Tag: africa

Egypt set for energy revolution with innovative solar strategies

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Egypt is undergoing an energy revolution, with the share contributed by renewables set to soar. Innovative solar strategies form a central part. 

“The Gulf States have oil; we have solar,” remarks Ahmed Zahran, CEO of the Cairo-based Egyptian solar company – Karm Solar – leaning against the window of a six-story office building in the leafy streets of Cairo’s affluent Zamalek neighbourhood.

Aswan in Upper Egypt ranked the third most sunny place in the world by the World Meteorological Organisation, proves his point.

As Egypt reimagines itself in the wake of the 2011 revolution, the country’s power mix is undergoing a transformation, too. Egypt’s current installed electricity capacity is around 42GW, of which 91% is backed by fossil fuels, the rest renewables. The government, however, envisages a rebalancing, with renewables responsible for 20% by 2022 and 37% by 2035. Solar, alongside hydro and wind, will be the driving force behind this capacity shakeup.

In fact, analysts have argued that if the solar market continues its upward trend, the government projections may turn out to be modest, with the International Renewable Energy Agency predicting that solar alone could contribute as much as 44GW by 2030 – making it the second largest energy source after gas.

Largest solar park

Benban solar park – located just north of Aswan – is set to be the world’s largest solar complex, and after some initial difficulties the project is shaping up as a trailblazer. Comprised of 41 individual solar photovoltaic plants, the park is expected to contribute around 1.6-2.0 GW of power by mid-2019.

In recent years, the Egyptian government has utilised two distinct models to drive investment into solar: feed-in tariffs (FiTs) and competitive tenders. FiTs work on the basis of a set price paid to the producer over a number of years, meaning that the price of the energy is not market-based, and therefore acts like a subsidy.

Benban solar park is the result of a two-round FiT scheme beginning in 2014. After initial interest from a German and Egyptian developer, contracts stalled when the Egyptian government insisted that any arbitration must be held on Egyptian soil. This was amended in the second round of the FiT, and a large consortium of public capital led by the European Bank for Reconstruction and Development (EBRD) stepped in to finance almost all of the projects, which are due to receive $78 per megawatt-hour under a 25-year power-purchase agreement.

In total, 16 development finance institutions (DFIs) are supporting Benban to the tune of $1.8bn, including the International Finance Corporation, the African Development Bank and the Asian Infrastructure Investment Bank.

With the projects underway, the experience is seen as a leading example of crowding in a consortia of development financiers. Furthermore, its developers, faced with logistical challenges and grid constraints, have joined hands to create the Benban Solar Developers Association – soon to become an NGO. Rarely do private solar-developers work effectively together to overcome challenges in the context of competitive emerging markets.

“In many ways Benban is an excellent case study of ways to support large scale renewable infrastructure projects, with a wide body of players and participants coordinating a joint effort,” comments Benjamin Attia, global solar markets analyst with Wood Mackenzie. “The market is now finally booming.”

Going once

With Benban due to come online this year, attention now turns to two competitive tenders: 200MW in the Kom Ombo project in Aswan, and 600MW of capacity in the West of Nile Area. This change in government policy away from FiTs mirrors a global change in strategy to drive investment into solar energy. Some have accused subsidies and government incentives of curbing the European and North American solar markets, arguing that they create unsustainable business models that rely too heavily on government support.

Tenders, otherwise known as auctions, allow governments to define a particular project – including its proposed capacity and sometimes the location – and then invite producers to bid for it. It is the competition associated with the bidding process which results in the market-based price of the energy, and hence the instruments’ growing popularity. The Egyptian Electricity Transmission Company reviewed six bids for the Kom Ombo project, with a Saudi Arabian company outbidding a Spanish developer.

While the jury is still out on the most effective model, Attia explains how competitive tendering can be a useful tool for solar expansion.

“The best way we have seen on a global scale is to create very transparent and regularly cadenced tender schemes,” he says. “Subsidies are no longer necessary for solar projects, particularly in the Middle East, as these are some of the lowest cost projects in the world. When the ticket size is large and the barriers to entry are low – and there are good governance and bankability – these large tenders can draw in big balance sheets from around the world.”

Private sale

Selling energy to government, however, is not the only way to help solar reach its full potential in Egypt. Cairo-based solar company Karm Solar is offering an alternative model: one that produces solar energy and sells it to the private sector.

“What we are doing which is new, even on a global level, is we are able to produce the electricity from central solar stations, and ship that electricity to a distribution network which we own to then sell at the doorstep of shops, offices or houses,” says Ahmed Zahran, founder and CEO. “We are the first company in Egypt to obtain a licence for the generation and sale to the private sector.”

