Year: 2018

Nigerian Senate to Probe Gas Company’s Business Activities

The Senate yesterday mandated its committees on public accounts and gas to investigate the alleged $784,265,947.54 fraud and other activities of Brass Liquefied Natural Gas, LNG, including an illegal account in the name of the Federal Government.

Drawing the attention of senators to the issue, Dino Melaye (Kogi-APC) accused the Nigerian National Petroleum Corporation, NNPC, of operating a fraudulent account in the name of the Nigerian government.

Presenting a motion titled “Monumental corruption at the NNPC”, Melaye noted that the Brass LNG was incorporated by the Corporate Affairs Commission on December 9, 2003 and limited by shares of $1 million.

He said: “The senate observes that the shareholders of this company are: the Federal Government (NNPC) represented by Mr. Funsho Kupolokun with $490, 000 shares, Philip Brass Limited whose address is in Cayman Island, British West Indies represented by Mr. R.L. Smith with a share capital of $170, 000, Eni International B.V with address in Amsterdam, Netherlands represented by Mr. A. Forzoli with share of S170, 000, while the fourth shareholder Chevron Texaco Brass LNG Limited with address in Bemuda represented by Mr. J.R. Pryor with a share of $170, 000.”

Melaye said the board of directors of the company was composed of foreigners and five Nigerians, all NNPC staff or ex-staff members.

He listed them to include Gauis Obaseki-Jackson, Former GMD NNPC, Yakubu Andrew, Former GMD NNPC, Ibogomo Gbeyansa, Staff NNPC, Dawa Joseph Thlama, Staff NNPC, Ige David, Staff NNPC and Mr. Buba Mohamman.

Melaye added: “The senate observes that from the Memorandum of Understanding, Brass LNG is supposed to be a Joint Venture Company with NNPC having the controlling shares and their account domiciled with the CBN.

“The senate is surprised that the account of this company is with Keystone Bank opened on August 1, 2012 with account number 1005825168 a USA domiciliary account with a closing balance of $137, 086, 462:54 currently, while $648, 179, 487 was recorded as the account’s last inflow on September 19, 2016 and a withdrawal of $4 million was effected on the 18th November, 2016 without BVN.”

He stated that there is an urgent need to define the position of the company, its operation, management and mandate in order to halt the seeming corruption.

The senate in its resolution mandated its committees on public accounts and gas to carry out a ‘holistic investigation into the activities of the Brass LNG and the complicity therein as well as the level of corruption that has taken place and report back within four weeks.’

Source: allafrica.com

Uganda SGR boss drives local content campaign

Uganda has set a high bar on local content for the Chinese contractor picked to build its standard gauge railway as it seeks dividends for industries and workers from the $2.3 billion investment.

The government official in charge of the project that will be financed by the China Export Import bank said the government expected nearly a third of the project sum — $700 million — to be used to spur the local economy, especially the building materials sector.

The government also targets to have one foreigner for every 10 technical staff working on the railway.

“We are going to have all the cement for the project procured locally. We have met them (steel rollers) and they are ready to supply the steel,” project coordinator Kasingye Kyamugambi said.

Among the companies that will benefit from the affirmative action are Hima Cement, Roofings Uganda, Steel and Tube, and Madhavani Steel.

African countries have tried in vain to enforce local content provisions on Chinese infrastructure builders with the firms often saying locally produced materials are not of the quality required to ensure safety of roads, bridges, railways or buildings.

Mr Kyamugambi, however, said the government was working with industry to produce the materials to the specification of  China Habour Engineering Company, the contractor.

“The key challenge is to get the manufactures to re-align their production lines to meet the needs of the project, ultimately, our aim is to keep at least $700 million (of the entire project cost) in the country,” he said.

The beneficiaries

Mr Kyamugambi said the 273-kilometre SGR from Malaba along the Kenya border to the capital Kampala was an opportunity to show the government was walking the talk on Buy Uganda Build Uganda policy.

“We have already been in discussions with Hima Cement and the other manufacturers to assess their capacity. We believe they have the right quality and can give us the quantities necessary,” said Mr Kyamugambi.

Financing and implementation of the SGR is yet to be confirmed with China wanting Uganda and Kenya to negotiate for the project as a joint venture because its viability is hinged on Kenya completing the line from Kisumu to the border town of Malaba.

Kenya

The China Communications Construction Company Ltd which built the SGR from Mombasa to Nairobi in Kenya said about 40 per cent of the $3.27 billion contract ($1.3 billion) was awarded to local firms.

The beneficiaries included 2,946 local security personnel and 1,234 suppliers during its two and half years of construction. It also said 46,000 local workers were deployed.

Most of the workers were not technical because of skill gaps and the company ended up taking hundreds of youth to China for training on rail related courses.

The company, however, did not benefit as many Kenyan firms as was expected, first because of concerns over quality and secondly a dispute that arose over taxation of services rendered to what was essentially a public project.

The company still bought 300,000 tonnes of cement from Bamburi Cement, a subsidiary of Lafarge, the only company that had upgraded its system to produce the heavy duty type that was required.

