Investing In The African Opportunity

CUSTOM MEDIA

Investing in the African opportunity Featuring exclusive interviews and articles on:

Kenya I Rwanda I Egypt I sierra leone I cote d’Ivoire I ethiopia

www.theworlDfolio.com

The Worldfolio

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STAFF

ÁLVARO LLARYORA Chairman, The Worldfolio

Jonathan Meaney Chief Editor Art Direction & Graphic Design:

EDUARDO BERTONE & IGNACIO PLASENCIA Project Coordinator:

gemma gutierrez

Contributing Writers:

Eleanor wragg & jonathan Meaney

TABLE OF CONTENTS

9 Can Africa’s rising continue?

23 Regulatory changes inspire confidence in Kenyan capital markets

49 Rwanda: Transforming lives and the economy through ICT

78 Africa financial services: No place for copy-paste

94 Private equity in Africa: Opportunities abound for the right investor

102 Interview with Prime Minister of Ethiopia, Hailemariam Desalegn

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The Africa Financial Services Investment Conference 2017 May 3rd to 5th 2017, Park Plaza Riverbank, London, UK The Africa Financial Services Investment Conference (AFSIC) is the leading investment event focused on Africa’s financial services sector. The annual AFSIC, now in its 5th year, attracts financial services companies, predominantly leading Banks, Insurance Companies, Microfinance, Leasing and other regulated financial services companies from almost all parts of the African continent.

The wide spread of companies from across Africa attracts a highly significant proportion of major institutional investors focused on investment into Africa, and those considering the increasing merits of doing so. These investors include sovereign wealth funds, supranational investors, listed equity and private equity investors, African regulated asset managers, alongside impact investors such as DFIs and microfinance-focused investors.

In addition to major Financial Services companies and investors, AFSIC is well represented by major Dealmakers focused on Africa, such as Investment Bankers, Stockbrokers, Corporate Finance experts, Fixed Income and Debt specialists, M&A bankers, many of whom attend the Meet African Dealmaker event which takes place the night prior to AFSIC. AFSIC has shown continued strong annual growth in delegate numbers with 500 delegates expected to attend in 2017, and welcomed over 100 speakers in solo and moderated panel sessions in 2016.

With companies from over 30 African countries expected to attend in 2017 and 150+ speakers, this is your chance to develop and nurture a robust, extremely high-quality network of friends, colleagues, investors and business contacts across the continent in preparation for Africa’s continued emergence as the most exciting investment destination in the world.

History The first Africa Financial Services Investment Conference took place in Brighton in May 2013. The objective was, and remains, to bring together African financial services companies with a wide range of Africa’s most important investors, both debt and equity.

In consideration of the difficulty of traveling within and across different African countries, the event provides an important forum where a large number of high impact meetings can be held in one place at one time.

AFSIC 2014 saw considerable growth with over 125 companies. The event grew considerably again in 2015 with over 220 companies attending representing 25 different African countries. The number of investors attending grew yet again, and the number of African financial services companies attending grew particularly strongly.

Following the move to London, AFSIC 2016 saw further strong growth in delegate numbers with significant attendance from Africa’s leading debt and equity investors of note.

As news of AFSIC spreads throughout the continent it is likely that the event will continue to develop as Africa’s largest financial services investment event attracting banks, insurance companies, consumer lending companies, microfinance companies, leasing companies, investment banks and brokerages and similar companies.

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AFSIC: The Gateway to Africa's Financial Sector Rupert McCammon, Founder and Managing Director of the Africa Financial Services Investment Conference (AFSIC), sat down with The Worldfolio to discuss key elements of AFSIC and what to expect from this year’s event also present themselves at AFSIC allowing attendees to understand better which investor is most suited to their own requirements.

Who attended last year’s AFSIC?

Rupert McCammon, Founder and Managing Director of the Africa Financial Services Investment Conference (AFSIC)

What is the objective of AFSIC? AFSIC is the leading investment event focused on Africa’s financial sector. African Banks, Insurance Companies and Microfinance Institutions from across the continent attend in order to meet global debt and equity investors who are looking to invest in equity or senior or subordinated debt capital. The large number of investors attending makes the event highly attractive as delegates are able to hold a wide range of high-impact, business-focused meetings in one place at one go.

What types of African financial services companies attend?

Banks, Insurance Companies and Microfinance companies, both those listed on African or other stock exchanges, and private companies attend AFSIC from all parts of Africa.

What types of investors attend?

Investors focused on both Equity and Senior or Subordinated debt attend AFSIC. The strong range of investors attending results in a focus on a range of investment sizes. For instance, organisations such as the IFC, EIB, AFDB, and some of the largest Private Equity funds may be looking for investment sizes of $50 million-plus. While other investors including Listed Equity funds, Impact Investors, Development Finance Institutions, smaller Private Equity funds may invest in a range of sizes from as small as $100,000 to much greater amounts.

How do I meet these investors?

Multiple opportunities to meet investors are built into the program, including an online meeting system which specifically highlights investors allowing delegates to arrange their own one-on-one meetings, to networking lunches and panel discussions. Many investors

Over 200 companies including banks, insurance companies, microfinance and leasing companies, etc. attended the 2016 event. Investors attending AFSIC 2016 included a wide range of major Africa-focused funds that made presentations such as Actis, African Development Bank, Amethis Finance, CDC, Development Partners International, the European Investment Bank, FMO, Frontier Markets Fund Managers, Helios, Leapfrog Investments, TLG Capital and The World Bank, among many others.

Apart from investors and delegates from African focused financial services companies, you can expect to meet a wide range of delegates with an interest in Africa’s financial services sector, including research analysts from leading investment banks, financial institutions group teams, sell side analysts, corporate finance advisors, members of the Africa Press Corps, private investors, and attendees from companies looking for business opportunities in Africa.

What is the Meet African Dealmaker event?

This event, which is focused on Dealmakers, such as stockbrokers, investment bankers, M&A experts, etc. takes place the first night of AFSIC within the Houses of Parliament on the banks of the River Thames. The event is highly recommended for delegates wanting to expand their network further across the African continent.

What is new for AFSIC 2017?

As AFSIC has grown the event team has strived to introduce new opportunities to make the interaction between investors and Financial Services companies from Africa even stronger. The biggest change at AFSIC 2017 has been the addition of an extra half day in the program, this reflects the growth in AFSIC, and its strong appeal to investors as a highly convenient venue to explore a wide range of investment opportunities.

AFSIC 2017 sees the addition of four exciting panels focusing on the investment opportunities in North, South, West and East Africa.

These panels have some excellent local companies participating who will provide real insight into these investment areas.

We are also delighted that FSD (Financial Sector Deepening) Africa which will be concentrating on highlighting opportunities in investing in Africa’s Financial Sector Frontier, specifically focusing on opportunities in Zimbabwe, Sierra Leone and the DRC as well as a dynamic session looking at Diaspora finance, remittances and long-term displaced people and the associated growth and investment opportunities offered by this unique situation.

Finally, we are offering smaller companies the opportunity to record videos of themselves presenting the merits of their own companies. These videos will then be made available to investors and other delegates after AFSIC.

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Can Africa’s rising continue?

With external shocks putting the brakes on Africa’s dramatic economic growth, do its economies have what it takes to continue to rise?

Africa, once synonymous with war, famine and poverty, has undergone a dramatic change in fortunes since the turn of the century. Today, six of the world’s ten fastest-growing economies are African, and the “Africa Rising” narrative, popularised by The Economist, has seen the continent’s economic dreams begin slowly to come true. Since the turn of the century, a commodities boom coupled with improvements in governance and new poles of economic growth have driven impressive advances in GDP and development. Headlinegrabbing achievements in the reduction of maternal and infant mortality, greater access to clean water and education, and an upswing in life expectancy have all come about as the Africa of the 2000s has begun to take shape.

In the decade between 2005 and 2015, the economy of Africa as a whole increased by 50 percent, versus the world average of just 23 percent. But behind those figures is a slightly less-than-rosy picture. A slowdown in China – the top export partner for the majority of African countries – coupled with security and political shocks and a fall in commodity prices pulled the continent’s overall average annual GDP growth down to 3.3 percent in the latter half of that decade, only just keeping step with population growth. This is a sharp decline from the average of 4.9 percent recorded from 2000 to 2008.

As the continent’s vulnerability to challenging external conditions threatens sustained growth, can Africa continue rising?

The African Development Bank believes so. It predicts an upswing in economic growth for Sub-Saharan Africa of

3.7 percent in 2017 and 4.2 percent in 2018. Meanwhile, in its most recent Regional Economic Outlook, the IMF said in reference to the recent slowdown that, “although this overall markedly weaker picture begs the question as to whether the region’s recent growth momentum has stalled, our view is that medium-term growth prospects remain favourable.”

Nonetheless, foreign direct investment into the continent has slowed down, with the OECD estimating flows fell by 46 percent in the second quarter of 2016. In a recent release, Michael Lalor, Africa Business Centre Leader at EY said, “Investor sentiment towards Africa as an attractive investment destination is likely to remain somewhat softer over the next few years,” however he pointed out that this has far less to do with Africa’s fundamentals than it does with a world characterised by heightened geopolitical uncertainty and greater risk aversion. “Companies already doing business in Africa will continue to invest, but will probably exercise a greater degree of caution and be more discerning. Some will invest at a slower pace, looking to consolidate operations and drive profitability; while others are likely to double down on their investments, using this period of economic slowdown to further strengthen their positioning in key markets,” he added.

Flows of finance into Africa are still mainly directed at resource-rich countries, but non-resource-rich countries are becoming more attractive, with consumer-facing industries now attracting a much more substantial portion of foreign investments. Nearly half of FDI projects are now in sectors

Massive investment by Chinese and other investors is leading to major upgrades and expansion at African ports and airports, with spending on infrastructure now at 3.5 percent of GDP, double what it was a decade ago

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such as consumer products and retail, financial services, and technology, media and telecommunications, with areas such as business services and automotive, clean technology and life sciences also rising in significance. New investors are also eyeing the continent, albeit cautiously, with flows of increasing size coming in from countries such as India and the United Arab Emirates.

It’s easy to see why. Despite external wobbles, Africa presents a multitude of pent-up opportunities for growth, some springing from the very frustrations that have held it back for so long. Its creaking colonial-era infrastructure, for example, has long hobbled intra- and inter-regional trade, with an estimated 50 percent of produce rotting before it can reach its intended market. Power outages lose businesses almost 700 hours of productive time a year on average. Poor air, rail and road links and sluggish customs procedures mean it is sometimes quicker to send goods to neighbouring countries via trade hubs such as Dubai rather than directly over the border. But change is coming. Massive investment by Chinese and other investors is leading to major upgrades and expansion at African ports and airports, with spending on infrastructure now at 3.5 percent of GDP, double what it was a decade ago. While the African infrastructure gap is still a headache for exporters, it presents an all but untapped opportunity for transport and logistics (T&L) companies willing to take a leap of faith. In Africa gearing up, a report by PwC, analysts highlighted the role T&L companies have to play in putting Africa in motion.

“By helping Africa grow, T&L operators can also secure future growth for their own companies... For companies willing to make long-term investments and work together with local governments, the long-term pay-off may be huge.”

Getting in position for the expected upswing in intraAfrican trade is a key draw for many investors. The Continental Free Trade Area, which is currently under negotiation,

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could allow manufacturers to set up supply and value chains which span multiple African countries, with electronics, machinery, chemicals, textiles and food production all sectors which stand to benefit. These labour-intensive industries are perfectly suited for the continent, which is expected by 2034 to have the world’s largest working-age population of 1.1 billion, surpassing that of India and China. What’s more, Africa’s rapidly-growing population will provide an important potential market. Africa is still urbanizing, and the UN predicts that over the next decade, an additional 187 million Africans will live in cities. As they move, they will require more and more goods and services. Africa’s middle class has already begun to emerge, with household consumption seen growing at 3.8 percent a year to total $2.1 trillion by 2025. African businesses are an even larger spender, with spending expected to climb from $2.6 trillion in 2015 to $3.5 trillion by 2025.

It’s not all good news. Because of falling oil prices and a slump in commodities, Africa’s finances have deteriorated, with worrying budget deficits opening up in many of its resources exporters, leading some of them to seek outside financial assistance. However, some governments are working proactively to diversify exports and national revenue sources, as well as open up their economies to new investors and new business sectors. Countries like Mauritius, Senegal and Tanzania are progressing steadily with economic reforms and increasing their competitiveness, while diversifying their economies and working to attract investment.

According to the World Economic Forum, Africa could nearly double its manufacturing output to $930 billion in 2025 from $500 billion today. The vast majority of that growth will come from local companies meeting domestic demand: despite its enormous agricultural capacity, Africa still imports one-third of the food, beverages, and other similar processed goods it consumes. But this cannot be achieved unless coun-

Africa is still urbanizing, and the UN predicts that over the next decade, an additional 187 million Africans will live in cities. As they move, they will require more and more goods and services.

Africa’s middle class has already begun to emerge, with household consumption growing at 3.8 percent a year to total $2.1 trillion by 2025

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tries take decisive action to create an improved environment for manufacturers.

Indications are promising. Virtually every country across the continent now has an investment promotion agency. These one-stop shops help smooth the way for investors, providing assistance with registration, taxes, setting up local partnerships and establishing companies locally. While foreign direct investors in the past have congregated around more obvious industries, such as diamonds, gold and oil, there is an increasing focus on new industries including technology, health care, and fast-moving consumer goods, driven in some part by the returning diaspora who bring with them skills learnt overseas.

For many businesspeople, Africa is a perfect test-bed for new ideas, because in many cases there is so much to be done that the field is wide open for innovation. Necessity is the mother of invention, and nowhere is this truer than in Africa. The mobile payments industry in East Africa is a particularly inspiring example. A vast unbanked population coupled with widespread mobile phone penetration allowed the region to leapfrog developed markets and unlock phenomenal growth. Since Safaricom rolled out its pioneering mobile money system M-Pesa in Kenya, its parent company Vodafone has been able to replicate its success in Albania, the Democratic Republic of Congo, Egypt, Ghana, India, Lesotho, Mozambique, Romania and Tanzania, disrupting traditional financial models across the globe. M-Pesa is far from an isolated case. Ushahidi, a crowd-sourced information collection platform, which sprang into being during the aftermath of Kenya’s disputed 2007 presidential election, has since been used in Washington, D.C. to map blocked roads, in Christchurch, New Zealand during an earthquake, and in the Middle East during the 2011 Arab Spring protests.

Africa, as its bankers and businesspeople tire of emphasising, is not a country but a complex continent of 54 very differ-

ent economies. And a closer look at the numbers provides an interesting insight into the current reality. While oil-exporting countries and North African economies still reeling from the political turmoil of the Arab Spring have seen growth stutter, pulling down the regional average, there are pockets of tremendous growth elsewhere. Indeed, the IMF pegs growth in Kenya, Senegal, and Côte d’Ivoire at above six percent this year. Growth paths among Africa’s economies have diverged, and the focus today for investors and financial institutions alike is to look beyond the continent’s challenges as a whole and assess economic prospects in individual economies.

According to the World Economic Forum, the Africa of today can loosely be divided into three groups of economies. The first group, which represent about one-fifth of the continent’s GDP, are a set of stable, growing countries the WEF calls growth stars. These include Rwanda, Côte d’Ivoire, Ethiopia, Kenya and Morocco. Their economies are not dependent on resources, they have carried out successful economic reform programmes, and score highly for competitiveness. The second group, dubbed “unstable growers”, account for about two-fifths of Africa’s GDP. These are countries such as Angola, the Democratic Republic of Congo, Nigeria and Zambia, which have experienced high growth rates over the past five years but lower scores on stability as a result of an over-reliance on resources, or security problems. The final group, the “slow growers”, which also account for roughly two-fifths of the continent’s GDP, includes the three major North African countries involved in the Arab Spring – Egypt, Libya and Tunisia, as well as South Africa and Madagascar. Each of these groups presents its own set of challenges and opportunities. But, with favourable demographics, enormous potential within the local market, and ever-more open and diversified economies, Africa will rise for some time yet.

According to the World Economic Forum, Africa could nearly double its manufacturing output to $930 billion in 2025 from $500 billion today. The vast majority of that growth will come from local companies meeting domestic demand

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Growth trajectorY AND increasing foreign investment drive nation towards realisation of

Vision 2030

The World Bank has called Kenya ‘one of the bright spots in sub-Saharan Africa’.

Sustained economic growth, increasing foreign investment and the execution of infrastructure mega projects are amongst the factors that will help transform Kenya into a newly industrializing, middleincome country by 2030 While Nigeria, Angola and South Africa struggle with low commodity prices, Kenya can currently boast one of Africa’s most robust economies. Kenya’s GDP is estimated to have grown by close to 6 percent in 2016, up from 5.6 percent in 2015, and well above the forecasted 1.7 per cent for the sub-Saharan region. The IMF predicts growth to slow in 2017, yet still remain robust at 5.3 percent.

“With economic growth rates sustained at above 5 percent, Kenya has outperformed the regional average, for eight consecutive years. Robust domestic demand emanating from private consumption and government investment are the key drivers of growth, underpinned by a stable macroeconomic environment, lower oil prices, diversification, improved security perceptions, and ongoing structural reforms,” a World Bank report states, citing agriculture, construction, increased foreign investment and a rebound in tourism as the main drivers of growth in 2016.

In recent years, the tourism industry was hit hard by security threats – most notably the Westgate Mall attack in 2013. But with the security situation much improved, tourist numbers in 2016 are estimated to have increased by 20 per cent on 2015, reaching almost 1.7 million by year end, while tourism earnings jumped to KES 100 billion (approx. £790 million), up from KES 84.6 billion in 2015.

Meanwhile, the agriculture sector, which makes up a quarter of GDP, experienced gains of around 5 percent in the first half of 2016, thanks to favourable weather conditions that led to increased production of key crops such as tea.

Since 2011, foreign direct investment (FDI) in Kenya has grown significantly year-on-year. In 2015, net FDI inflows reached a re-

Uhuru Kenyatta, President of Kenya cord $1.437 billion (approx. £1.2 billion), which was used to fund more than 80 large-scale projects in real estate, renewable and geothermal energy, as well as roads and railways. A recent report by investment monitoring platform FDI Markets ranked Nairobi as Africa’s top foreign direct investment destination as it saw inflows surging by 37 per cent in 2015.

“The trends in FDI have increased significantly over the last few years, namely in oil exploration, geothermal energy, and infrastructure,” says Henry Rotich, Cabinet Secretary at the National Treasury.

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The Worldfolio - Kenya

“Corruption is a sickness that cannot be cured overnight. We are making milestones every year. In the next 15 years, we can comfortably reflect back and see how different our country will be from the country that we inherited before Vision 2030” Dr James Mwangi, Chairman of Vision 2030 and Managing Director and CEO, Equity Bank “We have seen a growing interest in investing in Kenya, however the challenge has been to materialise those enquiries into actual and real investments. We are working closely with the national government to follow on the recent momentum.”

The UK remains the country’s largest investor, with British companies active across the services, manufacturing, energy and agriculture sectors. Remittances from the Kenyan diaspora in the UK have nearly doubled from $275 million in 2010 to $520 million in 2015, and is the single largest source of foreign exchange (representing about 2.6 per cent of GDP in 2015).

However, Kenya’s dependence on cash and investment inflows from the UK makes its quite vulnerable to the consequences of the fall-out from Brexit, and the World Bank warns that the East African nation is “likely to be hit from both direct and indirect channels as a result of the UK’s vote to leave the EU.” The increase in FDI to Kenya can be, in part, attributed to the continuously improving business climate. While many obstacles remain, Kenya jumped 16 places to 92nd in the World Bank’s Doing Business Index 2017 – that followed a jump of 28 places in the 2016 Index, from 136th to 108th – and is now among the top five economies in sub-Saharan Africa where it is easiest to do business.

“What we have done is simplify the business environment by removing the red tapes which hampered business establishment.

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You can register your company in Kenya, manufacture your goods and access both the local and foreign markets unlike before when you had to choose one,” said President Uhuru Kenyatta at the UN General Assembly in New York in September.

“I am here to tell you that Kenya is ready for business and we have taken necessary measures to make it easier for you to invest in Kenya.”

Since Mr Kenyatta came to power in 2013, Kenya has quadrupled its spending on infrastructure, with the government borrowing hundreds of billions of shillings for large-scale energy, transport and ICT projects. Some highlight mega projects include: the $3.8-billion Standard Gauge Railway Project, its biggest investment in infrastructure since it gained independence from Britain in 1963; a $2.2 billion investment in solar energy developments that will add 1 gigawatt to the grid; $3.2 billion for 10,000 kilometres of new roads; and the $2.9 billion National Broadband Strategy to increase access to high speed internet across the country.

“Infrastructure is a necessity if our economy is to grow and if we are to achieve the prosperity we desire as a people and as a nation. We cannot run away from it,” Mr Kenyatta said at a Nairobi infrastructure summit in August, in response to critics of his government’s massive borrowing for infrastructure development.

“The challenge we have is to ensure that we invest appropriately, to ensure that we invest without corruption, to ensure that we utilize the resources in that sector in the best possible manner.”

But the government cannot cover all the investment costs, and wants to avail of financing options such as public-private partnership (PPP) initiatives to ensure the bulk of infrastructure megaprojects are completed.

“Tapping into PPP financing is particularly advantageous for Kenya, in light of increased confidence from foreign private investors and its position as one of the largest economic powerhouses in sub-Saharan Africa,” said infrastructure investment expert Akshai Fofaria of law firm Pinsent Masons.

“Substantial investment in infrastructure is critical to achieving the ‘Kenya Vision 2030’ to become a globally competitive country.”

Vision 2030: A blueprint for a prosperous future The national Vision 2030 development plan aims to transform Kenya into a newly industrialising, middle-income country providing a high quality of life to all its citizens by 2030 in a clean and secure environment.

“Vision 2030 is an ultimate set of guidelines that aims to eradicate poverty, create a thriving economy, fight graft, build infrastructure, provide better-quality education to our citizens and make Kenya a hub for the rest of sub-Saharan Africa,” says Dr James Mwangi, Chairman of Vision 2030.

“It is anchored on three key pillars: economic, social, and political governance. The objective is to achieve an economic growth rate of 10 percent per annum and sustaining the same until 2030.”

Prioritised under the economic pillar are infrastructure development and the aforementioned mainstays of the economy, agriculture and tourism, as well as trade, manufacturing and business process outsourcing. Financial services will play a crucial role in the realisation of Vision 2030, which aims to deepen the capital markets and turn Nairobi into an international financial centre – initiatives overseen by the National Treasury.

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“In Kenya, the financial services sector is critical to achieving the Vision 2030 target of 10 per cent annual average economic growth,” explains Treasury Cabinet Secretary, Mr Rotich. “The sector is expected to stimulate a significant increase in investments and savings through mobilising both domestic and international resources.”

The political pillar focuses on public sector reform, constitutional changes, judicial and legal reform, improving policing and security, and tackling corruption, a thorn in the side of many African nations.

“The government is aligned with the private sector to eradicate the menace of corruption,” says Dr Mwangi. “Corruption is a sickness that cannot be cured overnight. We are making milestones every year. In the next 15 years, we can comfortably reflect back and see how different our country will be from the country that we inherited before Vision 2030.”

The third and final social pillar of Vision 2030 aims to increase the affordable housing stock across the country, improve and expand vital social services like health, education, water and sanitation, and develop human resources. Dr Mwangi says there has already been great progress made in education, with “27 per cent of Kenyans now accessing high-quality third-level education.”

The need to strengthen the role of women in business and government in order to support economic growth has also been

“Kenya is ready for business and we have taken necessary measures to make it easier for you to invest in Kenya” Uhuru Kenyatta, President of Kenya

recognised: under the plan, women entrepreneurs will have increased access to funding, while initiatives will be put in place to increase female representation at executive level in all branches of the government and the private sector.

Like long-term development plans in many other African nations, the goals of Kenya’s Vision 2030 are, indeed, lofty, and a great number of challenges must be overcome to achieve them.

“As the saying goes: Rome wasn’t built in a day,” says Dr Mwangi. “It has only been three years since the introduction of Vision 2030 and of course we are facing certain challenges and bottlenecks, but in another 15 years I believe most of the initiatives will take roots and mature.”

Kenya’s financial services sector is critical to achieving the country’s Vision 2030 target of 10 percent annual economic growth

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Nairobi plans

to become Africa’s financial epicentre As part of the Vision 2030 plan, the government sees Nairobi becoming the continent’s financial hub – an aspiration which will be supported by an already robust and expanding financial sector, a strong and diversified economy, and evolving regulatory framework With Kenya consolidating its domestic financial sector through ambitious government and private initiatives, the country is also working to establish itself as a regional financial hub.

Kenyan financial authorities and leading private banking executives argue that the country is the logical choice for this task as it is already the most important financial center for the six-member East African Community (EAC) which groups Kenya, Burundi, Rwanda, South Sudan, Tanzania and Uganda.

“Within the EAC, the finance sector has been growing at a rapid rate, with Kenya playing a leading role as an important financial hub for our neighbors,” explains Cabinet Secretary of the National Treasury Henry Rotich. “You will find most Kenyan banks are present in the neighboring countries and some have even extended their wings beyond the EAC region.”

Analysts point out that in Kenya the financial services sector is critical to achieving the country’s Vision 2030 target of 10 per cent annual economic growth while its EAC partners see it as vital to their own poverty reduction goals.

“A dynamic and efficient financial industry provides key pillars to spur economic growth by mobilizing and pooling savings; monitoring investments and exerting corporate governance; easing trading, diversification and risk management; and making possible the exchange of goods and services,” Mr. Rotich says.

In a major step towards these lofty aspirations, the government passed the Finance Act 2015, which introduces a broad range of modifications, such as the exemption of capital gains arising from the transfer of shares traded on an exchange licensed by the Capital Markets Authority (CMA). Among many other changes, it also establishes a new regime for rental income, overhauls the VAT agent system, extends the period to carry forward tax losses

from five years to two years and introduces tax reductions and tax rebate schemes for a number of industries.

Like other Kenyan financial institutions, the CMA has garnered praise for its performance and was voted the most innovative capital markets regulator in Africa. Mandated with both regulating and developing orderly, fair and efficient capital markets in Kenya with the view to promoting market integrity and investor confidence, the CMA has been lauded by Africa Investor, an investment and communication group.

According to the World Bank, Kenya has the third-largest financial sector in

“Within the EAC, the finance sector has been growing at a rapid rate with Kenya playing a leading role, as an important financial hub for our neighbours” Henry Rotich, Cabinet Secretary of the National Treasury

sub-Saharan Africa, but has cautioned that further reforms are needed for the country to reach its full potential. In a gesture of support, the international lender approved in May a $37 million credit line for the country’s financial sector to strengthen the institutional, regulatory and legal environment.

Meanwhile the government is adopting fresh measures to further boost the business community as the economies of the country and its neighbors grow, says Capital Markets Authority chief executive Paul Muthaura.

“First and foremost, we have introduced the new Companies Act that revolutionizes and modernizes the framework for company operations, public listing procedures and directors’ responsibilities. It also establishes much more explicit liability and responsibility for corporate governance and risk management for the board of directors,” he explains.

Complimenting the act is the new Corporate Governance Code for Public Listed Companies that was benchmarked against similar codes in the United Kingdom, South Africa and India.

“We are very confident that the framework will put us on par with any other financial centers, whether regionally or internationally, when it comes to transparency, accountability and clear allocation of responsibility at board level,” Mr. Muthaura says.

Exciting changes are also underway at the Nairobi Securities Exchange (NSE) which currently has 66 listed securities with a market capitalization of close to around KES 2 trillion (approx. £15.5 billion).

“For any market to work effectively and have enhanced liquidity, it must have mechanisms to execute short sales,” notes NSE chief executive Geoffrey Odundo.

“And the NSE is working with various stakeholders to develop a comprehensive framework and requisite regulations to

The Worldfolio - Kenya

enable market makers, short sellers and stock lenders to operate in the domestic capital market.”

In 2016, the exchange launched the Derivatives Market and Exchange Traded Funds and a mobile-based retail bond dubbed the “M-Akiba Bond”, a unique innovation that will facilitate the rapid mobilization of domestic savings, placing Kenya on the fast track to achieve the United Nations’ Sustainable Development Goals.

As an active member of the Sustainable Stock Exchanges Initiative, the NES is also working closely with multilateral partners and others to launch alternative green products such as green bonds and a carbon trading segment.

“We expect listings to occur on our traditional equity and bond segments,” Mr. Odundo adds. “We have begun the upgrade of our automated trading system, which will enhance our capability to support the trading of these products.”

