA about diamonds, platinum and engaging with grass roots communities.

by Paula Baranowska and Jeremy Kuper RICHARD MORGAN, International Government Relations Advisor at AngloAmerican, describes his role as: “Crosschecking engagement and reputation. It’s the whole politics around the benefits from what we do.” These are interesting times at Anglo. In April, Mark Cutifani replaced Cynthia Carroll as the CEO. But, says Morgan, the change on top will not make a huge difference: “I am sure that a lot of the values that Cynthia stood for, Mark will underline

as well. We’ve always been associated with building for the longer term. Therefore, Mark needs to strike that balance between maximising returns as well as guarding sustainability.” Recently, diamonds has moved up Anglo American’s agenda, mainly due to growing consumer demand in China and India. Last summer the company increased its shares in De Beers to 85 per cent (up from 40 per cent). The remaining 15 per cent is owned by the government of Botswana, home to some of the largest diamond deposits in the world. Currently, profits from the diamond sector constitute between five and ten per cent of the company’s income, but Mr Morgan sees a potential for more: “There is a good demand for natural diamonds of gemstone quality and there isn’t a huge supply.” As diamond prospects improve, demand for platinum has stayed low. Morgan believes that although the current situation in platinum industry is challenging, overall the future looks bright for South Africa. He insists that Anglo American is committed to the country: “Fifty per cent of our business remains in South Africa. We continue to invest considerable amounts there in all of our business units – coal, diamonds, iron ore, and platinum. There is no sense that we are in any way trying to turn our back on South Africa.” Morgan believes South Africa does not use their enormous natural wealth to its full potential; mining constitutes only six per cent of their GDP: “I would expect them to try to do more with that wealth. We could do more manganese, we could do more iron ore.

There is more that could be done in South Africa than is currently being done.” Morgan emphasises how during last year’s strikes, Anglo American faced protests at some of its mines and recognised the need for an expanded social labour programme in the platinum industry, including improved housing and equity share programmes for employees. Mark Cutifani wants to see more engagement with the communities, and Morgan explains that a percentage of the business will be made over to the workforce: “We need to ensure that there is an improvement in [the] well-being of communities, and a sense of ownership that makes the licence to operate a firm one.” Morgan is optimistic about the platinum industry over the long term: “It is a strategic mineral, so I think there would be a future for it. The question is – in what quantity and what price…You need to keep your costs pretty tight if you are to have a sustainable future in mining platinum.” He mentions that Anglo American’s internal report suggested that the company would have to cut 14,000 jobs across the platinum sector. “But we would then create 14,000 extra jobs through job-creation schemes and so on. It is very much the case of social responsibility that if you are going to have to rationalise business operations, that you put in place something else that will make up for it,” says Morgan. However, in light of recent development things appear to have moved on. The latest reports suggest that Anglo plans to shed 6000 jobs, but there is not much news on any redeployment of this labour.

June 2013 \ Views \ 11

COMMENT: Dr Jacqui Chimanzi

SA investment opportunities on the African continent Jacqueline Chimhanzi, senior strategist in South Africa’s Industrial Development Corporation and a Forbes Africa Young Power Woman, discusses South African investment opportunities on the African continent. by Jeremy Kuper 2013

GTA: In your view, which sectors present the greatest opportunities for South Africa’s exports on the rest of the African continent? JC: There are many but I will focus on three: mining, construction and the oil and gas sectors. Mining is an area that South African is able to claim expertise that is globally recognised. According to a recent Deloitte report, “South Africa is still seen, by the world at large, as a very innovative country and many of the technologies and new mining ideas which originate in South Africa are rapidly adopted around the world.” Additionally, “South African mining professionals are in high demand because of their capability and experience.” Kaplan, (2011) contends that “years of deep mining in South Africa have given the country an advantage in mining equipment such as underground locomotives, ventilation and shaft sinking with the country also recognised as a turnkey in new mine design and operation.” Interestingly, mining makes up a larger share of South Africa’s total number of patents than those of countries such as the United States, Australia and Canada according to the US Patent and Technology Office. Mining equipment exports to the rest of the continent have grown over the years, but I believe there is scope for yet greater economic returns to South Africa.

The case for investing in construction on the continent is strong given rapid urbanisation, strong economic growth and a rising middle class. South Africa is well positioned to leverage this opportunity. We are already seeing a rise in the construction of malls and mixed-use developments either funded by South African insurance and pension fund players or built by South African construction and civil engineering services. That trend is only set to continue. Also, there is a significant market for midpriced hotels on the rest of the continent. South Africa has also demonstrated excellence in the field of oil and gas services. With many African countries making new oil and gas discoveries – especially along the East coast of Africa – there is scope for South African private sector players to contribute in that space. South Africa currently has significant competence in a number of upstream service and supply areas such as upstream ship repair, oil and gas logistics and distribution, engineering services, equipment and materials supply and general and technical support services for the upstream industry.

GTA: Based on your knowledge of the continent, which countries are attractive from an investment perspective and why? JC: I think different countries in Africa are attractive for different reasons and, furthermore, attractiveness is largely a function of what investors are seeking and

their appetite for risk. Nigeria is extremely attractive from the perspective of the sheer size of the market – 167 million people. But equally, there are significant opportunities in the infrastructure, power, mining and agriculture spaces so it is not just consumer play. While doing business there has been historically challenging for investors, the country has committed to a reform programme and we see a critical mass of reformers in the country’s current administration. Nigeria is directionally correct and at a very exciting phase in its growth trajectory. The co-operation with South Africa, in light of President Jonathan’s recent State Visit to South Africa will bolster synergies and create a new momentum for both economies. East Africa is attractive from an ease of doing business perspective but, unfortunately, with smaller markets. That said, an integrated East African Community market in 2014, with the free movement of goods and people between borders, will bring the collective market size to 135 million. Current on-going cross border infrastructure projects bode well for the East Africa Community as they enable the operationalisation of the common market. Ghana is also attractive and is emerging as a gateway into the West African region. Ethiopia is very little spoken about but is the second most populous country at 87 million combined with an economy growing at 11 per cent annually.

