Year: 2018

South Africa: Business Welcomes Government’s ‘Commitment’ to Restore Confidence With New Eskom Board

Business leaders have welcomed the appointment of Eskom’s new board as a sign that there is political will to restore confidence in state-owned enterprises.

Government announced on Saturday that Telkom Chairperson Jabu Mabuza will chair Eskom’s board as part of a host of measures to “stabilise management” at the power utility, Fin24 reported.

It also recommended that former Land Bank CEO and Absa Capital executive Phakamani Hadebe be appointed as Eskom’s acting group CEO, with immediate effect.

“This is a clear display of commitment by government to the transformation of our state-owned corporations,” said Business Leadership SA (BLSA) CEO Bonang Mohale.

He said the composition of the board brought a mix of diverse but specialist skills that were needed to quickly restore stability to Eskom’s operations and finances.

It also showed what was possible “when there is political will”.

Mohale said Mabuza brought with him “unimpeachable integrity – a trait that is so badly needed right now in our country”.

Business Unity SA (BUSA) CEO Tanya Cohen said the announcement was a significant step by government to “finally” rid Eskom of escalating maladministration and corruption.

‘Complex challenges’

Mabuza’s office released some of his comments and/or reaction on his appointment, cautioning it should not be construed as an official statement.

He said he was honoured to heed the call to work together to reform South Africa’s economy through a display of ethical and inspirational leadership.

“The stabilisation of Eskom is of critical importance but is not a task that should be taken lightly. However, I believe that with the right people and support structures in place, we will find credible solutions to the complex challenges that need to be addressed to achieve sustained financial stability at Eskom, and by extension, alleviate the swelling debt burden on the fiscus.”

The new board had yet to convent and charter a way forward, and Mabuza said it should be given the space to do so.

“That said, I believe that part of any credible solution to stabilise Eskom centres around transparent and effective governance starting with the Board, supported by a competent and strong management team to formulate and execute on a strategy that supports the Board’s mandate.”

With the right governance structures, the priority would be to restore the credibility and integrity of the utility with financial markets.

Source: Fin24 , allafrica.com

Kenya Airways banks on pricing, on-board experience for success

Ticket pricing, on-board experience and choice of aircraft will be the main factors that Kenya Airways will be banking on to win passengers over as it starts its long haul flights to New York later this year.

The carrier will become the third African airline to fly directly to New York, after South African Airways (SAA) and Ethiopian Airlines.

Kenya Airways will have an introductory price of about $800 for an economy ticket: Gulf carriers charge the same for a premium economy flight with a minimum two-hour layover in Dubai or Abu Dhabi International Airport.

Kenya Airways chief commercial officer Vincent Coste said that KQ’s route strength will be the elimination of the layover time for time-conscious travellers.

“By reducing flight time by about seven hours, and with a non-stop flight, KQ will offer a competitive service from the US to East Africa,” Mr Coste said.

African airlines

The African airlines that currently fly directly to the US use similar wide-body aircraft. SAA operates the Airbus A340-600s and Boeing 777-200 on flights to Washington and New York. Ethiopian operates Boeing Dreamliner 787-8 and occasionally Airbus A350-900 aircraft.

In terms of comfort, SAA’s wide-body Airbus A340-600 aircraft and Ethiopian’s Airbus A350-900 have been rated by industry experts as offering a better flying experience for passengers than the advanced Boeing Dreamliner 787-800 that Kenya Airways and Ethiopian use.

According to Airbus, its economy cabin has legroom of up to 86cm, offering extra comfort for long-haul travel. The Dreamliner 787-8 has 69cm of legroom. The Airbus seats are 45.7cm wide, about 2.5cm more than the standard-width seats featured on the Boeing.

To some this may not be a big deal, but cramped seating is a complaint frequently heard from economy-class passengers. These few centimetres can make a big difference on long haul flights.

The Airbus also boasts of the tallest ceiling of any commercial aircraft, as well as larger overhead bins allowing for ample stowage space for passengers.

Besides comfort, the viability of daily flights on a route that has previously been rated as low revenue with few passengers is questionable.

The Africa-Europe route accounts for more than half of passengers travelling overseas. Data from the African Airlines Association (AFRAA) and the International Air Transport Association shows that the North America-Africa route has the lowest returns measured by revenue passenger kilometres.

West African hubs

Kenya Airways is also hoping to use West African hubs for onward passengers as is done by Ethiopian.

“We are targeting to offer the corporate and premium leisure market more connection points in East Africa through our Nairobi hub,” Mr Coste said.

Until 2015, SAA served the New York market via Dakar but stopped because of low pick-ups in Senegal.

“SAA saw limited demand for Dakar-New York and concluded that the premium demand for Johannesburg-New York non-stop was worth the extra cost associated with not filling the A340-600 passenger cabin to maximum capacity and restricting belly cargo,” the Centre for Aviation says in its analysis of the North American route.