The firm said it also bought simple machinery, chemicals and services in Kenya with only advanced equipment such as locomotives, operating equipment, SCE (signal, communication and electricity being imported.

In Uganda only Japan which is building East Africa’s first cable bridge at Jinja, has procured steel locally from the time the project began.

The funders and contractors of the Isimba and Karuma electricity dams insisted initially on importing the steel from China after raising quality concerns but have since adopted the local content policy.

Source: CHARLES M. MPAGI, The East African

Kenya: Down to Business – Drought-Hit Kenyan Women Trade Their Way Out of Poverty

Marsabit — Widow Ahatho Turuga lost 20 of her goats to drought early last year, but the shopkeeper is planning to reinvest in her herd once she has saved enough money.

“I think I will start with four goats and see how it goes,” she said, rearranging soap on the upper shelf of her shop in Loglogo, a few kilometres from Marsabit town.

She recalled how frequent droughts had left her on the edge of desperation, struggling to care for six of her own children and four others she adopted after their mother died.

But Turuga is finding it easier to cope since taking part in a rural entrepreneurship programme run by The BOMA Project, a non-profit helping women in Kenya’s dry northern areas beat extreme poverty and adapt to climate change.

The U.S. and Kenya-based organisation provides two years of business and life-skills training, as well as mentorship.

Groups of three women are each given a start-up grant of 20,000 Kenyan shillings ($194.55) and a progress grant of 10,000 shillings to set up a business.

After graduating, they carry on operating their businesses – mainly small shops selling groceries and household goods – either together or on their own.

The women also club together in savings groups of at least 15 people, who put away anything from 400 shillings a month each, and make loans to members at an interest rate of 5 to 10 percent.

Habibo Osman, a mother of five who was in the same group as Turuga, has been able to support her family even after divorcing her husband.

The 1,200 shillings she earns each week from the shop she established as a BOMA business has enabled her to enroll her eldest child, aged five, in nursery school. She is now hoping to save enough to buy her own land.

NO MORE AID

Ahmed “Kura” Omar, BOMA’s co-founder and deputy country director, said his native Marsabit is one of Kenya’s driest counties. It is often hit by prolonged drought, with many families losing livestock in its mainly pastoralist economy, he added.

“Given that there is no foreseeable end to these drought patterns, we need to stop relying on food distribution and aid money, and create more sustainable, life-long solutions,” Kura told the Thomson Reuters Foundation.

BOMA CEO Kathleen Colson said the programme aimed to help break the cycle of dependency on aid, giving women power over their lives and the means to move out of extreme poverty.

“People need to be treated with dignity and be empowered to achieve self-sufficiency and effect change on a community level,” she said.

BOMA asks villagers to help identify the poorest women among them to participate in the training. After completing the programme, they help other women, a process that raises income levels across the entire area.

Bakayo Nahiro, a widow and mother of six, belongs to the Namayana women’s saving group in Kargi in Marsabit. She has amassed 25,000 shillings in savings, but said profit margins go down in drought periods as people take shop goods on credit when they have no livestock to sell.

MONEY IS POWER

Jane Naimirdik, a BOMA trainer and mentor, said communities in Marsabit are highly patriarchal, but the programme helps women gain a voice in society.

The practice of grouping women in threes creates mutual accountability but also offers protection from husbands who may want to take money from them, she added.

“We once handled a case where the husband tried to take the wife’s savings by force, but we approached (him) and told him the money did not belong to his wife but to the women’s savings group and he understood,” said Naimirdik.

Moses Galore, Kargi’s village chief, said no such incidents had been reported to him, and men appreciated their wives’ financial contribution to the household.

Magatho Mifo, a BOMA business owner, said her husband was happy about her commercial activities as she could now provide for her family while he travels for days in search of pasture for his herd.

Her neighbours’ wives and children buy goods on credit when the men are away looking for grazing, and repay her when they return. This helps the community during lean times and generates more income for her business, she said.

“My husband sometimes gets angry when I attend the women’s group meetings, because they can last a long time, but once I arrive home with a bag of food or something else, all is forgotten,” said Khobobo Gurleyo, another entrepreneurship programme member.

BUSINESS PARTNERSHIPS

BOMA mentor Naimirdik said the women are also trained in conflict management to strengthen their business partnerships.

Ideally, each group includes women of different ages so as to benefit from the experience of older members and to make the programme sustainable as it passes to subsequent generations, she said.

In addition, the women receive information about family planning and the importance of having small families, as well as child and maternal health and hygiene, she added.

The BOMA Project has reported positive results in the communities where it works in Marsabit County and Samburu East, with about 15,700 women enrolled in its programme since 2008.

Data collected during a 2016 exit survey of participants found that after two years, 99 percent of BOMA businesses were still open.

Members experienced a 147 percent increase in their income, and a 1,400 percent increase in their savings, alongside a 63 percent drop in children going to bed hungry.

The BOMA Project plans to expand its programme across East Africa’s drylands by partnering with governments and other development agencies.

