Tar82 jul aug16 mauritius focus asia africa transport

AFRICA-ASIA Japan and Singapore play the long game

Ethiopia Plan to succeed

South Africa Zuma sweats on local elections

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w w w.t he a f r ic a r ep o r t .c om

The Mugabe Legacy

The winners and losers of the Zimbabwe land revolution

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 8 GH¢ • Italy 4.90 € • Kenya 410 shillings • Liberia $LD 300 • Morocco 40 DH • Netherlands 4.90 € • Nigeria 800 nairas • Norway 60 NK • Portugal 4.90 € • Sierra Leone LE 12,000 • South Africa 40 rand (tax incl.) • Spain 4.90 € • Switzerland 9.90 FS • Tanzania 9,000 shillings Tunisia 5.4 DT • Uganda 9,000 shillings • UK £ 4.50 • United States US$ 6.95 • Zambia 30 ZMW • Zimbabwe US$ 4 • CFA Countries 3,000 F CFA

GROUPE JEUNE AFRIQUE

AFRICA-ASIA Japan and Singapore play the long game

Ethiopia Plan to succeed

South Africa Zuma sweats on local elections

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w w w.t he a f r i c a re p o r t . c om

The Mugabe Legacy

The winners and losers of the Zimbabwe land revolution

INTERNATIONAL EDITION

Zimbabwe The Mugabe legacy

CONTENTS

Ethiopia Plan to succeed

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Africa

THE AFRICA REPORT # 82-83 - JULY-AUGUST 2016

Asia

potential

know-how

The future belongs to those who marry the skills and capital of the East to the continent’s resources and growing population

GROUPE JEUNE AFRIQUE

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 8 GH¢ • Italy 4.90 € • Kenya 410 shillings • Liberia $LD 300 • Morocco 40 DH • Netherlands 4.90 € • Nigeria 800 nairas • Norway 60 NK • Portugal 4.90 € • Sierra Leone LE 12,000 • South Africa 40 rand (tax incl.) • Spain 4.90 € • Switzerland 9.90 FS • Tanzania 9,000 shillings Tunisia 5.4 DT • Uganda 9,000 shillings • UK £ 4.50 • United States US$ 6.95 • Zambia 30 ZMW • Zimbabwe US$ 4 • CFA Countries 3,000 F CFA

South Africa Zuma sweats on local elections

w w w.t he a f r i c a re p o r t . c om

GROUPE JEUNE AFRIQUE

Your complimentary copy - Not for resale

BUSINESS

6 EDITORIAL Europa and the rest of us

64 AFRICA-ASIA Sharing Asian know-how The two fastest-growing continents need each other for a multitude of reasons – business, geopolitics, demography.

8 LETTERS 10 THE QUESTION

BRIEFING 12 SIGNPOSTS

74 INTERVIEW Nestlé chairman Peter Brabeck-Letmathe

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14 INTERNATIONAL 16 PEOPLE 18 CALENDAR

FRONTLINE 20 ZIMBABWE The Mugabe legacy The Africa Report takes you on a road trip to see the longterm impact of the country’s early-2000s land revolution

76 KENYA Troubles for TransCentury

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78 LEADERS Juliet Anammah, Jumia Nigeria CEO 80 FINANCE Can Ghana stop its borrowing binge?

81 HANNIBAL DOSSIER: TRANSPORT 82 Passages to growth Trade corridors have the potential to boost economic development dramatically, but realising those goals is not without its challenges

COVER CREDITS: ©DIEGO AZUBEL-POOL/GETTY IMAGES; ©DANIEL LAFLOR/GETTY IMAGES; JOSE LUIS PELAEZ INC/GETTY IMAGES

POLITICS 33 SOUTH AFRICA City hall cliffhanger Nelson Mandela Bay is a litmus test for the ANC in 3 August municipal elections

86 URBAN TRANSPORT Generation rideshare

38 ETHIOPIA The end, the means

88 INTERVIEW Aboubaker Omar Hadi, chairman of Djibouti Ports Authority

44 OPINION Stephen Chan 46 PROFILE Kamel Daoud, Algerian author

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48 BURUNDI No guns at the table 49 KENYA Hate-speech test 49 EGYPT Sisi marches on 50 NIGERIA The general’s grip

COUNTRY FOCUS 53 MAURITIUS Tax-haven twilight Mauritius braces for the impact of a change in a deal with India that has brought billions of dollars to the tiny island nation •

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90 PHOTO ESSAY People of the river All along its meandering route, people’s lives and livelihoods are locked in symbiosis with the powerful Niger River 94 ART & DESIGN Surface designer and visual creative Atang Tshikare

51 ANANSI

THE AFRICA REPORT

ART & LIFE

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96 LIFESTYLE Twitter trends on corruption gaffes and Behind the Scenes with Eka Christa 97 TRAVEL The high life in Kigali 98 DAY IN THE LIFE Nutritionist Ejiekpe Michael

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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

Europa and the rest of us

I

t has to be a European word – better still a German one – that captures the mood as the UK suffers a nervous breakdown. The word is schadenfreude, which roughly translates as gloating at another person’s misfortunes. The vote of 51.9% of Britons to quit the European Union (EU) in a referendum on 23 June triggered political pandemonium: the prime minister resigned; his rivals stabbed each other in the back and the front; and the main opposition Labour Party was torn apart in its own leadership struggle.

Meanwhile, the pound crashed to its lowest against the US dollar for 30 years and economists predicted an exodus of banks, money and jobs. So serious is the crisis that it may tip Britain into recession by December, causing further damage in Europe and undermining trade and investment in Africa.

Where is the schadenfreude?

Primarily, with advocates for quitting the EU. They have been relishing their revenge on the effete, cosmopolitan elite in London and Brussels. Their leader Nigel Farage told the European Parliament a week after the vote that “the little people” had rejected “big politics to get their country back”. Farage resembled a rather inebriated biggame hunter who in the course of bagging a lion had managed to shoot both his feet off.

‘Taking the country back’, the historic cry of nationalists, rings ever more hollow. Yet the populist victory in the UK’s referendum challenges the liberal democratic idea. Its components are not working: liberalism should include the rights and protection of minorities; representative democracy should mean institutions that can turn the people’s will into public policy.

CHA I R M A N A ND F O UND E R BÉCHIR BEN YAHMED 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

For many in the West, as in Africa and Asia, living standards have worsened since the financial crisis of 2008. National politicians look impotent in the face of economies managed by central bankers and trade deals concluded in secret. The Panama Papers scandal showed that one of the politicians’ remaining powers, to tax companies, has been usurped by a pin-stripe army of accountants and lawyers.

Should Europe’s parThe countries oxysms deter Africa from greater political that unity and economic balkanised integration? DefinAfrica are itely not. More global economic uncertainty struggling will make intra-African to keep their trade all the more important. Stagnant Westown union ern markets should entogether courage more African countries and companies to cooperate on processing and manufacturing projects.

It is a paradox that the European countries that balkanised Africa in the 19th century are now struggling to keep their own union together. But in the midst of the mêlée in Europe, the African Union (AU) launched its African passport, initially for its own officials, presidents and government ministers. The sooner the eligibility is widened to all African citizens, the better. Ghana, the home of former President Kwame Nkrumah’s panAfricanism, nods in that direction with its recent announcement of visa-free entry for all citizens of AU member states. Facing a dismal wave of parochial populists on all sides, Africa will need its internationalists and visionaries more than ever. ●

edit editorial@theafricareport.com THE AFRICA REPORT

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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 A S S O CI AT E E D I T O R MARSHALL VAN VALEN BUS I NE S S E D I T O R MARK ANDERSON E D I T O R I A L A S S I S TA NT OHENEBA AMA NTI OSEI RE G IO NA L E D I T O R S CRYSTAL ORDERSON (SOUTHERN AFRICA) BILLIE ADWOA MCTERNAN (GHANA) S UB - E D I T O R ALISON CULLIFORD P R O O F R E A D I NG KATHLEEN GRAY A RT DI R E CT O R MARC TRENSON DESIGN VALÉRIE OLIVIER (LEAD DESIGNER) SYDONIE GHAYEB CHRISTOPHE CHAUVIN (INFOGRAPHICS) P R O D UCT I O N PHILIPPE MARTIN CHRISTIAN KASONGO RE SE A R CH SYLVIE FOURNIER P HO T O G R A P HY PIERANGÉLIQUE SCHOULER O NL I NE PRINCE OFORI-ATTA SALES SANDRA DROUET 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 - $60 - £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 WITH JEANNY CHABON RE G IO NA L M A NA G E R S IBIJOKE FABORODE PASCALE LALLEMAND CÉCILE LOUEDEC PRINTER: SIEP 77 - FRANCE N° DE COMMISSION PARITAIRE : 0720 I 86885 Dépôt légal à parution / ISSN 1950-4810 THE AFRICA REPORT is published by GROUPE JEUNE AFRIQUE

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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

A FORK IN THE ROAD FOR BIYA

P

OIL & GAS New power generation

South Africa Tailor-made growth

Nigeria Sanusi’s revival plan

aul Biya took office in 1982 promising Cameroonians that he would implement institutional reforms to rid the country of the impunity, corruption and excesses of the Ahidjo regime [‘Cameroon: Staying power’, TAR81 June 2016]. Cameroon is at a crossroads and Biya now stands at a fork in the road. If he continues Innovative Africa Leapfrogging the obstacles, to chase after power and self-enrichment, he could a new wave of entrepreneurs is spurring growth plunge the country into further violence and destruction, but it is not too late for him to choose wa different path. He could exit at the end of this term, serve his country as an elder statesman, and provide the new crop of leaders with the support they need to chart a path towards sustainable human development and peaceful coexistence. History will judge Biya either as a public servant who spearheaded and directed the transformative processes or as an opportunist who used his public position to enrich himself and his benefactors. John Mbaku, Nonresident Senior Fellow, The Brookings Institution w w w.t h e a fr ica r e p o r t. c om

INTERNATIONAL EDITION

N ° 8 1 • J U N E 2 016

GROUPE JEUNE AFRIQUE

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 8 GH¢ • Italy 4.90 € • Kenya 410 shillings • Liberia $LD 300 • Morocco 40 DH • Netherlands 4.90 € • Nigeria 600 naira • Norway 60 NK • Portugal 4.90 € • Sierra Leone LE 12,000 • South Africa 40 rand (tax incl.) • Spain 4.90 € • Switzerland 9.90 FS • Tanzania 9,000 shillings Tunisia 5.4 DT • Uganda 9,000 shillings • UK £ 4.50 • United States US$ 6.95 • Zambia 30 ZMW • Zimbabwe US$ 4 • CFA Countries 3,000 F CFA

ENCOURAGING CHILDREN TO FOLLOW THEIR DREAMS It’s great to see women like Muthoni Garland, Sitawa Namwalie and Mumbi Kaigwa who are finally breaking free and realising their dreams to build a career in the arts [‘A dream deferred’, TAR81 June 2016]. It’s equally exciting for us to see young women who now see it as socially acceptable to start their career in the arts: women like Maame Adjei (producer, actress of An African City), Kaline Akinkugbe (singer), Ifeoma Fafunwa (producer, HEAR WORD!) and Titilope Sonuga (poet). When African parents push their children to be doctors or lawyers, it’s not because they are trying to kill their children’s

AFRICAN FOOTBALL v. EUROPEAN MONEY

dreams. It’s often because they want them to be economically independent.

The more we show that people can make a living in the arts, the more African parents will be encouraged to support their children’s dreams.

Africa is a huge market for the Premier League, which surprisingly has been left relatively untapped until now [‘Cashing in on the beautiful game’, TAR80 May 2016]. The likes of Jay-Jay Okocha and Tony Yeboah mesmerised fans the world over. Now, emerging young talents such as Kelechi Iheanacho (Nigeria & Manchester City) and Bertrand Traoré (Burkina Faso & Chelsea) ensure the Premier League maintains its African influence. African fans currently offer dual support between domestic and Premier League clubs. Sponsorships and an increased marketing presence will seriously dent domestic support. The identity of African football could be lost as Premier League clubs set up academies and impose their philosophies on the game.

With talks of a European Super League we will see a lot more of this activity not only from Premier League clubs, but the other giants of European football as football truly does become global.

Yasmin Belo-Osagie Co-Founder, She Leads Africa

Kay Sarpong FIFA-licensed agent

Correction In our Frontline ‘Who runs Nigeria?’ [TAR80 May 2016], one of the key sources used in the writing of the article was the work of the London-based Africa Research Institute (ARI), and in particular its April 2016 report “State(s) of crisis: sub-national government in Nigeria”. Due to an editorial oversight the ARI’s work was not credited. Their report can be found on the ARI’s website africaresearchinstitute.org.

The article also wrongly identified a photograph of Ayo Obe as Nike Ransome-Kuti.

Obe holds the position of Vice Chair at the International Crisis Group but does not practise law for the organisation. The Africa Report apologises for these errors.

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.

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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

Outgoing African Union Commission head Dr Nkosazana Dlamini-Zuma – the first woman to hold the top post – has been criticised by some for focusing more on her domestic political aspirations than on her pan-African duties

Has Dlamini-Zuma done a good job as AU Commission chair?

Yes THATO MOTAUNG Associate Executive Director, African Democratic Institute

Under her leadership the AU has evolved from a peace and security emphasis into an institution with a more inclusive focus on African development issues. She has brought her passion for women’s empowerment to the job. On every platform she has advocated for the rights of girls and women, introducing the African Gender Scorecard (2015), and a programme to appoint more women to AU organs.

She has also fought for greater African self-reliance, championing an AU move towards greater domestic resource mobilisation. In 2014 – for the first time in its history – an AU-private sector roundtable was convened in response to the Ebola outbreak, which mobilised funds from African businesses, governments and citizens. Furthermore, she administered the deployment of the AU’s first humanitarian mission of more than 800 health workers from more than 20 volunteering African countries, who eradicated the virus. Lastly, the adoption of Agenda 2063 provided Africans with a 50-year continental vision and roadmap that has been integrated into over 25 member states’ national development plans.

Having a continental long-term plan helps move beyond short-term crisis management into focusing on the demographic segment that matters most: young African men and women. ●

No KOFFI M. KOUAKOU Director, Southern Africa Node of the Millennium Project

The AU chairperson position, while prestigious, is a very challenging seat to hold. It is demanding, frustrating, politically intolerable and outright unhealthy. So why would anyone want such a job? Well, Dr Nkosazana Dlamini-Zuma wanted it so badly that her thirst to get it created a nasty two-round voting and a divisive political atmosphere in Africa in 2012, when she muscled out the former AU Commission chairperson Jean Ping. When she took the job, she became the first African woman to hold such a position, with the hope for a new, fresh change in outlook for the AU. She set her objectives high, rightly so, as she needed to prove she could lead the AU with vigour: first, to address the ongoing conflict in Mali and the resurgence of Islamist extremists in the Sahel; second, to help the AU support itself financially; and third, to support the political transition in Somalia and peace efforts in the DRC and the Great Lakes region. None of the above objectives were met as crises continued unabated. Worse, the AU is still financially dependent on outside donors, and images of Africans scrambling, drowning and dying to migrate to Europe for a better life continue to fill the media. Recently, she announced that she will not seek a second term, sending a message that she is rushing home to South Africa for greener political pastures. In her lacklustre Africa Day message, she failed to articulate what to celebrate. In short, she has not done well. ● THE AFRICA REPORT

YOUR VIEWS:

Her leadership on the articulation of the African Union’s Agenda 2063 was critical.

Its success depends on her successor.

Batanai Chikwene She has not been good! The continent has lost direction in her leadership, protecting criminals like those of Bashir and others.

She has not [been] able to practise justice. Darfur has died in her reign.

Kalo Yusif Kuku Yes, she has done a great job, implementing the African Union’s Agenda 2063, and particularly, Dr Dlamini-Zuma has helped my country – D. R. Congo – to have a facilitator in our upcoming dialogue.

Bibi Kazadi Emmanuel Sadly, we don’t get to hear much of her in Nigeria. The African Union should start making its presence felt in member countries, especially amongst the youth.

Philip Asuquo @AsuQuotes The question is do African male leaders listen to her? What have they done to stop Boko Haram in Nigeria? Does the “African solutions for African problems” approach work or is it just that some people want to protect their own interests and not those of the African people?

Simphiwe Magasela •

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Ibrahim Leadership Fellowships Programme Identifying and supporting African leaders of the future.

Invitation for Applications The Fellowships offer the opportunity to work in the executive offices of either the African Development Bank (Abidjan), the UN Economic Commission for Africa (Addis Ababa) or the International Trade Centre (Geneva) with an annual stipend of $100,000.

The three organisations will each host an Ibrahim Leadership Fellow for a 12-month period supporting senior management.

The Fellowships are open to young professionals, mid-career and new executives up to the age of 40 or 45 for women with children. The Fellows will be nationals of an African country with 7-10 years of relevant work experience and a Master’s Degree.

The application process opens on 12 August 2016 and closes on 14 October 2016 For more information about the Fellowship programme, eligibility and application process please visit: mo.ibrahim.foundation/fellowships

AFDB

ITC

UNECA

BRIEFING

SIGNPOSTS

DRC Thousands of supporters of President Joseph Kabila paraded through Kinshasa to mark their leader’s 45th birthday on 4 June.

?

Yes No Don’t know

SOUTH AFRICA Models and celebrities get their glam on at the Vodacom Durban July horse race at Greyville Racecourse.

SOUTH AFRICA Cape Town schoolchildren celebrate Africa Day on May 25 – the day the future African Union was launched in 1963.

SOUTH SUDAN

In conjunction with GeoPoll, The Africa Report asked 100 Kenyans the question: Do you trust the police?

Seemingly irreconcilable

T

43%

52% 5% GeoPoll is the world’s largest mobile surveying platform and sample provider in Africa, enabling companies and organisations to gather quick, accurate and in-depth insights.

To conduct your own mobile survey using GeoPoll’s easy-to-use platform visit Research.GeoPoll.com.

AGRIBUSINESS GREEN SHOOTS POTENTIAL A PwC survey of how agribusiness company chiefs expected their firms to expand in Africa during 2016 found that most believed better penetration of existing markets is the key to growth.

entative hopes that the illusive peace deal hammered out last year between South Sudan’s President Salva Kiir and rebel leader Riek Machar would hold were dashed as fresh fighting broke out in Juba in early July, leaving some 300 soldiers and civilians dead. A clearly frustrated UN secretary general Ban Ki-moon denounced the “indiscriminate attacks” on civilians, condemning the country’s leaders for failing their people. He concluded: “Rarely has a country squandered so much promise so quickly.”

After five days of street-to-street battles, artillery assaults and strafing by helicopter gunships, another ceasefire came into effect on 11 July, but analysts

were pessimistic as to its durability.

The peacemakers and mediators may be at a loss for a solution if Salva and Riek, who fought to a stalemate over a two-year period, must be involved in the conflict’s peaceful resolution.

Going ahead, there are worries about both Salva’s and Riek’s abilities to control troops loyal to their causes.

Aid workers are already warning that the renewed fighting could exacerbate severe food shortages, which could affect up to five million people. While eyes are now on Juba, the violence could quickly spread to other parts of the country if the parties cannot rapidly put in place measures to build confidence between the sides.

Some 2.2 million people have been displaced by the fighting

Business expansion in the next 12 months Better penetration of existing markets Mergers and acquisitions New geographical markets

11.5%

New joint ventures and/or strategic alliances New product dev.

Other

34.6%

2016

2015

7.7%

©BEATRICE MATEGWA/AP/SIPA

19.2%

SOURCE: PWC

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7.7% 19.2% THE AFRICA REPORT

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BRIEFING

KENYA Supporters of the opposition Coalition

for Reforms and Democracy in their thousands fill Uhuru Park, Nairobi, on Independence day, 1 June.

NIGERIA President Muhammadu Buhari meets the baby daughter of Chibok schoolgirl Amina Ali, who escaped Boko Haram.

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EGYPT Muslims celebrate the end of Ramadan and the start of Eid al-Fitr on 6 July with a joyful splash of colour in the streets of Cairo.

JUNIOR D. KANNAH/AFP; MARCO LONGARI/AFP; NIC BOTHMA/EPA/MAXPPP; GORAN TOMASEVIC/REUTERS; AFOLABI SOTUNDE/REUTERS; AMR NABIL/AP/SIPA

“I’m going to come back even

©KALPESH LATHIGRA FOR JA

if they have their fake police warrant […] I am a ca andidate did d in i 2016 ” Democratic Republic of Congo opposition lead der Moise Katumbi vowed to return to the countryy to take part in presidential elections slated for 2 2016 despite charges that he had hired mercenaries.

Morocco Egypt

Ethiopia

4.23

DRC

Kenya

Efficiency score

Pay as you go Asia >10W cash sale Africa > 10W cash sale Asia Pico-PV cash sale Africa Pico-PV cash sale

TRANSPORT LOGGING LOGISTICS PERFORMANCE The World Bank released its global review of countries’ efficiency in their logistics sector, such as ease of clearing customs and transportation infrastructure. Morocco, Niger and Sudan were among those countries whose score improved since 2014, while Angola, Chad and Libya lost ground.

THE AFRICA REPORT

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Forecasts for growth for off-grid solar panels predicted Africa would be one of the primary retail markets alongside Asia, with around 55 million units likely to be sold by the end of the decade through a combination of over-the-counter and pay-as-you-go sales.

Mozambique

Unit sales (millions)

2 2 9

South Africa

SOURCE: WORLD BANK

11

7

%

34

4 4 2 3 2

4

16

6 7

16

13

5 5

9

11

13

17

19

2015

2016

2017

2018

2019

2020

SOURCE: BLOOMBERG

2.36

The world’s second-biggest miner, Rio Tinto, has shelved a massive, $20bn iron ore project in Guinea due to stubbornly low commodity prices. Rio won the rights to Simandou in 1997 and the government was said to be in talks with a Chinese investor to take over control of the mine, railway and sea-port scheme.

ENERGY SOARING SOLAR SALES

Sudan Nigeria

SOURCE: RIO TINTO

MINING SHUTTERING SIMANDOU

BRIEFING

INTERNATIONAL STOCK MARKETS

$3trn

The value lost across global stock markets in the five days following the announcement on 24 June of Britain’s vote to leave the European Union, according to ratings agency Standard & Poor’s. Markets made some gains afterwards, but remained volatile.

CURRENCIES

UK

Down and on the way out

Worldwide currency markets spiked in the wake of the 23 June vote, with the British pound plunging to a 31-year low against the United States dollar on 6 July. On that day, £1 was worth only $1.28, as some analysts said it could sink further and hit parity with the greenback as investors predicted that the Brexit vote would lead Britain’s economic growth to shrink.

The South African rand fell 8% against the dollar and 6.6% against the Japanese yen while strengthening 2.7% against the pound in the immediate aftermath of the referendum amid fears of a dip in British trade and aid to the continent.

©JONAS GILLES/REPORTERS-REA

The United Kingdom (UK) voted 51.9% to 48.1% to withdraw from the European Union (EU) in a referendumon23June.That decision, which could take several years to implement, will take the UK and Europe into uncharted territory. No member has previously left the EU. The vote has already triggered the greatest domestic political turmoil in a generation. Pro-EU Prime Minister David Cameron immediately quit and was replaced by Home Secretary Theresa May, while opposition leader Jeremy Corbyn faced a challenge from his colleague Angela Eagle after 80% of Labour MPs called for him to step down.

Financial institutions employ more than one million people in London alone, and many of them voiced concern. Some banks warned that if Britain loses the right to conduct euro-denominated trades, they would seek to relocate operations to France, Germany or Ireland. The Bank of England sought to shore up the economy by easing capital requirements for banks amid talk of interest rate cuts and further quantitative easing. Carmakers, including Nissan and Toyota, warned the decision risked undermining exports, and British Airways and EasyJet also posted profit warnings.

Brexit bust

UK-AFRICA

“[The EU]

is a wholly inappropriate way to define the UK-Africa relationship.”

SOUTH AFRICA, NIGERIA, KENYA

Local Brexit worries Among the many ramifications if the UK follows through on its decision to leave the EU, African growth could be affected. South Africa is most exposed to a potential British recession, according to ratings agency Moody’s, as it receives 30% of the UK’s foreign direct investment in the continent and the UK is a principal buyer of South African exports. Nigeria, whose $8.3bn per annum trade with Britain was expected to more than triple to $28bn by 2020, and Kenyan agricultural exports, could also be hurt.

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James Duddridge Britain’s minister for Africa, Caribbean, and the Overseas Territories, criticised the EU in the run-up to the controversial referendum.

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BRIEFING

PEOPLE

FOURTH TIME LUCKY? 4 June 1962 Born in Monze 1986 Earned a bachelor’s degree in economics from the University of Zambia 1994 Became chief executive of auditing firm Coopers & Lybrand Zambia

©GIANLUIGI GUERCIA/AFP

16

SPOTLIGHT

Hakainde Hichelema The long-standing Zambian opposition leader – who lost the last presidential election in 2015 by 27,757 votes – is calling for international mediation amidst a violent run-up to the 11 August national polls STANDING SHOULDER to shoulder on a precarious dais in the garden of Lusaka’s Chainama Hotel, Hakainde Hichelema and Nevers Mumba call on the faithful to mobilise. Zambia is about to see a third day of liberation, they promise the throng stretched out before them in bright red and blue party colours. For these two veteran politicians, the elections on 11 August should rank on the calendar with

Zambia’s independence from Britain in 1964 and its opening up to multiparty politics in 1991.

That Hichelema, the millionaire businessman and cattle rancher, is sharing a platform with Mumba, the charismatic preacher and political dilettante, tells its own story. It was just days after the Movement for Multiparty Democracy (MMD) imploded in May and Mumba was sacked as its

2006 Elected leader of the United Party for National Development 2015 Won 46.7% of the national vote, his best score in three runs for the presidency

leader that he decided to throw in his lot with Hichelema’s United Party for National Development (UPND).

In style, the two leaders are miles apart. Mumba harangues the crowd in evangelical mode, calling for Zambia to be saved from the clutches of the ruling Patriotic Front (PF) and its “unsteady” leader, Edgar Lungu.

Party labels in Zambia have lost their resonance. Personalities and regional blocs dominate the race.

Amid the floor crossing and finger pointing, Hichelema cuts a stolid figure, somehow out of place in this political bazaar. In grey business suit with matching tie and handkerchief, he delivers his pointby-point critique of Lungu’s presidency like a management report.

It is long on detail, short on swirling rhetoric. That may be just as well. The crowd is already over-excited, jigging

“The sad event, 40 years

“If that shaky

Speaking of the Entebbe airplane hijacking of 1976, Uganda’s President Yoweri Museveni repeatedly referred to the wrong country in welcoming Israel’s Benjamin Netanyahu.

After a June border clash with Eritrea, Ethiopia’s Prime Minister Hailemariam Desalegn defended his government’s policy of “retaliate and silence” to parliament.

ago, turned into another bond linking Palestine to Africa.”

government wants to talk to us, our doors are open.”

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BRIEFING

Good times

“In life, you can’t

MICHY BATSHUAYI The Congolese-Belgian striker was snapped up by English Premier League side Chelsea in late June. The ‘Blues’ paid French side Marseille £32.2m for the prolific goal scorer, who netted 26 last season.

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TIMOTHY OGUNTAYO Skye Bank’s managing director resigned suddenly in July after the Central Bank of Nigeria started putting pressure on lenders showing signs of distress. Skye Bank purchased Mainstream Bank in 2014.