This flurry of measures seals the authorities’ commitment to ensuring Kenya’s future role as a major financial center while the banking industry is also playing its part through domestic and regional expansion, offering new products such as Islamic banking and introducing innovative methods to streamline operations and offer new banking opportunities to potential depositors.

These moves are attracting the attention of the world’s major financial players, which are already impressed with the performance and the future of the Kenyan economy, notes Joshua Oigara, the Chairman and Chair of the Governing Council of the Kenya Bankers Association and CEO and Managing Director of Kenya Commercial Bank (KCB) Group.

“Kenya’s economy is very resilient in comparison to other African economies because we are not dependent on a single sector like so many others,” he says. “Our economy has long been one of the most diversified in Africa, based on traditional sectors like agriculture, ICT, finance, tourism and the skills and services industries.”

Mr. Oigara recalls the recent downturn in foreign investment due to security concerns, which especially hit Kenya’s lucrative tourism industry, but he claims that the good times are coming back.

“Kenya went through some turbulent times when European and US investors cut back, there were travel advisories for the country, etc.,” he says. “However, the table is turning and we are already seeing some

of those key investors coming back. In fact, if you look at the US investment flows, we are the second largest in the continent after Egypt.”

Kenya’s banking sector will, of course, be a major player in channeling investments and the KCB chief is excited about a wide range of big-ticket infrastructure schemes over the next several years which will aid the country in achieving its vast potential.

“We are seeing big projects taking place such as geothermal, solar and wind energy, along with new roads, energy pipelines and transportation links. Banks in Kenya are very proactive and are the nerve center for investment to enable all of this,” he says.

On a small scale, Mr. Oigara emphasizes that the Kenyan banking system enjoys a sterling reputation as being the most sophisticated on the continent after South Africa and is number one in leveraging technology and mobile solutions within the financial sector.

One local bank which has racked up an impressive record in introducing mobile technology to ease transactions and other key services for its customer base is Co-operative Bank of Kenya, founded 40 years ago and now one of the five largest financial institutions in the country.

“We are also the largest co-operative bank in Africa supported by the largest cooperative sector in the continent,” explains Group Managing Director and CEO, Dr. Gideon Muriuki. “Kenya has 12,000 co-operative societies with 5,000 of those savings and credit cooperatives, so that makes virtually every member of society a member of one of these financial co-operatives.”

Since its beginning serving the co-operative sector, the bank has become a truly universal bank offering the entire range of financial services and products including insurance, stock brokering and corporate banking.

“We have also prioritized our big outreach effort,” Dr. Muriuki says, “and now we have 150 branches serving 5.9 million customers who have accounts with us.”

Around half that number have signed up for the bank’s mobile banking platform called MCo-op Cash, allowing depositors to access a variety of banking, money transfer and payment services. The mobile service is part and parcel of Co-Operative Bank’s investment in customer delivery platforms aimed at becoming more responsive to depositor needs.

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“Whereas customers would take up to 45 minutes to be served in our branches, they are now getting their business done in just five minutes,” Dr. Muriuki says. “We have enabled our customer interaction at alternative channels, notably mobile banking and agency banking, and today only 25 per cent of our customer transactions are done at branches.

“At our bank, we believe in empowering the millions of people in rural areas which is a very similar ethos to what the IFC stands for,” Dr. Muriuki explains.

“We are an institution for creating wealth for our shareholders but also for empowering the common man by providing cheap financing and capacity building with the co-operative societies to enhance their competitiveness in handling and investing money.”

“The long and short of all of this,” he concludes, “is that as a business we had very humble beginnings started by smallholder farmers and so we remain steadfast to our founding principles of supporting the interest of the majority.”

Change is also the driving mantra at Equity Bank whose managing director and CEO, Dr. James Mwangi, says that the institution pioneered new paths which proved successful for the local sector.

“In fact, Equity is a creation of innovation as our first step was to move to a high-volume, low-cost business model,” he recalls. “This really disrupted the Kenyan banking industry, which prior to our entry into the market, was high-margin, lowvolume. Suddenly, the unbanked became bankable and that led us to become home to more than 50 per cent of all of the bank accounts in the country to this day.”

But it is not just the Kenyan market where Equity is breaking new ground. Its operations have spread beyond the country’s borders and now the bank is active in South Sudan, Uganda, Rwanda, Tanzania and DR Congo, which bodes well for the bank playing a role in Kenya’s aspirations to become a financial powerhouse as part of the Vision 2030 plan, of which Dr. Mwangi is the chairman.

“One of the deliverables of Vision 2030 is to make Nairobi a financial hub for Africa,” he argues, “and we have the necessary ingredients to make that happen, such as strong financial inclusion, well-educated human resources in the sector, an evolving regulatory framework and the political will needed for the transformation.”

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The Worldfolio - Kenya

The Worldfolio - Kenya

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ICT innovations support development of smart economy and efforts to improve security

Following the establishment of Kenya’s Ministry of Information, Communication and Technology (MoICT) in 2004, the country’s ICT sector has blossomed into a key pillar of the economy.

During the first decade of the 21st century alone, ICT was responsible for the growth of approximately one-quarter of Kenya’s GDP, and today, Kenya has been ranked among the top five African countries with the fastest growth in telecommunication, infrastructure and mobile money innovations. At the core of this growth has been the mobile revolution which the country has seen, and which has led it to reach 82.6 per cent mobile penetration.

Platforms such as M-pesa – a mobile phone-based money transfer, financing and microfinancing service – are transforming lives and different sectors of the economy, from finance to health, education, and agriculture. Well aware of the

Already, companies such as Nokia and IBM are active in the Kenyan ICT market. They’ve established regional development centres in Nairobi, which has been gaining fame as a hotbed of ICT innovation thanks to Konza Techno City, a £10 billion project also known as ‘Silicon Savannah’

importance of mobile, the Kenyan government is also leveraging ICT technology to distribute information and boost security efforts following terrorist threats and attacks.

“The application of Information and Communications Technology will definitely enhance command and control,” says Joe Mucheru, Cabinet Secretary of the MoICT. “It will allow us to play a very important role in tackling some of the contemporary challenges we face in Kenya.”

Following a spate of terrorist threats, the general safety of cities such as Nairobi and Mombasa was compromised, though an ambitious CCTV project between leading Kenyan telecoms company Safaricom and the Kenyan police force launched in 2015 is making a difference.

From policing and government services to banking and farming, information and communication technologies are transforming lives and the economy, while also enhancing Kenya’s attractiveness as an investment destination “National security is a priority not only for the government but also for the private sector,” says Safaricom CEO, Bob Collymore, who was named the 2016 International Business Leader of the Year at the 9th annual Africa Investors CEO Investment Summit in New York in September 2016.

In exchange for free use of the infrastructure during the first year, the Kenyan government has an arrangement with Safaricom, which has provided a KES 14.9 billion (approx. £115 million) national surveillance, communication and control system that links all security agencies, making it easy to share information and direct operations. Broad in scope, the project involved connecting 195 police stations in Nairobi and Mombasa to high-speed (4G) Internet to ease communication.

Mr Collymore explains that the system enables security personnel to monitor areas under surveillance, detect any security incidents, and help direct police response and monitor the flow of people and traffic, especially in town centres. “The technology will help the public gain trust for police to fight crime,” he says.

Safaricom has trained more than 10,000 officers in maintaining and operating the system and equipped them with walkie-talkies with cameras to take pictures at crime scenes for assessment and evidence. The pictures can be sent in realtime to the command and control centre, which has greatly improved accuracy and response times. “Corruption and crime undermines fair competition, distorts development priorities and impedes long-term foreign and domestic investment,” says Mr Collymore. “A thriving economy is clearly important to a company like ours, and it’s not going to thrive if you have security threats every week.”

Safaricom has been at the helm of Kenya’s ICT push. According to Mr Collymore, mobile has created new possibilities for the country by transforming entire societies and reshaping the economy in more ways than any other technology since independence. “Innovation is part of Safaricom’s DNA,” he says.

“We have a long-standing commitment and passion to help nurture a vibrant ICT-powered economy.”

Following suit with Kenya’s National ICT Master Plan, the government has established three main pillars for guiding the

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The Worldfolio - Kenya

“We have a long-standing commitment and passion to help nurture a vibrant ICT-powered economy” Bob Collymore, CEO, Safaricom

An ambitious CCTV project led by Safaricom and the Kenyan police is aimed at increasing security in Nairobi development of the ICT sector. They include: using ICT to enhance public value, develop ICT businesses, and strengthen ICT as a driver of industry.

As part of the first pillar, the government is aiming to make public services more accessible by using e-government initiatives such as online business licensing, tax return submissions and applications. This objective is being pushed in tandem with the goal of getting 90 per cent of Kenyans to access at least some public services via the internet. In order to facilitate its projects, the Kenyan government has also made an effort to standardise e-government communication services and to market Kenya as a hub for ICT investment.

Already, companies such as Nokia and IBM are active in the Kenyan ICT market. They’ve established regional development centres in Nairobi, which has been gaining fame as a hotbed of ICT innovation thanks to Konza Techno City, a £10 billion project also known as ‘Silicon Savannah’. Spread over 20 square kilometres, just 70 kilometres south-east of Nairobi, the area will house science and technology parks, educational facilities, hotels and residences – creating 20,000 jobs during the first phase of construction.

Kenya’s education sector has also seen increased ICT traction. The government has spent around £190 million to provide more than 1.2 million laptops and roughly 20,000 printers and projectors to the approximately 24,000 primary schools across Kenya. Furthermore, ICT has allowed schoolage children access to a more affordable, expansive range of content, not to mention the potential of expanding access to online education for children who live far from schools.

In terms of financial inclusion, the help of ICT has made a significant impact on bringing two out of three adult Kenyans into the formal financial system. Through the rapid growth of

platforms like M-pesa, the business models of most of Kenya’s financial institutions have shifted, and mobile money agents now represent three-quarters of the total financial access points in Kenya. They have been a major driver in bringing financial access points closer to the population.

Likewise, in the health sector, ICT has been used to grant greater health-related information to the public and improve its access to quality healthcare. The procurement and distribution of medicine and supplies has also been improved, as has the attention and care given to pre- and post-partum mothers.

From an agricultural perspective, the use of mobile technology has also been fruitful. Better informed as to how to increase yields and access new markets, farmers are using new technologies such as iCow, a mobile-phone app invented in Kenya and developed in partnership with Safaricom, which gives farmers access to agricultural information services aimed to help them learn about better farming methods and increase productivity.

Still, for as much promise as it shows, ICT development faces many challenges and insufficient infrastructure has been the biggest constraint to continued expansion and to help boost financing for new infrastructure, increase the number of trained employees with the skills needed to serve in the ICT-related workforce and manage the ever-present challenge of IT security, the Kenyan government launched the $2.9 billion National Broadband Strategy (NBS); a joint product of the MoICT and the Communications Commission of Kenya, the sector’s regulator. More than half of the NBS’s budget is allocated to building infrastructure, with the balance directed towards capacity building and content development.

The Worldfolio - Kenya

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The Worldfolio - Kenya

Regulatory changes inspire confidence in Kenyan capital markets Paul Muthaura, CEO of Kenya’s Capital Markets Authority, explains how Kenya’s new investment framework puts it on a level pegging with the world’s major investment centres, its capital markets’ competitive advantages, and how it will become the market of choice for many to raise large amounts of capital To what extent do capital markets in East Africa play a pivotal role in the continent’s growth?

When you look at the wider continental story, the majority of the countries are thriving, with financial entities that started 20 years ago, with as little as several thousand US dollarsworth of loans that are now worth over several hundred million dollars. This transformation has been led by growth in the manufacturing of consumer goods, a burgeoning middle class, and sprouting infrastructure. The rate of growth and demand is significantly outstripping the ability of the traditional bank structures to finance further expansion; that’s where ultimately, we see the capital markets playing such a critical role in the transformation of the continent as a whole.

How is the Capital Markets Authority (CMA) in Kenya creating a friendly and convenient trading environment while increasing the nation’s competitiveness in the region?

In the East African story, the number of IPOs during the last few years has not been as high as expected, which has led us to establish several critical initiatives in order to accelerate the number of companies that are going to come forward. First and foremost, we have introduced a new Companies Act in Kenya that revolutionises and modernises the framework for companies’ operations, public listing procedures, directors’ responsibilities, and establishing much more explicit liability and responsibility for corporate governance and risk management for the board of directors.

“If you look at comparative markets that have stewardship codes, closest to us is South Africa, which is significantly larger and more mature. This is the progressive direction we are committed towards. We believe very strongly the new regulatory changes are going to create the necessary space for confidence in issuance and in the growth opportunity”

transactions to central bank money, the introduction of more stringent corporate governance and conduct of business standards for market intermediaries, the implementation of risk-based supervision, the introduction of international certification standards for market players in conjunction with the CISI out of the City of London, and the demutualization and self-listing of the Nairobi Securities Exchange.

How is the CMA set to compete with more sophisticated markets in the region such as South Africa?

Paul Muthaura, CEO of Kenya’s Capital Markets Authority The Companies Act is complimented by the new Corporate Governance Code for Public Listed Companies, which was developed by the Authority in collaboration with industry stakeholders and is currently awaiting publication into law by Kenya’s National Treasury. It was benchmarked against South Africa’s King III, the new code in the UK, the Malaysian and Indian codes, as well as a number of others. We are very confident that the framework will put us at par with any other financial centres, whether regionally or internationally, when it comes to transparency, accountability, and clear allocation of responsibility at board level.

In Kenya, we have taken much further strides that will complement the new Corporate Governance Code with a new Stewardship Code for institutional investors. The primary intent of the code is to encourage responsible management and oversight of assets by institutional investors through engagement with listed companies in order to ensure a more sustainable growth. If you look at comparative markets that have stewardship codes, closest to us is South Africa, which is significantly larger and more mature. This is the progressive direction we are committed towards. We believe very strongly the new regulatory changes are going to create the necessary space for confidence in issuance and in the growth opportunity.

We also note that there have been significant developments in strengthening market infrastructure and operations with the move to settlement of equity and corporate debt

South Africa (SA) is quite a significant market, but when you look at its impact beyond its borders, other than the jurisdictions that directly have borders with it, it has not been able to play an effective role as a funding centre into the rest of the continent. SA is a great destination for capital, however it is not as effective a conduit for capital. That’s where Kenya really has a very strong competitive advantage. When you look at the scope of countries we’re looking to target, we’re conscious that the continent is ultimately going to be divided into four. You have Nairobi, Lagos, Johannesburg, and Egypt/Morocco.

How is the CMA strategizing to become the conduit for the rest of Africa’s financial sector?

Kenya already stands out as financial centre for the East African Community, but it is true that we are more ambitious and are aiming to become a competitive financial centre able to cater to the whole of Africa, and in particular Middle Africa is our current target. Looking at the continent, the Master Plan has identified approximately 18 countries in sub-Saharan Africa that are ultimately not being adequately catered for in terms of market-based financing. There is a significant growth occurring; corporate growth, infrastructure development, but no jurisdiction has emerged that can channel funds into all these countries in an effective and scalable manner.

The CMA and the wider Kenyan industry is conscious as these markets in the continent grow and with less traditional financing from banks in the context of Basel III convergence, Kenya’s Capital Markets through its 10-year Capital Market Master Plan will become the market of choice for many of these jurisdictions to raise large amounts of capital.

The Worldfolio - Kenya

We are looking at the bigger picture, and this is where our 10-year master plan comes in to inform the innovation and reform of Kenya’s capital markets. Through the implementation of this blueprint we will not only be developing Kenya, but creating mechanisms for funding mining in Congo, funding dams in Ethiopia and funding new railways across Tanzania all through this single market.

Bearing in mind you were recently voted the most innovative capital markets regulator in Africa, how close is the CMA to achieving your vision of becoming “The Heart of African Capital Markets”?

A 10-year master plan was launched in November 2014. Within such a short time, the CMA was recognized as the most innovative regulator. We have a global benchmark corporate governance framework in place, a new Companies Act, and new products coming in such as Real Estate Investment Trusts, Exchange Traded Funds and Derivatives. Our ambition is targeted to be achieved over the 10 years; we have no delusions. You don’t wake up today and become the best. It is a very clear and sequential growth pattern, but when you look at the plan, what was critical to us was that we identified absolute clear milestones, so that even from an external perspective, you can assess whether the master plan was just a piece of paper, or if it’s actually a commit-

ted blueprint for growth and development. We have already exceeded the targets for year one.

We expect at some stage to be reclassified into an MSCI emerging market, as opposed to a frontier market. Which means underlying work around growing market capitalization, and creating greater flexibility for foreign investors. To this end, in July 2015 we amended the law to remove the 75 percent cap for foreign investors to come into our listed companies.

All of these are very conscious and sequential actions to make sure that we’re going to achieve our goal of becoming an international financial centre and the heart of African capital markets.

We further note that implementation of the Master Plan has been embraced at the highest levels of Government with the Steering Committee including four Cabinet level representatives including the Chairman who is the Cabinet Secretary to the National Treasury.

How would Nairobi-London dual listing play an increasing role for foreign investment, and also domestic reinvestment into the Kenyan capital markets?

When we look at dual-listing, we see it from two different perspectives. At one level where you have domestic Kenyan companies that realize with some of their growth parameters and aspirations, the size

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“A 10-year master plan was launched in November 2014.

Within such a short time, the CMA was recognized as the most innovative regulator.

We have a global benchmark corporate governance framework in place, a new Companies Act, and new products coming in such as Real Estate Investment Trusts, Exchange Traded Funds and Derivatives” of our local capital markets is not going to be adequate to raise the kind of capital they need. They have an opportunity to duallist so capital can be raised both in Nairobi and in London. By the same token, we see dual-listing as an opportunity for companies looking to enter into Kenya. As with many countries, there is a local content expectation for companies coming into Kenya, be it a 30 percent or a 20 percent local ownership, and we want to make it very clear that if they use dual-listing, they can effectively raise their local participation through the markets as opposed to identifying and negotiating with a particular investor.

“Kenya already stands out as financial centre for the East African Community, but it is true that we are more ambitious and are aiming to become a competitive financial centre able to cater to the whole of Africa, and in particular Middle Africa is our current target”

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The Worldfolio - Sierra Leone

Sierra Leone

A resilient nation This year Sierra Leone celebrates the 15th anniversary of the end of the civil war as a unified nation and beacon of democracy and social progress in Africa. After a major setback with the Ebola crisis in 2014 and 2015, which led to economic contraction of over 20 percent, the nation was officially declared Ebola-free in March 2016, and has resumed on a path to building sustainable and inclusive economic growth If the essence of this West African nation were to be distilled into a single word, that word would be resilience. After the devastating civil war, which tore through the country between 1991 and 2002, Sierra Leoneans quickly set about rebuilding their communities, repairing infrastructure, constructing new schools and clinics, and even restarting mining operations.

These efforts, coupled with nationwide reconciliation ceremonies and the successful restoration of multiparty democracy at both the local and national level, set the country firmly back on its feet. Economic output doubled in the decade following the war, driven by commodity exports and agricultural production. GDP growth took off in 2012 with the commencement of large-scale iron ore mining, reaching over 20 percent in 2013, with a further 11 percent forecasted in 2014.

However, in 2014 came the West African Ebola virus epidemic, which killed more than 3,580 of the country’s people in 18 months, wiping out the farming sector as quarantine restrictions meant that produce could not be taken around the country for sale. As if that weren’t enough, on its heels came a slump in the global price of iron ore, which crippled the mining sector.

“We must once again demonstrate our resilience and ability to adapt and work as one; to overcome the challenges thrust upon us by Ebola and to create the nation we know our children deserve” Ernest Bai Koroma, President of the Republic of Sierra Leone

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The Worldfolio - Sierra Leone

As a result, growth for the year came in at just 4 per cent, followed by a contraction of over 20 per cent in 2015. For a time, it looked as though all of Sierra Leone’s post-war progress would be undone.

But today, since being declared officially free of Ebola in March 2016, the country is demonstrating once again its drive for development. In its latest forecast, the IMF projected medium-term growth to gradually pick up to around 6.5 percent by 2020; while the government expects expansion of around 5.4 percent in 2017.

Through the National Ebola Recovery Strategy, Sierra Leone is picking up its Agenda for Prosperity – a document put together by President Ernest Bai Koroma at the start of his second term in 2013 – where it left off, and the aim is for the economy to be ranked as middleincome by 2035.

“We must once again demonstrate our resilience and ability to adapt and work as one; to overcome the challenges thrust upon us by Ebola and to create the nation we know our children deserve,” says President Koroma.

Now, as they look back on 15 years of peacetime accomplishments, including free democratic elections endorsed by the international community, and the peaceful transfer of power from one political party to another, Sierra Leoneans are rightly proud of their country’s achievements.

The 2015 United Nations Development Programme (UNDP) Global Human Development Report, published in March 2016, demonstrates that Sierra Leone is making significant progress in its Human Development Index (HDI) value, having risen from 0.268 in 1980 to 0.413 in 2014, a growth of 50 percent, putting its 0.625 HDI target by 2035 within reach.

“We are now better prepared to face new challenges. We are pursuing a stronger and more sustainable and inclusive growth for Sierra Leone, with different development activities across the country,” says Dr Samura M.W. Kamara, Minister of Foreign Affairs and International Co-operation.

These development activities include the president’s far-reaching economic reforms to increase government

revenue and streamline agencies such as the National Revenue Authority, while major industries such as mining have been injected with a modern outlook to bring them in line with international best practices based on the principles of sustainable development.

These reforms were applauded by the International Monetary Fund (IMF), representatives of which carried out a review mission to the country in September 2016 under its Extended Credit Facility. The IMF found that “since the last quarter of 2015, economic growth has resumed, and it remains on an upward trend, supported by new investments in mining, agriculture and fisheries. The recovery underway is projected to remain sustainable over the medium term.”

Few countries have escaped the implementation of austerity measures in recent years, as governments grapple with outsized expenditure and tougher regulation, but President Koroma is keen to show that Sierra Leone’s belt-tightening programme, in place until the first half of 2017, covers the whole country, including the governing elite. Not only did he implement the suspension of all foreign travel for public officials, except essential and statutory trips; he also slashed overtime payments and fuel allowances for civil servants.

The Sierra Leone of today is building on strong foundations in the relentless pursuit of economic development in order to reduce its reliance on foreign aid.

However, the president’s vision for the country puts the welfare of its people firmly at the forefront, as it is only by creating inclusive growth that Sierra Leone can dismantle the cycle of poverty once and for all.

“We are introducing nationwide school feeding, providing additional subsidised public transportation, cash transfers to the vulnerable and continued support to the free health care initiatives as well as free primary schooling and the payment of fees for public examinations,” says Momodu L. Kargbo, Minister of Finance and Economic Development.

One key focus is on making up for lost time in the classroom for Sierra Leone’s children. Since schools were closed

for an entire academic year during the Ebola outbreak, the country’s education ministry has implemented two shortened academic years with an accelerated syllabus focused on core subjects, boosting school enrolment rates and thus ensuring the younger generation are equipped with the necessary knowledge to continue the country’s development in the future.

And it is not only in welfare where the government is placing its efforts. In the past decade, the country has made the third-largest improvement in governance of any country in Africa, according to the Mo Ibrahim Index of African Governance.

“My government remains committed to good governance, and will continue to build upon our post conflict peacebuilding and democratic gains by further strengthening our democratic institutions and access to justice,” says President Koroma.

Over a million Sierra Leoneans live outside the country after fleeing during the country’s long civil war, and their recent history is one of close involvement in relief efforts. The diaspora was key in mobilising support for peace and justice post-conflict, and organisations such as the UK Sierra Leone Diaspora Ebola Task Force played a vital role in tackling the spread of Ebola. But it is also this diaspora who has been among the first movers in helping their home country on the road to economic recovery.

“Harnessing the African Diaspora in building capacity in Africa is the only way we can give practical relevance to the narrative of our common ancestry, our historic resilience, and our aspirations for a better world through a better Africa,” said President Koroma at an address to the World Bank in Washington, D.C. A World Bank survey of 600 foreign resident Sierra Leoneans found that almost half had already invested back home, with areas of interest ranging from real estate to education. Today, as Sierra Leone consolidates its spectacular progress in nation-building and sustainable development, they are fast being joined by businesspeople from all over the world.

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Creating an enabling environment

for the private sector With a need to diversify the economy and create jobs to reduce poverty, the government is committed to revamping the private sector and attracting foreign direct investment Despite the fact that the Ebola crisis has created a significant set of new challenges for Sierra Leone, the basics for the country remain the same – the country’s rich natural resources and its deep natural port mean there is large scope for development, but there is ultimately a need to diversify the economy and create jobs to reduce poverty.

President Ernest Bai Koroma has acknowledged these challenges, firstly in his Agenda for Change (2007-12) and more recently the Agenda for Prosperity (2013-17), which aim primarily to create a positive enabling environment for the private sector.

Indeed, the government of Sierra Leone is convinced that the future of the country is based on a vibrant private economy. One of the main objectives of the Agenda for Prosperity is to attract and diversify foreign direct investment, now estimated at only 10 per cent of GDP and mainly concentrated on just a few sectors, namely mining.

The foremost way in which the government is doing this is through its National Commission for Privatization (NCP). In addition to legal reforms targeted to boost private sector dynamism and cut red tape, the NCP is committed to the implementation of procedures and policies that address corporate accountability, integrity, and transparency to improve investor confidence.

Apart from building government capacity to enter into sustainable and beneficial public-private partnerships, such as putting into process the disinvestment of state-owned commercial assets, a big part of this effort has been focused on boosting Sierra Leone’s Doing Business ranking in order to attract greater investment.

For instance, through measures such as improving access to credit information by establishing a public credit registry and making it easier to register property by introducing a fast-track procedure, Sierra Leone’s ranking in the Doing Business Index has improved by 36 places in recent times.

While Sierra Leone’s formal business sector remains relatively small, the country is now rated one of the world’s top ten business re-

formers, moving from 176th to 140th within a five-year period.

In face of the country’s most serious obstacles to investment, like the shortage of skilled labor, the lack of infrastructure and the slow legal system, the government is committed to revamping the private sector in a very targeted and strategic approach. Assisted by the African Governance Initiative, the government has developed a plan that will create a unified vision for the country.

Sierra Leone’s plan aims to ensure that the government’s ministries along with country’s central bank work to push private sector development and have a coherent vision to align their various initiatives.

“A strong private sector is the best a country can have,” states Dr. Kaifala Marah, Governor of the Bank of Sierra Leone, whose own projects geared towards improving the business climate include the introduction of the National Switch and the Single Window Initiatives. “In our role as central bank, we are working in collaboration with the Ministry of Finance to ensure that we create a business environment that attracts as many FDIs as possible,” he adds.

“Even if our first step is to attract as many companies and individuals as possible to have investments in our country, the second step will be to entice these investors that are already in Sierra Leone to construct, for example, processing plants, that add value to their primary crops and boost our exports. This has multiplying effects as it will generate new jobs and allow the creation of new small businesses around the factories.”

Some of the major incentives that Sierra Leone offers foreign investors include accelerated depreciation of 40 percent for plants and equipment in a business’s first year and 10 to 15 percent for most other items. It also offers a loss carry-forward of 50 percent of the previous tax year’s taxable income.

While the government still heavily incentivizes development of the mining sector (100 percent deduction for prospecting and exploration and a 40 percent deduction for the first year of production costs), there is a huge push

to draw investors to other areas of the economy, for instance, to encourage investment in rice and timber, a 10-year corporate tax holiday is granted.

“Beyond mining, the main sectors that have the biggest potential for foreign investors are agriculture, fisheries, tourism and housing,” says finance minister Momodu L. Kargbo.

“Sierra Leone could also undeniably aim to capture the top of the tourism market and eco-tourism. To do so, we need to further develop different infrastructures including hotels and eco-tourism facilities. Finally, there is a large unmet demand for housing for all income levels, and so there is a need for more real estate developers to enter the market.

“Sierra Leone is open to investments from all parts of the world – Asia, Europe, America and Africa. We have a generous package of investment incentives for all sectors.”

“In our role as central bank, we are working in collaboration with the Ministry of Finance to ensure that we create a business environment that attracts as many FDIs as possible”

Dr. Kaifala Marah, Governor of the Central Bank of Sierra Leone

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The Worldfolio - Sierra Leone

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Transport and energy

projects unveiled The construction of new infrastructure is one of the pillars of the Agenda for Prosperity

Last October, Bolloré started the $120 million expansion works at the Port of Freetown, one of the biggest investments in Sierra Leone’s history Sierra Leone is pushing ahead with a series of big transport and energy projects to improve the African country’s infrastructure, and provide firm foundations for economic growth and development.