KQ may be targeting this West African market to fill its aircraft.

Feeder hub

Kenya Airways hopes to create an East African hub in Nairobi tagging travellers and cargo business from the region, southern Africa and the Indian Ocean islands market.

The hub will be fashioned alongside West African hubs created by SAA in Accra and Ethiopian Airlines in Togo, which they use to feed onward to the US.

On its North African route, SAA has over the past three years faced a reduction in load factor every year as a result of reductions in fares and traffic that is mostly outbound. Washington has proved a more profitable destination through new West African hubs in Ghana and Cote d’Ivoire.

The airline also now depends on its codeshare with Africa World Airlines (AFA), which provide feeds in Accra from Ghana and Nigeria.

Ethiopian Airlines has been relying on Lome to offer its passengers connections in West Africa through ASKY. Since launching its Los Angeles connection via Dublin, Ireland in June 2015, Ethiopian has achieved an average load factor of up to 80 per cent, making it one of its most profitable routes. A load factor of 74 per cent is considered profitable.

From its main hub in Addis Ababa, Ethiopian also offers its connecting passengers from the US connections to East and southern Africa, a hinterland that Kenya Airways also aims to tap from.

Return flights

On return flights, African-based carriers are also struggling with feeds from their code share partners in the US who are now focused on their domestic sales channels.

“Foreign carriers have generally seen availability of domestic feed to onward Africa flights in the US shrink as domestic load factors have increased and US alliance members have focused on their sales channels and their joint venture partners, leaving the African carriers alliance members with limited access,” CAPA says.

Kenya Airways will also be looking to get a share of the cargo market on the route. This has been dominated by Ethiopian through exports of flowers and tea to North America. West Africa sells a third of its exports, including cocoa, precious metals and coffee to the US and Canada.

Data from AFRAA shows that Johannesburg still remains the continent’s biggest freight hub, followed by Cairo, Nairobi, Addis and Nigeria. However, the freight market to the US requires an onward feed to make profit.

In its latest financial report, SAA says the Americas, while still positive, have shown only modest performance mostly due to capacity constraints on inbound freight, particularly from North America.

However KQ says it will target a niche market on the Nairobi-New York route, estimated to have a potential of two tonnes and seven tonnes from each end, respectively.

“The sales approach will focus on niche segments of valuable cargo and express. The daily frequency is a natural attraction for express business. Dense perishable product segments will be a secondary tier,” Mr Coste said.

Source: ALLAN OLINGO, The East African

All eyes on Kenya as Central Bank spells out 2018 roadmap

The Central Bank of Kenya is this week expected to set the tone for Kenya’s economic direction in 2018 with the first meeting of the Monetary Policy Committee (MPC).

Coming from a year in which the MPC was largely predictable in its deliberate attempts not to destabilise interest rates while inflation and the shilling remained largely in secure territory, the markets will be keen to see what direction the committee makes of this year.

Although 2017 was a delicate year for Kenya’s economy, owing to a severe drought and prolonged electioneering, the MPC maintained its benchmark lending rate at 10 per cent every time it met.

Interest rate capping

While the committee attributed the decision not to adjust the rate to muted inflationary pressures in the economy, analysts reckon the introduction of interest rate capping in 2016 has greatly rendered MPC decisions ineffective.

The last time the MPC adjusted the Central Bank Rate (CBR) in November 2016 it cut the rate by 50 basis points from 10.5 per cent to 10 per cent.
In 2017, Kenya’s monetary indicators remained largely stable with inflation closing the year at 4.5 per cent in the month of December, which translated to a 55-month low and below the government’s preferred ceiling of 5 per cent.

The shilling held tight to the dollar trading at an average of Sh102 while the current account deficit did not exceed 6.5 per cent of gross domestic product.

Foreign reserves also remain way above the statutory requirement of four months of import cover at $7.094 billion in November an equivalent of 4.7 months cover.

Although the economy is expected to rebound and assume a growth trajectory, concerns over shrinking credit to the private sector, rising crude oil prices at the world market and projected strengthening of the dollar might force the MPC to rethink its tendency to play safe with the CBR.

Source of discomfort

“Interest rate capping has made it impossible for MPC to adjust the CBR and I don’t see the possibility of any significant deviation in 2018 although the fundamentals of the economy could necessitate adjustments,” said Churchill Ogutu, research analyst at Genghis Capital.

According to the World Bank, the decline in the private sector’s access to credit over the past three years has played a key role in recent slowdown in economic performance in Kenya. As of last August, private sector credit growth stood at 1.6 per cent of GDP, its lowest in over a decade.

“Improved access to credit requires lowering the cost of credit, removing the interest rate cap, the universal adoption of credit scoring and accelerating the collateral registry,” said the bank in its Kenya Economic Update December 2017 edition.