MAIKANTI KACALLA BARU Nigeria’s President Muhammadu Buhari appointed Baru to the petroleum top job as head of the Nigerian National Petroleum Corporation in July. The post was previously held by Emmanuel Ibe Kachikwu, also deputy oil minister.

give any guarantees ” Embroiled in a political battle, South African finance minister Pravin Gordhan responds to rumours he could face imminent arrest over spying charges.

FRED M’MEMBE The editor in chief of Zambia’s The Post newspaper was briefly arrested in late June along with his wife Mutinta and deputy managing editor Joseph Mwenda after the government closed the title over claims it owed taxes totalling $6m.

MOHAMMED AL AMOUDI

ALL RIGHTS RESERVED

©HAMILTON/REA

Patrick Smith in Lusaka

LIDUDUMALINGANI The South African writer was celebrating after his short story, ‘Memories We Lost’, won the Caine Prize in July. Judges praised his “gracefully narrated” work, which tackles traditional beliefs in the treatment of schizophrenia.

ALL RIGHTS RESERVED

to the party songs and yelling for total victory against Lungu and the PF. The mood is less like boot camp and more like a football match; Zambia’s prowess at the beautiful game is well established. But there have been ugly incidents. On the line to The Africa Report, Hichelema angrily describes how one of his supporters, a young student, was ambushed after coming out of a church service and beaten to death. His crime, Hichelema says, was to have been wearing a UPND T-shirt.

Since then, the economic news has been almost uniformly bad, albeit not all due to Lungu’s government.

China’s falling demand for copper has depressed Zambia’s export earning.

A tough International Monetary Fund programme looms after the election, whichever side wins.

Bad news alone will not win it for Hichelema. He faces a skilled and populist campaigner in Lungu, whose campaign is squeezing every ounce of advantage from incumbency.

After three unsuccessful runs at the presidency, Hichelema is trying hard to shake off the business baron persona. “I’m a villager myself.

The first time I came out of the village was to go to secondary school. I was educated by the state, and I want to pay back.” A party video shows Hichelema playing football with some rather respectful youths, gingerly passing the ball to the prospective national captain.

Doubtless, Hichelema’s promise of a well-run government to create jobs and stamp out corruption sounds good to voters. But harsh realities on the ground will count, too, in a contest pitting the chief executive against the professional politician in State House who has some close friends in the military and the judiciary. ●

In late June, the Saudi-Ethiopian billionaire’s indebted Samir refinery in Morocco got what could be its last lifeline. It has been mothballed since August 2015 and now has less than six months to restart production and find a buyer.

Bad times

17

BRIEFING JULY

2-24 July SPAIN, ANDORRA, SWITZERLAND, FRANCE Eritrean rider Daniel Teklehaimanot, who made history last year as the first African to win the King of the Mountains title for the fastest mountain ascents, repeated his feat to become the first cyclist in two decades to wear the polka-dot jersey two consecutive years. letour.fr

UNCTAD 14 17-22 July NAIROBI | KENYA The UN Conference on Trade & Development, including the World Investment Forum. unctad-worldinvestmentforum.org

CALENDAR

ZIMBABWE INTERNATIONAL BOOK FAIR 25-30 July HARARE | ZIMBABWE ‘Igniting interest in reading for sustainable development’ is the theme of this year’s fair, which is open to the public from 28 July. www.zibfa.org.zw

MOBILE 360 SERIES – AFRICA 26-28 July DAR ES SALAAM | TANZANIA mobile360series.com

AFRICAN LEADERSHIP FORUM 28-29 July DAR ES SALAAM | TANZANIA uongozi.or.tz

AUGUST

OLYMPIC GAMES 5-21 August RIO DE JANEIRO | BRAZIL rio2016.com

AFRICA SINGAPORE BUSINESS FORUM 24-25 August SINGAPORE www.iesingapore.gov.sg/asbf

TOKYO INTERNATIONAL CONFERENCE ON AFRICAN DEVELOPMENT 27-28 August NAIROBI | KENYA ticad6.net

ZAMBIA PRESIDENTIAL ELECTIONS 11 August AFRICAN WORLD FESTIVAL 19-21 August MICHIGAN | US thewright.org/african-world-festival

GABON PRESIDENTIAL ELECTIONS 28 August CABO VERDE PRESIDENTIAL ELECTIONS 31 August

POWER-GEN AFRICA & DISTRIBUTECH AFRICA 19-21 July JOHANNESBURG | SOUTH AFRICA Renewables, fossil fuels and nuclear power are united in the continent’s premier energy industry event. powergenafrica.com distributechafrica.com

©CYRIL VILLEMAIN/SIPA

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ISRAEL-AFRICA TH

AFRIKA FESTIVAL 21-24 July

TÜBINGEN | GERMANY Burundi musicians and artists are guests of honour at this year’s festival for the African diaspora in Germany. afrikafestival.net

In the first sub-Saharan Africa visit by an Israeli leader in almost 30 years, Prime Minister Benjamin Netanyahu toured four East African nations in early July, accompanied by a delegation of 70 business executives. Netanyahu travelled to Uganda, Kenya, Rwanda and Ethiopia, and also met with the heads of Tanzania, South Sudan and Zambia, each time renewing Israel’s commitment to develop economic and security ties with African nations. In June, Netanyahu announced that he will seek government approval for a $13m aid package to boost economic ties with African countries. The historic trip marked the 40th anniversary of Operation Entebbe, a hostage rescue operation in Uganda during which his brother was killed.

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FRONTLINE

ZIMBABWE

The Mugabe

legacy

By Nicholas Norbrook in Zimbabwe

I

t is dawn on a perfect winter’s day in Harare. The air is chilly, but the sun soon brightens up the clear blue sky. Driving towards the city centre from the northern suburbs – home to President Robert Mugabe’s State House with its unblinking sabre-armed guards – the sense of economic desolation amid colonial pomp is unmistakable.

Thousands of people, trekking in from townships such as Highfield, are making their way to offices… or more likely to set up a stall to sell maize meal, tomatoes, onions or potatoes. Or they stand at street corners selling cellphone topup cards, tea towels and handkerchiefs.

The well-educated generation after independence is being reduced to penury.

There is talk of a breaking point soon.

Even tougher times loom ahead. With the worst drought in a quarter of a century, more than four million people – almost a third of the country – could require food aid. Supplies will dwindle further in next year’s lean season. ● ● ●

©HERMAN VERWEY/FOTO24/REX/SIPA

The Africa Report takes you on a road trip across Zimbabwe – from Harare to Masvingo Province and Mashonaland East – to see the long-term impact of the country’s early-2000s land revolution

FRONTLINE

ALL PICTURE

LAS NO S BY NICHO

RBROOK

22

African National Union-Patriotic Front ● ● ● The government is paying off its (ZANU-PF)partylaunchedwhatUgandan arrears to the International Monetary political scientist Mahmoud Mamdani Fund (IMF) and the World Bank to try calls the “greatest transfer of property in to get new loans. Western governments Southern Africa since colonisation”. are watching closely. Some worry that a political implosion caused by 92-year-old Within three years, war veterans Mugabe’s sudden departure from office backed by state security forces seized could finally crack the society asunder.

90% of commercial farms – more than Tendai Biti, a former finance minister 10m hectares. For Mugabe and ZANUand opposition luminary who runs a law PF, it was the ‘Third Chimurenga’, the logical sequel to two earlier wars against firm in the capital, explains: “We have a foreign invaders. Liberating the land berentier economy […]. The government says the gross domestic product is about came Mugabe’s clarion call.

For Britain, the US and sundry Western $15bn, but that’s an overestimate.”

Bitiandmostofhisfellowoppositionists powers, it was the abrogation of property wantatransitionalgovernmentwithpoprights and the destruction of commerular accountability to manage economic cial farming and the wider economy. reforms. They do not trust the governTheir officials reel off grim measures of ment, especially after Mugabe admitted the world’s fastest-shrinking economy. this year that some $15bn in diamondrevenuewasstolen Most Zimbabweans are in the past seven years. caught between ZANU-PF’s Everybody agrees on the severity of the crisis; hammer and the West’s anvil its causes are fiercely disMost Zimbabweans are caught puted. At the heart of the argument are between ZANU-PF’s hammer and the the politics of land. Each side quotes its own history. The Land Tenure Act of 1969 West’sanvil.Pragmaticand patient,many gave more than 15m hectares of the best of them have tried to make the most of land to 6,000 white farmers. Meanwhile, the new economics and avoid political more than 700,000 black families – over persecution. Western sanctions never four million people – shared 16.4m hechurt ZANU-PF ’s rulers much nor helped its opponents. Now, ZANU-PF ministers tares. At independence in 1980, 42% of and their Western counterparts are talkthe land was owned by whites. ing again; Mugabe’s endgame and ecoFacing rising demands from war veterans wanting higher pensions and from nomic revival are on the agenda.

As this new chapter opens, we set off in trade unionists calling for better wages, our trusty vintage Mercedes from Harare in February 2000 the ruling Zimbabwe

through 1,000km of tobacco, sugar and maize farms to talk to the winners and losers of the tumultuous events that took place some 16 years ago. We see lots of desperation, people failing to make ends meet. Schisms are ripping open the society. Elsewhere, people are building a new order and a new economy, in spite of their political leaders.

SUPERMARKET ECONOMY

On our way out of Harare, we stop off at a new supermarket in the Lanes neighbourhood. It is perhaps a kilometre away from State House and a treelined stretch of suburban road where young women sell sex and face police intimidation.

Inside the supermarket, it is suddenly the late bourgeois world. Well-fed black and white Zimbabweans inspect shelves groaning with fruit and vegetables. The butcher is busy hammering out choice cuts of meat while the serious drinkers are drawn to a well-stocked display of beer, wine and whisky.

Almost as popular is the dairy section, where Kefalos – a brand of yoghurt with hip packaging – stands out. It is a high-quality local brand, produced at a farm just beyond the city limits on Mubaira Road in Waterfalls.

We drive past the toll gate on the A2, where groups of apostolic sect members in their brilliant white robes congregate, before turning onto a deeply potholed road. At the factory gate is a taciturn white farmer, Kefalos managing director Leif Reeckmann, originally from Denmark.

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ZIMBABWE: THE MUGABE LEGACY | FRONTLINE

He made his deals with the government and survived the land seizures. Now, he is fighting in the marketplace. His ice cream wonawardsinSouthAfricawhenbusiness was good, but turnover has dropped to $10m a year from a peak of $16m.

He says he will lay off more of his 120 workers if things get much worse. “The standards here are world-class,” says Reeckmann. “That is still in people’s heads. They still have buying patterns based on their parents, but the youth don’t think Zimbabwe makes things anymore. They all watch South African TV.”

Local agribusiness companies face heavy challenges: some from South African competitors, but also in buying local ingredients. The milk in Kefalos yoghurt, for example, is now among the most expensive in the world. That is partly due to Zimbabwe’s adoption of the US dollar, which has strengthened sharply over the past year. That is cutting into Zimbabwe’s productivity and price advantages, as other countries in the region devalue their currencies.

For finance minister Patrick Chinamasa, “the government has taken steps

Zimbabwe's agricultural production

500

Left scale Sugar Cotton Tobacco Groundnuts

400

2 000

Right scale Maize

1 500

300 1 000 200

to bring finality to the land question so as to enhance agricultural production.”

Finality, according to Chinamasa, involves fixing new boundaries, agreeing 99-year leases for new farm owners and paying compensation to those who had their farms seized. Officials will not be drawnonwhenandhowmuchcompensation. Some suggest it could cost $3bn.

It is unlikely to be a priority, whichever party wins in elections planned for 2018.

Driving south from Harare, we pass through verdant, rolling countryside. The grass yellows as we near the southern provinces. Green-tipped spears whizz by as we pass endless well-maintained sugarcane plantations in Chiredzi.

Many agribusinesses elsewhere in the country have been shuttered. But here, heavyweights such as Triangle Sugar Estate still tick over. It runs around the clock. At night, huge floodlit gantries sit astride a railway yard where cargoes are baled up and shipped out. Triangle’s sugar cane fields stretch out for 13,000ha.

THE OLD, SWEET WAYS

500 100

0

0 1990s average

2002 2003

2003 2004

2004 2005

2005 2006

2006 2007

2007 2008

2008 2009

2009 2010

2010 2011

2011 2012

SOURCE: MOYO (2011A) DERIVED FROM MINISTRY OF AGRICULTURE, MECHANISATION AND IRRIGATION DEVELOPMENT (2010A, 2010B, 2011, 2012), FAO (2008, 2009), WORLD BANK (2006), GAIN REPORT (2010; 2012), ZIMBABWE TEA GROWERS ASSOCIATION (2010) DATA, *RBZ (2011) PROJECTIONS. THE AFRICA REPORT

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South African sugar company Tongaat Hulett owns all of Triangle and 50.3% of nearby Hippo Valley. It boasts a sugar milling capacity of 640,000tn per year, processing its own crop and cane from farmers in the area. Huletts SunSweet is Zimbabwe’s best-selling sugar.

Triangle and Hippo Valley estates are typicaloftheeconomybeforelandreform, where low-paid workers were bussed in from Zambia and Malawi. They ● ● ●

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FRONTLINE | ZIMBABWE: THE MUGABE LEGACY

are capital intensive, but have little connection to the rest of the rural economy. Like mines, these plantations are enclaves where millions of dollars leave the country straight to the owner’s overseas accounts, according to Ian Scoones, from Britain’s Institute of Development Studies (IDS). He argues that land reform has boosted production and incomes in ways not generally recognised. ●●●

SUCCESSES AND FAILURES

The government’s Fast-Track Land Reform Program cut up 6,000 large farms into smaller farms of about 5ha, known as A1. Larger commercial farms of around 50,000ha were taken over, then handed out as A2 farms. While Scoones sees some success in the A1 farms, many of the A2 farms have been relative failures, hampered by a lack of skills, finance and inputs.

Esther Chikote, who occupied a plot of land in 2000, has 20ha near Wedza: a small cattle shed, some brick-built round huts, and a small field near the homestead. Like many, she uses only a tenth of her land. But she is making it work, she tells us, laughing and explaining that she sends money to her husband who works in town, “Not the other way around!” She put all her children through school and employs four workers.

On the road, we meet a driver who recalls losing his way in Mazowe, some 50km north of Harare. There, first lady Grace Mugabe seized a citrus estate from Interfresh, expelling locals from

the adjacent land. Turning into what he thought was a hotel, the driver was immediately surrounded by armed goons demanding his licence. He has never taken that road again.

But it is too simple to lay all blame on the land grab by the ZANU-PF elite.

White farmers stymied efforts at reform and were backed by the West. It was very different from the sweeping land reform and the redistribution of feudal holdings in Japan; that was driven by US General Douglas MacArthur, who led the allied occupation after the Second World War. In Zimbabwe, land reform was fatally Zambia

entangled in local politics just as popular anger against ZANU-PF and Mugabe was rising in the mid-1990s.

Professor Sam Moyo, tragically killed in a car crash last year, was one of Zimbabwe’s leading authorities on agriculture. He explained to The Africa Report in 2009 how a panel of experts had warned Mugabe just before the Organisation of African Unity summit in 1997 that delays onlandreformwouldworsenthegovern-

HARARE Seke

Wedza

Chivhu

Bulawayo

Marondera

Mozambique

Masvingo Mashava Chiredze Triangle

Botswana

Beitbridge

100 km

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FRONTLINE

ment’s political woes. War veterans had already starting to agitate for land and were ready to embarrass Mugabe at the summit: “He [Mugabe] was worried, he toldusthathecouldn’t[seizecommercial farms] because the British would invade.”

But when Mugabe triggered the land seizures in 2000, it was not the carefully planned and negotiated reform programme that Moyo and the other experts had advocated. Rather, it was a political reflex, a military campaign that was spinning out of control. The more than 300,000 farm workers chased off the land were caught, sometimes literally, in the crossfire.

UP IN SMOKE

Saunders is philosophical. “We had a chance to do some land reform, share some land in 1998 [at a conference organised by the World Bank]. But we didn’t take it.” He says the bounce back in sales shows that smallholder tobacco farming can work.

After looping back to Harare for a day, we set off again down the A5, the motorway heading south-east, in search of tobacco farmers. A small white pickup truck stops for fuel along the Wedza road heading into Marondera – prime tobacco country. In the back, three men steady large bales of tobacco. They are heading for the auction house. One explains: “Our family was resettled in the 1990s, and they [the government] helped. Tractors ploughed up fields, and they gave help [seeds and fertiliser].”

Before 2001, around 3,000 white farmers exported all the country’s tobacco.

By then, white farmers were financing the opposition Movement for Democratic Change (MDC), led by trade unionist Morgan Tsvangirai. After ZANU-PF lost a referendum in February 2000 on a new conTobacco has created a new stitution, which included class of “middle farmers” clauses for land redistribuaccumulating from below tion but also greater presidential powers, the farm Today, about 90,000 black tobacco farmseizures started. Taking over lucrative ers share revenue of around $650m a farms helped keep top politicians and year. That money is now circulating in military officers loyal. the economy. “It’s driving new demand Abutting the Triangle Estate is the Malilangwe Trust, which runs a conserfor small-scale services,” says Scoones, vation area and tourist lodge. Buffalo, who points to a property boom in tolions, zebra and elephants roam the bacco towns. Taking a sample of 400 park. Mark Saunders runs the trust. Behouseholds across Masvingo Province, fore that he farmed tobacco for 10 years Scoones reports that on average $2,000 in Marondera, until his farm was seized. had been invested per farming family, THE AFRICA REPORT

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creating a new class of “middle farmers” who are “accumulating from below”.

It is not all roses, so to speak, in tobacco. In the latest auction season, which began in April, tobacco farmers were not being paid in cash because of the dollar shortage. Some had to open bank accounts in far-off towns, others were using mobile-money transfers.

SMALL PRODUCERS SQUEEZED

On the auction floors, there was little of the usual bustle. Instead, groups of youths, some wielding knobkerries or other weapons, gathered. They collude with ‘makonyera’, the shadowy traders who try to cheat farmers out of their crop.

On the approach to the auction houses, police run roadblocks to shake down farmers transporting their crops for sale.

Tobacco is losing its allure for smaller farmers. Gugulethu Matope explains that amongst her neighbours around Fair Advantage Farm, which was invaded in 2001, “True, 2010 to 2013 was good. But no one grew tobacco this year.

Everyone is going into tomatoes.” On her own plot, she has set aside a hectare for cabbages and tomatoes.

Matope burnt down her tobacco curing barn in case she was tempted to go back into into the crop. “The process is hard,” she says, “the labour is hard.”

Beyond the hassles with police and money, the contracts that she and her neighbours have been offered by the big tobacco companies do not provide ●●● a worthwhile return.

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FRONTLINE | ZIMBABWE: THE MUGABE LEGACY

And the smallholders have to deal with ● ● ● More than 75% of Zimbabwe’s a predatory state. Chrispen Sukume, of tobacco is grown on contract. That has the Zimbabwe Livestock and Meat Advishelped to raise finance in a weak economy, but it gives the whip hand in negoory Council, explains: “Farmers wake up tiations to big companies such as China’s at 3am to avoid police, else they are $30 Tian Ze or British American Tobacco down before they even hit the market.”

(BAT). Some 40% of Zimbabwe’s tobacco He complains about creeping taxation on farm goods as the government struggles ends up in China, the world’s biggest to pay its civil servants. market with some 300 million smokers.

Toendepi Shonhe, at the African InstiBefore land reform, farmers would tute of Agrarian Studies, has been studyslaughter 550,000 head of cattle a year. ing tobacco farming in Marondera. He Now, it is just 250,000, mostly in the inconcludes that the producers have to formal sector. The local government do more processing. “A kilo of untreated authorities are levying 10% on each cow slaughtered; typically a cow sells for $500. tobacco is just $3. But a kilo of cigarettes costs $60,” he says. Companies such as “And that $50 kills the farmer, as it is BAT work across the tobacco sector, he about 50% of his profit, given all the exadds: they arrange contracts with farmers, they run toWhat if the tumultuous land bacco processing plants and reform opens up possibilities they manufacture, package that may be transformative? and market cigarettes.

DISGUISED WORKERS

Smallholders who have been pulled into global markets by tobacco multinationals are now the ‘disguised workers’ of the trade, says Shonhe: “Just like those people in China who work for nothing to make iPhones that Apple sells for hundreds of dollars.” Despite the nationalist bluster of the land seizures, Shonhe argues that many of those now working the land have gained little. And several white farmers – the target of ZANU-PF’s wrath – have simply moved into the more lucrative financing and processing of tobacco.

pense of rearing the cow and getting it to market,” says Sukume, “it’s regressive taxation, as cow sales are now by poor people in the poorer, drier areas.”

Agriculture and husbandry are not creating enough new jobs. Many educated young people are trading, often on the streets, rather than producing. Artist Gareth Nyandoro tracks this legacy: in the art gallery by Harare’s central park, an eerie looped audio track of a street seller pipes out behind a sorry-looking installation: a pile of banana skins, sugar cubes, a pair of children’s socks, crumpled clothes and crisp packets.

These informal workers mostly vote for the opposition MDC. They faced the brunt of ZANU-PF violence during Operation Murambatsvina, a brutal slum clearance programme in 2005.

This divided politics between city and countryside, between provinces and regions, and now between political factions, is also Mugabe’s legacy.

FRUGAL BUT HOPEFUL

WeseeMaravaMisheck,theMDCsenator for Masvingo, at a petrol station and arrangetomeetinChivhu.Hebuysuspizza, we buy him drinks. “How can a soldier be an economist?” he asks, blaming the crisis on the militarisation of the regime.

“We took over the country at the barrel of a gun, then we destroyed everything.”

But what if the tumultuous land reform opens up new possibilities that might be transformative within a generation? In Mashava, behind the asbestos mines, we meet a small community of farmers who are practising the art of the possible.

Isaac Mpofu, a Mashava farmer, is pleased with his piggery. Although, the tenants are not yet in their stalls, the structure is sound. When it rains, the slight slope will sluice dung into a small dam downhill. “We will keep fish there,” he says. “We are not wasting anything.”

Drystone walls capture water, channelling rain into vegetable gardens, retaining vital moisture on the land despite the scorching heat in Masvingo Province over the past five months of drought. A new farm building, ● ● ●

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FRONTLINE | ZIMBABWE: THE MUGABE LEGACY

built a few months ago, shows the money the family is able to reinvest.

M p o f u ’s n e i g h b o u r, B l a s i o Mavedzenge, says city dwellers cannot grasp the change in the countryside.

Standing next to a red tractor, he surveys the 20ha of land that he and his wife took over in 2000. He points to his manure pits, two depressions in the ground, a metre square each. “We don’t need fertiliser; we can triple the nitrogen content like this,” says Mavedzenge.

They have got used to doing without the state. And that is creating a new social ethos and structure on the farms, says Mavedzenge. Before land reform, the employees on white farms were like “pampered slaves. If you get a bicycle, the owner would take you to task because he knows how much he gives you,” he says. ●●●

EATING FROM THE SAME POT

Mavedzenge now employs three workers and their wives. “While the whites held you at a distance, here we eat from the same pot.” New workers are more mobile, might own land themselves and hold work parties or nhimbes, sharing labour to get fields cleared, for example.

As they get established, the new farmers started hiring workers and the rural economy started to pick up.

“Previously here, six cattle farmers employed around 10 people per farm,” says Mavedzenge. “Now there are around 500 households living here, and at least half employ at least one labourer. So that’s 250 jobs instead of 60.

What this means politically is harder to fathom. These new farmers may be happy with ZANU-PF’s land reform, but they are also more demanding. IDS’s Scoones describes how some farmers he worked with had clubbed together to resurface a road. “These people were just pissed off they couldn’t get their stuff to market. These places are supposed to be serviced and roads are supposed to be graded, but the council wasn’t doing anything. So they came together, hired a grader and built their road.”

When citizens start supplanting the state, that creates a new political dynamic. A better-fed citizenry is less likely to be bullied by withholding of food aid. “We have our solar panels. We have our own water,” says Mpofu. “We don’t want the municipality coming round.” A new spirit of independence is emerging. The beneficiaries of land reform are gradually getting richer and less grateful to their political leaders. ●

INTERVIEW

Patrick Chinamasa Finance minister, Zimbabwe

Harare’s last-chance-saloon negotiator has his say

F

inance minister Patrick elsewhere. And besides, he adds: Chinamasa is perhaps “There will be no return of the an unlikely reformer. A hardline Zimbabwe dollar until macroeconomic member of the politburo of the conditions are right. We need at least ruling ZANU-PF, he was justice minister six to 12 months export cover in gold during the land seizures of 2000/2001. reserves. That’s why we are making “A lot of our problems arise the gold producers refine locally.” from reactions to the land reform,” he admits. Those problems include He wants exporters to step up. the ballooning of national debt to “Which is why I pushed legislation more than $7bn, and, with the failure through parliament for a special to repay, arrears of $1.9bn. economic zone for exporters,” says Now Chinamasa is piloting Chinamasa, who sees commercial the last-chance-saloon negotiations agriculture as a clear target. Not just to reintegrate Zimbabwe back into tobacco farming, although he is the international development finance pleased with its continued contribution system. These began at the World to export earnings. The cotton sector Bank meetings in Lima in September is another possibility. “We gave it to 2015 and have continued with the private sector, and they ran it to two staff-monitored programmes the dogs,” he says. “I want to give input with the International Monetary Fund. support to cotton farmers to get them And they have been fruitful so far. back into the sector because of the Development finance institution Afreximbank “There will be no return will provide $601m as of the Zimbabwe dollar until a bridging loan to pay off conditions are right” the African Development Bank, $218m to pay off World Bank soft loans and has also many value chains: growing, ginning, contracted a long-term loan to pay off spinning, inputs, travel and so on.” other World Bank arrears.

Many questions around land remain unresolved. “We have received Zimbabwe’s reform team have EU funding to do boundary mapping. also stabilised the civil service wage We are giving out 99-year leases to bill and righted the banking sector – farmers, which also is for bankability. no mean feat in a time of tough drought It just requires cabinet approval. and collapsed commodity prices.

We have looked at the compensation problem and already mapped out But the rising strength of the dollar – Zimbabwe’s currency after the Masvingo Province in terms of claims.”

The problem with any deal with 2007/2007 period of hyperinflation – is causing headaches for the finance international institutions will be political minister. “We need to tackle the import pushback against reform conditions. bill,” says Chinamasa. A slew of import Already, opponents of the ruling party are refusing to budge on any shake-up bans has had little effect but anger the populace, which is why the government of state enterprises, nor countenance paying compensation to white farmers. wants to introduce bond notes as a proxy currency for exporters.

With elections arriving in 2018, the pressure is on to complete any Opponents argue that this equates to bringing the failed Zimbabwe deal fast. But creditors will be wary. dollar in by the back door. Chinamasa “Trust is the currency of governments,” denies this, saying: “This is not a says Chinamasa. That may well be the problem. ● N.N. new thing. It has been done before THE AFRICA REPORT

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Côte d’Ivoire

T

here are currently 176,000 students at Côte d’Ivoire’s public and private universities and graduate schools. It is unthinkable that students, teachers, cardiologists,

radiologists and other vital personnel and services be deprived of electricity or forced to

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f!"c#io" a# sp$cific #i&$s b$ca!s$ of r$c!rri"g pow$r o!#ag$s. As $ss$"#ia' #o dai'y 'if$ as i# is #o &od$r"isi"g #h$ co!"#ry, d$v$'opi"g h$a'#hcar$ a"d r!""i"g fac#ori$s, $'$c#rici#y is #h$ fo!"da#io" of Cô#$ d’Ivoir$’s d$v$'op&$"# p'a". Prod!ci"g &or$, i" a c'$a"$r way, is i&p$ra#iv$ #o $'$c#rifyi"g #h$ $"#ir$ co!"#ry, $d!ca#i"g a"d #r$a#i"g i#s chi'dr$" a"d $"ab'i"g i# #o r$so'!#$'y $"#$r a "$w $co"o&ic $ra.