Key objectives are boosting power generation and transmission networks, expanding the mining sector, improving port facilities and extending trunk roads.

The government’s market-opening policies have won IMF backing, although some worry about China’s growing dominance, questioning project priorities and argue more should be allocated to health and education in a country where life expectancy is just 51 years.

The reform programme “has achieved its key objectives despite the exogenous shocks of the Ebola epidemic and the collapse of iron-ore prices and associated loss of production in

2014-15,” the IMF said in a September 2016 report, when it released another $33 million in financing.

The IMF also called for faster progress on structural reforms and said that “diversifying growth, making it more inclusive and distributing its benefits more widely should be the overriding focus of economic policy.”

A significant proportion of Sierra Leone households don’t have electricity and it is worse in rural areas where most public buildings, like health clinics and schools, lack connectivity, so there is a lack of lighting for medical care and problems maintaining cold storage for essential medicines.

Unreliable generator-based supplies used in many rural areas cost far more than power in urban areas, which benefit from grid connection and subsidised tariffs. During the Ebola outbreak,

a lack of reliable power was a major obstacle to its ability to cope with the crisis.

The government’s long-term plans include a huge increase in Sierra Leone’s installed generating capacity to 1,000 megawatts (MW), energy minister Henry O. Macauley said, partly through a ramping up of hydro and renewable energy and by encouraging private investment, with the objective of stable power links for all by 2025.

Sierra Leone has as much as 12 billion tons of iron-ore reserves, but the “cost of extraction is higher than the average precisely because of the lack of a reliable and affordable source of energy…once we fix that, we will be able to attract new foreign investors and, maybe, they would also install smelting plants locally that will improve the quality of the product before shipment,” Minister Macauley adds.

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Its main power source, the 50 MW Bumbuna hydro-electric plant, has been running at some two-thirds of capacity due to technical problems, although, private power company Joule Africa is hoping to complete a 202 MW expansion of capacity by end 2017, with its Bumbuna II project.

Other work underway involves Finnish company Wärtsilä building a 57 MW heavy fuel oil generation plant and the construction of transmissions lines funded by an India Exim Bank $78 million loan.

A May 2016 UK aid deal will install 250,000 solar-power units in households by end-2017. Over the next four years, half a million people are due to benefit from at least 90 mini-grids powered with renewable and hydro energy and operated by local entrepreneurs.

The first of three 2.2 MW mini hydroelectric dams, each able to supply 10,000 households with power, was signed over to the energy ministry in December 2016 by the constructor, China’s Hunan Group.

One of the biggest infrastructure projects underway now is for more port facilities at the Freetown Queen Elizabeth II Quay by French operator Bolloré Ports, which has run its container facility since 2011. It is funding the $120 million project to build a 270-metre quay extension and a power plant dedicated to the facility.

This will allow vessels carrying up to 6,000 containers to berth and in-

crease handling capacity from 90,000 twenty-foot-equivalent containers now to 750,000 at its completion, expected in September 2018.

“The Port of Freetown is one of the gateways of international trade for West Africa and the countries of the hinterland,” says Capt Fabjanko Kokan, Country Manager in Sierra Leone for Bolloré.

In the past five years, the company has invested heavily to rehabilitate existing yards and buy modern equipment, allowing port traffic to rise by over 30 percent.

Sierra Leona sits on some of Africa’s largest iron-ore deposits, whose exploitation is a major component of the country’s GDP, along with exports of diamonds, bauxite and rutile, a titanium oxide ore.

The slump in iron-ore prices and the 2014-15 Ebola outbreak prompted the shutting of the massive Tonkolili mine, but owner Shandong Iron and Steel Group restarted production in February 2016. It recently said it would spend $700 million to expand output and build a plant to process ore which up to now it had been exporting to Qingdao in China in an unprocessed state.

“To some, it looks as if China simply wants to export its domestic pollution abroad. Officials are desperately trying to close dirty domestic steel plants. There is a more favourable interpretation, however: that Chinese firms are taking a longer view of Africa’s potential. African

steel demand is expected to hit 300 million tonnes per year by 2050, according to Mysteel.net, a Shanghai-based trade publication,” The Economist magazine commented.

President Ernest Bai Koroma was in China in December to discuss this and other Chinese financing and investment, including a China Exim Bank-financed international airport to be sited at Mamamah, about 100 kilometres’ northeast of Freetown.

The President has long been a supporter of the planned airport, for which China earmarked around $315 million in 2011 only to be put off by the worldwide slump in commodity prices and Ebola.

The only international airport now is a former British air force base sited a hazardous one hour-estuary crossing away from the capital, or three hours by road.

“Sierra Leone needs this airport for economic growth, job creation and easier access,” China’s ambassador was quoted

by Sierra Leone media as saying, adding that a start to work is imminent and will take around three years to complete.

The road network is being expanded and upgraded with government money, foreign aid and loans, including a 103-kilometre road financed by the European Union. Other road financing is coming, among others, from The Kuwait Fund for Development, the Islamic Development Bank and the Arab Bank for Economic Development in Africa.

“The cost of extraction is higher than the average precisely because of the lack of a reliable and affordable source of energy… once we fix that, we will be able to attract new foreign investors” Henry O. Macauley, Minister of Energy Bumbuma II is the expansion of the 50 MW Bumbuna plant, on the Seli River

The Worldfolio - Sierra Leone

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Where’s best to invest in Sierra Leone?

Eager to attract foreign investors and ensure their projects are a success, Sierra Leone has been strengthening the macroeconomic situation, investment environment and foreign relations, particularly with China and the UK, to open up the wide scope of opportunities it holds beyond its mining sector to partners overseas. Minister of Finance and Economic Development Momodu L. Kargbo takes a look at the best areas for investment, the 2017 Budget’s target areas for accelerated growth, and the country’s ability to honor its credit obligations The head of the IMF Mission to Sierra Leone, Wakeman-Linn, highlighted last September how successful your government reforms have been in increasing Sierra Leone’s economic resilience in the face of two major exogenous shocks. What are the next reforms that you are planning to apply to boost Sierra Leone economic growth?

Since the moment that Ebola was waning, our government started to plan the recovery and developed the National Ebola Recovery Strategy. The first phase focused on the immediate recovery priorities in agriculture, health, education, private sector recovery and water and sanitation.

To allow farmers to return to their farms, this administration, supported by our development partners, provided them with agricultural inputs such as seeds, fertilizers and tools. We re-opened schools and restored general health services. This government also expanded its social safety net programs, including cash transfers to the hardest hit to avoid longer-term economic hardship. We encouraged the swift resumption of infrastructure projects that were halted due to Ebola, providing jobs and income together with investment activities that resulted in the resumption of export of iron ore from the largest mine.

The second set of efforts focused on energy and water supply. Our government provided fiscal support to the energy sector to complement the Bumbuna hydro dam, which increased the available energy and facilitated the growth of manufacturing and commerce. We also continued the implementation of sound economic policies and public financial management reforms under the Extended Credit Facility supported by the IMF.

One of the main objectives of the Agenda For Prosperity (A4P) is to attract and diversify FDI in the country and boost private sector investment, now estimated at only 10 percent of GDP and mainly concentrated on a few sectors, such as mining. Beyond mining, what sectors do you consider that have the biggest potential for foreign investors?

Momodu L. Kargbo, Minister of Finance and Economic Development Beyond mining, the main sectors that have the biggest potential for foreign investors are agriculture, fisheries, tourism and housing.

In agriculture, there is potential in increasing production crops such as rice as well poultry and livestock together with cash-crops production such as cocoa, coffee, cashew and oil palm and value-added products in agro-processing such as fruits, cassava or sugarcane. In fisheries, there are opportunities in the construction of the fish harbor, in fish processing for export as well as in the development of aquaculture.

Sierra Leone could undeniably aim to capture the top of the tourism market and eco-tourism. To do it, we need to further develop different infrastructures including hotels and eco-tourism facilities. Finally, there is a large unmet demand for housing for all income levels, and so there is a need for more real estate developers to enter the market.

Sierra Leone is open to investments from all parts of the world – Asia, Europe, America and Africa. We have a generous package of investment incentives for all sectors.

Together with President Koroma, you made an important visit to China, where you signed different agreements. One of them was a debt relief of 20 million RMB (of previous interestfree loans), signed by you. What were the main successes of this trip? How would you evaluate the current economic relationship between the two countries?

Our relationship with China is based in strong roots. Sierra Leone was one of the countries that decided to be bold and nominate the Popular Republic of China to the United Nations Security Council against Taiwan in 1971. We have always had a special relationship with the Chinese. Here in Sierra Leone, we enjoy the presence of Chinese companies at different levels, some as contractors and some as investors.

One of the main objectives of this trip was to accelerate the plans to construct our new international airport in Mamamah. We want to finish with the uncomfortable experience of landing in Lungi and having to take a boat to reach your final destination in Freetown. What we would like is to have our new international airport easily reachable from our capital by road.

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The Worldfolio - Sierra Leone

We are going to construct this airport with off-budget arrangements. In fact, one of the key discussions during our visit to China was to explore these different financial arrangements. We have been discussing his project for several years and during this visit we made substantial advances. In fact, the Chinese government has already put aside the required budget to make this new airport a reality.

From our side, the government of Sierra Leone has secured the fulfillment of our debt obligations, ensuring that we can sustain our macroeconomic stability before moving forward and start the construction of this infrastructure. We expect to start the works of it at the end of this January.

From the point of view of Sierra Leone, what are the opportunities and challenges that will appear in the post-Brexit scenario? How is Sierra Leone positioning itself to remain as one of the UK key partners?

First of all, it is important to remember our existing special relationship, rooted in our colonial history. The British are behind the origins of our country and of our population. Most of Sierra Leoneans still consider the UK as our second home. They remain as one of our largest ODA (official development assistance) donors, deeply involved in our reforms, development and investment programs.

Brexit opens a new opportunity for Sierra Leone to negotiate a new trade deal with the UK beyond the EU. I am convinced that we can enhance our relationship. There is eagerness to do it by the UK too. The British are looking forward to reviving the Commonwealth in order to increase their access to commodities, raw materials and new markets. All this factors will contribute to make us closer partners.

Finally, I would like to highlight that the UK is our one-stop shop for a majority of Sierra Leone international efforts: all our commercial meetings and economic and investment forums have been held in large part in the UK.

Beyond ODA, your government is exploring to access funds from international capital markets, working with partners to conduct credit sovereign ratings providing relevant assessment of Sierra Leone’s ability to honor its external obligations as and when they fall due.

What are the main partners you are working with on this regard?

We are closely working with Standard Chartered, a bank that is assessing our ability to honor our external obligations in terms of modalities and procedures. We still have to conduct a last arrangement meeting together for a final discussion before they release the indicators. The outcome of this last meeting will determine the publication of the results. All these efforts have been very important for our government to assess our situation and identify the aspects where we should improve to have the best possible credit sovereign rating.

Once Sierra Leone has its first credit sovereign rating, whatever its results, we will be in a position to define our goals to improve it and understand the required tasks to move forward and improve our ratings. We have already been improving our macroeconomic situation thanks to our enhanced partnership with the IMF: they have evaluated us, given us some specific advice, and finally backed our government macroeconomic policies. Currently we are taking new decisions to go beyond IMF recommendations in order to boost our growth.

The 2017 budget was presented at the beginning of December on the theme: “Recovery through Economic Diversification and Fostering Entrepreneurship�, dedicated to accelerating economic recovery and strengthening the resilience of the economy to withstand future global shocks. The discontinuation of the subsidization of petroleum products remains as one of the major concerns for Sierra Leonean public opinion. What are the main budgetary decisions that will accelerate your economic recovery? How is your government planning to limit the impact on the masses of the increase in the fuel price?

The main measures approved in the 2017 budget to accelerate the economic recovery of Sierra Leone are the following: 1. We are allocating more resources to the growth sectors including agriculture, fisheries and tourism in order to diversify the economy and reduce our reliance on mining.

2. We are going to continue to scale up our spending on infrastructure: roads, energy, water supply or ICT among others.

3. We are supporting domestic industries to produce goods where we have a competitive advantage to reduce imports.

4. We are supporting our SMEs through capacity building and improving their access to finance.

All of this will be done through budget discipline and a prudent expenditure management with enhanced efforts to increase domestic revenue collection. With stronger public finances, we will stabilize the economy and encourage foreign direct investment.

Regarding the fuel price increase, I must say it was a necessary measure, as the budget could no longer afford to subsidize consumers, especially the richest. To cushion the impact on the population with lower levels of income, we are introducing nationwide school feeding, providing additional subsidized public transportation, cash transfers to the vulnerable and continued support to the free health care initiatives, as well as free primary schooling and the payment of fees for public examinations.

You are part of an administration that is driving a rapid transformation of the country. Taking into account your previous experience serving as Minister of State, Deputy Minister of Finance, Governor of the Sierra Leone Central Bank and now, in your current capacity as Minister of Finance and Economic Development, where would you like to see your country in 10 years?

Foremost, I would like to see a country that is food self-sufficient and food secure, a country with high-quality infrastructure, especially with a good road network and increased access to reliable electricity and water supply. I would like to see Sierra Leone with improved education and health systems delivering outcomes such as higher literacy rates, longer life expectancy and lower infant and maternal mortality rates. Finally, I would like to see a strong and stable private sector-led economy with reduced reliance on ODA that has successfully increased its domestic revenue collection to 20-25 percent of the GDP.

What is the final message you would like to address to our audience?

Sierra Leone is more than ready to welcome investors. We will protect them and we will make sure their investments are a success in order to attract additional investors once they experience the positive results of the previous ones.

The Worldfolio - Sierra Leone

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The Worldfolio - Sierra Leone

Sierra Leone and China continue strengthening their partnership, while Brexit opens new opportunities for historical ties with the UK “The relationship between the two countries has always been based on mutual trust, respect and win-win,” said Mr Xi.

A Brexit opportunity

President Koroma with China’s president Xi Jinping. China is Sierra Leone’s leading trading partner In a fast-changing global political environment, Sierra Leone’s strong relationships with both East and West set it in good stead for the future.

With membership of the Commonwealth and friendly ties with China both to its advantage, the country’s government now seeks to open new avenues of collaboration and investment.

As China seeks to widen its sphere of influence within Africa, its relationship with Sierra Leone, which counts the Asian powerhouse as its largest trading partner, has been elevated to a Comprehensive Strategic Partnership of Co-operation.

“Our relationship with China is based on strong roots,” says Momodu L. Kargbo, Minister of Finance and Economic Development. “Sierra Leone was one of the countries that decided to be bold and nominate the People’s Republic of China to the United Nations Security Council against Taiwan in 1971. We have always had a special relationship with the Chinese. Here in Sierra Leone, we enjoy the presence of Chinese companies at different levels, some as contractors and some as investors.”

The upgrading of the relationship comes at an important time for the West African country as it shakes off past economic woes to work toward both the Global 2030 Agenda for Sustainable Development and the national Agenda for Prosperity. In a December 2016 meeting in Beijing, Chinese President Xi Jinping and Sierra Leonean President Ernest Bai Koroma witnessed the signing of co-operation documents after talks which covered areas including diplomacy, economy, infrastructure development and health, while the Chinese president urged domestic enterprises and financial institutions to “actively engage” in infrastructure building and mining in Sierra Leone for mutually beneficial co-operation.

Thus far, China has invested about $1 billion in Sierra Leone’s mining and timber industries, but the relationship between the two countries goes beyond purely economic interests. Indeed, Sierra Leonean officials are keen to point out that when Ebola struck their people, the Chinese government wasted no time in putting together a chartered flight full of medical supplies that was the first to arrive in the country.

Furthermore, the Confucius Institute, set up at Fourah Bay College, Sierra Leone in 2012, teaches Mandarin to around 1,000 Sierra Leonean students each year, and the success of the cross-cultural exchanges led by the institute saw Sierra Leone become the home country of the West Africa Regional Office of Confucius Institutes in 2014.

Meanwhile, as the Brexit vote causes uncertainty among Britain’s global trading partners, Sierra Leone is taking a pragmatic approach to its relationship with the former colonial power. The UK is currently the biggest bilateral donor in Sierra Leone, with a projected £428 million in overseas development aid destined for the country for the period between 2014 and 2019. Projects include the £4 million construction of 225 new classrooms across the country, improving school conditions for a targeted 63,000 children by June 2017. Sierra Leone will also be the first country participating in the UK’s Energy Africa campaign, which will launch a series of renewable energy initiatives to eradicate energy poverty in the country via solar solutions and off-grid technologies. But the African nation now seeks more of a relationship of equals.

“We are pursuing a stronger and more sustainable and green growth for Sierra Leone and different developments are ongoing across the country. In all these efforts, the UK must remain our strategic international partner, not only regarding official development aid, but beyond,” says Dr Samura M.W. Kamara, Minister of Foreign Affairs and International Cooperation. “Sierra Leone is ready for business and we still rely on our British friends to come, invest and trade with us. We are looking forward to strengthening our partnership with the UK in this post-Brexit era,” he adds.

Some UK companies, such as Standard Chartered Bank, are already there, while British law firm Herbert Smith Freehills has provided over £1.5 million worth of free legal advice to the country’s government in support of its development goals. AMR Gold, another British-run firm, is playing an active role in the post-Ebola rehabilitation of the Sierra Leonean mining sector. Many more are exploring options in the West African country, as demonstrated by the reception of its most significant postEbola investment outreach, the UK-Sierra Leone Trade and Investment Forum. Held at London’s Sheraton Park Lane Hotel in February 2016, the event welcomed over 200 delegates interested in investing in areas such as extractives, agriculture and infrastructure.

Speaking at the event, British Minister for Africa James Duddridge highlighted Sierra Leone’s rich mineral deposits, huge potential in renewable energy, strategic shipping location and millions of hectares of fertile agricultural land and abundant fish stocks as plus points for British investors. “This country’s strong historic ties with Sierra Leone, our long-term friendship, together with the familiarity with English, present UK companies with a unique advantage. I urge you to seize it with both hands,” he said. And hopes are also high for the possibility of increased trade flows between the two countries as the UK leaves the European Union (EU).

“Brexit opens a new opportunity for Sierra Leone to negotiate a new trade deal with the UK beyond the EU,” says Minister Kargbo, who adds that he is convinced that the two nations can enhance their commercial relationship, particularly as the UK looks to the Commonwealth in order to increase its access to commodities, raw materials and new markets as it moves forward with its post-Brexit strategy.

The Worldfolio - Sierra Leone

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Ready for business & new challenges Sierra Leone has drawn on the strength and resolve of its people to overcome major setbacks to its social and economic development, and now it is better prepared to face new challenges and is pursuing a stronger, more sustainable and greener path for growth. Minister of Foreign Affairs and International Co-operation Dr Samura M.W. Kamara discusses some of the lessons learned over the years, the proposed reform of the UN Security Council, and the efforts pushing ahead the country’s ongoing transformation After the IMF mission, last September, the institution backed Sierra Leone’s last three years of economic reforms, stating that its economy proved resilient in the face of the two major exogenous shocks: the Ebola outbreak and the drop in iron ore prices. What have been the main reasons behind this successful economic recovery?

First and foremost, I would like to mention Sierra Leoneans’ resilience as the main reason behind our recovery. The optimism and strength of our people have been critical. We, as a country, have learnt very bitter lessons.

We suffered a terrible civil war for years and even now, 15 years after, we are still recovering from that. From 2002 to 2013, we undertook a successful process to rebuild our country and reunite our society, achieving one of the largest GDP growths in the world in 2013. Then, in March 2014, Ebola came, an unseen enemy we could not stop. You cannot negotiate with an enemy you cannot see. Ebola took more than 30,000 of our people that we lost.

Despite all these struggles and suffering, we did not have any other option than moving forward. In fighting the Ebola crisis, we learnt two valuable lessons: the first one is that to overcome a crisis a country needs strong leadership that guides the different communities.

The second lesson we learnt is how important strong and engaged communities remain for Sierra Leone. Our different communities fought together against Ebola.

They took this fight as their own responsibility. Even musicians put all their efforts those days to create hopeful music and encourage the brave volunteers in our national fight against Ebola. Even if wearing the anti-contagion uniform and becoming an Ebola burial person was not a pleasant activity, we had hundreds of them. I was especially touched to see how engaged was our youth. Of course, we remain extremely grateful to our international partners too, who helped Sierra Leone’s efforts in fighting Ebola in very different but useful ways.

Currently we are in the middle of the postEbola country rebuilding. In 2015 our economy contracted 20.5 percent. All we had gained was wiped out. This is why our government launched the Ebola Recovery Program, whose goals are aligned to our previous Agenda for Prosperity and its eight pillars.

Dr Samura M.W. Kamara , Minister of Foreign Affairs and International Co-operation

Beyond the fight against Ebola, President Koroma’s leadership has been also experienced in Africa in his capacity as Coordinator of the African Union (AU) Committee of Ten Heads of State and Government. This group is canvassing the African Common Position on the reform of the UN Security Council that requests two permanent seats for African countries. In his speech last September to the UN General Assembly, President Koroma stated, on behalf of the AU 54-members, that Africa deserves such positions as a matter of justice and right to equal participation in decision-making on peace and security issues worldwide. With which international partners, beyond your African Union fellows, is Sierra Leone working to achieve this desired reform?

The African Committee of Ten, or the C-10, is the group of African countries responsible for advocating the request of the entire African community to reform the UN Security Council. The problem is that several countries are also requesting a permanent seat. The main challenge for the Sierra Leone Foreign Service has been to bring and keep all of Africa together and to deliver unified declarations and maintain a solid and common position. Our President’s main priority is to keep this common African position strong and ensure that we all remain on the same page, which is already a hard task.

The second priority is how to advocate this common African position towards the international community. For that, it is important to be part of one of the groups present in the UN

General Assembly. Even if there are so many groups, the P-5 remains as the most important one. This is the group of the five original Security Council members with veto. They are the ones that will take the final decision regarding whether this reform goes through or not, thanks to their veto power.

One of the alternative reform proposals that have been circulating is the one that proposes enlarging the number of permanent members of the UN Security Council without giving these newcomers the veto right. From the common African position point of view, this is creating a third category of members inside the Council, which is unacceptable. This will ultimately break the idea that all countries are equal.

In any case, we understand that the UN reform is neither a fast nor an easy process.

Reforming a multilateral organization still remains as a great challenge. We have already been 10 years discussing it. After all, the UN Security Council has only been reformed once, when it was enlarged and started to have 15 members instead of 10.

With the theme “Sierra Leone Foreign Service Renaissance in the 21st Century”, President Koroma officially unveiled the 2014-2018 Foreign Service Transformation Strategy to professionalize your foreign service and increase the country’s voice and representation. How are you achieving this transformation strategy?

It takes time to reform a ministry internally. I learnt that when I was the Minister of Finance, where I had to undertake different reforms too.

There, the biggest challenge was to change the mindset of my team. Working in a foreign service is not just about going to receptions.

You must also be an economic agent of the country. We are also ensuring the coordination of the foreign actions of the other ministries.

We want to remain the ankle of Sierra Leone’s international relations.

We are focused on making ourselves known in the world. The dimensions of international relations change. We should be a dynamic and adaptable organization ready to tackle them together with the international community. We are working to empower our Ministry of Foreign Affairs and making it a central piece of the Sierra Leone government.

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The Worldfolio - Sierra Leone

The Worldfolio - Equatorial Guinea

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CCEI BANK: Reinventing the financial system of Equatorial Guinea CCEI Bank is a strong financial institution that keeps betting on Equatorial Guinea in order to facilitate bureaucracy for investors. The Worldfolio speaks with General Manager of CCEI Bank, Alberto Doria Lajay There is no doubt that Africa is the continent of the future for several reasons. What’s the role of Equatorial Guinea in the region from your perspective?

Equatorial Guinea has played and continues to play an important role in the region, given its ability to manage and solve difficult situations without causing further conflicts.

Proof of this is that in 2012 the African Nations Cup was about to be cancelled. In the record time of one month, with no hesitation, this tournament was held in Equatorial Guinea, something that normally takes two years to plan.

On several occasions, the President has held the Presidency of the Central African Economic and Monetary Community, CEMAC, which Equatorial Guinea is part of. And during his mandates he has solved many problems that had been going on for years. An example is the reforms in the operation of the Community and the rotation of member countries in its management bodies.

What message would you send to investors that have intentions of establishing businesses in Equatorial Guinea?

Equatorial Guinea is a country with all the necessary conditions for investing. Among them there’s an investment law – which is one of the most attractive in the world – and we can highlight the repatriation of profits and invested capital with no issues, important basic infrastructures including the road network throughout the country,

“Equatorial Guinea is a country with all the necessary conditions for investing.

Among them there’s an investment law – which is one of the most attractive in the world – and we can highlight the repatriation of profits and invested capital with no issues, important basic infrastructures including the road network throughout the country, ports, airports, among others”

tors, while at the same time it modifies some instruments in order to be able to make it easier to invest in these sectors, one of which is the lowering of rates of interest. Also, we are extending a bit more the amortization period.

CCEI Bank has been betting on Equatorial Guinea since before the oil boom. How has CCEI Bank supported the industrialization of the country?

CCEI Bank is keeping an eye out on the projects that are being carried out in the country, financing them so this process can be successful.

Alberto Doria Lajay, General Manager of CCEI Bank ports, airports, among others. There is also a high per-capita income and a considerable middle-class with great purchasing power.

More than 1,500 representatives from private financial sectors, experts and political leaders decided in 2015, in Egypt, to attract investment in order to launch the largest trade exchange bloc in Africa. 26 countries account for 620 million consumers and a gross domestic product of 1.2 trillion dollars. From your point of view, what would be the impact of this agreement for the continent and particularly for Equatorial Guinea?

We know that investment in the country is important because it creates jobs, which at the same time increases the material wellbeing of society and reduces the number of people without a salary or a low salary.

Equatorial Guinea’s Horizon 2020 development plan has begun its second phase, in which the private sector has an important role. How does CCEI Bank fit into the national strategy and vision?

CCEI Bank is looking at the implementation of the second stage of the Horizon 2020 Plan, so we can support – like we always have – the different economic actors in the country.

What is the role of CCEI Bank in the development of the country’s financial system and in the collaboration with the private and public sectors for their development?

Our bank is creating different financial products to satisfy the needs of the economic ac-

What are the competitive advantages that have contributed to the bank’s expansion during all these years and made it possible to collaborate with the country this way?

One of the most important advantages has been always keeping an eye on the client’s needs and adapting according to the evolution of the Equato-Guinean society.

Here in Equatorial Guinea, we’ve heard on several occasions from His Excellency the President, the following sentence: “An educated population is worth more than a rich one.” There have been great investments in education, and the training in human resources is one of the main goals of the second phase of the Horizon 2020 plan.

How does CCEI work, promote and contribute to the training plan of human resources in the country?

In our annual budget, there is an expenditure item dedicated to social works, and one part of that item is reserved for donations to some schools and we participate in that way by financing some of these schools’ needs.

In what way does the latest technology contribute to this great challenge and how is CCEI Bank making use of this technology?

It’s true that nowadays cutting-edge technology influences every sector of society. CCEI Bank, like other banks, takes the necessary measures every day to be up to date with these technologies.

Where would you like to see CCEI Bank in 2020?

Continuing to be, like up until now, the main bank in the country, always with the financial products that solve our clients’ needs.

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The Worldfolio - Equatorial Guinea

‘GEpetrol's mandate is to be involved in

the economic fabric of the country’ GEPetrol was established as the National Oil Company of the Republic of Equatorial Guinea by Presidential Decree in February 2001, and became operational in 2002. General Manager Antonio Oburu Ondo sits down with The Worldfolio to talk about GEPetrol’s contribution to the nation’s economic development, as well as how the company aims to diversify beyond the oil industry through the establishment of its business incubator The re-election of President Teodoro Obiang Nguema Mbasogo last year will allow the continuation of the Horizon 2020 development plan with the same strength and course of action. What does the re-election of President Obiang say to the world about the confidence of the people, as well as about the continuation of the government’s projects and plans for the future of Equatorial Guinea?

Evidently, GEPetrol is included within that continuity that our party, the Democratic Party of Equatorial Guinea, preaches. This, for GEPetrol, means the possibility of continuing our diversification plans, most of all to maintain those plans for the globalization of GEPetrol, and for the participation of GEPetrol in the industrialization of the country.

This might sound very easy, but GEPetrol has not been involved before in these types of projects outside the world of petroleum.

So, we’re initiating a series of programs, and the re-election of the President of the Republic means, for GEPetrol, the continuation of those programs and the integration of GEPetrol into the international world.