Credit squeeze

The outlook for strong credit growth remains dim given depressed demand and the rise in the number of non-performing loans. The need to stimulate private sector credit growth is a reality the MPC must confront despite the rate capping leaving little elbow room for manoeuvre.

While the credit squeeze to the private sector will remain a major headache for the MPC in 2018, managing inflation in a year when oil prices are on upward trend could prove to be another source of discomfort.

The impact of rising crude oil prices at the international market which hit a three-year high of $70 per barrel last week are already being felt in Kenya with the corresponding increase in fuel prices, something that is expected to trigger food inflation.

“The rising crude oil prices will definitely have an impact on inflation although this could be marginal,” said Timothy Waweru, managing director of Africa Research and Economic Development Consultants.

While improved weather conditions are expected to ensure food prices are stable, the end of the maize subsidy programme is already being felt as witnessed in the rising cost of maize flour from Ksh90 (0.86 US cents) to about Ksh200 ($1.92) per 2kg packet in less than a month, against the government’s prescribed retail price of $1.15.

Source: NJIRAINI MUCHIRA, the East African

Nigeria: Adeosun, Others Call for Additional Capital for AfDB

Minister of Finance, Mrs. Kemi Adeosun and finance ministers from West and Central African countries have called for additional capital injection into African Development Bank (AfDB) to enable it meets its mandate for Africa.

This was one of the highlights of the Regional Consultative Meeting between the AfDB President, Mr. Akinwumi Adesina and the bank’s Governors and Ministers of Finance from West Africa and Central Africa held in Abidjan, Côte d’Ivoire. The meeting was the first consultations of its kind since the creation of the Bank in 1963.

Making the case for a general capital increase for the AfDB, the Governors recalled that the sixth capital increase, ratified in 2010, made it possible for the bank to take the volume of loans to unprecedented levels, noting that aid to countries receiving African Development Fund financing has increased seventeen-fold.

According to Adeosun there is need for a strong and well capitalized AfDB that is capable of fulfilling its commitments to member-countries.

She stated, “At the height of the crisis that shook our economy due to the fall in oil prices, the AfDB provided us with substantial budget support, while other partners were very reluctant.”

“At the height of the crisis that shook our economy due to the fall in oil prices, the African Development Bank provided us with substantial budget support, while other partners were very reluctant.

“We need a strong bank capable of fulfilling its commitments to assist us in mobilizing our internal resources”, Adeosun said.

Also speaking, Régis Immongault, the Minister of Economy and Finance and African Development Bank Governor for Gabon, said: “We are fully behind the bank’s general capital increase”.

“We are convinced that this will provide the bank with the resources it needs to support us even more in our development efforts than it has up to now. We are faced with the new challenges of population growth, climate change and security threats.”

Emphasized the urgency of providing the bank with sufficient resources to continuing providing development leadership in Africa, Guinean Minister of Development, Mama Kanny Diallo said: “The AfDB is the premier bank on the ground. It has helped a country like mine engage in policies to improve governance and mobilize internal resources. It has also helped us renegotiate mining contracts that are in our best interests and to explore innovative solutions”. .

Kanny Diallo went on to say, “Looking beyond the case of Guinea alone, a general capital increase is about giving the bank the means to keep the young people of the continent here. The destiny of our young people is not to go and die at sea or crossing the desert.”

Source: allafrica.com

Kenya: With Solar Water, Trees Grow Into a Sturdy Business in Western Kenya

Maseno, Kenya — Armed with a solar-powered water pump for irrigation and a quarter-acre piece of borrowed land, widow Hakima Mohammed has become a Western Kenya tree tycoon.

Since 2013, she has sold at least 1.5 million seedling trees, mainly to local small-scale farmers, who are planting them as a way to boost their incomes from wood and fruit sales, particularly in the face of recurring droughts that have shriveled crops.

In the process, the 57-year-old has found a way to support herself and her family – and Kenya is getting a hand in its efforts to see at least 10 percent of the country’s land covered in trees by 2030, as part of efforts to rein in drought and meet climate change goals.

“This is a very good example of entrepreneurship which I would really encourage young men and women to take up, and do the same in other parts of the country,” said Eston Mutitu, a senior research scientist at the Kenya Forest Research Institute.

Mohammed, who lives in Mwiyekhe, a village near Western Kenya’s Maseno township, started her tree nursery in 2013, soon after her husband’s death following a short illness.

Officials at the forest institute, where she has been working for nearly 30 years in a low-level position, arranged for her to borrow a plot of land for the sapling nursery, a project she and her husband had talked about trying before his death.

With little experience beyond having watered tree nursery beds at the institute, Mohammed went to work planting an initial 20,000 seedling trees, hiring local young men to help her carry water from a nearby stream to irrigate the young plants.

