Last year, the President of the African Development Bank (AfDB),  Akinwumi Adesina won the World Food Prize. His philosophy is not only that Africa has a true comparative advantage in this field but that agriculture should be viewed as a business opportunity as opposed to development. The agricultural sector, he points out, has made more billionaires than most industries. African Businesscaught up with him to find out more about his views on agriculture, one of the five priorities of the AfDB.

The Chinese and Indian agricultural landscapes were very similar to Africa at independence. Both these countries managed to bring about their green revolution. Do you feel this is going to happen in Africa?

There has been a problem in the way we look at agriculture. We have looked at agriculture as the sector for managing poverty, as a development sector. But in fact, agriculture is not a development activity, nor a social sector, but a business.

And I think it’s that approach – the opportunity in agriculture for business – that will allow us to transform that industry. It’s a business that allows you to transform rural economies and free millions from poverty.

It’s a business that allows you to earn foreign exchange and reduce your level of dependency on food imports. African leaders are beginning to get it that agriculture is centred on how they are going to get their economies to work. And that is what leads me to believe that the agricultural transformation we’re talking about is really going to happen.

The other thing is the importance of technologies. Today, we have rice varieties that allow people to produce about four or five times what farmers are currently getting.

We have cassava varieties that give you 80 tonnes per hectare compared to roughly about 20 tonnes per hectare. So, four times what farmers are currently getting. There are drought tolerant maize that allow you to get yields of 100% despite the presence of drought. We have all the technologies and what we’ve got to do now is take them to scale.

So, now at the AfDB, my focus is to make sure that we deploy technologies of scale to reach millions of farmers. Africa shouldn’t be thinking of feeding itself in 30 years, or 40 years – it should be thinking of feeding itself in 10 years.

We are putting $24bn, that’s a lot of money, behind agriculture in the next 10 years. It just tells you how seriously we consider this, because I think Africa must not only feed itself, but it must feed itself with pride.

You were at the Africa Fertiliser Summit back in 2006. Fertilisers destroy the natural habitat and damage the land and the water systems. What is the middle way that works for the African farmer?

The 2006 Africa Fertiliser Summit was a landmark event. One of the things that we agreed was that we had to build a network of agro-dealers and agro-input shops that will take fertilisers and seeds directly to the doorstep of farmers.

Today in Africa you literally have tens of thousands of them that we have created. The distance that farmers now travel to find seeds and fertilisers has declined tremendously, because of these rural input shops.

When I was at the Alliance for a Green Revolution in Africa, and then when I became Minister of Agriculture in Nigeria, we set up risk sharing facilities that supported banks to lend to the agricultural sector, including fertiliser companies, seed companies and agro-dealers. Right now at the AfDB, we are helping to replicate this in 30 African countries.

We’ve already started a lot of this in many countries, but we are going to reach 30 African countries in a very short period of time. When it comes to the issue of supporting local manufacturing of fertiliser, I am thrilled by the developments in Africa since the Fertiliser Summit.

For example, Aliko Dangote is putting $5.6bn into what would be the largest urea plants in Africa, one of the largest in the world, in Nigeria. Remember he was only in cement, now he is into agriculture. In Morocco, they have expanded rapidly into fertiliser production and now Morocco and Nigeria are trading fertiliser phosphates massively.

And when it comes to the whole issue of regional procurement of fertilisers, we are working with a group called the Africa Fertiliser Partnership, which is helping countries to put together their own plans to be able to procure fertilisers jointly, so they can reduce the cost of importing fertilisers.

Without the African Fertiliser Summit and the agreement to have a green revolution, I don’t think that we would have done any of these things, because for 30 years before that time, everybody said that fertilisers were useless. But I don’t think that’s the case, I think the main problem we have in Africa is not the overuse of fertiliser. The problem in Africa is the lack of use of fertilisers. Africa has the lowest use of fertilisers in the world.