In Kenya, it is undertaking a pilot programme with the government involving 1,600 women in Samburu, in addition to its existing work.

The project aims to reach 1 million women and children by 2022, said CEO Colson.

($1 = 102.8000 Kenyan shillings)

 – Reporting by Benson Rioba; editing by Megan Rowling

Source: allafrica.com

Tanzania’s Mining Firms Have Three Months to Comply With Law

Tanzania is set to restructure its troubled mining sector after the government gave mining companies three months to comply with new guidelines, which give local mining firms and financial institutions preference.

Part of the regulations state:

“A contractor, subcontractor, licensee or other allied entity shall before the commencement of mining activities submit a plan to the Commission specifying the role and responsibilities of the indigenous Tanzanian company; the equity participation of the indigenous Tanzanian company; and the strategy for the transfer of technology and know-how to the indigenous Tanzanian company,”

“Mining companies will have to open and operate bank accounts in a “100 per cent” Tanzanian-owned banks.

The rules give the government the right to oversee the implementation of these regulations, evaluate and review contracts as see fit.

President John Magufuli has previously complained that the country is not benefiting as it should from its resources.

New laws

Mid last year, Tanzania’s parliament pushed for new laws on its extractives industry: The Natural Wealth and Resources Contracts (Review and Re-Negotiation of Unconscionable Terms) Bill, 2017; the Natural Wealth and Resources (Permanent Sovereignty) Bill, 2017; and, the Written Laws (Miscellaneous Amendments) Act, 2017.

The new guidelines pushed for the mandatory listing of mining companies on the Dar es Salaam Stock Exchange by August last year as part of measures aimed at increasing transparency and sharing out wealth from the country’s natural resources.

President Magufuli signed the Mining Act in July last year and it requires the government to own at least a 16 per cent stake in mining activities. The troubled mining sector generates about 3.5 per cent of the country’s GDP.

The government accused gold mining company Acacia, of tax evasion and under-declaring amount and types of minerals exported. The government banned it from exporting gold/copper concentrates, which account for over 50 per cent of the company’s operations.

Other major foreign-owned mining companies that will be affected by the new legal regulations on local content include the South African AngloGold Ashanti and British mining company Petra Diamonds.

Conditions are ripe for economic development, says World Bank

There is much discussion about global poverty and the billions of people living with almost nothing.

Why is it that governments, development banks, think-tanks, academics, NGOs, and many others can’t just fix the problem? Why is it that seemingly obvious reforms never happen? Why are prosperity and equity so elusive?

Economic development is not easy. Good ideas and good intentions have usually crashed against a wall of vested interests, incapable institutions, and chronic corruption. And the recent backlash against globalisation will only make matters worse – if rich countries shut their doors to the movement of goods, capital, people, and ideas, the world’s poor will suffer disproportionately.

Yet, behind and beyond the headlines, politics and technology are coming together to make economic development more likely for more countries than ever before. How come? First, the way governments function, and for whom they function, is changing fast. It is in fact probable that, one day, governments will work for us. Why the hope?

Think of four ‘Ds’: democracy, decentralisation, devices, and debt. The more our leaders feel that others are vying for the top job – that is, leadership becomes ‘contestable’ – the more they will care for what voters want. This is true for presidents and prime ministers, but it is even truer for governors and mayors.

As the responsibility for public schools, hospitals, and roads is further ‘decentralised’ towards local authorities, it gets easier to demand accountability – closer physical proximity between policymakers and policy-takers is ‘welfare-enhancing’. Moreover, we now have devices that let us name and shame public officials in real time. With your smartphone, you can set off and organise a massive protest from the comfort of your Twitter feed or Facebook account. For us citizens, the marginal cost of collective action is approaching zero.

And then, there are bondholders, those investors who buy national debt and expect to be repaid. They trade their bonds 24/7, and sell them off in a blink if our government messes with the economy. This instantaneously raises the country’s spread – the difference in interest rates it has to pay to borrow, compared to the government.

Everyone sees this information, both at home and abroad, and soon enough political pressure mounts to correct course. Call it ‘accountability by spreads’.

Power of value chains

Politics and technology are also changing our understanding of economic management. It starts with the industrial process, which has become a cobweb of global value chains.

This is the idea that most of the products that consumers buy – say, cars – are made up of parts and designs produced in different countries and shipped across borders to a final assembly site. The ‘well-paying’ jobs that politicians talk so much about are now inside those value chains.

But you can’t be part of a chain, let alone climb it, if you can’t keep up with it. Imagine your country manufactures tyres but, because of weak quality controls, changes in tax rules, or poor port maintenance, you can’t be trusted to deliver them according to specifications, at the cheapest possible price, and on time.

Everyone else’s effort along the chain would be wasted. How long before they cut you off? Why would you be invited in the first place?

You see, value chains force countries to rise up to a more-or-less common standard of economic management: fiscal prudence, independent central banks, low public debt, open trade, smart regulation, adequate infrastructure, capable workers, and fair treatment of investors. Without these, you cannot offer the predictability that modern, globalised industry needs, and the jobs that people want.