“GEPetrol’s biggest contribution to the country’s economy, first of all, has obviously been the creation of GEPetrol and the training of Guineans. GEPetrol is the only institution in the country with a scholarship programme; the largest group of scholarship recipients in the country, who are studying both in Equatorial Guinea and abroad” Antonio Oburu Ondo, General Manager GEPetrol

The President has been a long-standing proponent of connecting Equatorial Guinea with the world. In the context of CEMAC (Economic Community of Central African States), what is the regional and continental role that Equatorial Guinea plays in the emergence of the African continent?

I want to make it clear that this is the national petroleum company of Equatorial Guinea.

This is not the Democratic Party of Equatorial Guinea. This is not a ministry. Therefore, I prefer to leave the purely political issues to the ministries.

But speaking as a citizen of Equatorial Guinea, for us, the reputation that the President has in the CEMAC zone and in Africa is clear. In fact, the image of Equatorial Guinea in CEMAC and in Africa for decades is absolutely different from that of today. Such that Equatorial Guinea is seen as a model in many regional forums.

It is even the case that, in the recent moments of crisis, there were countries that were put forth as models of the management

of petroleum costs, but after the onset of the current crisis, it is becoming clear that Equatorial Guinea is actually handling the management better. Of the petroleum-producing countries in Africa, Equatorial Guinea is best positioned because of how the petroleum funds have been invested. This has been very responsibly done; we have very little debt in this regard when compared to other countries, which are really much larger producers than Equatorial Guinea.

Since its founding GEPetrol has been key in the articulation of resources for development, supporting the country during oil booms, as well as in more complicated moments. What is your opinion as to GEPetrol’s greatest contribution to the country, and what role will the company play in the overall future development of the country?

One of GEPetrol’s mandates is to be involved in the economic fabric of the country, contrary to what a lot of people think, which is that it must solely be relegated to the petroleum arena.

We absolutely have to be involved in everything. In this sense GEPetrol has committed itself to being the leading company in the provision of oil services. And that is very important because, right now, the economy and money are in petroleum services.

In fact, the entirety of the petroleum industry moves through petroleum services.

And GEPetrol has committed to taking firm steps in that direction. We’re not just talking about future projects. In a very short time, we have even been able to implement its operation, a series of companies, with the participation of businesses from the sector who have knowledge of the subject matter, such as, for example, GEprom, as well as a number of other companies on the list.

In that sense, GEPetrol has managed to avoid something that is a very important issue, which is the flight of capital; and we’re talking about serious capital that is fleeing the country. GEPetrol is also promoting the transfer of technology. All those businesses mean employment for Equatorial Guinea.

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The Worldfolio - Equatorial Guinea

“We absolutely have to be involved in everything. In this sense GEPetrol has committed itself to being the leading company in the provision of oil services. And that is very important because, right now, the economy and money are in petroleum services” Antonio Oburu Ondo, General Manager GEPetrol

GEPetrol’s biggest contribution to the country’s economy, first of all has obviously been the creation of GEPetrol and the training of Guineans. GEPetrol is the only institution in the country with a scholarship programme; the largest group of scholarship recipients in the country, who are studying both in Equatorial Guinea and abroad. For example, there are students in Spain, and in Argentina. In fact, our most famous attorneys here studied in Argentina. The management of the cost of petroleum has also been a contribution, and the involvement of GEPetrol in the gas arena, which is currently one of the largest sources of income for the country.

The fall in the price of crude, since the middle of 2014, has affected investors in global exploration and extraction, obliging producers to make adjustments in order to maintain market share, even with much less income.

What is GEPetrol doing to adapt to those global trends, and what is your strategy in the long and short term?

Firstly, I want to make clear that the problem that Equatorial Guinea has seen is merely the fact that it’s the first time that Equatorial Guinea is in a cycle of declining crude prices. That’s never been encountered before. That’s absolutely normal. The prices of crude have risen and fallen throughout the history of petroleum.

GEPetrol, in the face of this situation, like any other company, has first undertaken a consistent policy to make significant adjustments, greater cost efficiency, both with regard to the functioning of GEPetrol and greater efficiency in the creation of new business ventures.

Another very important strategy that is the foundation and cornerstone of GEPetrol’s future is GEPetrol’s business incubator. GEPetrol wants to diversify beyond the world of petroleum, and it wants to globalize. It will

be the first time that a business incubator has been discussed in our area, an incubator not just of petroleum companies that will involve Guineans and foreign residents in Equatorial Guinea – an incubator now associated with international incubators, and an incubator that is already talking with banks. In fact, right now we are having meetings with local banks to allow them to be part of this portfolio of funders of the incubator’s different projects. That is the cornerstone of GEPetrol: the business incubator.

In order to withstand the fuel price crisis, one of the measures that a lot of companies are taking is the integration of their activities into the entire value chain, from extraction to derivatives production and distribution.

GEPetrol has been long been present at each step of the sector and increasing its product and service portfolio. What has been your company’s experience in integrating those

activities, and what plans are there to continue expanding that integration in the future?

You’ve already talked about the incubator, but could you give us specific examples of this diversification of the incubator?

The incubator, before it was launched internationally, began to operate and function, and one of the results of the incubator is the creation of a company created by GEPetrol and a Guinean entrepreneur, which is a business that offers services like a travel agency, offering moneychanging services, hotel rental services and car rental services. This is a result of GEPetrol’s business incubator.

Another result of GEPetrol’s business incubator is a company named GEPROC, which is the result of an endeavour between GEPetrol, Guinean entrepreneurs, Nigerian entrepreneurs and American entrepreneurs.

In fact, we have a GEPROC office in Houston.

This is the other result of GEPetrol’s incubator.

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A joint vision for regional

infrastructure development Regional allies show there is power in numbers as they combine forces to carry out vital energy and transport projects

Rwanda may now be a progressive African leader, but it is not alone on its journey. Mechanisms for greater cooperation across African borders are at last a real possibility. Ironically, in a region of the world where foreign aid has long represented the driving force, this progress is African-generated and inward-focused. Countries on the continent are now looking to each other for growth, and it is working.

“Rwanda belongs to a number of regional bodies such as the East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA), which is a bigger market by itself, and the Economic Community of the Great Lakes Countries (CEPGL). All these bodies have presented opportunities for member countries to enhance their social, economic and political relations to attain economic growth,” says Rwandan Minister of Infrastructure, James Musoni.

“To date, member countries have responded instinctively to the regional initiatives by allowing free movement of labor, goods, services and capital. It has further created ease of access to market through the creation of customs unions to promote production and consumption of locally manufactured products.”

Mr Musoni adds that road infrastructure has been developed to facilitate transport, from Mombasa in Kenya and Dar es Salaam in Tanzania to Kigali, and to open a transit path to the neighbouring countries of Burundi and the Democratic Republic of Congo (DRC).

“The Central Corridor member states have established the Central Corridor Transit Transport Facilitation

James Musoni, Minister of Infrastructure of Rwanda Agency (CCTTFA) to expedite the implementation of the East Africa Standard Gauge Railway Project. With the northern corridor, preliminary market-studies were conducted and construction started in Kenya. It’s expected that the completion of this project will significantly reduce the cost of transport for both exports and imports to facilitate regional and international trade,” he explains.

In power, regional alliances are constructing substations and transmission lines that will facilitate power trade

and cooperation. The power potential of Lake Kivu, for example, is jointly shared between Rwanda and the DRC, with each country managing half of the lake’s 700-megawatt capacity. Sharing resources, as this region of Africa is discovering, makes everyone stronger.

As Jean Bosco Mugiraneza, CEO of Rwanda Energy Group, explains: “In Africa, we have many energy sources but we are poor in energy supply. The solution to this problem is to share energy resources between countries.”

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To make this happen, he says, the region must put in place basic infrastructure and common networking standards. There are five power plants in Africa that belong to the East African market, and there are other shared energy projects between Rwanda, Kenya and Uganda for the construction of transmission lines and power plants.

Transmission lines have been completed from the Ugandan border to Kigali, and lines are being constructed to link Rwanda, the DRC, Burundi and Tanzania. Within the next two years, Rwanda expects to be trading 30 megawatts with Kenya.

“African leaders understand that there is no way of industrializing the region without common sources of

energy. To develop our industries, we must invest in energy sources and we must share our production. Power trade is also key for security and stability. If we have common interests, we will be keener to help each other. These projects are key to developing diplomatic ties and uniting populations,” adds Mr Mugiraneza.

The private sector has also been quick to support regional integration and to applaud efforts by government to improve the connectivity that supports business growth. Liliane Uwanziga Mupende, CEO of Ultimate Developers Ltd. (UDL), the company behind Kigali’s Vision City, Rwanda’s largest residential housing project to date, points to recent EAC achievements in

logistics and human capital, as well as in infrastructure investment.

“Several joint initiatives that have already been successfully rolled out, such as the East Africa Tourist Visa, unified immigration and administrative procedures and online government solutions. Major infrastructural investments made as a region rather than as individual nations such as the oil pipelines and railway, and the creation of one-stop border posts are all aimed at making our economic integration easier,” she comments, remarking on improvements in the elimination of double costs and in creating simplified business environments.

“Many companies that are establishing in Rwanda are looking at the

“We started Vision City in Kigali as one of our pioneer projects, but our interest is to start investing in these secondary cities as well. The next step will be to invest within the commercial area of the Muhanga district, as it is strategically placed as a city that helps us to extend out to neighboring countries too” Liliane Uwanziga Mupende, CEO, Ultimate Developers Ltd.

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entire region as an investment opportunity. At UDL, we are convinced that being successful in the Rwandan market will help us to expand within the entire region. We want to increase our economy’s potential. We want Africa to be perceived as a strong cluster, with Rwanda being one of this initiative’s drivers.”

Derek Claassen, Director of Roko Construction is counting on regional infrastructure cooperation to alleviate his business’ importation challenges.

“We are hoping these pipelines and the rail system that is now being worked on will be game changers. In East Africa at the moment, in Uganda or Rwanda, you don’t have a lot of transport options.

There are still constraints in terms of road traffic. Vehicular traffic from South Africa works a lot quicker. We have found, for instance, that certain materials can be trucked from South Africa, which is about four or five days, covering five or six thousand kilometres. Depending on weight and size, we can fly certain items in, but it is hugely expensive as you pay per kilogram. The COMESA initiative to open the borders more freely for trade will help with a lot of those issues,” he explains.

Mr Claassen also believes that infrastructure improvements will lead to the emergence of regional industries to support his business. “Cement suppliers and concrete suppliers are moving into East Africa, with large companies like Lafarge, who are now the biggest concrete suppliers in the world, moving in to Uganda and Rwanda. That can and will make life a lot easier,” he says.

The fact that regional integration is now on the agenda highlights just how far Rwanda has come over the past two decades. Major advances and investment have been made domestically in the development of the country’s transport, energy and social infrastructure. The country now boasts one of the densest road networks in Africa with over 12,000 kilometres. Paved roadways in the country have more than doubled in the last 20 years, with hundreds of new kilometres being covered each new year. More than 350 kilometres were paved in 2016 alone.

The Rwandan government is also working to boost air transport links, with the expansion of national carrier RwandAir and the construction of a new international airport in Bugesera,

National carrier RwandAir continues to expand its fleet

which will intially be able to handle 1 million passengers and 150 million tons of cargo.

“RwandAir is an integral component of the government’s Vision 2020,” states Jean Paul Nyirubutama, deputy CEO of the airline.

“By 2020, we want to become a mid-sized airline with a strong global footprint. We want to connect Rwanda with long-haul destinations in Asia, Europe and the U.S. All of that is based on a strong African network.”

Infrastructure minister Mr Musoni reiterates RwandAir’s important role leading up to 2020, and points out that while Rwanda may be landlocked, it is not “air-locked”.

“To transform our country into an aviation hub, we must first develop strong and sustainable aviation infrastructure,” he says.

“RwandAir’s fleet is growing and growth will continue up to 2020 with the addition of more planes. This will allow us to serve the entire region and to connect Rwanda to the rest of the world. The construction of the new airport in Bugesera will commence in the next few months and will have other auxiliary services to make it an airport city.”

Beyond Bugesera, secondary cities are also being constructed to act as hubs for non-agricultural industry development, investment in affordable

housing is being made, and power grids and sanitation infrastructure are being extended. Information and communications technologies are also being extended into rural areas to connect the country’s population electronically.

Perhaps a singular sign of the country’s progress is the fact that Kigali now boasts an international-class convention centre, along with hotels including a Radisson Blu and a Marriott.

“Rwanda is a country that is developing at steady pace. We have made some good achievements in infrastructure development,” says Mr Musoni.

“Member countries have responded instinctively to the regional initiatives by allowing free movement of labor, goods, services and capital. It has further created ease of access to market through the creation of customs union to promote production and consumption of locally manufactured products” James Musoni, Minister of Infrastructure of Rwanda

The Worldfolio - Rwanda

“However, the government is making more efforts in constructing and completing projects in the pipeline and improving the existing ones to reach the desired levels. For example, efforts are being made to ensure universal access to electricity and 100% water distribution coverage, among others, by the year 2020.”

To meet its electrification goals, Rwanda is looking to a variety of solutions including sustainable energy sources, particularly solar.

“We recognise that as we are yet to explore and produce the natural resources that are beneath the surface, Rwandans can benefit from the energy above the surface of the earth,” says Serge Kajeguhakwa, the Chairman and CEO of Energy Resources Petroleum.

“We have made significant strides in developing our solar and renewable energy strategy in tandem with the government’s objectives and will focus initially on solar power through basic household solar systems, followed by development of mini-grid solutions and then large-scale solar projects. We expect to be able to produce around 50 megawatts from solar energy alone, and have entered into joint-venture partnerships to achieve this target.”

Electrification coverage jumped 34% between 2014 and 2015 to a total installed capacity of 170 megawatts, and in 2016, goals included increasing this by an additional 70 megawatts, while constructing 835 kilometres of new transmission lines and adding 60,000 new households to the grid. Off-grid solutions supplied electricity to 11,000 additional families in 2016. These moves support the government’s bid to expand electricity coverage to 75% of all Rwandan households by 2018.

“In our strategy to accelerate electricity access, we have targeted 48% from on-grid solutions and 22% from off-grid solutions, with an emphasis on solar power. Using solar home systems allows us to serve even the most remote places. To this end, the Mobisol project currently under implementation has a target of serving 49,000 households.

Combining on- and off-grid strategies will drive electrification like never before,” comments Mr Mugiraneza of Rwanda Energy Group.

The two largest independent power producers in Rwanda are Symbion Power and ContourGlobal, both American. The companies were attracted to Africa by former President Barack Obama’s ‘Power Africa’ initiative, says Mr Mugiraneza. “Investors know that there is no place for trade if there is no infrastructure. If the US, China and other countries are investing in our continent it is because they see an immense trading opportunity,” he adds.

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phases. There are also 80 megawatts to be added from the Rusumo HPP Project, a regional collaboration between Rwanda, Tanzania and Burundi. Rusizi III, a shared 147 megawatts power plant project between Rwanda, the DRC and Burundi is in the pipeline, and the Rwandan government is also working on a power sharing agreement with Ethiopia and Kenya. “We are committed to enhancing regional power trade to meet the demand, and our projections are showing that we will be successful,” says Mr Mugiraneza.

Moving forward

“African leaders understand that there is no way of industrializing the region without common sources of energy. To develop our industries, we must invest in energy sources and we must share our production. Power trade is also key for security and stability” Jean Bosco Mugiraneza, CEO, Rwanda Energy Group

ContourGlobal currently produces 26 megawatts at the KivuWatt plant in Lake Kivu. A second phase of this project will add 75 megawatts. A power purchasing agreement has been signed with Symbion Power, to develop methane gas production in Lake Kivu and Turkey’s Hakan has been contracted to construct a peat power plant with a production of 120 megawatts in two

Growth of this sort has a domino effect on a country’s construction industry and Rwanda is no exception. The government’s secondary cities program is aimed at providing a balance between the rural and urban poles, and meeting a demand for new housing in the capital that has reached 3,000 units per year.

UDL’s Ms Mupende comments, “We started Vision City in Kigali as one of our pioneer projects, but our interest is to start investing in these secondary cities as well. The next step will be to invest within the commercial area of the Muhanga district, as it is strategically placed as a city that helps us to extend out to neighbouring countries too. People crossing in through the southern border have to go through Muhanga, which has already started to attract regional investments in addition to national ones.”

She adds that this project, along with subsequent phases of Vision City, offer potential areas for investors to partner with UDL. Roko Construction’s Mr Claassen says his company is also actively seeking new partners as projects across the region ramp up: “Construction has grown over the years in East Africa, and the company has grown to the extent where we are turning over about 80, 90, or 100 million dollars at the moment, which allows us to tender only to specific projects. If a project comes out tomorrow worth 820 million dollars, we may not be financially able to get involved in building it, which is why we are looking at joint ventures and at partnerships, and even equity at the end of the day.”

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Transforming lives and the economy through

ICT

Rwanda is quickly expanding its 4G LTE network to reach some of the remotest areas, while Kigali, with its startup incubators and Innovation City, is becoming the tech hub of East Africa. The rapidly developing ICT landscape is vital to the Vision 2020 goal of becoming a middle-income, knowledge-based economy Cashless payment systems on buses, start-up incubators, an Innovawith more than 5,000 kilometres so far and continuing. In 2017, Rwantion City, a laptop manufacturing facility, and super-fast 4G LTE interda will have a 4G LTE network covering our target of 95 percent of the net access: these are just a few of the things you may encounter on a population,” explains Mr Nsengimana. tour around the Rwandan capital Kigali, now a thriving African hub “A number of countries have taken interest in what has been for innovation and technology. done until now in Rwanda. The private-public partnership strategy Rwanda’s steadfast economic growth has enabled it to build one used, combined with building one single wholesale network was the of the most exciting ICT landscapes in Africa. The ICT sector contribonly way to ensure both nationwide rollout and affordability for our utes 3 percent to GDP and, according to Jean Philbert Nsengimana, people.” the Minister of Youth and ICT, has enjoyed 25 percent average annual In July, ORN announced it would slash 4G prices by 30 percent, growth over the past three years, making it one of the most attracwhich would help to make the service accessible to a greater portion tive segments for foreign direct investment (FDI). A report released of the population. Meanwhile, U.S. company Vanu Inc. is working with in 2016 by the central bank estimates that, of the $458.7 million of the government to “extend coverage to the most remote areas of the FDI injected into the country in 2014, $116.1 million – or around 25 country, usually seen as not commercially viable,” according to the percent – was directed towards ICT. minister.

One of the largest foreign investors is Korea Telecom (KT), which Tigo is also bringing 4G to rural areas where there is limited to no in 2013 signed a deal with the government to invest $140 million in escoverage and wants to support the creation of “smart villages”. tablishing a 4G LTE broadband network that would eventually reach “The government promotes ICT, a sector in which we are a key 95 percent of the population. player. We will continue to invest in this market to improve our netMobile 4G LTE was launched in October 2015 by operator Tigo work,” says Mr Amoateng. “Today people are now connected to the Rwanda. In partnership with the banks and the government, Tigo has world in the most remote places.” used its 4G network as a springboard to launch new online payment “We recently partnered with various organizations and the govsystems, supporting the migration to a cashless society. ernment to create a smart village in Ruhunda, Rwamagana District by “We are expanding in areas that are not part of our core business, providing affordable WiFi for the entire village. The vast majority of such as banking. We also partnered with the government in order to Rwanda’s population lives outside big cities, mainly in villages. That is make it possible for inhabitants to pay their taxes through mobile dewhy we wish to develop not only the concept of smart cities, but also vices,” says CEO, Philip Amoateng. smart villages.”

“Our company is also steering towards Extending access to high-speed interthe agriculture sector through, for example, net is vital to the Vision 2020 development “We have invested in the Tigo Payment Solution for Agriculture. plan’s goal to become a middle-income, the densest fiber-optic Tea farmers in two districts are now paid their knowledge-based economy. So too is fosnational backbone salaries in 48 hours, compared to the 20 days tering innovation and startups; and already previous. In the long run, we want people to there are a number of facilities doing just on the continent, stop using physical money, as this costs the that. with more than 5,000 government a lot and is not as transparent as kLab was set up in 2012 as the country’s kilometers so far and digital solutions. We want to achieve a cashfirst tech incubator. Situated on the top floor less society.” of an office complex in Kigali, with its cofcontinuing. In 2017, Tigo’s competitor MTN Rwanda was fee shop and ‘foosball’ table, one could think Rwanda will have a 4G quick to follow suit, rolling out its 4G mobile they had stumbled into the office of any SiliLTE network covering broadband services in March, 2016. ORN, the con Valley startup. Here, Rwanda’s budding wholesale distributor established by KT, propool of young tech entrepreneurs are workour target of 95% of vides access to the network to both Tigo and ing on turning their ideas into viable prodthe population” MTN, as well as other operators. ucts and services.

“We have invested in the densest fibrekLab also host events, workshops and Jean Philbert Nsengimana, optic national backbone on the continent, networking sessions to promote collaboraMinister of Youth and ICT

The Worldfolio - Rwanda

Rwandan President Paul Kagame at the Transform Africa Summit tion, partnerships, investment and financing.

Some projects to be developed at the centre include an Android application for watching Rwanda TV and online inventory system software, which was sold to a number of Rwandan organizations.

Staff from M.I.T. helped to launch Rwanda’s first Digital Fabrication Lab (Fab Lab) in 2016. The Kigali Digital Fabrication Laboratory is part of a global community of over 1,000 fab labs in around 80 cities across the world, and gives members access to threedimensional modelling software and 3D printers. “Just like kLab helped to transform the ideas of emerging entrepreneurs into enterprises, Fab Lab will turn the ideas into usable products which can be produced in mass,” Dr Marie-Christine Gasingirwa, Director General for Science, Technology and Research at the Ministry of Education, told Rwandan daily newspaper, The New Times.

Fab Lab could eventually support the ‘Made in Rwanda’ initiative to manufacture more products and reduce the dependence on imports. This includes next-generation hi-tech products.

“The Internet of Things is coming, and billions of these devices will be needed here.

We either have to accept that these products will all be imported from out of Africa, or built here on African soil. We believe in that second option,” says ICT minister, Mr Nsengimana.

The ‘Made in Rwanda’ tag can already be found on the first domestically made laptops, thanks to Argentinian-Brazilian company Positivo BGH, which set up its 3,000-square-foot factory in Kigali in 2015 to

produce the devices. The Rwandan plant is the company’s first venture outside of South America as it bids to go global.

Aside from supplying the Rwandan government with 150,000 laptops each year, mainly for the education sector, Juan Ignition Ponelli, Positivo-BGH President in Africa, has said he wants to help increase the country’s exports by selling the ‘Made in Rwanda’ laptops to neighbouring countries in the East African region and beyond.

Kigali Innovation City Positivo-BGH could eventually be joined in Kigali by more high-tech manufacturers.

Last year, Rwanda Development Board announced its flagship project, Kigali Innovation City (KIC) – which aims to develop a dynamic ecosystem of technology clusters, where companies will innovate and deliver products and services for global markets.

The plan has been hailed as one of the key enablers to transform Rwanda into an economy driven by technology and innovation.

“KIC is inviting global technology multinationals that want to feel the pulse and innovate for the African continent, emerging markets and beyond,” says Mr Nsengimana.

“There is a limit to how much one can innovate for Africa based in Silicon Valley for instance. Most of the existing problems in Africa and corresponding solutions are usually not what the Western world think. KIC offers different platforms – talent development,

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business incubation, financing, etc. – towards the growth of a selected number of ICT clusters that have promise to transform lives in Africa. They include fintech, biotech, smart energy, big data, Internet of Things, cybersecurity, creative industries, amongst others.”

With an estimated cost of $1.9 billion, KIC will be built on the grounds of the Kigali Special Economic Zone, located 10 kilometres east of Kigali City’s business district.

The project plans reveal the Innovation City will comprise all elements of a typical urban centre including corporate buildings, retail, leisure and sports facilities, accommodation, health care centres and other amenities.

“Initiatives such as kLAB and the Kigali Innovation City will definitely benefit the whole country,” says Mario Safari Rugambwa, a young entrepreneur who is founder and CEO of Touch Media Design. “Rwanda has limited natural resources, but what we have is our people and our knowledge. We have to use our knowledge in ICT to develop our people and our country.”

Mr Rugambwa, a programmer and IT graduate of the Adventist University of Central Africa, set up Touch Media five years ago, after having spotted a gap in the market.

“Five years ago, while I was in university studying information technology, I saw the printing business was very poor, both in quality and quantity. So, when people wanted to print they would go to Kenya, Uganda, Dubai and so on. I saw there was an opportunity and I decided to venture into it and I started Touch Media Design. At the beginning, it was though, but here we are today.”

Since its inception, Touch Media has grown to offers its clients – the largest of which is the Rwandan government – a range of design, printing, advertising and ICT services, and is now looking to expand its successful business model throughout Africa.

“We are now thinking of opening different branches in Angola, Burundi, Kenya, DRC and Uganda,” adds Mr. Rugambwa. “I have travelled through the region and saw I can replicate what we do in Rwanda in other markets. Right now, we are focused in Angola; there, I saw, are a lot of opportunities.

By 2020, I would like to have a presence in at least 10 African countries.”

The young CEO names Rwandan President Paul Kagame as his role model. But there is no doubt that President Kagame himself would hope that ambitious and successful entrepreneurs like Mr Rugambwa will serve as strong role models for the bright young Rwandans developing their ideas in places like kLab, Fab Lab and across the nation.

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Proudly Servicing rwanda and the region Established

in

2012,

Energy

Resources

Some of its products are retailed through

ERP’s tank farm, located near Kigali, has a

Petroleum (ERP) Limited is a Rwanda-registered

its wholly owned subsidiary Excel Energy

combined capacity of 10 million liters and it

oil trading company and a major supplier of

Resources Trading Limited. Its other subsidiary,

operates a total of 80 operational trucks, of

white and black products, such as Premium

Energy Resources Power Limited, is a Rwandan

which 10 trucks are ERP-owned. ERP currently

Motor Spirit (PMS), Automotive Gas Oil (AGO),

indigenous power utility company with a target

operates four retail service stations in Kigali,

Heavy Fuel Oil (HFO) and Light Fuel Oil (LFO), to

of becoming the country’s premier provider of

Rusizi, Rwagitima, Nyamata and Kayove, with

the Rwandan market and across Central Africa.

electricity solutions.

plans to open more.

www.erpetroleum.com

The Worldfolio - Rwanda

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RWANDA Rwanda’s current investment climate comes under the scrutiny of Bank of Kigali’s CEO, Dr Diane Ngendo Karusisi, who points out that foreign investors coming in is the fastest way for the country to grow its economy and realise its development ambitions. The head of the largest commercial bank in Rwanda also highlights the importance of supporting the nation’s SMEs, its relations with the US, and how the international community should view the country today

growth through resilience, commitment and innovation

We are experiencing rising momentum in Africa as many investors are looking at opportunities on the continent. What would you say is attracting the attention of global investors?

I think the demographics of Africa, with such a large and young population, makes it attractive to investors, as Africa is potentially a very big consumer market. We have young people who are more educated, more connected to the world, and more technology savvy; this provides a significant workforce that is ready to produce and add value, hence an extra incentive for investors.

It is the youngest continent in the world and it is projected to boast the largest labor force globally. What are the challenges and how should they be addressed?

The main challenge might be education; we want to make these young people productive so we need to invest in an education system that actually empowers them. The traditional education model is very expensive, but today with these IT solutions we can have schools and universities connected and people getting knowledge in a very effective and efficient way.

A crucial priority for the continent is regional integration. The largest untapped market for Africa and its biggest opportunity is right on its doorstep. What are Rwanda’s efforts in order to increase the muchneeded regional integration?

For investors, considering Africa as one single market is more attractive than looking at individual countries. Africans today understand that opportunities are first with our neighbours. We know that intra-Africa trade is the lowest when compared to other regional blocks – it averages 16 percent, while it stands at 70 percent in Europe and 50 percent in Asia.

We need to reduce barriers. This is what we are doing in the East African Community; we are developing an integrated market of more than 150 million people. Investors that setup shop in Rwanda gain access to the Tanzanian market or the Ugandan market and more. Also, Rwanda recently re-joined ECCAS, the Economic Community of Central African States. We want to be the hub for people coming from the East to the West of Africa. We want to connect these two parts of the world, the Anglophone Africa and the Francophone Africa. Being bilingual and being in the centre of Africa, we believe we can achieve that mission to connect both parts of Africa and trade more amongst those African countries.

