Year: 2018

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

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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

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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

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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

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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

 

African leaders in Beijing for 2018 FOCAC Summit

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Presidents and heads of government across Africa are in the Chinese city of Beijing for a high-level summit hosted by the Chinese government.

The Forum for Africa-China Cooperation, FOCAC, is a meeting between the two partners and is largely premised on ways to increase diplomatic, economic and bilateral ties.

The Summit has officially started today on September 3 lasting till tomorrow, September 4. This year’s edition is themed “China and Africa: Toward an Even Stronger Community with a Shared Future through Win-Win Cooperation.”

The summit is seen largely as a key diplomatic event hosted by China this year and attended by the largest number of foreign leaders to date. African leaders already in Beijing have held different levels of talks with their Chinese counterparts signing deals and also meeting investors.

This year is the third time the summit has convened, following the inaugural 2006 summit in Beijing and the 2015 summit in Johannesburg, said Chinese State Councilor and Foreign Minister Wang Yi.

African leaders and the chairman of the African Union (AU) will be in attendance, and the United Nations (UN) Secretary-General will be the esteemed guest, joined by 27 international and African groups as observers.

The interest in the forum is a result of China’s growing influence on the African continent and proves the FOCAC has been pragmatic and efficient, analysts said.

“Established 18 years ago, FOCAC has led international cooperation with Africa and has become a significant marker of South-South cooperation,” said Li Dan, director of Africa Studies Center of China Foreign Affairs University.

“AFRICAN SCHOLARS: MADE IN CHINA” – Brandy’s Research Experience at AFCHAM

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This summer, I had a great opportunity to intern at the African Chamber of Commerce in China.

Even though I have been to Shanghai before, being able to work in the environment was very interesting. One thing that caught me by surprise was the dress code. While I came to China with my most professional clothes for work, most people were actually very casual and laidback.

My overdressing helped, though, when it came to conducting interviews for people to take me seriously so I saw it as a reward. There were very vibrant people in the office and I was even able to participate in out-of-office events that made living in Shanghai much more fun. Living in Shanghai alongside doing the internship was also a rewarding experience. It was very hot every day, but after the boiling sun went down, it was fun to go and see the lights of the city and meet new people in social settings.

My research that I conducted with AfCham also opened doors for me to meet new people and understand new ideas that led me to cities like Jinhua where I was able to attend the Cameroonian Students Association election dinner. Thank you to everyone that has made this experience worthwhile. If you participated in my research or you are interested in seeing the results, you can find attached to this article.

Written by Brandy Darling

Click on the following link for Brandy Darling research ” AFRICAN SCHOLARS: MADE IN CHINA”

AFCHAM Brandy’s Research

Investing in food matters. First ever Nutrition Africa Investor Forum to launch in Kenya

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The Global Alliance for Improved Nutrition (GAIN), will host  the first-ever Nutrition Africa Investor Forum (NAIF) in Nairobi, Kenya, on October 16-17, it has been announced.

The aim of the forum is to bring together to and engage private sector investors to play a key role in improving nutrition across Africa.  The event is hosted in partnership with Royal DSM, a purpose-led global science-based company in nutrition, health and sustainable living recognized for its global fight against malnutrition, the SUN Business Network and African Business magazine.

The Nutrition Africa Investor Forum will highlight business opportunities in a largely underdeveloped market. From farm to fork, nutrient gaps in diets within low and middle-income markets constitute a largely untapped market worth USD$120bn. According to a recent study, no African country is expected to reach the UN target of ending childhood malnutrition by 2030.  In fact, malnutrition indicators remain “persistently high” in 14 countries, stretching across from Sahel from Senegal in the west to Eritrea in the east.

This challenge needs to be addressed. GAIN argues engaging the private sector is key in addressing this issue. Nutrition-sensitive capital investments along the entire food value chain are critical to drive better availability, access, affordability — and finally — consumption of nutritious foods.

China’s Xi promises $14.7bn in investments in South Africa

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In addition to $14.7-billion in investments promised by China, the cash-strapped state-owned enterprises which had dodgy links to the Guptas, Eskom and Transnet, will receive major new Chinese loans worth a combined R37.7-billion.

Chinese President Xi Jinping has committed China to investing $14.7-billion in South Africa, President Cyril Ramaphosa said after meeting Xi in Pretoria on his state visit to South Africa on Tuesday. This would be a significant boost to Ramaphosa’s international drive to raise $100-billion in investment over the next five years.

