Month: October 2018

Ethiopia announces $7 billion road and power projects

Posted by khaoula on

Ethiopia announced $7 billion worth of new road and power supply projects, according to the state-affiliated Fana news agency.

The government’s Public-Private Partnerships Office said the three road and 13 power projects would be launched this fiscal year after the tendering processes were completed, Fana reported.

It did not say how they would be financed or give any other details on the projects.

Ethiopia – which has recorded the highest economic growth rate in sub-Saharan Africa for years – has invested heavily in state-led infrastructure projects, drawing on foreign borrowing and its own foreign exchange reserves.

But there have been signs that China, a major creditor, is slowing financing to Addis Ababa as doubts grow over the profitability of some infrastructure projects there.

The power projects are a-469MW Genale Daw 5, 100MW Genale 6, 280MW Chemoga 1&2, 424MW Halele Werabe, 798MW Dabus, 125MW Gad, 125MW Dichato, 100MW Mekelle, 100MW Humera, 150MW Wolenchiti, 150MW Weranso, 125MW Metema, and 125MW Hurso.

Similarly, the three road projects are a 125km Adama-Awash, a 72km Awash-Mieso, and a160km Mieso-Dire Dawa highways.

Dr. Teshome Tafese, director general of the office noted that the projects will be launched this fiscal year after necessary tendering procedures are completed.

source: REUTERS

100 African Companies Signed Up to Participate to the Shanghai International Import Expo (CIIE)

Posted by khaoula on

Deputy Director General of the China International Import Expo (CIIE) Bureau, Ms. Zhong Xiaomin, has informed journalists that over 100 African companies have already signed up for the event that is to be held in Shanghai this November.

Speaking Thursday, 19th July, at the National Exhibition and Convention Centre in Shanghai, she said the 100 companies are coming from 38 African countries.

She noted that China wants to share the experience of her progress with countries around the world, adding that CIIE is a bold step taken by the Chinese government to open up its market to the world.

“This is also a platform where countries will show what they can produce to the rest of the world. It is China’s wiliness and determination to expand export. The participatory countries are those from developing and least developing economies. The President of Kenya, among other presidents, will be attendance,” she disclosed.

Ms. Zhong revealed that at the initial stage of the preparation for CIIE, they apportioned space of 210,000 square metres for the exhibition, but as more participating countries continued to show interest and they didn’t want to leave anyone out, thus has increased the space to 270,000 square metres.

“African banks should embrace fintech” says Sunil Kaushal at Standard Chartered

Posted by khaoula on

Sunil Kaushal, CEO of Africa & Middle East at Standard Chartered Bank outlines how the rules of the game are changing in Africa’s banking sector.

Halfway through 2018, total funding for start-ups in Africa has increased by nearly four-fold compared to the first half of last year. Digital entrepreneurs are changing the Sub-Saharan continent, and we have an opportunity be part of this monumental transformation. However, it requires all of us to embrace both exponential thinking and the latest technology to the fullest. African start-ups have raised a record breaking $560m in 2017, an increase of 53% from the previous year. African governments have welcomed technology into the continent, hoping to inspire a revolution across all industries and sectors.

Some of the brightest minds are determined to rewrite the rules of the game by harnessing technology to tackle some of the continents greatest challenges – with one of them being the distinct lack of access to banking services for large parts of the population. Only 4 years ago, an astounding 66% of Sub-Saharan Africans did not have a bank account. Now, Africa has been described as a “leapfrogger” with the application of a technology driven economic model to reach the unbanked.

FinTech remains to be the most appealing industry for investors as African start-ups look to bridge the financial gap. Several of the largest deals in 2018 involved African FinTech companies: Kenyan-based Cellulant raised close to $50m from investors this year, while microfinance company Branch received another $20m investment to continue funding their mission to bring digital financial services to the Sub-Saharan continent.

Think exponentially, not incrementally

It is a reality that the financial industry is experiencing disruptions on all fronts. As banks, we have a choice as to how we approach and address this change. One of the most important principles to master this evolution is to move from managing people and processes to managing purposes and principles with an entrepreneurial mindset.

During a recent trip to San Francisco, I had the opportunity to meet Patrick Collision, co-founder of Stripe (think PayPal). Started only seven years ago, Stripe displaces the need to have a merchant capability and enables sellers and buyers in e-commerce to invoice and collect payments. He believes it can be a large company, but it would have to have the mindset where people prioritise the greater good over personal goals. I thought this insight was fascinating, as for this kind of culture to grow, there must be unhindered obsession about doing better every single day.

US-based Singularity University, one of the world’s leading incubators and think-tanks in the field of technology, stresses that the greatest challenge for established institutions is to reinvent themselves using a digital mindset by thinking exponentially and not incrementally. This doesn’t mean the core of what companies do today has to be discarded, rather it is about innovating to foster sustainable growth.

Driven by unhindered obsession

An impressively large number of companies as well as individuals are investing in research, innovation and ideas for execution to keep up with the ever-changing demands of African consumers. Just in the first half of 2018, nearly 120 deals between investors and start-ups were signed. The time when start-ups were considered small, insignificant companies is long over: in fact, with their entrepreneurial spirit and unconventional approaches, they have the power and ability to shape the future of the continent. It can even be said that the people leading these small enterprises hold the key to growth by prioritising the greater good over personal goals. This is perfectly aligned with our bank’s mantra ‘Good enough will never change the world’.

We must do everything we can to harness technology and champion the next generation of entrepreneurs in Africa. We must put our faith in people who are on a mission to accelerate the continent’s development. In the words of renowned African entrepreneur and philanthropist Tony Elumelu, we have a responsibility to ‘collectively invest in our young people, and if they succeed, we all succeed’.

