Tar61 June Africa Brazil Moz Ug Power dossier

NIGERIA Security services penetrated

by Boko Haram

RWANdA President Kagame: “France helped prepare the genocide”

SOUTH AFRICA The new opposition generation

w w w.t hea f r ic a r ep or t .c om

N ° 61 • j u N e 2 014

the africa report

Dilma Rousseff, Neymar, Yaya Touré, Pelé and Jacob Zuma

Africa-Brazil

monthly • n° 61 • june 2014

A love affair

The warm embrace across the Atlantic may be built on shared history, but beneath the surface lies the realpolitik of sharp economic interests

groupe jeune afrique INTERNATIONAL EdITION

Algeria 550 DA • Angola 600 Kwanza • Austria 4.90 € • Belgium 4.90 € • Canada 6.95 CAN$ • Denmark 60 DK • Ethiopia 75 Birr • France 4.90 € • Germany 4.90 € • Ghana 7 GH¢ • Italy 4.90 € • Kenya 410 shillings • Liberia $LD 300 • Morocco 50 DH • Netherlands 4.90 € • Nigeria 600 naira Norway 60 NK • Portugal 4.90 € • Sierra Leone LE 9,000 • South Africa 30 rand (tax incl.) • Spain 4.90 € • Switzerland 9.90 FS • Tanzania 6,500 shillings • Tunisia 8 DT • Uganda 9,000 shillings • UK £ 4.50 • United States US$ 6.95 • Zimbabwe US$ 4 • CFA Countries 3,500 F CFA

NIGERIA Security services penetrated

by Boko Haram

RWANDA President Kagame: “France helped prepare the genocide”

contents

SOUTH AFRICA The new opposition generation

w w w.t heafr icarep or t.com

N ° 6 1 • J U N E 2 014

Dilma Rousseff, Neymar, Yaya Touré, Pelé and Jacob Zuma

Africa-Brazil

A love affair

The AfricA reporT # 61 - june 2014

The warm embrace across the Atlantic may be built on shared history, but beneath the surface lies the realpolitik of sharp economic interests

GROUPE JEUNE AFRIQUE INTERNATIONAL EDITION

Algeria 550 DA • Angola 600 Kwanza • Austria 4.90 € • Belgium 4.90 € • Canada 6.95 CAN$ • Denmark 60 DK • Ethiopia 75 Birr • France 4.90 € • Germany 4.90 € • Ghana 7 GH¢ • Italy 4.90 € • Kenya 410 shillings • Liberia $LD 300 • Morocco 50 DH • Netherlands 4.90 € • Nigeria 600 naira Norway 60 NK • Portugal 4.90 € • Sierra Leone LE 9,000 • South Africa 30 rand (tax incl.) • Spain 4.90 € • Switzerland 9.90 FS • Tanzania 6,500 shillings • Tunisia 8 DT • Uganda 9,000 shillings • UK £ 4.50 • United States US$ 6.95 • Zimbabwe US$ 4 • CFA Countries 3,500 F CFA

Business

4 Editorial Guns and growth 6 lEttErs

56 banking East versus West Foreign banks raced to take a stake in Uganda’s financial sector, but while Kenya makes inroads, Nigeria is struggling

8 thE QuEstion

Briefing 10 signposts 12 intErnational 16 calEndar

frontLine

cover crediTs: siphiWe siBeKo1/reuTers;ThemBA hAdeBe/Ap/sipA; deAn mouhTAropoulos/GeTTy imAGes; moreirA/efe/sipA; vincenT fournier/jA

62 illicit capital The fight against dirty money goes global

18

14 pEoplE

65 baromEtEr Top performers on the Nairobi Stock Exchange 66 profilE Ruka Sanusi

18 brazil/africa Trans-Atlantic ties Brazil and the continent are forging ever-closer links.

So what can Africa learn from the experience of its South American partner?

68 intErviEw Amine Tazi-Riffi 70 financE Syndicated loans boost Africa’s corporate giants

poLitics

30

30 south africa What comes after the victory?

What do key players think should top the new government’s policy agenda?

36 opinion Stephen Chan A victory without a silver bullet

78 rEnEwablEs South African opportunities

Art & Life

40 nigEria Media headlines, security deadlines

80 world cup Africa’s hopes in Brazil Which of the continent’s teams will get past the first round?

42 zimbabwE The MDC in crisis 43 drc/angola Borders and barrels 43 mozambiQuE Murder on Marx street 44 anansi

country focus 47 rwanda Middle-income or bust Financial sector reform launched the country’s recovery, now it must grow its service sector •

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dossiEr 72 powEr Energy and elections Egypt’s new government must tackle the country’s power crisis and cut fuel subsidies 76 intErviEw General Electric Africa’s CFO

38 intErviEw Somalia’s Prime Minister Abdiweli Sheikh Ahmed

the africa report

71 hannibal Goes to the WEF

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84 in briEf Africa’s best bloggers and Kinshasa’s robot policemen 86 lifEstylE Radio presenter Anele Mdoda and slam poetry 90 day in thE lifE James Akpojagaye, chapati maker This issue carries two inserts between pages 34-35 and 66-67 for selected countries

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editorial

The AfricA reporT A Groupe Jeune Afrique publication

By Patrick Smith

57‑Bis, rue d’Auteuil – 75016 PAris – FrAnce tel: (33) 1 44 30 19 60 – FAx: (33) 1 44 30 19 30 www.theafricareport.com

Cha i r m a n a nd f o und e r Béchir Ben yAhMed

Guns and growth

I

n Gabriel García Márquez’s masterpiece Chronicle of a Death Foretold, he recounts the murder of Santiago Nasar and how everyone in the town knew it was going to happen but did nothing. On a larger canvas, we all know that the widening levels of inequality of wealth and opportunity – despite faster economic growth in so many developing countries – are leading to social division and conflict. But, like Santiago’s neighbours, most of us seem incapable of action.

It surely gladdened Márquez’s heart, before he died in April, to see the transformation of Medellín in his native Colombia. Over the past decade, Medellín has changed from a fiefdom run by drug cartels to a culturally and technologically innovative city offering world-class education free to its poorest citizens. That is a global lesson.

It was the extreme inequality and lack of public services in Colombia in the 1980s and 1990s that helped recruit runners and mules for the cartels of drug bosses such as Pablo Escobar. He then used money he earned from cocaine trafficking to buy the loyalty of communities long neglected by the government. Escobar ruled his fiefdom with a mix of criminal largesse and extreme violence.

With widely differing political agendas, insurgent groups in Africa are repeating Escobar’s formula, exploiting inequalities and state indifference, even as bankers and economists roll out news of record-breaking growth.

Few African states are following the Medellín path. As Africa’s newly crowned top economy and the site of a ruthless insurgency, Nigeria clearly makes the case. In Borno State, where the 230 schoolgirls were abducted by the Boko

P ub l i s he r dAnielle Ben yAhMed publisher@theafricareport.com e x e Cut i ve P ub l i s he r JérôMe MillAn

Haram militia, the adult literacy rate is below 60%; in Lagos, the commercial capital and headquarters of international banks and oil companies, it around 90%.

The cycle of worsening inequality, lack of opportunity and economic breakdown reinforced by violent insurrection is undermining Nigeria’s development chances and productive investment – not just in the north-east but in parts of the Middle Belt and the Niger Delta, where oil theft and militant attacks are on the rise again.

Across the continent in Kenya, shootouts and bombings along the coast Insurgent and in North Eastern Province are unnerving groups locals, let alone tourists in Africa are and big investors. repeating Seemingly muscular economic fundamentPablo als in Nigeria and Escobar’s Kenya are no safeguard against these formula crises. The same synin Columbia drome springs up in smaller and weaker economies: Mali, Central African Republic, Sudan and now South Sudan. Journalists offer good earlywarning systems of the toxic combination of inequality, corruption and social breakdown. That is why Ethiopia convened a colloquium of economists, security specialists and African leaders to the Tana High-Level Forum on Security in Africa in April to show how the crooked trade and procurement deals that are selling Africa short will also lead to crises and conflict. The experts have spoken, the evidence is on the table: now it requires political action. ●

m a r K e t i nG & d e ve l o P m e nt AlisOn KinGsley‑hAll e d i t o r i n Chi e f PAtricK sMith m a na G i nG e d i t o r nichOlAs nOrBrOOK editorial@theafricareport.com a s s i s ta nt e d i t o r chArlie hAMiltOn e d i t o r i a l a s s i s ta nt OheneBA AMA nti Osei r e G i o na l e d i t o r PArselelO KAntAi (east Africa) a rt & l i f e e d i t o r rOse sKeltOn s ub - e d i t o r s AlisOn culliFOrd MArshAll vAn vAlen P r o o f r e a d i nG KAthleen GrAy a rt d i r e Ct o r MArc trensOn desiGn vAlérie Olivier christOPhe chAuvin éMeric thérOnd P r o d uCt i o n PhiliPPe MArtin christiAn KAsOnGO r e s e a r Ch AnitA cOrthier P ho t o G r a P hy clAire vAtteBled o nl i ne JeAn‑MArie Miny Prince OFOri‑AttA sales sAndrA drOuet sOlène deFrAncq tel: (33) 1 44 30 18 07 – Fax: (33) 1 45 20 09 67 sales@theafricareport.com cOntAct FOr suBscriPtiOn: Webscribe ltd unit 8 the Old silk Mill Brook street, tring hertfordshire hP23 5eF united Kingdom tel: + 44 (0) 1442 820580 Fax: + 44 (0) 1442 827912 email: subs@webscribe.co.uk 1 year subscription (10 issues): All destinations: €39 ‑ $59 ‑ £35 tO Order Online: www.theafricareportstore.com d i f Co m internAtiOnAl AdvertisinG And cOMMunicAtiOn AGency 57‑Bis, rue d’Auteuil 75016 PAris ‑ FrAnce tel: (33) 1 44 30 19‑60 – Fax: (33) 1 44 30 18 34 advertising@theafricareport.com a d ve rt i s i nG d i r e Ct o r nAthAlie Guillery r e G i o na l m a na G e r s cArOline Ah KinG FAdOuA yAqOBi liliA BenAceur us r e P r e s e ntat i ve AzizA AlBOu a.albou@groupeja.com

editorial@theafricareport.com the africa report

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Printer: sieP 77 ‑ FrAnce n° de cOMMissiOn PAritAire : 0715 i 86885 dépôt légal à parution / issn 1950‑4810 the AFricA rePOrt is published by GrOuPe Jeune AFrique

letters For all your comments, suggestions and queries, please write to: The Editor, The Africa Report, 57bis Rue d’Auteuil - Paris 75016 - France. or editorial@theafricareport.com

living with the past

NIGERIA The government’s business scorecard

i

ZWELI MKHIZE Is this the man to succeed Jacob Zuma?