Despite employing 70% of the workforce, the industry is still small as a percentage of GDP and it is dominated by smallholder farmers. Will the structure need to change to contribute to the green revolution?

Part of the reason why African agriculture has been slow in developing is because the African smallholding farmers are not organised and so they don’t form big political pressure groups. Therefore, it’s easy for them to be forgotten by leaders. Leaders court their votes before elections, and afterwards they forgot them.

But look at France – if you forget the farmers in France, what do you get? You get trucks on the street. No president of France will ever toy with farmers. So, good organisation by farmers is very important for their voices to be heard. African farmers need to really, really, organise to be able to push their way.

Source: African Business Magazine

In a year likely to be dominated by electioneering, as the country gears up to the 2019 polls, the Nigerian economy is nonetheless expected to see growth of 2–5% – writes Rafiq Raji

In Nigeria, the 2019 elections will be the big issue over the coming year. The campaigns have started in earnest, and it is beginning to look like the duel will be between Muhammadu Buhari, the incumbent president, and Atiku Abubakar, a former vice-president. President Buhari’s ill health made almost everyone assume he would not seek re-election. But having started to recover, he has begun to give signals he will ask for peoples’ votes.

With a veteran politician like Abubakar expected to put up a good fight in a system likely to be fairer because of a less overbearing incumbent, it will fall to the president’s underlings to take him on in the trenches, where almost anything goes.

They are probably doing so already. In September, the authorities terminated a lucrative logistics contract Abubakar’s firm had with the ports authority. They asserted the terms violated the Nigerian constitution. More challenges are likely to follow for the former vicepresident. It would not be totally out of the question if a corruption probe were suddenly launched. That way, President Buhari would not need to contend with him at the polls.

As an informal agreement between the major political parties dictates that the presidency will go to a politician from the north in 2019, potential candidates from the region are already battling one corruption case or the other. Abubakar had been left unperturbed, but that was while he was still a member of the ruling All Progressives Congress (APC) party. This changed in December, when he moved to the leading opposition People’s Democratic Party (PDP).

In the event that oil prices remain above $50 per barrel and structural reforms are implemented, growth could improve to about 5%.

Will the expected mudslinging and schemings put the largely optimistic 2018 Nigerian economic outlook at risk? Not necessarily. The prospects of politically induced violence are minimal. It could actually be a positive that the political cycle is gathering steam much earlier than usual. The Buhari government is already beginning to be more responsive to the needs of the people. After only the slightest outcry, action is taken. When Nigerians complained about the misdemeanours of an elite police unit in December, the head of police quickly ordered a reorganisation. In the past, such protests would have gone unheeded.

Stimulus needed

While it is unduly sensitive to the Brent crude oil price, the technically diversified Nigerian economy should be boosted by an expected pick-up in agriculture, lower inflation and interest rates and increased public spending. The International Monetary Fund (IMF), which expects 0.8% GDP growth in 2017 and almost 2% in 2018, could revise its forecasts upward when it next publishes its economic outlook report.

Some economists urge caution amid the optimism. Ayomide Mejabi, an economist at Stanbic IBTC Bank, says: “The economy continues to show signs of weakness, especially if one focuses on the non-oil economy.” And he urges the Central Bank of Nigeria (CBN) to ease monetary policy if the recent economic recovery is to be sustained.

His advice will probably be heeded if the inflation outlook is anything to go by. Still high but slowing consumer inflation of about 16% in the second half of 2017 was primarily due to high food prices, driven largely by domestic factors. Informal exports of food to neighbouring countries and the increasing reliance on domestic inputs by local manufacturers have been pressuring prices. The situation may improve in 2018.

“We are very optimistic that food prices will come down, and as they come down it will help to complement the reduction in core inflation,” commented CBN governor Godwin Emefiele. Base effects would help, in any case, with annual consumer inflation likely slowing to the high single digits by mid-2018. “We are hoping that by the middle of next year we should begin to approach the high single digits,” said Emefiele. This may be indicative of the timing of a much-anticipated easing of monetary policy by the CBN.