12 \ Views \ June 2013

GTA: What strategic partnerships is your department working on with the private sector and how are you utilising the know-how from South African businesses that have been successful in trading with Africa?

US$10bn, regional integration creates the very necessary volume and economies of scale. For South Africa, specifically, being part of a functioning SADC market of 250 million people or part of the 530 million of the Grand SADC-COMESA-EAC Free Trade Area confers greater muscle at the BRICS negotiating table.

JC: Our mandate as the Industrial Development Corporation (IDC) is to fund projects, in South Africa and on the rest of the African continent, that contribute towards industrialisation. Our mandate stems from recognition that a major hurdle to industrialisation is the high cost of input materials which subsequently render manufacturing uncompetitive. This, in turn, is caused by the supply gap in input materials leaving manufacturers to resort to importation. To that end, we fund projects that either strengthen or close gaps in backward or forward linkages along value chains in 12 key areas: agro-industries, chemicals and allied industries, forestry and wood products, green Industries, healthcare, ICT, media & motion pictures, metals & machinery, mining & mineral beneficiation, strategic high impact projects (large scale infrastructure projects that unlock industrial opportunities), textiles and tourism. One of our lending criteria on the continent but outside of the Southern African Development Community (SADC) region is that there must be “SA benefit” meaning that the projects’ benefits must accrue to both the investment’s host country and to South Africa. So by virtue of this conditionality, we necessarily leverage the experiences and expertise of South African businesses in our continental projects. “SA benefit” can also be in the form of the use of South Africa capital goods in the projects being executed on the rest of the continent.

GTA: Are you optimistic about the future with regards to investment in Africa? If yes, explain why.

GTA: What are your thoughts on the need/ desire for increased regional integration? JC: The impetus for regional integration is significant. With a similar population size to China and India, Africa is 54 markets, China is one and India is one and, for me, therein lays the challenge for doing business on the African continent. The need for regional integration underpins almost every sphere of economic activity on the continent – be it trade, energy, financial services, tourism, infrastructure development, agriculture or healthcare. Given that 27 of Africa’s countries are small, with populations of fewer than 20 million and economies of less than

JC: There is so much happening on the continent that inspires confidence about Africa’s future from an investment perspective. We are seeing more investment climate reforms as well as peace prevailing and less wars and conflicts.

Furthermore, governments have greater appreciation of the important role that the private sector can play as ‘development partners’. Africa’s trajectory will necessarily be determined by greater dialogue and collaboration between the private and public sectors and the co-creation of solutions. To that end, we are seeing the rise of PPPs on the continent in vital areas such as infrastructure. The North-South Corridor is one such initiative that will be driven by PPPs. Finally, we are seeing more intraAfrican trade with African home-grown companies expanding outwards from their home countries – this is a relatively new phenomenon and points to the fact that Africans are themselves beginning to have faith in their continent and its potential. That self-belief is so important!

14 \ Views \ June 2013

COMMENT: Washington Gikunju

In Africa, China wins battle for minds and trade deals Our Nairobi correspondent Washington Gikunju takes a closer look at China, the new power in Africa

by Washington Gikunju in Nairobi WHEN INTERNATIONAL Criminal Court indictee, Uhuru Kenyatta, was elected Kenya’s president in polls held in March, major Western powers refused to send congratulatory messages to him. China, on the other hand, was among the first countries to congratulate Mr Kenyatta on his election. Britain, the European Union, USA, and Canada, in separate messages, praised Kenyans for holding peaceful elections but avoided naming Mr Kenyatta. It was only about two weeks after the election and a Supreme Court ruling affirming Mr Kenyatta’s election that Western countries and the EU recognised the new President. To most Kenyans, the apparent snub of a democratically elected leader is a reflection of arrogance and superiority attitude with which Western nations view former African colonies. The Chinese have sensed an opportunity for a diplomatic and trade coup against the West’s long hold on Africa and are going for the kill. In his first foreign tour after ascendance to China’s presidency, Xi Jinping visited Russia, and then headed to three African countries- Tanzania, South Africa and the Republic of Congo. “Unity and cooperation with African countries have always been an important foundation for China’s foreign policy, which will never change, not even when China grows stronger and enjoys a higher international status,” said the Chinese president on his stop in Tanzania’s capital, Dar es Salaam. “China will continue to offer, as always, necessary assistance to Africa with no political strings attached.” In China the emerging African nations have found a reliable trade partner and donor, minus the persistent chiding by Western powers about democracy and human rights. President Xi’s choice of African capitals to visit was instructive in the signals it sent about China’s likely focus over the next ten years of his presidency. Tanzania and the Republic of Congo are among Africa’s most mineral rich countries. They both have tonnes of gold and diamonds among other vast un-tapped mineral deposits to feed the huge Chinese factories’ appetite for raw materials. Tanzania has recently discovered in excess of 13 trillion cubic feet of natural