KENYA Security dominates Kenyatta’s first year

have very painful memories from the genocide [‘The past that mingles with the future’, TAR60 May 2014]. Some memories are vivid in my mind.

Without intention, a painful memory will erupt, strong and willful. Despite my efforts to suppress it, the memory will play and replay, each time with newer, fresher details. Suddenly, I am transported back to the most painful periods of my life.

I remember the horror, terror, and unimaginable Concrete visions for the continent fear. But, I marvel at the beauty of human kindness, of principle, of fearless sacrifice, as I remember those who contributed to my survival by standing up against evildoers.

I miss everyone who’s gone. I find myself seething with anger at my inability to undo […] anything. We must remember that significant loss for us as a country started four years prior to the genocide, and continued well into the new millennium inside DRC. We desperately need the non-existent social and political space in Rwanda necessary to heal.

Alice Gatebuke Communications Director, African Great Lakes Action Network INTERNATIONAL EDITION

Algeria 550 DA • Angola 600 Kwanza • Austria 4.90 € • Belgium 4.90 € • Canada 6.95 CAN$ • Denmark 60 DK • Ethiopia 75 Birr • France 4.90 € • Germany 4.90 € • Ghana 7 GH¢ • Italy 4.90 € Kenya 410 shillings • Liberia $LD 300 • Morocco 50 DH • Netherlands 4.90 € • Nigeria 600 naira • Norway 60 NK • Portugal 4.90 € • Sierra Leone LE 9,000 • South Africa 30 rand (tax incl.)

Spain 4.90 € • Switzerland 9.90 FS • Tanzania 6,500 shillings • Tunisia 8 DT • Uganda 9,000 shillings • UK £ 4.50 • United States US$ 6.95 • Zimbabwe US$ 4 • CFA Countries 3,500 FCFA

w w w.t hea f r ic a repo r t .c om

GROUPE JEUNE AFRIQUE

6

David Adjaye, Architect

N ° 6 0 • M AY 2 014

Hailemariam Desalegn, Ethiopia’s Prime Minister

Donald Kaberuka, AfDB President

Architects

of the future

in 2013. One way for farmers to increase their production is through aggregation. Successful, well organised cooperatives and farmer groups can be an effective vehicle for managing risk, access to finance and other benefits.

Thomas Copple Economist, International Coffee Organization, via email

Financing ghana’s Future

Despite Ghana’s promising economic prospects it continues to experience tough fiscal challenges and unfavourable market conditions, resulting in its one billion dollar Eurobond being placed on hold [‘Eurobonds: A good time to hit the market’, TAR60 May 2014]. The cedi aggregate Fighting the Flab currency has dropped to lows against the dollar since last year and the to accumulate Africa to some extent can be said nation has also been struggling with I read with interest your report to be getting fat [‘Is Africa getting fat?’, a ballooning national budget deficit. on coffee production in Ethiopia TAR59 Apr 2014]. The problem also For Ghana, the expectation is and Burundi [‘The Ethiopian shows up among children. This that things will get worse before policy speciality sector starts to blossom’, is because the lifestyle of adults tends measures start taking effect. Volatile TAR59 Apr 2014]. The speciality coffee global markets demonstrate that to affect that of children. In the past, sector represents a significant children would play. These days they the best way to finance an economy opportunity for producers to increase is through internal savings and a solid are more indoors playing with the value and profitability of their computers and toys. As fatness domestic market. Eurobond issues coffee. However, it remains a relatively should ideally not be the main is growing in Africa, we must embark small market worldwide. Coffee on a pragmatic step such as intensive approach to funding a deficit, they production in Africa has stagnated education to promote healthy living should rather serve as a supplement.

Steven Loubser over the past couple of decades, habits and to reduce this pandemic.

Kwaku Oppong Amponsah decreasing from 18% of world Portfolio Manager, Investec Asset via Facebook production in 1990 to just 12% Management, via email

How To gET youR copy of THE AfRIcA REpoRT On sale at your usual outlet. If you experience problems obtaining your copy, please contact your local distributor, as shown below. ghana: GREENWICH MAGAZINES & BOOKS, Mr Ernest Asare, +233 (0)208 142 374, greenmaghana@gmail.com – KenYa: NATION MEDIA GROUP, Josephine Bonareri Abuga, +254 (0)20 32 88507, JAbuga@ke.nationmedia.com – nigeria: NEWSSTAND AGENCIES LTD, Solomon Otinwa, +234 (0)709 8123 459, newsstand2008@gmail. com – sierra leone: RAI GERB ENTERPRISES, Mohammad Gerber, +232 (0)336 72 469, raigerbenterprise@gmail.com – southern aFrica: RNA DISTRIBUTION, Luisa Rebelo, +27 (0)11 602 9800 • luisar@magcservices.co.za – tanZania: MWANANCHI COMMUNICATIONS, Erasto Matasia, +255 (0)713 512 551, ematasia@ tz.nationmedia.com – uganDa: MONITOR PUBLICATIONS LTD, Stephen Eselu, +256 (0)702 178 198, seselu@ug.nationmedia.com – uniteD KingDom: COMAG, Mark Swan, +44 (0)1895 433791, Mark.Swan@comag.co.uk – uniteD states & canaDa: LMPI, Sylvain Fournier, +1 514 355 5610, lmpi@lmpi.com – Zimbabwe: MUNN MARKETING (PVT) LTD, Nick Ncube, +263 (0)4 662755, nickncube@munnmarketing.co.zw For other regions go to www.theafricareport.com

ADVERTISERS’ INDEX TOTAL p 2; BOA GROUP p 5; IE SINGAPORE p 7; CNN p 9; SAITEX p 17; AFRICA GRI p 17; ODEBRECHT p 23; HOTEL CARDOSO p 25; STANDARD BANK p 28-29; GMA p 45, 91; WORLD COCOA CONF. p 45; JAGUAR p 46; BLOOMBERG TV p 53; SPEAR MOTORS p 59; THE AFRICA REPORT p 61, 87; AUC p 61; ADEXEN p 67; COOL FM, WAZOBIA, NG. INFO p 67; DDP OUTDOOR p 69; ENERGYNET - AEF p 69; INTERPLAST p 75; CARMIX p 77; COMP. INDUST. INTERN. p 77; FRISOMAT p 77; ECONET SOLAR p 79; EKO HOTELS & SUITES p 89; DANGOTE GROUP p 92 the africa report

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the question To respond to this month’s Question, visit www.theafricareport.com. You can also find The Africa Report on Facebook and on Twitter @theafricareport. Comments, suggestions and queries can also be sent to: The Editor, The Africa Report, 57bis Rue d’Auteuil, Paris 75016, France or editorial@theafricareport.com

many african governments attract foreign direct investment with tax breaks. however, a scathing new report criticises sierra leone for offering too many fiscal advantages to multinationals, resulting in underfunded public services.

Is Africa selling itself short with tax holidays and other breaks?

Yes Savior MwaMbwa Policy and advocacy manager, Tax Justice Network – Africa

African governments have not been benefiting sufficiently from the tax revenues that their natural resources would allow. Something fundamental has to change in governments’ approach and international tax rules.

Unless this happens, African governments will be losing out on much-needed tax revenues. It is not a case of companies not paying any tax, it is that they are not paying the level they should be paying.

Instead, they go to extraordinary lengths to reduce their tax bills.

While tax rates are important to companies deciding where to locate their operations, it is not the top priority. Companies are more concerned with the political stability of a country, whether it has skilled manpower and an educated workforce. Countries must provide an investment climate which is attractive to multinationals, but one in which they can benefit too, rather than obsessing about economic policy peddled by the International Monetary Fund and the World Bank. In theory, tax and non-tax benefits such as technology transfer should filter down, but in practice it does not happen. Income taxes from staff do support a country’s economy – but look at Zambia.

Here 70% of the country’s tax revenue comes from income tax. ●

No EuStacE DaviE Director, Free Market Foundation

Lowering the levels of corporate tax is a crucial element in attracting investment. Look at the case of Mauritius, which has seen its economy soar on the back of increasing foreign direct investment as its corporate and individual tax rates have fallen from 25% to 15%. Google has recently been in the news because of the tax it pays in Ireland. People forget that it is not just the corporate taxes that support the economy. The salaries that Google pays to staff in Ireland are subject to income tax.

The same is true of Mauritius. Low tax rates attract multinational firms, and they in turn create a demand for further services which can be satisfied by the local market, growing the economy. If you take all these corporate tax revenues and income tax revenues into account, that makes it a totally different story. If you lower your tax rates, it often increases your tax take as people concentrate on doing business rather than getting involved in elaborate tax dodges.