© NABIL ZORKOT © JACQUES TORREGANO/DIVERGENCE

© GuIllAume BInet / mYOP / JA

© OLIVIER / JA

© JACQUES TORREGANO/DIVERGENCE

No development without electricity

© SIA KAMBOU

 The Azito thermal power plant.

Triple production by 2030

Côte d’Ivoire is entering the active phase of its 2016-2020 National Development Plan (NDP). It provides for investment of $60 billion to boost the economy and improve people’s living conditions.

Central to this programme is producing enough energy to ensure a constant supply, for all human and industrial activities.

ADVERTORIAL

With the new Azito and Ciprel plants, Côte d’Ivoire now possesses Sub-Saharan Africa’s most modern and productive gas-fired power stations. They operate on the “combined cycle” method which uses both a gas and a steam turbine to produce electricity and capture waste heat from the gas turbine, increasing efficiency and electrical output and preventing the release of thousands of tonnes of CO² into the atmosphere. Several months of work and over $1 billion in investment boosted the production capacity from 290 MW to 430 MW at Azito, and from 320 MW to 550 MW at Ciprel. Both these new plants are located in the Abidjan area. Azito was commissioned in mid2015 and Ciprel in February 2016. This increased production will allow for the electrification of 250,000 households, giving more than 2.5 million people access to electricity.

UNINTERRUPTED SUPPLY IN THE ENTIRE COUNTRY

Operating theatre at the Treichville Cardiology Institute.



The opening of five new universities in 2020 (in San Pedro, Bondoukou, Daloa, Korhogo and Man) represents 160,000 additional students – and a hike in domestic demand for electricity. Then there are the tens of thousands of pupils expected to fill 13,000 primary school classes and those of 100 junior and senior high schools. Not to mention the five new teaching hospitals due to open in 2020 (in Cocody, Treichville, Yopougon, Bouaké and Korhogo), as well as a Radiotherapy and Oncology Centre and Cardiology Institute, both in Abidjan, which will become regional referral centres. In terms of everyday life, shops, streets and homes need to be electrified, even those in the most remote villages. It is crucial to avoid creating a two-tier Côte d’Ivoire with, on the one hand, villages that are constrained to function by daylight and, on the other, urban centres living totally in the 21st century.

To cope with this anticipated increase in demand, the country has to triple its electricity production. © OLIVIER / JA

Increased production, cleaner energy

OBJECTIVE: ELECTRIFY 100% OF THE COUNTRY BY 2025 Hydro, solar, biomass and more

The commissioning of the new extensions to the Azito and Ciprel power stations increased the total installed capacity to its current 2,000 MW, compared with 1,300 MW in 2011, of which less than 900 MW was actually available due to years of poor maintenance. Many experts believe that the achievement of Côte d’Ivoire’s development goals requires at least a doubling of the current capacity by 2020 and, thereafter, a continuous increase.

Energy-related investments are thus a major feature of the 2016-2020 NDP as they represent 20% of total projects and 34% of costs, amounting to $20 billion. These investments will enable Côte d’Ivoire to step up its electricity generation to more than 5,000 MW by 2020 and 6,750 MW by 2030.

At the same time, several household electrification programmes will achieve a coverage rate of 95% of the country by 2020, compared to 31% in 2009. By the end of this year, all villages of more than 500 people will have been connected to the electricity network and Côte d’Ivoire will in all likelihood be one of the first African countries to achieve total electrification by 2025.

The Kossou hydroelectric dam.

© NABIL ZORKOT



In parallel with the electrification programme, the country’s energy mix will change profoundly, with renewable energy power plants (hydro, solar and biomass) taking precedence over thermal power plants, currently the main source of electricity. In fact, the 2016-2020 NDP includes 11 hydroelectric power projects which, together, will generate 1,250 MW. Added to this is the construction of 12 biomass power plants, which produce electricity from agricultural waste, and five solar plants. All these projects will ensure that renewable energy makes up 50% of Côte d’Ivoire’s power generation by 2030 (currently less than 10%).

Focus on emergence and inclusive growth 182 projects and $60 billion

T

he new plan for the development of Côte d’Ivoire’s economy covers the period 2016-2020. It includes 112 public projects and 70 private projects, ranging from the National Nutrition Programme, the implementation of a virtual university and the installation of 5,000 kilometres of optical fiber to the construction of road and energy infrastructure a n d t h e d eve l o p m e n t o f n ew

industrial zones. Together, all these projects represent a total investment of 30,000 billion CFA francs ($60 billion), comprising 62% private investment and 38% public investment.

In May 2016, in Paris, this plan was presented to Cote d’Ivoire’s development partners, including the World Bank, the African Development Bank (AfDB), the Islamic Development Bank (IDB), the Eu-

ropean Union (EU) and the United Nations Development Programme (UNDP), as well as bilateral agencies (United States, France, etc.).

In a sure sign of the international community’s confidence in Côte d’Ivoire, the meeting resulted in the mobilisation of $15.4 billion from these international partners, a quarter of the overall budget and twice that hoped for by the Ivorian government.

Côte d’Ivoire > No development without electricity

© JACQUES TORREGANO/DIVERGENCE

A new African industrial power The ambition of the 2016-2020 NDP, which is an extension of the previous 2012-2015 NDP, is to build a modern economy. It has to be able to create a large number of skilled jobs – the country’s industrial sector already employs 700,000 people – and generate sufficient added value at a national level to ensure that its results are not compromised. Côte d’Ivoire has what it takes to succeed. It possesses exceptional agricultural and mineral wealth and is able to rely on its solid human capital. Its manufacturing industry now extends into building materials, metallurgy, mechanics, chemistry, textiles and wood. Côte d’Ivoire has the densest and most diverse manufacturing industry in the West African sub-region and it is ranked 8th on the continent, according to the United Nations Industrial Development Organization (UNIDO).



ELECTRICITY PROGRESS IN CÔTE D’IVOIRE (development plan results and objectives) 2011

2016

2020

Available capacity

900 MW

2,000 MW

5,000 MW

Outage rate (hours per year)

55 h 51

14 h

0

31%

70%

95%

Access to electricity (% of the population) Investments in electricity

5 billion dollars

20 billion dollars

KEY ACHIEVEMENTS OF THE 2012-2015 NATIONAL DEVELOPMENT PLAN (socio-economic infrastructure)

ADVERTORIAL

Primary and secondary education

Health

9,056 classrooms built 3,943 classrooms renovated 24,422 teachers recruited 4 hospitals built and equipped 52 health centres built and equipped 150 health centres renovated and equipped

68 new secondary schools 30 secondary schools renovated 7,966 teachers recruited

9,638 health professionals recruited

DEVELOP THE AGRO-INDUSTRIAL SECTOR Côte d’Ivoire is also the 5th largest African agro-industrial exporter, even though it currently processes only a small proportion of its agricultural production, for example just 33% of cocoa and 6% of cashew nuts. As the world’s largest producer of these high-demand crops, the goal is to locally process 100% of cocoa and 35% of cashew nuts by 2020, which will boost the added value of its exports. Côte d’Ivoire is also a major African producer of palm oil and rubber, both of which are covered by the agro-industrial development strategy. All this adds up to new reasons to increase electricity generation and so ensure an uninterrupted supply.

In 2030, the babies born in Côte d’Ivoire this year will be 14 years old, and they will more than likely be getting their first Smartphone. They will have no trouble charging their phones, and being the recipient of a vaccine delivered by drone to the neighbouring health centre or having their scholarships paid to them via their mobile phones will come as no surprise. High schools, universities and graduate schools will lead them to the doors of dynamic, international Ivorian companies. They will know nothing of the 2016-2020 National Development Plan. Yet it is this very plan that will have built the Côte d’Ivoire of 2030.

DIFCOM/DF - PHOTOS: © ALL RIGHTS RESERVED AND LESS NOTED.

Cocoa processing plant in San Pedro.

POLITICS

©MICHAEL SHEEHAN/AFP

SOUTH AFRICA

City hall cliffhanger As municipal elections hit the country on 3 August, Nelson Mandela Bay is a litmus test for the ANC. If Mayor Jordaan has shored up some of the party’s popularity locally, deep faultlines of poverty and discontent make this a knife-edge contest with national repercussions

By Crystal Orderson in Nelson Mandela Bay

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D

anny Jordaan, credited with bringing the World Cup to South Africa in 2010, is now the man that the ruling African National Congress (ANC) hopes will rescue it from a local election disaster in its political heartlands on 3 August. ANC leaders see its control of Nelson Mandela Bay metropolitan area, which includes the city of Port Elizabeth and neighbouring towns ofUitenhageandDespatch,asvulnerable to a challenge from the leftist Economic Freedom Fighters (EFF) and the rightof-centre Democratic Alliance (DA).

POLITICS

Hitbyrisingunemploymentcombined with a poor record on local services and corruption, support for the ANC had been slipping in the area since the last elections in 2011. Jordaan, a local man who still heads the South African Football Association, was brought in a year ago to stop the rot in Nelson Mandela Bay after a succession of appointees had failed. “I was minding my own business.

When I heard what was going on here, I had to come back. This is the place of my birth, I grew up here and I will retire here,” Jordaan tells The Africa Report.

ZUMA’S DAMP SQUIB

©MICHAEL SHEEHAN/AFP

34

Doubtless, the charismatic Jordaan has won back some goodwill for the ANC in the region, but the party will have to struggle hard to hold on to the metro area. Mounting criticism of President Jacob Zuma in the wake of his sacking People like Manyala have borne the of finance minister Nhlanhla Nene in December and Zuma’s links to the Gupta brunt of poor service delivery in the family are weakening the party’s position. area. In June, auditor general ThemMany of the country’s liberation heroes bekile Makwetu reported that Nelson Mandela metro had the country’s worst were born in Eastern Cape and worked in Port Elizabeth. Not for nothing did the record for wasting public funds. It lost ANCchoosetolaunchitscampaignmanimore than R235m ($15.4m) in revenue festo here in April. But the event turned from water and electricity last year. out to be a damp squib: the 46,000-seater Manyala wants action from the govfootballstadiuminPortElizabethwashalf ernment: “I am too much disappointed empty when Zuma arrived. Some angry in the ANC. I think it’s time I vote for someone else,” she tells The Africa Report.

ANC officials talked of sabotage and investigatingwhatwentwrong.

But the true reasons beIn local elections in 2011, hind dwindling enthusiasm the ANC hung onto the metro for the ruling ANC were not hard to fathom: “No toilets. with just 51.9% of the vote No water. My children are AlongtimeANCstronghold,theEastern sick every day, and there’s too much Cape has been weakened by in-fighting. crime,” complains Nloyiso Manyala, The party split after Thabo Mbeki lost a mother of four. Manyala’s home is a the national presidency to Jacob Zuma two-roomed zinc and iron shack – with in 2007, and most of the ANC’s national no running water, electricity or sanitexecutive in the province left to form the ation – in the Nelson Mandela metro Congress of the People (COPE). township of Edongweni, KwaZakhele, In local elections in 2011, the ANC on the outskirts of Port Elizabeth.

Speaking in Xhosa and English, Manhung onto the metro with just 51.9% yala talks of her frustrations with the area. of the vote. The DA won 40.1% of the She has been living in the shack since vote, while COPE trailed with 4.9%. In 1990. She has to walk to a communal tap general elections in 2014, the ANC got to collect water for drinking, bathing and just 49% of the vote in Nelson Manlaundry. The communal toilets are still dela Bay, its second-lowest result in further away. There is no street lighting. the country after Cape Town, which is Many people, especially women, are an opposition bastion.

The ANC slide looked set to continue scared to use the toilets after dark.

Conditions at KwaZakhele’s Silvertown until its headquarters at Luthuli House were the worst in the country, according hit on the idea of drafting Jordaan as to the 2011 census. Most people were mayor of Nelson Mandela Bay to sort still using the bucket toilet system and out the troubled metro, which has had paraffin was the main source of energy. six mayors in just 15 years.

Pout and shout: Jordaan fans make their views clear at DA candidate Athol Trollip’s rally

“The top six of the ANC have been in the metro regularly. The law was laid down […] support must be given to Danny Jordaan,” says Professor Joleen Steyn Kotze, who works in the politics department at Nelson Mandela Metropolitan University. And over the past year, Jordaan has started shaking things up: officials accused of corruption have been suspended and are being investigated, and public services are improving.

“It’s been challenging, difficult but rewarding. We will retain the metro […]

I am confident of that. I see great possibilities for the city,” Jordaan says on the campaign trail. Although he is upbeat about the ANC’s prospects, Jordaan admits the fight against corruption and waste is a work in progress.

VOTERS UNDECIDED

It will be an all-out fight in elections on 3 August. TV broadcaster eNCA and polling company Ipsos conducted a poll in Nelson Mandela Bay that indicated the ANC could still win the municipality – based on what it didn’t know rather than what it did. In the poll, conducted on 6 and 7 June, 34% of people polled said they plan to vote for the DA and 30% for the ANC, but as many as 21% of respondents were either undecided or refused to say who they would vote for.

Not only does the ANC face challenges from the DA and the EFF, it will also have to contend with the United Democratic Movement, a breakaway from the ANC,

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POLITICS

tration’s new five-year plan will “change 27-year-old Ncababakazi Manasi pores over a map of the area with 10 other party the economic life of the city entirely.” supporters. She says the youth are tired Jordaan’s campaign against unemployof the ANC, but much of the older genment focuses on diversifying the ecoeration is still loyal to the party that led nomy away from the auto sector and instead developing the ocean economy, the freedom struggle. The youth vote is increasingly important to all the parties. tourism and revitalising the township On the other side of the city, in the and creative economies. rundown Northern Areas, groups of unThe mayor holds regular briefings with business and labour leaders. During one employed youths are standing around on street corners. Fred – who declined to give his Jordaan’s campaign focuses surname – says people are on diversifying the economy angry and disappointed at away from the auto sector conditions in the city and the lack of jobs and educational opportunities. “Every five years, such session, local businessman Chumani Maqina tells The Africa Report that politicians promise us things but then he has been impressed with the ideas: nothing happens,” he says. “But this “It’s been refreshing to hear the plans, time we are feeling motivated because but the change in the political landscape we can change things.” might not enable it.” Others speak of the FIVE-YEAR PLAN need for stability and continuity if the Nelson Mandela Bay accounts for just development plans are to work. over 40% of the Eastern Cape’s economy.

“He’s had to clean up, restore trust Of the more than 1.2 million people liv[…] he is making inroads, but is this ing in the metro area, one in four is jobenough?” asks Northern Areas ● ● ● less. Yet in June rating agency Moody’s upgraded Nelson Mandela Bay’s creditJulius Malema pledged to seize worthiness to AA1, second only to Cape white-owned land at the EFF’s Town. According to Jordaan, his adminisnationwide campaign launch

MUJAHID SAFODIEN/AFP

and the United Front (UF), formed by radical trade unionists from the National Union of Metalworkers of South Africa (NUMSA), whose base is in the auto industry around Port Elizabeth.

With sprawling factories owned by Volkswagen and General Motors, the auto industry is one of the biggest employers in the area. Most of the unionised workers belong to NUMSA, which fiercely opposes the Zuma government and last year split from the Congress of South African Trade Unions, the proANC union federation.

Nelson Mandela Bay is the DA’s number one target in the local elections. Its mayoral candidate, Athol Trollip, has been campaigning since last November. “This is a tale of two cities, one rich and the other poor. There are signs of massive strain with no infrastructure.

The apartheid hierarchy is alive and well,” Trollip tells The Africa Report while campaigning in KwaZakhele and Soweto-on-Sea. “We are the party who can bring about change.”

Trollip, who speaks fluent Xhosa, promises to make Port Elizabeth an integrated and connected city and fix its crumblinginfrastructure.AlsoontheDA’s campaign in Soweto-on-Sea township,

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POLITICS

● ● ● resident Donovan Davids. Davids, who has known Jordaan since his sporting days in the 1960s, says Jordaan will do a great job but asks whether he will be a caretaker mayor or remain in office for a full term if the ANC wins.

The DA’s Trollip, who also thinks the metro should use its two ports and expansive ocean to drive growth, is highly critical of Jordaan and the ANC: “There is infrastructural strain. Danny has bragged about the R2bn [in cash reserves], but it doesn’t help if you have money in your bank account but you’re not delivering and fixing potholes.”

The DA has run one of its longest-ever campaigns in Nelson Mandela Bay, with Trollip spending at least a day in each of the 60 wards in the metro. “Every second young person in this metro is unemployed, and this will bring the ANC to its knees,” Trollip confidently predicts.

DA DISARRAY

But Trollip’s campaign has its own problems. In late May, seven DA council candidates defected to the ANC. Then Veliswa Mvenya, the DA’s chairwoman for Eastern Cape, announced her resignation, apparently due to disagreements with Trollip. Mvenya had played a key role in building the party’s base in the province, especially in rural areas. It took an intervention from former party

the wards, but we don’t think there will leader Helen Zille to dissuade Mvenya be an outright winner and a coalition from quitting permanently. might govern the area.”

All the fuss has helped the ANC. Jordaan says Trollip’s strategy has creOn the record, the ANC’s Jordaan rejects the possibility of a coalition. He sees ated problems in the party and alienplenty of people who want to be ANC ated people: “DA structures are collapsing. I think the real opposition here councillors and perhaps more defectors from the DA. For his part, the DA’s Trollip will be the EFF, not the DA. The EFF is is talking tough: he would only go into getting young people, and we have to a coalition with a party that was willing work in that space.” to implement DA policies.

On that point, EFF secretary genIn fact, the EFF has the clearest, and eral Godrich Gardee would agree with perhaps most practical, strategy on coJordaan. Gardee says the EFF will field candidates in all the contested wards in the metro “Every second young person is and says it has the capacity unemployed, this will bring the to shift things and deal with ANC to its knees,” Trollip says the many deep-seated service delivery issues. “People arelookingforacrediblealternative.They alitions. Gardee says the party wants a are not happy with the ANC or the DA. “coalition of a special type”. That means The EFF is here to win!” Gardee asserts. it would be willing to give up seats in EFF leader Julius Malema addressed Johannesburg, Tshwane or any other thousands of supporters on a whirlwind area where it may win substantial votes, tour of the Eastern Cape in May, and its to its rival parties. In exchange, it would door-to-door campaigning across the demand seats from them in areas such city is winning over voters, who complain as Polokwane or Mpumalanga so it can the ANC has neglected them. govern those areas outright.

With its plans to stamp its authority on The other new leftist party, the UF, a particular area of the country, the EFF has made less of an impact. Mziyanda shows its distinct strategic thinking comTwani, a NUMSA official and leader of the UF in Eastern Cape, is confident the pared with its rivals. As the ANC copes ANC will lose overall control of Nelson with growing pressure, the EFF plans Mandela Bay: “We are contesting all to seize its big political opportunity. ●

Local litmus tests THIS YEAR’S local government elections due on 3 August will see parties compete for control of 278 municipalities.

But above all, it will be a litmus test for African National Congress (ANC) rule since it came to power 22 years ago.

On the face of it, the signs are not good for the ruling party.

Scandals at the top of the party and factionalism are

Breakdown of the 2011 local election results ANC outright winner DA outright winner IFP outright winner NFP outright winner ANC, DA tied ANC, IFP tied Other party largest

ANC largest party DA largest party IFP largest party NFP largest party

SOURCE: WIKIPEDIA

36

weakening its solidarity. Making matters worse are the sluggish economic growth and unemployment figures, which rose to its highest ever in the first quarter of 2016.

Although opposition parties argue that Nelson Mandela Bay is the ANC’s weakest area, they are also wresting control of cities such as Johannesburg, South Africa’s economic capital, and Tshwane, which includes the political capital, Pretoria.

The campaigns have already been marred by bitter political rivalries and political assassinations. Much is at stake for the parties and the candidates. At a time of economic troubles, being a councillor with perks such as new cars, bodyguards and the authority to award contracts looks highly attractive.

The contest over mayoral posts also reflects factional battles in provinces. In Gauteng, the battle lines have been drawn between groups vying for mayoral posts for their candidates in Tshwane and Ekurhuleni.

According to the Independent Electoral Commission (IEC), there are close to 26 million citizens on the voters roll, with 77% of eligible voters now registered. The IEC says more than 53,000 candidates contested in the last municipal poll in 2011. This time, even more are joining the fray, many sensing that political change is in the air. Many of the rival parties see the local elections in August as a dress rehearsal for the critical national elections in 2019. ● C.O. THE AFRICA REPORT

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POLITICS

Polling the public Ahead of the August local elections, The Africa Report carried out a survey in conjunction with GeoPoll, the world’s largest mobile surveying platform, to take the temperature of South Africans’ attitudes to a range of political and economic issues.

8.7%

Do you feel economically better off now compared to four years ago?

How satisfied are you with the performance of the economy in the past four years?

37.2%

54%

42%

9.1%

17.3%

Very satisfied Satisfied

31.4%

Unsatisfied Yes

No

What is the most important policy issue for you?

Combating corruption Creating jobs

Don’t know

Very unsatisfied

62.2%

Are you going to vote for change in the local elections?

19.3%

18.4%

3.3% 87.4%

9.1%

Yes No

Providing free education

Don’t know

5.9%

When you are deciding who to support in the local elections, will you decide based on national issues or local issues?

41.4%

National

Will you vote for the same political party in the local elections as national elections?

52.9%

Local

Yes

Don’t know

67.2% 25.5% 7.1% No

Don’t know

Are you happy with the direction South Africa is heading politically?

Yes

6.2%

5.1%

No

Don’t know

7.8% 19.6%

26.2%

31.8%

5.7% 33.3%

61.8%

68.6%

72.5%

60.8%

National results

Gauteng

Western Cape

Eastern Cape

Survey methodology THE RESEARCH FOR THIS SURVEY was carried out on 30 and 31 May with a total of 559 people aged between 15 and 75. GeoPoll targeted respondents by age, gender and location in order to make the poll nationally representative. It has a margin of error of less than 5%; however, by its nature, SMS surveying excludes those without a mobile telephone (less than 10% of adults). Around 20-30% of those approached take part in surveys, and those who complete them are given a small top-up to their phone airtime credit. “For a long time, it’s been difficult logistically and prohibitively expensive to collect robust data in many countries in Africa,” says Roxana Elliott, director of communications at GeoPoll. “It’s important to better understand the preferences and views of people across Africa, and mobile surveys make it much easier for us to do that. We’ve found that people like knowing their voice is being heard, especially on important issues such as the economy,” she explains. ● Charlie Hamilton THE AFRICA REPORT

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Analysis SOUTH AFRICA IS HUNGRY for change and frustrated with the country’s current political direction, according a poll conducted ahead of the 3 August local elections by The Africa Report in conjunction with GeoPoll. Our survey of more than 500 people from across the country found a population predominantly satisfied with the economy. The majority said they felt more financially secure than four years ago and put creating jobs as their top policy priority.

One key result of the research was the overwhelming number who said they planned to vote for change. While nationally 87.4% reported they wanted change, this rose to 89.8% in Eastern Cape, home to Port Elizabeth, one of the key election targets where the ruling African National Congress (ANC) is under most pressure from the Democratic Alliance (DA). Gauteng recorded the highest level of contentment, with only 12.4% of respondents endorsing change, however this data was gathered before the violent June street protests in Tshwane. Western Cape, where the DA has controlled Cape Town since 2011 reported the lowest level of satisfaction with South Africa’s political trajectory.

Only 19.6% of people said they were happy with it, almost 10% lower than the national average.

For satisfaction with the economy, Western Cape stood out from the crowd with only 5.8% reporting they were very satisfied and 33.3% saying they were satisfied, compared to national averages of 17.3% and 42%, respectively.

Of particular concern for the ANC will be the fact that 41.3% of respondents also said they would make their decisions in the municipal elections on the basis of local issues against 52.7% on national matters. More than two-thirds said they would vote for the same party in the local elections as they would in the national elections in 2019. ● C.H.

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The Huajian shoe factory in Dukem: the government sees manufacturing as the future

ETHIOPIA

has also been rocked by deadly protests across Oromia, its most populous region. Protesters have targeted investor properties, and the unrest has placed high demands on a security force known for violent crackdowns.

The state-driven economic model leaves no room In Ginchi, the small town in Orofor dissenting voices as Ethiopia sticks to its 11.2% mia where these protests began, stugrowth target, with manufacturing leading the way dents said they took to the streets after hearing rumours that the government epeated so often by officials, the accounting is flawed – that agricultural wanted to lease some land to investors phrase ‘double-digit economic output figures, for instance, are skewed without consulting the population. The growth’ has become something by false assumptions about the volume police clamped down violently, says of crops in storage; that low-level officials B.H., 20, who asked only to be identified of a sacred slogan for the Ethiopian government. It is a statistic that makes are incentivised to exaggerate progress; by his initials. One of his classmates, headlines, attracts investors and imand that this level of GDP growth sughe said, was shot dead. presses economists. According to the gests productivity increases that are, “The protests have not stopped, and government of Africa’s second-most quite literally, incredible. they won’t stop until justice is done,” populous country, average annual Still, many agree that the rate of exsays B.H. “The families of people who gross domestic product (GDP) growth pansion is impressive. Over the past decdied must be compensated, and those for the past 12 years exceeds 10%. And ade, the International Monetary Fund who were arrested must be released.”

(IMF) has typically projecDespite the drought and while economies across the continted growth of between 7% unrest, Ethiopia has not ent are faltering, dragged down by a slump in the prices of the commoditand 9% annually. officially revised its amies that sustain them, Ethiopia holds bitious GDP targets for CHALLENGES out hope. Its economic performance this year, although Prime has never been pegged to the price of Minister Hailemariam DeBut this will be a tough oil, natural gas or minerals. salegn admitted in March year for Ethiopia. The The target for GDP growth this fiscal that growth could slow to country is experiencing year is 11.2%. And to achieve similar between 7% and 10%. In its worst drought in decManufacturing rates in the years to come, officials argue, April, the IMF slashed its ades, with crop failures represents around leaving 10.2 million people the government must stay the course growth projections from in prioritising one key sector: industry. in need of emergency food 8.1% to 4.5%. But the govof ernment dismisses predicSome scepticism surrounds those aid. After the last major Ethiopia’s GDP tions like these. Deputy magic numbers. Civil servants and aid drought, in 2001, GDP workers whisper that the government’s planning commis- ● ● ● contracted. The country SOURCE: WORLD BANK

The end, the means

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POLITICS

sioner Abraham Tekeste, a longserving technocrat and former state minister of finance, says: “They tend to consistently underestimate growth targets.” He acknowledges, though, that the drought will make the 11.2% growth target “very difficult to achieve”.

Officials say the economy grew by 10.2% last year, about a quarter of which was driven by agriculture – mostly by smallholders who benefited from expanding irrigation networks and government schemes to spread best farming practices. Improving agricultural resilience, insists Abraham, has lessened the drought’s impact.