Bank of Kigali’s CEO, Dr Diane Ngendo Karusisi

How would you describe Rwanda’s current investment climate?

In the financial sector, doing business has been significantly facilitated. For example, the land information system in Rwanda is fully automated with a unique identifier for every parcel of land in the country. As a result, land registration and transfer is done online in a simple and efficient way. This has significantly facilitated the mortgage market as banks can easily mortgage properties and provide long-term financing for owners. Also, commercial courts introduced in 2008 have hugely supported businesses in reducing uncertainty and improving predictability. Commercial cases and disputes are now settled efficiently and fairly quickly, and the business community appreciates this.

How would you describe Rwanda’s finance sector?

Financial services are indeed crucial to any economy. Growth and development happen when entrepreneurs and private companies innovate, produce and add value, and create jobs. The government’s role is to facilitate by establishing an enabling environment for business. Financial services can be considered as the lifeblood for business, as entrepreneurs need financing to develop projects, produce, process food, create jobs, etc. A well-functioning financial industry is always required to efficiently channel savings to investments and hence fuel development.

In Rwanda, the financial industry is still fairly small, with a nascent capital market, and the banking industry well capitalized but unable to provide sufficient financing for development. Rwanda wants to have a big airport, and a railway connecting the country to the region’s major ports, but we cannot rely only on Rwandans’ sav-

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ings. This is where foreign investors come in because this is the fastest way for us to grow our economy and to reach our ambitions. As such, the local private sector is willing to partner with foreign investors to leverage our local business knowledge and further support growth.

comes climate resilient, especially as agriculture remains the backbone of our economy. For instance, we have recently partnered with a local conservation association to plant over 150,000 trees over the next three years in one of the districts of Rwanda.

Bank of Kigali is the first Rwandan company and bank to be rated by a credit rating agency, but it exceeds the Rwandan market as it has been named best East African Bank for several years, amongst other awards.

What are the strategic pillars on which your approach is based to excel at the regional level?

Human resource development is also a focal point of your strategy, and as you recently said you will continue investing in your people. Having well over 1,000 employees, how are you helping them to develop their capabilities?

Bank of Kigali is the largest commercial bank in Rwanda, and one of the few local companies that are listed on the Rwandan Stock Exchange. Obtaining a rating is helpful mainly for our international investors, who require this kind of information to make their investment decisions.

Today, the bank’s market remains Rwanda, financing businesses and people in Rwanda. We believe that excelling in our home market is a prerequisite to doing well in the region and beyond. Our strategy is simple; it is to remain open and flexible, because this is what business people want. We want to be at the forefront of innovation and always provide the best banking products in the market.

We are constantly improving our IT systems to make sure we serve our customers in a safe and efficient manner. We are committed to this country and to Rwandans, which is why the bank is investing in systems and expanding its branch network to support financial inclusion efforts.

You just mentioned another important topic, financial inclusion. How is Bank of Kigali working to enhance financial inclusion?

Technology is a key ingredient for banks and other service providers as it allows us to reach people in areas that are otherwise physically hard to reach. In addition, we have partnerships in the pipeline with various telecommunication companies to enable people to open a bank account with their mobile phone and access a number of money services from their mobile phones. We are investing in technology to stay close to our people.

Speaking about commitment to the country, SMEs account for almost 20 percent of your key segments. What are the services you offer Rwanda’s SMEs? We have a wide range of products and services that we offer them, including investment loans, working capital, stock loans and trade finance. We also provide support with professional advice and financial literacy, in particular in the micro and SME sector. We want to walk our customers through from being micro enterprises to larger companies. It gives us a lot of pride when we see small businessmen and women grow and support their communities. It shows us that we are doing the right thing, transforming people’s lives financially.

We know you support many social projects in different sectors such as education and environmental conservation. What would you say is the responsibility of big companies, big brands such as Bank of Kigali, towards its communities?

We want to show our communities that we are not only in business; we are also working to promote the communities in which we work.

We know that when communities are not doing well, the bank cannot strive. We have a number of projects in education, support for vulnerable households, and environmental conservation.

Regarding climate change, we believe that every person and business has a role to play. We want to make sure our country be-

Banking is a people-to-people service, so getting and retaining talent is key. We have a number of training programs that our members of staff undergo because we want them to grow as people, professionals and future leaders. We make them work in different areas to give them greater knowledge of the bank. We put a lot of emphasis on customer service, responsiveness and professionalism.

What is your assessment of the relations between Rwanda and the US and how could they be enhanced also?

From where I sit, I believe commercial relations between Rwanda and the US are good. We have seen American investors in Rwanda involved in projects that are critical to its development, including power generation and others. Rwanda offers a very good investment environment with zero tolerance towards corruption as well as a very good quality of life in Rwanda with security and safety. One way to enhance Rwanda-US relationships is to enhance the information flow between the two countries.

“Resilience, commitment and innovation; some 22 years ago, Rwanda was a shattered country known for death, extreme poverty and despair. Today, Rwanda is a thriving nation, and this is a testimony to what people can achieve together, with commitment”

Prior to joining Bank of Kigali, you were the Head of Strategy and Policy and Chief Economist at the Office of the President. What has been the biggest challenge you had to face?

As anyone would expect, serving a Head of State is very demanding as it requires you to remain well informed and focused to be able to continuously provide critical analysis almost in real time to support the President’s decision making. Our President is a visionary and forward-looking leader who always thinks of what’s next, and what can be done better to improve the livelihoods of Rwandans.

The team supporting him is always required to be educated on new trends, and get reliable information to assess the implementation of government programs and policies – this was very challenging but also instructive and fulfilling.

Which concepts would you like people in the international community to associate Rwanda with?

Resilience, commitment and innovation; some 22 years ago, Rwanda was a shattered country known for death, extreme poverty and despair. Today, Rwanda is a thriving nation, and this is a testimony to what people can achieve together, with commitment.

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Transparency, good governance, ICT and infrastructure drawing in FDI Rwanda’s big push for regional integration and its investment in infrastructure to facilitate doing business both domestically and with its close neighbours is increasingly attracting the attentions of international investors. Minister of Trade and Industry François Kanimba discusses the country’s aims to become the regional centre of choice for conferences, communications, industry and trade through its physical infrastructure and ease of doing business Africa is becoming a growing investment destination for both advanced and emerging economies. Would you please discuss this prominence the continent is gaining in the international arena, especially attracting those investments?

During the last 10-15 years, there have been a lot of reforms on the continent to streamline the economic management framework.

This is recognized and I think there has been a kind of global coalition to support reforms in Africa. Global financial institutions like the International Monetary Fund, the World Bank, big regional development financial institutions like ADB, and the key bilateral development partners, really came together to influence economic reforms and sector policies. I think in most African countries a number of macro-economic policy management frameworks are good and this has significantly impacted on the perception of Africa as far as foreign direct investment (FDI) is concerned. That is the reason why now you start to hear that Africa is the next frontier.

At the same time, there are some realities we have to recognize too. Africa has a very young population that is growing fast, while developed countries have an ageing population. People talk about the potential of the demographic dividend in Africa. Secondly, when you look at what has been driving global economic growth in the last two decades, it was in part the Chinese economy with other emerging countries in South Asia. Now there is a change, particularly in China where the economic growth has significantly slowed down. Even the competitiveness of the Chinese economy is coming

François Kanimba, Minister of Trade and Industry down due to the fact that wages have significantly increased and global investment, which has been converging in China in the last two decades, doesn’t see China as that attractive and is now looking to alternatives.

Today Africa is seen as a very strong alternative to attract potential FDI, which is looking for opportunities. I think from that perspective, Africa is now really in a position to receive increasing FDI.

Regional integration and industrialization are among Africa’s key priorities, and Rwanda is no stranger to it. Africa’s largest untapped market and its biggest opportunities are right on its doorstep. Please discuss Rwanda’s regional integration efforts regarding infrastructure.

As we are a landlocked country, we are working with our regional partners to develop regional infrastructure that will be

a game changer, for example developing railways, which we think are key. That is the reason why Rwanda has been actually pushing some of our partners in the Northern Corridor to establish this Northern Corridor project, which brings together Kenya, Uganda, Rwanda and later on South Sudan.

The whole focus so far has been to develop infrastructure. We will develop the railway from Mombasa up to Kigali via Kampala. We are also working on the Central Corridor with Tanzania, to develop the railway from Dar Es Salaam to Kigali. For Rwanda, these are very high priority projects. They are very costly, but when you look at how this infrastructure is going to affect the competitiveness of the Rwandan economy, there is no doubt Rwanda is ready to invest, as long as our partners in the region are also ready to take part of this regional investment.

The Government of Rwanda is well aware that the private sector is the engine of growth.

What are the tangible efforts in order to enhance the ease of doing business and how would you describe the business environment in Rwanda?

Rwanda is recognized as a very strong performer as far as the doing business reform is concerned. Our main focus has been on governance structures. Since the end of the 1995 genocide when the new government came to power, it has clarified its economic policy management framework. The first thing that was really done and has significantly impacted on the economic trend we have seen in this country is a recognition of

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the important role of the private sector to drive the growth, while at the same time building a capable State that can regulate the economy without creating any bottlenecks in the private sector and developing values for partnerships between the private sector and the government.

That is why the Government of Rwanda has disengaged from all the big public enterprises that were established after the country got independence in ‘62. Now these companies are in the hands of the private sector: sectors like the tea or coffee industries, big infrastructure, telecommunications and even the financial sector. The government has privatized most of the banks where it used to be the main shareholder, attracting foreign direct investment into the banking system, but at the same time the government has established a very strong regulator.

When you see how the Central Bank has been strengthened in the last 15 years, it has significantly contributed to stabilizing the financial sector in the country and has attracted investment.

On the corruption front, the Government of Rwanda has stated zero tolerance towards corruption since the year 2000, and this is not only a statement. Many Rwandans can confirm that Rwanda walked the talk when it comes to fighting corruption. This goes from high-level officials, to middle posts all the way down to the lower levels of public service. When you speak to foreign direct investors who came to Rwanda, one of the things that attracted them is the low level of corruption compared to other countries in the region. That is something that I think is part of the strength of Rwanda.

I want to mention two other things apart from establishing a robust governance system that has created a friendly environment for private people to operate. There are some key enabling sectors in which the government has invested heavily. The first one is ICT. Rwanda is among the few countries in Africa that have deployed broadband infrastructure covering the whole country, where all the administrative sectors are connected by fibre optics. We are among the few African countries that have high-speed internet. I think this has significantly contributed to shaping this very nice business environment for the private sector.

There are other sectors in which we have been investing significantly to achieve our Vision 2020, our long-term vision to transform Rwanda into a regional trade and communications hub. We are landlocked but we would like in the long run to be land-linked. This ICT strategy is part of it.

Since we are in the ICT capital of Africa I would like to ask you a question regarding innovation. Steve Jobs once said that innovation is what distinguishes a leader from the followers. What is the key innovation that you are proudest of?

My key innovation in this ministry has been to set up a program to support small and medium enterprises (SMEs). That is really my key priority and focus. Another innovation I am proud of is our clear Trade Logistics Development Strategy, which was developed in the last three years. As we want to develop Kigali as a regional trade hub, we have to work on cutting down the cost of trading across borders. We have a clear strategy, a clear vision. That is how I can define my own contribution since I was appointed as Minister of Trade and Industry.

How is Rwanda planning to enhance industry’s contribution to GDP? Economic growth in Rwanda has been mainly driven by services

and some improvements in agricultural productivity. The growth of the manufacturing sector is still very low: it only contributes around 14 percent to our GDP. Our second Economic Development and Poverty Reduction Strategy – EDPRS 2 – and the Vision 2020 have been targeting a 20 percent contribution to the GDP, but it has been a challenge to grow the share of the industrial sector in the total GDP. This means something more needs to be done to attract more investment into the industrial sector.

One of the key strategies is to make sure we facilitate manufacturers’ easy access to fully serviced land at an affordable cost. That is why we are developing a very ambitious industrial parks program, which supplements the on-going Kigali Special Economic Zone. With these industrial parks, we are looking to enable investors to access land at very affordable costs, about $10 per square meter.

Apart from the Kigali Special Economic Zone, we have started to develop the second biggest industrial park in Bugesera.

Bugesera is just a 40-minute drive from Kigali and is closer to where the new international airport will be developed. This new international airport is also part of our vision to make Rwanda a regional conference centre and a regional communications hub.

It is a big project in the pipeline; after the Kigali Convention Centre, it’s going to be the next big investment by the government. It will mobilise private investors to develop it in publicprivate partnership (PPP). So, close to this international airport we will develop the second biggest industrial park, 330 hectares.

We see more and more private investors approaching us to develop this PPP; they see a lot of potential to attract investors in the manufacturing sector. We hope this will contribute to our industrialization.

In terms of specific areas, we are focusing on the textile and garment industry. It has huge potential to create employment and to diversify our export base. But, like in any other developing country, the textile industry has been hampered by the large dominance of second-hand clothes imported from developed countries. That is why the heads of states in the East African Community have decided to ban imports of second-hand clothes in the next three years, and Rwanda’s government has decided to speed up the implementation of this policy.

We have started already to increase taxes on second-hand clothes to create room for the domestic industry to kick off, and we are providing special incentives for investors who are investing in the garment and textile industry. This is going to be critical in terms of how the industrial sector will grow in Rwanda in the next five years. We see a lot of interest; we have already seen some Chinese companies coming to Rwanda to invest in textile and garment factories, and not only for the domestic market but also for exports as they can take advantage of some market preferences to export to the US through the renewed AGOA or to Europe through the ‘Everything but Arms’ initiative. We have also recently concluded negotiations of the economic partnership between the EAC and Europe, which will also enhance our quotafree, duty-free market access, etc. to a big region like this one.

What would you say are the competitive advantages of Rwanda?

Competitiveness is a complex thing; it depends on a lot of factors.

Every country may have its competitive advantages and its competitive disadvantages. In Rwanda, some of the investors tell us “we prefer to come to Rwanda due to your good governance, your openness and your flexibility in economic policy management.”

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BUE

produces UK-standard graduates to enter key sectors of the Egyptian economy Aside from offering its students a top-class UK-accredited education, the British University in Egypt fosters a culture of innovation and entrepreneurship and encourages freedom of thought across its nine faculties, producing highly skilled graduates that will play a key role in Egypt’s economic development As Egypt looks to produce high-calibre graduates to take up the skilled jobs that will be needed to drive its economy forward, the UK is offering its support to Egyptian universities, both private and public, to develop the highest standards of research, innovation and education.

Last year marked the beginning of this new comprehensive partnership between the UK and Egyptian higher education institutions. In February 2016, ten British universities signed partnership agreements which aim to create dual degrees, research collaboration, student and staff exchanges and curriculum development.

Some of the UK institutions involved in this program include: University College London, which will partner with Giza University; King’s College London, which will collaborate with the faculty of medicine at Cairo University; and Cardiff Metropolitan University, which formed a partnership with the Arab Academy for Science, Technology and Maritime Transport.

The UK’s work on higher education reform in Egypt is just part of its wide-ranging effort to support young Egyptians with education and skills.

Since 2010, the British Council has helped more than 75,000 Egyptians learn English or gain internationally-renowned UK qualifications.

British Ambassador to Egypt John Casson has said that the UK is uniquely placed to provide experience and expertise as Egyptian partners seek to build a more modern, independent, and inter-

The key to BUE’s success has been its alliances with UK institutions, which have enabled it to offer the highest educational standards to its students

national higher education system that serves the three million young Egyptians studying now and will serve many generations to come.

A British-style education is a very attractive option for young Egyptians that hold the UK system in high esteem, which is why the British University in Egypt (BUE) in Cairo is a popular choice for those seeking UK-accredited degrees.

Following the signing of a Memorandum of Cooperation between the UK and the Egyptian governments in 1998, BUE was established as a private institution in 2006 with the aim to produce graduates of UK standards to enter key sectors of the Egyptian economy, particularly in the areas of engineering, computer science and business studies.

BUE has almost 5,000 students spread out across its nine faculties – Engineering, Informatics and Computer Science; Business Administration; Economics and Political Science; Pharmacy; Dentistry; Law; Arts and Humanities; Communication and Mass Media; and Nursing – and has strong partnerships with three prestigious UK universities, Loughborough University, London South Bank University and Queen Mary University.

“We are the sole Egyptian university which bestows two certificates to graduates: one from the Egyptian authorities, and the second by our British partner, for both undergraduate and post-graduate degrees,” says Prof Ahmed Hamad, President of BUE. The key to BUE’s success has been its alliances with UK institutions, which have enabled it to offer the highest educational standards to its students.

“We started with Loughborough University. We learned much from them on how to arrange the classes in the right way. It was not an easy task, but together we surmounted many obstacles. It has required much work and devotion from our team here,” explains Prof Hamad.

“Early on, we modelled our professional excellence on the standards for the British Quality Assurance Agency for Higher Education. We achieved this certification from the QAA, which was a meticulous task to meet all criteria, however I am happy to say that we did

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Prof Ahmed Hamad, President of BUE it. The QAA was later used nationwide here in Egypt for educational standards of excellence, so I am very proud that we were the pioneers in adopting these standards.”

Prof Hamad sees BUE as playing a key role in Egypt’s economic development over the coming years; and admits that its graduates’ professional performance will be reflective of the university’s academic performance.

“What we are keen to build on is the reputation not only of the university itself, but on the profile of the graduate,” he adds. “BUE is a new player in this feel, but yes, this process will take years. However, I will say that I am very proud that many banks here in Egypt have told me already that BUE graduates are some of their most promising new employees.”

Tackling youth unemployment is one of the greatest challenges for the Egyptian government. And while institutions like the BUE will continue to churn out top-class students for the country’s banks, as well as construction, IT and engineering firms, the truth is that there

are just not enough jobs to accommodate all of the graduates currently entering the Egyptian workplace.

This is why it is also important to not only equip students with employable skills, but also to foster a culture of innovation and entrepreneurship in thirdlevel institutions like BUE. Doing so means that some graduates will have the capacity to set up their own businesses, becoming job creators themselves and supporting the development of a thriving SME sector, the backbone of any successful economy.

“I myself believe in the power of the student. We try to disseminate the philosophy of entrepreneurship and innovation,” says Prof Hamad. “This is the key issue for developing Egypt. It will not depend on the government; it will depend on our young people. We have very positive stories from our young graduates going into business, and some of them even starting their own. Across all disciplines in our university, we seek to instil these values.”

Under his tenure, Prof Hamad also encourages freedom of thought and

creativity across campus, which is perhaps something not traditionally encouraged in this part of the world.

“Freedom of thinking is also a critical theme of my leadership here. Freedom of thinking not belonging to any particular ideology; but prioritizing creativity. I got my PhD in France, and I see how I was able to benefit from having been exposed to the world and learning in a different society.”

Going forward, BUE will continue to invest in improving standards across its nine faculties. Prof. Hamad says that in its 10-year history, no dividends have been paid to shareholders. But these patient investors have bought into the BUE’s quest for excellence and are happy to see all profits made invested back into the university.

“The money we’ve made has all been invested to produce excellence,” he says. “Despite having yet to receive any returns on their investments, shareholders are satisfied with the progress and reputation of BUE, and we have maintained a positive relationship because they understand our drive to grow.”

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Tough decisions get Egypt back on track The new reform program seeks to revive Egypt’s growth prospects by restoring stability and confidence in the economy, and implementing structural reforms that will create jobs In spite of the many great challenges that Egypt continues to face as a nation following an extremely tumultuous recent period in terms of security and economic issues, 2016 turned out be another breakthrough year on certain fronts.

If 2015 was marked by the momentous Egypt Economic Development Conference – a bold statement to the world that the country was back on its feet again and open to business (investment deals worth a total of $130 billion were signed at the landmark event), 2016 was characterized by the implementation of the boldest reform plan seen in Egypt since the 1980s; reforms that persuaded the IMF to agree to a long-delayed $12 billion loan program over three years, intended to restore public finances and refresh the interest of foreign investors.

The new reform program seeks to revive Egypt’s growth prospects by restoring stability and confidence in the economy, and implementing structural reforms that will create jobs. As noted by IMF Managing Director Christine Lagarde on announcing the measures that successive loan, “the program is by the governments had postpo“God will also judge and so will Egyptian government, for ned, such as imposing a the Egyptian people, and value-added tax, capping history. All the difficult decito help the Egyptian ecopublic sector salary increasions that many hesitated to nomy.” ses, cutting fuel subsidies, Egyptian President Aband allowing the Egyptian take over many years, that they del Fattah el-Sisi has enpound to float so its value were afraid to take, I will not sured that he is committed halved against the dollar. to pushing through the reWhile the immediate impact hesitate to take for one second” forms necessary to turn the of these actions has been a economy around, seemingly spike in inflation, Mr. el-Sisi Abdel Fattah el-Sisi, President of Egypt undeterred that one of major has sought to help the poofacets of the plan is the slasrest segments of society with hing of subsidies, a potentiacash handouts and a governlly politically troublesome isment-funded food program. sue that previous administrations have thought best to avoid.

As a positive consequence of the measures in the short“It is not only you who will judge me,” said President elterm, the Egyptian finance ministry is aiming for an econoSisi addressing the nation on the reforms. “God will also judge mic growth rate of 5% in the next financial year, according and so will history. All the difficult decisions that many hesito its 2017/18 budget (up from 4.3% in 2016). The ministry tated to take over many years, that they were afraid to take, I also hopes to reduce the budget deficit to 9.5% of GDP, and will not hesitate to take for one second.” the total public debt to 94%, while targeting an unemployAnd President el-Sisi hasn’t gone back on his word. Just ment rate of 11%, down from the current 12.6%. With fursince October 2016 the government has implemented tough ther sound implementation of the reform program, growth

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could rebound to 6% by 2021 – similar to the levels in 20052010 – according to the IMF. In terms of long-term economic strategy, then there is Egypt’s Vision 2030 too, of which the final draft was also outlined during 2016 by President el-Sisi. The government’s sustainable development plan for the next decade and a half aims to raise GDP growth to 12% by 2030 and expand the contribution of the private sector to 75% of GDP up from 60%. Additionally, the unemployment rate is targeted at 5% in 2030 (down from 12.8% in 2015), while the population poverty rate should fall to 15% (down from 26.3%).

On unveiling these ambitious plans, President el-Sisi pointed to the developmental progress already made by his government over the previous 24 months, including the 5,000-kilometer national road network currently under construction, the state’s success in addressing its power shortage problem (new power added to Egypt’s national grid by the end of 2017 will amount to half of the country’s total generating capacity), as well as the fulfilment of the New Suez Canal project.

The Vision 2030 program, which aims to revive Egypt’s leading role in the Arab world, is not just a purely economic strategy however. Aside from sustainable economic development, the program aims to turn Egypt into a fairer, more interdependent sothe nature of the Egyptian people.” ciety, characterized by equal economic, Mohamed S. Younes, Chairman of one social, and political rights. of the leading fund managers of Egyptian “We are a nation Whether Egypt can achieve such securities, Concord International Investhat has devellofty ambitions remains to be seen over tments, agrees. “We are a nation that has the coming decade or so. But one thing developed a survivor culture,” he says. oped a survivor that is for certain is the immense poten“We’re the only country that has nowadays culture. We’re tial the country holds. It has a dynamic almost the same borders we used to have and young population, a large market 5,000 years ago. That’s got to tell you sothe only country size, a favorable geographic location, mething.” that has nowadays as well as access to important foreign Mr. Younes particularly believes that markets, while the opening of the pathe key to the nation’s future success lies almost the same rallel Suez Canal, large investments in with its large youth population. “We’re a borders we used the energy sector, and the discovery of country with 90 million people; and this a major gas fields also bode well for is growing at a fantastic rate,” he stresses. to have 5,000 years Egypt’s development.

“Twenty-seven percent of the population ago. That’s got to Despite the many internal and exis under the age of 30, which is such a ternal challenges affecting the country, tremendous resource. Embracing this the tell you someyou can always count on Egyptians to right way and taking advantage of it is the thing” show remarkable grit and determigreatest challenge.” nation too, affirms Osama Bishai, the The New York-based Con has seen Mohamed S. Younes, Chief Executive Officer of one of the first-hand the interest of U.S. investors in Chairman, Concord Middle East’s leading construction and the Egyptian market.

International engineering firms, Orascom Construc“In the last year, Concord generated Investments tion. two billion dollars by selling [Egyptian “Egypt has always been a country companies] Amon and Bisco Misr, which where growth expansion and achievewere both sold to U.S. investors. It’s a ments are made by real hard work,” he matter of timing, investors are prepared says. “We never had sudden influxes of wealthy oil discoveto come to the market. ries. It’s all done through hard work, focusing on markets and “We will keep buying the companies and offering them, creating value. that’s what we do. We are interested in managing money. We “Egypt also represents a huge consuming market of cuwant to be the best at what we do, which is investment marrently 90 million people. And you can see that over the years, nagement, and we want to do this by being completely focuwhen its people and organizations went through tough times, sed. So, we’re not jumping and venturing into buying banks or they’ve weathered through and sustained their existence. It is brokers, we’re not interested in the headlines.”

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Egyptian construction industry ‘most prosperous’ in MENA region HSBC has named Egypt’s construction industry, which is predicted to grow by more than 8 percent annually, the most prosperous the Middle East and North Africa Egypt’s development aspirations in the run up to 2030 will depend heavily on the nation’s builders. Building a sustainable and diversified economy and a better future for the Egyptian people, as envisaged in the Vision 2030 plan, requires building new roads, power plants, schools, affordable housing and even entire new cities.

Since President Abdel Fattah el-Sisi came to power in 2014, a large number of construction mega projects have been launched, attracting billions of dollars of investment from abroad. One of the country’s flagship projects entails building a brandnew capital city 28 miles east of Cairo. In October, the Chinese state-owned China Fortune Land Development Company signed a deal to provide $20 billion of the total $45 billion needed for phase one of the project, which commenced in February 2016.

In January, U.S. investors traveled to Egypt to look at opportunities at another grand venture of the el-Sisi administration – the New Suez Canal Economic Zone (SEZ), an enormous project which aims to transform the land around the newly expanded Suez Canal – an important global shipping waterway connecting the Red Sea and Mediterranean Sea – into a transport, logistics and manufacturing hub.

Megadevelopments such as the SEZ and the new capital city, as well as a number of other large-scale housing, transport and power projects, are why Egypt’s construction industry has been named the “most prosperous” in the Middle East and North Africa (MENA) by HSBC in a regional construction report released in January. Another report

by Timetric released last August predicts that the Egyptian construction sector will

experience average annual growth of 8.24% between 2016 and 2020. “The growing number of public-private partnership (PPP) projects and the increasing pace of foreign investment will also drive industry growth over the forecast period,” the report stated.

Also driving growth is Orascom Construction. The largest construction company in Egypt, Orascom has a diversified project portfolio, and is heavily invested in the power sector, supporting the nation’s rapidly growing demand for electricity. In January, it was announced that Orascom will form part of a consortium to develop the Assiut and West Damietta combined-cycle power plants, costing a combined $650 million.

Orascom is also involved in the $8 billion New Capital power plant project, which will have a generation capacity of 4,800 megawatts once completed.

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‘We have to change this mindset as private sector investment is key for Egypt’s growth’ Orascom Construction is a leading Egyptian developer, whose project portfolio spans the globe.

In this interview with The Worldfolio, CEO Osama Bishai discusses Egypt’s fast-growing construction sector, changing the mindset towards private investment in the country, and developing human resources for the nation’s sustainable growth Regarding Egypt’s capacity to get back on its feet despite both internal and external challenges affecting the country, its people are seen as key here. Where do the Egyptian people get this resiliency from?

First of all, Egypt has always been a country where growth expansion and achievements are done by real hard work. We never had sudden influxes of wealthy oil discoveries.

It’s all done through hard work, focusing on markets, creating value. Egypt also represents a huge consuming market of currently 90 million people. And you can realize that over the years its people and organizations went through tough times, but weathered through and sustained their existence. It is the nature of the Egyptian people.

The construction sector in Egypt is growing now at a rate of 8 percent, which is in line with the big infrastructure needs that the country has.

Nevertheless, there has been some problems with implementation of some infrastructure projects in the past year. Could you describe what the current challenges are in Egypt’s infrastructure development?

There are many. Number one is availability of funds. There are not enough funds for all projects. Second is how to prioritize the needs of infrastructure projects. The third challenge is how to create attraction for the segments of infrastructure. If I take for instance power generation, which is doing successfully, the government understood

“The positive impact of our projects makes us proud.