The company has grand production and distribution ambitions, and currently services 15 private clients with a capacity of 73MW. The Egyptian market, Zahran argues, is the most coveted in the region and is ripe for a business model like his, which is motivated by profit rather than incentives. In fact, Karm Solar sell their energy at a cost lower than government prices, he says, and have thus far been almost entirely financed by angel investors.

“We own everything to make sure we are completely in control of the product we are delivering and in control of the costs,” he says. “That’s the only way to be in control of the returns that we want to achieve.”

As the government target of 20% renewables by 2022 looms on the horizon, both the public and private sectors are exploring innovative solar strategies which should convincingly see this target met.

Contribution to Tom Collins (African Business Magazine)

When young talents lead innovation and development in Africa

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“Solving Africa’s complex challenges will require innovative solutions including those developed by young inventors from the African continent. It is important that we create the necessary environment to discover them.”

Sixteen young African investors weree recently shortlisted as finalists of the Africa Prize for Engineering Innovation awarded by the Royal Academy of Engineering.  While the overall winner and three runners up will receive cash funding, all the finalists will receive training and the mentoring they need to scale up their inventions and ultimately translate them into commercial products. The inventions that range from a vertical farm to an online vaccination platform to a device that can convert air into drinking water using solar technology, are bound to deliver practical solutions to Africa’s challenges, including food insecurity.

Indeed, Africa’s recurrent challenges can benefit from many inventions coming off the African continent. Moreover, Africa stands to make more headways when its young people, who represent 60 per cent of its current population, take the lead.

But to pave way for many more inventions from Africa’s young minds, the continent must invest in creating an environment that makes it easy to discoverer these inventors. So how can the African continent pave the way so that many more young inventors are discovered?

Beginning at a young age, when students are attending elementary and high schools, the African education system should make room for young students to be creative, problem solvers and critical thinkers. Currently, the education system, in many countries, including my native country Kenya, and South Africa, is poor quality and mostly focuses on content mastery. I know. The primary and high school I attended in Kenya, for example, focused on teaching theories and materials we needed to pass our national examinations. None of the teachers ever challenged my peers and me to think and create. It was all about mastering the contents and regurgitating them back in the exams. Further, we also lacked other resources including textbooks, libraries, science labs and other resources to help create a conducive environment.

Across Africa, stakeholders investing in education operate under the assumption that passing national examinations gauged by the grades students get is clear evidence that investments in education have paid off. The caveat to this approach is that it does not necessarily prepare students to be inventors or problem solvers and to meaningfully participate in developing our global world.

Moving forward, if Africa wants to reap the dividends of inventions by African students and its young minds, African schools should adopt action-oriented teaching approaches that hone critical thinking skills, creativity and innovation. Africa’s young minds should consistently be challenged to identify local problems, seek out relevant information and resources, and to design authentic plans and solutions to solve the challenges they have identified.

Once discovered, future inventors must be supported through training and mentoring. They must also be funded. Doing so will allow them to fully develop their inventions and translate them into products that offer solutions to the challenges many African citizens face.

The Royal Academy of Engineering prize of mentoring and training support and funding will definitely allow these innovators to translate their inventions into products and to scale up and widely disseminate them. The good news is that, presently, across Africa, there are several programs including The Anzisha Prize, Made in Tony Elumelu Entrepreneurship Programme and the Innovation Prize for Africa that are actively supporting, mentoring and funding  young African inventors.  This needs to continue.

Moreover, as we aim to pave the way for many African inventors to rise up, while strengthening the overall African innovation ecosystem, we must protect these ideas and ensure that people adhere to intellectual property rights. Before the young inventors’ ideas are shared, they should have the opportunity to trademark and protect them. At the moment, many African countries, research institutions, and universities and other institutions where inventions are born do not understand quite well how to manage intellectual property assets including knowing the available options when they want to protect and translate their inventions into commercial products for national, regional and international markets.

Eventually, when these inventions are translated into products, governments should create market opportunities for their products to ensure that they thrive. For example, government hospitals can buy and install the vertical gardens in hospitals, and these could be used to grow the food to feed patients. The Kenyan Government could use the Chanjo Plus online vaccination platform and roll it out across the country. Further, these inventors must be funded so that they can build industries that further support the production of the products they have created. Such support would further lead to economic empowerment and job creation by the youth and for the youth.

Solving Africa’s complex challenges will require innovative solutions including those developed by young inventors from the African continent. It is important that we create the necessary environment to discover them. Once discovered, we must nurture the inventors, celebrate them, support, and fund their ideas all the way, until they have products and companies to manufacture these products. It is the right thing to do.