If a country needs to boost its infrastructure, it is better to attract private investors. All too often governments get involved with projects for which the economic case in not justified. Yes, there is an issue with governments being out-gunned in negotiations with large, rich multinational firms, but that is the time when they should hire some astute negotiators to represent them. ●

RESpOnSES to last month’s question:

Is the Muslim Brotherhood being persecuted in Egypt?

Egyptian people must decide, not the media or foreigners.

Agustin Cordoba via Facebook It’s important not to allow current troubles in Egypt to cloud the view of the Brotherhood’s history and actions in the country.

I believe any non-MuslimBrotherhood government would continue to be proactive in monitoring the organisation’s activities.

Ibrahim Alkanadi via TheAfricaReport It’s a case of the hunter being hunted for the Muslim Brotherhood.

Olu Areola via Twitter All societies have cleavages (political, religious and so on), but these shouldn’t erupt into violence, abuse or death. Who is benefiting?

I’m not a supporter of Morsi or of this political movement, but I’m 100% against the death penalty and hunting people for political beliefs.

Gabriel Florea via Facebook Yes, they are being persecuted [by] being prevented from standing in the elections.

Yaw S. B. via Email the africa report

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TM & Š 2014 2014 Cabl Ca e News News Netwo Netwo work. rk A Time Warne rk.

Warne arn r Compan Compan m y. All All right right ightss reserv reserv erved. ed ed.

where Richard Quest goes to tell the business story

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frontline

r B

a c i r f a / l i az

Trans-Atlantic 2003 was a watershed for Brazil and Africa, when shared sorrows gave way to a shared brighter future. As the FIFA World Cup kicks off, we look at what Africa can learn from Brazil’s experiences as a rapidly developing country

By Tolu Ogunlesi in Brasília Teimosa

B

rasília Teimosa, an oceanfront settlement in the north-eastern city of Recife, is gentrifying. Rents are rising, and homes are taking on new floors and replacing their weather-beaten facades with gleaming ceramic tiles studded with aluminium doors and windows. Hotel porter Romualdo Andrade, 45, points out a series of steel street lights being installed to replace the concrete ones. They are more resistant to the salt-strewn breeze from the shark-infested ocean, he explains. “The only thing that resists the salt breeze is ugly girls,” Andrade says, laughing.

He traces the turning point to about a decade ago, when President Luiz Inácio ‘Lula’ da Silva spearheaded a four-part regeneration project that involved pulling down the least habitable of the settlement’s structures – while paying the occupants a monthly allowance to enable them to rent proper housing – and building a sea wall, roads and parks.

About five decades ago, Brasília Teimosa was a proper slum full of houses on stilts that rose out of the swamp. The Teimosa in its name means stubborn, Andrade says – a testament to the resistance its earliest inhabitants put up in the face of government attempts to demolish the slum and pave way for the reassignment of the prized land to developers of luxury apartments and hotels. The stubbornness seems to extend to the determination of residents to hold onto their property today. ●●● “We stay here until we die,” Andrade explains.

BPI / PanoramIc; EFE/SIPa; DEan mouhtaroPouloS/GEtty ImaGES; SIchoV/SIPa; WIktor DaBkoWSkI; orlanDo BarrIa; un Photo/rIck BajornaS

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brazil/africa trans-atl antic ties

● ● ● A similar resolve has come to define Brazil as a country. It survived decades of military rule and a long spell of hyperinflation in the 1980s to emerge stronger than before in the late 1990s. It now has one of the 10 largest economies in the world and is on the brink of hosting the FIFA World Cup and the Summer Olympics back to back, a feat no other country has managed.

On top of that, it has positioned itself as a leader in South-South affairs in forums like the BRICS grouping that gathers the emerging economies of Brazil, Russia, India, China and South Africa.

Most recently, Brazil’s President Dilma Rousseff has taken the lead in seeking to limit the United States’ (US) control of the internet after revelations about spying on international communications.

burden of the past

The relationship between Africa and Brazil, sure to be dusted off as the FIFA World Cup kicks off in June, is long and complex. Between the 16th and the 19th

centuries, millions of slaves were shipped Brazilian head of state. He also increased from the coast of West Africa across the financial and technical aid.

Atlantic.Theakara(friedbeancake)ofNi“Lula turned [Brazil’s] gaze south, to geria’s Yoruba people crossed the Atlantic Africa,” says Celso Marcondes, coordinator of the Africa initiative at the Institobecomeacarajé. Certainly, colonialism features prominently in the Brazil-Africa tuto Lula think tank. It helped that many historical narrative. Portugal’s colonial Africancountrieswereatthatpointfinally leaving behind an era defined by dictatadventure connects Brazil, Angola and ors, wars and stunted growth.

Mozambique. It was around these hisButinbusiness,sentimentalandhistortorical burdens that Brazil and Africa ical ties count for little. Under Lula, trade had negotiated their relationship – an undeniable past, but no effort at a future (see page 26).

Lula doubled the number Today, wealthy Angolans of Brazilian embassies in pile into Rio to shop and Africa and visited 12 times recycle petrodollars. While Lusophone young people between Brazil and Africa grew fivefold to in Africa affect a Brazilian accent, older $27bn between 2002 and 2012. Minerals generations stay in to watch telenovelas fromtheBrazilianTVnetworkRedeGlobo. accounted for 84% of Brazil’s $14.3bn in Things changed with the election of importsfromAfricain2012.Brazil’sappetLula as Brazil’s president in 2003 (see beite for Africa’s natural resources – mainly low). He doubled the number of Brazilian oil and gas – account for its consistently embassies in Africa, a gesture reciprocnegative trade balance with the continated by African countries, and visited ent. In return, it exports food products, the continent 12 times – a record for any biofuels and manufactured goods.

profile

Luiz Inácio ‘Lula’ da Silva Former president, Brazil

Paulo Whitaker/reuters

“Lula continues to be the president”

Despite stepping down from office in January 2011, lula has maintained his influence on domestic politics and the international scene

T

he 2002 election of Luiz Inácio ‘Lula’ da Silva to the presidency was a momentous occasion. He was a veteran, the candidate who refused to give up despite failing in three consecutive elections in 1989, 1994 and 1998.

Rafaela Albuquerque, a university student in Recife, north-eastern Brazil, remembers her grandparents crying at the news of his win.

“It was a dream come true,” she says. “Everyone was so emotional.”

Lula’s trade union background – he was elected president of the metalworkers’ trade union in 1975 – suggested he would combine being a champion of the bottom millions with a left-wing distrust of the rich and privileged.

Albuquerque says only one of those assumptions turned out

to be true: the devotion to the poor. Billions of dollars in state funding went to national development programmes that focused on industry, agriculture, infrastructure and slum reform, with particular emphasis on the country’s blighted north-east region, where Lula is from.

“In the north of Brazil, Lula is like a god,” hotel porter Romualdo

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Brazil’s trade with sub-Saharan Africa (US$)

38 38

$12bn $2bn

buckling inflation

This hard-nosed, economically confident Brazil that Lula was elected to lead was one poised for emergence as a global power. Credit for this should go to his predecessor, Fernando Cardoso, under whom – first as finance minister (1993-1994) and then as president (19952003) – Brazil broke the grip of inflation.

Conquering inflation paved the way for economic transformation. Purchasing power improved, and Brazil was already familiar with the business of conquering poverty when Lula took over.

If the slaying of hyperinflation in 1994 was the country’s economic watershed, the political one happened in 1988: ● ● ●

rich got richer

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2000

2010

African-Brazilians in Brazil

(% of total Brazil-Africa trade) Rest of Africa

Morocco South Africa

Brazil Russia France China USA

8.36% 20% 8.41%

Egypt 11.53% Algeria

Africa’s share in Brazil’s foreign trade

15.52% 36.18% Nigeria Export

Import

10%

44.7%

50.7%

8% 6% 4%

2000

2010

Share of Brazil’s top exports to Africa

2%

2000 01

02

03

04

05

06

07

Food, beverages & tobacco 37.20%

Vegetable products 14.28%

Transport equipment 7.80%

Machinery 6.06%

The effect of lifting millions out of poverty has totally changed the opposition game

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Brazil’s top trading partners in Africa

46 48 49

between Brazilian poverty and poverty in the rest of the developing world: both causes deserved to be championed.

His actions went beyond rhetoric. Under Lula, Brazil was the only major power to recognise Palestine as a state, it refused to isolate Iran for developing its nuclear energy programme and promoted Mercosur, the Latin American alternative to United States (US)-backed free trade zones.

At the Cancún conference of the World Trade Organisation in 2003, Brazil helped prevent attempts by the European Union and the US to push through greater free

Andrade says. “If you say something bad about him, beware.”

Much like Britain’s Margaret Thatcher, Lula grabbed the political centre of a country – yet crucially yanking it to the left rather than the right in his case. The effect of lifting millions out of poverty has totally changed the game for any future opposition to the ruling Parti de Trabalhadores.

But in his relations with the rich, however, Albuquerque says the president surprised everyone, pushing policies that supported big business and “helped the rich get richer”. She concedes that economic pragmatism may have been at work. Lula stood on the side of big business so it could create more jobs for the poor, she says. Which, of course, had its downsides: “In between, the middle class got squeezed.”

Brazil’s upper classes do not hold him in affection. Jokes about his bad grammar abounded.

Lula was also eager to leave his mark beyond the shores of Brazil.

To him, there was little difference

Brazil’s diplomatic missions in Africa

trade agreements that would have benefited the rich countries most.

These concrete actions for other countries contrast with those of other ‘populist’ leaders in Latin America, such as in Venezuela and Bolivia, who sometimes fail to practise what they preach.