Nobody remembers that we’ve done that but for us it is extremely satisfactory to realize that we’ve improved the quality of life of people in the places we’ve worked. Leaving a print wherever we go and contributing to community development while doing good business is great for us”

Osama Bishai, CEO of Orascom Construction that in order to drive the growth in power availability and resolve the power problem in Egypt, they needed to be able to promote Egypt as the center of attraction for the major manufacturers. They closed one deal after another to generate this climate that attracted investors and manufacturers. So, I think the challenge here is on how to replicate this in all the other segments of infrastructure development.

Finally, one important challenge for us is the mindset. We need to erase the notion that the government will do everything on its own, because they can’t. They must acknowledge that private sector investment, whether it’s local or international, or a combination of both, is the best way to complement the government plans. We have to change this mindset as private sector investment is key for Egypt’s growth. This is probably the core issue to solve.

In the big context of you having the credibility and track record to attract, for example, $1 billion of investment from an investment group led by Bill Gates, or Goldman Sachs, what are you doing to improve investor’s confidence in your stock?

That’s a very difficult question because unfortunately we are bound by the number one, the market sentiment for Egypt. There’s a big

issue about convertibility, about being able to repatriate your dollars, so let’s say there’s a cloud there. We are also unfortunately being limited by the perception of the construction business, because there has been a lot of bad results generated by some of our peers in the region. Basically, what we would like to do and our plan is that hopefully this year we will not have any surprises like what we had in Iowa last year. That I think is our first step to regain confidence because they need to be confident in our business.

The second is that we would like to push very hard on several local opportunities as we start to invest in certain equities like our business model. Whether they’re infrastructure opportunities or something else, the idea is to drive the confidence that our model is exactly what we’re trying to do. For us, this year I think the best thing to do is focus on making sure we deliver high quality and it should be done. Investment in equities are long term, not short. We would actually like to see steady firm growth as you grow the share value.

In the context of iconic buildings and of all these projects that you are involved in, we have to talk about the Grand Egyptian Museum, which will open in 2018.

The Worldfolio - Kenya Egyptian history is the only one with its own science: Egyptology. There is a huge number of people that will look at the museum as a new target. The museum will just simply unleash a demand that was not there. This is one thing. The second is that even tourists who have already come to Egypt, who have been to the other Egyptian museums, will come again as they’ll be thrilled to explore this whole set up under a completely new and different atmosphere. The best tourists are the people who repeat the visit because they find more reasons to. There is a lot of potential around the opening of the Museum. We could announce that 2018 is the year of the museum and there will be a big promotion campaign around it. Egyptians need to make a great deal from it by generating attraction. It’s a major opportunity.

What do you believe is needed to make Egypt’s growth sustainable?

First of all, the change of mindset that we discussed before. The other key factor is investing in people. Because I believe the only way we can sustain value creation and growth is through having the best human capital. We have a major challenge here.

We need to realize that Egypt is beyond our borders. And by this, I mean the number of Egyptians abroad that are top professionals in their sectors that we’re missing here.

Successful and well prepared Egyptians are finding their ways elsewhere in the world, but not in their own country.

We need to develop our human capital.

Think about it, we are 90 million people.

If we manage to create a top-notch 10 million, we could achieve major things in less time… become more competitive.

It’s common sense. There’s all the potential. We just have to invest more in them.

The game of sustainability is people. And let me tell you, the reason why we are successful as a company is because we have top quality professionals.

Finally, what is your opinion on the role Orascom has played in Egypt’s development?

We’re extremely proud of what we have done here and what we can still do. Actually, we feel better because we’ve done things also that are not just showy. We’ve done things of real value to the to the society. Not only in Egypt. In fact, we’ve built the desalination plant for Algeria, for the capital. Basically, since 2008 or 2009, every drop of water in the Algerian

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“There is a huge number of people that will look at the museum as a new target.

The museum will just simply unleash a demand that was not there. This is one thing.

The second is that even tourists who have already come to Egypt, who have been to the other Egyptian museums, will come again as they’ll be thrilled to explore this whole set up under a completely new and different atmosphere”

capital is being done through the plant that we built. So, the positive impact of our projects makes us proud. Nobody remembers that we’ve done that but for us it is extremely satisfactory to realize that we’ve improved the quality of life of people in the places we’ve worked. Leaving a print wherever we go and contributing to community development while doing good business is great for us.

The new Grand Egyptian Museum, which will open in 2018

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The Worldfolio - Sierra Leone

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‘Electricity is everybody’s business’ Henry O. Macauley, Sierra Leone’s Minister of Energy, sits down with The Worldfolio to discuss plans to increase power supply in the West African nation in order to achieve sustainable economic growth What should be the role of the energy sector in Sierra Leone’s plan to reach middle-income status by 2030?

Energy as a significant enabler has a key role to play in both our current economic recovery and in our vision to reach the middle-income status. Energy is also critical for the development of a country and the stimulation of its economy to grow. In Sierra Leone, we need to provide the foundations of an environment where businesses can operate and thrive. The post-Ebola Recovery Strategy and the Agenda for Prosperity as initiatives launched by our President, are directed towards enabling Sierra Leoneans to make the necessary leap forward. However, entrepreneurs still face extra difficulties as they do not have sufficient access to electricity.

In 2014, when I took office, the President gave me the mandate to increase the country’s power generated capacity from the existing 100MW to 1000MW. We elaborated a very clear Energy Strategy Plan to achieve it. Our vision was that this electricity would not be only directed to supply individual customers that want to use their appliances, but would also extend to industrial customers which are a key support pillar for our economic recovery. With available electricity, we can stimulate investment; energy is a major factor when decision-makers study future options.

With a reliable supply of energy, operational costs will decrease. Presently, the industries in Sierra Leone, such as the breweries and manufacturing factories, have to rely on their own generating plants. Implicit in this are costs and labor associated with the purchasing of the plants, their maintenance and especially, buying fuel oil or diesel on a daily basis. This increases the final cost of the output. Aside from the big industries, our larger pool of smaller entrepreneurs need energy too, from the women that sell cold beverages to the man doing carpentry work.

We must not forget our mining sector, which also requires substantial amounts of energy. It is not a secret that Sierra Leone has large amounts of iron ore and other mineral resources. However, the cost of extraction today here is greater in part due to the lack of a reliable and affordable source of energy.

When this is resolved, we will be able to attract new foreign investors that will consider installing smelting plants locally, improving

“Also in education energy plays a fundamental role.

We have been observing that students coming from areas without a reliable electricity supply are not consistent performers at school due to lack of continuous electricity.

Energy is thus fundamental for a brighter future for our country” the quality of the product before shipment. It is a good business for everybody and at the same time, jobs will be created.

Also in education energy plays a fundamental role. We have been observing that students coming from areas without a reliable electricity supply are not consistent performers at school due to lack of continuous electricity. Energy is thus fundamental for a brighter future for our country.

With your government being aware that reliable, affordable and accessible power is the cornerstone of your economic development, your Ministry launched a five-year roadmap to increase the generation capacity. This plan requires a structured approach to private investments in the sector. What have been the policies of greatest success and where do you see the greatest need for improvement?

Conventionally, we see that demand creates supply. However, with electricity we have experienced the opposite seeing that supply creates more demand.

In order to guarantee electricity provision, a holistic approach must be taken, including regulatory reform, a powerful and diversified generation system and good transmission and distribution networks. The area in which we are lagging at the moment is in generation. It is unfortunate that we have not made as much progress as we should, given the amount of effort, creativity and energy we have put into developing our generation capacity.

We have experienced several constraints that delayed our plans. Nevertheless, we have also seen several achievements starting with an increase in the customer awareness and customer service of the energy sector. One of my mantras is “Light is a Right” as we consider that to have electricity is a right. Another of my mantras is “Electricity is Everybody’s Business”. Now, in Sierra Leone, we do not have electricity consumers anymore; we have customers.

Until 2014, the national utility company was government owned. On its privatization, it was unbundled by separating the generation and transmission operations from the distribution and supply operations; a model which has proved successful in other African countries like Nigeria and Ghana.

The newly established utility companies have therefore had to look for their own income and become self-sustained. A regulator was also established for the sector. Guiding the mindset of the new utilities into a business driven one was a major challenge I faced when I arrived at the Ministry. Now, faults are repaired faster: the loss of income is better appreciated as it is directly linked to the salaries of the employees. Government subsidies are also being eased out because our current system has become performance based. This is an important achievement. The appetite for electricity is also growing as we have seen a multiplication by ten in the figures of people requesting new connections. This is a result of the increasing expectations created by our new model.

Over 650,000 tons of crop wastes are produced annually having a high annual energy potential

“Foreign investors will be interested to learn that the government is reviewing the national Electricity Act. It is expected that one of the key aspects in the review process will be the consideration given to private investors that will open new opportunities to invest in the development of our transmission network”

of more than 2,500 GWh that can be exploited for cooking, lighting and motive power applications. What are the recent developments of your Ministry regarding biomass?

The Addax Bioenergy Project is one such project the Government has welcomed. It produced sugarcane ethanol and offered renewable electricity from the biomass to power its operations and provide the excess energy to the national grid.

As with many other businesses at the time, the project was affected by a number of unexpected problems including the Ebola outbreak in May 2014. Presently the project has been transferred to a group of investors led by Sunbird Bioenergy Africa. We hope the project can now realize its objectives and positively contribute to our clean energy goals.

Of course, generation is just one part of the chain to achieve a reliable supply of energy.

Transmission is critical too. Access to the West Africa Power Pool (WAPP) has proven critical in ensuring the required energy supply for Sierra Leone’s demand for power. The interconnection with Côte d’Ivoire, Liberia and Guinea was due to be completed this year.

What is the current status of this interconnection? Looking to Sierra Leone, what are the main improvements that you have implemented in the transmission network? What are the biggest opportunities for foreign investors in this regard?

At present, the WAPP Project Agreement has been signed by the Ministers of the CLSG countries (Côte d’Ivoire, Liberia, Sierra Leone and Guinea) and it is expected that construction for the lines will commence by the second quarter of 2017 and be completed by the end of September 2018.

For the transmission network, last year we concluded an upgrade on a key network in the east of Freetown providing much needed access to over 20,000 homes. This was an IDB (International Development Bank) funded

project. With the support of JICA (Japan International Cooperation Agency) we are also presently rehabilitating the network in the west (11kv and 33kV lines). In the provincial towns, much needed rehabilitation and expansion work is planned for the Bo-Kenema Axis (DFID and AFDB funded).

Foreign investors will be interested to learn that the government is reviewing the national Electricity Act. It is expected that one of the key aspects in the review process will be the consideration given to private investors that will open new opportunities to invest in the development of our transmission network.

Beyond interconnection, off-grid technology will also play a vital role to the rural Sierra Leone population, where currently less than 1% have access to power. What are the investment opportunities arising in this needed off-grid technology?

The majority of our population uses solid fuels and coal to meet their basic needs, yet causing detrimental effects to their health. To provide access to clean and renewable energy, the Energy Africa Campaign was launched in Sierra Leone in collaboration with the Government of the United Kingdom, at the Energy Revolution Expo held in May 2016.

The Compact outlines bold energy access targets: Power for all citizens by 2025 (5 years ahead of SDG7 and Energy Africa Access Campaign target of 2030) and modern power to 1 million people in Sierra Leone by 2020.

The Rural Renewable Energy Project sponsored by the DFID and implemented by UNOPS is an example of a project meeting the Compact objectives. This year, the project will provide more than 50,000 homes with solar units and increase access to public services through the electrification of priority institutions such as Community Health Clinics, schools and agricultural business centers through 6kWp PV installations. At least 5,000 solar lamps will also be provided to potential customers on a pay-as-you-go basis to further increase the interest in solar products.

Additionally, through private investors including the Renewable Energy Association of Sierra Leone (REASL), various models have been developed to provide nationwide access to energy through solar home systems.

A number of opportunities remain for other investors, as we are still a long way from achieving our rollout target for 2017.

The UK is not only Sierra Leone’s largest donor but also one of your key trade and investment partners. In the energy sector, Sierra Leone was the first country participating in the UK’s Energy Africa campaign to sign an energy

agreement. How would you like Sierra Leone to be perceived by UK investors?

The UK has staunchly supported Sierra Leone through every step from crisis to recovery and forwards to development. I believe it is because the UK recognizes that the Sierra Leone Government is serious about changing the trajectory of its progress. For energy in particular, this has been shown by us being the first country to sign an energy compact agreement and do so with the UK. UK investors should therefore see this as evidence that Sierra Leone is open to developing clean and renewable energy and that we welcome businesses looking to enter the market to provide energy supply and support services.

What is the final message you would like to give to our audience?

We must not underestimate a nation’s appetite for electricity. It cannot be said that the manner in which one country increases its demand for power will be mirrored by another. The telecoms sector in Sierra Leone is a case in point that proved wrong all expert assumptions and growth forecasts.

Today technology has not bypassed Sierra Leone and our young are as hungry for more gadgets as any other. Even in the most rural of communities, charging sales kiosks for mobile phones are prevalent and notwithstanding the high cost per charge to the consumer.

It is therefore important that any support to be given by a third party or donor agency looking to assist our development plans must support us not according to their assumptions and past experiences elsewhere but based on a model tailored and sensitive to us. The model has to capture our unique characteristics and variances as well as our aspirations and dreams. In short, any support must be to help achieve our agenda and not theirs or any other. Do not starve Africa of energy.

“The UK has staunchly supported Sierra Leone through every step from crisis to recovery and forwards to development. I believe it is because the UK recognizes that the Sierra Leone Government is serious about changing the trajectory of its progress”

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JAPAN LOOKS to grow its presence

across Africa Between 2016 and 2018, Japan has pledged to invest $30 billion in Africa’s development, as it bids to join the likes of China and the US in the battle for influence on the continent Competition in Africa is heating up, with Japan aiming to increase its presence and influence on the continent as it looks to make up ground lost to China since the turn of the century.

Japan launched the Tokyo International Conference on African Development (TICAD) back in 1993, and since then has invested around $50 billion in Africa, a meagre sum when compared to China and the US. But that figure is set to increase by 60 percent in the space of just three years.

At the sixth TICAD summit in the Kenyan capital of Nairobi last August, Japanese prime minister Shinzo Abe pledged to invest $30 billion in Africa’s development by 2018, with $10 billion being earmarked for infrastructure projects in education, energy, urban transport (roads and ports), health and agriculture. This was the first time the event took place in Africa, which is symbolic of Japan’s newfound interest in deeper engagement with African nations.

“We need to move ahead with investing for the future of Africa. Africa and Japan will work together. Japan will launch various initiatives that will support Africa in different sectors including infrastructure,” Mr. Abe said at the summit.

Aside from growing trade and investment ties, Africa and Japan share political alignment particularly in relation to UN Security Council reform. “Reform of the United Nations Security Council is truly a goal that Japan and Africa hold in common,” said Mr. Abe, who called on all African states to work with Japan to achieve

it by 2023. He explicitly endorsed Africa’s ambition for a permanent presence on the Council.

Energy and Mining

“We need to move ahead with investing for the future of Africa. Africa and Japan will work together. Japan will launch various initiatives that will support Africa in different sectors including infrastructure” Shinzo Abe, Prime Minister of Japan

Expanding electricity access is key to Africa’s development aspirations, and thus is a major pillar of Mr. Abe’s plan, which aims to increase Africa’s power generation capacity by 2,000 megawatts and bring electricity to 3 million homes by 2022, through investments in a range of hydro, solar, coal, gas and geothermal projects throughout the continent.

Some Japanese-backed power projects include hydropower plants in Uganda and Madagascar, the Takoradi II gas-fired plant in Ghana and a coal-fired power plant in Safi, Morocco, which will produce 1,386 megawatts, or 25 percent of the country’s needs.

Koyo Corporation announced last year it plans to build a 1,000-megawatt gas-fired power plant in Tanzania and is also looking to invest in solar power plants in the country. In January, a Tokyo-based solar company signed a memorandum of understanding with Kitui County, Kenya to develop the first Japanese solar project there.

Meanwhile, general trader Marubeni will a build fossil-fuel plant in Nigeria’s Lagos state. The plant, estimated to cost around $1.9 billion, will be Nigeria’s largest when fully built, with a capacity equal to 15 percent of the national total. Construction will begin in 2018, with power production to start in 2021.

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Japan aims to increase Africa’s power generation capacity by 2,000 megawatts and bring electricity to 3 million homes by 2022, through investments in a range of hydro, solar, coal, gas and geothermal projects throughout the continent

Japanese players in the geothermal sector are seeking to boost geothermal capacity in East Africa from 600,000 kilowatts to more than 1 million kilowatts, as part of the Power Africa programme, an initiative launched by former US president Barack Obama in 2013. Japan joined Power Africa last year, following the signing of a partnership agreement between the Japanese Ministry of Foreign Affairs and the U.S. Agency for International Development (USAID). Other partners of Power Africa, which has leveraged nearly $43 billion in commitments from the public and private sectors, include the African Development Bank (AfDB), The World Bank, Sweden, Canada, Norway, the United Kingdom and the European Union.

With almost no oil or gas resources of its own, energy security is a top priority for Japan, particularly after the closure of all of the country’s nuclear reactors following the 2011 Fukushima nuclear disaster. This is why Japan is making several big investments in oil and gas projects across Africa.

One of Japan’s largest trading companies, Mitsui Group holds a 20 percent stake in the Mozambique liquefied natural gas project (LNG) project that will eventually produce 50 million tons of LNG a year. Much of this production is expected to be exported to Japan. In Tanzania, the Japan International Cooperation Agency (JICA) and the AfDB are making a joint investment of $75 million in the country’s gas distribution network.

Japanese companies tapping oil and gas opportunities are supported by the Japan Oil, Gas and Metals National Corporation (JOGMEC), which provides financial and technical assistance, as well as offering up to 75 percent equity and taking on up to 75 percent of the liability in oil and gas projects during the development phase. JOGMEC provides financial backing of $5.2 billion yearly for oil and gas M&As. It now has a particular focus on Africa, where it is supporting Japanese companies investing in oil and gas projects in countries such as Mozambique, Tanzania, Kenya and Gabon.

The Japanese government and JOGMEC also aim to step up financial support to promote investment by Japanese companies in African mining, by accelerating bilateral meetings with each African country to bring more mining projects forward. This will help Japan to secure supplies of resources like coal, copper and rare earths needed to make electronic components.

“Japan aims to expand opportunities to bring about a mid-to-long term stable supply of mineral resources from Africa,” read a statement released by the Japan’s Ministry of Economy, Trade and Industry last year.

In February, Japan signed a cooperation agreement with mineral-rich South Africa, which allows the two nations to collaborate in a number of areas across the mining value chain.

“With the agreement, the two countries acknowledge that Japan, as an important consumer and investor, and South Africa, as a supplier of minerals and most importantly, a key participant in the mineral beneficiation value chain, have complementary interests in mining,” said South Africa’s Minster of Mineral Resources Minis Mosebenzi Zwane.

“Our country cannot grow exclusively on the back of supplying raw minerals to other nations. It is

Increasing Japan-Africa trade, which totalled almost $20.2 billion in 2015, is an important priority for Japan. This will require the expansion of shipping connections and investment in Africa’s port and logistics infrastructure

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An increasing number of Japanese companies are venturing into Africa

in this context that we wish to invite Japanese companies to invest in South Africa’s downstream mineral development industries, effectively manufacturing and beneficiation as well as production of goods and supply of requisite services.”

Ports Increasing Japan-Africa trade, which totalled almost $20.2 billion in 2015, is an important priority for Japan. This will require the expansion of shipping connections and investment in Africa’s port and logistics infrastructure.

The Japanese government is investing $255 million in the second development phase of Port of Nacala in northern Mozambique. The project will expand the capacity of the port to more than 250,000 twenty-foot-equivalent units (TEUs) and 5 million tons of cargo per year by 2020. Japan also financed the first phase of the project, which included the construction a new railway terminal, a project that was awarded to Japanese company Penta-Ocean Construction.

In Kenya, JICA has provided financing for a new container terminal at the Port of Mombasa. The $297-million facility can handle 550,000 TEUs and ramps up Mombasa’s existing annual cargo handling capacity to 1.6 million TEUs. In February, a trade mission made up of eight major Japanese companies travelled to Namibia in southwest Africa, where they are interested in investing in the Wallis Bay International Logistics Hub project.

Japan and Rwanda are fostering particularly strong ties in ICT. Last year, the Rwandan capital, Kigali signed an agreement with the Japanese city of Kobe to recruit over 1,000 ICT engineers from Rwanda. Under the deal, the two cities also agreed to collaboration and will exchange innovations in industries and research findings from their academic institutions. Kobe City also partly funded the establishment of k-Lab, an ICT incubation hub in Kigali, where a number of young Rwandan tech entrepreneurs have successfully managed to develop and sell ICT products.

Health is another important factor of the JapanAfrica plan, and part of the $30 billion pledged by Prime Minster Abe will be used to develop robust health systems, through investment in hospitals, clinics and the training of healthcare professionals.

The Japan Centre for International Exchange (JCIE) seeks to leverage on Amref Health Africa’s six decades of experience in Kenya to gain insights into the Kenyan health sector.

“The corporate sector has unique resources that can be applied to addressing health challenges, resources that are different from those of the governmental and non-profit sectors. Japanese companies have increasingly been applying those resources while recognizing that investing in health is also a good investment in their bottom line,” said JCIE. One Japanese company that has so far made an investment in the Kenyan health sector is Toyota Tsusho Corporation (TTC). Last November, through its subsidiary Tsusho CSV Africa Pte. Ltd. (CSV Africa), a social contribution-oriented venture development fund for Africa, TTC signed a capital investment contract with Kenyan ICT company Seven Seas Technologies Limited (SST).

SST will use the money to invest in medical infrastructure, healthcare programs and solutions for enhanced management of healthcare institutions and resources. Over the next five years, CSV Africa will share in SST’s formative vision to enhance the quality, cost and accessibility of health services in contribution to Kenya’s development.

Education and Health Aware of the need to develop strong human resources, Japan is supporting Africa in the field of education and training, mainly through the African Business Education Initiative for Youth (ABE), which, based on the Japanese principle of kaizen (continuous learning), will provide education and training to African foremen, plant managers, worksite leaders and 30,000 student engineers, while 1,500 business executives will receive training in Japan.

This programme offers opportunities for young and eligible African men and women to study at Master’s courses in Japanese universities as international students and to experience internships at Japanese enterprises in order to develop effective skills and knowledge in various fields for contributing to the development of industries in Africa.

One country currently benefitting from the ABE initiative is Rwanda. Several Rwandan ICT experts have gone on scholarships to Japan, in order to acquire hands-on skills in information and communication technology as part of efforts to strengthen economic ties between the private sectors in the two countries.

Health is another important factor of the JapanAfrica plan, and part of the $30 billion pledged by Prime Minster Abe will be used to develop robust health systems, through investment in hospitals, clinics and the training of healthcare professionals

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Africa financial services: No place for copy-paste

With around 80 percent of Africa’s adult population lacking access to formal financial services, the financial services landscape in Africa is unique in both its challenges and the opportunities it presents. What works elsewhere won’t work here American banks since the crisis. They have supported the growth of individual countries with better products and services. They have advanced economic integration and helped foster financial inclusion, they have leveraged technologies, including disruptive ones—witness the great gains of mobile banking in Kenya.”

But with the positive changes these banks have brought about have come regulatory headaches, in particular the need to strengthen supervisory oversight on a consolidated and cross border basis and improve internal controls and transparency. Recent years have seen African financial sector regulators step up to address these new challenges, cooperating with their counterparts across the continent as they upgrade supervisory procedures and practices.

Nonetheless the overall reach of commercial banks, measured by ATMs and physical branches versus population, remains well below global averages. With low household incomes and often scattered rural populations, the traditional operating model of a bank just doesn’t make finanThe benefits of financial inclucial sense in Africa.

“Since the global financial crisis, pansion for pro-poor and inclusive But with rosy prospects growth in Africa are well known, for economic growth over the African banks and other institutions but there are still 330 million coming years, the financial have become important features of adults – the majority of the Afsector is considered to be one the continent’s financial landscape. rican adult population –without of the continent’s brightest access to the financial system, prospects, which is why many They are one more piece of evidence which signifies tremendous opplayers seek to explore alternaof the region’s dynamic changes” portunities for financial services tive operating models to bridge providers that are ready to emthe financial inclusion gap in Christine Lagarde, IMF Managing Director brace them.

Africa.

As Africa grows and develGovernments, too, cogniops, its rising middle class have zant of the potential of broadbecome a driving force in its ening and deepening the secgrowing financial services industry. To meet their needs, African tor, have thrown open the doors to investors. Policy reforms over banks, such as Togo-headquartered Ecobank and Nigeria-based the past decade have contributed to an environment more conduUnited Bank for Africa, have expanded their footprints into new cive to financial sector development, with many countries putting countries, in many cases picking up where American and Euroin place regulatory frameworks and information systems aimed at pean banks, which pulled back from the continent post-financial enabling and facilitating further development. crisis, left off.

As a result, new initiatives have popped up, each addressing Speaking in February at the IMF Conference on Cross-Border a particular pain point. The most obvious of these is the M-Pesa Banking and Regulatory Reforms in Mauritius, Christine Lagarde, system. Springing up in Kenya in 2007 thanks to a loose regulatory IMF Managing Director, said, “Since the global financial crisis, structure which enabled mobile telephony providers to act as fipan-African banks and other institutions have become important nancial institutions, this mobile money service now counts almost features of the continent’s financial landscape. They are one more 20 million active users in the country, out of a total population of piece of evidence of the region’s dynamic changes. These institu47 million. The service, which allows users to deposit money into tions have filled the gap left by the retrenchment of European and an account stored on their cell phones, to send balances using text

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Today, the entire African mobile money market is forecast to reach $14.3 billion by 2020, up from $2.7 billion in 2015, with more than 100 mobile operators in Africa launching mobile money services, according to The Advanced Payments Report 2016

messages, and redeem deposits, has enabled even the most farflung of Kenyans to access the formal financial system.

Today, the entire African mobile money market is forecast to reach $14.3 billion by 2020, up from $2.7 billion in 2015, with more than 100 mobile operators in Africa launching mobile money services, according to The Advanced Payments Report 2016.

The services, which reduce transaction costs and facilitate personal transactions in the absence of traditional financial infrastructure, have also enabled the reach of microfinance, microcredit and microinsurance products, with mobile wallets functioning to all intents and purposes as bank accounts. The service has bloomed to the extent that Africa has become almost a mobileonly environment: fully 60 percent of all payments come from mobile devices on the continent, versus just 30 percent in the West.

Because these mobile wallets offer better services at lower cost and at greater proximity to customers – gone are the days of a two-day walk into the nearest town to an ATM – there is likely to never be a need for most Africans to adopt traditional banking services. Simply put, traditional banking products are not relevant to these customers.

However, in the same way that traditional banking products cannot be copied and pasted into Africa from elsewhere, what works in one African country may not work in another. When South African mobile operator Vodacom attempted to replicate MPesa’s roaring success in East Africa in its home market, it was met with failure. Launched in 2010, it had only managed to garner 76,000 active users by 2016, and was scrapped. “Vodacom’s decision is based on the fact that the business sustainability of M-Pesa is predicated on achieving a critical mass of users. Based on our revised projections and high levels of financial inclusion in South Africa there is little prospect of the M-Pesa product achieving this in its current format in the mid-term,” the company said in a statement. Many reasons have been posited for M-Pesa’s lack of success. Firstly, in South Africa, Vodacom was forced by regulatory constraints to partner with a bank to provide the financial service on its platform. What’s more, customers in South Africa already have an array of banking services and platforms through which to conduct their business, with the reported existence of a bank, branch or ATM within a 20-kilometer radius of any urban or rural settlement.

The lesson learnt, somewhat painfully by Vodacom, is that in Africa, financial services are very market-specific. For any inves-

tor looking to enter an African market, an understanding of the system they are looking to disrupt, the cultural nuances of the country and how potential customers interact with money is vital.

To this end, many banks, who have the advantage of knowing their local market well, are linking up with fintech providers who can provide the last-mile reach into underserved markets. Initiatives such as the annual Barclays Africa Accelerator, which first took place in Cape Town, South Africa last year, give fintech startups the opportunity to participate in a 13-week program to scale up their ideas and tap previously untapped customer segments.

The difference between African fintech and fintech in the rest of the world is that African fintech isn’t disrupting the financial industry; it is building it, since in many areas of the continent there is nothing there to disrupt in the first place. The opportunity, therefore, is to construct a whole new infrastructure, tailored to the unique needs of African customers. The race is now on for financial services companies to find new and innovative ways to get customers on board.