Written by Dr Esther Ngumbi,  a distinguished post doctoral researcher at the Entomology Department, University of Illinois at Urbana Champaign. She is also a food security fellow with the Aspen Institute New Voices.

Significant progress on path to Africa Continental Free Trade Area

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The African Continental Free Area (AfCFTA) is a vital step for boosting intra-African trade. Eighteen countries have ratified it so far, and it is highly expected that 4 more will to do so in the coming months – to meet the 22 ratifications required.

From around 750 CE, the town of Gao in modern-day Mali played a crucial role in the trans-Saharan trade route. The town, which lies on the Niger River, thrived as a major trading centre for gold, copper, salt and slaves travelling north towards modern-day Libya.

The town’s importance and wealth diminished when Portuguese explorers in the 15th century opened up new avenues for trade via sea, before the French colonisation of Mali ended much of the empire’s trade with its northern neighbours.

Today, the trans-Saharan trade routes are mostly used by Berber nomads and a sparse number of trucks carrying fuel and salt. The African Union (AU) and African Development Bank (AfDB) have proposed extending the Trans-Sahara Highway from Algiers in Algeria to Lagos in Nigeria via Tamanrasset.

The project reflects a desire to reignite intra-African trade, which was stymied for many African countries during the colonial era. Trade between African nations stands at 18% of total regional trade, compared to 59% in Asia and 69% in Europe.

The African Continental Free Trade Area (AfCFTA), which has been signed by 49 African countries and could boost African economic output to around $29 trillion by 2050, is a vital step in boosting trade among African countries, according to one of the architects of the agreement, David Luke, coordinator of the African Trade Policy Centre (ATPC) at UNECA.

“The reason intra-African trade is so small is that colonialism forced Africans to export their raw materials outside of the continent to Europe and the US; therefore, much of the trading infrastructure was built with this in mind,” he says. “The AfCFTA is a new paradigm which lets African nations reduce tariffs and non-tariff barriers such as red tape and inconsistent standards for products, which will help boost economic activity across the continent.”

The benefit of the deal is clear. However, to date, only 12 out of the required minimum of 22 member states have ratified the accord. The AU had hoped the agreement would be ratified by the end of 2018. The AfCFTA has six main protocols, including rules on trade in goods, trade in services, rules and procedures on dispute settlement, competition policy, investment and intellectual property rights. All the protocols have to be agreed upon by member states by January 2020 for the full adoption.

While some critics have voiced concerns about the pace of ratification, defenders of the deal believe that significant progress has been made, including Vera Songwe, executive secretary of the UN Economic Commission for Africa (UNECA).

“I believe we are doing very well in terms of ratification of the deal and I’m confident that we will reach the minimum threshold by the middle of 2019 despite the fact that Nigeria is yet to sign up to the agreement,” she says. “There is definitely momentum behind the deal but we need to ensure that we are ready to implement the next part of the strategy the day after it is enacted.”

President Muhammadu Buhari of Nigeria announced that the country would delay signing up to the accord pending further discussions with local trade unions and the business community. The absence of Africa’s largest economy has led some to question the viability of the deal. However, Buhari’s decision is based on a political calculation rather than a lack of faith in the deal, says Gerhard Erasmus, co-founder of the South African-based Trade Law Centre (TRALAC).

“There are very powerful lobby groups who would prefer that Nigeria doesn’t enter into any regional trade arrangements that could challenge their interests,” he says. “And, with the elections coming up next year the incumbent President Muhammadu Buhari has indicated that he is quite sensitive about domestic opposition for this agreement and the official line is that they are consulting the relevant players.”

It seems that it will only be a matter of time before Nigeria – which actually chaired the negotiations that eventually led to the AfCFTA – signs up, with government officials, such as vice president Yemi Osinbajo making positive statements about the deal.

The agreement has, however, received a major boost after South Africa’s parliament ratified it in December. South Africa’s total trade with Africa amounted to R421bn ($30bn) in 2017, with exports amounting R311bn and manufactured goods accounting for 64% of exports to the region. The continent’s second-largest economy and the largest contributor to intra-Africa trade is expected to submit the approved instrument of ratification at the 32nd Ordinary Session of the Assembly of the AU in February 2019.

Reforms

Most African businesses pay an average of 6.9% tax on cross-border transactions and that does not include the additional costs of non-tariff barriers such as excessive bureaucracy, regulatory discrepancies and delays. The agreement calls for member states to cut tariffs on 90% of goods traded. However, removing tariffs is only the first step. Serious reforms will need to be implemented by member nations signed up to the agreement.