That hard work became easier starting in 2016, when she acquired a solar-powered water pump from Futurepump, a company in Kenya that makes pumps available on credit. The bit of technological help has let her dramatically step up the number of seedlings she can raise and sell.

“This helped me increase productivity and now I have at least 250,000 tree seedlings on my nursery at any given time all round the year, given that I no longer rely on rainfall or manual fetching of the water to sprinkle on the crops,” said the mother of three, who was not educated beyond primary school level.

PLENTIFUL BUYERS

Mohammed’s trees have found a ready market among local farmers who, like her, are less concerned about the environmental impact of planting trees and more interested in the profits they generate.

On his three-acre piece of land in Muhanda, a village in Siaya County, farmer Moris Otieno has planted a thousand trees from Mohammed’s nursery, mainly eucalyptus but also grevillea – another Australian native – and cypress.

Unlike many other tree nurseries in the area, which offer smaller numbers of seedlings of just a few types, Mohammed’s nursery has 30 species of trees that grow well in the region – and farmers can take home as few as 10 or as many as 20,000 seedlings in a single order, she said.

Apart from fruit trees – including grafted avocadoes, mangoes, oranges, pawpaws and loquats – she sees the highest demand for three kinds of eucalyptus trees, as well as grevillea, casuarina (also from Australia) and cypress.

“We prefer eucalyptus because they grow fast and uniformly, and have high demand in the timber industry,” Otieno said.

Tom Joseph Olumasai Nyangweso, another farmer who lives in Ebunyiri, a village in the heart of Kakamega County, has planted eucalyptus on two of his three acres of land, and grevillea trees throughout the property, many used as a living fence posts.

Both men say their move into tree planting is driven by a desire to boost their incomes.

“In the next three years, I will sell all these trees either to the Kenya Power and Lighting Company to be used as electricity poles, or locally as timber – and that will definitely help me buy another piece of land,” said Otieno, of his three-year-old eucalyptus woodlot.

In Western Kenya, a six-year-old eucalyptus tree can fetch up to 6,000 Kenyan shillings ($60) in the local market. For 750 trees – assuming that 50 of them may have structural flaws by then – Otieno could earn up to 4.5 million shillings ($45,000).

If he had planted maize each year – the most commonly grown crop in the area – he would likely earn about $8,100 over the same six-year period, based on average harvests and prevailing market prices, he said.

Apart from more expensive grafted fruit trees, all other trees at Hakima’s nursery retail at 10 Kenyan shillings per seedling. She sells not less than 200,000 each rainy season, which earns her at least 2 million shillings ($20,000) – and she cannot meet all the demand, she said.

“This has helped me take my children to school, where one of them has just finished her undergraduate degree and the other a diploma course. This nursery is also going to be my main source of livelihood when I finally retire sometime next year,” she told the Thomson Reuters Foundation.

 Source: allafrica.com

Game over for silent killer in Africa’s food?

If I told you there was a cancer-causing poison that 4.5bn people are chronically exposed to you’d think I was making it up. But I’m deadly serious.

Most of you won’t even have heard of its name before. That needs to change and we need to eradicate it. And the incredible thing is that the very people who could do this aren’t scientists – they’re computer gamers.

The poison is called aflatoxin. It’s an invisible substance produced by fungus that contaminates staple food and cash crops, mainly in the developing world. Staple foods that billions of people need to survive – maize, tree nuts, cassava, millet, peanuts, wheat – are affected, as are animal feeds too. Billions of people around the world are eating foods contaminated by aflatoxin as you read this.

Aflatoxin B1 is the most potent naturally occurring liver carcinogen that we know. It’s considered a Class 1 carcinogen by the WHO International Agency for Research on Cancer. As a result, it is thought that aflatoxins may play a role in up to 28% of all liver cancer cases globally. Climate change will only make this worse. Rising temperatures allow the aflatoxin-causing fungi to flourish.

Worryingly, the impact doesn’t stop at increased cancer rates. Eating aflatoxin-contaminated food is also associated with stunting in children, as well as increased rates of maternal anaemia and mortality. Stunted children suffer from poor cognitive skills, leading to low educational performance and even lower wages in adulthood. There is no reason why there can’t be many more brilliant African scientists in the world, but aflatoxins make that much less likely. We have an urgent moral imperative to change this.

This burden falls primarily on the developing world. In developed countries, laws limit the parts-per-billion (ppb) of aflatoxins allowed in food for humans, livestock and pets. These laws are enforced by extensive – and expensive – monitoring processes and technology. The developing world, on the other hand, has low healthcare budgets, subsistence agriculture and small-scale, under-regulated food production businesses. And in that context limits are set, but often not enforced.

At Mars, we test raw materials for aflatoxin to ensure that our products are safe. But consistently over the past 50 years, most food and feed samples in the developing world have been found to be well above legal aflatoxin limits.