As a result, investment is flooding into startups providing clever ways of offering financial services. According to Disrupt Africa, a portal for start-ups and accelerators across the region, fintech start-ups raised a combined total of more than $31 million in 2016, or 24 percent of all the fundraising recorded in the course of the year, coming in ahead of both the health and the agriculture sector. Successes are happening with growing frequency: for example, Nigeria’s Interswitch, a digital payments and commerce firm, is now valued at around $1 billion, a good way ahead of most banks in the country. It’s not just homegrown fintech firms which are doing well: American firm Paypal saw $610 million of payments made by Nigerians on international shopping in 2015.

That is not to say that traditional banks in Africa have had their day. Foreign investors are increasingly looking to invest in bricks-and-mortar financial institutions. Bob Diamond, former head of Barclays Bank, set up Atlas Mara, an investment vehicle, with the specific objective of buying up African banks to create a pan-African conglomerate. It first bought BancABC, which operates in markets such as Botswana and Zimbabwe, for $265 million, and then followed up with stakes in Union Bank of Nigeria and the Development Bank of Rwanda. Meanwhile, Norwegian development body Norfund, Dutch bank Rabobank and private sector development bank FMO have formed a $660 million financial services investment company, Arise, by combining investments in financial service providers across more than 20 countries, including Kenya, Tanzania and Zambia. Starting this year, the company plans to allocate new capital for investment in banks that serve retail and SME clients in eastern and southern Africa. Portuguese financial group Banco Montepio is tipped to join Arise shortly. It plans to expand into West Africa, investing $1 billion into domestic financial companies.

In both traditional and non-traditional areas, Africa’s financial services sector is on the cusp of an enormous transformation, and the gaping void between potential customers and the reach of banks and institutions is ripe to be bridged. African countries still lag far behind the rest of the world in the adoption of banking products, offering profitable opportunities for those who are able to create solutions that suit the particular and unique needs of the huge unbanked population across the continent.

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CÔTE D’IVOIRE Africa’s fastest growing economy

Almost six years after the end of the Second Ivorian Civil War, Côte d’Ivoire has witnessed a successful and peaceful transition to economic growth, bucking regional trends with 8.5 percent GDP expansion in 2016 Côte d’Ivoire can comfortably be described as booming. Its near-unstoppable economic growth – 8.5 percent in 2016 – places it as one of West Africa’s largest economies. And this achievement is all the more notable given that it comes following over a decade of stagnation and conflict.

Two successive civil wars marred the start of the 2000s, and divided the country into a rebel-held Muslim north and a government-held Christian south. The economic destruction the conflict brought with it is best illustrated by the fact that it even drove out the African Development Bank (AfDB) in 2004 from its headquarters in the economic capital Abidjan, where it had operated since the 1960s. The Second Ivorian Civil War came to an end in 2011, and under the watchful eye of the post-war President Alassane Ouattara, the country began to flourish once more. The return to Abidjan in 2014 of the premier African financial institution was a “symbol of the renaissance of the Ivorian economy after a decade of recession and a symbol of the reconstruction of Ivorian society,” according to former AfDB head, Donald Kaberuka, but it was the 2015 landslide re-election of President Ouattara which truly cemented the West African country’s bid to put the past behind it and revive its war-scarred economy.

“Indeed, the 2015 elections were a major challenge for Côte d’Ivoire,” says Hamed Bakayoko, Minister of the Interior and Security. “The country had to show that it has turned the page of the crisis, that it has turned the page of violent elections and that it is projecting itself towards a more peaceful and brighter future. What do we intend to do to maintain this climate? Maintain dialogue…There is collaboration and exchange on all issues with the opposition. There is no dogmatic or fixed position. There is really the idea of creating a calm environment so that the country can develop.”

With the peaceful vote seen as a big step in consolidating peace and economic confidence in the country, Côte d’Ivoire has proven itself capable of an astounding political transformation. Today, the country, the world’s largest cocoa producer, is a rare African bright spot, and while poverty rates remain high despite surging export rates, President Ouattara has pledged to create more inclusive growth by smoothing the way to greater investment. Tax breaks, customs duties cuts and even compensation in the event of social unrest have

“We have started a new mandate that must mark a new departure in the direction of state affairs.

The establishment of a new government will have better coherence as a goal so the government can be more efficient.”

Alassane Ouattara, President, Côte d’Ivoire increased investor confidence, while a focus on infrastructure development – with power distribution and transportation at the forefront – lay the groundwork for the government’s stated aim to transform the West African nation into an emerging country by 2020. Early indicators are promising – according to IMF data, Côte d’Ivoire was the fastest growing economy of the African continent and the third-fastest in the world in 2016, and the AfDB projects GDP growth of 8.3 percent for 2017.

“Côte d’Ivoire has experienced an impressive turnaround since 2011, with economic growth averaging about 9 percent per year. The economic outlook remains strong. The authorities’ 2016-20 National Development Plan (NDP) appropriately prioritizes inclusive and sustainable growth, focusing on

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structural transformation and improving living standards,” said Dan Ghura, the IMF’s mission chief for the country following a recent mission.

“We have started a new mandate that must mark a new departure in the direction of state affairs,” President Ouattara, a former IMF official himself, said to gathered media following his re-election.

“The establishment of a new government will have better coherence as a goal so the government can be more efficient.”

Confidence is growing among the business community around Côte d’Ivoire’s prospects. The country knocked Nigeria from the top spot of Nielsen’s Africa Prospects indicator (APi) overall results in Q2 of 2016, and has since held on to its top ranking, making it a more stable African investment destination than the larger economies of South Africa and Angola. Nielsen analysts pointed to its favorable economic growth, stable inflation climate and recent elections as providing a fertile investment environment.

What’s more, for international investors, opportunities also abound to develop partnerships with increasingly strong homegrown entrepreneurs. At the 2016 edition of the Africa CEO Forum, held in Abidjan in March, and marking the first time that the event has taken place on the African continent, Sébastien Kadio-Morokro, Chief Executive of local oil firm Petro Ivoire, was named Africa’s Young CEO of the Year, recognizing the potential both of Ivorian firms and their leaders. As participants from the Ivorian private sector discussed their role as a

Tax breaks, customs duties cuts and even compensation in the event of social unrest have increased investor confidence, while a focus on infrastructure development – with power distribution and transportation at the forefront – lay the groundwork for the government’s stated aim to transform the West African nation into an emerging country by 2020

catalyst for growth and value creation in the country, President Ouattara highlighted that “the time has come for us to industrialize, which will see more jobs being created, and to accelerate the growth of the agro-industrial, textile and mining sectors.”

The Ivorian Government is keen to deepen economic cooperation with the United States, which accounted for $134 million of foreign direct investment in

the country in 2014, a 14 percent increase from 2013. And while the most fruitful areas of investment for U.S. businesses are in oil and gas exploration and production, agricultural commodities and the mining industry. The country’s expanding middle class also presents an opportunity for American retailers. When a new shopping mall, West Africa’s biggest, opened to much fanfare in Abidjan in January last year, among the shopping center’s tenants was American fast-food giant Burger King, which selected the country as the location for its first restaurant in the region.

Today, political progress keeps on coming. In May last year, President Ouattara set up a committee of experts to propose a new constitution. Its key aims, which included setting up the position of a vice-president, establishing a senate, and incorporating traditional leaders, was seen by many as a solid move toward the consolidation of constitutional principles. While the November 2016 vote was not without incident – opposition party members boycotted the polls – over 93 percent of voters elected in favor of the new charter, which the president said would “help end years of instability”.

With the peace and stability that are pre-requisites for economic growth now firmly in place, the government can get to work on returning the country to its former status as West Africa’s regional economic and financial powerhouse, by spurring on the private sector with heavy investments in long-neglected infrastructure.

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Foreign investments

in mining, oil and gas to drive future growth Amara Mining will invest around $430 million to build one of the continent’s largest gold mines at Yaoure, while Exxon Mobil returns to the country after a 32-year absence, with a planned $400 million investment in exploring the nation’s vast potential oil wealth

Located between Liberia and Ghana in the northwest corner of Africa, the predominantly agricultural Côte d’Ivoire, with its population of 24 million, is now also emerging as one of the continent’s leading players in mining and in oil and gas production.

Together, these two industries represent 25 percent of the country’s GDP though they are still in their infancy, relatively speaking, and production levels are modest – more on a par with Mali and Burkina Faso than with big guns like South Africa and Zambia.

Recent events have not made it easy for Côte d’Ivoire to expand in this sector. But after a decade-long Civil War that ended in 2011 and had all but crippled the economy – further burdened by embargoes placed on the country in 2005 by the UN which have only recently been lifted – things are finally beginning to look brighter. In 2014, 140 exploration permits and 11 production licenses were issued. Gold, a major mining product, rose from 14 tons in 2012 to 25 tons in late 2015.

“From a modest production of around 36,600 barrels a day we now expect to increase this to 100,000 and then double that figure by the end of 2020, thanks mainly to resources that have been discovered in our territorial waters”

Ibrahima Diaby, Managing Director, Petroci

Jean-Claude Brou, the country’s Minister of Industry and Mining, has evaluated the current situation in this area. He acknowledges that for many decades the real force behind the economy has been agriculture, with Côte d’Ivoire holding its position as the world’s largest cocoa producer and coffee and palm oil exports continuing to flourish. The mining industry, in turn, was given a real boost with the appearance of the revised 2014 Mining Code. “In order to create the conditions for increased investment in the sector it was absolutely necessary to review this code,” Mr. Brou explains. “The operators require a good return that provides an adequate fiscal income for mining activity. It has to be an economic activity, and the revised code allows the communities to benefit from the output from this, providing a compass for investors, giving clear and specific references to environmental constraints, the dimensions related to community development and governance framework.”

The Chamber of Commerce’s role, meanwhile, is seen by Mr. Brou as a partnership between the state and operators, aimed at strengthening relationships with all investors. “This department serves as a crucible for the promotion and development of the sector,” he observes.” It also plays a role in job creation and is especially beneficial for agriculture because it engages in added-value transformation. Agribusiness is very important. The Chamber of Commerce acts as a support to other sectors as well.”

The country boasts a rich and lucrative abundance of minerals that include iron, nickel and gold – “more gold, in fact, than neighboring Ghana and Mali,” Mr. Brou is quick to point out.

“Our iron reserves total 4 billion tons,” he adds, “and we have nearly 260 million of laterite nickel and 60 million tons of copper nickel.” Diamond mining is also a major industry in Côte d’Ivoire and a recently successful audit into this sphere of operations ensured integration into the Kimberley Process which has greatly benefited progress in extracting the muchtreasured mineral.

Overall, it is gold that is proving one of the most potentially progressive areas, and over the next two years, one of several interested international companies, Amara Mining, is scheduled to invest around $430 million in building one of the continent’s largest gold mines at Yaoure, where they expect to extract over 325,000 ounces a year (spot gold is currently trading at around $1,200 an ounce).

Mr. Brou hopes that U.S.-Ivorian business relations, in particular, will continue to expand as the country handles its international dealings with a new dynamism and strengthens its bonds with all its investors. At the same time the country is carefully monitoring the standard of all its industrial and agricultural products in line with a 2013 quality control ruling.

Oil and gas investments In spite of a series of recent severe problems, Côte d’Ivoire’s oil and gas industry is also now tentatively moving ahead. Its guiding hand is the Petroci company, founded in 1972 and re-structured 23 years later into Petroci Holding, with three subsidiaries: Petroci Exploration-Production which handles upstream gas and oil activities; Petroci Gaz, which is responsible for the natural gas sector; and Petroci Industries-Services which manages all other related services. Currently Petroci offers up to 49% interest to private sector investors. It also covers the development and maintenance of the main data base for the country’s oil assets.

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The greatest of Petroci’s setbacks was a 75% loss of revenues in 2015 when global oil prices plunged in just two years (2014-2015) from around $110 a barrel to just $30 a barrel.

To ward off total financial disaster and safeguard its future the company accordingly agreed to sell its petrol distribution network to Puma Energy, a Swiss-based private firm. As a prelude to this, and following the recommendations of a thorough audit, 50 of Petroci’s 600 employees were made redundant and a further 150 are expected to follow. Indignant workers recently launched a three-day strike protest at these radical steps, but from the management’s viewpoint their tactics have paid off: projected earnings have now reached $30 million, a figure that’s expected to put Petroci back on the right track economically.

The newly streamlined industry has further ambitions to boost its output, says managing director, Ibrahima Diaby.

“From a modest production of around 36,600 barrels a day we now expect to increase this to 100,000 and then double that figure by the end of 2020, thanks mainly to resources that have been discovered in our territorial waters.”

Such an achievement would make Côte d’Ivoire a viable competitor to neighboring Ghana who are aiming at an output of 250,00 barrels by 2021. He’s optimistic about the company’s future despite the recent withdrawal of their powerful Russian partner Lukoil, and feels the government’s decision to privatize Petroci will help it regain its former stature thanks to the Puma Energy intervention which has helped the company acquire several service stations.

Mr. Diaby sees Petroci as performing an important social and economic role for the country during the next half decade.

“One of our key projects is the future acquisition of an offshore gas field, which will provide a significant supply of electricity to the country’s business centers.” His strategy is to concentrate on the exploration and production of petroleum and maintain the presence of petroleum oriented companies in off shore activities. “These measures don’t stem from me,” he’s careful to

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explain, “but from the recommendations of a variety of different official audits carried out in 2013 and 2014.”

Mr. Diaby also aims to relaunch natural gas projects with a view to continuing the supply of thermic centers some of which – such as those of Contourglobal and Starenergie – are either already in operation or about to be set up. Other companies, including RAK and Foxtrot, are also currently involved in marketing Côte d’Ivoire petroleum products, and, most significantly, two U.S. giants, Anadarko and Exxon Mobil are about to invest $30 million and $400 million, respectively, in key oil projects for which productive partnership contracts (CPPs) have already been signed. Anadarko will operate in an area of 1,028 kilometers in deep waters south of Abidjan. Exxon, making a welcome return to the Côte d’Ivoire after a 32-year absence, is providing an investment to cover initial exploratory periods in various areas. These ambitious new projects all augur well for Petroci and the country’s future.

“In order to create the conditions for increased investment in the sector it was absolutely necessary to review the mining code. The operators require a good return that provides an adequate fiscal income for mining activity.

It has to be an economic activity, and the revised code allows the communities to benefit from the output from this, providing a compass for investors, giving clear and specific references to environmental constraints, the dimensions related to community development and governance framework”

Jean-Claude Brou, Minister of Industry and Mining

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Cocoa production to lead agricultural sector Côte d’Ivoire‘s agricultural sector is key to its economy and following recent growth, international investment is now being sought to power further development Agriculture has become a mainstay of Côte d’Ivoire’s economy contributing nearly a quarter to its GDP, but a revamped strategy looks set to ramp that up further over the coming years.

The agricultural sector, which is dominated by products such as cocoa, coffee, cashew nuts and cotton, accounts for at least 50 percent of the West African nation’s exports and is estimated to support between 60-70 percent of jobs in the country.

Reforms have already been made in order to make the market sustainable and ensure revenues are more stable through the introduction of a forward auction market. The system was introduced in 2011 by the Conseil Café Cacao (CCC), which manages the regulation and development of the coffee and cocoa sector and replaced the previous system of spot sales, and sees grinders and exporters bidding for export licenses for 70-80 percent of the country’s output.

“When the current president came into office, he asked for the coffee and cocoa sectors to be reformed. And, amongst other objectives, he guaranteed to secure revenue for the producers, so that they would get at least 60 percent of the market price,” explains Massandjé Touré-Litsé, the CCC’s Managing Director.

The remaining output is sold on spot, ensuring the vast majority of sales prices are largely fixed and providing a modicum of predictability for state revenues. Mamadou Sangafowa Coulibaly, Côte d’Ivoire’s Minister of Agriculture and Rural Development, says that such reforms are helping to revitalize the sector and power wider economic growth.

“Everyone knows that agriculture plays an important role in our country,” he explains. “To revive this sector, we have had two main focuses. The first is to make reforms that improve the governance of the sector, and the second is to develop a national investment program that allows for the return of investments back into the sector.”

The national investment scheme began in 2012 and Mr. Coulibaly says results to date have been impressive, with a surge in job creation across the country. Food security has also improved and revenues from crops such as cashew nuts as well as cocoa are up.

“We have enjoyed sustained agricultural growth and have been able to increase our food crop output by 28 percent in three years,” explains Mr. Coulibaly. “We have not only seen our quantities grow, but quality has improved as well. And more importantly, income earned by our producers has increased fourfold.”

Mr. Coulibaly adds that cashews have risen in price to 650 francs per kilo (approx. $1.05) against 75 francs before the reforms, while cocoa has more than doubled in price to 850 francs per kilo.

“Everyone needs the cocoa from Côte d’Ivoire,” says Ms. TouréLitsé, who adds that the improvement in quality has helped the country to fight off competition from fellow cocoa producers such as Ghana. “Today, three years or so after the reforms, it is the exporters who

“Today, three years or so after the reforms, it is the exporters who congratulate Côte d’Ivoire because our bet on quality has been achieved. As far as securing their income, they are more than satisfied” Massandjé Touré-Litsé, Managing Director, Conseil Café Cacao

congratulate Côte d’Ivoire because our bet on quality has been achieved. As far as securing their income, they are more than satisfied.”

There is little doubt that the country’s agricultural sector has faced considerable challenges over recent years but Mr. Coulibaly, whose team has remained in place following a reshuffling of the government in January, says the sector has now regained its place in the economy.

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The next focus is on private investment, he says, and by 2023 the government wants 50 percent of its cocoa output to be processed locally to ensure further domestic growth.

It is an ambitious target, but certainly at present, the figures are moving in the right direction. Cocoa production jumped to a record 1.7 million tons in 2014, up from 1.47 million tons in the 2012/13 season and international companies are moving into the space.

France’s Cémoi is investing in a chocolate factory with an annual production capacity of 5,000 tons, but the key will be to use the country’s agricultural growth to deliver structural reforms, which should ensure domestic producers can take a stake further down the production line and move into finished products, thus securing a greater share of the profits.

“It’s important – and not only for cocoa, but in all agricultural sectors. What we have achieved by putting this sector on a growth trajectory is nothing new. Côte d’Ivoire has known agricultural growth in the past. It has never been able to achieve structural transformation of this agricultural economy. This makes it turn from primary/raw to value-added production,” adds Mr. Coulibaly.

“We need finished products produced locally because we have a local market and a sub-regional market,” continues the CCC’s Ms. Touré-Litsé, who adds that other international partners are also in demand to invest in the sector, following the lead of Cémoi.

“We want Americans to come and work in partnership with us to come and set up transformation units such as that of Cémoi.

U.S. investors have their part to play,” Touré-Litsé adds. “They are already here. But they should go a bit further down the value chain and transform.”

Mr. Coulibaly adds that despite some apprehension when the reforms were first introduced, Côte d’Ivoire-based operators have been largely satisfied by the positive impact it has had on the market.

The CCC chief is also clear that foreign investors should have confidence in the territory, and its government, as they attempt to become an emerging country by 2020.

“You have to be courageous and get going. Africa is not at the other end of the world. Africa is not that continent of catastrophes, it is the continent of beautiful things. In Africa, there is development, it is the continent on which the rate of growth is greater. It takes bold businessmen to come and invest now.”

The government is also supporting extensive investment into the agricultural sector to both entice foreign direct investors but also to assist domestic producers. The Programme National d’Investissement Agricole (National Program for Agricultural Investment, PNIA) has pledged more than $3 billion to support the growth of cash crops such as cocoa, rubber and palm oil, with the injection already having helped create around one million new jobs for Côte d’Ivoire’s population.

“The PNIA should generate over 2.4 million jobs,” says Mr. Coulibaly. “Today we are already at one million, and the PNIA should contribute to the food security of six to seven million Ivoirians.”

Mr. Coulibaly also highlights the success of the Agriculture and Animal Resources Salon (SARA), an international trade fair that was rebooted after 16 years in 2015 to attract global investors to the country and provide information on opportunities.

“We want to put the accent on private investment, this is why we renewed the SARA platform,” Coulibaly adds.

While much of the focus at trade fairs such as SARA has been on cocoa, it is by no means the only product powering Côte d’Ivoire’s agricultural reawakening. Côte d’Ivoire is Africa’s biggest exporter of palm oil, a sector that is also attracting investment, while the country’s famous coffee industry is also being revived and Ms. Touré-Litsé says rising prices are helping to entice producers back.

“Today, coffee prices are rising, so naturally our production is increasing,” Touré-Litsé explains, adding that the sector has a vital role to play as the country looks to improve life for its citizens.

Indeed, the improving cocoa and coffee sectors are beginning to deliver real change to workers, while a recent tie up between the CCC and Cargill has seen them working with local farmers to deliver improved education and healthcare across the country.

A key aspect to delivering widespread social improvement however partly lies in the price of products, according to Malamine Sanogo, former Director General at the Cotton and Cashew Council (CCA).

“The price of products has an impact on the quality of life in rural areas. That is very important and that is why these reforms have taken place. The objective of these reforms is to ensure that there is an impact,” Mr. Sanogo says.

“If you take the cashew, before the reform, prices were set at 100-200 francs. They were set by the big operators who dictated the market. But with the reforms, prices have doubled or trebled and this has had a direct impact on rural areas. We are now working on capacity building for producers and we are urging that they group together to better sell and organize.”

Mr. Sanogo adds that by grouping cashew growers together and working together with them throughout the production chain, the entire sector can see an uptick in revenues as best practices are passed down. Bundling sales is also having an impact while educating producers about good agricultural practices is helping to ensure the quality of the cashew, and providing a better bottom line for producers.

“We are also developing other services for local producers,” Mr. Sanogo explains. “We are in the process of creating a sector development fund and we will improve the living conditions by digging wells, building schools and health centers, while also providing loans and supporting diversification, which is very important.”

It is another example of how Côte d’Ivoire’s burgeoning agroindustry and the opportunities it affords both domestically and internationally are so pivotal to the country’s future prospects.

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Private equity in Africa: Opportunities abound for the right investor Despite the recent economic slowdown, Africa remains one of the world’s greatest growth opportunities for private equity With the exception of South Africa, which saw the emergence of home-grown funds in the 1980s, the history of private equity investment in Africa is a relatively short one. Private equity investment was pioneered by development finance institutions (DFIs) such as the International Finance Corporation (IFC) in the early 1990s, in line with their mandates of promoting economic and industrial development. In the years that followed, a few local funds sprang up, generated by western-educated African general partners which started to invest more widely across the continent.

By 1997, there were 12 private equity funds that had collectively raised $1 billion to invest in Africa.

Today, private equity funds operating on the continent number more than 200, managing upward of $30 billion, according to the African Private Equity and Venture Capital Association (AVCA). These range from predominantly local funds that have operated in Africa for decades, including Nigeria’s African Capital Alliance and South Africa’s Ethos; regional funds such

as Actis, Helios and the Abraaj Group; and major global players such as KKR and The Carlyle Group.

The “Africa Rising” narrative coupled with the 2008 global economic crisis which dampened opportunities in developed markets pushed PE funds to emerging markets in the continent to seek levels of growth that were unattainable elsewhere.

The region’s rapidly expanding companies offer high returns for investors with the right appetite. With the arrival of global funds, the development finance institutions gradually gave way to more traditional, large institutional investors, such as pension funds, insurance companies, and endowments.

In the period between 2013 and 2015 alone, private equity funds mobilized $10 billion to invest in Africa and completed $14.8 billion in deals, more than double the level of the previous three years. While funds have in the past tended to target the same sectors that were supported by the development institutions – energy, banking, and commodities – recent years have

seen a shift toward investments focused more on Africa’s growing consumer base.

Since 2007, 57 percent of private equity investments were in companies selling goods and services, with around a quarter being invested into telecommunications-related businesses. Fifteen percent went into consumer discretionary business, such as electronics, cars and apparel, with just nine percent going into energy.

Investors are diversifying geographically, too. While a majority of deals used to be done in South Africa, the country’s share of African deals dropped to 15 percent on average from 2010 to 2015, according to AVCA, while East, Central, and West Africa captured 33 percent of total investment.

And there is a lot to invest in. An extra $90 billion a year is needed for infrastructure alone, and the rewards are tremendous. Shareholders in Uganda’s privatized and now publicly listed electricity grid, for example, get an annual, state-guaranteed return of 20 percent on all capital invested in the network.

In the period between 2013 and 2015 alone, private equity funds mobilized $10 billion to invest in Africa and completed $14.8 billion in deals, more than double the level of the previous three years

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But for Africa-focused PE funds, it isn’t always plain sailing. With limited data to work with and a multitude of business cultures and customs, transactions in Africa often take 18 to 24 months to complete, far longer than in developed economies.

Building local capabilities in order to operate successfully means that these funds are forced to employ more staff than similarly sized funds elsewhere, with a median of just $45 million in assets under management for each staff member, versus $112 million at international private equity funds.

What’s more, exits have to be planned with near-military precision. With options for divesting a holding limited, funds need to identify potential buyers for African corporate assets before they even make the investment. Traditional private equity funds also face the constraint of having to cash out of investments at specified times and at attractive return levels, no mean feat in Africa.

In general, private equity funds have tended to target big, profitable companies that dominate their chosen markets. But unlike Latin America with its multilatinas, Africa as an emerging market offers far less in the way of regional superstars to attract PE firms. There are currently only 400 companies in Africa with annual revenues greater than $1 billion. Consolidation is key here, which likely goes some way to explaining the growth in the share of deals involving private equity in M&A activity on the continent to 22 percent of total activity in 2014 from less than six percent in 2012.

Africa’s economy is still dominated by SMEs, many of them dynamic, vibrant firms operating in high-growth segments such as education, healthcare and consumer-facing industries. According to McKinsey and Boston Consulting Group, there are more than 10,000 African companies with revenues of $10 million to $100 million, which would be well served by the expertise and discipline private equity can bring to the table. Indeed, a recent survey by PwC found that almost a quarter of Kenyan family-owned SMEs prefer to raise capital from private equity, and that 37 percent plan to sell or float their companies, compared with a global average of 20 percent.

However, of new money raised in 2015, almost 70 percent is accounted for by three of the largest funds: Abraaj, DPI, and Helios, which need to make large-cap investments in order to efficiently put their capital to work. A gap therefore exists for “missing middle” funds to cater to the smaller investment targets.

This gap is gradually being addressed.

Approximately three-quarters of deals in the first half of 2016 were below $250 million, with most below $100 million. This is something of a shift from 2014, when 70 percent of funds went on buyouts of more than $250 million. Typical of recent deals is the $54 million investment by Actis in Food Lover’s Market (FLM), a South African independent food retailer with operations in 11 countries. This followed investments into home furnishings retailer Coricraft, sports shoe retailer Tekkie Town, and credit bureau and information services business CSH. For many countries in Africa, the presence of private equity funds can have an impact beyond the bottom line. Growing currently smaller African companies into larger companies is not only good for private equity firms at all points in the financial value chain; it is also good for economic development. What’s more, private equity can bring about job creation and improvements in corporate governance and health and safety. As Runa Alam, Chair of the AVCA Sustainability Committee, said in a statement: “As the African private equity industry was started with significant help from the DFIs, sustainability and impact have always been in the lexicon of private equity discussions and go hand-in-hand with doing business in Africa.” In a study of 200 African companies backed by PE between 2009 and 2015, AVCA found that companies generated a net increase of 10,990 jobs. Thanks to environmental, social and governance (ESG) requirements that PE firms embed into their investment terms, companies receiving investment are upping their standards. For example, when Phatisa, an Africa PE fund focused on housing and agriculture, invested in an egg producer in Zambia in 2012 called Goldenlay, it catalyzed the installation of a full-service onsite incinerator resulting in the reduction of toxic emissions.

However, the volume of PE investment has dropped sharply of late. In 2016, the amount of funds committed was just $2.3 billion, down 47 percent versus 2015’s $4.3 billion. This is largely attributed to a downturn in the continental economy as a result of a fall in commodity prices, but some are choosing to cut their losses and exit the market. Standard Chartered, for example, has slashed its private equity team in Africa in half as it looks to divest assets following a number of disappointing deals. “You need to be a bold investor today,” said Andrei Vo-

For many countries in Africa, the presence of private equity funds can have an impact beyond the bottom line.

Growing currently smaller African companies into larger companies is not only good for private equity firms at all points in the financial value chain; it is also good for economic development robyov, a partner in Bain & Company’s Johannesburg office, speaking to Bloomberg.

Nonetheless, for many investors, Africa remains a strong growth opportunity. Indeed, AVCA identified $3.8 billion in planned but not completed PE deals last year, up from $2.5 billion in 2015. Ninety-one percent of global limited partners surveyed by AVCA also said that they plan to either hold or increase their private equity allocations in Africa over the next few years.