“I’m not one of those that believe that suddenly when this agreement is ratified, there will be an explosion of booming inter-African trade,” says Erasmus. “Trade agreements around the world only work when there is a consistent, well-designed effort to improve governance and transparency and, most importantly, there is a private sector producing tradeable goods that other countries want to buy.”

“Therefore, African policymakers need to address nontariff barriers to trade, such as limited industrialisation, weak productivity and poor infrastructure,” he adds.

The success of the agreement hinges on African countries implementing pro-private sector reforms and diversifying their economies. While countries including Tanzania, Kenya, Uganda and South Africa have similar diversification levels to other emerging markets, oil export countries such as Nigeria and Angola have become more dependent on revenues from commodities.

Nevertheless, if endorsed by all the countries of Africa, the AfCFTA would potentially create the largest free-trade area in the world, and leverage Africa’s surging population and a combined GDP of more than $3.4 trillion. However, the agreement is only an enabler. Governments need to create the ideal environment to allow trade to flourish.

Credits to: Taku Dzimwasha (African Business Magazine)

Angola-China Trade Surpasses U.S.$26 Billion

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The business volume between Angola and China surpassed last year the USD 26 billion figure, however, the Asian countries authorities predict an increase soon of such value, given the intensity of the bilateral relations.

The information was given last Friday, in Luanda, by the Chinese ambassador to Angola, Cui Aimim, at the end of a meeting with the Speaker of the Angolan National Assembly, Fernando da Piedade Dias dos Santos.

According to the Chinese diplomat, the bilateral co-operation is growing every day, including in the parliamentary domain in which the two states have frequent contacts.

Angola is the main partner of China in the African continent, with the bilateral trade growing rapidly in the past few years. However, the commercial relationship is still too much focussed on crude-oil.

According to Cui Aimim, whose diplomatic mission to this African country is nearing its end, the trend in the coming times will be to diversify the commercial exchanges, with emphasis on agriculture.

“We’ll expand the trade to other goods, such as cassava flour, tropical fruit juices, mineral products besides oil”, emphasised the Chinese diplomat.

How e-commerce supports African business growth

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Africa’s booming e-commerce sector can not only jump-start small businesses but also help large companies enter a market full of energized consumers.

Africa has one of the most digitally connected populations on the planet, with 400 million internet users. Sacha Poignonnec, co-founder and co-CEO of Jumia, Africa’s largest internet group, discusses why the e-commerce opportunity in Africa is so great for companies large and small in this interview with McKinsey’s Georges Desvaux. An edited transcript of his remarks follows.

There are more than 400 million internet users in Africa, which is the second-largest internet-user population on the planet, just after China. And yet distribution for goods and services is challenging. And it’s notorious that in Africa, for consumers, it’s more difficult to find goods and it’s more difficult to shop. Because of mobile and because of the internet, consumers now have a way to access goods and services in a more efficient way.

Understanding Africa’s consumers

Consumers in Africa want the same thing as consumers everywhere else: they want good products at a good price, good quality. It’s the same thing. I speak to a lot of business partners who are thinking about Africa and how different it is. There are some things which are the same everywhere. And for us, consumers want to save time and save money.

In terms of consumer segments, what is surprising is we have a lot of consumers who are not necessarily in the big urban areas. From an outsider, one could think, “OK, e-commerce is for the inhabitants of Lagos and Cairo and Nairobi.” We have a lot of consumers who live in the small villages and in the small cities. Why? Because they see a lot of choice on Jumia, and they don’t really have that choice in the areas where they live. For them, it’s very difficult to have access to the goods.

Overcoming barriers to business

One of the barriers, obviously, of e-commerce is the logistics because we have to move the products from the merchants who are selling the products to the consumer who is ordering the product. And logistics is obviously a big challenge for whoever knows Africa.

In Africa, there’s no address system in most of the cities. For someone to find a consumer, you need to have a local partner who knows where the consumer is, based on very subjective information. And, for example, if you say in a city in Africa, “I live in the third street by the church with the blue door,” that’s the address.

Building Africa’s business ecosystem

I very much believe e-commerce provides a much safer and cheaper way for small businesses to grow, because the investment required is smaller, and yet you are able to reach so many consumers. For example, one of our largest sellers in Tunisia is a person who started from scratch, and he was designing T-shirts. Then he started to sell them online. And then he was selling more T-shirts, and he hired one person to help him with the production of the T-shirts, and now he has 20 employees. And he is selling maybe 80 percent of his merchandise online, and now he opened a store.