In Nigeria, aflatoxin is now the single largest cause of liver cancer. Kenya has been particularly badly affected by aflatoxins. In 2004, Kenya was beset by the largest recorded aflatoxicosis outbreak in which 319 people who had consumed aflatoxin-contaminated maize were hospitalised. Scientists have been working hard to address aflatoxin for years, but no current strategies to remove aflatoxin infestation have been successful.

The harm isn’t just to human health either. It’s also a massive trade and economic issue. In the 1960s, before the effects of aflatoxin were understood, Africa had 77% of the global peanut export market. Its current share is about 4%. African countries now find it very difficult to meet aflatoxin standards in the developed world, and this hits exports hard. This is costing it $1bn per year in lost peanut revenue alone. If you include other indigenous crops to this, the number will increase dramatically.

Computer gamers seek solution

But the solution to this growing public health crisis may come from an unlikely source: an army of global computer gamers. On World Food Day 2017, we launched a series of aflatoxin puzzles on the Foldit platform led by computer scientists from Northeastern University and the University of Washington.

Foldit is a revolutionary crowd-sourcing computer game that allows anyone in the world with a computer and imagination – but not necessarily any scientific training – to help solve scientific puzzles. Foldit has already had great success by solving a riddle involving an HIV enzyme that had troubled scientists for decades.

The gamers cracked the structure within three weeks and helped identify targets for drugs to neutralise HIV. In this case, the puzzle is to figure out how amino acids are folded together to create proteins, the workhorses of our bodies. Gamers don’t need to know how the science works, they just need to create an increasingly perfect folded form that might mimic the one that exists in nature.

At the start of the gaming session, Foldit players are provided with the form of an enzyme that has the potential to degrade aflatoxin. Gamers can then put their skills to the test to see if it can be redesigned and improved by twisting and turning the enzyme’s structure. In the month that the puzzles have been active, gamers have generated over 400,000 designs.

The important thing is this – humans have an innate skill in coming up with solutions to 3-D puzzles, more so, at the moment, than computers. Science has not been able to provide a solution to aflatoxin yet. This initiative means this challenge is now open to hundreds of thousands of gamers around the world.

The gamers’ best designs are currently in development using the latest synthetic biology techniques and materials donated by Thermo Fisher Scientific. The souped-up enzymes will then be tested in real life by the Siegel Lab at the University of California, Davis to see how they can recognise and neutralise aflatoxins. And all of the players’ discoveries will be kept in the public domain, free of patents. The Siegel Lab is optimistic that we can expect the first results later this month.

We’ve brought together a diverse set of partners to make this happen, including the Partnership for Aflatoxin Control in Africa, led by the African Union Commission. And on World Food Day 2017, we brought together some of the world’s best Foldit players to bring the search for a way to eradicate aflatoxin that bit closer.

Over my lifetime, computer technology has transformed the potential for finding solutions to complex scientific problems. I never thought that computer technology and science could work hand in hand one day to solve some of the world’s most terrible health issues. It’s a dream that will hopefully come true when we say game over to aflatoxin, the silent killer in our food.

Dr Howard-Yana Shapiro is chief agricultural officer of Mars, Incorporated.

Source: African Business Magazine

African Trade Legislation Passes U.S. House by Unanimous Vote

By Office of Congressmember Karen Bass (CA -37)

Today, Rep. Karen Bass (D-Calif.), Ranking Member of the House Africa Subcommittee, applauded the passage of the African Growth & Opportunity Act (AGOA) and Millennium Challenge Act (MCA) Modernization Act, which passed by a unanimous voice vote on the House Floor.

The bill, introduced by House Foreign Affairs Committee Chairman Ed Royce (R-Calif.), will make AGOA more effective by directing the President to establish a website with information regarding AGOA and by encouraging embassies in chosen countries promote export opportunities to the United States.

The bill also included Rep. Bass’s MCORE Act of 2015, which enables eligible countries with Millennium Challenge Corporation compacts to simultaneously enter one additional compact if the country is making considerable and demonstrable progress in implementing the terms of the existing Compact. This would promote and develop a stronger economic relationship between the sub-Saharan Africa and the United States.

“The African Growth & Opportunity Act and the Millennium Challenge Corporation have proven track records of spurring economic development. Expanding these programs advances our position as international leaders, strengthens our domestic job market and economy, while protecting our national security interests,” Rep. Bass said. “It is in our economic and political interest to expand our economic relationships with the nations of Africa and this legislation strengthens these key laws in that effort.”

For well over a decade, AGOA has served as the key foundation to U.S. – Africa trade and investment. The AGOA Enhancement Act hopes to build on and improve this successful law. Rep. Bass has devoted a large portion of her time in Congress to pushing for the extension of AGOA. Working hand-in-hand with Democratic and Republican members of Congress, business and labor officials as well as the AGOA ambassadors and members of the African diaspora and civil society to push for the reauthorization of AGOA, earning its passage in June of 2015.