21

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Live animals, animal products 15.39%

“If we want to give a signal to the poorest countries that they will have a chance in the 21st century, the US, the United Kingdom, France and Germany must make concessions,” he told the World Economic Forum in 2007.

Lula’s international outlook – unprecedented in Brazilian history – paid off. “Now everyone talks about Brazil,” says Romualdo Andrade . There may be no greater evidence of that than the feat, accomplished towards the end of Lula’s presidency, of winning the rights to host both the 2014 FIFA World Cup and the 2016 Summer Olympics.

Out of office, he continues to exercise influence on the presidency of Dilma Rousseff, who succeeded him in 2011 after serving as his chief of staff. When he is not making headlines at home, he is globetrotting as the latest member of a club of former heads of state once exclusively peopled by the Tony Blairs and Bill Clintons.

“We say that Lula continues to be the president,” says Andrade.

“We hear he’s still got an office T.O. next to Dilma.” ●

SOURCES: GLOBAL TRADE ATLAS, 2013; BRAZIL POPULATION CENSUS, 2010; WORLD BANK; LULA INSTITUTE

Even though Brazil has found it easier to do business in former Portuguese colonies for linguistic reasons, its sphere of engagement extends further than that.

Its largest trade partners in Africa are Nigeria, Algeria, South Africa and Egypt.

Those four account for more than half of the volume of trade.

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22

The Bolsa Família programme raises families above the poverty line with grants ● ● ● the launch of a new constitution after almost three decades of military rule. That “social democratic” constitution allowed Brazil to “[settle] scores with the past,” says Sérgio Fausto, executive director of the Fundação Instituto Fernando Henrique Cardoso. Embedded in the new constitution was the idea of a state that liberally devoted its resources to social welfare.

The Brazilian government has also embraced the idea of the state playing a strong role in the economy. Like China, South Korea and Japan before it, Brazil used a combination of trade barriers and industrial support for sectors it considered critical for economic development.

This particular policy mix is now a live debate in Africa. There are many lessons that African governments could learn from Brazil, especially in terms of infrastructure development, technological innovation and social welfare.

water and jobs

In Brazil’s semi-arid north-eastern region – home to a third of the country’s population – a government partnership with development organisations has brought 700,000 water cisterns to the smallholder farmers. The cisterns provide access to water for crops and farm animals, mitigating the devastating impact of droughts.

The cisterns are useful in more than one way – apart from their direct impact on the availability of water, constructing them provides jobs.

allocatefamilymoneybetter,” saysFausto.

Non-governmental organisation The government spent $12bn on Bolsa worker Carlos Magno de Medeiros MoFamília in 2013, covering 14.1 million rais says the cistern project, which has consumedR$1bn($450m)ingovernment families. Social development minister funding, is “one of the most successful Tereza Campello says every R$1 invested in Bolsa FamíliadeliversR$1.78 in returns programmes in this region. It’s cheap, easy to build and owned by the farmers.” to the country’s gross domestic product.

Farmer Joelma Pereira is one of the going further beneficiaries of the project. She started herfarmonahalf-hectareplotshebought Amid concerns that extreme poverty still in 2001. Today she owns 7ha that grow persists, President Rousseff launched corn, beans and fruit. Before the cisterns, the Brasil Sem Miséria (‘Brazil Without her family had to trek long distances in Poverty’) programme, which seeks to expand Bolsa Família’s reach. The number search of water. “Now we don’t have to of Brazilians living below the poverty line do that any more. We can use the time of $2 per day nearly halved from 21% of more productively,” Pereira says. Small the population in 2003 to 11% in 2009 farms like hers produce 80% of all the according to the World Bank. food consumed in Brazil.

Nigeria’s north-east faces similar water shortages.

Every R$1 invested in Bolsa Analysts link the impact of Família delivers R$1.78 this – on agricultural yields in returns to Brazil’s GDP and poverty levels – to the heightened levels of unrest that have plagued the region in recent Nonetheless, many Brazilians still see themselves as being a long way from the decades and which has culminated in promised land, suggesting that Africthe emergence of Al Qaeda-affiliated ans should be wary of making any rigid terrorist group Boko Haram.

Arguably Brazil’s most ambitious and comparisons. Discontent has mounsuccessful home-grown project is Bolsa ted in the face of difficult conditions.

Família (Family Purse). Lula launched An ageing population, rising inflation, it in 2003 to provide conditional cash currency devaluation and slowing ecogrants – amounting to an average of $100 nomic growth have placed the country per family per month – to the country’s on a tight economic rope. poorest families. The programme aims to Public anger heightened as the World boost incomes just past the poverty level Cup drew closer. Brazil planned to spend of $1.25 per person per day. The money, about $15bn to host the 2014 tournapaid into bank accounts associated with ment. Many citizens say that money the programme, is targeted at women. should be spent on upgrading schools, “The state tends to believe that women hospitals and roads. “This is not the time are more reliable than men, that they for Brazil to host the World Cup,” ● ● ● the africa report

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argues a São Paulo taxi driver, “the stadiums cost too much.”

Activist and teacher Michelle Carvalho is a Bolsa Família sceptic. She points out that while it helps ensure that school attendance rates are high, it does nothing for the quality of teaching. “It’s an entitlement mentality, not a mentality for transforming yourself,” she says, adding that the problem is passed down generations.

●●●

poverty is racial

But minister Campello has data challenging this criticism of Bolsa Família.

She says that 75% of adult members of beneficiary families are employed, a proportion similar to that for the segment of the population that does not participate in Bolsa Família.

Inequality is a challenge all countries face. But in Brazil it is especially acute, says Alexandre Chiavegatto, a professor at São Paulo university: “The poorest Brazilians are among the poorest people in the world. The richest Brazilians are almost as rich as the richest Americans.”

Poverty is pronounced along racial lines. According to government data, three of every four Bolsa Família beneficiary families are black. South Africa has even greater inequality and is divided by debates over policy, especially black economic empowerment.

TheBraziliangovernmenthasconcerns at the strategic level, too. Writing in the LondonReviewofBooksin2011,professor Perry Anderson picked apart the supposed inevitability of Brazil’s economic emergence in the 2000s. He points to the demand for raw materials from China, in particular soy and iron ore, and the cheap creditgeneratedbytheUSFederalReserve in an effort to stop a financial bubble bursting. Both of these external forces turbo-charged Brazil’s growth.

But – and here South Africa may again feel a pang of recognition – Chinese resource demand also came with a torrent of cheap goods that damaged sections of Brazil’s manufacturing sector. While the going was easy, the impetus to reform manufacturing by, for example, reforming the skills base, was not there. Now that China’s economy is cooling rapidly, global commodity demand is abating and the era of cheap money over, Brazil is developing an almighty headache. Can Africa learn from Brazil’s failures, as well as its triumphs? ● Tolu Ogunlesi reported from Brazil as a fellow with the International Reporting Project

No amount of clucking will keep Brazilian chickens off African shelves

ORLANDO KISSNER/AfP

24

From (cold) poultry war to land grabs Brazilian companies and African actors do not always see the arrival of new investors in the same light

“

B

razil has fooled us!,” Mozambican writer Mia Couto exclaimed during one of his recent trips to the country.

Couto recalls that when black footballers became prominent in Brazil – such as Pelé in the 1960s – many Africans saw this as a dream come true. But a good part of this was an illusion, Couto argued. “We saw a Brazil that did not exist, and this is still true today,” he told reporters.

Many African governments say they want to share Brazil’s development experiences, but the arrival of Brazilian investors has not led to the equal sharing of benefits. Brazilian business practices in Africa have revealed the Latin American giant to be every bit as tough as other developing-world competitors, blending technical assistance with an interest in contracts for infrastructure, agriculture and mining. training at a price

The ProSAVANA project in Mozambique is a case in point. Brazil’s tropical agriculture institute Embraba is helping to train agronomists, but the tripartite deal that involves the Japanese government also carves out stretches of northern Mozambique for Brazilian

agribusiness. Local groups have sounded the alarm, claiming people have been pushed off their land.

The South African government has complained that Brazil’s cheap frozen chickens are hurting local producers. It unsuccessfully took a dumping case to the World Trade Organisation in 2011 and 2012. Last year Pretoria decided to raise import tariffs to 82%. “We are not creating problems for local production. We have been talking to consumer groups, and some are imploring us to sell chicken there,” says Francisco Turra, president of the poultry exporters’ association in São Paulo. “There have already been talks to form a joint venture with a South African company. We would rather talk about cooperation than war,” says Turra.

It has not always been easy for mining companies either. In Guinea, Brazil’s Vale partnered with Beny Steinmetz’s BSG Resources to develop two blocks of the Simandou iron-ore mine. President Alpha Condé’s government cancelled their rights in April after an investigation cast doubts on the way Steinmetz’s company obtained the licences. ● Thierry Ogier in São Paulo

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Brazil/africa Trans-aTl anTic Ties

opinion

Ondjaki Author

MAlbA/FundAción costAntini

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F

Brazil: has the giant learnt to fly?

or those who grew up in the 1980s in Angola, it is impossible not toassociateBrazil with the world of telenovelas. The television showed telenovelasatnight,andthiswasamomentof fictionimportantinthelifeofalmosteveryone.

Itwasevensaidthatmuggingsdidnothappenatthistime of night: even the thieves were interested in the development of the drama. The characters of telenovelas left the world of fiction to give names to places and people: Roque Santeiro, a character, was eternalised as an openair market where you could find all kinds ofgoods. Itwas razed a few years ago, but going to Roque Santeiro at the end of the 1980s was the equivalent of visiting Gabriel Garcia Márquez’s fictional town of Macondo.