This is one of the many examples that we see where someone can start from zero and grow. Start small, invest, and from there you grow, and then you go from online to offline instead of doing the same thing as in Europe or the US, where the merchants go offline to online.

Credits to:

Georges Desvaux is a senior partner in McKinsey’s Hong Kong office. 

Sacha Poignonnec is cofounder and co-CEO of Jumia.

Ethiopia selected to host 2020 World Economic Forum

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The World Economic Forum (WEF) in 2020 will be hosted in Ethiopia, as the Eastern African nation hopes to attract more investment.

The announcement was made following a meeting between Ethiopia’s prime minister, Abiy Ahmed and Prof Klaus Schwab, Founder and Executive Chairman of WEF.

The office of the prime minister said the two leaders discussed the importance of a collaborative approach among government, the private sector and civil societies in addressing key global challenges

Abiy Ahmed attended the WEF 2019 meeting held in Davos, Switzerland, where he met several business leaders before heading to Belgium.

PM Abiy Ahmed courts investors

Abiy Ahmed, who has championed reforms since taking office in April last year, called upon investors in Davos to take advantage of the huge business opportunities available in the country.

Reiterating Ethiopia’s plans to liberalize the previously state-controlled sectors of telecommunications, banking, and aviation among others, Abiy Ahmed pledged to do more to make it easier to do business for anyone planning to invest in Ethiopia.

“In order to enforce our up word trajectory and achieve even more rapid and sustainable growth, Ethiopia has embarked on a comprehensive reform process since last April,” he said.

Credits to Daniel Mumbere

“Speed up, scale up and synergise”, says Trade and Development Bank chief – Admassu Tadesse

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Admassu Tadesse, President, and CEO of the Trade and Development Bank (TDB) – shares his thoughts on the bank’s growth strategy and the prospects for drawing more investment into Africa.

Admassu Tadesse is believed by some to be one of the outstanding bankers of his generation. He has an enviable CV, having attended LSE, Wits and Harvard and having gained experience in banking in the US and South Africa. Like many Ethiopians, he is self-assured and determined. Colleagues say he has a very clear reading of situations. He was catapulted to the head of the Trade and Development Bank (formerly PTA Bank) at 41 and has since assembled a strong team of youth and experience, giving them, as he puts it, the reins to grow the bank.

“Systems are developed by people, systems are managed by people and in the end it’s all about talent and the ability to have an eye for what will work and what will not work,” he says.

Since he joined the bank in 2012, its balance sheet has grown from $1bn to nearly $6bn. To put this into context, the AfDB’s loan book stands at approximately $18bn and that of Afreximbank at $12bn. Over that time, he has managed to bring in a number of institutional partners as shareholders to support its growth, including African pension funds and insurance companies. In 2017 the bank grew 20%, despite a challenging environment. We caught up with Tadesse on the sidelines of the Africa Investment Forum in Johannesburg, where he called for partners to speed up, scale up and synergise to ensure greater investments into the continent. Here are excerpts:

How do you see the current economic outlook on the continent?

The year 2018 has been quite a watershed in many respects. We have seen Zimbabwe reset, we’ve seen Ethiopia reset, we’ve seen Angola reset and we’ve also seen South Africa reset. So these are four very significant countries where the political risk perspective is somewhat improved. We’ve also seen South Sudan sign a peace agreement. We’ve seen Egypt advance its reforms and improve its economic performance and prospects. We’ve to see Sudan come out of sanctions.

That’s seven countries where there have been very significant positive developments. We are not operating in any way in Somalia but Somalia also has a government that’s looking much more robust than in the past. So just generally in Eastern and Southern Africa, there has been a positive development. We are seeing sanctions being removed from Eritrea on the back of the wind of peace that is coming out of the Horn of Africa. So that’s eight very interesting developments. It means that there are more prospects for co-financing projects and opportunities with partners.

And the investment picture in your East African base?

We come from East Africa, which is continuing to grow very strongly. We have Tanzania, Kenya, Uganda, Ethiopia, Rwanda. These five countries are all growing in the range of 5 to 9%, so the average growth rate would be the highest in Africa. Mozambique is beginning to recover and they’ve also now closed one or two big deals on the gas front. All of this adds up and translates into a more interesting set of transactions to come on many different fronts.

Will you continue growing at 20% in the foreseeable future?

We have an asset growth strategy that is scenario based, where growth can range from 5-20% per annum. Our base case, our working plan, is to grow assets, mainly loan and investment assets, at between 10-15% per annum. The low case is 5-10% and the high case is 15-20%. If the business environment is enabling, and we are able to originate healthy assets on a diversified basis we can still do 20% per annum.