Industry contributed to just under one third of last year’s economic growth, but that was mostly driven by private investments in construction. And just under half the country’s growth was driven by services, consisting mostly of expansions in trade, hospitality and transport.

Although services are still contributing the most to Ethiopia’s growth, the industrial sector, including construction, is picking up the most speed, having expanded by more than 20% annually over the past five years – nearly twice the rate of services.

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KEY TO THE FUTURE

The government sees manufacturing as more than just another sector; it is the key to Ethiopia’s future. The government is investing heavily in infrastructure to attract manufacturers and is enacting policies to cut through red tape. Industrialisation has already been a primary focus for the past five years, but it is still hampered by power outages, a lack of skilled labour and complicated customs procedures. Manufacturing makes up only about 4% of GDP. But to hear officials tell it, this is only the starting point. Arkebe Oqubay, the prime ministerial adviser who leads Ethiopia’s industrialisation drive, says the administration will spend roughly $1bn annually to get five top-of-the-line government-owned industrial parks up and running (see interview).

Ethiopia cannot get by on its own, and so the national debt is growing, with total external debt totalling nearly $20bn at the end of last fiscal year. About $6.8bn came from concessional lenders like the World Bank, but China’s share has lately been rising and could soon surpass that of the multilateral lenders.

Officials across the board wave away concerns over rising debt, em- ● ● ●

INTERVIEW

Arkebe Oqubay Special adviser to the prime minister, Ethiopia

We need to create 200,000 jobs The government is investing heavily in industrial parks to boost employment and production.

Arkebe Oqubay talks to The Africa Report about new projects and lessons learned

I

nglobalcircles,ArkebeOqubay is probably best known as an academic. Oxford University Press published his book Made in Africa: Industrial Policy in Ethiopia last year. But inside Ethiopia, he plays a dynamic role.

Despite his cool reserve, Arkebe is energetically leading Ethiopia’s efforts to industrialise.

He works in a sunny office with pristine white sofas, a golden ceiling and little in the way of decoration except for one wooden model ship, received during an official visit to Mauritius, and a replica of an Ethiopian Airlines jet. Arkebe walks the party line better than most, and he has been doing it from the beginning as a member of the Ethiopian People’s Revolutionary Democratic Front.

TAR: Where do we stand on the industrial parks under construction?

ARKEBE OQUBAY: Hawassa Industrial Park is an eco-industrial park. It will be completed in June, and it’s 100% occupied by leading manufacturers and will generate 60,000 jobs. When it operates at full capacity, it will generate about $1bn in export earnings. Parks in Adama, Mekelle, Kombolcha and Dire Dawa will finish construction by the end of this year. Hawassa is

a model. This park is being completed in less than nine months; it’s one of the fastest. And we want these to be green industrial parks.

So Hawassa, for instance, does not discharge any treated water.

We believe that we need to build 2 million square metres of factory buildings every year and to create 200,000 jobs. In order to do that, we’ll need roughly between $1bn and $2bn every year.

And these parks mark a departure from Bole Lemi, the country’s first such project?

We learned lessons from Bole Lemi. Bole Lemi took more than five years, and in terms of standards it also has its own problems.

So, based on it, our government made comprehensive studies and designed policies with a new approach. The key difference is that […] rather than focusing on all types of investors, we are focusing on the high end. This is one major shift. Secondly, we don’t just build the park and then try to attract investors. From the very beginning we engage the investors so that we include their requirements.

This is also a different approach.

Thirdly, we have to build this at a high standard of eco-industry, and we use this as leverage, as a source of competitive advantage.

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How do you incentivise manufacturers to come to Ethiopia?

In Ethiopia, one of the great things for manufacturing is the big,younglabourforce.Sotheywill haveacompetitiveprice.Secondly, we ensure that they have good infrastructure. We have also given them additional incentives if they are engaged in the export sector.

We give them a profit tax holiday for many years, we allow them to import duty-free machinery and when they export they don’t pay any type of taxes.

But the key issue for investors is not the incentives. They look at the basic conditions. So within the parks, we are going to organise one-stop government services.

Customs clearance will be done in the park, licensing renewals will be done in the park and banks will have offices inside the park.

Hawassa is for textiles. What other manufacturing sectors are getting priority?

Footwear, leather products, food and beverages, and the pharmaceutical industry. Pharmaceuticals are particularly important for us because we are importing 85% of our requirement. We want to fully supply our own needs.

Secondly, we have Ethiopian Airlines. Pharmaceutical goods are THE AFRICA REPORT

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air freighted most of the time, so we want to use this as leverage.

1957 Born in Mekelle, the capital of Tigray region

So much infrastructure growth has been enabled by loans, especially from China. Is the government trying to keep a lid on debt or is there an attitude that all of this is going to be repaid?

Yes, it will be repaid. When we calculate economic feasibility, we base it on a 15-year repayment period, which is acceptable. Over time, once more companies are investing inside the park, from year to year, our capacity to generate foreign exchange and additional income will increase.

1974 Joined the armed struggle to overthrow the Derg regime 1991 Derg regime ousted, and the EPRDF assumes power 2003 Became mayor of Addis Ababa, serving for two years 2010 Appointed as adviser to the prime minister

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Industrialisation has been a focus for Ethiopia for a while but previous goals haven’t been met.

Manufacturing is still low as a percentage of gross domestic product (GDP), and there are still challenges in terms of trade logistics and unskilled labour.

Weknowtheexistingchallenges.

You highlighted labour skills, but the facts show that the labour in Ethiopia is in a good position to catch up. Now we have more than 1,350 technical schools […] with the capacity to train up to a million students. And the student population in universities has expanded to more than half a million.

When we talk logistics, a big component is transportation. But now the Addis-Djibouti railway is being completed. We are also expandingairports because air transport is a major part of the solution.

People are dying in the Oromia protests[againstlandclearance].

Somearetorchinginvestorproperty, which sends a pretty clear signal that this method of growth isn’t working for them.

The Oromia issue […] it’s related to other issues. The youth want opportunities. They want jobs.

The solution is to accelerate economic growth. In fact, one of the good things about Ethiopia is that growth has been very inclusive.

When you talk about stability, it also means macroeconomic stability. Without having macroeconomic stability, there is high inflation, a high interest rate and high fluctuation in exchange rates.

Investors will have difficulty predicting what they can generate.

In addition to this, they want policy continuity. You need a governmentthathasaveryclearvision – not just that it listens to advice and prescriptions coming from the big guys. The country should have a very, very clear path. ● Interview by Jacey Fortin in Addis Ababa

POLITICS

phasising that these loans only fund bankable investments – and that Ethiopia’s debt-to-GDP ratio is below that of many rich countries.

Ethiopia’s approach is turning it into a model for the continent, says Carlos Lopes, the executive secretary of the United Nations Economic Commission for Africa. He adds that Ethiopia was a major influence when the organisation began emphasising industrialisation about four years ago.

“We had pushback from the Bretton Woods institutions, and particularly the World Bank, insisting that we should be talking about diversification of the economy and not so much about industrialisation. Implicit was the notion that the market should be let go,” Lopes explains. “Our view is much more forceful. It’s to promote industrial policy as the key policy for African countries […]. Now, four years later, the World Bank is talking about industrialisation all the time.” ●●●

SOUTH KOREAN MODEL

Ethiopia finds its inspiration in the East and seeks to take advantage of rising labour costs there. It seeks to emulate countries like South Korea, which rose from poverty in the 1960s to become a global manufacturing hub. Ha-Joon Chang, a South Korean economist at Cambridge University, acknowledges that Ethiopia still has

Strict adherence to a state-driven a long way to go but says the coungrowth model has left no room for try can succeed if it stays the course.

Unlike South Korea, Ethiopia is relying dissenting voices. The political space heavily on its state-owned enterprises at is closed, and the ruling Ethiopian the expense of private-sector dynamism.

Peoples’ Revolutionary Democratic But Chang does not see that as a liability: Front (EPRDF) and its allies won all parliamentary seats in 2015’s national “Countries like Taiwan, Singapore and election. Many citizens say they fear increasingly China have made up for the security agencies, which are the lack of large domestic firms by actively using state-owned enterprises and powerful and secretive. transnational corporations,” he says. “What is important is that SECURITY CRACKDOWN the country is in control of its destiny through its ability to set As Ethiopia modernises, the parameters for the operafarmers, who make up tion of productive enterprises, most of the population, Agriculture are being displaced from not who owns the enterprises.” represents The Ethiopian government supalmost half their land – and often ports financial repression, which of Ethiopia’s offered little or no comsuccessful Asian industrialisers pensation. In NovemGDP used in order to channel money ber 2015, unrest erupSOURCE: USAID ted when members of the from savings towards particular Oromo ethnic group, Ethiopia’s largest, sectors of the economy. The United began protesting against their politStates-based Brookings Institution’s ical marginalisation. Security forces John Page explains the risks of such a have cracked down, and activists say policy: “Yes, you can use that money hundreds of people have died. to subsidise industry, but only if you have set clear performance targets for T., a 21-year-old university student the recipients of that money. It’s worth in the city of Adama who requested anonymity, says he once joined a peaceful looking at countries in Latin America demonstration that was shut down by where companies got the subsidy but security agents within minutes. Ecoweren’t set proper targets.” nomic growth, he argues, does not Workers sort coffee beans justify this kind of treatment. “The at the Oromia Coffee Farmers EPRDF has been ruling for 25 years, Cooperative Union but it has never addressed our concerns,” he argues. “Our future is dark if the government continues like this.”

Some officials dismiss the demonstrations as isolated incidents. Others claim the movement has been hijacked by instigators, terrorists and puppets of Ethiopia’s rival, Eritrea. No matter what the excuse, it is clear that the unrest is an uncomfortable subject for a country that prizes its stability as a key draw for foreign investors.

In response to critics, officials say the state is pouring investments into initiatives that will create jobs. They emphasise how much spending – about a quarter of the budget, according to deputy planning commissioner Abraham – goes toward education.

They point out that Ethiopia’s record for inclusive growth is much better than that of other African countries. And they fall back on one more key slogan, one that officials deploy regularly as they lay the foundations to turn Ethiopia into a pioneer of African manufacturing: ‘We are on the right track.’ ●

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OPINION

Sttephen Chan

Professsor of international relations, School of Oriental and African Studies, UK

Dlamini-Zuma’s awful AU legacy

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kosazana Dlamini-Zuma is not seeking a secondtermaschairpersonoftheAfrican Union (AU), and she has not been a good chairperson. Her five-year term will finish towards the end of 2017. Most chairs are expected to serve two terms, so Dlamini-Zuma’s decision to leave has prompted speculation that she wishes to begin a campaign to succeed her former husband, Jacob Zuma, as president of South Africa.

She would bring with her the same torpid inaction she brought to the AU. Her supporters say she has kept the AU ship steady, and this is true, but she has done nothing to reinvigorate the organisation to keep it dynamic and useful to a rapidly changing continent.

She succeeded Gabon’s Jean Ping after a bitter competition that took three electoral rounds. It was seen in 2012 as a South African power play and split the states of Africa along Anglophone and Francophone lines.

Ping, a Gabonese citizen of half-Chinese parentage, is an urbane and cultivated person of immaculate, elite French formation. Dlamini-Zuma is herself a highly educated person, having obtained her medical degrees from Bristol, but was a poor health minister underPresidentNelsonMandela.Thepublicprotector criticised her for weak financial controls and, more damningly, she was instrumental in the choice of Virodene as an anti-AIDS drug. It was cheaper than other drugs but the scientific community saw it almost unanimously as ineffective. Her qualities as a doctor, as well as a minister, were thus questioned.

After President Thabo Mbeki fired the then deputy president Jacob Zuma, she was offered her former husband’s position – which she declined. But she was by then foreign affairs minister and, later, served under Zuma as home affairs minister. Although the two divorced in 1998 and he has married many times, they have retained a cordial relationship and she is loyal enough to him for many to think her ascension to the presidency would guarantee protection for a man accused of vast corruption.

As chairperson of the AU, she may have played a role in ensuring the safe passage of Sudan’s President Omar al-Bashir out of South Africa in 2016, when the International Criminal Court (ICC) had issued a warrant for his arrest. The South African High Court

accused the government of “disgraceful conduct” in letting Bashir go. Whether Dlamini-Zuma acted in any behind-the-scenes fashion or not, the AU under her charge has not come to any rapprochement or understanding with the ICC – nor issued any compelling statement as to why African leaders should be exempt from justice. The record of the ICC in indicting mainly African figures does not mean they are treated unjustly. It just means figures from other parts of the world are not pursued, and they should be.

Dlamini-Zuma has not sought major reforms of the AU bureaucracy. Maybe, like the United Nations (UN) and European Union (EU) bureaucracies, reform is impossible. But she ran on a ticket of reform and, once elected, did not even try. In particular, reform of the

In a way, the AU is a concentrated microcosm of Africa and its ills cumbersome financial problems of the organisation hasnotbeenundertaken.Herpenchantformicromanagement has meant huge delays in decision-making.

Delegation seems not to be her strength.

The AU is meant to be an African organisation for Africa. But, half way through her term, 95% of the peace and security budget, indeed half of the AU’s total annual budget of $278m, was funded by external donors. As for peacekeeping, she has had great problems establishing cooperation with the UN in the complex situations of insurrection and struggle in Mali and Central African Republic. She dislikes the French military presence in many Francophone jurisdictions, but the AU has struggled to develop its own rapid reaction force. The French entered Mali in early 2013 and rolled back the advancing Islamic forces only because the AU force would not have been ready for at least a further two months after what would have been a total victory for the insurrection.

Dlamini-Zuma has been accused of acting as an extension of her ex-husband’s and South African interests in, for example, Democratic Republic of Congo (DRC), where President Joseph Kabila has sought a third term without the AU ensuring that the constitutional limits of two terms should be maintained and enforced. The same goes for Burundi.

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This, of course, is the crux of the matter. The AU chairperson has considerable authority invested in her office, but there has been little pressure within Africa itself for her or the AU to live up to the pious declarations and principles that accompanied its foundation. In a way, the AU is a concentrated microcosm of Africa and its ills. However, unlike the wider continent, it is still only one organisation. And one concentrated organisation is capable at least of an effort to reform itself and to do things like peacekeeping in a proper way. The estimate of two million deaths in the wars of eastern DRC are a heavy stain on an organisation that has not prevented them or negotiated even an uneasy stability in the region.

The danger is of an organisation cut off from its membership. The beautiful, or grandiose, new headquarters of the AU – built by the Chinese complete with golden statue of Nkrumah – is itself an example of isolation. The headquarters is not just a huge conference chamber and offices. It is an entire complex, complete with luxury hotel for African presidents arriving in Addis Ababa for summits.

From the airport to the headquarters and back again, one need never step outside a limousine or the walled compound of the AU; one need not THE AFRICA REPORT

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speak to any ordinary Ethiopian; and one need not learn anything of a common person’s problems. If complaints of the privileged positions of Eurocrats are one of the factors leading the EU into crisis, the Afrocrats – from presidents to staff members – lead lives that are unrelated to Africa as a whole.

Dlamini-Zuma’s stepping down, probably to contest in the first instance the deputy presidency of the governing African National Congress party, has engendered a competition for her succession. There are a number of female candidates, so at least she has broken down the gender barrier at the highest African level. However, the demand of Southern African Development Community countries that it should be another Southern African – on the grounds that they were entitled to two terms, not just one – while specious in itself has nevertheless epitomised the AU’s top job merely as a political prize.

Dlamini-Zuma was seen by many as a placeperson: Jacob Zuma’s emissary to Addis. When she began, South Africa was the richest country in Africa. It is not now, having slipped to third, behind Nigeria and Egypt. South Africa may no longer have the clout to determine who comes after Dlamini-Zuma at a time when continental political and economic leadership is in high demand. ●

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PROFILE

Kamel Daoud Author, Algeria

Algeria has been immobilised Algeria and the North African region have suffered a philosophical collapse, where polarised ideologies leave no room for cultural growth, says the prize-winning writer

S

omehow, the lives of Algerian writers Kamel Daoud and Albert Camus have converged spiritually, if not temporally. Daoud was born in Oran, some 400km to the west of Algiers, a decade after Camus died in a car crash in the south of France in 1960. The obvious link is Daoud’s award-winning first novel, Meursault, contreenquête. It is narrated by Harun, the brother of the unnamed Arab murdered by the protagonist in L’Etranger, Camus’s classic novel about alienation. Daoud revisits the plot of Camus’s philosophical cliffhanger 70 years later and from the point of view of an eyewitness in post-colonial Algeria. It is more of a conversation between the two writers than Daoud consciously writing a sequel.

Partisans for individual freedom and responsibility as a force for socialchange,CamusandDaoudalso share an imaginative power and a courageous honesty that has enraged their opponents. In different eras,bothhavesufferedtheangerof politicians and their apparatchiks but also group denunciations from bien-pensants in the West. Daoud’s forthright critiques of political and religious leaders in North Africa as well as calls for a cultural revolu-

tion earned him a fatwa last year from Abdelfattah Hamadache, an obscure imam with connections to Algeria’s security services.

Refusing to be cowed, Daoud spares no one – secular liberals, Islamists, generals and political grandees – as he analyses the malaise in North Africa and the Middle East. His first target is Algeria, which he describes as “immobilised” under the regime of ailing president Abdelaziz Bouteflika.

SURREAL POLITICS

AskedwhetherthenovelsofCamus or Franz Kafka are a better guide to Algeria’scurrentpoliticalcondition, Daoud tells The Africa Report that he would leave that judgement to the readers: “But yes, we can call the current situation absurd. […]

We are ruled by a political system

A WRITER’S PERILOUS PATH 17 June 1970 Born in Oran 1994 Joined Le Quotidien d’Oran 2013 Release of his awardwinning novel, Meursault, contre-enquête 2014 Fatwa issued for his death 2016 Won the Jean-Luc Lagadère prize for journalism

“I don’t see the political will for a soft transition, I see the possibility of a regression” that is surreal, with a president totally absent, who in the eyes of Algerians is not able to govern.”

The growing political concerns in Algeria are absolutely justified, says Daoud speaking on the phone from Oran, the country’s second-biggest city. “When you

add a dose of Islamism – which is resurgent again – and a crisis in the oil markets, you have a situation that is totally confused.”

On the survival prospects of the Algerian state and whether it can be remade, Daoud says he hopes there could be a managed transition and democratisation. But he issceptical:“Idon’tseethepolitical will for a soft transition, worse still I see the possibility of a regression […] something harder and harder.”

Much is at stake, not least the diminishing spoils from Algeria’s multibillion-dollar oil and gas industry and the gargantuan road and rail contracts that it finances.

Some optimists close to the political clan speak of the country being on the brink of an era of sweeping reform; some talk about an uneasy stasis; and yet others talk about rearguard actions by the securocrats, even a palace coup.

Tensions are running high, warns Daoud: “I think that if we continue with the current political violence on the part of the regime vis-à-vis itsopponents […] we are heading for a violent rupture.”

Paradoxically, what could prevent such a confrontation, says Daoud, is the social trauma caused by a decade of bloody confrontations between Islamist militants and the stateafterthemilitarycancelledthe 1992 parliamentary elections won by the Front Islamique du Salut.

WRESTLER’S GRIP

That war, in which some 200,000 are reckoned to have died, ended with an opaque settlement in 2002 thatlegalisedsomeIslamistparties.

The Islamists have boosted their power on the streets, but the old nationalist politicians have kept a wrestler’s grip on the military and the hydrocarbon-fired economy.

Daoud’s knowledge of all this is more than academic. As a re-

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porter for the Le Quotidien d’Oran in the 1990s he covered some of the worst massacres, talking to all sides, picking apart the politically inflected explanations. Few reporters had dared to venture into that bloody terrain.

Growing up in a family of six in Oran, Daoud was torn between literature and religion. He was recruited by his geography teacher into an Islamist cell in the mid1980s.TherewereIslamistsummer schools, and Daoud eventually became the imam at his high school.

VINCENT FOURNIER FOR JA

GENERATIONAL CRISIS

Islamist activists had seized an opportunity as Algeria’s socialist movement waned after the death of President Houari Boumediene in 1979. His successor, Chadli Bendjedid, pushed market economics but reversed popular policies such as land reform.

By his late teens, Daoud had becomescepticalofthetwodominant factions in Algeria’s fight: the secular nationalists who held power and the rising Islamists who challenged them. Today, he talks about the generational crisis haunting Algeria: “We have an old generation that does not want to leave power, that does not want to hand over, does not want to leave a legacy.”

Meanwhile, there is an intense debate about the gains – or otherwise – of the Arab Spring five years after Tunisia’s President Zine El Abidine Ben Ali was chased from power. “The problem is not the revolution,” insists Daoud, “the problem is what makes the revolution inevitable. If the people were happy, they would not go out onto the streets.” He adds that it is not enough to talk about a political change, but there should also be a cultural alternative to the status quo, a challenge to the prevailing ideologies and religious positions.

In the battle to control the state, civil rights have been trampled on.

“We live in a society where the individual does not exist but where the group exists,” argues Daoud, “in a society where there has been a philosophical collapse. That is to say that outside Islamism, outside religion, there is no direction.” ● Interview by Patrick Smith

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ANALYSIS Pre-election protests in 2015; today the opposition is militarised

©BERTHIER MUGIRANEZA/AP/SIPA

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BURUNDI

No guns at the table

In May talks, attendance in Arusha included a government delegation and some opposition groups, but not the exiled coalition Conseil National pour le Respect de l’Accord d’Arusha pour la Paix et la Réconciliation au Burundi et de l’Etat de Droit (CNARED). Parties within this alliance were invited New peace talks in Arusha have again but some declined to attend, citing the need for CNARED excluded armed opposition groups to be represented as an entity.

Foranti-third-termcivilsocietyleaderPacifiqueNininahazwe, the government must be open to negotiation: “If the mediation t the start of the second round of Burundi peace talks wants to find a comprehensive solution, they have to invite all in Arusha on 12 July, concerns lingered over their efficacy after five political parties boycotted the summit armed movements. In 2000, it was already a mistake to ignore armed movements in talks from the start. We lost a lot of time.” over a conflict about who should participate. Mediated by the Armed groups include the Forces Républicaines du Burundi East African Community and facilitated by Tanzania’s former president Benjamin Mkapa, the talks are an attempt to engage (FOREBU), composed of 2015 coup plotters and army defectstakeholders in the ongoing crisis that started in April 2015 ors, and RED Tabara, boasting a base of demobilised soldiers when President Pierre Nkurunziza decided to seek a third and oppositionist youth. Both have claimed to target police term. Since then, more than a quarter of a million people have positions in the capital, and FOREBU is believed to be behind fled to neighbouring countries and hundreds have been killed. attacks on military barracks last December. The group claims Brutal repression of civil society and opposition has fuelled its new chief is General Godefroid Niyombare, leader of the a militarisation of the protest movement, as illustrated by 2015 putsch who is on the run since its failure. routine night battles and the emergence of new rebel groups.

Rebel sources say they represent distinct movements, alMichel, a protester now exiled in Rwanda, says he has lost though they share the same objective: removing Nkurunziza hope: “Bujumbura’s regime had different opfrom power. Van Acker says they lack “the portunities to dialogue with the opposition and striking power to mount large-scale offensives and destabilise the military,” due in part to the has refused each time, so why would it now? “efficiency of repression and infiltration by It’s acting in bad faith.”

GhentUniversityresearcherTomasVanAcker the government forces.” The government has Number of people the saysthetalkscouldbeasteptowardssomething dismissed rebel groups as a farce.

United Nations estimates bigger: “Given the enormous amount of misArmed opposition coincides with tit-forhave been summarily trust in the process by both sides, it’s difficult tat assassinations of military officers, stirring executed between to be optimistic. But it’s still an important step fears of army fracture and all-out war. RenegApril 2015 and April 2016 ade generals claimed responsibility for killing after months of total stalemate.”

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Lieutenant Colonel Darius Ikurakure, a senior army figure considered loyal to the regime, this March. Thereafter, officers from various political and ethnic backgrounds have been shot dead, some apparently in revenge for the killing of loyalists.

Based on the findings of an African Union (AU) mission to Burundi, both sides have contributed to violence, but government is responsible for a much larger share of abuses. The AU accused the ruling party’s youth league, Imbonerakure, of infiltrating police and working like a militia, in parallel with security organs, to arrest, intimidate and kill civilians. ●

for a “hero”, graced by CORD leader Odinga. Muthama, who was among the politicians detained last month for suggesting that killing Kenyans might be a good thing, was effervescent, undeterred and dancing jovially for a wild crowd. He said he would not “honour summonses” by the NCIC any more.

Mwalimu Mati, the chief executive of Mars Group Kenya, a media watchdog organisation, says there is a long way to go to address the problem of political hate speech: “Irresponsible journalism aside, the courts – with a long backlog of cases and the suspicion that they are amenable to political influence – have yet to provide a deterrent effect on the words of politicians in Kenya.” According to Mati’s count: “Moses Kuria has a bond of about KSh10m ($100,000) for three charges from 2014, 2015 and 2016, but it seems to have no deterrent effect on him whatsoever.”

A commission that investigated the 2007/2008 violence also reported that vernacular radio stations played a very large role in disseminating propaganda for violence and war, largely by quoting politicians. The media council set up by the government to monitor journalistic ethics seems powerless over broadcast media, raising doubt as to its capacity to restrain hate speech. ● Carlvins Odera in Nairobi

Archie Henry in Kigali

KENYA

Hate-speech test MP’s incendiary statements put Kenya’s new laws in the dock

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ALL RIGHTS RESERVED

K

enya’s elections are due in August 2017, and feverish political campaigns are already ratcheting up political tension with incendiary language. This raises the threat of a repeat of the electoral violence that followed the contested 2007 presidential polls. The post-election violence in 2007 resulted in the murder of 1,200 Kenyans and more than 500,000 people displaced, which was largely attributed by a judicial commission of inquiry to the work of ethnic militias inspired by political speeches and radio broadcasts.

In June, eight politicians were locked up in police custody for four days and charged with violating hate-speech laws.

Among the most alarming was a statement by member of parliament (MP) Moses Kuria at a prayer meeting outside Nairobi in which he called for the assassination of opposition leader Raila Odinga. A new constitution enacted in 2010 prohibits hate speech, and a new law establishes a National Cohesion and Integration Commission (NCIC) headed by a former speaker of the National Assembly, Francis Ole Kaparo. Prosecutions are pending in the courts, but no one has been convicted for the newly enacted offence of incitement to ethnic hatred.

What makes Kuria’s statement even more controversial is that he is MP for Gatundu South, President Uhuru Kenyatta’s former constituency. Kenyatta, who was in Brussels when the arrests were made, decried the irresponsible political speech and said that even if Kuria were his brother he would not hesitate to take action. Odinga, meanwhile, extended a very public olive branch a week later with a lunch for those arrested, to which the press was invited.

Kuria has already tangled with the authorities over his words.

In January last year, barely hours after he was pardoned by the NCIC for making hate-speech remarks, news media featured a screenshot of Kuria’s Twitter page in which he had changed his name to “Bible verse Genesis 17:14”. This was seen by many to reference Odinga, a member of the Luo ethnic group who traditionally do not circumcise their sons.