Maybe around the age of 13 or 14 years old, I entered another Brazil: Um Certo Capitão Rodrigo by Érico Veríssimo and soon thereafter books by Graciliano Ramos. From then on it was impossible to stop reading Brazil. These readings were part of a kind of personal plan of reading all of Latin America. When I was reading works by Jorge Amado, García Márquez, Jorge Luis Borges, Julio Cortázar, Mario Vargas Llosa, I smiled and admitted that I had put myself in a labyrinth that was nearly infinite. a smile on the street

Many years later I would come to know Brazil with my own eyes. It was 2001 and my first contact was with Salvador da Bahia. Welcomed by Bito, an Angolan living there, I was warned: “Here you will meet people so like those from Luanda that you’ll want to greet them.”

Sometimes that would happen, and it was good to smile thinking that it was a neighbour, a friend from Luanda. Salvador had that human component and that rhythm that, yes, was like that of Luanda.

I returned to Brazil in 2005 to spend 40 days filming in the south – other people, other customs, other beverages and rhythms. And from 2006, I visited Brazil regularly until I moved to Rio. In that way, little by little, I started to see a ‘true Brazil’. Whether wanting to or not, I compared what I saw and what I lived with the things I had seen on telenovelas and in books. Brazil is such an enormous country that it has to be called a continent. This is not just about its

Brazil/africa trans-atl antic ties

geographical size but its historical and human complexity and the sociological variants that present themselves to confuse all concepts and assumptions.

Its diversity is very visible and very noisy. Whether everyone – journalists, politicians, social actors, etc. – can see it or wants to see it is another matter. I saw all this diversity – in fauna and flora, in contributions to historic heritage, in the social gap and the presumed proximity of the classes – because all of that is the Brazilian continent manifesting itself. we must hold the discussion

After living in Brazil, I find interesting the attempts by various groups to discuss important questions like the cultural contribution of Africans, the role of racism, the lack of opportunity for blacks and the pertinence of affirmative action. I confess, I am a little more pessimistic when I see the practical effects of these debates. I think it is very important that we discuss this. I don’t know if in my country we discuss half of what they propose to discuss here, but I think that Brazil is prepared to get better results from that discussion.

The impacts of race and the colour of one’s skin are lived everyday in Brazilian society even if you can find someone who says Brazil does not have problems with racism. That seems to me a moment of bad fiction.

There are few places in the world where racism does not exist, and Brazil and Angola are not those places.

It is unjust to generalise, but it is possible to say that there is ignorance in Brazil about African countries.

Perhaps with Angola, Brazil has recently created or discovered new political, commercial and even cultural relations. There has been more movement between our countries of late. Brazilian curiosity has increased, and this is seen in the televisionprogrammes that strive to incorporateAngolansubjects and guests.

| frontline

As the world of Brazilian television has never stopped enthralling Angola, the number of public figures – businessmen, actors and singers – that visitAngola is considerable. But there is also a huge influx of workers – more or less qualified –, and even prostitutes – more or less qualified. Equally, Angolans from all social classes go to Brazil to shop, for business or simply to visit.

I do not want to enter into political questions. I am not the right person to speak of the type of exchanges that have gone on between Brazilians and Angolans since the 1990s – the kind of money or influence that is trafficked between the two, how deals are made and withrecoursetowhom,orwhobuyswhatineachother’s country. But I think that all this ‘social movement’ – let’s call it that – is positive: after visiting Angola, a Brazilian’s opinion changes. She’s seen people, tried food, danced and laughed. He’s seen the frenetic rhythm of Luanda, seen some provinces, smelled the ocean and witnessed

In the end, it was more complicated to be black in Brazil than in Angola thepersistenceofdust.She’sseenmodernbuildingsand musseques (informal neighbourhoods). He’s witnessed a city full of money and a periphery looking for it. She’s seen and spoken to people and therefore understood who orders what – or whom – around.

The same happens with the Angolan who visits Brazil. It’s one thing to be on holiday and visit the malls, good restaurants and good beaches. It is quite another to arrive at the end of the 1980s as a refugee of war. In the end, there was no Roque Santeiro walking around the streets, not everything was so beautiful, not everyone so kind. In the end, it was more complicated to be black in Brazil than in Angola. It is one thing to visit a beach in Rio de Janeiro; it is another to visit a favela in São Paulo or Porto Alegre. One thing is sun and beer; the other is brutal rain and houses and neighbourhoods falling apart. But that, we all know, could be in Rio, Luanda, Caracas, Medellín, Johannesburg or Lagos. When we visit places, sometimes, we change our mind – happily.

I still see Brazil as a giant. Even with the immensity of things that I don’t know about this country and this culture, I see a giant, mostly cultural, that is slowly waking up. It can reinvent itself, rediscover itself not just through petroleum, through football, through music, but even more through social movements, through public discussion of the most delicate subjects.

There is no way of not thinking of the Brazil of football this year. But football, after a month, will be over. The tourists will leave. Brazil, the giant, will follow its destiny.

We must also think about the people that have been and will be outside the stadiums discussing other things in this “year of futebol.” As a child said to me: “a country is made from all of its people, even the smallest ones.” ● Translation Marissa J. Moorman

Ondjaki’s most recent book, Granma Nineteen and the Soviet’s Secret, was published in March (Biblioasis).

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Mozambique is seen as a land of growing prospects for long term investors. The investment opportunities have developed out of strong GDP growth over the past 10 years, the recent significant natural gas discoveries in Rovuma the large coal reserves in Tete basin and the need for new power generation resources.

W

ith a relatively diversified economy, Mozambique presents investment opportunities across various sectors from resources to energy which requires substantial infrastructure development to support the LNG and power generation related projects. It is estimated that Mozambique will need to invest US$5-billion in the next five years alone to upgrade its infrastructure in order to realize the economic growth potential of its coal and gas reserves.

and private partnerships for the production, transport and delivering of electricity, following a succesffuly implemented South African model.

The exploitation of these new reserves is set to position Mozambique as a developed economy and given its projected growth trajectory, Standard Bank Mozambique, which has a 120 year history in the country, is well positioned to assist with the requirements of global investors courting the potential opportunities.

Standard Bank Mozambique has identified the oil and gas, energy and infrastructure sectors as central to growth in the country, and believes that providing a variety of funding mechanisms and banking services to these high-growth sectors is essential to realising Mozambique’s growth potential.

As Mozambique witnesses the establishments of projects that require huge consumption of electricity, the country needs to invest in alternative sources for generation of power for the efficient and qualitative distribution of energy.

Standard Bank Mozambique has seen a move towards public

The growth in the production of power, natural resources such as oil, gas, coal and other mineral resources is one of the most prominent trends that will continue to drive Africa’s economic and commercial regeneration in general, and Mozambique in particular.

Standard Bank Mozambique, backed up by the 19-country footprint of Standard Bank Group in Africa with its specialized expertise in key development sectors, provides a gateway for investors wishing to enter Mozambique and plays a key role in building investor confidence in Mozambique’s economic future. ■

André du Plessis André de Plessis is the Head of Corporate and Investment Banking, Standard Bank Mozambique. André joined Standard Bank Mozambique recently from Standard Bank’s head office in South Africa. He has worked for the Group in various senior roles for 16 years.

Meet André du Plessis in Maputo for deep understanding on how Standard Bank can move you forward into these opportunities.

www.standardbank.co.mz

At Standard Bank he led the Rest of Africa unit as the Chief Operating Officer (COO) of the Corporate and Investment Bank and was also responsible for operations for other business units in retail banking. He has a passion for the Bank’s strategy to be the number one Corporate and Investment Bank, in, for and across Africa and transferred to Mozambique to contribute to Standard Bank’s growth in this very exciting market.

André is a Chartered Accountant(CA), and an alumni of Deloitte and Touche. He has also worked in the Power and Electricity industry for ABB, and in the Telecoms industry for Plessey in Malaysia prior to joining Standard Bank.

Get in touch with Standard Bank and André’s team: Praça 25 de Junho, 1 - Maputo – Moçambique +258 21 35 25 25 - Andre.duplessis4@standardbank.co.mz

DIFCOM/FC - Photos : DR

ADVERTORIAL

Standard Bank Mozambique: The investor’s gateway to a land of opportunities

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business

ugandan banking

East versus Uganda is the battleground for foreign banks seeking to profit from oil investment and regional trade. But while Kenya’s banks have made huge gains those from Nigeria are facing difficulties. Kenyan successes have galvanised local banks to look to expansion

By Jeff Mbanga in Kampala

T

his was not the plan.

When West African banks charged into Uganda’s financial services industry from 2007 onwards, most expected that profitability was just around the corner. Ugandan banks themselves were looking to a profitable new dawn. Today, both the West African banks and domestic banks see Kenyan banks cleaning up and

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would use its financial strength to take over a local bank. It instead chose the greenfield route, setting up from scratch.

Global Trust Bank, which is part owned by Nigeria’s Industrial and General Insurance, had also just come into the market and snapped up a lesser-known credit institution called Commercial Microfinance Limited for an undisclosed fee. Togo’s Ecobank launched its services in Uganda in early 2009, promising a large interlinked service network across its 34 African operations. Bigger banks likeStandardBank-ownedStanbic, Uganda’sfinancialbellwether,worried about the new competition.

Banks have increased their lending but losses from non-performing loans are high

West have been left rueing what might have been.

Back in 2007, Uganda had just discovered commercial hydrocarbon deposits, supposedly laying the stage for huge investment, with the government promising that oil production would begin in 2011.

That was not all. East Africa was gradually turning into one economic bloc as traders and goods crossed borders with greater speed

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increase in write-offs for bad debt at the Uganda branch of Equity Bank

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big feet, small profits

and ease. A single market of more than 120 million people was slowly being created, spurred by the signing of trade pacts like the customs union and the common market protocol. For several foreign banks, flush with cash from recent stock market listings, this was too attractive an opportunity to ignore.