Sunil Kaushal, CEO of Africa & Middle East at Standard Chartered Bank

See: Africa Business Magazine

Making African agriculture more attractive for investors

Posted by khaoula on

While global population growth slows, Africa’s population is set to double over the next three decades, reaching around 2.2bn people by 2050.

This surge in numbers will have significant ramifications for the continent’s food security, which is already under pressure mainly due to climate change. The good news is that Africa’s agriculture sector has been growing at a steady pace and the continent boasts at least 65% of the world’s uncultivated arable land. If this is fully utilised, then African farmers could meet the food needs of the entire world.

As things stand, however, the continent will continue to be dependent on the rest of the world for food, with imports amounting to $35bn annually entering the African market. This includes imports of staples such as wheat ($9.3bn), rice ($5.3bn) and maize ($4.1bn). The rate is projected to rocket up to $110bn by 2025. The current system is geared towards cheap imports of commodities such as sugar, rice and palm oil which are all also produced in Africa, making it very difficult for domestic farmers and food processors to compete.

The conundrum is clear: Africa must find a way of scaling agricultural output. In response to this challenge, the African Union adopted the Comprehensive Africa Agriculture Development Programme (CAADP) in Maputo, Mozambique in 2003. One of the key policies called for member states to increase public agricultural investment to 10% of national budgets per year and for a 6% increase in agricultural productivity per year.

Obstacles to investment

Despite most member states signing up to the ambitious strategy, very few nations have met the minimum requirements of the programme. While the African Union attempts to accelerate CAADP, agribusinesses have to rely on the private sector to help meet its funding needs in some countries. However, investors tend to be reluctant to offer affordable finance to agribusinesses because they consider the sector to be too risky, according to Dagmawi Habte-Selassie, programme officer at the UN-backed financial institution the International Fund for Agricultural Development (IFAD).

“The challenges facing the agribusinesses in Africa is that there is a shortfall in access to finance because many financial institutions view the sector as too risky,” Habte-Selassie says. “Some of the main obstacles cited by these institutions include an absence of data such as information on land titling, weak infrastructure in some areas, insufficient regulations and a lack of collateral to access significant amounts of funds, to name a few. “Investors would rather throw their backing to something which will guarantee returns such as real estate or ICT-related investments, but if you show them the model that is viable then they will definitely be willing to step in and seize the opportunity.”

Only 3% of total bank lending in Africa is allocated to agribusiness, this despite the fact that it contributes 40% of sub-Saharan Africa’s GDP and employs 70% of the population. The available domestic funding is expensive, with agricultural lending interest rates reaching as high as 50% in some countries. De-risking agricultural investment is achievable through the right kind of collaborations between government, private sector and agribusiness stakeholders.

De-risking agribusiness

Private investments in the agriculture sector are mainly targeted towards high-value crops and export products such as flowers. There is also an increase in countries such as China purchasing land in some African countries to secure their long-term food and biofuel supply. There are also a number of private agribusiness investment funds targeting African agriculture. These funds use various instruments such as quasi-debt investments and public-private partnerships (PPPs). 

More investors are embracing the opportunities on offer in agribusiness, but the lack of consistent government policy and poor regulations in some countries continue to constrain investment, according to Hans Bogaard, director at the Dutch development bank FMO. “It helps if governments and policymakers don’t interfere in agriculture in a way that creates uncertainties and unpredictabilities in the market,” Bogaard says. “The governments need to really understand that they have to facilitate a strong agricultural sector, which means investing in the rural infrastructure and creating predictable regulations.”

Government intervention, however, is required to improve poor infrastructure in every stage of the supply chain. Improving rural roads or implementing cold storage facilities could boost the volume of quality products making their way into the market. More countries need to ramp up their implementation of CAADP and embrace pro-private sector policies such as offering tax incentives to new agri­businesses. While these measures will go some way to making agribusiness an attractive investment prospect, systemic issues, especially the fragmented nature of Africa’s agribusiness will continue to hamper the sector.

by Taku Dzimwasha (African Business Magazine)

Ethiopia PM opens industrial park in Oromia region

Posted by khaoula on

Ethiopia’s latest industrial park is located in the Oromia region – the largest and most populous, and home region of Prime Minister Abiy Ahmed.

Abiy was back home to inaugurate the Adama Industrial Park. The parks are central to the country’s economic plans and were started years back. Also in attendance was President of the Oromia region, Lemma Megerssa and other regional officials.

 

The PM’s chief of staff wrote on Twitter that the park is “an important addition to a network of world-class, sustainable eco-industrial parks in Ethiopia ready for plug and play investment. Productive investments strengthen the base of our economy and generate sustainable jobs.”

According to the Ethiopian Investment Commission, EIC, these parks are set up for specific sectors such as textile and apparel, leather and leather products, pharmaceutical, agro-processing and more.

The Adama Park joins others like the flagship Hawassa Industrial Park and the Bole Lemi I Industrial Park. Its scope will be the textile, apparel, vehicle assembly and food processing cluster. It is expected to open up a million job vacancies.

Adama, also known as Nazreth, is a city in central Ethiopia and the previous capital of the Oromia. Adama forms a Special Zone of Oromia.

Other upcoming industrial parks include Dire Dawa, Mekelle, Kombolcha, Kilinto, Arerti, Bole Lemi II and Debre Berhan Industrial Parks.

Ethiopian government has often taken high-profile visitors to tour these parks. The International Monetary Fund chief, Christine Lagarde; Rwandan president Paul Kagame and President Isaias Afwerki of Eritrea have all visited these parks whiles in the country.

by Abdur Rahman Alfa Shaban