June 2013 \ Views \ 15

gas, making it potentially one of the biggest exporters of the commodity together with neighbour Mozambique. South Africa, the continent’s largest economy, is the world’s top exporter of gold and diamonds, offering China both an opportunity for supplying raw materials and a potential market for its finished goods. The Chinese preferred method of winning African minds has been through construction of multi-billion dollar infrastructure projects such as a grandiose conference centre in Dar es Salaam, a sixlane superhighway in Kenya and African Union headquarters in Ethiopia. A recent survey by the Center for Global Development found that China committed $75.4bn to Africa between 2000 and 2011, trailing the United States’ $90bn in the period. Ghana, a new oil exporter, was the largest beneficiary having received $11.4bn followed by Nigeria, Sudan and Ethiopia. President Xi repeated China’s $20bn pledge to support infrastructure growth on the continent, which was made during the fifth forum on China-Africa Cooperation (FOCAC). Chinese largesse is widely popular with Africans, who are impressed by the mega infrastructure projects funded by the emerging Asian power rather than American aid that mostly goes into non-conspicuousyet vital-projects such as promotion of good governance, health and protection of vulnerable children and women. A 2011 poll by Gallup surveying global attitude toward China’s leadership found sub-Saharan African states had highest approval ratings for the Asian nation, taking the top 20 positions. Of the three African States where President Xi visited, the Republic of Congo reported the highest approval of Chinese leadership at 81 per cent, Tanzania 68 per cent and South Africa 52 per cent. In yet another survey done by GlobeScan in partnership with the University of Maryland, 75 per cent of Kenyans polled said China had a positive impact on the economy. The figure was higher in Nigeria where 89 per cent said the Chinese impact was positive. The favourable view of Chinese presence in Africa has translated into warming business relations, reflected in an increase in trade volumes to $166bn in 2011 from $10bn in 2000. This surpasses trade between Africa and the world’s largest economy, the US, which increased 300 per cent over the past decade to $95bn as at 2011—largely

driven by provisions of the African Growth Opportunity Act (AGOA). Cheap Chinese goods, which range from motorbikes to baby toys to electronics and heavy machinery have attracted strong demand in African capitals and rural towns. In Nairobi’s Luthuli Avenue and River Road, which mostly stock electronics, Chinese goods far outnumber the closest competitor’s merchandise, the Japanese. A feeling that the influx of small Chinese traders was pushing Kenyans out of business led to low-key street demonstrations last year, which however did not deter their growing presence in the area popular with middle and low income shoppers. In both high-end shopping malls and cheaper supermarkets, Chinese goods dominate the counters and are popular with shoppers due to their pocket friendly prices. The Middle Kingdom has successfully managed to turn sentiment on the continent in its favour, save for a few

voices of which caution that China’s presence on the continent should not be viewed as a free lunch. The Nigerian central bank governor, Lamido Sanusi, recently wrote in a column for the Financial Times that China’s thirst for Africa’s raw materials in exchange for cheap consumer goods resembled colonialism of an earlier era. With 22 of the 54 African states now classified as middle income countries, the continent is getting a voice and an opportunity to chart its destiny. If present growth trends continue, the World Bank predicts that almost all the current stable, low income countries will reach middle income status by 2025. Still, some 400 million Africans, or nearly 40 per cent of the continent’s population of one billion, live on less than one dollar a day. The number represents both a big challenge for the continent’s leadership, but at the same time also a huge market for China’s cheap consumer goods.

16 \ Business Life \ June 2013


Tullow Oil’s fortunes rise with African discoveries Washington Gikunju, our intrepid reporter in Nairobi speaks to Tullow Oil, the British oil company doing big things in Africa.

by Washington Gikunju in Nairobi AFRICA’S RISING portfolio of new oil and gas discoveries has lifted the fortunes of one British company in a big way, rewarding the firm’s faith in a continent that many had shunned for decades citing political and economic uncertainties. London Stock Exchange listed firm, Tullow Oil, has made significant discoveries across the vast African continent, earning it a distinction of the exploration company with a golden touch. From a start-up firm founded in the 1980s in a small Irish town called Tullow, about 35 miles south of Dublin, Tullow Oil has grown into a multinational operation that has generated big economic hopes for millions of Africans. Out of the 25 countries in which Tullow Oil has a presence, about 15 are African, highlighting the firm’s deliberate strategy of maintaining a heavy exposure in a continent that most multinationals

abandoned in the 1960s and ‘70s as independence from European colonial powers gave way to political and social upheavals. Tullow’s major discovery of billions of oil barrels in Ghana, on Africa’s Western coast, and subsequent finds in Uganda and Kenya, on the eastern tip, have placed the company firmly on the continent’s exploration map. “Our heartland and our focus is still very much Africa and that’s where our main assets are. It is our key area where we see the biggest upside and our biggest exploration programmes are all in Africa,” says Tullow Oil’s chief executive officer, Aidan Heavey. It is perhaps the manner in which Tullow was started that has heavily influenced the company’s focus on Africa, which many industry analysts now predict could pay off in a big way. Mr Heavy, the founder and current CEO of Tullow, says he was inspired to start the firm in the 1980s, a time when dozens of fortune seekers were setting off for the North Sea and Celtic sea frontiers to dig for the black gold. One day, while he was waiting in a banking hall in Tullow, a conversation with a friend switched to an unexpected topic, about small oil fields in Africa that had been abandoned in a huff by oil majors. An idea was born, and Mr Heavy contacted another friend of his who worked with the World Bank and he thought could have an inside knowledge of Africa’s oil exploration efforts. The friend mentioned to him about some small gas fields in Senegal that

“Our heartland and our focus is still very much Africa and that’s where our main assets are. It is our key area where we see the biggest upside and our biggest exploration programmes are all in Africa,” - Tullow Oil CEO, Aidan Heavey. the country was searching for people to develop. “I knew nothing about the oil and gas industry at the time, which made it more challenging. No one thought Tullow would succeed because of my lack of knowledge of the industry, no major backers and I was starting a company in a country with no oil industry.” Nearly three decades later, Tullow oil is a profitable multinational with over 150 operation licenses spanning Africa, Europe, South America and Asia. In 2012 the company’s turnover touched $2.3bn, returning an operating profit of $1.2bn while boasting a cash flow balance of $1.8bn. This is a multiple growth from Tullow’s first year of operation in 1986 when it earned £1.7m revenue and an operating profit of £250,000. The number of workers has grown from just 42 to over 1,700, more than half of whom are stationed in Africa. The London-headquartered group has corporate offices in Ireland, Ghana, Uganda and South Africa, and its shares are