Source: allafrica.com

‘Egypt is our most profitable region,’ says Ahmed El Sewedy

Elsewedy makes around 80% of its total revenues from wires and cables, along with engineering and contracting, and is active in Europe, the Gulf States and Africa.

Favourable conditions

The economic reforms, especially the devaluation of the pound, have impacted positively on Elsewedy Electric, leading to a 95.7% year-on-year revenue increase for the six-month period ending 30 June, says Ahmed El Sewedy.

“The devaluation was the best thing implemented in the last five years. Before the devaluation and before the revolution, industry was dead and everyone was investing in property. At that time the exchange rate of the Egyptian pound meant we were not able to compete with China, India or Turkey,” he expands.

After devaluation, exports became more competitive, and Egypt is now one of the cheapest countries worldwide, he adds, which in turn has led to industry leaders re-investing in Egyptian infrastructure and manufacturing. Indeed, the company has recently invested heavily in Egyptian industry.

The company has partnered with EDF France to build two 100MW solarplants, under the feed-in-tariff (FiT) scheme, with $150m funding from the European Bank for Reconstruction and Development (EBRD). Launched in 2015, the FiT hopes to produce 4,300MW from wind and solar farms by procuring an eventual $7bn in investment.

According to El Sewedy, the renewable energy feed-in-tariff programme has been very successful in attracting investors, and at the time of writing 25 companies were close to financially closing solar energy projects in the second phase of the programme.

By undertaking solar projects, Elsewedy demonstrates its ability to capitalise on market opportunities by aligning strategy to government vision, for which renewable energy takes increasing precedence: by 2022, 20% of energy should come from renewable sources.

Similarly, Elsewedy is involved with the government’s Mega Projects and has signed a contract with El Mostakbal for Urban Development to supply electricity and communication infrastructure networks for the first phase of Mostakbal City, New Cairo.

Furthermore, as the government aims to overcome a large budget deficit by reducing energy subsidies, Elsewedy can offer its energy saving solutions to companies battling increased operational costs.

Increasing electricity capacity via reducing consumption and pumping up production is of central importance to the Egyptian government, which dealt with an electricity deficit and power outages for quite some time. In 2013, Egypt produced 24,000MW of electricity, but 29,000MW were needed to meet domestic and industrial needs.

This creates enormous opportunity for a company like El Sewedy, and through a range of public-private partnerships and initiatives, the Ministry of Electricity has recently reported a surplus for more than 11 months of around 5,000MW – which can now be exported for profit. “It’s a very special time,” says El Sewedy.

Using Egypt as a base

El Sewedy describes how the company’s global network – working in almost 45 countries and exporting to more than 80 – is well grounded in Egypt. Egypt’s exports benefit not only from the devaluation of the pound, but also numerous free trade deals, he explains. “I am free to export to a lot of places without customs. With COMESA, we are free to export to Africa and the same thing with Europe.”

As it stands El Sewedy has become one of the largest sup- pliers of electricity generation and distribution equipment in Africa, and is active in Togo, Zambia, Nigeria, Mozambique, Angola, Tanzania and Kenya amongst other countries. Most recently, the company signed a MOU with Zimbabwe to build $15m of pre-paid smart water meters in Harare, expanding on the 20m water meters it has supplied to 46 other countries.

The company also signed a contract to supply 300,000 prepaid meters in Togo, with a contract value of EUR44m.

“Africa’s electrification is less than 10%, so there’s a lot of space in the continent, either in the energy sector or the transmission sector. I really believe Africa is one of our main interests, for us as a company in Egypt,” says El Sewedy.

Looking to the future, the company has its sights set on Latin America, reporting a decrease in demand for wires and cables in the Gulf States.

As for Egypt’s energy sector in general, El Sewedy finishes by saying: “I think before the economic reforms there was no future for investments in Egypt. On the back of the economic reforms a lot of investments have been made in infrastructure, in water and in energy, and so the sector has found a workable solution.”

Source: African Business Magazine

Ethiopia: Winning Pull Factors in Drawing FDI to Ethiopia

OPINION 

The last couple of years have been quite challenging for the Ethiopian economy as natural and man-made problems posed themselves as obstacles to efforts of sustaining the rapid growth of the last fifteen years. The El-Nino induced drought and political unrests in various parts of the country took their toll on various sectors of the economy. Notably, the drought slowed down agricultural growth while various investment projects were vandalized throughout the political unrest.

Various sources on the forces driving FDI identify both policy and non policy factors as drivers of FDI. Policy factors include openness, product – market regulation, labor market arrangements, corporate tax rates, direct FDI restrictions, trade barriers, human development and infrastructure. Non-policy factors include market size of the host country (often measured by the GDP), distance/transport costs, and political and economic stability.