When Nigeria’s United Bank for Africa started operating in Uganda in 2008, analysts predicted that it

West African banks have now widened their footprints across Uganda, but hardly any of them have shown that they can turn that presence into profit. Banks released their annual financial statements in April for the year ending 2013. They show that Global Trust Bank, Ecobank and United Bank for Africa yet again recorded losses, further stretching the time they will need to make it to sustained profitability (see table).

The June 2013 supervision report from Uganda’s central bank explains why some of these new banks continue to struggle and sounds a word of caution about non-performing loans (NPLs).

“The performance of new banks licensed since 2007 continues to be mixed. Many of the small and new banks, in a bid to increase market share, have increased their lending, but loan quality among these banks remains a concern,” the report noted. It adds: “Overall, most of the new banks are still loss-making, and their NPL ratios have increased as they strive to attain market share.”

The number of NPLs across the sector has been rising. Local bank Centenary reported that its write-offs for bad debt rose by 66% to USh7.8bn in 2013. Write-offs for the Uganda branch of Kenya’s Equity Bank increased by 163% to USh2.9bn last year.

The lack of profitability in the banking sector is creating ● ● ●

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business | companies & markets

West African banks make heavy weather of Uganda While assets are growing strong...

Asset growth (2013)

% change from 2012

Bank

Assets

global trust Bank

USh96.5bn ($38.6m)

40.6%

ecobank

USh238bn ($95.2m)

45%

United Bank for Africa

USh224.4bn ($89.6m)

71%

…profits are still hard to come by gloBAl net loss (2013)

% change from 2012

Bank

Loss

global trust Bank

USh11bn ($4.4m)

17%

ecobank

USh17.2bn ($6.8m)

40%

United Bank for Africa

USh4.6bn ($1.8m)

-26%

● ● ● knock-on effects. Uganda Revenue Authority (URA) reports that it is recording substantial shortfalls in predicted revenue collection due to poor performance in the banking sector. In May, it reported a USh51bn deficit in what it expected to receive from banks in the 2013/2014 fiscal year.

Other West African banks that have been in Uganda for more than a decade have also been recording losses. Orient Bank Uganda, which is owned by Nigeria’s Keystone Bank, and Bank of Africa Uganda – from Mali – made profits in 2012 but recorded net losses for 2013.

But where the West Africans failed, the top players from neighbouring Kenya – Equity Bank and Kenya Commercial Bank (KCB) – have thrived. While Global Trust Bank and KCB launched their services in Uganda at around the same time, their fortunes have varied greatly.

KCB maKes a Killing

KCB’s profit for the year 2013 went up to USh6.7bn ($2.6m) from USh1.1bn in 2012, an increase of close to 510%. Albert Odongo, the chief executive of KCB Uganda,

SoUrce: company filingS

58

the going has been tough for the West african trio of global trust Bank, ecobank and United Bank for africa. the annual net loss at global trust Bank shot up to Ush11bn ($4.4m) in 2013 from Ush9.4bn in 2012. although global trust Bank managed to widen its asset base by 40.6% to Ush96.5bn in 2013, the bank was partly hurt by a decline in interest on loans and advances, which went down by 22% to Ush11.3bn. ecobank made improvements in some of its numbers, with total income rising by 27% to Ush33bn in 2013, driven by an increase in loans and advances, coupled with revenue from investments in government securities and forex trading. the size of its balance sheet also grew by 45% to Ush238bn in 2013 from Ush164bn in 2012. however, those figures were not strong enough to save ecobank from making a net loss, which ballooned to Ush17.2bn in 2013 from Ush12.2bn in 2012, an increase of 40%. the bank’s provision for bad loans more than doubled to Ush15.5bn in 2013 from Ush7.4bn in 2012, pointing to loopholes within its risk management structures.

United Bank for africa fared somewhat better, recording a loss of Ush4.6bn in 2013, down from Ush5.8bn in 2012, a 26% drop. its total assets shot up to Ush224.4bn in 2013 from Ush131.5bn in 2012, a 71% increase. the bank was constrained by an increase in expenditure, which was driven by a more than 100% increase in the provisions for bad loans. ●

says the bank’s “robust performance” was due to its loan portfolio, improved interest income and increased earnings from its foreign exchange business. “The performance was further bolstered by significant forex income due to increasing currency trade volume among Uganda, Kenya and South Sudan,” Odongo explains.

Other Kenyan banks are performing well. The total assets of Kenya’sEquityBankshotup21%to USh370bn in the year ending 2013.

Even Kenya’s ABC Capital, which merged with the Capital Finance Company in late 2008, managed to record a net profit of USh892m in 2013, although this was lower than last year’s figure of USh1.1bn.

Otherforeign-ownedbankshave not fared this well. Stanbic Bank and Standard Chartered Bank, the two biggest banks in Uganda, recorded drops in their profits for 2013 of more than 20%. Both institutions blamed the tough times on donor cuts that weakened the economy, coupled with high interest rates that dampened borrowers’ appetites to take on more credit.

The central bank, the Bank of Uganda (BOU), has been calling for banks to lower the rates of in-

terest on loans and to extend more financetotheprivatesector.ABOU report in May said that credit to the private sector had risen by 8% betweenJuneandDecember2013.

510%

the Kenyan advantage

increase in profits for Kenya Commercial Bank in 2013 compared to 2012

20%

drop in profits for Stanbic Bank and Standard Chartered’s Ugandan operations

The finance ministry says it will work on reforms to reduce the cost of lending. This year does not look much better for the performance of Uganda’s commercial banks.

There have been warnings that the war in South Sudan, Uganda’s main export market, will hurt the local economy.

So how did the Kenyan banks manage to succeed where others fellflat?ForKCBUganda’sOdongo, the less successful banks relied on interest income to make their money: “We don’t rely entirely on interest income like most other banks. If you look at other banks, close to 80% of their revenue is from interest income, with the rest coming from commission fees.”

The regional network of KCB gives it the upper hand in winning foreign exchange and trade finance business in Uganda. But there is also the issue of overheads discipline. “We kept our costs flat,” explains Odongo. “There are ● ● ●

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maybe just two other banks that did that. The costs in most other banks went up by 10-20%.”

At least two local commercial banks – Crane and Centenary – continue to give the larger international banks a run for their money.

After Stanbic, Standard Chartered Bank and Barclays, these two have the largest asset bases.

A.R. Kalan, the managing director of Crane Bank, says it plans to keep competitive when it comes to pricing. “We intend to have some of the best-priced products in the ●●●

marketandlowercharges.Wehave proved that we can do this with some of the best products, like 5% interest on the savings account, which I believe is the best in the market,” he says. crane’s expansion

Kalan adds that Crane is seeking to “cut down on the bureaucracy” when dealing with customers and will open up more branches to add to its network of 41 locations.

Crane is the largest local bank, with assets of USh1.4trn. It spent

Created from the purchase of Uganda Microfinance Limited, Equity Bank Uganda has thrived

around$40monexpansionineach of the past two years. As a result, Crane Bank saw its profit slump for thefirsttimeinrecenthistory,dropping to USh47.2bn in 2013 from USh80.3bn in 2012, a 41% drop.

The Catholic Church-owned Centenary Bank is almost as big as Crane in terms of assets. It had a much better year than Crane and recorded profits of USh58bn in 2013, up from USh54.9bn, an increase of 5.6%.

Uganda’s banks are also emulating the regional shift to keep up with the Nairobi crowd. Crane Bankissettoopenupoperationsin neighbouring Rwanda. “Rwanda is almost ready. We are only awaiting approval from the central bank of Rwanda,” Kalan says.

Centenary Bank managing director Fabian Kasi says the bank has “a belief in the power of partnerships” in order to make banking affordable for its customers. In 2012, Centenary Bank signed a memorandum of understanding with Ivory Bank of South Sudan, where the two institutions will share banking services and support clients moving across the borders between Uganda and South Sudan. It might be just the beginning, but Ugandan banks appear to have been galvanised by the performance of financial institutions from Kenya. ●

Insurance fIrms restructure and competItIon IntensIfIes With a national insurance coverage rate of about 2%, insurance companies in uganda are restructuring their businesses and trying to take advantage of economic growth and the demand for services. there is another reason for the changes, too. the insurance act of 2011 took effect in December 2013, meaning that companies had to split their life and non-life offerings into separate companies. the rationale for the law is that the life

sector is different in nature from short-term products and thus should be treated differently. Kenya, rwanda and tanzania are all implementing similar reforms. a 2014 survey commissioned by the uganda insurance association calls for companies to come up with ways to counter the spread of health management organisations (hMos), which are taking a sizeable share of the life business. hMos insure patients but also deliver healthcare.

“the main threat to medical insurance companies is hMos. it would be important to understand why the shift to hMos is occurring and what can be done to increase medical insurance company’s market share,” the survey notes.

Kampala’s nakasero hospital terminated its services with insurer sanlam in order to offer its own products. the hospital formed the nakasero health care hMo and received a licence to offer insurance in March.

small insurance companies might not be able to compete against hMos. With stringent regulatory rules such as the increase in the minimum paid-up capital, they might be targets for takeover or merger. in november 2013, sanlam emerging Markets, parent company of south africa’s sanlam, completed the purchase of 49% of Malawi’s nico holdings, which has a presence in uganda. sanlam took over 50.3% of nico’s uganda unit, making it the majority shareholder. ● J.M.

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AFRICAN UNION

UNION AFRICAINE UNIÃO AFRICANA

AFRICAN UNION TENDERS SECTION The African Union, established as a unique Pan African continental body, is charged with spearheading Africa’s rapid integration and sustainable development by promoting unity, solidarity, cohesion and cooperation among the peoples of Africa and African States as well as developing a New Partnership worldwide. Its Headquarters is located in Addis Ababa, capital city of Ethiopia.