Otherwise, Emefiele has been noncommittal on the timing of a potential rate cut if his inflation expectation is vindicated: “I would like to see low interest rates and I would like to see low inflation and I would be happy to see it as quickly as possible. When? I cannot categorically say,” he told the media in London.

But would commercial bank interest rates fall in tandem? Not necessarily. Banks are forced to charge a high interest rate premium due to the tough business operating environment. For example, their ATMs are run on standby generators. Consequently, Nigerian banks must transfer some of the costs.

Possible interventions in the foreign exchange markets by mid-2018 – when capital reversals on fears about the 2019 elections may begin to gain pace – should not be a problem.

Recovery is still fragile In the medium to long term, structural reforms must be implemented regardless. Power supply remains erratic and logistics are a nightmare for firms, despite reforms, although it is improved. The authorities’ Economic Recovery and Growth Plan (ERGP) uses the right buzz words but does not inspire much confidence among market participants. Not all of it is being implemented. The foreign exchange ban on some 41 imported items remains in place.

The plan also assumes the Buhari government will be in place after 2019. Even so, it represents “the best attempt at a structural reform plan in many years” according to Stanbic IBTC’s Mejabi.

Fears about a relapse into recession are related to the oil price. Nigeria’s economic trajectory has been moving in sync with the oil markets. When prices fell, the economy went into a five-quarter recession. When oil prices recovered, positive growth returned.

And because crude oil prices are not expected to rise to the heady levels of $100 a barrel and more of some years back, the 7% GDP growth target of the authorities by 2020 may be elusive.

“In order for the economy to continue growing at a steady pace, private sector credit needs to grow once more,” says Mejabi, who assumes a base case growth forecast for 2018 of around 2%. In the event that oil prices remain above $50 per barrel and structural reforms are implemented, growth could improve to about 5%.

Analysts are doubtful the CBN would abandon its multiple exchange rate system, even though the special foreign exchange window for investors and exporters, where the rates are set by buyers and sellers, is proving quite buoyant.

With crude oil prices also expected to remain above $50 in 2018, foreign exchange reserves are expected to rise above $40bn in the year, from about $35bn in November.

Possible interventions in the foreign exchange markets by mid-2018 – when capital reversals on fears about the 2019 elections may begin to gain pace – should not be a problem.

However, it would be better still to let go of the lever and save more foreign exchange for the next rainy day, which will surely come.

Source: African Business Magazine

Dar es Salaam — China will build a university that will specifically cater for transport needs in the country, State House said yesterday.

A statement, released after President John Magufuli met with the new Chinese ambassador to Tanzania, Ms Wang Ke, said the Asian economic powerhouse would provide $62 million (about Sh138.3 billion) to finance the project.

According to the statement, Ms Wang Ke, who also delivered a message to President Magufuli from Chinese President Xi Jinping, said the grant was part of China’s assistance to Tanzania as the two countries fostered their bilateral ties.

“President Magufuli asked Ms Wang Ke to deliver his word of thanks to the President of China for the message and the assistance, saying it will help in improving transport in the country,” the statement said.

A transport university will greatly help Tanzania to increase the number of professionals in aviation, especially at this time when the government is purchasing planes to as parts of efforts to revive Air Tanzania Company Limited (ATCL).

Data produced by the Tanzania Air Operators Association (Taoa) shows that as of November 2012 there were 183 local pilots in the country against a demand of 456.

Meanwhile, President Magufuli received a report on the future of Tanzania Telecommunications Company Limited (TTCL) in the wake of its recent change of mandate from a company to a corporation.

President Magufuli reappointed former Cabinet minister Omar Nundu as TTCL board chairman and Mr Waziri Kindamba as the corporation’s director general.