Finally, we have new weapons in the war on poverty. Technology has made it possible for policymakers to know the poor by name, one by one. As India has shown, you can biometrically identify almost a billion people in about seven years, at a cost of less than four dollars per head.

Once you ID the person, it is almost costless to transfer cash directly to her or his debit card or cell phone. So more than 70 developing countries do just that. Some attach conditions to the transfer – like keeping your kids in school – and others don’t.

Individualised approach

This individualised approach to social policy is not just politically popular, it is also incredibly effective. It allows you to react faster, and send more cash to those in need, when an economic crisis breaks out.

It helps you promote desirable social behaviour – from breast-feeding to vaccination. It sheds light on the aberration of subsidising the rich – as many governments do when they sell things like gasoline or electricity at below-cost prices. And, one day, it may be used to turn citizens into shareholders who directly receive dividends from the oil, gas, or minerals that their countries export. Picture that for Africa.

Need for coordination

All this optimism about economic development is not without risks. In the short term, one worries about protectionism in the US, stability in the European Union, and slower growth in China – just to name a few. Even more difficult problems loom on the horizon, like climate change, cybersecurity, and chronic conflict. These global challenges call for international coordination, something at which the world is not very good.

But, overall, never before did the profession of economic development have the alignment of technical tools and political incentives that it has today. Yes, we will still see countries zig-zagging along the path of common-sense policy, and a few stubbornly going backwards. For most, however, the chance at a better life has never been greater.

*Marcelo M. Giugale is the World Bank’s Director of Financial Advisory and Banking Services, and a Fellow of the US National Academy of Public Administration. He led over $30bn in lending, received decorations from the governments of Bolivia and Peru, and taught at the American University in Cairo, the London School of Economics, and Universidad Católica Argentina. He is also the author of Economic Development: What Everyone Needs to Know. ISBN 9780190688424. The book is available via goo.gl/J35iVQ

Source: African business Magazine

Nigeria’s debut N100bn sovereign sukuk

The successful launch and closing of Nigeria’s first sovereign sukukin September is another feather in the cap of the relatively new Director General of the Debt Management Office (DMO) of the Nigerian Ministry of Finance, Patience Oniha.

The DMO was established in 2000 to centrally coordinate the management of Nigeria’s debt, which was hitherto handled by a myriad of establishments in an uncoordinated fashion, leading to inefficiencies and confusion. It coordinates the issuing of government-backed securities and fixed-income bonds in the domestic and international markets. Sukuks are Islamic financial instruments. In line with sharia law, they do not pay interest but pay subscribers a share of profit.

The DMO issued the N100bn ($277m) sukuk through a locally incorporated special purpose vehicle, the FGN Roads Sukuk Company 1 Plc. In a statement issued on September 26, the DMO announced that the bond was oversubscribed, having attracted a total subscription of N105.878bn ($293m)The sukuk certificates, which are guaranteed by the Nigerian government, are priced at a rental rate of 16.47% payable semi-annually, and mature on September 25 2024.

The rationale for the issuance of the sukuk, explains Oniha, “is to enable the government to diversify its sources of funding, deepen the market for domestic securities and improve financial inclusion. After the issuance of the debut sukuk, the DMO plans to continue issuance based on the Federal Government’s financing needs.”

The sukuk provides investors with the opportunity to participate in the country’s growing capital market. In its statement the DMO said that subscribers came from a broad cross-section, including pension funds, banks, fund managers and institutions as well as more than a thousand retail investors from across Nigeria, who accounted for over 4% of the total subscription. With the success of the sukuk, another window has been opened to raise funds to close Nigeria’s infrastructure gap, said the DMO.

Funds earmarked for roads

The funds raised from this debut sukuk will be used for the construction and rehabilitation of 25 roads across the nation’s six geopolitical zones. The Federal Ministry of Power, Works and Housing says it has now commenced work on the project.

Nigeria’s infrastructure finance gap over the next 30 years is estimated at up to $3 trillion by the African Finance Corporation. The oil, gas, power generation, road and rail sectors alone will require $600bn over the next six years to provide quality infrastructure and upgrades, according to the Infrastructure Concession Regulatory Commission (ICRC) of Nigeria. The sukuk is also part of an ambitious plan of the Securities and Exchange Commission of Nigeria (SEC) to develop the debt market in the country.

Role of local banks

The issuance of the sukuk is also major achievement for local banks in that it was largely structured, arranged and distributed through a book-building exercise by them. It was jointly lead-managed by FBN Merchant Bank and Lotus Financial Services, which also acted as financial advisers and bookrunners to the transaction.

First Bank of Nigeria, Jaiz Bank, Zenith Bank and Sterling Bank acted as lead managersAccess Bank, Citi Bank Nigeria, Coronation Merchant Bank, Ecobank Nigeria, First City Monument Bank, FSDH Merchant Bank, Guaranty Trust Bank, Stanbic IBTC Bank, Standard Chartered Bank Nigeria and United Bank for Africa acted as placement agents.