Thereareproblemswithhatespeechonbothsidesofthepolitical spectrum. In Machakos, a dusty town situated 63km east of Nairobi, members of the Coalition for Reforms and Democracy (CORD) gathered in July at Mulu Mutisya Gardens to welcome Senator Johnstone Nduya Muthama – a “homecoming” event

Kuria (right) and Odinga (left) at the ‘hate-speech lunch’

EGYPT

Sisi marches on The regime’s ample use of brute force is keeping a lid on a dispirited opposition

T

he Egyptian Air Force made its customary pass over Cairo on 30 June. Flying US-made F-16 jets over the city, it marked the third anniversary of the 2013 protests that unseated former Muslim Brotherhood president Mohamed Morsi and brought Marshal Abdel Fattah el-Sisi to power – first through a military coup and then an election.

Few would disagree that the peace and prosperity Sisi promised three years ago have failed to materialise. Egypt remains racked with debt and unemployment, dependent on aid from its Saudi and Emirati sponsors, and subject to the repeated attacks of the Islamic State group’s affiliate in the Sinai peninsula.

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Posters against the interior minister at the Journalists’ Syndicate

©AMR NABIL/AP/SIPA

50

But under the current order, expressions of dissatisfaction with the state of the country can carry a high price. Liliane Daoud, the Lebanese host of the television show Al-Soura al-Kamila (‘The Full Picture’), which aired on the privately owned station OnTV, had repeatedly invited guests who openly criticised President Sisi. On 15 May, OnTV was sold by its former billionaire owner, Naguib Sawiris, to Ahmed Abu Hashima, a steel magnate more supportive of the regime. On 27 June, Daoud’s contract with OnTV was terminated and the following day officers from Egypt’s internal intelligence agency, Amn al-Watani, visited her home in Cairo, separated her from her daughter and had her deported to Lebanon.

Deportation ranks relatively low on the list of punishments dissidents face. The harsh realities of life in Egypt under the rule of ageing generals have resulted in extensive state repression. Thousands have been imprisoned and hundreds more tortured. Of late, Amn al-Watani has taken to night raids and the use of indefinite detention. Even relatively tame Facebook posts can lead to a home visit from security officers.

Despite the many popular grievances, it is almost impossible for opposition voices to overcome this repression long enough to organise effectively, says Heba Morayef, a long-time human rights campaigner and associate director of the Egyptian Initiative for Personal Rights, one of the country’s foremost rights groups: “There’s been a very steady, very brutal, unrelenting repressive path with the aim of closing down all political space,” Morayef tells The Africa Report. “And it’s been a very well-managed operation on behalf of the regime. If the objective is to deter and weaken the opposition, then it’s on track.”

While activists struggle on, trying to keep out of prison, the formal political opposition is all but dead, even according to its own representatives.

The few openings the civic opposition has managed to create have consisted of jumping on, even hijacking, minor shows of disaffection: the government’s decision to cede two sandbar islands to Saudi Arabia, and protests by high-school students against the movement of exam dates. However, even the small expressions of dissent prompted by these developments are marked chiefly because of their rarity.

Labour unrest, and the state’s harsh responses, such as the subjection of 26 striking Alexandria shipyard workers to military trial on 18 June, has remained disconnected from political organisation in the capital. “It goes without saying that this is a much more brutal regime than Mubarak’s, with

no checks on security services excesses, and there’s an added measure of cruelty thrown in. There’s really very little hope at the moment,” Morayef explains.

The interior ministry felt confident enough of the passivity of the country’s newspapers to mark World Press Freedom Day on 1 May by storming the Journalists’ Syndicate. The head of the syndicate, Yehia Kalash, is now being tried on a charge of harbouring fugitives, for helping two journalists protesting the state’s decision to issue arrest warrants for them.

“A lot of the opposition activity has been pushed back to online activism, which is really the weakest form of organising,” argues Wael Eskandar, a popular dissident writer and analyst. “The power of it used to be in being able to translate it into something on the street.”

Eskandar argues that the April and June protests against the ceding of the islands of Tiran and Sanafir show there are some opportunities to translate online dissidence into street activism and notes that the regime has alienated many constituents, from pharmacists to doctors, students, the educated youth and even the parents of high-school students. “But fundamentally, when you don’t have freedom of assembly, freedom of the press, freedom to object, there’s no ability to hold anyone in power to account,” Eskandar says. “The system isn’t sustainable, however for those of us in the activist community, the question is: what price will wehavetopay personally before anything changes?” ● Tom Stevenson in Cairo

NIGERIA

Honeymoon over Buhari is losing popular support as he struggles with security and graft

I

t takes a general to deal with a $7bn per year military machine that has spun out of control. That was the thinking that piled up more than 15 million votes for President Muhammadu Buhari in last year’s dramatic election. An ascetic and battle-hardened general, Buhari was seen as the man to straighten out the military, defeat the jihadist insurgency in the north-east and jail a generation of corrupt officers, politicians and businesspeople.

As often happens in Nigeria, it turned out a little differently. In all sorts of ways, political opponents are striking back – parrying here, blocking there. Evidently, some of the government’s problems are self-inflicted. Some are about policy: protracted arguments over exchange rates and fuel subsidies. Delayed reactions to harsher market conditions play a part, and at times the government simply hasn’t got its case across. Popular support is ebbing fast.

Buhari is now dealing with a rhomboid of security crises stretching across much of the country: terror attacks and economic implosion still wreak havoc in the north-east, clashes between pastoralists and local farmers are spreading south from the Middle Belt, and reshaped insurgent groups are testing the government’s will in the Niger Delta and south-east, where one group is set on rekindling the Biafra secessionist movement.

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dollars of state theft. The trial of former national security adviser to President Jonathan, Colonel Sambo Dasuki, for diverting some $400m of funds for weapons procurement into a political fund has dragged on for a year. A phalanx of retired top officers – Air Marshal Adesola Amosu, chief of defence staff Alex Badeh and chief of air staff Mohammed Umar – have also been charged with corruption in arms deals.

Jonathan’s former oil minister Diezani Alison-Madueke, accused of multiple corrupt deals with her business allies, is facing investigation in London by British and Nigerian detectives. Jonathan – said to be the discreet owner of a $40m mansion just south of London – has not been overtly troubled by the anti-graft squad but has hired a clutch of public relations companies to help his post-presidential career.

No one questions the gravity of state theft, but there are doubts about the plan of attack. Much of the heavy lifting is being done

by Ibrahim Magu, the new chairman of the Economic and Financial Crimes Commission, with an underpoweredinvestigative andprosecutorialcapacity.Thelargelyunreformedjudiciaryhas

been extraordinarily generous to some of the multimillionaire defendants. Likewise, weak oversight and a heavily politicised promotion system are undermining the police force. Politics are also slowing the anti-graft campaign. The case against Senate president Bukola Saraki for making false declarations about his wealth has become a parliamentary soap opera.

Watching the succession of bail hearings, adjournments and counter claims, sceptical politicians quietly doubt whether the campaign will really cut graft. New deals are being done with impunity, they claim. Certainly, the promised new public accounting systems have not been set up yet.

More dramatically, Magu’s pursuit for racketeering of the Delta militant leader turned defence contractor Government Ekpemupolo, a.k.a. Tompolo, seems to have triggered a new wave of militant attacks in the Delta. It is unclear whether the new outfit, the Niger Delta Avengers – based in Tompolo’s backyard – wants to force the authorities to drop the case or plans to pick up the mantle as the region’s new militant force. ● Patrick Smith

ANANSI Hot tempers

Southern African spring AS SPRINGTIME approaches across Southern Africa, its politics are hotting up too. In early July, protesters in Zimbabwe, led by 39-year-old pastor Evan Mawarire, organised a stayaway campaign against the lack of jobs and dollars in the banks and a surfeit of corruption. The effort landed Mawarire in jail. The protests coincided with a strike by state workers, nurses, doctors and teachers, complaining about the late payment of salaries.

Itinerant finance minister Patrick Chinamasa, who is trying to finalise a debt deal with the International Monetary Fund and the Paris Club, was not spared the demonstrators’ ire either: twice his car was surrounded in London by protestors calling for 92-year old President Robert Mugabe to quit.

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ZAMBIA’S REPUTATION for multiparty political and peaceful transitions is under fire after several clashes in the streets between activists from the ruling party and the opposition.

Tempers are fraying ahead of the 11 August presidential and parliamentary elections, in which the main issues are job losses, inflation at over 20% and serial power cuts. Protests in Lusaka, initially against the government’s closure of The Post newspaper, culminated in clashes with police after the government banned a demonstration on 8 July. At least one opposition supporter was killed when the police opened fire.

The Electoral Commission then banned campaigning in the capital for 10 days.

Zuma not spared JACOB ZUMA is determined to hold on to the presidency amidst corruption probes. The August local elections will be a crucial test for the ruling African National Congress (ANC) as the Economic

J U LY- AU G U S T 2 016

Freedom Fighters and the Democratic Alliance seek to challenge the ANC’s control of municipalities (see page 33).

Violent protests flared in late June in Pretoria after the ANC imposed an unpopular candidate, highlighting internal ANC schisms. In July, Johannesburg hosted service delivery protests and marches against censorship by the public broadcaster, SADC .

Dos Santos, the softie ALL THE EDGES of the Angolan regime of President José Eduardo dos Santos are not hard ones. In late June, the courts conditionally released 17 activists, including rapper Luaty Beirão. They were charged with rebellion for having held a book club that discussed American academic Gene Sharp’s book on non-violent protests, and had been sentenced to multi-year prison terms in March. The move shows a bit of the judiciary’s independence while Dos Santos refuses to countenance publicly the need to plan for his succession.

He said he will step down in 2018 but is now running unopposed as leader of the ruling party. ●

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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 8 GH¢ • Italy 4.90 € • Kenya 410 shillings • Liberia $LD 300 • Morocco 40 DH • Netherlands 4.90 € • Nigeria 600 naira Norway 60 NK • Portugal 4.90 € • Sierra Leone LE 12,000 • South Africa 35 rand (tax incl.) • Spain 4.90 € • Switzerland 9.90 FS • Tanzania 9,000 shillings Tunisia 5.4 DT • Uganda 9,000 shillings • UK £ 4.50 • United States US$ 6.95 • Zambia 30 ZMW • Zimbabwe US$ 4 • CFA Countries 3,000 F CFA

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 8 GH¢ • Italy 4.90 € • Kenya 410 shillings • Liberia $LD 300 • Morocco 40 DH • Netherlands 4.90 € • Nigeria 600 naira • Norway 60 NK • Portugal 4.90 € • Sierra Leone LE 12,000 • South Africa 40 rand (tax incl.) • Spain 4.90 € • Switzerland 9.90 FS • Tanzania 9,000 shillings Tunisia 5.4 DT • Uganda 9,000 shillings • UK £ 4.50 • United States US$ 6.95 • Zambia 30 ZMW • Zimbabwe US$ 4 • CFA Countries 3,000 F CFA

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COUNTRY FOCUS Mauritius

India and Mauritius have cultural links, but that doesn’t change the bottom line

Tax-haven twilight India and Mauritius have ended a fiscal agreement responsible for billions of dollars of investment passing through Mauritius each year. With the threat that other countries may want to do the same, the government is looking for new ways to promote growth outside the offshore financial sector

By Kervin Victor in Port Louis

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hefoundationsoftheMauritianoffshorefinancialcentre are crumbling. Misunderstanding has prevailed among financiers since the signing of a new amendment to the double taxation avoidance agreement (DTAA) between Mauritius and India in May. The DTAA had allowed investors to avoid paying Indian capital gains tax by routing their investments through the African island state. Bankers are worried that the offshore ‘global business’ sector – which represents 3,000 direct and more than 6,000 indirect jobs, and ● ● ●

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COUNTRY FOCUS | MAURITIUS

PORT-LOUIS Indian Ocean

MAURITIUS

Indian Ocean

10 km

MAURITIUS IN NUMBERS POPULATION URBAN POPULATION (% of total)

40%1

LIFE EXPECTANCY AT BIRTH

74.62

INFANT MORTALITY (per 1,000 births)

11.82

FDI, INFLOWS (current US$)

$272m3

GDP (current US$)

$12.63bn1

GDP GROWTH (annual %)

3.6%1

INDUSTRY, VALUE ADDED (% of GDP)

23.2%1

INFLATION, CONSUMER PRICES (annual %) 1.3%1 INTERNET USERS (per 100 people)

41.41

SOURCES: WORLD BANK 2014 & 20151, AfDB 20142, BANK OF MAURITIUS 20163

1.265 million1

Structure of financial system 40% as % of GDP 34% Banks Non-bank depository institutions Insurance Pensions Others

17%

9%

Total assets 432% 332%

SOURCE: IMF COUNTRY REPORT MARCH 2016

FINANCIAL SYSTEM

GROSS DOMESTIC PRDUCT GDP breakdown Agriculture, hunting, forestry, fishing Mining, utilities 2% Manufacturing 4% 18% Construction Wholesale, retail 6% trade, restaurants 42% & hotels Transport, 19% storage & communication 9% Other services

SOURCE: UNCTAD

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particularly in Africa.” He adds: “With this ● ● ● contributes 3.5% of gross domestic product – could soon collapse. The govnew deal, the Mauritian financial centre ernment is now scrambling to develop has no choice but to go up in value. It other sectors to counteract the impact must move from its actual back-office structure to front-office operations. The of the taxation changes. context is not the same as 20 years ago.

On 10 May, one day after the signing Previously, when you were taking advantof a new agreement between the two governments, financial services minister age of tax treaties, it was seen as a smart Roshi Bhadain said: “The DTAA existing move. Today, double taxation treaties between Mauritius and India is comare frowned upon, especially with the ing to an end.” The deal sees Mauritius recent Panama Papers.” giving up, as of 1 April 2017, 50% of its Some are optimistic that the change taxing rights on capital gains for Indian will not bring too much trouble. Vikash investments, rising to 100% from2019.BhadainhadpreMauritius will be competing dicted the likely end of the with much more sophisticated DTAA, which was signed more than 30 years ago, but jurisdictions such as Singapore the government was slow to put in place a plan to address the crisis.

Tulsidas, managing director of Axys Addressing parliament in May, Stockbroking, says: “We are not worse off.Wewillbeonasamelevelplayingfield Bhadain said the country’s low tax with other financial centres.” However, he rates would still make it attractive to inhighlights the uncertainty that will come vestors in India’s debt markets. Samade Jhummun, the chief executive of Global after 2017: “The question that remains Finance Mauritius (GFM), argues that to be asked is whether, with the entry it is a huge blow to the offshore sector: into force of the new treaty, investors “We took 20 years to build the foundawill continue to use Mauritius to invest tions of the global business sector, with in India, especially when we know that Mauritius will be competing with much India as plinth.” more sophisticated jurisdictions such as SingaporeandtheNetherlands.Probably, CONDUIT ON A HUGE SCALE FromApril2000toMarch2016,financiers we will see the effects of the new treaty as channelled $95.9bn of Indian investment from 2017. Banks and accounting firms through Mauritius. That is more than are likely to be the first to suffer.” twice the amount – $45.8bn – that went GFM’s Jhummun points out that on the Global Financial Centre Index, Lonthrough the financial centre of Singadon is ranked first followed by New pore over the same period. According York, Singapore and Hong Kong, while to figures from the Mauritius Financial Mauritius is 73rd.

Services Commission, there are now more than 20,000 active global business Kamal Hawabhay, chairman of the companies in Mauritius. The treaty with Association of Management and Trust Companies – the representative body of India accounts for almost 75% of the the global business industry in Maurivalue addition of global business, while Africa generates only 4% of that amount. tius – says there could be a rush to make While Indian officials had long voiced deals before next year, but he is pessimtheir opposition to the DTAA because it istic overall. He explains: “Till 31 March hurt tax revenue, some of their Mauri2017, investors may benefit from the grandfatheringclause–that tian counterparts thought means paying taxes only a compromise could be salvaged.ButGaëtanWong, in Mauritius […]. I don’t see new businesses for our the chief executive of the National Investment Trust, global business sector.” argues that the smart inWhile some players in the sector have turned their vestors saw the end was attention to Africa, Jhumnigh: “It was high time.

Mauritius has a high mun says he fears that It is a grudging decision, population density of which was necessary. One “the revision of the Indosawthisrevisioncoming for Mauritius treaty has crea long time. Some companated a precedent and may people per square km encourage other countries ies anticipated it and have SOURCE: AfDB rightly decided to diversify, to renegotiate their DTAAs

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Local banks like the State Bank

with Mauritius.” That is a view shared by Hawabhay. He says: “Now that India and South Africa have revised their treaties with Mauritius, it’s a matter of time before other countries want the same thing. In Africa, on which we place great hopes, there is Mozambique, which, for two years now, has wanted to renegotiate its DTAA with Mauritius. Kenya still has not ratified its fiscal treaty with Mauritius. If African countries ask to change their treaties with us, we will be in big trouble.” Mauritius has tax treaties with 16 African countries. Thus far its African business dealings have been worth much less than its Indian financial activities, but this may change.

Not all Mauritian banks are exposed to Indian activities, with the international banks channelling most of the loans and investments to India. The International Monetary Fund (IMF), however, has warned about the impact of the treaty changes, saying that there are “sizeable” linkages between the offshore and onshore banking sectors and that the government should have put measures in place to cope with the changes.

Prime Minister Anerood Jugnauth has faced few challenges from his political rivals thanks to his Militant Socialist Movement’s alliance with the THE AFRICA REPORT

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of Mauritius are less exposed to Parti Mauricien Social Démocrate and the implications of the tax treaty the Mouvement Libérateur. Other than events like the March resignation of his environment minister due to a corthe labour market. Another potential growth sector is the field of education, but ruption investigation, there has not been much that opposition leader Paul several British universities that have set Bérenger of the Mouvement Militant up satellite campuses in Mauritius over Mauricien has been able to crow about. the past few years have recorded new But with the country’s political alliances student intakes of less than 100 people. often shortlived, all sides of the political Critics say that the ideas for the blue spectrum are on the lookout for ways economy have been around for years and have not attracted much investment. to shift the balance of power.

Economic policy is likely to dominate The smart cities initiative is filled with buzzwords like ‘innovation’ and ‘incubthe political debate this year. Jugnauth prides himself on having turned around the island’s Jugnauth turned around the fortunes in the 1980s when island’s fortunes in the 1980s agriculture was struggling.

His supporters and oppon– can he do it again? ents alike are wondering if ator’ but will need the private sector to he can pull off a second ‘economic mirget on board if they are to take off. The acle’ that will make Mauritius a highincome country. The government’s main government has a limited latitude to borrow to finance new projects, and the economic growth priorities include the development of a ‘blue economy’ based IMF notes that public debt is set to drop slightly to 61% of gross domestic product on ocean resources (see page 58), the this year. In June, the central bank anrevitalisation of cities together with the creation of new smart cities, and further nounced that foreign direct investment integration into Africa’s economies. fell by about half to Rs9.6bn ($272m) in The Mauritian population is ageing, 2015, showing that economic growth is an uphill battle in these times of difficult and the government may need new fundraising for African projects. ● strategies to help meet the demand of

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INTERVIEW things my own way. Other people have been in the post and did things their way. I do not think it would be fair for me to judge.”

She stresses that it is up to individuals to drive change, and people shouldn’t and cannot wait on politicians: “We have to break the mould and become doers. It’s down to us to make a change.

This is the only way forward.”

She is focusing her activities on the environment, governance, gender equality and the country’s international relations.

WOMEN AND CLIMATE CHANGE

TED TALKS.

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Ameenah Gurib-Fakim President of Mauritius

I do things my own way Mauritius’s first female president is a force on the national and international scene as island states like hers confront the impact of climate change and economic challenges

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ith her life’s experience as a Muslim woman and one of the continent’s top scientists, Ameenah Gurib-Fakim wants her time as Mauritius’s president to deliver more than its ceremonial trappings usually entail.

The presidency has tended to be a figurehead position, historically occupied by a senior politician and usually by a man. In 2015, newly elected Prime Minister Anerood Jugnauth, himself a former

president, surprised many when he chose scientist Gurib-Fakim as his nominee for the sixth president of the island. Gurib-Fakim says she is pragmatic and goaloriented and wants to be able to see results. Changing perceptions of the president’s role in what is a fairly conservative society could well be difficult, however.

Many Mauritians who spoke to The Africa Report since her election in June 2015 were full of praise for Gurib-Fakim. She responds matter-of-factly: “I do

It has been a remarkable year for Gurib-Fakim: she was ranked as one of the world’s top women leaders by Forbes magazine; visited Pakistan in April; attended an African Union summit and met with United Nations (UN) secretary general Ban Ki-moon, amongst others. In June, she scored a major public-relations victory by hosting close to 400 influential scientists, business leaders and politicians from more than 40 countries for the Women’s Forum, held in Mauritius on 20-21 June, where she spoke exclusively to The Africa Report.

This was the first time the Women’s Forum was held on African soil, with Gurib-Fakim helping to set the agenda that discussed climate change and its impact on poorer countries and small islands. She has been vocal on environmental issues and the severe impact climate change could have on the island’s economy and its people. The country was among the first 15 states to ratify the 2015 Paris climate agreement.

In April, the World Bank and the UN appointed her to co-chair a high-level panel on water.

Garib-Fakim explains that it is “women that will be more affected by climate change” since they are more dependent on natural resources. Because climate change will threaten the backbone of socioeconomic development, she wants to see a push for ● ● ●

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● ● ● quality educationto respond to these changes within the global market. She has also launched a special science and climate fund for innovators on the continent.

The very public role of president is undoubtedly a far cry from studying indigenous plant species, which is Gurib-Fakim’s area of expertise in the field of biodiversity.

The author of more than 20 books, she left her laboratory and her post as director of the Centre International de Développement Pharmaceutique to become president. However, she argues that her training as a scientist is what drives her to want to see results in whatever she does: “As a scientist, you are trained to get results. I think there is a convergence when you are in politics. There must be a drive to get results.” She insists she is cautious not to overstep her mandate, however, and all too aware of how sensitive and fickle Mauritian politics can be.

A UNIFYING FIGURE

What has also counted in her favour is that she has never been active in any of the island’s political parties and was unanimously approved by the national assembly. One of Gurib-Fakim’s former lecturers tells The Africa Report: “She is her own woman, and people across the political spectrum respect her – and

that is big in Mauritian politics.” Since taking office, she has quickly moved from just cutting ribbons at new schools and hosting tea parties at State House to engaging with critical local and global issues.

President Gurib-Fakim is also part of the country’s debate about its economic future. The local political class needs to come up with solutions to the disruption of the finance sector that the recent amendment to Mauritius’s double taxation avoidance treaty with India will bring (see page 53). “We are not just a sun and sea destination. There is so much we as Mauritians can do. We should play this role fully,” says Gurib- Fakim. “It’s time to look at new directions, to leapfrog forward,” she adds.

She argues that Mauritius’s close ties to India, China and Africa will assist the country in adapting: “Politically, we are Africa and we form part of the different African economic blocks. In India and China, we share common roots. We have been pragmatic to work with all our friends, we can all work together. Pragmatism for Mauritius has worked.”

Mauritius is one of the richest – and least corrupt – countries in Africa, with about 1.3 million people and a per capita gross domestic product of just over $9,000.

MAURITIUS’S FIRST WOMAN PRESIDENT 17 October 1959 Born in Surinam, Mauritius 1983 Earned a degree in chemistry from the University of Surrey, UK 1987 Received a doctorate in chemistry from the University of Exeter, UK 2009 Became managing director of the Centre International de Développement Pharmaceutique 2015 Elected President by the National Assembly

Gurib-Fakim says she wants to see the other countries of the continent build credible and strong institutions that people can be proud of. “Why do we look up to the [countries of the northern hemisphere]? They have cultivated credibility and appoint people who act as guardians of institutions. Meritocracy is the only way,” Gurib-Fakim adds.

Another issue she is closely watching is the diversity of people in the country and ensuring no one feels marginalised because of religion or culture. The island has a population that is a mix of Indian, Chinese, French and Creole peoples who practise Hinduism, Christianity, Islam and other religions. There have been no reports of violent extremism in Mauritius, but Gurib-Fakim says no one should take for granted that the island is a melting-pot of people.

“We have so many groups living here. We are small and diverse.

My mantra has been that we have to make differences work for us,” she says, adding that intercultural and inter faith-dialogue must continue: “I bring people to State House to share and talk. This is important to get to know if there is any friction. We should be able to talk to people and make them go out there to sort it out.” ● Interview by Crystal Orderson in Flic en Flac

The President discusses water with Dr Snowy Khoza, CEO of BigenAfrica, and the Mauritian energy ministry’s Lormus Juggoo, at the Women’s Forum THE AFRICA REPORT

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58

Energy drives leadership.

More than a century ago, the vision of our predecessors laid the ground to make us key players in the present Mauritian economy.

Today, we are 4600 people sharing the same vision and zeal.

In every action we take, we strive for higher levels of performance. From being instrumental in the creation of the country’s hospitality industry to leading the uprising of our national carrier, Air Mauritius, while pursuing our swift expansion across the globe, it is that same focused energy that drives us forward.

Focused Energy, Every Day FINTECH

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Mauritius has big fish to fry as it looks to the ocean economy for economic diversification

“This project should enable us to save about Rs175m on the import of petroleum products and therefore reduce the trade balance deficit.”

The project could help Mauritius to reduce its carbon dioxide emissions by 40,000tn per year. The company also expects to create 200 to 300 jobs. In addition, there is the potential to create a larger number of indirect jobs in various activities, including aquaculture, pharmacology and bottling of treated water.

Ong Seng says the first stage could be operational in two years.

The maritime sector will need skilled employees to take its development forward. Ocean economy minister Koonjoo says the government is working closely with universities “in order to train our young people for the sector. For example, courses such as marine techOCEAN ECONOMY nology and marine engineering are offered to students. Moreover, with the development of our port, we are also training young Mauritians to work on cruise ships, tankers and fishing boats.”

The new ministry is fielding a host of projects that go argues that Mauritius should attract beyond fishing and port activities to encompass deep- He at least 10% of the 30,000 boats that water cooling for buildings and renewable energy pass near Mauritius every year. Last year, less than 1,000 boats stopped in he Mauritian economy is at a marine services and renewable enthe ports of Mauritius. crossroads, and the government ergy projects. After Anerood Jugnauth The government mentioned that was elected prime minister 18 months is turning to the ocean to spur Dubai-based port giant DP World was ago, his government created the ocean growth. The financial sector, accountinterested in the country last year, but economy ministry and the National ing for more than 12% of its gross dono deals have emerged. Other projects are gaining momentum, however.

Ocean Council to drive the strategy mestic product (GDP), is grappling In late June, Australia’s for the sector. with the revision of the advantageous Indo-Mauritius tax treaty (see page 53).