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18 \ Business Life \ June 2013

also listed on the Irish and Ghana stock Exchanges besides being a constituent of the FTSE 100 index. By Mr Heavey’s own admission, Tullow Oil’s biggest break came with the Ghana offshore Jubilee oil well discovery about six years ago. Ghana has now moved on to the production stage, and is seen as the flagship of Tullow’s business. “Ghana is by far the biggest operation that we have; it’s the asset that the outside world looks at and when it first came on stream, it put Tullow up on a pedestal,” says Mr Heavey. “We have the opportunity to bring people from other countries around the world to Ghana and show them how to do a project properly and the Ghanaians could actually travel around to say the same.” In Africa, Tullow Oil has operations in Kenya, Ghana, Uganda, Mauritania, Liberia, Sierra Leone, Côte d’Ivoire, Equatorial Guinea, Gabon, Congo Brazzaville, Ethiopia, Namibia, Mozambique, Madagascar, Tanzania. The company also has interests in Norway, UK, Netherlands, Greenland, French Guiana, Guyana, Suriname, Uruguay, Bangladesh and Pakistan. Last year was particularly successful for Tullow, as it followed up on its successes in Ghana and Uganda by opening a new field in Kenya, the South Lokichar oil basin. The cash pile in Tullow’s accounts is meant to finance what it calls “high impact” exploratory wells in Kenya, Ethiopia, Norway, Mauritania, Mozambique, Côte d’Ivoire and French Guiana. The company has focused on exploration driven growth, but does not rule out building its financial and technical muscle to develop wells and

also get involved in eventual production. It has not been an easy ride though for Tullow. The company has had to venture into frontiers that have no infrastructure at all, work in highly insecure environments, overcome shortage of skills in countries of operation while also having to win over suspicious communities that assume the firm is only out to exploit their natural resources. “In a number of the areas in which we operate we have seen changes in governments and this can bring uncertainty at times. There are also issues associated with transparency and governance,” said Tullow in an e-mail response to GTA’s queries. The discoveries in Uganda and Kenya are mainly on-shore, which have posed the headache of environmental management on a bigger scale than what is ordinarily the case for off-shore fields. The legislative environment has also tended to be fluid. In both Ghana and Uganda, differences on revenue sharing agreements caused delays in commencement of production. In Kenya the government is in the process of reviewing its licensing laws, loyalty payments and tax codes which could impact on Tullow’s operations. Mr Heavy’s view however is that the best way of entrenching stability in Africa is by getting more investments, which have the effect of uplifting the countries’ economic welfare. “Any tension or political unrest is a concern. It’s not just a concern of Africa;

“From a start-up firm founded in the 1980s in a small Irish town called Tullow, about 35 miles south of Dublin, Tullow Oil has grown into a multinational operation that has generated big economic hopes for millions of Africans.” - Washington Gikunju

it happens in a lot of places. Our view is that we are a commercial enterprise, and the best way of getting stability is to get investment. The more investment there is in countries, the more education there is in the countries, the more businesses there are, the more stability you will have.” With Ghana’s Jubilee field nearing full potential, Tullow’s focus is increasingly shifting to Eastern Africa, where it is set to spend most of its energy and cash in 2013. The company expects to drill multiple wells in the South Lokichar basin to assess commercial viability of the discoveries which spread across Kenya and Ethiopian borders. “East Africa is a very exciting new frontier and Tullow is very proud to have been instrumental in opening up a number of new basins. We have seen significant gas reserves which will fundamentally change the shape of East Africa’s energy future,” said the British firm in the interview.

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20 \ Feature \ June 2013


SA car manufacturers applaud road map to electric vehicle industry The initiative aims to establish and foster local production and innovation in this promising sector

by Brett Petzer in Cape Town SA CAR manufacturers have welcomed the government’s Electronic Vehicle Industry Road Map. The Road Map aims to introduce electric vehicles as part of South Africa’s road transport mix. Nissan SA CEO Mike Whitfield said that his company fully supported the initiative, describing it as a “good start to working with all stakeholders”. The CEOs of Toyota SA and BMW, Johan van Zyl and Bodo Donauer respectively, shared Whitfield’s sentiments. “This is…a long-term plan. It is a process whereby we have to work together to first of all, establish the infrastructure. From the motor industry side, the technology has already been developed and is available whether it’s electric or hybrids. In the

future, [most] vehicles will use alternative technology. This is the right time to start. If we don’t start sometime, we will be left behind,” said Van Zyl. Trade and Industry (dti) minister Rob Davies launched the long-awaited Road Map in early May. One of the initiative’s key goals is the establishment of incentives for the local manufacture of electric vehicles in the spirit of the Joule, a concept car produced by the nowdefunct Optimal Energy. The road map

is intended to create an environment that is friendlier to risk and innovation than that in which Optimal Energy rose and fell. The company, established in 2004, had secured funding, created widespread media interest, and developed a prototype in limited production before foundering for lack of a commercial partner in 2012. “We are well aware that as development takes place transportation demand will grow. What is absolutely evident is that vehicle manufacturing must adopt new

“10 years - time it took from Tesla Motors’ founding for it to become the first all-electric carmaker ever to post a profit.”