According to Oniha, the multilateral Islamic Development Bank (IDB), in which Nigeria has a major equity subscription, provided a two-day training on sukuk for staff of the DMO, the CBN, the SEC, the MoF and Cross River State Government.

Adding depth to capital markets

According to Oniha, the SEC is in the process of “implementing a 10-year Capital Market Master Plan to make Lagos a [regional] financial hub. The DMO as part of its Strategic Plan, 2013–2017, has the objective of developing alternative sources of raising finance for development and attracting a wider pool of investors. This particular objective led to the development of new products, which includes sukuk.”

The Plan is similar to that of Kenya’s Capital Market Authority which two years ago launched the Capital Market Master Plan, incorporating an Islamic Capital Market Master Plan. It will take a number of years to develop and implement, and is part of Kenya’s ambition to develop Nairobi as the East African financial hub, which would include an Islamic finance hub.

To further add depth to the development of the Nigerian capital market, the Ministry of Finance has announced that the sukuk certificates qualify as securities in which trustees can invest under the Trustee Investment Act.

The certificates also come under government securities within the meaning of Company Income Tax Act and Personal Income Tax Act for Tax Exemption for Pension Funds. In addition, they are classified as liquid assets by the Central Bank of Nigeria; this will help banks holding these certificates in their liquidity management.

Credit rating not a concern

Oniha is unfazed by the fact that in recent months, Nigeria’s sovereign rating has hovered slightly above or below investment grade. “Nigeria,” she says, “recently successfully issued a $1.5bn Eurobond and $300m Diaspora Bond in the international market – both notes recorded high subscription levels. In view of these, credit rating has not been a major concern to Nigeria with respect to securities issuance in the international capital market.”

S Africa, Senegal, Togo and Côte d’Ivoire have been recent issuers of sovereign sukuk in Africa. The S African $500m sukuk has been the only sovereign issuance in the international market to date. Sudan was the pioneer of sukuk in Africa, while Djibouti and Gambia have also issued local currency sukuk.

The IMF and G20 countries have said that sukuk, by its very nature being asset based or backed, may be an ideal instrument for emerging countries in Africa and Asia to raise financing for infrastructure and by the corporate sector.

International sukuk could be on the cards 

“Going forward,” confirms Oniha, “sukuk has a role to play in future government public debt programme, subject to the government’s funding need and portfolio management strategy. Maybe Nigeria may also go down the route of S Africa in issuing a sukuk in the international market.” Oniha, who was responsible for a number of innovations in her previous role at the DMO as Director, Market Development Department, is quietly bullish about the outlook for the Nigeria economy and financial services sector over the next year.

“The outlook for Nigeria,” she maintains, “is positive given the government’s initiatives and actions to stimulate growth and diversify the economy. Non-interest finance is beginning to evolve and we expect it to grow. The investment environment in Nigeria is open and not linked to creed or ethnicity.” Indeed the very purpose of the DMO’s Eurobond, FGN bond and now sukuk drive has been to create a debt capital market where the public and private sectors can access long-term funds to finance Nigeria’s growth and development.

Source: African Business Magazine

Nigeria: NNPC to Build More Depots, Expand Market Share

The Nigerian National Petroleum Corporation (NNPC) on Monday said it would build more depots across the country.

The information is in a statement by NNPC Spokesman, Mr Ndu Ughamadu in Abuja.

Ughamadu stated that the NNPC Group Managing Director, Dr Maikanti Baru, made the disclosure in Abuja while inaugurating the board of one of its downstream companies, NNPC Retail limited.

He added that the addition to the corporation’s existing 23 depots nationwide would ease products supply and distribution in the country.

Baru urged members of the board to expand the company’s market share from 13 per cent to 30 per cent, saying that building more depots by the corporation was more feasible than acquiring dormant ones.

He lauded NNPC Retail “for its strong intervention to wet (supply) the market at a time when other downstream players were playing underhand games to create artificial scarcity.

“By mid-2019, you should be having plans to go into the sub-region, this board should propel NNPC Retail into a new height,” Baru tasked the board.

On diversification and backward integration, he directed the company to venture into lubricants production, marine and industrial services to boost its revenue profile as it was in line with the quest for an integrated oil company.

Mr Saidu Mohammed, the Chairman of the board and Chief Operating Officer, Gas and Power, said as an NNPC-owned company, the watch word for NNPC Retail should be “efficiency and profitability, especially in a downstream system like ours that is highly competitive”.

He pledged the commitment of the board and management of the company to the attainment of the goals of the corporation. (NAN)

 Source: allafrica.com

Rwanda: Volkswagen in Rwanda – Car-Sharing and a Future in E-Mobility

German car maker Volkswagen (VW) will be the first international automobile company to invest in Rwanda. The first cars are expected to be ready by May. For the future VW also plans to build electric cars in Rwanda.