Historically, the majority of our loan book has been trading finance, roughly two thirds, and our long-term loan book would range between 30% to 40%. Our strategy is to keep trade finance as being a majority [of our loan book]. You don’t just grow for the sake of it, we are always trying to shape our portfolio that meets certain requirements. The success of any portfolio depends on the geographic base on which it sits.

Which sectors are giving you case for excitement?

We are seeing quite a bit of demand coming through on the resources side, gas and mining. Agri-business is also a continuous area of growth. Trade is back as well, dominated by commodities. And with higher valuations, the volumes of trade have gone up again. So that’s also going to give us some good opportunities for further growth in some of those sectors. The power sector is well poised to attract considerable investment. It is attractive as an investment sector now because the cost reflective tariffs today have moved us beyond where we used to be in the past, where power was so deeply subsidized.

Transport is also a sector where we will see more activity. There are a lot of opportunities for spinning off transport projects, such as toll road based projects.

The speed of execution has been a common complaint from private sector operators with regards to DFIs. How is the organisation adapting to respond to their needs?

We’ve introduced innovations in our organizational structures. We’ve established offices closer to the subregions in order to speed up access to the bank and to have people residing in the different sub-regions able to receive applications and process them quicker. At the same time, we’ve strengthened our capacity at the centre to actually process the deals, to do the due diligence, prepare the papers, get the approval systems in place. The committees meet much more regularly. So we’ve been investing in a more efficient and quicker business process.

You mentioned that investment rates need to grow. Can you elaborate on what you meant?

We are actually at record levels of FDI and fixed capital formation has improved. At the turn of the millennium, we were all very critical of the levels of investment in Africa.

We were looking at very low numbers and today, there are many countries that are getting very close to 25% and quite a handful that are well above 25 and several above 30. Twenty-five percent fixed capital formation is considered to be an adequate level of investment to help generate 6% growth. But with African population growth at about 3%, we need to be aiming higher. We’ve seen the Asians invest for sustained periods, 35%, 40%, 45% of GDP.

It’s very important that we keep stimulating the discussions around how to regenerate surplus savings so that we can finance more of our own investment, but that is not going to be very easy to do because savings are very low in Africa. The private sector has a domestic, regional and global character and we need much more of that to come in and boost the numbers.

We’ve scaled up already, we are doing much better than we were 10 years ago, but it’s still nowhere near where we need to be. We have to be much more aggressive, much more proactive and innovative in how we do things. We really have to boost confidence internationally to make Africa a very serious investment destination.

Source: African Business Magazine

Chinese firms to construct Economic Zone in central Zambia

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A consortium of Chinese firms will construct a Multi-Facility Economic Zone in central Zambia’s Chibombo district, with President Edgar Lungu saying the project will go a long way in helping the country in its endeavor to ensure value addition to local products.

The groundbreaking ceremony of the Jiangxi Multi-Facility Economic Zone was held in Chibombo district on Wednesday. It will cover 600 hectares of land, with an initial investment of 300 million U.S. dollars in the first phase which will create more than 5,000 jobs.

Speaking during the groundbreaking ceremony, the Zambian leader said the project by a consortium of Chines companies — the Jiangxi United Industrial Development Limited, marked another symbol of the strong relationship between the two countries which dates to pre-independence period.

The Zambian leader said the project was one of the fruits from his recent visit to China where he attended the Forum on China-Africa Cooperation (FOCAC) summit held in Beijing in September.

Zambia, he said, has already started benefiting from the 60 billion U.S. dollars in funding support pledged by Chinese President Xi Jinping at the summit to serve China-Africa cooperative projects, as evidenced by the industrial park project.

According to him, the Economic Zone was also a culmination of a business forum the Zambia delegation attended in east China’s Jiangxi Province on the sidelines of the FOCAC summit.

“It is indeed a great mark of achievement to see that it’s not long ago that we visited China, but we are already witnessing the fruits of our visit. This is an indication of the importance that People’s Republic of China attaches to the bilateral cooperation with Zambia,” he said.

The Zambian leader further reaffirmed his government’s commitment to create a conducive business environment for their operations and commended the provincial administration in Jiangxi Province to ensure the actualization of the Economic Zone.

He further said his government will continue to encourage the development of multi-facility economic zones, industrial parks and farm blocks in order to foster industrialization and value addition.

Li Jie, Chinese Ambassador to Zambia, said the economic and trade cooperation zone plays an important role in pushing forward the Belt and Road Initiative and industrial capacity cooperation between China and Zambia.