There is still plenty of room for growth: while African countries account for three percent of global GDP, they make up less than 0.1 percent of institutional investor portfolios. Speaking at a panel discussion, David Marchick, global head of external affairs at Carlyle, said: “We’re not even in Chapter One of private equity in Africa. It’s more like the Prelude. We hope all the major firms will be there in five to 10 years.”

Despite a more subdued economic backdrop of late, the African growth story is still underway, driven by surging demand for infrastructure, goods and services. Private equity penetration on the continent remains low, but Africa continues to draw increasing amounts of interest from international investors with steady hands and the right amount of risk appetite.

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For insurers, Africa is a land of opportunities With much of the continent virtually virgin territory for the insurance market, new initiatives to reach the bottom of the pyramid and tap untapped customer segments are starting to pay dividends for insurers

With 13 percent of the world’s population but just 1.5 percent of its insurance market, Africa is woefully under-insured. With the exception of South Africa, on average, Africans spend just $70 per year on insurance, compared to $2,700 in Europe.

It’s a mixed picture. Fully two-fifths of all premiums in Africa are sold in South Africa, which has an insurance penetration rate of about 13 percent, ahead of the developed world average and far ahead of the rest of the continent. But the second-

placed African country, Kenya, has a penetration rate of just three percent. Nigeria, the largest economy on the continent, only has an insurance penetration of 0.3 percent.

The gap is staggering. But all this could be set to change. Africa’s young population, its growing middle class and an ever-larger returning diaspora, have increasing disposable income and are buying more and more insurable goods.

What’s more, big infrastructure projects

Africa’s young population, its growing middle class and an ever-larger returning diaspora, have increasing disposable income and are buying more and more insurable goods. What’s more, big infrastructure projects on the horizon in many countries offer promise for large-scale insurers

on the horizon in many countries offer promise for large-scale insurers.

Life insurance in particular has the potential to drive economic growth and development through mobilizing domestic savings and investment, creating employment and enhancing household welfare, and insurance in general can act as a stabilizer for local economies, but barriers need to be overcome in order to boost penetration and acceptance by the market.

The people of Africa need cover and protection in the same way the rest of the world’s population does. But low average individual incomes mean insurance premiums are seen as an extravagant luxury for many who can ill afford to pay for extras. Indeed, the typical premium from a traditional insurer can be as much as 10 percent of the average income. Meanwhile, a lack of government-mandated auto insurance or medical insurance means insurers have struggled to make inroads into the market. Firms have been actively lobbying through trade associations to make insurance mandatory for a number of assets from cars to houses, but thus far little progress has been made in signing these regulations into law.

In many cases, traditional solidarity networks take the place of insurance policies, with villages grouping together money to pay for unforeseen eventualities. A trust deficit is also present, in that people won’t buy insurance because they don’t believe that their claims will be paid, and in many cases, are unable to successfully make a claim due to challenges such as literacy levels or difficult access to insurance company branches. Add to all that the lack of formal bank account access by most African adults, and the challenges for insurance growth are clear. However, the development potential of insurance is too

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big to be ignored, and governments are increasingly looking at ways to build an insurance culture.

In a report on insurance regulation in the continent, EY noted that, “Most countries in the region are improving, or intending to improve, their governance and risk management regulations, with some countries opting for requirements resembling a simplified form of Solvency II.” For EY, the outlook for regulatory reform in Africa is positive, “fostered by the need for a healthier insurance market that can grow and prosper”. The firm believes that risk-based capital principles will help insurers to strengthen technical capabilities, improve their capacity to retain more risk and increase the availability of funds for reinvestment.

Recent transactions by international insurers are a clear sign that global companies are keen to tap the potential of the African insurance market. Last year, Prudential Financial, Inc. (PFI) invested $350 million into Africa-focused investment firm LeapFrog Investments to seek out investments in life insurance companies in leading economies on the continent, including Ghana, Kenya and Nigeria, to be made over a three- to five-year period. Charles Lowrey, chief operating officer of PFI’s international business, said to the Financial Times that LeapFrog’s expertise would help

By reducing these administration costs, agricultural insurance now makes sense for African smallholders, with technology opening up a new, profitable market for insurers.

it access an “African presence we couldn’t build ourselves.”

Meanwhile, global insurance firm AXA paid $84 million to take a stake in e-commerce firm Africa Internet Group (AIG), to provide insurance products and services through AIG’s Jumia unit and other AIG online and mobile phone-based businesses across Africa. Speaking to Bloomberg, AIG Chief Executive Officer Jeremy Hodara said, “The offline world, or real world infrastructure in Africa, is simply moving too slowly. You cannot find a real estate company or travel agency or insurance company on every second corner and our online businesses aim to fill that gap.”

Homegrown firms are also gearing up to expand, with South Africa’s largest five insurers all embarking on a pan-African strategy. The country’s largest player, Old Mutual, estimates it will invest $500 million in the region before 2020.

Human resources development will need to be a priority for any insurer moving into a new African market. The EY report quotes Matt Lilley, CEO of Prudential Africa, as saying that when entering a rapidly growing market, “human resources are almost always the major constraint, because your business grows faster than your ability to recruit and train people.” Unless more focus is given to training up new actuaries, insurance firms will struggle to meet consumers’ needs.

In order to realize the full potential of insurance in Africa, insurers are having to think quickly in order to create products that both suit the specific features of local markets and that will be accepted by the populace.

Thus far, most insurers in the continent target the group insurance market and the top economic strata of the population.

But new initiatives which enable insurers to target the bottom of the pyramid are seeing high uptake and good returns. Mobile microinsurance, which allows insurers to reach low-income, unbanked customers, has seen tremendous take-up, with 54 percent of the world’s microinsurance products now being launched in Africa, compared to 23 percent in South Asia and 20 percent in East Asia and the Pacific. Whereas most early mobile microinsurance projects were driven by insurers seeking new channels to expand their customer base, the latest offerings are driven by mobile network operators, who are taking the next logical step from mobile money into mobile financial services.

Bima, a mobile insurance startup which has gone into 15 developing countries, counts 40 percent of its customers in Africa, 60 percent of whom live on less than $2.50 per day. The company offers life insurance for premiums as low as $0.50 a month for a potential payout of $500, and has managed to achieve successful market penetration due to a strategy of setting up a network of hundreds of sales agents spread across the countries in which it operates, which help to educate people about insurance and sell the product.

Harnessing technology to reach new customers is vital to the success of insurers. In a continent where over half of the population is employed in agriculture, farming insurance is a huge opportunity. But with the sums to be covered too low in the face of administration costs, most African farmers have until recently been regarded as uninsurable. But of index-based insurance, which draws on big data to calculate claims, has been a gamechanger. Unlike traditional products, which need a claim assessor to go out and work out economic loss for an insured party, index-based insurance uses satellite imagery to check agricultural claims and average yield data to model losses from, for example, insufficient rainfall. Insurers no longer have to send out staff to a field; satellites can do the job for them. By reducing these administration costs, agricultural insurance now makes sense for African smallholders, with technology opening up a new, profitable market for insurers.

Although South Africa already has the continent’s most developed insurance market, insurers aren’t resting on their laurels.

Fintech innovation in the insurance space is gaining momentum there, too. One insurer, Discovery, has introduced tech solutions which track behavior such as gym visits and driving habits, which it then uses to assess risks and reward customers that make sensible choices and thus reduce its outlays.

Despite the challenges involved in getting their products out to Africans in the right way at the right price, insurers are setting their sights in growing numbers on the continent’s potentially lucrative markets. Dynamic demographics, fast-growing economies and rising incomes mean Africa is the next frontier, and a land of opportunities, for the insurance sector.

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Eco-friendly industrialization holds huge private sector potential Prime Minister Hailemariam Desalegn discusses Ethiopia’s plans to shift from an agrarian-based to an industrialbased economy and outlines the opportunities for investors as the government looks to the private sector to maximize the potential of market gaps opening up throughout the entire value chain, from agriculture and infrastructure to energy and tourism. Mr. Desalegn also highlights how Ethiopia is leading by example with its sustainable emphasis on development, as well as its regional integration efforts and foundations of peace and stability “I think the first bottleneck the private sector finds when trying to be competitive in Africa is the infrastructure gap. We have to fill this infrastructure gap as quickly as possible, because if you want to industrialize you need to have reliable power and electricity and you need to generate electricity from a renewable source. My country has chosen a path of development that we call the ‘Climate-Resilient Green Economy Strategy’, which is our comparative advantage” In the 2015 UN General Assembly you mentioned the Herculean challenges we face today: peace, terrorism, climate change. Could you please discuss Ethiopia’s efforts in this regard, such as being the second largest contributor to UN peacekeeping operations, or your Climate-Resilient Green Economy Strategy, and what example are you sending to the international community?

First of all, thank you very much for this opportunity. You can see that without peace, development of any kind is not possible. Peace is a pre-requisite for any kind of engagement and as far as developing countries are concerned, we need our people to mobilize around the development agenda and the democratization of the country. To do so, they need peace and stability.

Peace is, I believe, the most important issue that has to be addressed. If you take a look at the whole African continent, you can see that in places where there is no peace, the economies are dwindling and people are suffering. Ultimately, we all live in the hope of having an enjoyable life, if peace doesn’t exist, it reduces your existence. That is why we feel peace is the most important pillar necessary for our country’s development.

Coupled with any kind of conflict or clashes in countries, nowadays we have the issue of extremism, which uses religion as a shield when, actually, religion has nothing to do with extremism. I think this religious-based or camouflaged kind of terrorism –which affects the whole globe and is killing innocent people and focusing on soft targets – is something that we have to address very quickly, otherwise, the human existence is at threat. The recent incidents in Paris, Nigeria, Mali and in Cameroon, all at the same period of time, show that this is a global problem and we have to address this global problem with a strong global partnership and coordination.

My country is championing to bring peace and tranquility to Africa and beyond. We have a limited capacity, but we are trying our best, looking into the fact that peace is a pre-requisite for any kind of development and democratization.

So, peace is a pillar issue and fighting terrorism is an existential issue for us. These are the things we have to work on together with the global community and I hope the global community has now understood this properly: I hope they can set aside their differences and come together to fight terrorism and to make our world a peaceful place to live in.

Thanks to the advance in communications and information technologies and the social media network, so much information is available now and even the terrorists are using this opportunity to destabilize us. I believe

we have to come together and use the opportunities these tools bring for the betterment and positive growth and engagement of our people. We have to champion – and many countries have to champion – this regard.

When it comes to global warming and climate change, we have to understand this is not about theorists talking; it has become a reality and if we continue with this pace, it means we are going to disappear from the globe within the coming years.

Ethiopia wants to be a responsible global citizen in this regard, even though our contribution is minimal to the global greenhouse emissions and the impact of our contribution is very small. We have to showcase that if a country like Ethiopia, which is a less developed country, can contribute this much, then how much can big countries, like the United States, Europe, China, Mexico, India and Brazil contribute. So we are urging the global community to see the reality on the ground and that if global warming goes up 1.5 degrees centigrade, Africa is going to suffer.

Recently, we were drought stricken in Ethiopia because of El Niño and it is plain to see that even though governments are trying their best to improve these things, there is a limit, because this is a global impact that individual governments can’t face by themselves. We need to take climate change seriously. I am glad some countries – like the United States, China and Brazil – are now showing they are willing to improve their commitment, but still, the commitment is not up to the expectation of the global community.

This issue is no joke: the ice is melting in the Arctic, the ocean levels are rising, the droughts are visible in Australia and California; people are suffering. This has to be taken care of. Climate change has become an existential issue for all of us and every one of us should feel responsible. In Ethiopia we will continue to champion and to speak in one voice with our African brothers and sisters to showcase that Africa is the most vulnerable continent as far as climate change is concerned and that the global community has a responsibility to act and act quickly.

Regional integration is one of Africa’s key priorities, and Ethiopia is no stranger to it. As Ethiopia is Africa’s political capital, please discuss Ethiopia’s regional integration efforts.

If you see the global order, the larger the size of a community, the better their economy performs. Look at China or India, or Russia and Brazil. They all have large populations and their continental size is so big, they can com-

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pete globally. So, competition now is not within Africa, it is with the global community, which means Africa has to integrate very quickly in terms of trade, investment and infrastructure integration, which is essential for the mobility of people as well as that of goods and services, and fast movement in terms of logistics. All these are necessary for Africa’s integration.

We hope to expedite people-to-people relations, because Africa is an important region for Ethiopia. Of course, all regions are important to us, but we need to integrate Africa first so we can then integrate the global community. African integration is high on our agenda for the next 50 years and, also, in our short-term 10-year plan. We have used that plan as a roadmap to integrate Africa very quickly, while we are doing so, first we need to integrate all the regional blocks or regional economic communities. We have five regional economic communities and one of them is COMESA, which I currently chair. I think it is a very important issue to integrate Africa to move forward with global competition.

Ethiopia is one of the fastest growing economies in the world and the Growth and Transformation Plan is transforming Ethiopia’s economy.

On which strategic pillars will the GTP II be based?

First of all, as a country, we have to focus on our comparative advantages and the Growth and Transformation Agenda I was our roadmap for the last five years: we have focused on boosting agriculture production and productivity, and taking agriculture as an agent of growth, because we have huge potential in that sector.

We are modernizing agriculture, moving from subsistence agriculture to commercial agriculture, and that means a large number of small farmers are beginning to commercialize. Around half of our smallholder farmers have become commercial, but we still have the remaining half, so in GTP II we have to complete this phase of commercializing the whole farming community.

Aside from that, we have to go for private sector investment in agriculture. Our young people, graduates from universities and technical and educational colleges have to go into agriculture investment with the support of the government and the respective facilitations we can offer them, so they may move into modern, intensified agriculture.

So, we have two tracks: one, to continue modernizing our smaller farming and two, enhancing private involvement in agriculture production, especially for agro-processing.

We have to work on all the value chain, from production to processing, and then value marketing. These are essential areas that we have to see to in GTP II. We have to move from an agrarian-based economy into an industrial-based economy, and that transformation has to slowly take place in GTP II. In GTP I we achieved some transformation, but it is not enough; we have to see a visible transformation in GTP II. The manufacturing sector has to grow very quickly and therefore the manufacturing share of our GDP has to increase from 5-8 percent by the end of GTP II. This means we need our manufacturing sector to grow at least an average of 24 percent, which means a very dramatic, fast industrialization has to take place.

By doing so, we shouldn’t ignore small and medium-sized enterprises, which are the basis for equitable development. One of the pillars is rapid accelerated growth, but it should be shared equitably as well; that is why we are focusing on smallholder farms and their modernization, as well as on small and medium enterprises, because these are the ones that employ most of our people. But, of course, we also have to focus on large-scale manufacturing and especially our comparative advantage, which is leatherintensive large-scale manufacturing.

How are you creating the necessary conditions for industry to play a key role in the country’s economy?

I think the first bottleneck the private sector finds when trying to be com-

“I believe what investors seek is macroeconomic stability, and ours is perfect: we have a stable macroeconomic system and a prudent management of the macro economy. This is very important both in the fiscal and monetary levels.

Besides that, this country is peaceful and friendly to our entire neighborhood; we support peace beyond our borders, including in South Sudan and Somalia. We want to pacify our region”

petitive in Africa is the infrastructure gap. We have to fill this infrastructure gap as quickly as possible, because if you want to industrialize you need to have reliable power and electricity and you need to generate electricity from a renewable source. My country has chosen a path of development that we call the ‘Climate-Resilient Green Economy Strategy’, which is our comparative advantage. We have huge potential from hydro sources, wind, thermal, biomass and from solar energy. These are important sectors we have to focus on while generating more power for industrialization. Ethiopia is a hub for the Eastern Africa Power Pool; we can even export electricity to our neighboring countries.

The second area is trade facilitation and logistics issues, which are essential. In order to reduce the cost of transportation, we have established railway infrastructure from Addis Ababa to Djibouti, which is the main corridor for our exports to the seaport. I believe this infrastructure can help us reduce the costs of transportation, but it will also provide other facilitations like customs clearing, foreign currency availability, credit provision, investment licensing, and incentives provision, all those things that help the private sector move forward faster.

Aside from that, and in order to reduce these bottlenecks, we have chosen to learn from the Asian Tigers, that industrial park development is essential for fast development, giving one-stop service to our investors. In this regard, we are now in the process of establishing eight large industrial parks, which are federal parks, but regional states also have their own industrial parks of smaller size. Bigger industrial parks are on the process of development in the country’s major cities. I think this can also help us move forward. One example is the pilot industrial park we are building in Hawassa, which has 300 hectares of land. We have developed it very quickly; the investment attraction rate has become 100 percent and they have asked us to move into phase two. I believe this helps us in FDI attraction so we can reach that 24 percent of GDP growth in the industrial sector.

Minister of Transport Wokneh Gebreyehu told us that the state-owned enterprises (SOEs) are the strategic tools to carry out the developments the country needs. What is your assessment on the responsibility and performance of Ethiopia’s SOEs? In most developing markets, especially in Africa, there is a huge market failure, a market gap, where the private sector is not going to respond quickly. If the private sector is not ready or willing to respond quickly, then the government has to intervene. All our state-owned enterprises are meant for this purpose. The state has the responsibility of filling the infrastructure gap very quickly.

We have tried to attract many investors to the railway sector; it has been 10 years since we started and none have shown up. So it means the government had to intervene in infrastructure development. We did it and we are successful in this regard.

So, I think the government has a huge responsibility to fill the gap where the private sector is not ready or willing to come in. That is the

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principle we are following. Some say this is a state-led economic growth.

We say: it is a private-led economic growth, but the private sector was not able to go there so we had to intervene and fill the gap. But we are not the engine of growth, that role belongs to the private sector.

we feel that we have reached a very low rate of corruption. The government is zero tolerant towards corruption and, if we find anything, we take actions quickly against corrupt practices. So, this is another fact that can help attract more direct foreign investment into my country.

Ethiopia and the UK have had long and fruitful relations. What is your assessment on the current diplomatic and commercial relations of both countries and where would you wish to see more cooperation?

Bearing in mind we are read by top investors and key decision makers, what message would you like to send them so that they take Ethiopia into consideration when they think about investing in Africa?

I believe Ethiopia and the UK’s cooperation is excellent in many ways. First, the UK is our largest donor and supporter in our development cooperation.

We are direct recipients of the development cooperation fund from the UK, and this shows that we are a priority country for the United Kingdom, simply because Ethiopia utilizes every penny that is channeled into development.

Our wastage rate is almost zero and that effectiveness in utilizing this fund is essential. But our future strategy is to move from aid to trade; we want more trading investment attraction from UK. I recently inaugurated two big beer factories in which UK investors are involved; one is Diageo and the other is Duet. These two big companies support our farmers, because the raw material they use is malt barley, which is produced by our farming community and smallholder farmers, so it boosts their productivity and it increases our manufacturing capacity. There are big UK firms now engaged in Ethiopia and we also have big companies in leather and leather product manufacturing. So we have a number of UK investors in Ethiopia today and others who are interested in investing here, but we need more of them to come and invest in my country.

Another aspect of this cooperation, if you take a look at our economic cooperation, you’ll find the UK has supported us in reforming our tax system to mobilize more domestic finances for our development. That is a remarkable achievement: we have quadrupled the growth of tax collection. The result of this reform is that it has become fourfold. When we started GTP I in 2012 we were able to mobilize something like 60 billion birr, but now we have reached 197 billion birr within five years. This was achieved because of the reform and thanks to increasing the tax base and diversifying and modernizing the tax system with the support of the United Kingdom.

The economic cooperation also goes into education, which also helps boost the manpower necessary for the private sector. We have to use our demographic dividend: 70 percent of our population is below the age of 30, which is very young and is also a comparative advantage to compete globally and attract more investment.

We also have cooperation in terms of providing basic services like health services and even agriculture services. The UK is our major supporter in the provision of basic services to our community, and that also boosts healthy people who can engage in production, apart from enjoying a good life. So I can say we have an effective and excellent relationship with the UK.

The private sector is an engine of growth and it has to be very active and revolutionize the African context. In this regard, I feel that these days, infrastructure investment is where the private sector has to come forward, especially in energy, which is very necessary for African industrialization.

They can get involved in the generation of power in Africa and the Ethiopian government is ready. If the private sector gets into power generation we will buy back; the utility company can buy and purchase the power generated at a reasonable price so that it is competitive for the private sector. Now, if they want to get into any kind of infrastructure, especially in railways, we will go for BOT (build, operate and transfer) mechanisms they can engage, because it is another investment potential they can harness.

Apart from Africa’s need for industrialization, they could benefit from coming and investing in Africa in the industrial sector, and I don’t only mean manufacturing industries, but also in construction, mining and tourism.

These are all very important sectors they can come and invest in.

Ethiopia has become an attractive tourism destination, for example, and you know how important tourism is for the economy. My country is the cradle of mankind, and many people want to see their ancestors’ land; I believe that is worth visiting.

Ethiopia is also the original producer of coffee. When anyone sips a cup of coffee they should know that it came originally from Ethiopia, even though it is grown now in different parts of the globe; originally it was discovered in Ethiopia.

We are the origin of many things and diverse animals and species.

Our biodiversity is immense. We have 24 national parks and safaris and the renowned first century Obelisks. We are also the first place the Muslims came to when they were persecuted and the prophet told them to come to Ethiopia and find sanctuary here. So we have a diversity of both Christians and Muslims coexisting together peacefully. All extremists can learn that Muslims and Christians coexist in Ethiopia and are very friendly; in one family you may find half Christians and half Muslims. This coexistence is a global example; religion cannot be something that divides us.

So, I believe this is a country that is worth visiting, and we also have a great airline, the best in Africa; Ethiopian Airlines can help boost the tourism sector. We have potential in many areas and investors can come and evolve them, apart from manufacturing, which is one of the pillars we have taken into consideration in our strategy to develop the country.

How important is the rapport you build up with potential investors that come into Ethiopia and find a country where they can do business easily?

I believe what investors seek is macroeconomic stability, and ours is perfect: we have a stable macroeconomic system and a prudent management of the macro economy. This is very important both in the fiscal and monetary levels. Besides that, this country is peaceful and friendly to our entire neighborhood; we support peace beyond our borders, including in South Sudan and Somalia. We want to pacify our region.

Ethiopia ranks 14 globally with the lowest crime rate, even better than many European countries. This is one of the comparative advantages we have. If you walk around the city alone at night, nobody will bother you.

There is very little crime in the country; it is a peaceful country. This is one of the things the investors need to work and invest.

Another thing that is very important is that we are zero tolerant to corruption; Ethiopia is the least corrupt nation compared with the African standard. We know there are still some areas where we have to fight, but

Peter Ferdinand Drucker said, “The best way to predict the future is to create it”. What is the future you would like to create for your country?

We see that the 21st century is a century for Africa and for Ethiopia, and we have to harness this opportunity. It means that because the global community is maturing in many ways, Africa, as an emerging continent, has huge comparative advantages. The future that I want to see is one where people live in peaceful coexistence, where they have a decent job. And this can be created through transformation in many ways. But in this regard, we feel that, in my country, we need to go for renaissance that helps us to reach a middle-income level by 2025.

This is the short-term future I see, but in 50 years’ time, I want to see my country become an advanced economy, I want to see everybody living here in peace and prosperity and leading decent lives. So, we need to follow a democratic development that helps us move forward and reach that prosperous stage within 50 years’ time.

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Nascent financial sector

opens up to foreign investors

Ethiopia has one of the least developed financial industries in the world. But that is changing, thanks to a new openness to foreign investment and local banks investing in technology and improving services that are reaching an ever-growing number of Ethiopians

Ethiopia’s central bank is overseeing the unprecedented development of the banking sector, while building an attractive regulatory environment for investors Ethiopia’s financial sector has seen significant opening up since the government’s plan to come up with a series of policies that will open the market to international players. This move towards a more inclusive financial sector began three years ago, when the government amended a capital goods leasing business law that granted greater access to the local financial sector. Although there are still limitations as to where foreign firms can invest and local banks continue to have relatively limited financing capacity, things are changing.

Despite Ethiopia still being considered one of the least developed financial markets in the world, a key component of the country’s Growth and Transformation Plan (GTP) involves stimulating and maintaining economic growth around at least 11 percent per year. In order to do so, significant changes are required to improve the country’s financial sector, promote financial inclusion, modernize banking, and open up Ethiopia to foreign investment.

“The development of the financial sector is a key priority for the government,” says Ahmed Shide, former State Minister of Finance and Economic Cooperation (now Minister of Transport,

“Banking in Ethiopia is driven by high rates of economic growth, huge unmet needs for basic financial services and a steady inroad of technology”

Taye Dibekulu, President, United Bank

following the November). “We take it very seriously and have been working on it for the past 10 years.”

Indeed, under both the first (2010-2015) and second phase (2016-2020) of the GTP, the Ethiopian government has articulated development policies and strategies for all major sectors of the economy. According to Mr. Ahmed, the government will retain an active role in investing in infrastructure, institution building and human skill formation. The ultimate goal is to generate wealth for the private sector and allow Ethiopians and international investors to benefit.

“We have to modernize the banking sector in general; their ability to mobilize resources, their capacity to effectively give credit to the private sector has to be enhanced and the payment system has to be modernized. Our ability to regulate the banking sector must also increase,” says Mr. Ahmed.

To this end, the Development Bank of Ethiopia is being supported by the government so that it can extend larger credit lines to the development of the private sector, and agriculture and industrialization activities. Ultimately, it is expected that this will not only benefit the local economy, but also provide Ethiopian businesses with a greater opportunity to shine in the COMESA (Common Market for Eastern and Southern Africa) market and the African market.

In complement to its advancements in the financial sector, Mr. Ahmed further explains that Ethiopia is also establishing industrial zones to use as a platform for catalyzing investment and job creation, with a focus on export-led manufacturing. By offering cheap labor and power supply in these parks and improving transport, he adds that Ethiopia wants to be a hub for textiles and

The Worldfolio - Ethiopia other industries by attracting investors who are moving some manufacturing plants from China and other Asian markets, where costs are rising.

Taye Dibekulu, President of United Bank, explains that opening branches all over the country is key to his bank’s strategy in a bid to boost deposits and increase opportunities for the mobilization of financial resources. “The importance of banking in the Ethiopian economy is undeniable,” he says. “It is driven by high rates of economic growth, huge unmet needs for basic financial services and a steady inroad of technology that is currently shaping the way banking is done in the country.” He adds that United Bank, via the provision of financial resources to enterprises operating across the various economic sectors, is pioneering a number of IT-backed modern banking services and using innovative approaches to reach out to a growing number of customers. By boosting its financial assets and mobilizing resources, Mr. Taye argues that the bank is also contributing to the success of the various long-term investment projects carried out by the government.

Another key pillar of United Bank’s expansion strategy is a strong emphasis on investing in human talent. “Apart from procuring the hardware and software, we invest a lot in our staff in terms of acquiring the knowledge,” he explains. “We send some of our staff abroad for training and capacity building. This knowledge transfer allowed us to introduce SMS banking and Internet banking.”

As a result of these efforts, United Bank is now in a position to offer fully fledged internet banking services for transactional purposes. The hope is that this will allow them to attract new customers and to make their transactions at lower cost and in

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less time. Ultimately, these new multi-channel banking services contribute to financial inclusion, which is a significant improvement in a cash society like Ethiopia, where cash could formerly only be accessed from ATMs or bank branches.

In addition to being the first bank in Ethiopia to develop and offer agent and mobile banking, United Bank has also recruited agents in remote areas in order to allow customers in these areas to access cash through their mobiles.

Still, Ethiopia’s state of financial inclusion needs improvement. According to a study published by Getnet Alemu Zwedu for the UK Overseas Development Institute (ODI) in November 2014, the country’s banking penetration is less than 10 per cent of all households. Yet another study by the African Development Bank in 2013 asserted that the percentage of adults who have bank accounts is 23 per cent in the whole of Africa, and 22 per cent in East Africa.

In addition to improving on these percentages, Mr. Taye also stresses the importance of ensuring strong compliance in line with international standards. “Nowadays, compliance is a critical requirement for global banks, and fulfilment demands a lot of investment,” he explains, adding that the bank decentralized its trade finance function. As a result, transactions are instead initiated at the branch level and core banking is interfaced with Swift so that transactions can be handled with greater ease.

“We believe the influx of investment and business opportunities that is bursting forth in Ethiopia is likely to create chances,” concludes Mr. Taye. “These will help us enjoy a leap in growth and put us in a position to reap the benefits that will accrue as a result of the financial deepening taking place in due course.”

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