If everything goes according to plan, the first car “made in Rwanda” could be on the streets as early as May, according to the German automobile giant. After South Africa, Nigeria and Kenya, Rwanda is the fourth African country in which VW has invested.

“I think we have come to the right place,” said Thomas Schäfer, managing director of VW in South Africa. “The attention, the focus and the will is here to implement this.” Moreover, Schäfer said, he was impressed by the support from Rwanda’s government right from the signing of the letter of intent in December 2016. He spoke of the government’s anti-corruption drive and Rwanda’s tech savvy younger population. The invester-friendly climate is one of the reasons why Rwanda is often treated as a “darling of the West,” despite its democratic deficits.

The future is electric

As with the Kenyan plant which was opened in late 2016, VW only plans to assemble the cars in Rwanda. The parts will be imported from a manufacturing plant in South Africa. In the first production phase, which will last approximately one year, VW hopes to assemble 1,000 cars, which will include the Polo, Passat and SUV models.

The automaker plans to create between 500 and 1,000 jobs and it says that it will invest $20 million (€16 million). For Rwanda, this is an important move.

“Volkswagen’s investment that they just announced is extremely important for Rwanda,” said Clare Akamanzi, CEO of the state-run Rwanda Development Board. “It demonstrates that a global company like VW can find a vital business in Rwanda. One, that they can begin to assemble motor vehicles in Rwanda, which is something that has not been done in Rwanda before. And secondly that it can actually help to solve a transport problem in our country.”

Indeed, VW doesn’t just plan to sell cars in Rwanda, it also wants to sell mobility. Schäfer knows that only a small section of the population will actually be able to afford new cars. And so he plans to introduce car sharing and renting vehicles in the capital Kigali – all of which will, of course, be organized via an app and smartphone.

If everything runs as planned, Rwanda will also soon witness the introduction of the first electric cars on its roads. “In developing countries like Rwanda, we often skip development steps ,” Schäfer said. “We’ll start with what we have already announced. But of course we’re already looking at the next phase and I think that we this should be easy to implement in a country like Rwanda and a city like Kigali.” Rwanda has a good network of roads and, due to its small size, setting up charging stations across the country should not be a problem.

Rwanda seems very open to Schäfer’s ideas. The country aims to become a leading example of environmental protection and sustainability on the continent. Electric cars fit well in this plan.

Cobalt is the key

Electric cars also mark a major change within VW itself. The carmaker plans to invest 34 billion euros in the development of electric cars in the next five years. It hopes to become the leading electric car maker by 2025.

To achieve this, the company needs one major component: cobalt. And the biggest reserves of the rare metal can be found in Rwanda’s neighbor, the Democratic Republic of Congo (DRC), which produces 60 percent of the world’s cobalt.

In 2016, car makers felt the squeeze after Amnesty International visited mines in DRC and came back with alarming reports.

“The miners are extracting cobalt using very rudimentary hand tools and no protection. The pits they dig are often deeper than the 30 meters (3.2 feet) legally stipulated. They could go to 60 or 70 meters. They have no supports. These people are working in really dangerous conditions where pit collapses and deaths is a common,” said Amnesty’s Lauren Armistead.

The batteries for electric car require much more cobalt than, for instance, smartphones. For Armistead, this means a leading carmaker like Volkswagen should take responsibility for this. “If they want to become the major player in e-vehicle production, they need to position themselves as a leader in terms of their cobalt sourcing practices,” she says. “It is really paramount that the electric vehicle revolution is not built of the backs of children and adults in hazardous conditions in the DRC,” she added.

While it might still be a while before electric cars hit the streets of Rwanda, cobalt is already a central component for VW’s future plans. Schäfer, however, denies that the company’s investment has anything to do with its proximity to the DRC.

 Source: All Africa

Interview with Li Yong, Director General of the United Nations Industrial Development Organization

The United Nations Industrial Development Organisation (UNIDO) has put the 47 least developed countries (LDCs) – 33 of which are in sub-Saharan Africa – at the heart of its agenda for inclusive and sustainable industrial development.

“Building global partnerships: Enhancing growth and inclusiveness in LDCs” was the theme discussed by public and private stakeholders in Vienna on 23 and 24 November 2017 at the 7th LDC Ministerial Conference. UNIDOdirector general Li Yong talked to African Business about the work of his organisation in partnership building and resource mobilisation for sustainable industrial development in LDCs.

The least developed countries face many challenges. How can UNIDO contribute?

In the process of development, each challenge is an opportunity. But opportunities are not guarantees of sustainable wealth creation. Converting challenges into opportunities and opportunities into sustainable sources of wealth and the creation of decent jobs is an ongoing process. UNIDO remains committed to being an effective and efficient development partner to support the process which enables LDCs to graduate and continue to grow beyond that point.

What has prevented more countries graduating from the LDC category since the Istanbul Conference in 2011?

The Istanbul Conference was dedicated to assessing the results of the 10-year action plan for LDCs adopted at the 3rd United Nations Conference on LDCs in Brussels, Belgium, in 2001 and to adopting new measures and strategies for the sustainable development of the LDCs into the next decade. The resulting Istanbul Programme of Action (IPoA) prioritised productive capacity, agriculture, food security and rural development, trade, commodities, human and social development, multiple crises and other emerging challenges, mobilising financial resources for development and capacity-building, and good governance at all levels.