Xi himself announced at the same joint press conference with Ramaphosa that China would take “active measures” to boost imports from South Africa to support the country’s development agenda and priorities.

State-owned China Development Bank has also agreed to lend $2.5-billion (R33.7-billion) to cash-strapped power utility Eskom to complete the Kusile coal-powered power station project in Mpumalanga.

And a $300-million (R4-billion) loan from Industrial and Commercial Bank of China (ICBC) will go to another ailing state-owned enterprise, Transnet.

The two loans deals were among 14 different agreements signed between South African and Chinese government departments, SoEs and private companies after the Ramaphosa-Xi official meeting.

Trade and Industry Minister Rob Davies explained to journalists that the measures which Xi had agreed to take to boost South African imports included sending more buying missions to South Africa, with a focus on purchasing value-added goods from this country. Pretoria sees such measures as steps towards establishing more balanced trade with China, rather than just exporting raw materials to that country, and importing Chinese manufactured goods.

As an example of the type of Chinese investment South Africa is looking for, Davies said that Ramaphosa and Xi would later on Tuesday participate by video in the launch of the R10-billion car factory built by the Chinese vehicle company BAIC in the Coega special economic zone near Port Elizabeth.

He said this investment had been announced at the time of Xi’s last state visit in 2015 and the first vehicles would be rolled out on Tuesday.

“What’s special about the Chinese is when they make a commitment to invest, they’re reliable and they happen,” he said.

Davies added that the Chinese TV and domestic appliance manufacturer Hisense would also be expanding its local production.

But he also disclosed that South Africa invests a lot more in China and other BRICS countries than they invest in South Africa and that this imbalance needed to be corrected.

He said China’s accumulated total investment in South Africa to date was about $11-billion and that South Africa had invested a greater amount than that in China.

South Africa’s investment imbalance with the other four BRICS countries as a whole was even greater. Total outward investment was about $60-billion against only $18-billion of inward investment. That’s why he would be arguing at the BRICS Business Forum in Sandton on Wednesday that BRICS needed to support more investment-led trade. If South Africa could expand its production capacity, it and other BRICS countries could also increase their manufacture of intermediate goods which would boost trade in supply chains.

Davies said about two thirds of world trade was now in such intermediate goods and that the focus needed to be on investment-led trade, not the other way round, (as many economists advocate).

The BRICS Forum, which all the leaders of the BRICS countries – Brazil, Russia, India, China and South Africa – are to attend, will be the first leg of the BRICS summit. On Thursday the five BRICS leaders, Ramaphosa, Xi, Brazilian President Michel Temer, Russian President Vladimir Putin and Indian Prime Minister Narendra Modi will have a meeting among themselves, followed by a retreat.

On Friday the five leaders will have two separate “outreach” meetings, one with several African leaders and another with non-African leaders, mostly representing regional organisations.

Davies said that apart from new investments, the other important announcement by Xi on Tuesday was to take active measures to increase imports from South Africa. In addition to sending more buying missions to this country, he said China had already relaxed health restrictions on South African beef imports and had undertaken to do the same for dairy imports.

 

 

Xi said the two countries would prioritise co-operation in infrastructure, trade and investment, science and technological innovation and financial co-operation.

Xi pledged China’s support for the big investment and jobs summit which Ramaphosa plans to hold later in 2018 in an effort to attract $100-billion of investment in five years and said China would take “active measures to expand imports from South Africa to support the government in achieving its development agenda and priorities”.

Xi said China and South Africa held similar views on international issues and so should work more together to strengthen multilateralism – the inclusion of all nations in reaching international decisions.

This would include bolstering the multilateral (international) trade system and increasing democracy in international relations.

(Contribution to Peter Fabricius)

 

Nigeria Air seeks strategic partner to invest $300m

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Nigeria’s government is seeking a strategic partner to invest up to $300 million and operate the new national airline, Nigeria Air, according to a document seen by Reuters on Thursday.

The West African country’s previous national carrier, Nigeria Airways, was founded in 1958 and wholly owned by the government. It ceased to operate in 2003.

Hadi Sirika, minister of state for avi

ation, on Wednesday said the government would not own more than five percent of the new carrier, called Nigeria Air. He made the comments while providing details of the airline at the Farnborough air show in England.

The government plans to launch the airline in December, making good on President Muhammadu Buhari’s election campaign promise.