Carnegie Wave Energy The manufacturing sector, contributing COOLING THE CITY launched a pilot survey to determine the potential more than 14% of GDP, is facing uncerOne of the projects movtainties after Britain’s vote to exit from of wave-power electricity ing ahead seeks to use generation off Mauritius’s the European Union, as the country is cold water from the deep southern coast. The govthe top export market for Mauritius. seas off the island to cool ernment is planning for a Some new ocean economy projects buildings in the central public/private investment are under way, but government offibusiness district of the Mauritus has cials admit that their impact will not be of $250m to revamp and capital, Port Louis. The a maritime zone covering some company Urban Cooling is double the size of the Port quickly felt. Ocean economy minister Premdut Koonjoo concedes that MaurLouis port and also create a special purpose vehicle million that plans to invest Rs4bn itius is a neophyte in this emerging seca new fishing port. square kilometres tor: “The ocean economy is something Embracing the govern($113.2m) in deep ocean SOURCE: WORLD BANK ment ambition to develop water applications. Urban new. We have no expertise. We do not know what our exclusive economic zone Cooling’s chief executive, Mauritius into a bunkerPhilippe Ong Seng, says the project is at can actually offer […]. But I am optiming hub, the four oil marketing coman advanced stage: “A feasibility study istic, I think that in three years we will panies operating in Mauritius have and a conceptual design have already begin to reap the fruits of our efforts.” decided to invest in increasing fuel The government is encouraging inbeen completed, as requested by the storage. Construction of the 25,000tn vestment in hydrocarbons and minerAfrican Development Bank, which will facility is expected to begin in July. ● als exploration, fishing, fish processing, finance part of the project.” He adds: Kervin Victor in Port Louis ©JIRI REZAC/REA

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Water, water everywhere

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PEOPLE TO WATCH

Big stakes for small businesses Everyone wants the same thing – for SMEs to take an even greater role in the diversifying economy.

But somehow they can’t agree on how to do it

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mall and medium-sized enterprises (SMEs) are centre stage in the country’s economic roadmap, Mauritius Vision 2030. They already account for about 40% of gross domestic product, but the government and business leaders are not on the same page about what is needed to help spur entrepreneurship and job creation.

Sunil Bholah (1), the minister of business,enterpriseandcooperatives,hasjust commissioned a master plan to address the weaknesses and strengths of the SME sector. He explains: “The SME sector is fundamental for Mauritius in generating revenue, employment, economic growth and prosperity. Investing in SMEs is a long-term and smart strategy, which can bring sustainable returns.”

Banks have heeded the call, among them Mauritius Commercial Bank, which boosted SME funding to Rs2.8bn ($79m) between December 2011 and August 2015, while AfrAsia Bank issued a $7.5m debt facility to TLG Capital, which is a key SME financier.

In its bid to encourage entrepreneurship, the government is providing seed capital to entrepreneurs without any need for collateral. It has created a fund of Rs10bn to be loaned out to companies with an interest rate of 1% below

their businesses. MyBiz is managed by the Small and Medium Enterprises Development Authority (SMEDA), whose director, Phalraj Servansingh (3), explained the motivation behind it: “The solution for the development of the SME sector doesn’t depend on funding. What we want above all is that entrepreneurs turn towards value-added products. So we will accompany them, monitor them and offer technical assistance to better manage their businesses.”

Amar Deerpalsing, an entrepreneur and president of the Fédération des Petites et Moyennes Entreprises, says MyBiz is not delivering: “More than 6,000 people have visited MyBiz […] but unfortunately only a few projects have been approved. We must revisit the MyBiz project. It is ne-

the repo rate – which means companies would currently pay 3.4% interest.

Maubank, a bank formed through the fusion of two state-owned financial institutions, has been piloting the programme since the start of the year.

Sridhar Nagarajan (2) took up the top leadership post at Maubank last year, havingpreviouslyworkedaschiefexecutiveofStandardCharteredBankMauritius and as Standard Chartered’s director for strategic initiat“This is the time to take ives in South Asia. risks, but you have to do it “This is the time to take with passion,” Nagarajan says risks, but you have to do it with passion,” Nagaracessary to review the conditions which, jan says. “Entrepreneurs should not do a project because banks are offering in my opinion, are too demanding and money. It’s not the money that should too difficult to meet,” says Deerpalsing. motivate them, but the passion.”

Rudy Tanoo, a craftsman and member of SMEDA’s board, adds: “There is ONE-STOP SHOP too much cut and paste. The authorities should come forward with a list of emerWith business leaders wondering how much money the government will ultigingactivitiestogiveasenseofinnovation mately put behind this push, Nagarajan to the SME sector. There is also a lack of says that there could be some surprises incubators and SME parks. That prevents in the upcoming national budget. small businesses from growing.” ● Kervin Victor in Port Louis In December 2015, the government created MyBiz, a one-stop shop that provides support and information – as well as delivering all the permits and licences SMEs need to start and grow

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BUSINESS AFRICA-ASIA

Sharing Asian know-how The two fastest-growing continents need each other for a multitude of reasons – business, geopolitics, demography. Japan is the latest Asian country to move onto the front foot in this relationship, but it is not alone

By Nicholas Norbrook in Tokyo, Rosie Collyer in Nnewi and Jacey Fortin in Addis Ababa

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i t s u m e i k a n Asia Pacific University (APU) sits on a hill overlooking the spa resort town of Beppu in south-west Japan. Silver-haired tourists simmer happily in steamy bathhouses while students of all stripes walk up steep lanes to reach their classrooms. “In the beginning, people would just stop and stare,” laughs Eugene Wanyama, a Ghanaian who came for his master’s degree and stayed to work at APU. “But the local community has been very supportive”.

Opened in 2000, APU is distinct because 50% of its student body is from overseas, compared to 5% in other Japanese universities. “We had to battle the education minister to get our licence,” recalls APU’s dean, Yuichi Kondo. But the maverick is now the model, with many universities trying to internationalise. “Over 450 companies come to visit the campus every year, banging on our doors, saying: ‘Whereareyourstudents?Wewant more!’”Kondosays.Theplacement rate for graduates is 95%, a sign that Japanese corporates prize the

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global outlook such a cosmopolitan establishment brings.

Japan needs to open up. Prime Minister Shinzo Abe knows it. In 2013, he explained: “The future of Japan’s economic growth depends onushaving thewillpower and the courage to sail without hesitation onto the rough seas of global competition”. Leading ministers like ShigeruIshibaandTaroKonohave spoken out in favour of increasing immigration levels. The International Monetary Fund says labour shortages are hampering Japan’s growth, which is already anaemic.

And whereas in Africa the youth bulges, in Japan, the sun sets. The population is set to fall from 127 million people today to 87 million in2060,bywhichtimenearlyhalfof the population will be over the age of 65. Katsumi Hirano, executive vice-presidentoftheJapanExternal Trade Organization (JETRO), tells The Africa Report: “We must have a more open economy. It’s part of therevitalisationofJapan’ssociety.”

This global turn is in part spurred by criticism of Japan’s role in the international community.

Howevercrudely,Republicancandidate for the White House Donald Trump articulated US gripes over the cost of maintaining the American security umbrella over Japan and sharing the burdens of Middle Eastern wars.

Meanwhile, Japan’s backyard hasnotgotanysafer.TheSenkaku/ Diaoyu Islands dispute is just one of many maritime wrangles with Beijing, which is keen to extend its claimsovertheSouthChinaSea.In February, North Korea launched a long-range missile over a part of Japan, and in January detonated a nuclear device underground for the fourthtime. ●●●

©DANIEL LAFLOR/GETTY IMAGES; JOSE LUIS PELAEZ INC/GETTY IMAGES

SHRINKING GIANT

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This motivates Japan’s campaign – alongside those of Brazil, Germany and India – for a seat on the United Nations (UN) Security Council, though China is likely to try to block it for as long as possible.Japanisthesecond-largest contributor to the UN budget.

Part of Japan’s international lobbying effort involves setting up international institutions at home. The Global Health Innovative Technology Fund (GHIT), which provides funding for clinical trials for neglected tropical diseases, was set up in Tokyo in 2013.

One of GHIT’s directors, Bumpei Tamamura, explains its mission: “We take the risk on behalf of the drug companies [to incentivise them]. Osaka University is doing a trial for a malaria vaccine in Burkina Faso on children under five, which started last summer.” ●●●

AFRICAN VOTE BANK

Another part of Tokyo’s lobbying effort is a classic courting of votes at the UN. Africa’s 54 governments provide a formidable vote bank to whichgreatpowershavebeenpaying ever-greater attention. Beijing has been running its Forum on China–Africa Cooperation (FOCAC) since 2000. Washington held its inaugural US-Africa summit in 2014, and Delhi launched its India-Africa confab in 2008.

Japan wants the Tokyo International Conference on African Development(TICAD) tobedifferent.

“It is a multilateral conference, not just about Japan-Africa,” stresses

Norio Maruyama, director-general of the African affairs department in Japan’s foreign affairs ministry.

“So we will connect with other big themes, like the COP21 climatechange conference.”

The first TICAD was in 1993.

This year, from 27-28 August, it will be held for the first time in Africa. With the Nairobi meeting, the frequency of summits will be increased from every five years to every three. The urgency is perhaps driven by China’s rapid diplomatic ascendency. By building the African Union headquarters in Addis Ababa, as well as sundry stadiums, government buildings and vitalroadandenergyinfrastructure, Beijing has gained the ear of nearly every African administration.

China also looms in the background of some of Japan’s activities on the continent, even though officials will not always say so directly.

“Of course, there are challenges for Japanese companies on the continent,” says Maruyama. “Japan is very much rule-based. It makes it hard for them to compete.”

OtherfactorskeepingJapanfrom seizing commercial opportunities include slow decision-making and high costs. An African finance minister at the African DevelopmentBankMaymeetinginLusaka, who preferred not to be identified, offered a reason why Japanese companies do not get many deals: “We need 20 cheap roads a year, not one expensive one.”

Japanese companies might not be able to beat the China

Nigerian auto manufacturer Innoson owes some of its success to Chinese engines and a Japanese factory ethos

3.1$bn Singapore’s Pavilion Energy bought a 20% stake in three gas blocks in Tanzania in 2013

SOURCE: BLOOMBERG

price on roads, but their other qualities are, in the main, unknown in Africa. To address this, the upcoming TICAD will have a heavy business component, with a delegation of more than 100 Japanese companies.

COME TO OUR OFFICE…

Despite the Asian competition, Japan has substantial economic interests in Africa. These are, for now, largely concentrated in the commodities business, but also in the consumer and logistics sectors.

There are 440 Japanese company offices in Africa, according to the African Development Bank, including 136 in South Africa, 40 in Kenya and 39 in Egypt. They range from consumer electronics to industrial manufacturing to resource extraction, with household brands like Casio, Toyota and Mitsubishi, and industrial giants like Sumitomo, Marubeni and Itochu.

TICAD, then, is not just to gain geopolitical influence but to “use Japanese aid flows as a way to trigger Japanese investment, says Hiroaki Ichiba, an Africa specialist at the foreign affairs ministry.

For example, the Japan International Cooperation Agency (JICA) provided funds for the expansion of the Mozambican port of Nacala, followingwhichMitsui&Co.invested in coal production alongside Brazilian miner Vale (see page 72).

Some Japanese purchasers of Western companies have shown their intent to expand in Africa.

Toyota Tsusho bought ● ● ●

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JICA in a Dynamic Africa Japan International Cooperation Agency (*JICA) supports Africa’s sustainable development for decades, however, various challenges remain across the continent. Toward TICADVI, the 6th Tokyo International Conference on African Development which will be held in August at Nairobi, JICA is determined to tackle Africa’s challenges to promote“Transformation”and“Resilience”with African partners towards the achievement of the SDGs (Sustainable Development Goals) and the Agenda 2063.

Photo : JICA Photo : JICA/Shinichi Kuno

Photo : JICA

Photo : JICA/Shinichi Kuno

Photo : JICA/Masataka Otsuka

Photo : JICA/ Yuji Shinoda

Photo : JICA Photo : JICA

*JICA is an executing agency of Japanese ODA (Official Development Assistance) through loan aid, grand aid, and technical cooperation

Japan International Cooperation Agency

BUSINESS | COMPANIES & MARKETS

France’s CFAO in 2012 as a waytogrowmarketsonthecontinent. CFAO is one of the largest car importers and retailers in Africa, and it also opened a new Carrefour shopping complex in Abidjan in 2015. Auto and machinery companies like Sumitomo, Nissan, Marubeni and Isuzu are present acrossthecontinent,particularlyin theindustrialareasofthenorthand south. Infrastructure companies likeChiyodaand MitsubishiHeavy Industries are all over, and food companies like Morinaga (milk) and Nissin (noodles) are looking for new retail footholds in Africa.

So if there is so much Asian interest in Africa, how can African policy-makers get the best deals for their countries? Can there be complementarity as well as competition between various Asian countries? ●●●

CONTRACT TUSSLE

Certainly, the emergence of both Japan and China as keen investors in Africa carries the possibility of diplomatic arbitrage. In 2015, JICA provided soft loans to fund Kenya’s upgrade of the Mombasa port. While it was understood that Japanese companies would get the work for the second phase of the upgrade, Chinese companies lobbied Kenyan politicians hard to wrest the contract from the Japanese. The more than $300m

Singaporean role model SINGAPOREAN ADMINISTRATION AND BUSINESS LEADERS are in high demand on the continent from governments wanting to turn their countries into the ‘Singapore of Africa’. One of various government-to-government initiatives is training for African air traffic controllers at Singapore’s new state-of-the-art training centre. Singapore’s trade and investment in Africa, however, lags behind that of its Asian peers.

The Africa Singapore Business Forum aims to turn the tide. It takes place this year on 24-25 August on the island city-state. International Enterprise Singapore, the external trade promotion agency, set up offices in Accra and Johannesburg in 2013.

Among the Singaporean companies with a head start in Africa are manufacturing and agribusiness groups Indorama, Olam and Wilmar International. Firms like desalination plant builder Hyflux are in the scrum competing for African infrastructure contracts, while real-estate company Perennial is building a development to house a Singaporean-run hotel in Accra’s Airport neighbourhood. Singaporean firms rival their Japanese counterparts in scoring urban-development deals: Surbana, for example, will be working with the authorities in Kinshasa and Arusha. ● Marshall Van Valen

commitment from Japan appears to have swayed Nairobi towards its original suitor.

Asian countries have different lessons and capital for African companies and countries to seize.

Hideyuki Oiwa, general manager for energy infrastructure of Toyota Tsusho, which provided equipment for the Mombasa port, is pragmatic: “Let’s give the roads to the Chinese. We can compete on quality and technology. We can offer something different.

Our hybrid cranes actually save money on capex [capital expenditure], for example.”

In Mozambique, Ncondezi Energy is co-developing a coalto-power project with Shanghai

AsianAfrican cooperation in action at an Olam wheatmilling facility in Ghana

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Electric Power, China’s secondlargest power company. Ncondezi’s chief development officer, Hanno Pengilly, thinks low risk appetite sets Japanese companies apart from their Chinese counterparts in countries with low credit ratings, giving Chinese companies the edge “with respect to their funding packages, as well as their return requirements”. Conversely, in South Africa, where you have a more established investment track record and stronger credit rating, he sees Chinese companies struggle to compete with Japanese or Korean energy groups.

African leaders want to move the relationship between the continents away from a simple Asian appetite for African commodities and basic infrastructure. For those African countries that have the appetite, Asian countries are competingtoofferbig-pictureimprovements in urban development, industrialisation and health – areas where there are, of course,overlaps between aid and commerce.

Japan’s funding agency JICA, for example, is preparing master plans for Lusaka, Mombasa and Abidjantohelpmanagetheirurban expansion. Korea’s Hyundai and Dongsan Engineering are part of the consortium building Abidjan’s $1.4bn light railway. On the other sideofthecontinent,ChinaRailway Group built the light railway that is now the pride of Addis Ababa, with help from a loan from Beijing.

Public health systems are also a focus of Asian soft power. ● ● ●

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The Executive Director of Federation of Kenya Employers Jacqueline Mugo explains a point at a press conference

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he Sustainable Development Goals are hinged of the fact that the world will need between USD 5 to 7 trillion of annual investments for the ambitious objectives of securing prosperity for all people to be met. And whereas it was not quite clear where this money will come from, the role of the private sector as a key source of investments and jobs has been globally recognized and enshrined in the goals. This has presented the private sector players all over the world with a unique and achievable opportunity to make the world a better place for all humanity.

Improving the conditions for sustainable economic development has increasingly become a focus of government reform efforts in Africa. As a result, private sector actors in Africa are increasingly being recognized as a major force in development and clearly with the rapid transformation the continent is going through they have not disappointed.

United as one strong voice, the Federation of Kenya Employers represents the interests of thousands of its members from businesses, enterprises and organisations large and small and in all business sectors across Kenya. Our main goal is to promote an enabling socio-economic environment to enhance industry competitiveness in Kenya. We work for positive change and advancement through new thinking, engagement and value for money. We also house the headquar-

Our work continues to influence Kenya’s employers daily because we represent all enterprises, from the smallest to the largest. We have the ability to tap into and champion issues affecting all sectors of business and society on a daily basis and a mandate to make submissions representing the business sector with particular emphasis on labour and employment matters.

Our business is to make Kenya’s businesses successful. We help our members improve the performance of their businesses though the way they organize, lead, develop and reward their people. FKE is a strong champion of an enabling business environment, employment creation, skills development, organization development and gender equality.

We also seek to proactively enhance social dialogue amongst FKE members by addressing social issues facing employers. We help business and employers explore the economic, social and environmental challenges of sustainability and ensure that the relationship between Kenya’s business and society is healthy and mutually supportive. Some of our notable works include Work place employee wellness programmes, Elimination of Child Labour, Youth Empowerment and Employment creation, Women Entrepreneurship programmes and Labour Migration among others.

We invite all investors in Kenya to partner with us because together we form a stronger network of employers who will play the momentous role of driving Kenya’s prosperity.

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ThecityofNagasaki,wedged between the sea and surrounding hills, hosts the Nagasaki University Institute of Tropical Medicine.

Tarek Numair and a handful of other African students arrived there under the Abe Initiative – a prime ministerial attempt to bring in more foreign students. “There were four stages of interviews to get here,” says Numair, who is doing a master’s in public health.

“They take those they think will be leaders in the future.”

Numair is being taught by professor Satoshi Kaneko, a specialist in the spread of diseases who is setting up a molecular biology lab in Kenya that will use new technologies to track viruses like Ebola and Zika. “This multiplex technology allows us to see things coming in advance.Wecanseetrendshidden in the community,” says Kaneko. ●●●

LOW-COST HOSPITALS

Indian hospitals are keen to expand to Africa. Backed by state aid, they are bringing the country’s low-cost models to the continent with initiatives like the Pan-Africa e-Network Project, through which African clinics can link up with Indiandoctors.And, asShyamSaran, chairman of India’s think tank the Research and Information System forDevelopingCountries,explains, this is an investment in the future:

“As both Indian and African economies are poised to grow rapidly in the coming decades, healthcare expenditure per capita would also go up considerably, demanding more healthcare services.”

The clearest advantage for Africa may well be industrial learning. Beyond infrastructure, African leaders want to industrialise – and Asia brings a multitude of experiences. Key is the use of ‘financial repression’, a tool used to channel national savings into cheap loans for industry.

Carlos Lopes, head of the United NationsEconomicCommissionfor Africa, argues that industrialisation is not a question of snapping your fingers or putting together a special economic zone. He says that what drove progress in China, for example, was an eagerness in dealing with technological innovation, somethinghedoesnotseeinmany African countries yet. Most African administrations are keen to get investment “and not so much with the eagerness of learning to master the value chain,” says Lopes.

“I see that appetite in Morocco.

I definitely see that appetite in Ethiopia. I also see it in countries that have already done it, but on a very small scale, like Mauritius.”

Some countries, such as Rwanda, may have the appetite but lack plans that match their

Japanese firms had to fight off Chinese competitors to secure phase two of Kenya’s Mombasa port upgrade

India-Africa trade is expected to reach $100bn before the end of the decade SOURCE: INDIAN EXTERNAL AFFAIRS MINISTRY

economic realities. Kigali’s special economic zone, for example, aims to replicate the export-driven manufacturing miracles of China’s Shenzhen. But while China’s great manufacturing zones were built near the coast, the logistics costs of trucking material from Mombasa to Kigali suggest Rwanda would be better off with another model.

Ajay Sharma, an Indian consultant now working for a media company, has some advice: “Perhaps [Rwanda would be better off ] choosing to build a cluster of universities and become the Boston of Africa.”

CHINESE WORK ETHIC

Ethiopia has most clearly applied the Asian model of export-driven manufacturing, and has attracted investors from China, Japan and Taiwan. Demis Degef, 26, is a star employee at a shoe factory just outside Addis Ababa that is run by China’s Huajian Group. He started out less than five years ago with no manufacturing experience.

His employers saw promise in him and eventually sent him to China for 18 months so that he could learn Mandarin.

He now works as a manager and a translator, earning about $900 a month, or about 20 times his entry-level salary. He says he does not know of any co-workers who went off to start their own subcontracting factories – which is how foreign-owned companies often spark local manufacturing into life.

Demis talks less about skills transfers and more about cultural transformation or “civilisation”, as he puts it. His words are sprinkled with Huajian jargon – he has learned about “time concepts” and “working concepts” that convinced him of the value of working six days a week with as much overtime as possible. “I got this chance because I worked hard,” Demis tell The Africa Report, adding that the factory employs more than 4,000 people who otherwise might not have jobs at all.

Practical ideas around how to run factories have been codified in Japan. Half a world away in a small meeting room, 11 African civil servants – all wear- ● ● ●

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● ● ● ing sky blue JICA caps – sit throughaPowerPointpresentation from the management of Towa, a Japanese company that produces auto parts. They are there to learn about kaizen, the quasi-religious business process of ‘continuous improvement’ that evolved from the shop floors of auto manufacturer Toyota. It was later adopted

by US companies and has now been institutionalised by Kaizen Institutes – of which Addis Ababa hosts Africa’s first.

SPREAD OF TECHNOLOGY

But while managerial quality is important, many African companies also want to enter the manufacturing business themselves. Japan is well-versed in seeding technology and capital across Asia. “Mitsubishi gave technology to South Korea’s Hyundai and Malaysia’s Proton car manufacturers”, explains JETRO’s Hirano.

Nigeria shows signs of something similar occurring. Men in beige overalls and egg-yolkyellow helmets stand at work stations along the final assembly line inside Innoson Vehicle Manufacturing plant in Nnewi, a town of around 120,000 people in south-east Nigeria. The engine and body of what will soon become a 14-seater minibus floats from one work station to an-

other suspended on an overhead conveyor belt. Factory manager Chukwuemeka Onusogu closely supervises that workers doublecheck their tasks. “We have experienced a 300% increase in production over the past year,” explains Onusogu as he oversees the work of two Innoson employees fixing rear lights onto a shiny black 4x4.

Innoson produces 14 different models of vehicles, from a fiveseater saloon to a dustcart. The company says that about 70% of its materials are sourced locally.

Steel is produced from the iron ore of Kogi State, and Indorama Eleme’s petrochemical plant in nearby Port Harcourt produces plastic that is moulded by Innoson’s other plant in Nnewi.

The engines are manufactured in China by Ningbo Jingcheng Motor Co., or JC, where Innoson chief executive Innocent Chukwuma spent time observing engineering in the early 2000s. In automotive circles, JC’s research and development arm is widely thought to have ‘borrowed’ technology from the more expensive Japanese multinational Suzuki.

“This company is very much influenced by how things are done in Japanese car companies. For instance, the company doesn’t belong just to me, but to all the employees. We’re all family,” says

32 $bn Japan pledged $32bn in aid to African governments spread over five years from 2013 SOURCE: JAPANESE FOREIGN MINISTRY

Chukwuma,referringtoSuzuki, which is currently run by the fourth adopted son of founder Michio Suzuki.

Nigerian lawmakers have been inspired by the economic nationalism that propelled many Asian countries forwards.

In December, senators voted in favour of the Automotive Industry Development Bill (AIDB) to support the sector. The government is actively encouraging car makers to buildplantsandassemblevehicles in Nigeria. They are set to benefit from tax breaks on imported materials. Ford, Honda, Hyundai and Nissan are all building plants, but it remains to be seen if these new car factories will allow the government to meet the AIDB’s goal of driving up local production by 80% over the next seven years.

There areChinesemenworking at Innoson’s car plant, but it was made clear that they are off limits for interviews. There is also heavy machinery from Asia visible at the plant, some with Mandarin script and others inscribed with figures from the Japanese kanji alphabet. What they were being used for was not made clear. Innoson’s slogan, “First made-inNigeria car” has a better ring to it than “part Asian, part Nigerian-made”, but the latter might better fit Africa’s Asian future. ●

INTERVIEW

Akihiko Yoshizumi Head of African affairs, Corporate Planning and Strategy Division, Mitsui & Co.

Infrastructure and energy are Mitsui’s top priorities TAR: Will your activities help Mozambique diversify its economy?

In the area of gas, we are considering ways to utilise the gas produced not only in the liquefied natural gas [LNG] business but also in other areas, such as electric power generation and the petrochemical business, by exerting our integrated strengths as a sogo shosha [general trading company].

In the area of rail transportation, we aim to contribute to regional development

through the infrastructure development project. [This will include] not only the main [railway] line for coal transportation but also a branch line linking northern Mozambique with Malawi, as well as a general cargo port and through the operation of general freight and passenger transportation business. In addition to the enhancement of general freight transportation capacity, Mitsui & Co. will also use its integrated strengths to contribute to the Nacala Corridor project.

Has the government asked for any technology transfers?

We have received some requests during meetings with the president, the minister of mineral resources and energy, and other senior officials. We are responding to these requests by providing training to develop personnel capable of project management – finance, marketing, administration, and legal matters – in addition to training of LNG engineers at the ministry. ● N.N.

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INTERVIEW

Peter Brabeck-Letmathe

Chairman, Nestlé

A lot of change has been made Learning from the conflicts of the past, the Swiss food manufacturer has been promoting a new approach to social responsibility that involves business not charity

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estlé’s annual’s Creating Shared Value Global Forum took place on 21 June in Abidjan, where the company opened its first Africabased research and development centre in April 2009. Nestlé chairman Peter Brabeck-Letmathe hosted the event, which brought together stakeholders and investors to discuss how to accelerate sustainable development in Africa. The idea of creating shared value is that companies can make profits and address a society’s problems through its business activities rather than through disparate corporate social responsibility projects.

While the Swiss-based food company has promoted its community engagement, business has not been smooth sailing. In an interview with the Financial Times last year, Cornel Krummenacher, the chief executive of Nestlé’s Equatorial African region, announced that the company was cutting 15% of its workforce across several African countries because it had “overestimated the rise of the middle class”. The company is also having to deal with grow-

ing competition from homegrown African rivals that have local appeal and are adapting their brands to different markets. The Africa Report sat down with BrabeckLetmathe after the forum to discuss the company’s plans.

“Today we have a very constructive, cooperative approach with NGOs” TAR:Howdidcreatingtheshared value(CSV)conceptcomeabout?

PETER BRABECKLETMATHE: On one hand, the CSV concept was born out of a personal frustration with how corporate social responsibility was applied, and on the other hand the intellectual frustration that [Harvard University professor] Michael Porter had. With two frustrated men coming together, we started to discuss and we then came up with this new concept of CSV, which basically puts business back at the heart of society.

This is the seventh edition and the first time the forum is being held on the continent. Why did it take so long?

SWEET TASTE OF SUCCESS 1968 Joined Nestlé as an ice-cream salesman 1970 Named Nestlé’s Chile national sales manager 1987 Appointed senior vice-president of culinary products 1997 Selected as the company’s chief executive 2008 Named chairman of the board

COMPANIES & MARKETS | BUSINESS

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The first time we started to speak about it we had to be sure that the main stakeholders understood it.