The time after the natural and man-made challenges was, therefore, a period of fierce competition between the pull forces of policy and the push forces of political instability. Setting horticultural green houses and the properties of other investments on fire is only going to discourage FDI flow into the country. The uncertainty that is associated with such unrests is a threat to those who seek to make money off their investments. Therefore, the lack of political instability in the country serves as a push factor keeping foreign investors away.

On the other hand, the policies that set out to draw in FDI act as pull factors. As Ethiopia has opened its market for foreign investment over a couple of decades ago, the expected expansion and maturity that comes with age is now evident in the country. With an educational system that plans to make education accessible to most of the people, the country produces enough skilled manpower to satisfy the demands of foreign investors. The great deal of attention granted towards radically changing the state of infrastructure also serves well in drawing FDI. The availability of energy, water, roads and other forms of infrastructure has shot up in the last couple of decades due to the pro-poor nature of Ethiopia’s development schemes and the key role foreign investment is expected to play in them.

The tax and land incentives provided to foreign investors in Ethiopia are also internationally known for their generosity. Some even question the feasibility of the scheme that provides long periods of tax exemption and extremely cheap lease of land. For instance, the country exempts business income tax from five to fifteen years depending on the sector the business operates in. Businesses can also carry forward their losses for five years and beyond. There is also a personal income tax exemption of up to five years to expatriate employees of sourcing companies located in industrial parks. The price of land appropriated for investors is also one of the cheapest, if not the cheapest, in the world.

As disheartening as damage to property can be, the policies and incentives put forward by the government prove to be far more appealing. There is also the little matter of belief in the capability of the Ethiopian law enforcement to put things back to normal within a short period of time.

The result of the meshing of all these variables is a sustained fast growth in foreign investment coming into the country. Investment Commissioner, Fitsum Arega, recently noted that FDI flowing into the country is increasing despite global and national challenges. He cited falling commodity prices as the main global challenge while the national challenges are represented by the above discussed realities in the country over the last couple of years.

The Commissioner explained that FDI flow has reached 4.17 billion USD this year and created 16,000 jobs. That is a five fold increase on FDI flows a decade ago. Xinhua reported that FDI inflow in the Ethiopian Fiscal Year (EFY) 2007/2008 was 814.6 million U.S. dollars but that figure has increased to 4.17 billion dollars in EFY2016/17.

The official website of the Ethiopian Investment Commission indicates that manufacturing, agriculture, construction, hotel and real estate services as well as horticulture are the sectors foreign investors have invested in. It also quotes the Commissioner Fitsum as saying: ” We are one of the few countries to register such a high FDI.” It also identifies investors from China, India and the Netherlands as being at the forefront in their engagement in industrial parks, textile manufacturing and horticulture.

A 2012 study presented by the International Journal of Financial Research indicated that FDI has expanded strongly over the past three decades. The study cites UNCTAD as saying that the growth in FDI accelerated in the 1990s, rising to 331 billion USD in 1995 and 1.3 trillion USD in 2000. The study states that Africa’s share in total FDI flows dropped significantly from 36 percent in 1970 – 74 to ten percent in 1980 – 84 and to three percent in 1995 – 99. A 2007 UNCTAD report indicates that Africa’s share of global FDI inflows decreased from 3.3 percent in 2003 to 2.7 percent in 2006.

The recent invigorated quest for development in the African continent has brought the continent forward as infrastructure and social services such as health and education have all enjoyed a tremendous bask of sunshine. Accordingly, the state of FDI inflows to the continent has gained a positive momentum.

The World Investment Report 2015 by UNCTAD clearly depicts the steady rise in Africa’s share in global FDI inflows to reach 4.4 percent in 2014. The report shows that despite a 16 percent global FDI fall in 2014, inflows to Africa remained stable at 54 billion USD. “North Africa saw its FDI flows decline by 15 percent to 12 billion USD, while flows to Sub-Saharan Africa increased by five percent to 42 billion USD. In Sub-Saharan Africa, FDI flows to West Africa declined by ten percent to 13 billion USD , as Ebola, regional conflicts and falling commodity prices negatively affected several countries. Flows to Southern Africa also fell by two percent to 11 billion USD. By contrast, Central Africa and East Africa saw their FDI flows increase by 33 percent and 11 percent, to 12 billion USD and seven billion USD, respectively.” The report goes on to state that East Africa saw its FDI flows increase by 11 percent, to 6.8 billion USD and singled out Tanzania and Ethiopia for claiming a considerable stake of the increased inflows.

With five fold increment in FDI inflows in the past decade, Ethiopia has demonstrated its capacity to serve as a positive influence in the region. The tremendous growth is also a testament to the triumph of the pull factors of policy over the push factors of political instability in Ethiopia.