June 2013 \ Feature \ 21

The Electric Car in 2013

Total EVs in country Percentage of world EVs

United Kingdom 5,244


3% 4%

France 18,129 •

“From the motor industry side, the technology has already been developed and is available whether it’s electric or hybrids. In the future, [most] vehicles will use alternative technology. This is the right time to start. If we don’t start sometime, we will be left behind” - Johan Van Zyl, CEO: Toyota SA.

technology [to reduce emissions further],” said Davies. This process is particularly driven by ever-stricter emissions standards imposed by major markets like the EU and, to a lesser extent, the USA. The minister said that South Africa was the world’s 13th-largest global emitter of carbon dioxide. According to a 2009 estimate by the International Energy Information Administration (EIAI), South Africa’s per capita emissions of 9.18 tonnes of carbon dioxide were more than twice the global average of 4.49 tonnes, and about 40 per cent of all African emissions. The percentage of these emissions that stem from the transport sector is also high by international standards, and has risen as freight rail has declined and South African cities have sprawled in the last fifteen years. Davies hoped that the Road Map would keep electric vehicle jobs inside country, thereby fighting poverty and climate change at the same time. Whitfield said that cooperation between

government and industry would be crucial in this regard – not only for the legislative framework, but for the education and awareness of the public. According to Davies, this would be bolstered by a “very generous quota for manufacturing” under the auspices of the dti’s Automotive Production Development Programme (APDP) which has enjoyed a measure of success in encouraging manufacturers to maintain or expand production in clusters like those in Buffalo City and Nelson Mandela Bay. The APDP, which takes effect this year, builds on the Motor Industry Development Programme (MIDP) which saw production double between 1994 and 2012. The APDP aims to expand South Africa’s production of vehicles to 1,2 million by 2020 while also increasing local content and diversifying the local supply chain. Electric vehicles are expected to remain a small part of that mix, but the relatively researchintense nature of the nascent industry are widely expected to produce positive spin-offs for South African’s hi-tech community that far exceed government investment. Under the Road Map’s terms, manufacturers would need to produce at least 5000 electric vehicles to qualify for consideration for the incentive, in terms of which government would repay about a third of the production costs over three years. The Road Map will be subject to public commentary and engagement with manufacturers and labour (especially the powerful National Union of Metalworkers of SA) from next month before an expected Cabinet session in September.

Norway 11,968

11% 1%

Germany 7,497 Italy 1,643

Today’s best-selling EV is the Nissan Leaf, with total global sales of more than 50 000 units (February 2013). The newest model has a range of 200km (124mi). At end 2012, there were over 180 000 highwaycapable plug-in EVs in use worldwide - or 0.2 per cent of total passenger cars.


USA 71,174 •

Norway, with nearly 12 000 EVs for 5 million people and 3 per cent of passenger car sales, leads the world for market penetration. In the UK, EV sales have increased by 914 per cent between 2010 and 2013 to 1 262, of which half were Nissan Leafs. The UK’s Plug-in Car Grant covers 25 per cent of new car costs (capped at £5 000 for passenger cars, and £8 000 for vans)

China 11,573

24% 6.2%

Japan 44,727

22 \ Feature \ June 2013


Invest in Africa Newcomer Invest in Africa seeks to pool and harness the deep insider knowledge gleaned by businesspeople with a successful track record on the continent by Jeremy Kuper AS A group, Invest in Africa is relatively new, having launched just over a year ago. However, this umbrella organisation of companies investing in Africa draws on the vast experience of its partners, Ernst & Young, Tullow Oil and Lonrho, in working on the continent. Invest in Africa announced its arrival with great boldness in the form of a shirt sponsorship deal with Sunderland in the Barclays Premiership. This was a way of sharing their vision of Africa as a longterm growth project. The name implies quite a broad remit, but as William Pollen, director of Invest in Africa says, the organisation is “actually quite sector specific. We can’t be all things to all people. We’re focusing on infrastructure, extractives, telecoms, financial services, agribusiness …because that’s where we can make the biggest difference, in creating jobs for local companies and bringing more local firms

into international companies’ supply chains, for them to partner with.” “And although we’re called Invest in Africa, we’re not a fund, we’re not investing our own money; we don’t have any. We have partners who come in and put money into Invest in Africa, but more importantly, we invest people, and time, and resources. This helps us pull together the various connections that we need, and build the kind of activities that will help new investors and also those already there, to do more business in Africa,” explains Pollen. “Part of our job is to demonstrate Africa as a credible business destination to the outside world, in a balanced way. It’s not all good news; [rather, we try to be] fair and transparent about it…to start to overcome those misconceptions. [Our aim is that] an investor will start to put Africa on the same pedestal, where credible, with the Indonesia, Turkey, India, Russia, China, Brazil [and other emerging economies] of this world. And they [the investors] will start to put them

World’s fastest growing economies

on the same page, rather than always thinking Africa is like a basket case, or a tier down, or a tier up in risk.” Pollen talks about getting investors “over that misconception hurdle.” He reveals that one of the biggest things that Invest in Africa has learned is that most international companies struggle to find credible local partners to work with, as either partners to deliver a product or service, or to incorporate into their supply chain. Any prospective partners need to be carefully vetted before they can be approved. “The first business questions you have when you look to into operations with a partner for the first time [do not even relate to the question] ‘Can you produce the thing I need, to the degree of quality I need?” says Pollen. He says the questions that need to be asked are ‘What’s your policy on antibribery and corruption? How do you

“Part of our job is to demonstrate Africa as a credible business destination to the outside world, in a balanced way. It’s not all good news; [rather, we try to be] fair and transparent about it...” - William Invest in Africa sponsored Sunderland in 2012-13 season

Pollen, director of Invest in Africa

June 2013 \ Feature \ 23

treat your people, how do you treat the environment? Can you show me your track record of having paid your taxes on time, are you legally registered, do you have the insurance in place that I will need to [be able to] work with you?’ explains Pollen. Invest in Africa was conceived by Tullow Oil, but its emphasis on sharing know-how between corporates across different sectors is fairly novel. “We’re looking for other international firms, and [they] could be African or… foreign. [What we require, however, is that] they share the vision for doing more with their business locally and [are] prepared to put the hard yards in to build local capacity, train companies, transfer knowledge and skills – so that they have capacity to still be doing business there in 15, 20, 30 years and more.” Invest in Africa is not a charitable initiative, but a hard-nosed business enterprise. “It’s not time to give back, it’s about improving the business environment for everybody including themselves,” says Pollen. “What’s in it for them,” he continues, “is that, if they can improve the number and quantity and suppliers there for them to work with, even though they’re already in Africa, it makes their business cheaper. It makes their business faster. It makes their business more efficient.” Another aspect is to better understand issues around indigenisation legislation that is already in existence or in the process of being introduced in various African countries. These include the incorporation of indigenous companies into the supply chain, and finding local partners in those jurisdictions where this is necessary. “You see it in the insurance market in Kenya with the requirement that 90 per cent of your suppliers must be legally sourced…that has also now been [extended to] the oil and gas sector in Ghana [under a 2020 deadline]. [Companies] need to start thinking about how they’re going to increase the amount of local companies they incorporate throughout their supply chain. So it’s answering a real business need for them.” How does a company sign up, I wonder? “There’s a capital but also a time commitment from their people,” Pollen replies, “and actually the money is less important; that’s just to cover our running costs if you like, to keep us