So the first forum we organised was at the United Nations (UN), because this is where you have civil societies mostly represented. We then moved into the heart of non-governmental organisations (NGOs), which is basically in London, in order to explain to the NGOs what this all meant. We then moved over to Washington, whichwastheAmericansideofthe story, each time explaining what it was because nobody knew what CSV was. And then we started to move into the first countries where CSV had already been applied so that one could talk first of all with practical examples.

That was the case for India, for example, with our milk district in theMogaregion.Butitwasalsoimportant for us to move out from the directly involved stakeholders and NGOs, governments and private enterprises, in order to invite local businesses to acknowledge and to learn about CSV – and then afterwards hopefully convince them that they also have to embrace it.

So that’s why we went to India and to Colombia. Then we made a step back to Switzerland because we thought it was good that Switzerland also hears about it, because in Switzerland CSV was not very well known. And now it’s in Africa.

So was this a well-crafted plan?

Yes, it was a strategy: how to make this new concept known – first to the people who will be directly involved and affected, and then the change that has been created in the way we are working with NGOs today. Before we had CSV, our relationship with NGOs was mainly confrontational.

Today, we have a very constructive, cooperative approach with NGOs, but first of all we had to explain. We also needed to get the backing of institutions like the UN, for example. We had the UN Children’s Fund (UNICEF), which was very confrontational with us, [but] now you have the former head of UNICEF being with us for the CSV forum. You see that a lot of change has been made.

ManypeopleseetheCSVconcept as just a marketing tool.

I would say the big majority clearly sees it now in a different light. Of course, it has also been thanks to Michael Porter, because nobody can accuse him of having any interest to promulgate something that belongs to a company.

So it was very important that he and his colleague Mark Kramer have now created this CSV movement. Forty-eight countries now have CSV communities.

Nestlé is celebrating 100 years of doing business in Africa. What did the company see back then that others did not?

We have always said that Nestlé is at the service of people, not governments. When we decided 100 years ago to come to Africa, it was because we felt there was a possibility for us to be at the service of the African people. In 1927, I believe, we had already built the very first factory in [South] Africa. We started CSV [back then] by creating a milk district, by building a factory, by training our people, by taking care of waste and waste water very early on. And today we are close to 30 factories and still building.

How has Nestlé influenced smaller businesses in the industry?

I think there is no doubt that we have been forerunners in technology. So I think about food dehydration: we were the inventor of soluble coffee, we were the inventor of the portioned coffee with Nespresso. We were the forerunner, for example, in dehydrated vegetables with our Maggi line of products. We opened up a technological field, and then afterwards manyothercompaniesfollowedus and came into the same industry.

I think the fact that we have decided to strategically reposition Nestlé from a pure food and beverage company to a nutrition, health and wellness company is a major change. You can see that several other companies have already followed this model and are also positioning themselves now as a health and nutrition company. ● Interview by Oheneba Ama Nti Osei in Abidjan

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KENYA

Troubles for TransCentury The infrastructure company’s new chief executive will need to act quickly to right the ship and source funds, to avoid a default on bond payments later this year

19 May 2015 TransCentury loses a bid to develop coal mines at two blocks in the Mui Basin.

Share price: KSh13

2 September 2015

24 April 2015 TransCentury reports a pre-tax loss of KSh2.1bn ($22.4m) for 2014, due to a loss on the sale of its stake in Rift Valley Railways and project delays.

Share price: KSh15.75

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uffeted by the high cost of borrowing and some strategic missteps, Kenyan infrastructure company and cable manufacturer TransCentury is in themidstofacrisis.Chiefexecutive Gachao Kiuna resigned in January before the company reported a 2015 loss of KSh2.4bn ($23.8m) in May. The company blamed East Africa’s currency depreciations for part of its losses and pointed to the impact of lower copper prices on its cable business. The 12% depreciationoftheKenyashillingagainst theUSdollarin 2015raisedthecost of repaying foreign-denominated debt due to be repaid this year.

TransCentury has yet to surmount its problems linked to a $80m bond that it issued in 2011.

The company was due to pay the bondholders about $75m on 25 March or convert the debt into equity. The company did not have the cash and shareholders refused to have their stakes diluted.

The capital market authority then warned that TransCentury could default. US-based Kuramo Capital Management came to the firm’s aid with a $20m capital injection, though terms of that deal have yet to be made public.

Aly-Khan Satchu, the investment analyst and founder of Rich

Management, explains that the lack of clarity is not good for business: “It’s not clear now who’s really in control. You’ve had a private-equity company come in. It’s difficult to do the maths at this point and work out who’s holding the biggest stake.”

But before the month’s end, the senior management had negotiated a six-month reprieve for bondholder payments. Satchu says the bond “was priced to the moon. Once that started to fall apart, it started to put pressure on the business.” Afreximbank, a development finance institution, announced in early July that it would help to turn TransCentury’s finances around by buying some of its outstanding bonds.

TransCentury files a lawsuit after losing a contract to build a power plant.

Share price: KSh14.9

TransCentury has invested in more than half a billion dollars’ worth of infrastructure projects SOURCE: TRANSCENTURY

CABLES NEED SCRUTINY

Eric Musau, an analyst at Nairobibased Standard Investment Bank, says TransCentury will take some time to recover but its fundamentals are strong. “The core business is actually quite good – it’s just the financing bit they have to worry about,” he explains. He adds that managers need to look into the performanceofEastAfricanCables (EAC), of which TransCentury holds a 64.3% share. Musau says that the copper cable business is “doing exceptionally well,” but that the aluminium cable business is foundering and EAC’s factory may be operating at just 20% capacity.

Satchu argues that TransCentury’s new chief executive – Nganga Njiinu, who was its

90%

Shares once valued at KSh60 dipped to KSh4.85 in June SOURCE: KSE

former finance director – needs to be careful about his choice of direction, as previous takeovers have been problematic. He explains: “I suspect their acquisition of the road construction company Civicon [in 2011], which was very big in South Sudan, slowed them down. They took a hit on Rift Valley Railways (RVR). I think it was a perfect storm. There was a lack of focus as well.” TransCentury lost money on its investment in RVR, which runs a metre-gauge railway line linking the Kenyan port of Mombasa to the Ugandan capital, Kampala. It bought an initial stake in 2006 and sold off its shares in 2014.

TransCenturyhasbeen a homegrown success story. It was founded as a vehicle to invest the savings of a group of entrepreneurs and produced a record level of annual revenue – $158m – in 2012.

The company listed on the Kenyan stock exchange in 2011, but its shares are now trading at less than 10% of their initial listing price of KSh60. TransCentury won a raft of government contracts when President Mwai Kibaki was in office – 2002 to 2013 – but is now finding it difficult to snag tenders under President Uhuru Kenyatta.

Nairobi’s chattering classes point out that TransCentury bosses used to play golf with powerful people during the Kibaki days.

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JENNIPHER WACHIE

Industry secretary Julius Korir (right of picture) visits East African Cables’ refurbished Nairobi copper production plant in February. The firm, which is majority owned by TransCentury, invested KSh1bn in updating two plants, but while the copper business is thriving the aluminium one is struggling

7 March 2016 Capital Markets Authority warns that TransCentury could default on $75m in bonds.

Share price: KSh5.85

15 January 2016

3 May 2016 TransCentury announces a net loss of KSh2.4bn ($23.7m) for 2015 due to currency depreciation and other challenges.

Share price: KSh4.7

Chief executive Gachao Kiuna resigns.

Share price: KSh9

Now, TransCentury has been losing out on bids and has sought the intervention of the local courts to get government concessions overturned. Standard Investment Bank’s Musau argues that TransCentury has been too rosy-eyed in its annual reports about its ability to win government tenders. He explains: “I think their reporting was probably quite optimistic in terms of their outlook.”

BAD LOSERS

After TransCentury and its partners failed to win the rights to develop a 50MW geothermal project at Olkaria in August 2015, the company filed a case at the Nairobi high court. The court ruled TransCentury’s argument that it made the best offer was baseless and confirmed the award to Rentco East Africa and its partners. The company was also in court in 2015 over the bidding process for a contract to build a fuel depot at Jomo Kenyatta airport in Nairobi. TransCentury also crafted a losing bid THE AFRICA REPORT

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to develop coal mines in the Mui Basin in 2014 and ended up in court and arbitration proceedings after falling out with US company ContourGlobal, which had subcontracted Civicon to help develop generation plants powered by the methane gas in Rwanda’s side of Lake Kivu in 2015.

One of the company’s recent focuses has been on renewable energy. TransCentury and its consortium partners, including US-based Aperture Green Power, signed a contract to develop a 50MW wind farm at Limuru in central Kenya in November 2014.

They were due to break ground in 2015 but since have not made any announcements about the project’s progress. On a brighter note, the 35MW geothermal plant at Menengai that Civicon and its partners have developed was due to come online in July.

TransCentury has been a big proponent of East Africa’s economic potential, while also recognising that it lags in terms of

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29 March 2016 Bondholders agreed to a six-month extension for paper worth $40m.

Share price: KSh5.2

electricity and other infrastructure development.Buteconomicgamechangers like the Lamu transport corridor and the exploitation of East Africa’s oil and gas reserves have been slow to materialise.

Civicon had signed a two-year deal with Ireland’s Tullow, which holds oil acreage in Uganda, to help the oil company to build infrastructure in 2013. Although that deal has now expired and oil prices remain low, Uganda’s government has relaunched talks with investors seeking to build a refinery, which is a lynch pin to getting the country’s oil reserves developed. If TransCentury can sort out its current problems, it could be in a position to profit from the region’s continued growth and governments’ spending on infrastructure. ● Honoré Banda in Nairobi and Mark Anderson

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BUSINESS | LEADERS

INTERVIEW

Juliet Anammah Chief executive, Jumia Nigeria

We’ve barely scratched the surface The e-commerce CEO talks about the rapid growth of online sales and the need for nimble companies to overcome some of Nigeria’s logistical hurdles

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ess than a year since she took over the reins of Jumia Nigeria, Juliet Anammah has already learnt some valuable lessons as chief executive of Africa’s leading online shopping platform. “People tend to say e-commerce is about technology, [but] it’s really all about consumer experience. It’s really about understanding who the consumer is and being able to provide the services and the products that the consumer wants. So for me that’s fundamental, that’s number one,” she tells The Africa Report. Prior to joining Jumia, Anammah was a partner at consultancy firm Accenture and managing director of the company’s consumer goods practice in Nigeria.

Launched in April 2012 by German venture capital firm Rocket Internet, Jumia Nigeria was born at a time when online shopping was virtually nonexistent in Africa’s largest economy. Four years on, the story has

changed and a report released by the consultancy McKinsey predicts that e-commerce could account for 10% of retail sales in Nigeria by 2025.

Anammah explains the hurdles the company has surmounted so far: “The entire concept of ‘I can just pay online, order something and then someone delivers it to me’ was new. So there was a lot of building [up] that trust that if you order it, it will come, it will be delivered to you.”

MOST CLICKS IN NIGERIA

Today, around 86% of all orders are paid on delivery. Jumia is the most visited e-commerce website in Nigeria, according to analytics company Alexa. Global investors including US-based investment bankers Goldman Sachs and French insurance house AXA gave their stamps of approval in March, injecting more than $325m.

Nigeria’s emerging middle classes and the evolution of the mobile industry have also

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A WOMAN AT THE TOP 1999 Earned an MBA in finance from ESUT Business School, Lagos 2010 Appointed managing director of Accenture’s products operating group covering Nigeria and West Africa 2014 Became a fellow at the Nigerian Leadership Initiative October 2015 Appointed chief executive officer of Jumia Nigeria

played a critical role in bolstering e-commerce growth. According to research group Euromonitor International, the number of middle-class households in Nigeria will hit around 15m in 2030, up from 10m in 2015, making the country’s middle classes the second-fastest-growing in the world behind Guatemala.

According to Jumia’s own 2016 Mobile Trends in Africa report, focusing on the app revolution is critical because 70% of Nigerian shoppers used mobile phones to access the company’s website in 2015, and 50% of its customers continent-wide. In addition, 80% of Nigerians are estimated to own a feature phone or smartphone.

“Customers tend to spend a lot more time on the app than they do on their desktop device or any other handheld device that they use to access the site, so mobile is key to how we follow the market,” Anammah says.

Jumia is not the only company making headway in the e-commerce game, however.

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WHAT CUSTOMERS WANT

When asked about Jumia’s strategy in the face of growing competition, Anammah explains: “I don’t wake and look in the mirror and say: ‘How do I look relative to the competition?’ I ask myself how I look relative to what the customer expects. […]

And as long as you’re in tune with the demand of the customer and the things that the customer wants, you will always win in this market.” Moreover, operating in Africa’s most populous country means there is enough room for everyone. “We have 170 million Nigerians in this market. We’ve barely scratched the surface,” she adds.

But even if the growing competitive threat might not be cause for alarm, the country’s current economic crisis cannot be ignored. The Nigerian government is battling significant revenue losses and the deterioration of fiscal and current account balances due to a protracted decline in crude oil prices.

“It’s a difficult time, that’s for sure,” Anammah admits, “but no one has stopped shopping in Nigeria.” For her, the task is to align the company’s business strategy and prices to be able to respond to changing consumer buying habits, making sure that at each stage of the economic cycle they remain relevant in the market.

She says Jumia’s model is recession proof but the company lost $18.8m in the first three months of 2016 and its share price has fallen 39% this year.

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Anammah sees a bright future for e-commerce in Nigeria. “One of the key lessons we’ve learnt is that you can’t just be an Amazon that just concentrates on retail, on the marketplace, on providing the assortments and customer experience. You also need to begin to look at logistics because the logistics infrastructure is not as mature and not as developed, so you can’t just plug and play,” she says. Jumia has invested in its own logistics company, AIG Express, which ensures delivery with its 800 vehicles, 35 hubs and 600 delivery associates.

Besides developing the Jumia brand in Nigeria – now present in 10 other African countries – Anammah trains women entrepreneurs through workshops she organises with other organisations. She says she is passionate about empowering women and has noticed that female entrepreneurs are not well positioned to access the opportunities available. “I like to have in-spite-of stories. ‘I succeeded in spite of X’, not ‘I didn’t succeed because of X’. There’s a different tune to it, and that’s what I try to encourage women to do,” she explains.

With her appointment in October 2015, she joined other women at the top leadership pos-

“It’s a difficult time, that’s for sure, but no one has stopped shopping in Nigeria” ition of major tech companies, including Google Nigeria and Uber Nigeria. She says women are naturally endowed with the balanced management skills required to run a company in terms of culture, technology and training the workforce. “I think women probably have a bit more patience in understanding that those take a while to build. It’s more of the value that a woman in leadership brings – some level of maturity and also a lot more emotional intelligence that comes to play. It’s quite valuable when a woman is at the top.” ● Interview by Oheneba Ama Nti Osei

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APPOINTMENTS

Bruce Cleaver The career Anglo American executive and former lawyer at Webber Wentzel was promoted to chief executive of diamond miner De Beers and takes up the new post in July. The company has been cutting production to support prices amidst weak demand.

Kihara Maina The Barclays bank veteran joined the Kenya subsidiary of I&M Bank in May as its new chief executive. I&M is opening new branches and its parent company bought Kenya’s small Giro Commercial Bank in June.

Mohamed Tantawi US-based information technology company EMC Corporation has its eyes on private and public sector projects in Egypt and the Middle East North Africa region. Tantawi, who has been appointed General Manager for EMC Egypt, brings experience in Saudi Arabia for EMC and for Alcatel, Cisco and IBM in the region.

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Competition in the local e-commerce market, albeit weak, is gaining momentum. Local rival Konga, founded in 2012 by former Google Africa representative Sim Shagaya, is Nigeria’s second-largest online retailer.

Launched within a few months of each other, Jumia and Konga control the lion’s share of the Nigerian e-retail market and are both credited with strengthening the online shopping culture.

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BUSINESS | FINANCE

Mahama will have to resist the temptation to spend in order to win popular votes

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PUBLIC FINANCE

Can Ghana stop its borrowing binge?

The government’s high levels of debt are unsustainable and it is turning to costly borrowing in order to bridge deficits ahead of high-stakes elections in November

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s Ghana heads towards national elections in November, the government of President John Mahama is taking a high-risk bet that international investors believe in its attempts to reduce spending and debt levels during a period when a change in government could be possible.

The government has announced its intention to issue a $1bn eurobond by September, but keeps on equivocating about following through. The economy has been going through rough times since 2012, when the currency nosedived amidst power cuts and a huge government deficit.

Since then, Accra has faced diminishing returns on its eurobond offers – bonds issues in foreign currency – and the international climate is particularly difficult with the impact of the June Brexit vote in the UK on already meagre global growth prospects. Despite signing a $1bn International

Monetary Fund (IMF) bailout in 2015, the government has not been spending within its means.

The local financial sector is worried about the future. Sampson Akligoh, managing director of investment bank InvestCorp, explains his concerns: “The core issue is public debt. The utility price deregulation needs to continue.

We need to have steady institutions and to be able to finance our election and policies without messing up public finances. Despite the election, we shouldn’t see surprises of projects being done outside the budget.” The IMF predicts that Ghana’s debt-to-GDP ratio will rise to 74.1% by the end of the year, but it recommends that it should be below 60%.

Even though the fiscal deficit dropped to 6.7% of gross domestic product at the end of last year – which was lower than the IMF’s target of 7% – finance minister Seth Terkper said in June that the government needs

Ghana’s nonperforming loans

16.2%

14.7% 11%

2014 2015 SOURCE: BANK OF GHANA

1q 2016

$750m to meet the budget deficit and $250m for debt repayments.

Keen investors could be worried as election time typically leads to much higher levels of government spending in order to gain popular support. Professor Newman Kwadwo Kusi of the Institute of Fiscal Studies argues that Mahama will have to resist temptations like scaling back taxes and restoring consumer subsidies to win over the electorate, which is calling for the government do something about infrastructure deficits and weak public services.

Ghana’s international borrowing is getting more expensive.

Ghana’s 2015 $1bn eurobond was oversubscribed, but with a coupon of 10.75%, which is the highest rate for an African eurobond and higher than the 8% of its first eurobond in 2007. The government expressed concerns about the higher costs of eurobonds due to weaker investor confidence, with the finance ministry saying on 5 June that low prices for Ghana’s oil production and other concerns could make it turn to private loans instead. Two days later, finance minister Terkper said that there could be a new eurobond as early as July and as late as September but has been talking the issue up since last year without any action.

TIMING IS KEY

Professor Kusi explains the government’s challenges: “Uncertainty and risks surrounding the eurobond are likely to be heightened close to the elections. The likelihoodofhavingadifficulteurobond issue as late as October in terms of subscriptionandpriceis,therefore, high. The worst scenario would be for the government to resort to central bank financing, which would breach an important condition of the [IMF deal] and may send the programme off track.”

Raising money on the local markets is much more expensive as interest payments can be around 25% per annum, but repayment is not subject to currency risks, as

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HANNIBAL eurobonds are. The government cancelled the issue of several local bonds last year over cost concerns.

In June, the ministry of finance sought to issue ¢500m ($126.3m) in domestic bonds but attracted investmentofjust¢350m.Itwasthe third local bond floated this year.

BORROWING FOR BAILOUTS

Other African governments have raised eurobonds to finance infrastructure, and some investors are worried that Ghana’s money will not be going into moneygenerating projects. The government also announced in June that it wants to issue $2bn in syndicated bonds to address the high levels of debt of state-owned companies, including the Volta River Authority and GRIDCo, in the troubled electricity sector. The petroleum ministry said that a new 10% levy on electricity tariffs would be necessary to ensure the government can make the bond payments.

Analysts say that they are not too concerned about the potential for drastic policy changes, no matter who wins the election, but all of the borrowing could leave future governments in trouble if they do not have a good plan to raise the funds to repay. Investcorp’s Akligoh points out: “All the governments, more often than not, have been pro-market. It is only the intensity and the approach that is different.

We will continue to see an open economy, with minimal restrictions on capital flows.” Repayment of Ghana’s initial $750m eurobond is due in 2017 and there are risks that the government will seek to pay back borrowed money with a rollover eurobond that would have even higher costs.

Other financial problems are likely to take up a lot of the campaign as three-time presidential also-ran Nana Akufo-Addo seeks to replace Mahama. The tough economic climate has led to a rise in non-performing loans (NPLs) in the commercial banking sector. A report by Moody’s in June recorded NPL rates of 14.7% at the end of 2015, up from 11% at the same time the previous year, negatively impacting the banks’ ratings. ● Billie Adwoa McTernan in Accra THE AFRICA REPORT

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Deal or no deal?

DEALS FALL APART for so many reasons, and a series of high-profile conflicts highlight some of the uncertainties of doing business in the economies of the continent.

The Ugandan government has been playing hardball over the development of its promising oil sector. It fought companies over tax when they tried to bring new investors into acreage on Lake Albert.

The latest casualty of the high-stakes negotiations is Russia’s Rostec Global Resources, which signed up to build a $2.5bn oil refinery that is key to getting other oil developments online. In June, Kampala announced that it is now negotiating with an alternate bidder, South Korea’s SK Engineering, after Rostec sought to change the terms of a deal agreed in May.

Diplomatic risks UNDER INCREASING INTERNATIONAL PRESSURE, the government of President Hage Geingob in Namibia has had to ditch its friends in North Korea. In early July, South Korean sources revealed that Geingob’s administration would no longer be working with Pyongyang’s Korea Mining Development Trading Corporation and Mansudae Overseas Projects. The companies are under international sanctions for earning money for Kim Jong Un’s government through arms sales, and one had built munitions plants in Namibia.

Market pressures THE GOVERNMENT OF GUINEA and Anglo-Australian miner Rio Tinto are heading towards a new confrontation about the rich Simandou iron ore deposit. Chief executive Jean-Sébastien Jacques told London’s The Times newspaper in early July that the company is not interested in developing the $20bn project – which requires the construction of a railway and other infrastructure – due to the sustained period of low iron ore prices.

The government has expressed its frustrations that Rio has not made much progress on the mine since it won ownership back in 1997. Already, in 2008, the government confiscated two of the four Simandou blocks from Rio and sold them to another company, leading to an ongoing legal battle.

Change is coming PRESIDENTIAL DAUGHTER Isabel dos Santos is now the head of state oil company Sonangol and is promising to bring it back to its core business and improve transparency. For now, that means all deals are off.

Dos Santos announced in July that all sales negotiations for non-essential assets – the company also runs an airline and develops real estate projects – were put on hold as she stripped the firm’s legal department of its authority. Having become a billionaire exclusively during the period in which her father, President José Eduardo dos Santos, has been in charge of a highly corrupt regime, Isabel has a long way to go to convince investors that she will reduce the opacity that has earned Sonangol the reputation as one of the least transparent state-run companies on the continent. ●

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DOSSIER TRANSPORT

Passages to Trade corridors have the potential to boost Africa’s economic development dramatically. But in order to take off, they need massive investment and delicate political manoeuvring

By Mark Anderson

F

rom afar they look like lonely palaces, rising grandly out of desolate scrublands. In fact, they are railway stations. Connecting them all is a brand new electrified railway line stretching about 800km from Ethiopia’s capital Addis Ababa to the neighbouring country of Djibouti. The railway, which was built at a cost of about $4bn and financed mostly by loans from the China Export-Import Bank, will help this landlocked country overcome infrastructure problems that have held back its development for decades.

With all of the tracks now laid, the hard work is just about over, Getachew Betru, head of the stateowned Ethiopian Railways Corporation, tells The Africa Report.

“We are working on electrification, testing and communications – the last finishing touches,” he says.

Some of the track has already been used to transport grain shipments from Djibouti’s port and thus ease Ethiopia’s food shortages during the worst drought the country has seen in decades.

Trade corridors like this one are essential to getting African agricultural products, mineral resources and manufactured goods

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Construction of the Dire Dawa electric railway, connecting Addis Ababa to Djibouti

growth ©XINHUA/ZUMA/REA

to global markets. Worn-down roads, creaky railways and underdeveloped ports make the cost of intra-continental trade higher than anywhere else in the world.

Trade between African countries costs about 50% more than in East Asia,accordingtotheInternational Trade Centre. Improving corridors that link ports and roads with consumers and markets could therefore boost economies.

Johny Smith, CEO of the Walvis Bay Corridor Group (WBCG), explains the potential of regional infrastructure: “Trade corridors are very important for the future of Africa, not just in terms of transTHE AFRICA REPORT

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There are

33

planned and existing trade corridors in Africa, but only 10 are active

SOURCE: JAMES COOK UNIVERSITY

J U LY- AU G U S T 2 016

port and logistics but also the other sectors they need to support, like agricultural development and future manufacturing possibilities in Africa.” The group facilitates trade along four corridors that connect the Namibian ports of Walvis Bay and Lüderitz to the landlocked countries of the Southern African DevelopmentCommunity(SADC).

REDUCING BARRIERS

Recent years have seen a surge in new cross-border logistics projects as well as a growing resolve among regional blocs to reduce barriers to trade. There are now 33 planned and existing trade cor-

ridors in Africa, combining ports, tarmacked roads and railways, according to researchers at James Cook University in Australia. If all of them are completed, they would traverse about 53,000km around the continent.

The Trans-Caprivi Corridor – which has been operational since 2004 – allows vehicles, boilers and machinery to travel to the Democratic Republic of Congo (DRC), Zambia and Zimbabwe via Walvis Bay port. It also plays a vital role in getting the region’s minerals to the global market and was designed to attract traffic from South Africa, Mozambique

DOSSIER | TRANSPORT

and Tanzania. In 2014, WBCG generated $32m in direct revenue for ports, rail and road companies, according to the company’s annual report.

Despite some early success, however, most of Africa’s 33 planned and existing corridors have not got off the ground. Corruption in the award of substantial infrastructure contracts is a major hurdle in many countries.

Another problem is an abundance of red tape. Truck drivers in Southern Africa need to carry as many as 1,600 documents with them because of the plethora of bureaucratic hurdles in the region, according to the International Trade Centre.

Africa’s good, stalled and tricky trade corridors

MORE INVESTMENT

Many of Africa’s ports, which form a crucial element of most corridors, need more investment.

Karl Xhanti Socikwa, chief executive of South Africa’s Transnet Port Terminals, says his company is looking to expand: “There’s no port that we wouldn’t look at on the African continent in terms of establishing a strategic relationship,” Socikwa says. “But many African ports are not at the stage of development that we believe is necessary [to ensure] that they’re not bottlenecked to trade between Africa and the rest of the world, and also between African countries themselves.”

Socikwa argues that it takes dialogue and coordination to get ports operating effectively: “Efficiencies in transport networks, transport infrastructure, the running of ports – it’s a full-contact sport and it requires all the supply chain partners to play a role.

Our approach now is that we are working much more collaboratively and smarter with the other partners in the supply chain.”

For now, corridors with upgraded ports are left in an advantageous position. Aboubaker Omar Hadi, chairman of the Djibouti Ports and Free Zone Authority, says: “For the time being, there is no competition. The demand is higher than the offer.” ● Additional reporting by Jacey Fortin in Addis Ababa

JB DODANE

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Namibia Reaching inland Touted as a model corridor for other African countries by the United Nations Conference on Trade and Development, the Trans-Caprivi Corridor helped to ramp up capacity at Namibia’s Walvis Bay port and laid highways and railways to connect mineral exporters in the Democratic Republic of Congo (DRC), Zambia and Zimbabwe with global markets. The corridor also brings in consumer goods and includes a 2,600km highway that connects the port with Lubumbashi in the DRC, and a railway line that links the port with Grootfontein in Namibia.