Source: The Citizen Reporter, allafrica.com

RELI Assets Holding Company (RAHCO) is confident that Tanzania’s Standard Gauge Railway (SGR) which is currently under construction, is expected to be the best railway in Africa upon completion.

The first phase of construction of 300 kilometers from Dar es Salaam to Morogoro is currently being undertaken by the Turkish company Yapi Merkezi, in partnership with a Portuguese firm, Mota-Engil Africa. According to RAHCO Project Manager Maizo Mgedzi, the construction of the first phase has been completed by 20 per cent so far, since construction activities began in May last year.

The phase is expected to be completed in November 2019. Tanzania’s SGR is of higher quality compared to those already built in some countries in Africa. Mr Mgedzi mentioned Ethiopia, South Africa, Kenya and Morocco as among African countries that have built modern railways; but pointed out that the SGR built in those countries had a speed capacity of 120Km/h compared to 160 Km/h of Tanzania’s SGR.

“The SGR we are building will be electrified compared to the SGR built in some African countries which use diesel trains. For example, Ethiopia is now building an electrical SGR and a small part of Johannesburg SGR in South Africa which is also electrified,” he said, adding: “We are also building a railway line capable of allowing 2km long trains to exchange routes at stations while the ones in other countries are less than one kilometer long; so the quality of the railway we are building in Tanzania is of higher quality compared to those in otherAfrican countries.”

By considering the quality and durability of the railway, the government has decided to build the concrete standard gauge railway which is more durable compared to the Meter Gauge railway that is currently in operation.

On the advantages of using concrete sleepers on SGR, the project manager said that it would enable trains to carry heavy weight load of up to 35 tonnes per excel whereas the existing Meter Gauge railway cannot exceed 14 tonnes of cargo per excel. He explained further that, concrete sleepers were also able to withstand a speed of 160km per hour passenger train and 120 Km per hour cargo train while the currently operating train cannot exceed 70Km/h.

In addition, the modern railway line will have a 1,435 mm width (equal to 1.435 meters) while the current railway has only 1,000 mm, width which is equal to one meter. “The bigger width of the railway we are building will enable the train to be stable, faster and more secure. So the width of the railway we are constructing is 435 mm more compared to the current meter gauge railway; and when we say ‘gauge’ it means the width of the railway.

Railways have two legs, namely the left and the right legs which are fastened with sleepers, so the width between one rail and the other is called ‘gauge’,” Mr Mgedzi elaborated.

On the quality and standards, the railway constructed in the country will be able to transport between 17 to 25 million tonnes of cargo per year compared to the meter gauge whose capacity is to transport only 5 million tonnes of cargo per year. Regarding the passengers’ train, the RAHCO project manager said that due to the length of exchange routes at stations, the railway can transport a higher number of passengers, but initially, it will transport not less than 1.2 million passengers a year.

The completion of the first phase of the project will facilitate the existence of three passenger trains as the starting point. The trains will be undertaking daily round trips between Dar es Salaam and Morogoro. Mr Mgedzi told the ‘Daily News’ that one passenger train can operate three to four trips per day between Dar es Salaam and Morogoro , thus making it possible to have a total of nine to 12 trips per day, but the number can be increased as passengers increase.

“When you start with something new, the first step you have is to attract customers by offering them reliable, fast and timely service and above all by avoiding wastage of time along the route; these are important criteria for winning the confidence of customers,” said Mr Mgedzi.

According to the project manager, the modern railway from Dar es Salaam to Morogoro would have a total of six stations Dar es Salaam, Pugu, Soga, Ruvu, Ngerengere and Morogoro.

Describing the lifespan of the envisaged railway, Mr Mgedzi said that its bridges had been designed to survive for 100 years, while the rail itself can survive for 40 years before major repairs. On electrical and communication systems, he said that it depended on the type of plant and cables that would be used, adding that the designs were still underway and that information about its lifespan would be released later

Source: Matern Kayera, allafrica.com