standing still, [maintaining] our website and our salaries and so on…it’s not a huge amount,” says Pollen. “More important is [our ability to] tap into their supply chain [and] their knowledge on the ground, [their] access to the partners that they work with,” he adds. “[Prospective partners] also need to be able to demonstrate a sustainable investment code of conduct, which essentially draws on the highest international standards.” However, Pollen admits that the requirements of this sustainability code

are so stringent, that for now it remains aspirational. “We want to be able to demonstrate progress towards it each year, and [be able to say that] in a given area, we as a group of companies at Invest in Africa have improved in a given respect.” Invest in Africa is looking to work with comparable established companies with significant track records of doing business in Africa. “If there’s a new company out there, for example, they wouldn’t be a suitable founding partner, because part of what is appealing to

Africa’s middle class vs Brazil and Russia’s entire population

Africa’s population age

24 \ Feature \ June 2013

new investors is being able to access the experience and the knowledge of the founding partners who are working with Invest in Africa,” explains Pollen. “And often without that simple signposting they get so confused, and so put off that, as I said, they’ll then turn to other markets. At times it’s as simple as that.” Pollen points out that unlike North America and the Far East, there are relatively few resources containing market intelligence on Africa. “We tend to be trying to get people more into the right mind set. If you’re going to be successful it’s a long-term investment. Don’t expect to just rock up and make money,” he cautions. “This is more about building capacity for a business that you want to be running there in 10, 15, 20 years’ time, and doing that means taking your time in the beginning to really understand the marketplace,” says Pollen. Pollen emphasises that Invest in Africa will want to get down to the nitty gritty, when it comes to sourcing local suppliers. He highlights the importance

“We tend to be trying to get people more into the right mind set. If you’re going to be successful it’s a long-term investment. Don’t expect to just rock up and make money,”

of aspects like environmental policies, and the need to understand exactly what practices prospective suppliers will need to have in place to work with them. This awareness extends “right the way down to things like cash flow management, working capital practices and managing an inventory” he says. “[These] tend to be typical things that local African firms are really struggling with. And [these factors] stop them getting from a very successful little 30-man business, to a regional 100200 person player, or from a 50 to a 200-person company.” The high-profile Sunderland shirt sponsorship was only ever a oneyear deal says Pollen. “A lot of it was really to overcome the misconceptions around Africa not being a credible business destination. And just putting those words Invest and Africa on the shirt together… for some people that was a huge step.” Small is beautiful and Invest in Africa don’t want hundreds of firms joining. Pollen is hoping to convert the current

three founding partners (Tullow Oil, Ernst & Young and Lonrho) to about six to ten firms, and beneath that, to have a tier of associates. “It needs to stay manageable,” he says. “And each of them needs to feel that it’s delivering a return for their business as well. As a private sector [concern] it needs to demonstrate that it’s actually helping them to do business in those markets, as well as for new investors.” “I would love to have the likes of an MTN or a company with real African roots – such as SABMiller or Barclays - on board. We mustn’t be perceived [to be]…a group of foreign companies telling Africa what to do or how to do it. And there’s a real danger that we need to be careful to manage, because as long as it’s foreign companies there’s a chance that we could be perceived as outsiders trying to manipulate.” “That’s why we’re really keen to build these bridges with local companies as quickly as possible and put investment into them. And even better would be to have a truly African company sitting at the founding partner table too,” says Pollen.

William Pollen, Invest in Africa

June 2013 \ Final Word \ 25


ANC Premier of troubled province defends BEE GTA speaks to the woman in charge of South Africa’s platinum province about BBBEE and ‘that’ Bill

by Jeremy Kuper and Medha Prakasam

GTA: I notice that your ‘extracurricular’ activities are more cultural and social, you seem to be less interested in business, why? TM: I think that if the government pays you a good salary, gives you good perks, it protects the poor and the vulnerable, it is a caring state, it wants to develop responsible citizens – [if it does all that, then] you owe it to that government to tread the straight and narrow. In my province, I lead the call to stop corruption within government and in corporate society. Therefore it would be difficult for me to be involved in anything that is going to come into conflict with what I stand up on this platform and say.

Image by Christine van der Merwe

GTA: The perception remains of BEE that it is to the benefit of an often small [and highly interconnected] elite. Should it be changed, perhaps become more broad-based, to achieve what was intended? TM: Let me start off by an affirmation. Your system in SA was such that a big majority of people were deliberately disempowered, they lost their land, their education was degraded, they were taken off and divided as people, they were pushed against one another. Socially, economically, politically, the Africans lost out. If you look at the other races, the women were just [discriminated against to] a little degree…Amongst the whites, the coloureds, the Indians, the women were just a little degree better. You need to be very deliberate, and that is

why affirmative action is a policy that I think I will go to [the] death defending. You have in the rural provinces, a big percentage of people who are not equal. Now, if you want Africans to participate in the economy of their country, you definitely have to look at different mechanisms and BEE was one. And I think within a year or two we came to the conclusion that it was open to abuse. It was open to abuse because many people used [black] Africans [as fronts] and they would not really benefit. So, that is why we moved from BEE into broad-based economic empowerment. I come from a province which believes in sharing. We believe that if you are empowering people, you must take turns: this one got [a leg up] today, somebody must get that opportunity tomorrow. The fact is, that for broad based economic empowerment to take place, you must have the support that will ensure that any young person, any woman, any African man, any Indian, any coloured man, who wants to participate in this has some [support system]. You did not have African people as managers and we actually came to hate managers. So management becomes an issue here. You will find that the policies today are tweaked so there is an element of empowerment of people who are getting into business. There will be an outcry amongst the communities if they see that the same person is benefitting over and over, which is the reason why we are looking at changing the whole system. Is the system bad? It is only bad because of the way it is structured. Is it wrong to benefit people who were deliberately left out of the economic level? I don’t think so.