Mozambique Development through trade Mozambique is home to both the successful Maputo Development Corridor – which links the country to South Africa and Swaziland – and the Beira Corridor, which gives Zimbabwe access to the Beira port. The Beira project aims to bolster Mozambican mining and agricultural production through better transport links. The Nacala Corridor is not yet developed and has, as a key component, the ProSAVANA project – a huge agricultural programme supported

by Brazil and Japan. It would serve as the backbone for the development of northern Mozambique.

Djibouti Continental ambitions In November last year, the first train left Djibouti’s port and travelled along a new 756km railway to a depot near Addis Ababa. Djibouti is already the main route to the sea for Ethiopia to import and export goods. In addition to the railway, the corridor includes massive upgrades to Djibouti’s ports, a planned oil pipeline to neighbouring South Sudan and a gas pipeline to Ethiopia’s Ogaden region. Political instability in South Sudan has delayed that element from getting off the ground so far.

Meanwhile, the gas pipeline could be completed in three years.

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Some sections of the 3,242km Trans-Maghreb highway, which aims to connect Mauritania, Morocco, Algeria, Tunisia and Libya, were completed decades ago. But political instability in Libya and Tunisia, and budgetary problems across the region, have prevented this corridor from crossing borders. For now, the vision to connect 55 cities, 22 international airports, as well as the region’s main ports and rail hubs, is on hold.

Algiers

Tunis

Rabat

Tripoli

Cairo

JAMILA AKWELEY OKERTCHIRI

Maghreb Dreams deferred

Nigeria Looking inward Nouakchott Dakar

Djibouti

N’Djamena Addis Ababa

Abidjan

Trans-African trade corridors

Lagos Douala

Cairo-Dakar Algiers-Lagos Kinshasa-Cape Town Cairo-Gaborone (Cape Town) Dakar-Lagos Lagos-Mombasa Beira-Lobito Douala-N’Djamena Windhoek-Livingstone Djibouti-Addis Ababa

Bangui Nairobi

Kampala

Kinshasa

Mombasa

Lobito Livingstone Beira Windhœk

©NOOR KHAMIS/REUTERS

Cape Town

Kenya’s first new railway in more than a century – linking Nairobi with the port of Mombasa – is its biggest infrastructure project since independence.

The government is paying $5.2bn to two Chinese companies. This price is estimated to be three times more than the market value of the project, so activists have raised concerns that graft could derail it.

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Somaliland Sovereignty before trade Somaliland’s quest for recognition of its independence from Somalia has scared off investors from its Berbera port, which could serve as a crucial trade artery for Ethiopia.

PetroTrans, a Chinese company, pulled out of a deal to develop the port in 2012, saying that Somaliland had pushed too hard for recognition of its sovereignty in the contract. Addis Ababa has said it wants as much as 30% of its trade to go through Berbera by 2020, but that looks unlikely. Somaliland has, however, signed a deal with DP World to manage the port.

Gaborone

Kenya Next stop, opacity

Nigeria has failed to take the lead on developing regional trade links. Poor roads and rail links raise costs and reduce efficiency. “Without bold improvements in infrastructure, the high cost of trade will remain unchanged,” said a Chatham House report.

Corridors seeking to link Port Harcourt to Dakar and Abidjan have failed to attract significant investment or political interest. After a fight with investors, work on the 105km Lagos-Ibadan expressway is restarting.

Cameroon/Chad Terror hits trade

The 1,600km journey from Cameroon’s main port of Douala to Chad’s capital of N’Djamena can take as long as 28 days, according to the World Bank. Plans to lay down new roads have been set back by Nigeria’s Boko Haram insurgency, which has destabilised huge swathes of land that the project must go through.

Libya Lawless highway A highway more than 10,000km long that aims to cut through the African continent, linking Tripoli with Cape Town, has hit snag after snag. Lawlessness in Libya, the Boko Haram insurgency in northern Cameroon and stunted state development in the Central African Republic have made this extremely ambitious project hard to get off the ground.

DOSSIER | TRANSPORT

Uber has vaulted over every hurdle so far, and wants to spread its app-based model across the continent

VICTOR PEACE/UBER

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URBAN TRANSPORT

Generation rideshare

Adapting to local conditions, transport apps are the continent’s new startup frontier, enabling users to cut through the gridlock on four wheels or two

S

ix months ago, Nairobi’s Lawrence Karugu became a driver for Uber, a ridesharing app that connects taxi drivers with customers who want a lift. In that time, he says he has seen his monthly salary nearly double to $500. The 42-year-old driver makes about 13 trips per day. “The experience has been good, especially compared with the other taxis,” he says. “There’s more money, and the clientele has more trust in you.”

Uber is aggressively expanding its African footprint. In June, it launched operations in Ghana, Tanzania and Uganda. Before the

June launches, it was already operating in nine cities in Kenya, Nigeria and South Africa. Alon Lits, general manager of Uber’s subSaharan African operations, tells The Africa Report: “We think we can be in another 12 African cities before the end of the year.” Angola, Mauritius, Namibia, Côte d’Ivoire, Cameroon, Rwanda, Ethiopia and Senegal are some of the countries Lits says Uber is eyeing.

Places with reliable mobile networks, adequate mapping and online payment facilities are most desirable, he says. Harnessing the power of mobile phones makes senseforcompaniesofferingtrans-

port services: GPS services allow drivers and customers to share their locations; mobile platforms can be used to make payments; and users can factor in live updates on things like traffic congestion and road closures. Uber says that it wants to offer services in every citywithmorethan200,000people.

But, as with many businesses, a single model might not necessarily work everywhere. Justin Coetzee, the chief executive of GoMetro, a South African app that helps users plan journeys using public transport, explains: “Local operating conditions are highly variable: what works in Johannesburg is not going to work in Lagos.”

In some countries, Uber has been forced to adapt its approach.

In places where credit card facilities are lacking, for example, the company has shifted to a cash payment model. “Nairobi was our second city globally to test the cash product,” Lits says. “We saw more and more that cash was needed as a solution. People weren’t comfortable uploading their payment information […] or there was just a lack of access to credit cards.”

HEADACHES AND HURDLES

Regulatory hurdles have given Uber headaches all around the world. African countries are no different, says Lits. “The regulatory frameworks do not cater for smartphone technology, and they were never written with smartphone technology in mind.” Perhaps more worrisome are labour laws, which vary greatly from country to country. “[Uber’s] economic model rewards the flouting of labour regulations, which

Uber in South Africa Uber rolled out its first sub-Saharan African operations in 2012 with services in Cape Town, Durban and Johannesburg

Uber drivers have clocked up more than 93 million kilometres since launching – equivalent to 121 trips to the moon and back

The longest journey recorded was a 6-hour 580km trip from Johannesburg to Durban

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More than 500,000 passengers have taken Uber cars since its launch

Vehicle utilisation

More than 4,000 Uber drivers operate in five cities: Johannesburg, Cape Town, Durban, Port Elizabeth and Pretoria

FIRST MONTHS SUBSCRIPTION

mostly because it will draw attenis going to become a problem,” tion to the usefulness of transsays GoMetro’s Coetzee.

Uber must convert taxi drivers port apps. Coetzee says: “Uber has to its platform in order to expand opened up the fringe market [of people]whowillnotalwaysbeable into new African markets, and many drivers are not happy about to afford Uber-only services from the company’s disruption of their home to work or other activities.

The most important contribution industry. Karugu, the Nairobiby Uber to [Johannesburg] is the based Uber driver, warns of amount of people being freed from the abuse that Uber taxis face. dependence on their car and who A friend of his recently had his are going to be looking for other car stopped by a group of taxi travel alternatives.” drivers on the side of the road.

They punctured his tyres for being an Uber driver. “There are the BEHAVIOUR CHANGE guys who are very infuriated by Maxime Dieudonné, one of the the prices of Uber, so when you co-founders of SafeBoda, also go to pick someone up you have says Uber is not a threat: “Uber’s to be very cautious,” Karugu says. expansion into Africa is good for Uber’s rival Lyft is soon due us […]. In particular, working on to launch operations in Nairobi, the behaviour-change aspects of and local tech startups catering using an app is really important. to Africa’s growing pool of smartOur focus is on motorcycle taxis, [which] is probably the next fronphone users are also creating tier after taxis.” apps that capitalise on the busiSafeBoda says about 12,000 ness opportunities. Some apps passengers use its service every let users hail private transport, day in Kampala, although most like SafeBoda, which connects of these fares are still hailed on Ugandans with motorcycle taxis and helmets. Others, like Nigeriathe street in the old-fashioned based MyQ, monitor vehicle way. The company employs 600 queueing and customer loaddrivers and is eyeing expansion ing in transport depots and offer e-ticketing Uber has paved the way services, making bus for other app developers and minibus travel such as SafeBoda and MyQ more efficient and predictable for users.

In Nigeria, there is a “complete to other African cities, where it lack of information technology in estimates more than five million the inter-city mass transit,” Ishiaku people use motorcycle taxis.

“There is significant potential,” Gwamna, one of the developers says Alastair Sussock, another of MyQ, tells The Africa Report.

SafeBoda co-founder. “Techno“[We want to] harmonise all road logy is a great way to scale and transportation information on a leapfrog infrastructure constraints single platform,” he says. […]. Companies in the space are In South Africa, GoMetro’s Coetzee says his company “is digitbuilding technology and placing ising the existing informal minibus it in the customers’ hands.” ● taxi industry and other transport Mark Anderson services in South African cities.” He Additional reporting by welcomes Uber’s growing reach, Abigail Higgins in Nairobi

DOSSIER | TRANSPORT

INTERVIEW

Aboubaker Omar Hadi Chairman, Djibouti Ports & Free Zones Authority ©VINCENT FOURNIER/JA

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We have to expand Djibouti is aggressively investing in its ports and other infrastructure in a bid to become a global trade hub. The head of the country’s ports authority explains his ambitious strategy

D

jibouti is strengthening its role as a shipping hub. The number of containers handled by its port has doubled over the past decade.

Last year, the port handled about 900,000 twenty-foot equivalent units (TEUs), placing it among the continent’s 10 busiest ports, according to the Djibouti Ports & Free Zones Authority (DPFZA).

The country is taking advantage of the fact that 30% of the world’s maritime trade passes through its shores due to its strategic position along the Red Sea. Djibouti has three operational ports: a container terminal, a multipurpose port and an oil terminal. Three more ports are projected to be completed by December, as well as a fourth by the middle of 2017. DPFZA chairman Aboubaker Omar Hadi says the government has spent $864m on building and expanding the ports in recent years.

Hadi has other big plans. In the next five years, he wants to attract more than $15bn to develop Djibouti’s ports and maritime business activities. “Every time the port capacity reaches 70%, we have to expand,” he tells The Africa Report.

The DPFZA has secured 42% of the total financing it needs

to expand the ports, but Hadi says there is still a long way to go. “What we are trying to build in this strategic location is a shipping hub for the whole of Africa.

We are working to unleash the vast economic potential of the continent,” says Hadi, noting that Djibouti can serve 10 neighbouring landlocked countries.

LOCATION, LOCATION

Djibouti is modelling its ports on thoseofSingaporeandHongKong, whichhandled35mand22mTEUs in 2014, respectively. But Djibouti’s strategic location gives Hadi’s port an advantage, he says. “We have a better location. In addition to the water depth of the port is the location. Djibouti is location, location, location. Singapore and Hong Kong – they don’t have it.”

“What we are trying to build […] is a shipping hub for the whole of Africa” Djibouti’s trans-shipment segment is growing fast, Hadi says.

“The business today between international shipments and transit is split almost 50-50, and that trans-shipment business is our fastest-growing business activity today.”

The ports are heavily reliant on handling Ethiopia’s imports.

Hadi explains that he expects the railway linking Addis Ababa with his port to handle “at least 75% of the [cargo] coming to Djibouti’s ports”. Ethiopia imports around

220,000 TEUs of goods per year and exports just 40,000 TEUs. Hadi predicts that Ethiopia’s exports will grow rapidly, particularly in terms of manufacturing, horticulture and agricultural products.

South Sudan’s fragile peace deal could spell more activity for Djibouti’s ports too, but Hadi adds that he wants there to be quick progress on building an oil pipeline. “We are expecting a pipeline to come from South Sudan for crude oil exports,” he says. “It was supposed to be operational by now, but unfortunately they had a civil war. Once peace comes back to the country, construction will start. The situation is improving now since the unity government was formed.”

Djibouti could become even busier if Ethiopia’s ambitions to export natural gas reserves by 2019 are realised. A Chinese company, POLY-GCL Petroleum Group Holdings, is working on exporting natural gas from Ethiopia’s Ogaden Basin. Hadi says a project to develop a liquefied natural gas terminal is underway.

The ports and a 48km2 freetrade zone will need 3,700MW of electricity to meet demand. “We are inviting foreign companies or national companies to invest in that sector, and we guarantee to buy electricity from them,” Hadi says, noting that Djibouti will buy electricity from Ethiopia. But that won’t be enough, he says: “From 2018, we will need to put in place about 400MW every year.” ●

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ART & LIFE

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The Niger River carves its way through five West African countries. All along its route, people live in symbiosis with the river, but today low water levels put their livelihoods at risk

Text and photographs

by Ricci Shryock in Niamey

LOVE OF TWO WHEELS Ousane, 35, washes his motorbike on a shallow platform beside the Niger River in Niamey. “Our river has a lot of importance for me,” he says. “I come and clean my motor and wash myself and do the dishes.”

I

t is a washing machine, a fishing destination, a gardening tool and a source of drinking water. The Niger River is the lifeline for not only the residents of Niger’s capital, Niamey, but also the more than 110 million people living in the Niger River Basin. Winding down from south-eastern Guinea to Nigeria’s Niger Delta, crossing Mali, Niger and Benin, it provides for fishermen, farmers, cattle breeders and transport needs on its way.

Today the effects of climate change are threatening the way of life for these millions of people.

According to Robert Dessouassi, director of the Observatoire sur le Bassin du Niger, after decades of decreased rainfall in the 1970s and ’80s water levels are close to 30% lower than normal, and increasingly sporadic rainfall makes it difficult to build, farm or operate successfully along the river.

One local boat owner in Niamey, Mamadou, says he’s been bringing boats full of squash to Niamey for more than 20 years. In previous years they used to transport the food all year long, but falling water levels during the dry season now mean they can only bring them during the rainy season and for a few months afterwards. “The river is important for us, because when the water goes down we cannot navigate,” he says.

The river bank is also a popular hangout for various groups of teenage boys. “The river reminds us of our tradition,” says one of the boys, Karim. “Our elders came here to walk and bathe and talk. We do that too.” ●

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ART & LIFE

THE GANG’S ALL HERE Karim, a member of the The ‘Jeune Star Boys’, makes tea by the river in Niamey. The group hangs out along the banks of the river, drinking tea and smoking cigarettes. Many of them have tattoos to show their bonds of friendship, such as the initial of another group member.

IN A LATHER Armed with his soap, Seydou takes a bath, partly clothed, in the river. When the river is high it provides for every cleansing need: washing utensils, clothes and oneself. At other times collecting water for these simple tasks is labour-intensive.

BUILDING BLOCKS FOR BIRDS The river serves as a water source for nearby residents to produce a range of materials: here, children make clay bricks for pigeon houses in an inlet of the river, leaving them to harden in the sun.

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PRODUCE COMES TO MARKET Squashes roll from a pirogue as it docks in Niamey. Large pirogues arrive twice a week from Mossye (Benin) and Kirtachi (Niger) during the high-water season from August through January. According to Mamadou, who has been delivering squashes for 20 years, pirogues used to travel all year long, but now it is only possible for less than half the year, forcing people to find new sources of income.

“Now we fish in the dry season, instead,” he says.

SCRUBBING IN THE SUN Faty Abdoulaye, 20, washes clothes in one of the canals carved out to serve as a lavoir. Many young women in Niamey use the river as a place to do laundry, dishes and other daily chores, keeping their homes and families scrupulously clean while catching up on the local news and gossip.

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ART & DESIGN

Prolific, prodigious but never pop The mind of self-taught Cape Town designer Atang Tshikare fizzes with ideas, but he’s focused on one thing: telling positive stories about Africa with his Zabalazaa Designs brand

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mong the old textile factories of Cape Town’s rapidly gentrifying Woodstock, one building on Albert Road stands out. Across its black brick wall sprawls a rainbow-coloured Op Art mural, clinging to the side of the building like a huge cluster of diamonds refracting the light. By the Spanish artist Okuda, it symbolises a cluster of another kind: the 30 or so artists’ spaces that make up Side Street Studios. This is where surface designer and visual creative Atang Tshikare has his studio and runs his business, Zabalazaa Designs.

The child of an artistic father and entrepreneurial mother, Tshikare grew up in Bloemfontein as a comic book obsessive, moving on to graffiti as soon as he could get his hands on a spray can.

It was during two years in the UK, from 2006 to 2008, that he really got into the street art scene. While there he started collecting customised sneakers, and on moving back to South Africa decided to turn his love for sneakers into a career,

customising his own instead of buying them from overseas.

Prolifically creative, he didn’t stop there, but moved on to designing furniture, bicycles, postcards, bags, wallets and skateboards … a list that continues to grow with each day in the studio.

Design Indaba 2012 was a turning point for Tshikare. After being invited to take part in the Cape Town design expo as one of 40 ‘emerging creatives’, his brand, Zabalazaa Designs, took off. He now employs five people, has exhibited in Dubai and Germany and has won several design and innovation awards.

NavigatingTshikare’sstudio is quite a challenge. It displays thekindoforganisedchaosthat is best understood by someone

who spends most of his days and nights there. There is a green bicycle standing upside down in the middle of the room.

A colourful self-portrait sits above his desk. The walls and floors are covered in sketches, artwork, prototypes.

Despite the apparent disorder, Tshikare is focused on what he wants to say, both verbally and through his designs: “I want to talk positivity. That amid all of this [wars, coups] black people are doing things – whether it’s running small businesses or raising families – and they are not waiting for the rest of the world to affirm them.”

BEYOND SURVIVAL

One of the benefits of working in an area like Woodstock is being part of a vibrant creative community, Tshikare says. He is able to find material for his designs with ease, as well as people to collaborate with within walking distance. As a self-taught artist he is continually pushing himself to try out new mediums: “I don’t have THE AFRICA REPORT

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preconceived ideas of what the method is so I experiment more, collaborate often and work harder to reach higher.”

Hefeelsfortunatetobeabletolivefrom creativity, as well as helping to train the next generation of designers: “I’m one of the few lucky people, I’m just beyond survival mode using my own wits. As an artist you are a risk manager convincing people to buy into a product that most consider a luxury and many artists are not equipped on how to manage this.”

Giventhecomicbook,skaterandstreet art origins of his work, some might be tempted to call it Pop Art. But Tshikare is adamant in drawing a line: “I don’t believe in Pop Art because I don’t think it comes from the heart; it’s popular, and easy to love. But African art is about storytelling, it’s beautiful art that has an origin. It is saying to the world: ‘This is who we are’. As an African I believe art should reflect issues society needs to know about.” This idea of storytelling unites the vast array of different objects hehasdesigned:“Africanartissomething that flows naturally through me, I don’t even need to think about it. For me, it’s a narrative and has to tell a story.”

Tshikare plans to take this African story to Europe and the US: “In the SA design world I feel like I’m sailing on a new ship that has not been used to its full potential and has lots of room to try new ideas that express the design language of this country,” he says.

When it comes to developing naturally talented designers, however, Tshikare feels South Africa is still some way off: “There is a lot bubbling from the underground and we need more institutions to take a different approach to unearth these talents […]. We have a voice but we still need to know how to express ourselves with it. In design we trust.” ● Neo Maditla in Cape Town Clockwise from left: Where We At steel bench, with Laurie Wiid van Heerden; detail from Above, a mixed-media diptych; Batho, from a story by Tshikare; Ska’ ngata sneaker; ceramic fish, with Andile Dyalvane; Atang Tshikare in a hat of his own design

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LIFESTYLE BEHIND THE SCENES

TWITTER TRENDS #FANTASTICALLYCORRUPT

Eka Christa

A battle of tweets ensued after the UK Prime Minister was caught on camera describing Nigeria as #FantasticallyCorrupt to the Queen

The young actor and director is seen as the new hope for Cameroonian cinema after the success of her short films Beleh and Alma

HRH Mustapha AbuBakr @Mustyblax

Can’t fault anyone’s claim on how #fantasticallycorrupt Nigeria is. But to hear it from@David_Cameron?

Smells of #panama.

What is your greatest challenge as an actor/director?

Hmmm, let’s see – pre-production! I have to work twice as hard during the pre-production phase, since I will be juggling both acting and directing during production.

max albedo @MaxAlbedo

Who would you most like to collaborate with?

Honestly it’s what Charles said – I read it on Twitter #FantasticallyCorrupt

Austrian director Michael Haneke and, of course, Nigerian filmmaker Kunle Afolayan.

What job would you do if you weren’t in the movie industry?

TV presenting, or maybe advertising.

#KeepRunning @WanCee

As a former colonial master, Britain taught Nigeria everything they know about corruption.

What is colonialism if not #FantasticallyCorrupt?

Karo @KaroOrovboni

Buhari agreed with Cameron that Nigeria is #FantasticallyCorrupt.

Is this a lie though? Why are you people pulling your hair over it?

Shelomi @Shelomi

So is David Cameron returning Nigeria’s stolen assets or nah? #FantasticallyCorrupt Lily Bailey @LilyBaileyUK

“Nigeria and Afghanistan are fantastically corrupt!” Now, now, Mr Cameron, jealousy is not a nice trait.

What music do you listen to?

These days, mostly gospel.

What is your greatest extravagance?

Quiet moments. I’m always trying to get some alone time.

What’s your favourite meal?

I don’t have a favourite, but I like spicy food.

What films are you looking forward to watching?

Mira Nair’s Queen of Katwe.

Who do you like hanging out with?

My siblings, friends who make me laugh, my godmother. Wisdom and laughter: I am always drawn to people I can receive these from, or share with.

Which famous person (deceased) would you invite round for dinner?

Ingmar Bergman.

I love his films, they intrigue me. ● Interview by Dzekashu MacViban

©WILLIAM NSAI

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GAEL R. VANDE WEGHE

TRAVEL RWANDA

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The high life in Kigali The Rwandan capital is on the up. Take a breather and enjoy the view from a city in transformation

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osting the World Economic Conference in May gave Rwanda the chance to show just how far it has come in rebuilding itself, physically and emotionally, after the genocide of 1994.

Now, 22 years after that tragic period in its history, the country is beginning to move from an agriculture-based to a knowledge-based economy, and all eyes are firmly on the future. In the capital, Kigali, the transformation is already starting to show. A plethora of new buildings are going up, fast, free wifi is offered in cafes and you can even get online in the airport lobby. With the city centre built on a ridge at 1,600m there are also ampleopportunitiestoenjoyaviewofthe mountains beyond this high-altitude city.

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Breakfast Shokola Café (1) If you want a healthy breakfast with a view, this is the place for you! Fresh juices and smoothies, decent coffee and reliable 4G wifi are some of the pluses at the new Kacyiru branch atop the Kigali Public Library, famed for its wall of Kitenge prints. The Kimihurura branch is also a relaxing spot for brunch in the garden.

KPL Rooftop, KN 8 Ave, Kacyiru +250 788 350 530 facebook.com/ShokolaCafe

Shopping Kimironko market (2) Catch a ride on a boda boda motorbike taxi and head to the market. Nothing beats the fresh fruit and vegetables here, but you can also find crafts and Kitenge fabrics that make great presents – you can even have a garment tailored for you on the spot.

Drinks Hotel des Milles Collines If you have seen the film Hotel Rwanda then you know the story behind the Hotel des Milles Collines, whose manager gave shelter to over a thousand Tutsi refugees

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during the genocide. It’s back to luxury hotel serenity now, of course, with the poolside bar a great place to enjoy views of the city over cocktails or a local beer.

2 KN 6 Ave, Kiyovu +250 252 576530

Dinner SoleLuna A pole with a Heineken sign is the only clue that there might be a restaurant behind the imposing wooden doors in this quiet part of the capital. Run by an Italian and his Rwandan wife, it serves an extensive list of Italian specialities in an attractive, shady terrace garden.

Boulevard de l’Umuganda, Rukiri I +250 788 859593 soleluna-rwanda.com

Nightlife Beirut Sky Pool (3) Located atop a hill, the view from the Sky Bar alone is worth the trip here. The placeispopularwiththelocalcrowd,who enjoy the chance to dance and swim at the rocking Saturday pool parties and Sunday chills – from noon till late. (former Aloha) KG 304 St, Kibagabaga +250 788 622 111 Neo Maditla in Kigali

DAY IN THE LIFE EXTRAORDINARY STORIES OF ORDINARY PEOPLE

Eat Good Ejiekpe Michael runs the Kids Chef Project in Lagos, introducing children to the art of cookery in the classroom to raise health awareness for the next generation

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grew up in a mixed-class neighbourhood called Alagomeji, in Yaba, Lagos. My early years played a huge role in my being interested in food. As a child, I was very close to the women in the family. My sisters enlisted my help when they were cooking, sending me on little errands and involving me in tasks like washing up after meals. In some way, this made me interested in cooking, being around a kitchen and knowing how it works. These days my partner, Mercy, owns the kitchen during the week, but on Sundays it’s mine. I love grilled food. That’s my real passion.

Mercy loves my catfish barbecue served with vegetables and rice. My son is still nursing, so joining in on the barbecue is still ahead for him.

My first business venture was a joint where I made chicken and chips, called Esa’s Place. It was at this point that I started thinking about alternatives and healthier nutrition and I was able to raise money to get myself into the Yaba College of Technology to read Hotel and Catering Management. After I graduated in 2004 I ran my own restaurant and pub called Cactus. I also worked as an assistant chef at a Lebanese restaurant and helped start several kitchens here in Lagos.

Every day in Nigeria you hear about how a few people have decided to seize what belongs to a larger majority.

The educational system is inadequate and may be the cause of people’s future frustrations, so I started thinking about attacking the problem from its roots. My experience as a trained caterer also made me aware of a huge nutrition problem in Nigeria.

I started the Kids Chef Project in 2014. We target kids aged between two and 10, introducing them to

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healthy nutrition. This helps develop their senses of taste, smell, touch, sight and hearing, as well as increasing their knowledge of the world around them and making them understand the importance of interaction in class and with each other.

There are many healthy nutritional options in our Nigerian diets. We have soups and stews made from local medicinal vegetables, herbs and seasonings, like the locust bean, iru. Nigerians are fond of starchy foods because that’s what’s readily available. We, however, love the more traditional menus that are vegetable- and fruits-based.

Before the Kids Chef Project my diet was heavy on starch and carbohydrate-based foods. Then I started reading up on feeding patterns and general nutrition and started to shift to a more complete diet. I drink more water than soda, and eat more fruits and raw food than cooked foods.

The kids are the most rewarding part of my work so far. From the time they put on their aprons I have their attention. Funding is still a challenge and we do not have sponsorship, but the Kids Chef Project is able to thrive thanks to loans and strategic partnerships with interested institutions.

Despite the wonderful reception, it’s still a challenge to get schools to adopt the programme into their curriculum, so for now we work mostly with private schools due to the easy access and reduced bureaucracy. Getting into mainstream schools is our ultimate goal. Nobody seems to remember that kids are silent watchers and fast learners. ● Interview by Dzekashu MacViban THE AFRICA REPORT

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