In order to promote the African Union Agenda of Integration and Economic Sustainability, The African Union Commission (AUC), Procurement Division is hereby calling all African Suppliers, Consultants and other service providers to visit the African Union Tenders Section quite often on its website through the link: http://www.au.int/en/bids for possible procurement opportunities. Better still please find time to fill in our supplier registration form available on the website. Any queries can be addressed to the address below.

Head of Procurement, Travel and Stores Division, Email: tender@africa-union.org, Addis Ababa, ETHIOPIA. P.O. Box 3243 Tel: (251) 5517700 – Fax: (251-11) 5510442

theafricareport.com/the-africa-report-digital-edition.html

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dossier power

egypt

Energy and elections

Quick-fix solutions after the fall of President Morsi did not stem the long-standing power crisis. Now the new government has to move swiftly to increase electricity supplies and develop renewables and natural gas

By Amira Salah-Ahmed in Cairo

T

he persistent electricity deficit and government fuel subsidies were high on the public agenda when Egypt held presidential elections on 26-27 May. In April, electricity minister Mohamed Shaker said that the transitional government would not be able to prevent the widescale summer blackouts that contributed to the popular protests against the former governmentofPresidentMohamedMorsi last year. Political instability since the downfall of President Hosni Mubarak in 2011 has meant that there has been little investment in national production capacity.

In mid-2013, power crises crystallised public anger towards President Morsi. Winding queues outside gas stations brought Cairo to a standstill for a week before the 30 June protests called for by the Tamarod (‘Rebel’) movement.

For a time after Morsi’s fall, and with the army-backed interim government installed, the energy crisis seemed to fade inexplicably. Some argued that this was proof of the army’s plan to undermine the Muslim Brotherhood-led government. But others argued that the patchwork solutions implemented to quell citizens’ ire were by no means sustainable, and they are being proved right.

Egyptians had to adapt to daily power cuts as early as March, well before the summer surge in air conditioning

Photo12/AlAmy

spring blackouts

Just a few months later, the power cuts were more frequent and widespread. In an unprecedented twist, blackouts began occurring in February 2014, well away from the peak consumption period during the summer months.

Egypt’s energy woes are exacerbated by a shortage of natural

$4.8 bn Arrears the Cairo government owed to international hydrocarbons companies in March

50% Drop in capacity at Suez Cement due to dwindling supply of natural gas

gas supplies, despite the country’s great production potential.

In response to the electricity deficit, the government approved a quick-fix solution in April to allow coal imports for use in the energyintensive cement industry.

Tourism operators and environmental experts predict disastrous implications, which could ripple through the economy. Mahmoud el Kaissouni, an environmental adviser to the ministries of tourism and environment, says: “It’s obvious that the government is facing a dire economic crisis, but this is no excuse to commit suicide.” subsidy reform

The crisis also underscores the long-standing flaws in Egypt’s inefficient subsidy system. Successive governments have refused to reform subsidies, which make up a quarter of the national budget.

“Whatever regime is in charge has to immediately work to solve the problem. It has to be on top of the agenda as it affects the economy, industry, services and average citizens,” says Alaa Ezz, secretary general of the Federation of Egyptian Chambers of Commerce and adviser to the Federation of Egyptian Industries.

Small improvements may be on their way. Well before the winner of the presidential election was announced, the interim government took the decision to approve coal imports and weeks later said it would progressively increase the price of natural gas for households.

The government made a similar move with electricity prices two years ago.

“Some of the harder decisions are already being taken so [the incoming president] will not be

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dossier

recently with at least $12bn flowing in from Gulf states that have offered financial support after Morsi’s ousting, namely Saudi Arabia and the United Arab Emirates. Egypt has used some of this money to pay arrears to oil companies, which are slowly starting to look into investing more in the local market.

Egypt’s poorest depend on butane gas to cook, making this subsidy a political necessity

renewable energy

KHALED ELFIQI/EPA/MAXPPP

Fuel subsidies in figures

totally blamed,” says Angus Blair, founder of The Signet Institute, a Cairo-based consultancy. “Egypt does not have any choices except to try to cut subsidies as quickly as possible, and raising natural gas prices is a necessary step,” he says. Natural gas represents 8.1% of Egypt’s fuel subsidies.

“It’s adjusting energy prices, not raising them, and it needed to be done years ago. Natural gas is not even worth the bill it’s printed on, it’sbeentremendouslysubsidised,” says Ezz. The new pricing scheme is expected to bring in E£800m ($113m) more in state revenue, whichwillfinancetheexpansionof the natural gas grid to households, petroleum ministry officials say. butane for the poor

“One of the biggest subsidies we have is butane gas, which is mostly usedbythepoorest,” Ezzadds,making it practically untouchable in terms of politics. “The government tries to play between the social dimensionandthebudgetdeficit,” he explains.Homesinwealthierneighbourhoods tend to be connected to the national gas grid, whereas those in poorer districts are not.

For Blair, it is not just about finding a way to trim the subsidy bill.

“You have to simultaneously try to grow the economy. This isn’t an austerity programme. You can increase spending elsewhere to try to boost growth.”

Egypt’s finance minister has cut growth forecasts for this fiscal year ending in June to 2-2.5%, from 3-3.5%. The budget deficit stands at 12% of gross domestic product and is expected to be 14% in the coming fiscal year. “It’s the first government since the 2011 uprising that has been serious about doinganythingtotacklethebudget deficit,” says Blair.

Natural gas has been in short supply. Foreign companies have been reluctant to spend money on the exploration of discoveries they had already made or to expand their investment while the government was unable to pay its debts to them. This problem became even more acute when the government began directing companies to sell more natural gas on the local market rather than export it.

There has been a slight improvement in the government’s finances

Egypt’s fuel subsidy bill for 2013/14 totalled E£99.6bn ($14bn), about a quarter of the annual budget and more than cumulative spending on health and education.

Subsidies break down into: Diesel:

39.8% Butane gas:

23.1% Gasoline:

19.3% Gas oil:

9.7% Natural gas:

8.1%

Ezz says that investors have seen a decline in risk over the past several months. “Oil companies see that stability is coming. The security risk is still there, but the political risk has declined,” he adds, especially with the election of a new national president.

Subsidyreform,pricingschemes and foreign investment are one side of the problem. In parallel, experts argue that tremendous efforts need to be taken toward developing renewable energy sources and building a culture of conservation. With about 30% of energy wasted – from production to transmission and utilisation – the lowest-cost course of action is to encourage people to conserve by making them feel the sting of more accurate energy prices, especially higher-income brackets that benefit the most from subsidies, says Ezz. There is also more talk now about renewable options, especially solar energy. Ezz says the Federation of Egyptian Chambers of Commerce has communicated with the prime minister’s office to support the enactment of a longdormant law on renewable energy.

A feed-in tariff law for solar energy projects is a high priority. Such a policy would incentivise companies to invest in renewables by having the government buy power from them at preferential rates.

“You can import solar panels from China at shockingly cheap prices,” El Kaissouni says, “and it’s essential to capitalise on the fact that 94% of Egypt is desert.”

But like many factors weighing on the economy, a solution is contingent on political stability. “My hope is that the new government can take decisions like this,” says El Kaissouni. ●

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dossier | power

interview

Thomas Konditi

Chief financial officer, general electric (ge) africa

We can turn people into world-class providers

all rights reserved

76

the Ge facility being built in Calabar exemplifies the company’s approach to developing suppliers in Africa

G

eneralElectric(GE)moved its Africa chief executive Jay Ireland to the company’s Nairobi office in March 2011, and the United States-based manufacturer has since increased its focus on bringing African firms into its supply chains. In the energy sector, GE is working with Aeolus Kenya to build a 61MW wind farm at Kinangop and plans to triple gas-fired turbine sales to emerging markets by 2017.

TAR: How are you approaching manufacturing locally in Africa?

THomAs KondiTi: We have five countries where we have announced or are about to announce some level of manufacturing supply chain or assembly facility. In Nigeria we have a facility we are creating in Calabar which we are going to use as a supplier development platform. So we will do assembly and manufacturing in that facility, but the majority of the work will actually be done by Nigerian suppliers.

So the difference is I don’t just go and hire a thousand people for a factory. I actually go and create wealth by developing a supplier who has 10 people and is doing casting, but who we are going to turn into a machining company doing world-class machining. He will then sell to GE, but he also sells to five or six other global companies. So you are bringing the manufacturing base into the global supply chain, not just creating jobs.

How does that sit with the local-content provisions that are commonplace across various industrial sectors?

Don’t tell me how many people to hire, tell me what you want. You want a $200m high-tech supply base? Give me that target and I will go figure it out. Our chairman Jeff Immelt came through about a month and a half ago. We did Kenya, Ethiopia, Mozambique and Nigeria. He says: ‘The new corporate social responsibility is developing SMEs [small and medium-sized enterprises]. Don’t ask me to fund medicine for cholera. I do $90bn of supply chain a

“We’re not just creating jobs, we’re bringing companies into the global supply chain” year, that’s what I’m good at.’ We can take a guy who has a certain level of production, quality and training, and get him to where he becomes a world-class provider.

How far has the Calabar facility progressed to date?

We have purchased the land, we have started clearing it. The facility itself will be up in 2016, and it will be supplying the oil and gas and power sectors. We have just hired the first batch of Nigerians to start training to build the equipment that’s going to be there in two years. With the suppliers, we have done multiple supplier fairs

aroundtheworld–Holland,China, Nigeria, Chicago, Angola. We got international suppliers like Parker Hannifin, a US supplier, and said: ‘You come. We are going to offer you off-take from our Calabar facility. And the trick is, you are going to produce that using a local supplier. Here are your Nigerian partners. You are going to teach them, and I’m going to support the funding of that process and guarantee the offtake.’