26 \ Final Word \ June 2013

Image by Christine van der Merwe

I think that in every system you’ve got bad apples – people who were always trying to break the system and benefit themselves to the detriment of others. We must deal with the bad apples, we must create a [black economic empowerment] system that enables people to be equal. You still have [black] Africans in South Africa who cannot afford to move to a suburb, because even though legally they can move, they do not have the money to do so.

GTA: If you look at how, arguably, Zimbabwe has lost its position as an agricultural producer since their failed land reforms, and understanding everything that you’ve said about land reforms and the need for them, how do you achieve restitution of lands which were taken even from a particular family? TM: The actual dependants and beneficiaries of the land that was forcibly taken from people are still around. I think the government has a system of identifying these people, and that is why it is working. But in SA, so far no land has been taken by force from anybody. There are agreements, people talk and government buys the land and return the land, I can only in this instance speak for my province. We have a program and money which we have put aside to help the people who are being resettled in

this land after restitution – help to make that land productive, make sure that we help find markets. It is not true that when Africans were farming they were bad farmers. The reason they fail in farming today is because of the loss of land. They grew away from the land… they have no resources to get into it. When you analyse poverty in SA it is directly linked to the loss of land, loss of livestock, to being forced to become migrants…[Black South Africans were forced to] leave their families back home, [those families in turn were] removed from the lands they occupied, [and] put…in arable land where nothing can grow, where there is no water. And if you want to reverse this, the state has to have the will to deal with this matter. We have farmers in the North West, white farmers who volunteer to help people who are acquiring land, whether they’re buying land out of their own pockets or the land has been restituted. And you find that if we are clever…[in managing] this relationship, there are no tensions. In no way do you want to see the land claims in SA resembling those of Zimbabwe. I’ve seen one of the things that went wrong there, taking land away from people, getting in there, having [not a] cent to run these farms. Also, even with the people who claim their land, some in SA choose to take money because they say they’re not up to farming, [although the land was] rightfully in [that]

We have farmers in the North West - white farmers - who volunteer to help people who are acquiring land, whether they’re buying land out of their own pockets or the land has been restituted. And you find that if we are clever…[in managing] this relationship, there are no tensions…That way, the land falls into the hands of people who can take care of it. family. That way, the land falls into the hands of people who can take care of it. [On] the issue of Zimbabwe…I think that if they had resolved the matter sooner, they might not have had to deal with this. The delaying of resolving issues actually tends to complicate issues [rather] than resolve them, so we need to work it out.

GTA: Finally, why does your party persist with the Secrecy Bill? It seems undemocratic, unconstitutional, heavy-handed. Why can you not leave the press to be free as it as in the constitution? TM: I think that there was a lot of mismanagement of the Bill itself. I think that if there had been greater openness about the intention of the Bill, a lot of insecurities might have been dealt with. Once the Bill has come into Parliament, Parliament must deal with it. And frankly, each party can only speak through the members of that committee. In this instance, you have had a lot of excitement; I know that the ANC had to look into this Bill, that [it] was taken to the public, and that a lot of unhappiness came out because of the process of this bill.

28 \ Destination \ June 2013

Amount (Cubic metres cu m)


Natural Gas Proven Reserves (Sub-Saharan African Rank)

127bn 113bn 90.6bn 84.9bn

56.6bn 14.1bn






28.3bn 28.3bn 28.3bn

Cote D’Ivoire





Equitoreal Guinea





36.8bn 36.8bn


Africa in numbers: Focus on Namibia


The stock of proved reserves of natural gas in cubic meters (cu m). Proved reserves are those quantities of natural gas, which, by analysis of geological and engineering data. (CIA Factbook)

4.3% 65 years and over

4.8% 55-64 years

32.6% 0-14 years

















23.1% 15-24 years


Population Structure of Namibia A very young population where more than half of the population is under 25 years of age. Even though youth unemployment is an issue for Namibia, a recent report from allafrica. com shows that unemployment in Namibia now stands at 37 percent in 2011 as opposed to the 51 percent unemployment rate of 2008. (Sources; CIA Factbook and Paulus Paulus from, 3 April 2013)

35.3% 25-54 years

South Africa

(thousand km) Length of track


Reasons; the extensive railway was originally built to transport minerals. Plans are being made to extend the railway to access Maputo and the rest of Southern Africa and a coal-line through Botswana and South Africa. (Source; CIA Factbook and Department of Transport - South Africa)

Railway length (Sub-Saharan Africa)

May 2013 \ Destination \ 29

June 2013 \ Destination \ 29

Equatorial Guinea Equatorial Botswana Guinea Mauritius Botswana Gabon Mauritius South Africa Gabon South Namibia Africa Angola Namibia DRC Angola Nigeria DRC GNI per capita based on purchasing Lesotho Nigeria power GNI is gross GNI per parity capita (PPP). based PPP on purchasing Lesotho national income (GNI) converted to US

Sub-Saharan Sub-Saharan Africa GNI per Africa GNI per capita(PPP) (PPP) capita power parity (PPP). PPP GNI is gross Dollars.income (Source: Worldconverted Bank) to US national (GNI) Dollars. (Source: World Bank)