UNIDO continues to support these priorities through a range of technical assistance interventions from strengthening agro industries to supporting productive work for young people and entrepreneurship development. Nevertheless, since then, only two LDCs have graduated: Samoa and Equatorial Guinea, with Angola and Vanuatu expected to graduate by 2021.

A range of factors have prevented countries from graduating the LDC category, including the cost of energy, political instability, and unfavourable business climates. The absence of accreditation frameworks, slow regional integration, and weak cross-border infrastructure are all at stake.

Furthermore, weak logistics and trade facilitation systems and a pervading lack of competitiveness add to the challenges that LDCs face in graduating. UNIDO is committed to working on these issues with global partners to support LDCs in their inclusive and sustainable industrial development efforts. For example, in a country like Gambia, UNIDO, with the help of the Global Environment Facility (GEF) has trained young women to design, install and maintain stand-alone power systems. From supporting banana processing in Uganda by ensuring that processed banana products meet international quality and safety standards for consumption and market competitiveness, to supporting urban micro economic activities in Senegal, UNIDO actively supports LDCs in sub-Saharan Africa in a wide range of ways.

What benefits can the least developed countries expect from global partnerships?

The scale of the challenge facing LDCs means that multi-stakeholder partnerships and investment promotion, as well as innovative financing solutions for industrial development, are needed. Global partnerships are integral to the graduation of LDCs from their category. Through combining efforts and learning from one another on both national and regional levels, the scope for upscaling and maximising the effectiveness of efforts is significantly enhanced. By focusing on that specific theme, UNIDO’s recent LDC Ministerial Conference was able to gather public and private sector stakeholders from the 47 LDCs. Innovative schemes and mechanisms were identified by enabling partnership building and resource mobilisation for sustainable industrial development.

African countries form the largest number of LDCs in terms of regional representation in this category. Among these, African countries also dominate the 10 least developed. Overcoming the many challenges they face requires a multi-pronged approach, with partnerships at the heart. Lower foreign investment in leading commodity-rich LDCs persists, with risk perceptions ensuring that many potential investors continue to feel nervous about investing in many African LDCs (as well as other LDCs). Coordinated, strategic efforts are required to overcome such challenges.

The cost of energy is one of the main hindrances in industrialising LDCs. How does UNIDO support those countries in overcoming this major obstacle?

The renewable energy industry presents opportunities to improve energy access by lowering the cost of bringing power to rural areas. In spite of the initial investment costs, the long-term economic benefits from higher productivity of green and clean technologies, greater markets for green and clean technologies, and the economic incentives for further skill upgrading, innovation and job creation are significant. UNIDO promotes resource efficiency and renewable energy, as well as supporting countries in executing internationally agreed environmental agreements, including those on climate change.

Strengthening institutional and enterprise capacities lies at the heart of this area of work, as well as supporting LDCs at the upstream level of policy and institutional frameworks to mobilise greater investment and increased transparency in management for energy infrastructure. UNIDO coordinates the Global Network of Regional Sustainable Energy Centres in cooperation with various regional economic communities and organisations. Burundi, Rwanda, and Uganda are just some of the countries that currently benefit from these centres.

PPP does not seem to be a one-size-fits-all solution to entering the process of industrialisation. What could be a good balance between the private and public sector in order to maximise the positive impact on LDCs?

There is undoubtedly no one-size-fits-all solution to industrialising. Public-private partnerships and blending public and private financing are just one option. A wide range of broad-based, multi-stakeholder partnerships involving governments, the private sector, development partners, development finance institutions, multilateral/ bilateral development agencies, civil society and others can be leveraged for greater development impact. UNIDO’s innovative Programme for Country Partnership (PCP) approach provides a platform for multi-stakeholder partnership for the promotion of inclusive and sustainable industrial development and encourages a scaling-up of efforts through a country-wide programme

It is a country-owned process that builds on partnerships with various stakeholders, including development finance institutions and the private sector, to mobilise large-scale resources and achieve a greater development impact. There are clear guidelines in place for having a PCP though, and again this approach might not be the best fit for all countries. Nevertheless, we strongly believe that only through global partnerships will the scale of impact needed across LDCs and beyond be achieved.

China plays a major role in supporting Africa on its path to inclusive and sustainable industrialisation. What can other countries learn from China’s approach?

Manufacturing and industrial development were core to the “miracle” of the southeast Asian countries – countries like Japan and the Republic of Korea, who moved very fast after the Second World War. Those “tigers” and “dragons” moved quickly up to the middle and high-income country level. China learned from them in the 1980s, and we opened up a very, very poor country, with a big population, to the world.  China transformed from an agricultural-based to a more industrialised country in 30 years.

