Two years ago, Uber was unheard of. Today it’s a buzzword. You could argue that Rudolf Makopole Malaka has been on the same fast track. From humble township beginnings to a property on an estate; with three Uber cars and three companies – he owes it all to the mobile app.
Uber gives drivers the opportunity to be the CEO of their own company – they own their own cars and set their hours. Connecting riders with drivers through a smartphone app, users submit a trip request, which is then routed to Uber drivers. Since 2013, the online ride-hailing service has taken off in South Africa.
“People lack jobs. We decided to join Uber – not just to make money but to create job opportunities for our fellow brothers who don’t have jobs because we know how hard it is not to have a job. We’ve been there,” he says.
“I spent weeks eating only Weet-Bix. You go to school on an empty stomach, you walk long distances. I don’t want my kids to go through that, I don’t want kids from the location to go through that,” he says.
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After getting his degree in IT, he was unemployed and disheartened.
“I’ve been jobless and I’m a qualified auditor and qualified in IT. You go to school, you get the qualification but you don’t get the job. You wait, you go to interviews, they say they’ll call you but they don’t call you. You can’t just sit around and wait,” he says.
He brainstormed new opportunities. He started his first company in property development which grew into construction and image consulting – styling people, homes and their businesses. Riding on the momentum of his success, he started an IT company and became an Uber partner. A far cry from scouring through the classifieds and being rejected at interviews, he now makes about R150,000 (around $11,000) a month. With a fleet of three cars and looking to expand to 15 by next year, business is booming.
“Uber is a platform to make a change. We will have five cars by the end of the month. That’s five families we’re feeding. We’re making a change,” he says.
It should be so simple but Uber has faced its fair share of challenges. In June, cab drivers in Paris locked down the city in protest; operations were banned in Germany after a court ruled that Uber violated transport laws; in South Korea employees linked to the company were charged with running an illegal taxi firm; and in South Africa, metered-taxis are demanding a clampdown on the new kid on the block. They claim it’s operating illegally, flouting regulations and putting passengers at risk.
“A meter taxi attacked me. I was protecting the client. I said ‘you can smash my car, you can do whatever you do, but not to my client’. He was trying to pull my client. The problem is that they don’t understand competition. They say they’re taking our customers but what about other public transport? It’s a client preference to use us. We don’t scout for clients, we’re requested.”
Malaka sets himself apart from the rest by putting his drivers through his image consulting business. Putting professionalism at the fore, his drivers are dressed to impress, paying attention to every detail from the cut of the suit to the color of the tie; the radio station and temperature are adjusted for the customer; and a charger and auxiliary cable are always made available. His drivers go through training every month to ensure that their Uber ratings stay high.
“We want to empower them – they work for us for only two years. We want our Uber drivers to buy their own cars. We give them advice, we make sure that they know how to save. Then we hire other people. It’s a chain – we’re empowering you, we want you to empower someone else.”
“I moved up. I go back to where I came from because I know I left people there who helped me to get where I am. You can’t forget where you come from. I employ people from the townships because I know the struggles,” he says.
He’s driven and he’s making it, one Uber ride at a time.