5,000 10,000 15,000 20,000 25,000 30,000 05 5,000 10,000 15,000 20,000 25,000 30,000 05

The Ruacana Power Station is one of the hydroelectric plants that provide energy to 162,000 homes. More plans are in place to build more Power hydroelectric however, the countryplants currently imports energy extra power from South Africa, and Zambia. The Ruacana Stationplants, is one of the hydroelectric that provide to 162,000 homes. MoreZimbabwe plans are in place to The state-owned utility NamPower says it will be able to produce all its energy domestically by 2016. (Sources; CIA Factbook, build more hydroelectric plants, however, the country currently imports extra power from South Africa, Zimbabwe and Zambia. The state-owned utility NamPower says it will be able to produce all its energy domestically by 2016. (Sources; CIA Factbook, Mali 51.6%

Mali 51.6% Central Africa Republic 54.3%

(% of total (% installed of total capacity) installed capacity)

Central Africa Republic 54.3% Ghana 59.4% Ghana 59.4% Uganda 59.5% Uganda 59.5% Tanzania 60.5% Tanzania 60.5% Sudan 66.3% Sudan 66.3% Namibia 66.7% Namibia 66.7% Cameroon 72.2% Cameroon 72.2% Ethiopia 82.1% Ethiopia 82.1% Malawi 94.3% Malawi 94.3% Burundi 98.1% Burundi 98.1% DRC 98.7% DRC 98.7% Zambia 99.6% Zambia 99.6% Mozambique 99.9% Mozambique 99.9% Lesotho 100% Lesotho 100%

Powerfrom fromhydroelectric hydroelectricplants plants Power

30 \ Destination \ June 2013


Namibia NAMIBIA HAS had a chequered history. From a one-time German colony to South African occupation, which lasted from World War 1 to the 1990s, the country only gained independence in 1994. The Namibian economy is still closely linked with the South African economy and it operates a dual currency system in the country. With the aNamibian dollar and the South African Rand both in circulation, this means that the country has limited monetary instruments at its disposal. The Namibian economy has relied heavily on mining and processing of minerals, which generates over 50 per cent of the foreign exchange earnings.



This month we profile South Africa’s Atlantic coast neighbour…Namibia

By Grant Mowatt


Windhoek Botswana

Namibia is the world’s 4th largest producer of uranium and it produces large amounts of zinc. Increases in fish production and mining have resulted in the growth of the economy and the re-opening of copper mines will provide another boost. Unlike other African countries, Namibia is not an agricultural economy. It imports 50 per cent of its cereal requirements. Issues of poverty, high unemployment and inequality still overshadow this growth. The Namibian government has created several programmes which provide young people with the required skills, through vocational training, to support them in starting their own businesses. Namibia came 120th in the human development index in 2012.

South Africa

Namibian Economy

Currency: Namibian Dollar Population: 2.1 Million GDP based on PPP: $7,800 GDP growth (2011): 4% Head of Government: Hifikepunye Pohamba Finance Minister: Saara Kuugongelwa-Amadhila Central Bank Governor: Tom Alweendo

Namibian Business

Language: English, German World Bank Doing Business rank: 87 World Economic Forum Global Competitiveness rank: 92 Investment agency: Namibian Investment Centre; Legal system: Amalgamation of Westminster-style Constitutional law, Roman-Dutch law, customary law and international law.

Getting There

Airlines: British Airways, Lufhansa and South African Airways Visas: Visas are required for business purposes but UK residents do not need a visa for travel. Windhoek Hotels: £24- £190


















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25th - 29th November 2013 Cape Town International Convention Centre, South Africa Africa’s Premier International Oil & Gas Event Sub-Saharan & Maghreb-North Africa

15th Scramble For Africa: Strategy Briefing - 25th November 2013 10th Africa Independents Forum - 26th November 2013 20th Africa Upstream Conference - 27th - 29th November 2013 54th PetroAfricanus Dinner - 25th November 2013 Celebrating our 20th Africa OIl Week Join us as we celebrate our 20th Africa Oil Week 2013 in Cape Town, where we shall again host the world’s leading meeting on Africa for corporate deal-making and senior-level networking across the oil/gas industry in and on Africa. This is now the landmark Conference occasion for Africa, a meeting with a global reputation, and one of the top world-class Conferences held annually in the international industry Calendar. The event was sold out in 2012 and Conference was host to: •

Over 1,200 Delegates from Six Continents - 90 Presentations made during the Week - Ministers/Government Delegations in attendance - African and Foreign State Firms/National Oil Companies and State Officials on the Program - 90 Exhibitions

In 2013 the conference will take place at a new venue - the Cape Town International Convention Centre - from 25th - 29th November 2013. The venue is able to accommodate 1,500 in the Auditorium and has added capacity for exhibition stands and parallel sessions. The Week includes separately bookable Events plus; Annual Awards - 2 Conference Dinners and Networking Receptions - Champagne Breakfast - BBQ-Braai - Parallel Sessions: Corporate & Investor Showcases. We recommend early bookings/confirmations for Sponsors & Exhibitions, and for your earliest registration/s as delegates to the different events held across the Africa Oil Week during this year’s much expanded event.

Lead Sponsor

Titanium Sponsor

Palladium Sponsor

Platinum Sponsor

Diamond Sponsor

Rhodium Sponsor

Gold Sponsor

Bronze Sponsor


Adepetun Caxton-Martins Agbor Segun

Exclusive International Broadcast Partner

Barristers + Solicitors, Lagos

Associate Sponsors

Contributing Sponsors

Senior Partners

Sponsor / Exhibition/ShowCase Enquiries


Dr Duncan Clarke: Babette van Gessel:

Amanda Wellbeloved: Sonika Greyvenstein:

Tanya Beddall: Jodee Lourensz:

Gateway to Africa June 2013 is a multi-platform title for businesses looking to take part in expansion opportunities in Sub-Saharan Africa.

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