I would say that African countries can learn a lot from China’s experience. Africa can draw inspiration from China but must not aim to be China. Each continent should bear in mind its own local context when industrialising and look to international partners for inspiration. Ultimately though, they must take ownership of their industrial development efforts. For the same reason, the PCP model is a country-owned process, with a strong focus on the host country and ensuring that efforts are aligned with existing and emerging national and regional priorities.

A country’s business climate and political stability are detrimental to mobilising investment. Many LDCs are constrained by these aspects. What can be done to ensure that they overcome this impediment?

As far as possible, UNIDO seeks to support capacity-building in the LDCs aimed at improving their abilities to attract Foreign Direct Investment (FDI). A targeted programme is being developed with contributions from a range of partners, including the World Bank, which is aimed at actively assisting the LDC Investment Promotion Agencies (IPAs) by designing and implementing tailored capacity-building activities, taking into account the diverse needs of the various LDCs.

This programme represents a vital milestone in creating a positive investment promotion environment and contributing to the structural transformation and sustainable economic growth of LDCs. A one-size-fits-all approach will not work for LDCs, and therefore a tailored approach to supporting these countries is adopted, in order to maximise the effectiveness and efficiency of our interventions. In light of reduced FDI flows to LDCs – following a high of $44bn in 2015, FDI inflows to the LDCs contracted by 13% to $38bn in 2016 – a range of strategic approaches have been developed for IPAs. These include adopting a spatial approach to investment promotion – providing information about specific regions, industrial corridors, more elaborate investment promotion programmes to increase the benefits of FDI, as well as IPAs becoming focal points for broader regulatory reforms and investment facilitation activities. 

Source: African Business Magazine

African Union Commission Gears Up to Launch Highly-Anticipated Single African Sky

PRESS RELEASE

African Union Commission gears up to launch highly-anticipated Single African Sky

The African Union Commission is set to launch the first AU Agenda 2063 Flagship project, the Single African Air Transport Market (SAATM), in Addis Ababa, Ethiopia, on 28th January 2018 as a historic event at the African Union Summit, nearly two decades after the adoption of the 1999 Yamoussoukro Decision.

Speaking ahead of the launch event, Dr. Amani Abou-Zeid, Commissioner for Infrastructure and Energy at the African Union Commission said “With preparations continuing on schedule, the launch of the Single African Air Transport Market will spur more opportunities to promote trade, cross-border investments in the production and service industries, including tourism resulting in the creation of an additional 300,000 direct and two million indirect jobs contributing immensely to the integration and socio-economic growth of the continent.”

The Commissioner stated that the aviation industry currently supports eight million jobs in Africa and hence SAATM was created with the aim of enhancing connectivity, facilitating trade and tourism, creating employment, and ensuring that the industry plays a more prominent role in the global economy and significantly contributing to the AU’s Agenda 2063.

“The AU Summit will also see the adoption of the regulatory text of the Yamoussoukro Decision, that is, the competition and consumer protection regulations that safeguards the efficient operation of the market,” the Commissioner added.

An exhibition billed “Flying the AU Agenda 2063 for an integrated, peaceful and prosperous Africa” will be unveiled to mark the launch, as well as ribbon cutting and the inauguration of the commemorative plaque.

So far, 23 African countries out of 55 have subscribed to the Single African Air Transport Market whereas 44 African countries signed the Yamoussoukro Decision.

“The African Union Commission, under the leadership and personal commitment of H.E. Moussa Faki Mahamat, has been playing a key coordinating role in the establishment of the Single African Air Transport Market and advocacy to AU Member States, who have not yet committed to the solemn commitment, to do so,” the Commissioner intimated.

The African Union Commission (AUC), the African Civil Aviation Commission (AFCAC), the International Civil Aviation Organization (ICAO), the International Air Transport Association (IATA) and the African Airlines Association (AFRAA) are also advising African countries to open their skies for enhancement of connectivity and efficiency of air services in the continent.

“As the first of the 12 African Union’s Agenda 2063 flagship projects to be launched, the implementation of SAATM will pave the way for other flagship projects as the African Passport and enabling the Free Movement of People, the Continental Free Trade Area (CFTA),” Commissioner Abou-Zeid stressed.

The Declaration on the establishment of a Single African Air Transport Market, as a flagship project of the AU Agenda 2063, was adopted by the African Union (AU) Assembly in January 2015. Immediately thereafter, eleven (11) AU Member States declared their Solemn Commitment to establish a Single African Air Transport Market through full implementation of the Yamoussoukro Decision of 1999 that provides for full liberalization of market access between African States, free exercise of traffic rights, elimination of restrictions on ownership and full liberalization of frequencies, fares and capacities.

To date, the number of Member States that have adhered to the Solemn Commitment has reached twenty-three (23), namely: Benin, Botswana, Burkina Faso, Cabo Verde, Congo, Cote d’Ivoire, Egypt, Ethiopia, Gabon, Ghana, Guinea, Kenya, Liberia, Mali, Mozambique, Niger, Nigeria, Rwanda, Sierra Leone, South Africa, Swaziland, Togo and Zimbabwe.