From Down  On His Luck  To Uber Bucks

It was a sunny southern hemisphere spring day in October 1931 when businessman Max Sonnenberg and his son, Richard, opened the doors of a small shop in Cape Town&#8217;s city center. Allegedly housed in the dining room of the old Royal Hotel on Plein Street, within spitting distance from parliament&#8217;s back entrance, the store promised to bring value and affordability to South Africa&#8217;s white middle class.
Timing was far from ideal. The Wall Street Crash two years before had submerged the world in a frothing whirlpool of economic turmoil. South Africa too, was affected. Despite hardship dominated by poor economic growth, tumbling exports, and mass retrenchments, the store was a success. It did so well that it captured the entrepreneurial imagination of serial businessman Elie Susman who had made his fortune from cattle, banking, and retail.
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Having a genuine eye for business opportunities, Susman was taken aback by the success he saw, prompting him to financially back the opening of a second store in Durban. More branches followed suit and soon Woolworths was deeply embedded in South Africans’ day-to-day shopping lexicon.
Since the 1930s, Woolworths has morphed into a multi-billion-dollar holding company, comprising the familiar Woolworths food and clothing brand, as well as Australian brands Country Road and David Jones. The latter, a denim retailer, was bought last year for $2 billion. The acquisition proved to be a massive boost for Woolworths Holdings Limited (WHL), which saw its profit over the first six months to December 28, 2014, jump by 29%. Sales increased by 55%, to $2.56 billion. Without the David Jones business, sales would have grown by only 12.5%.
The David Jones acquisition also led to an expansion of WHL’s footprint, to 1,200 stores in 15 countries worldwide, including Australia. The 633 Woolies branches in 12 African nations, including Botswana, Namibia, and Kenya, however remain the company’s backbone. This number is likely to increase.
“We want to grow our footprint by some 10% per annum for the next three or four years,” says Group CEO, Ian Moir, adding that a lot of attention will go to the food side of the business. “Our food footprint has more than doubled since 2010.”
While WHL has been doing well, things have not always looked bright. The retailer was badly affected by the economic crisis of 2008/2009, which sank South Africa into its first recession in 17 years. Moir says the attitude of the company, which only comprised food and clothing at the time, towards its customers, was one of the culprits.
“We had become complacent, arrogant, and too expensive, and we were not listening to our customers. As a result, our sales plummeted during the recession,” he says.
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The downturn forced Woolworths to rethink its strategy.
“Someone once said that one should never let the benefits of a good recession pass by,” says Moir. “The Woolworths of today sees the customer as king, not the product. That is the big difference. If the customer thinks we are wrong, then we are wrong. If the customer thinks our prices are too high, then the prices are too high. That has been the biggest transformation since the recession.”
Complaints are taken seriously, says Moir.
“We used to be known as arrogant and not wanting to listen. Today, we reply to all complaints, queries, and criticism through our customer communications and social media teams. I even get some of them.”
The Woolworths approach has been well received in South Africa, as well as in other African countries such as Botswana and Namibia. Here the brand is still growing substantially. In some countries however, Woolworths didn’t manage to get off the ground. Nigeria is one of them. Last year the company decided to pull out of Africa’s largest economy for the second time.
“We were losing money hand over fist. Nigeria is a very difficult market for any apparel retailer to make money in. Firstly, the Nigerian retail market is largely informal, with very few shopping malls. The rental of the shopping malls that do exist, is very high,” says Moir.
“Doing business is very difficult, generally speaking, from traveling around to getting goods in the country,” he says, adding that Woolworths uses the same suppliers regardless of the location.
“We made a mistake by going into Nigeria, despite having the right partner,” Moir confesses. “It was the second time we tried it, and we won’t be trying it for a third time. Nigeria just doesn&#8217;t work for us.”
Moir doesn’t see Woolworths’ Nigeria adventure as wasted time. Making mistakes, he says, makes you grow.
“You, as a business, can always get better, and you will always make mistakes and there are always things to learn. My biggest fear is complacency in a business. If you think you won’t make mistakes, then you will fail.”
In other countries, business is going well. Moir says this is a result of the way Woolworths treats its employees.
“Our salaries are competitive and our benefits are better than elsewhere.”
Based on feedback from employees, the jobs portal, Indeed.co.za, gives Woolworths four out of five stars as an employer with staff discounts and incentives lauded. It, however, says salaries are too low and work hours too long.
The brand’s strength, according to Moir, is associated with value, principles, integrity, and sustainability.
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The company donates $79,000 to educational causes every week. Moir also says the company is committed to environmental sustainability, such as minimizing water consumption and reducing the use of genetically modified organisms (GMOs).
Despite its good intentions, Woolworths has faced the wrath of environmental activists more than once, and for a multitude of issues, including the treatment of pigs, the use of GMOs and claims the company’s free-range milk was not free-range at all.
“That type of activism is good for us as it forces us to do the right thing,” says Moir.
“That is why we, apart from selling free-range eggs, want to ensure that free-range eggs are used in all Woolworths branded products, down to the cake mix. This was a tough process. You are, after all, dealing with large suppliers of which you are not the only customer. As a result, you can’t do things as fast as activists would want you to. It takes years sometimes.”
Environmental activist, Caroline Hurry, however, claims the company won’t speak to her.
“They refused to answer any of my questions in writing. In the beginning, when I started investigating their practices in relation to animal cruelty, they suggested I call them for ‘a little chat’. But being a journalist, I insist on answers in writing. I have also found that the soy in their bread had the second-highest GMO content in the country&#8230; Woolworths doesn’t label all their GM food. At best, the label says ‘may contain GMO’. I have now been blocked on Twitter, by the very account that told us to ask questions,” says Hurry.
While he has sympathy for environmental activists, Moir is no fan of the Boycott, Divestment and Sanctions (BDS) campaign, which calls for the active isolation of Israel and for the country to end its occupation of Palestine. In South Africa, BDS has its teeth firmly sunk into Woolworths. Their objective is to force the retailer to stop selling Israeli products – 0.4% of its total offer.
“These protests were very unpleasant for our staff and customers, with pig heads being left on our shelves and people charging through stores, knocking over our goods, destroying them even. We have had protestors lying on the floor, pouring blood over themselves. A court order has stopped this.”
Despite the court order, the protesters claim their actions were costly for the retailer.
“The campaign is successful and growing. An independent report, released by Wits University, states that WHL has lost close to $3 million, since the start of the #BoycottWoolworths campaign in August last year. A survey among 300 people has shown that 84% of respondents said they stopped shopping at Woolworths shortly after we called for boycott,” says BDS coordinator, Muhammed Desai.
Despite a few setbacks, Woolworths has grown from a small store in Cape Town to an international retailer – a story of shopping bags
to riches.