“We believe that the project will fully take the location advantages of Central Province to promote the agriculture, manufacturing and food processing industries, which will contribute to local economic development and regional industrial upgrading,” he said.

Xu Guojian, a representative of all shareholders, said the project was the fulfillment of one of the eight major initiatives proposed by the Chinese president at the 2018 FOCAC Beijing summit where Chinese firms were encouraged to expand their investment in Africa by establishing and upgrading a number of economic and trade cooperation zones.

Source: Xinhua

Boosting green investment in Africa with the African Development Bank’s AFAC initiative

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Launched on the sidelines of the Annual Meetings of the African Development Bank in Busan in May 2018, the African Financial Alliance on Climate Change (AFAC) was the subject of a special session held at the Africa Investment Forum on November 7 in Johannesburg.

The AFAC Steering Committee comprising investors, lenders, regulators and insurers from Africa’s financial sector, met to approve the guiding principles underlying this new African Development Bank initiative, which seeks to boost the flow of climate finance towards the continent.

Currently, Africa receives only three percent of the world’s climate finance despite being the continent most at risk from climate change and accounts for less than 4% of global greenhouse gas emissions.

African Development Bank Vice-President for Power, Energy, Climate Change and Green Growth, Amadou Hott, opened the session in a packed room, pointing out that the Bank was at the front line of the fight against climate change in Africa: “We have agreed that 40% of our investments will include a ‘climate change’ aspect by 2020.  We reached 28% last year and will achieve 32% this year”.  He added, “If the Bank is strongly committed to this fight, investments must be strengthened.”

Jens Frølich Holte, the State Secretary for Foreign Affairs in Norway, one of AFAC’s earliest contributors, reaffirmed his country’s support for the Bank’s action and the new pan-African financial alliance launched by the Bank to increase climate finance for Africa.  “We are an enthusiastic partner of the Bank”, he began.  “A transition is under way in the energy sector in many African countries, and the market for renewable energies is developing very quickly.  But we are surprised that there is not more investment in Africa, where the potential is huge.  It’s a shame”.  He continued, “In 2017 Norway pledged to double its development aid for renewable energies by 2019.  And Africa will be at the heart of these actions!”

The co-chair of the AFAC steering committee, Rwandan Minister of Finance and Economic Planning, Uzziel Ndagijimana, began by thanking the Bank’s leadership for this excellent AIF initiative, before describing how Rwanda had seized upon the climate change challenge, integrating it in its policies.  “Climate finance from public sources will not be enough to meet Africa’s colossal needs… We need extensive cooperation and more political will,” she said.

AFAC co-chair, Lord Nicholas Stern, former Vice-President of the World Bank, in his video message reiterated “the need to act”.  This sense of urgency was shared by all the panellists, including Dolika Banda of Zambia, the president and managing director of the African Risk Capacity Insurance – which is at the forefront of risk mutualisation linked to natural disasters in Africa – Youssef Rouissi, Assistant Managing Director for the Attijariwafa finance and insurance bank, and Parks Tau of South Africa, president of United Cities and Local Governments (UCLG).

According to Anthony Nyong, the African Development Bank’s Director for Climate Change and Green Growth, this urgency has arisen “because the financial sector is crucial”.  He repeated AFAC’s purpose: “to lead the African financial sector at the heart of action to combat climate change…We must build an entire ecosystem: multilateral development banks, central banks, national and regional banks, commercial banks, institutional and sovereign investors, etc.  We must strengthen financial institutions in Africa,” he added.

Carla Montesi, the Director of Planet and Prosperity at the European Commission’s Directorate-General for International Cooperation and Development, addressed the session and in particular welcomed the Bank’s “ambitious” goal of integrating climate change in 40% of its investments by 2020: “We know that climate change will have a huge impact on African economies.  But doing nothing will take a heavy toll,” Montesi said.

Final remarks came from Amadou Hott, who welcomed the commitment and will of all actors present to move forwards.

“We want Africa to advance towards a green economy; not as a fad, but because it is a viable and responsible economic vision,” he added.

Rwanda: The Emerging Economy To Watch

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In recent years, Rwanda has proven to be a role model for the continent.

During her November 2018 visit to Rwanda, World Bank CEO Kristalina Georgieva described the country as one that has enjoyed impressive growth and often has bold ambitions.

At business summits across the world, it’s not uncommon to hear such praise about Rwanda. Various speakers have singled it out as one of the emerging economies to look out for in terms of investment opportunities, value for money and economic growth.

The statistics explain why Rwanda has become Africa’s poster child for progress. The country has reduced reliance on donations and currently, domestically funds about 84% of the budget up from about 36% two decades ago.

