Category: News

FinTech to contribute $150 billion to Africa’s GDP by 2022

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The contribution of the financial-technology industry to sub-Saharan Africa’s economic output will increase by at least $40 billion to $150 billion by 2022, according to Financial Sector Deepening Africa, a development-finance organization.

The industry currently employs about 3 million people directly and indirectly in the region, FSD Africa Financial Markets Director Evans Osano said in an interview last month.

Sub-Saharan Africa’s gross domestic product is about $1.6 trillion, according to data compiled by the International Monetary Fund.

“If you look at the value chain, most of that money is coming out of mobile-phone companies,” Osano said. “So from the other support services the contribution is not much, but is expected to increase as fintech develops to address the financial needs of people or making services more accessible.”

Safaricom Plc, East Africa’s biggest mobile-network operator, developed one of the world’s first mobile phone-based money transfer services, and says 88 percent of its almost 30 million customers now use it. About 21 percent of adults in sub-Saharan Africa have a mobile-money account, nearly twice the share in 2014 and the highest of any region in the world, according to the World Bank’s Global Findex Data.

Ethiopia announces $7 billion road and power projects

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

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

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

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

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

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

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

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

source: REUTERS

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

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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)