When all is said and done, Parker Hannifin has volume, the Nigerian supplier is now a Parker Hannifin-qualified supplier and its manufacturing is based in Nigeria.

What about outside of nigeria?

We are going to be building a $250m facility to do this in the north of Angola, and we are also looking at Ethiopia. We are putting in a distribution facility with Ethiopian Airlines so you can get any one of our high-value parts in 48 hours or less, which will blow away the model for Africa because everything now is four to eight weeks away.

We are also putting in a lightassembly facility, and we are going inaheadofanylocalisationrequirements and saying we will assemble andputinanylocal-contentneeds for the stuff that makes sense for Ethiopia, be that final configuration on power equipment or doing a decent size of assembly on healthcare equipment. ● interview by Nicholas Norbrook

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dossier | power

Renewables

Investors excited about South Africa

The sector is attracting investors from Silicon Valley to Beijing, especially for new solar and wind projects that will reduce dependency on coal

A

imed at reducing unemployment and South Africa’s reliance on coalfired power stations, the department of energy’s Renewable Energy Independent Power Producer Programme (REIPP) has succeeded in attracting investment of an estimated R150bn ($14.3bn) in its first three phases. Previous attempts to attract renewable energy investors in 2009 had failed due to uncompetitive tariffs and a hostile regulatory environment.

The REIPP was launched in 2011, bringing a competitive bidding process for tariffs and 20-year contracts with government.

Despite teething problems, especially around the close of deals, the process has been “remarkably successful”, says Johan van den Berg, chief executive of the South African Wind Energy Association.

“There is a lot of interest in doing business here, helped by the fact that Europe continues to struggle economically,” he explains.

The government has approved 64 projects with a combined capacity of nearly 3,900MW. The country’s first major solar plant, a 75MW project near Petrusville, Northern

Cape, delivered its first electricity to the grid in November 2013. The Kalkbult project is owned by Norway’s Scatec Solar and local partners, and was commissioned in 10 months.

Interest has been growing. In the third bidding round, which concluded in November, the government received 93 bids for a total of 6,023MW, while only 1,473MW was on offerfordevelopment.The government is now counting on an additional 3,200MW by 2020 on top of the 3,725MW it was initially planning to buy.

The next bidding round, for 1,000MW, will close on 14 August. The last round under the current programme is expected inAugust2015.Bidshavebecome increasingly competitive, with average tariffs for wind energy, for example, declining by 35% from 2011’s first round.

While the renewable energy programme has interested foreign investors, local partners are required. Projects also have to comply with local content re-

quirements and demonstrate socioeconomic benefits and jobcreating potential, which count 30% towards a final bid score.

Local companies building projects include Exxaro Resources, which formed the Cennergi joint venture with Tata Power, and Shanduka Group, whichhaspartneredwith China’s Tsinghua Solar and Spain’s Gestamp Wind. South African financial institutions, including Standard Bank, Nedbank, Investec and the Industrial Development Corporation, have provided billions of rand in debt funding.

R150 bn

google invests

Investment in renewables planned under the REIPP

The solar industry offers new jobs and training for rural south africans

Per-Anders Pettersson/Corbis

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Many of the major international players are also active in South Africa, including Suzlon Energy, BrightSource Energy and China Longyuan Power Group. Technology firm Google has invested $12m in the Jasper solar project, with a capacity of 96MW. Most of the projects are being built in remote regions, raising concerns about the efficiency of transmission. Van den Berg says the current projects are all located near existing substations. “There haven’t been any deep connection issues that would have a drastic impact on transmission costs,” he explains.

As most of Eskom’s power is generated by coal-fired stations in Mpumalanga in the north-east of the country, the utility already experiences transmission losses of around 15%, Van den Berg says. As many renewable energy projects are being built in the south, this will help to lower those losses.

Energy minister Ben Martins says that work is under way to upgrade grid infrastructure and to include storage capacity in the procurement process. ● Jana Marais in Johannesburg

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power | dossier

UNiTed STaTeS

The Kariba North bank extension will produce an additional 300mW

Zambia

Power exports on the rise Zambia’s new projects should produce enough electricity for mining expansion and enlarged sales in the region

Z

ambia is set to become an important regional energy supplier. A series of new power plants to come on line this year will make the country’s electricity production surge. Zambia currently produces a little more than 2,200MW, but this is set to increase by more than 600MW by the end of the year as the Kariba North Bank extension and Maamba power plant begin production. They will be further boosted by output from the 120MW Itezhi-Tezhi hydropower generating station, which is slated to start production in 2015.

Zambia’s copper mines are hungry for power, and the extra capacity needed for new mining projectscannotarrivesoonenough for the mining firms. In April, Zambia’s energy regulator hiked electricitytariffsforminingcompaniesby

28.8% hike in electricity tariffs for mining companies from April

28.8%.Theminesministrypredicts that annual copper production will rise from 760,000tn in 2013 to 1m tonnes in 2015.

A member of the Southern African Power Pool, which has facilitated electricity sales, Zambia already provides up to 100MW of emergency electricity to neighbouring Botswana. Zambia is set to ramp up energy exports across the region from 2015.

The parastatal is also seeking to push ahead with the 750MW Kafue Gorge Lower power station project. Its proposed completion deadline has slipped from 2018 to 2021 due to difficulties in securing financing. It is expected to cost $2bn. The government called for pre-qualification bids for contractors in June 2013 and has not announced the winners. ● Charlie Hamilton

Bring

www.econetrenewable.com

Mackson WasaMunu/reuters

Obama electrifies the house The Republican-dominated House of Representatives overwhelmingly approved President Barack Obama’s Electrify Africa Act during a vote on 8 May. The Democratcontrolled Senate must still pass the plan, which would help bring electrical power to 50 million Africans, but the House vote was a key political hurdle. The act aims to finance projects that will deliver 20,000MW of electricity output in Africa by 2020 through a series of funding schemes, with organisations such as the Overseas Private Investment Corporation set to offer credit guarantees.

moroCCo

Clean windfall The first 44 of 131 wind turbines at one of Africa’s largest wind farms in Tarfaya, southwest Morocco, went on line in April.

It was a step in the plan for the country to generate 42% of its electricity needs from renewable sources by 2020.

A total of 88 turbines have so far been erected at the 10,000ha site along the southern Atlantic coastline. Work on the €500m ($685m) Tarfaya project began in early 2013, and the remaining turbines are due to become operational in October, producing up to 300MW at full capacity. Moroccan company Nareva Holding and France’s GDF Suez are constructing the wind farm.

Home the Power of the Sun

79

day in the life Extraordinary storiEs of ordinary pEoplE

MAKING SOME DOUGH

Thomas campean for Tar

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James Akpojegaye, aka Easy James, saved money in a tin box when he first arrived in Kenya; now his talent at baking chapati has brought him success

I

n my family I’m the eldest of two boys and four girls.

My father died when I was nine, and that’s where my entrepreneurial skills kicked in, becoming the family’s father figure. At school I sold roast groundnuts and cake that I helped my mum make.

Life in Nigeria is hard, and my village, Oshepio in Delta State, is no exception. There are simply no jobs. A friend of mine whose brother was making it big in Kenya – he was selling anything from illegal skin-lightening lotions to bootleg copies of Nollywood movies – asked if I was interested in doing business in Nairobi. This is my Canaan, I thought. Armed with my KSh460,000 ($6,000) savings and airfare to Nairobi, I left just before Christmas of 2009.

My aim was to settle first then call my comrades for shipments of stock to sell from the motherland.

I took an overcrowded, speeding matatu (taxi bus) to the estate where some Nigerian countrymen lived. I was robbed of my suitcase, with all the money in it. They must’ve noticed I was new. With an overflowing agbada robe and matching headgear I stood out like a sore thumb.

I had to re-evaluate my dreams. I was penniless in a foreign land. I took up work breaking stones in a quarry for KSh100 and a cup of porridge a day. For a year and a half I saved KSh50 a day in a tin box.

I’ve been a jack-of-all-trades since then. I’ve sold secondhand clothes, French fries, Congolese fabric, hair wigs from China and even ran a Christian bookshop. Most projects failed, but I kept saving. I met my wife in my hustles. She’s a Kikuyu from central Kenya. She encouraged me to try the chapati business, largely a woman’s forte

in Kenya, after noticing I was good in the kitchen. I was reluctant at first, but she sweet-talked me into investing my KSh28,000 savings into the venture.

For two years I’ve been making chapati, madondo, cabbage and tea. My tin kiosk is out on a road reserve, perched over a storm-water drain. The municipal officials bother me and solicit bribes, and immigration officials threaten me with deportation on account of my alien status. I sell 500 chapatis daily, which pays my rent, my bills, luxuries and my four assistants. They help with the dough, sorting the beans and cleaning the utensils.

builders gobble them up

My three-year-old daughter just joined nursery school this year. Her sister is crawling now. I don’t want them to live here forever. I want a better life for them, but I also want them to take pride in their father’s hard work. I only rest on Sundays and sing in the church choir.

Nairobi is experiencing a construction boom, and my best customers work in construction. I even deliver to the sites sometimes, and everything gets gobbled up! People tell me I make the best chapatis around. I think I do. I’m still saving up to start a beauty products shop for my wife and a few mobile-money-transfer kiosks. I send my mother something every month.

I’ll never quit cooking chapatis. My secret is being punctual, honest and clean, and having good recipes to satisfy my customers. I have KSh1m in the bank and counting.

That’s all I can say. ● Interview by Robert Oluoch the africa report

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