Source: allfrica.com

Tunisia: Rulers Fail to Live Up to Arab Spring Promise

Nearly one thousand people have been arrested in Tunisia in the biggest wave of social unrest since the revolution. Anger at new austerity measures has brought hundreds of Tunisians back onto the streets with the same demands they did back in 2011. Seven years on, protesters say the government has failed to live up to the promises of the Arab Spring.

Every January since the 2011 revolution, Tunisians have taken to the streets to vent their anger over high unemployment and corruption. Seven years on, some of the same problems remain.

“People are very angry and very frustrated by the lack of hope and lack of perspective,” says Olfa Lamloum, the Country Manager in Tunisia for the British NGO International Alert.

Protests that are usually confined to Tunisia’s socially deprived west and south regions, have this year spread to the capital Tunis.

“All our research shows that the situation of people, inhabitants of marginalised areas, especially the youth has deteriorated since the collapse of Ben Ali,” Lamloum told RFI.

Youth unemployment stands at more than 35% according to the UN’s International Labour Organisation, and the economy remains wracked by corruption and clientelist networks.

“These protests that we’re seeing in Tunisia right now, they didn’t come out of the blue,” Monica Marks, a Tunisia expert at Oxford University told RFI.

“People are upset about many of the same things that upset them seven years ago. And each year that it continues and these demands aren’t met, the frustration keeps building.”

IMF under scrutiny

Frustrations reached boiling point early January when the government unveiled this year’s budget, aimed at raising taxes and prices of basic necessities, while at the same time scrapping subsidies.

The social cost though is too high warns Marks: “Austerity measures are hard enough for Western countries, imagine if you just came out of an authoritarian state, you’re trying to go into a democracy, and all of a sudden you get austerity measures, naturally it increases old-regime nostalgia, naturally it would make people feel less confident in democratic governance as a successful solution.”

In December 2017, the International Monetary Fund urged Tunisia to take decisive measures to address its economic problems. The biggest of those problems is the public deficit.

Marks slams the IMF for placing too much emphasis on public sector cuts and not enough on tackling corruption.

“A lot of poor people in the country simply don’t have anything left to give. Tackling corruption and clientelism would have a huge impact, because a lot of the protests we’ve seen have started because of unfair, corrupt hiring practices.”

Public sector corruption

Two years ago in January as well, huge protests erupted in Kasserine in Tunisia’s South, after a 27-year old car mechanic named Reda Yahyaoui was electrocuted, after climbing a transmission pole to foment further action by protesters.

Days beforehand, he’d been turned down from a job interview, due to corruption says Marks.

“The local phosphate company was not hiring people transparently. To get a job there, you would have to bribe someone 3 or 4,000 dinar (1.000 – 1.500 euros), and this is rampant in public sector jobs, they’re not given meritocratically, they’re given corruptly.”

Olfa Lamloum travelled to Kasserine at the height of the unrest in 2016, and co-directed a documentary called “Voices from Kasserine”.

“Voices from Kasserine is a 52 minute documentary. We travelled through the governate of Kasserine, which is a stronghold of the Revolution of January 2011, to hear the words of its inhabitants.”

Kasserine’s disillusioned youth

The documentary gives a voice to farmers, unemployed graduates, and even child smugglers, who benefit from Kasserine’s close proximity to the Algerian border says Lamloum.

“I was really troubled by my interview with a kid smuggler. He avoided during all the interview looking at the camera,” she said of one interviewee who proved difficult to interview.

“I felt like I was dragging his words out of him. It really shows the vulnerability of youth in Kasserine, where for some youth smuggling is the only opportunity to survive.”

Tunisia has been held up as the only successful democratic transition among the Arab uprisings but its struggling economy is unable to meet the aspirations of its young people, making them prey for groups like the Islamic State armed group.

Tunisia’s President Beji Caid Essebsi has vowed to improve the lives of young Tunisians during a visit last week to a youth centre in a working-class suburb of Tunis. He handed out loans and promised to improve aid for the poor and provide healthcare.

Too little too late

Though welcome, Lamloum says the government response is only a pain-killer, “but doesn’t deal with the underlying causes of poverty and inequality.”

“It’s late and it’s insufficient and it’s not going to solve the problem. The help that most families are going to get from these reforms only amounts to 12 or 20 dollars a month. It’s very very little.”

The country’s economic challenges have taken the shine off democracy, but both Lamloum and Marks acknowledge that the revolution did bring some gains.

“For sure we gained some new things, like the new democratic constitution, democratic elections, freedom of expression, the right to protest, despite the arrest of hundreds of protesters recently,” said Lamloum.

“People are not satisfied, that doesn’t mean that the revolution has failed or that the protests are a rejection of the revolution,” comments Marks.

Seven years ago, the battle cry of the revolution was: “Work, Freedom, and Dignity”. Seven years on, protesters are again chanting the 2011 slogans.

“Tunisians got freedom,” says Marks, “today’s protests are a continuation of the revolution’s demands which have not been met.”

 Source: allafrica.com