Investing in infrastructure

Decades of neglect and lack of investment have left Nigeria with low-quality infrastructure seen as a hurdle to prosperity. The government has said that upgrading it will require private investment.

“The initial capital is likely to be in the range of $US 150 to 300 million, invested in tranches over time from start-up through the first years of operation,” a government document stated.

It said the government will provide initial capital but did not state the sum or give further details.

The government will “facilitate the process for opening up the capital of the airline to private sector financial investors”, the document stated.

A private operator, sought through a Public Private Partnership (PPP) process, will manage the airline without interference, it said.

 

Nigeria’s aviation industry

Nigeria Air would serve domestic and international markets and expect to have a fleet of 30 aircraft in five years with hubs in Lagos and Abuja, Nigeria’s two main cities.

British billionaire Richard Branson set up domestic and international carrier Virgin Nigeria in 2000 but pulled out in 2010 in frustration at what he said was interference by politicians and regulators.

The airline he created, which was later rebranded Air Nigeria, closed in 2012 after collapsing under about 35 billion naira of debt which left it unable to pay staff, a former finance director of the company told Reuters at the time.

Nigeria is overhauling its aviation infrastructure and handing over its airports to private managers in order to improve the business environment for the industry sector to attract investment, the document said.

It said current air traffic in Nigeria is around 15 million passengers which is expected to grow at five percent per annum through to 2036.

REUTERS

Special Supplement: African Energy – A vibrant market

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First the good news. Analysis of the 5,300-plus operating, under-construction and planned generation plants now recorded by African Energy Live Data shows installed capacity on the continent will increase by almost 50% from 2018 to 2022, should all announced commercial operations dates be met. The majority of the growth will come from gas and liquid fuel-fired projects, but investment in renewable energy (RE) is increasing quickly.

It is of little surprise that Africa’s largest economies and most populous countries have the largest amount of power generation under construction. With the exception of Ethiopia – which is developing the 6 GW Grand Ethiopia Renaissance Dam (Gerd), East Africa has relatively few megawatts under construction, particularly in troubled areas such as Somalia and South Sudan. However, the region’s ambitious transmission plans point to considerable potential for power trading and, away from established grids, East Africa has proved the crucible in forging innovative off-grid solutions, as it has for other transformative technologies such as mobile banking.

Despite significant gas and hydroelectric power (HEP) resources available in West Africa, of the 6,838 MW under construction in the region, 4,102 MW is taking place in Nigeria. Gambia, Guinea-Bissau, Sierra Leone, Liberia and Burkina Faso are witnessing very little progress and have seen little new capacity come online in the past few years.

South Africa and Angola account for 92% of new generation being built in Southern Africa. In North Africa, Egypt and Algeria also account for 92% of the under construction megawatts, although Morocco and Tunisia also have major renewable energy (RE) and thermal construction projects.

Almost half of the under-construction power generation is located in North Africa (18.5 GW in Egypt and 11.4 GW in Algeria). West, East and Southern Africa have more modest levels of new capacity being built, while only 814 MW is recorded as under construction in Central Africa.

 

Live Data is an innovative and interactive data platform that allows investors and developers to identify and evaluate power projects across the continent. The platform contains detailed information on more than 5,300 projects and 4,500 organisations as of May 2018, with data points on everything ranging from fuels and technology to shareholders, financing and background information. Live Data’s sophisticated Data Tool aggregates project data to provide insight into the structure and outlook of the power sector at a country, regional and continental level.

 

Renewables breakthrough

Tumbling prices for solar and wind technologies, coupled with enthusiastic support from programmes such as the World Bank Group’s Scaling Solar and any number of bilateral initiatives from RE enthusiasts such as Germany, have contributed to ever more economies turning to RE solutions. Should the pipeline recorded by Live Data be realised, the share of renewables in the energy mix across Africa will grow from 21% by end-2018 to 25% in 2022.

Broken down regionally, the share of renewables (which includes HEP) in Central Africa will increase from 64.4% to 68.8%, in East Africa from 59% to 65%, in Southern Africa from 25.5% to 28.1%, and in West Africa from 20.4% to 25.9%. RE as a share of the gas-dependent North African electricity supply industries (ESIs) will only moderately increase, from 8.7% in 2018 to 10.2% in 2022.

 

Jon Marks is editorial director and David Slater is senior project manager at African Energy (www.africa-energy.com).