In the last fiscal year (2017-2018), the economy grew by 8.9%.

Barely 24 years after the horrific genocide against the Tutsi, when the East African nation lost over a million lives and the devastation left a trail of trauma and economic ruin, its achievements have often been described as miraculous.

At the center of the tiny country’s recovery is President Paul Kagame, who led the revolt that ended the genocide.

Kagame has led his country from penury to prosperity. His government has co-invested alongside private capital to reduce risk and create a more appealing proposition.

For instance, when one of Africa’s leading telecoms groups, MTN, was keen on entering the Rwandan market in 1998, the government boosted their confidence by purchasing a 20% stake in the company.

This was driven by an ambition to not only attract the firm to the country but to ensure citizens have access to affordable telecom services. Years later, the government offloaded its stake in the firm through an initial public offering, allowing citizens to be part of a meaningful income-generating firm.

MTN is just one example of the strategic approaches taken by the Kagame-led government. The same has been replicated in multiple sectors, including finance and agriculture.

The last two decades on the Rwandan economic front have also been characterized by improving the investment ecosystem to create interest from the international and local business community.

While most would concentrate on the odds against the country, such as its small size, and its landlocked location, amidst a volatile region, Kagame sought to give investors every reason to put their money in Rwanda.

In a continent that has always been associated with corruption, the Rwandan government adopted a zero-tolerance stance on graft.

This was paired with the improvement of service delivery across all sectors, eliminating the need for bribes to access public services.

The most recent Corruption Perceptions Index by Transparency International placed Rwanda as third least corrupt country in Africa.

The reforms have for the last two decades addressed challenges that have often kept investors up at night. Steps that are cumbersome in countries across the world, such as business registration, were eased to a six-hour activity, while tax declaration and registration were simplified to online processes.

The World Bank ranked Rwanda 29th globally in its 2018 Ease Of Doing Business Report and put it second in Africa. The index tracks business efficiency across the wd

Statistics from the RDB indicate there were about 10,488 hotel rooms in the country in 2017, while aviation traffic is expected to grow to about 1,151,300 in 2018, from 926,571 in 2017.

The trend is expected to persist going forward. Rwanda will by the end of 2020 have a new modern airport located in the Bugesera District, a 25-minute drive from the capital.

While pursuing externally-driven growth, Kagame has not forgotten about the home front. This led his government to adopt a ‘Made in Rwanda’ strategy in 2016, which has reduced the trade deficit by about 36% and increased the value of total exports by about 69% from about $558 million to $943 million. Local producers have fast become empowered to produce for the local and export market.

The Rwandan leader has turned his attention to regional integration in the six-member East African Community to counter complaints about Africa’s small, fragmented markets.

The consolidated market of over 200 million citizens is more reassuring to investors and makes a business case for joint infrastructure projects such as the Standard Gauge Railway, which will connect the major Kenyan centers of Mombasa and Nairobi.

Lisa Kaestner, a practice manager for finance competitiveness and innovation at the International Finance Corporation, says: “I see Rwanda is keen on this and trying to support through the East African Community. This is one way to reduce the cost of doing business. If you look at it through the doing business lenses, all countries are trying to improve.”

Kagame’s continental mission has been evident in his various roles at the African Union (AU).

As the chairperson of the AU Reforms team, Kagame has advocated for less donor dependency and more sustainable funding by African states.

He has often challenged African countries who contribute less than 30% of the AU’s budget and turn to external donors with a begging bowl, which has been blamed for influencing the body’s decisions and priorities.

As  AU chair, Kagame has sought an adjustment of terms between Africa and the rest of the world for mutual benefit. This, he has argued, is more sustainable in the long run and presents an avenue for growth among all parties, as opposed to aid, which maintains dependence.

Months after assuming the chairmanship of the AU, in March 2018, Kagame hosted over 50 African heads of state and government in Kigali for the signing of the African Continental Free Trade Area.

As a trade bloc, the trade agreement envisions a continental market of 1.2 billion people, with a combined gross domestic product of more than $3.4 trillion.

So far, 49 countries have signed the agreement, with nine ratifications. The development is a huge step towards encouraging industrialization and job creation across Africa.

Peter Mathuki, Executive Director of the East African Business Council, says: “The country’s leadership is on the grip to lift the EAC country to middle-income level faster than most African countries. The fast economic growth is premised on pillars of good governance, easy-to-do business climate and zero tolerance to corruption… Rwanda is indeed Africa’s rising star and driver for economic transformation.”

Credits to Collins Mwai and the publication in Forbes