How David Became A Goliath

Nigeria desperately needs to move towards becoming a society driven by data and the Internet of Things (IoT).
Obviously piqued by the inefficiencies and historical shenanigans of national data and information governance, President Muhammadu Buhari recently instructed relevant government agencies to fix the nation’s “data scarcity” syndrome.
For Nigerians, data has become like water – naturally abundant, largely unexploited and clearly unavailable in its useful form to large sections of the human race.
Data mining efforts in Nigeria have at best been a debacle. Without a coherent data management strategy, development is jeopardized. For so long, private and state-owned enterprises have collected the same data for a plethora of reasons. Hospital and airline records are mostly paper-based. Banks collect Know-Your-Customer (KYC) and biometric information. Cell phone companies do the same. A few years ago, the Nigeria Communications Commission (NCC) embarked on a nationwide SIM registration exercise.
The Passport Office also collects citizens’ biometric data. The police, and various driver and vehicle licensing authorities, collect a similar set of information from citizens and drivers. Ditto the National Identity Management Commission (NIMC), which produces national identity cards. Let’s not forget the electoral commission which collects voters’ data. None of these databases connect.
I may be wrong here, but I reckon most African nations never had functional directories – the natural precursor to today’s networks and databases. Today, most of sub-Saharan Africa has leapfrogged this era of data inertia into a new age of mobile economies driven by millennials – with governments, citizens and industries across all economic sectors better able to adopt ‘smart data’ solutions and techniques.
Leading technology firms estimate that 90% of all data generated by devices, such as smartphones, tablets, connected vehicles and appliances, is never analyzed or acted on. As much as 60% of this data loses value within milliseconds of being generated. Humanity presently generates around 2.5 billion gigabytes of data daily, generated by 1 trillion connected objects and devices.
Big data is therefore big business, but the skills needed to manage, analyze, and convert data into meaningful insights are in short supply. Estimates vary, but according to the International Data Corporation, the market for big data-related analytics and services will skyrocket to $125 billion in 2015, and it’s expected to become even larger in years to come.
Technology experts say Africa’s economic and social reforms will be greatly influenced by five disruptive technologies converging at once to create a new continent: social media, mobile, cloud, sensor networks, and big data.
Any one of these technologies alone will be disruptive. Together they have the power to reshape how we think of and build the most basic systems and organizations in our economies and societies: whether it’s how we organize business operations, develop our energy grids, run transportation systems, or structure interactions between citizens and governments.
Few places are better positioned to benefit from this convergence than Africa. The comparative immaturity of the continent’s physical, governmental and economic infrastructures means these technologies could stimulate greater benefits for the continent than anywhere else.
In Nigeria, the need for disruptive technologies is apparent. In the area of tax collection, there is a huge compliance gap. Mobile systems could help tackle the issue of revenue generation, making it easier for individuals and businesses to pay taxes electronically. Hosting city services in the cloud would lead to a more transparent and cost-effective system, while applying big data analytics would make it easier to track fraud and people who aren’t paying taxes.
Africa needs smart energy solutions. Nigeria currently leads the continent in load shedding and blackouts. Power supply for the country has never progressed beyond 5,000 megawatts. Smart meters and smart grids could monitor and manage electricity distribution, while diversifying energy supplies could balance the load. General Electric and a host of other companies have begun to invest in off-grid energy solutions, and telecommunications provider Airtel is piloting the use of wind and solar power across Africa as a backup to grid power for its mobile stations.
African governments will do well to collaborate with the global car industry. Companies in North America, Europe and Japan are developing a wireless technology called V2X. It encapsulates vehicle-to-vehicle and vehicle-to-infrastructure communications.
This is the sort of disruptive technology Africa’s political and business leaders should be

Big Data Blues

Will the announced nuclear program energize South Africa’s manufacturing and construction?
My background is power engineering. Building power plants across Africa generates as many stories as they do megawatts. It is ironic that, in Africa’s most electrified economy, there are tales of powerless people and an economy running out of juice.
Eskom, South Africa’s national power generator, is cooking with gas (turbines) – at the cost of around $78 million a month – while grinding away at the late completion of the new 9,000MW Kusile and Medupi coal power plants. Medupi’s first 800MW unit is generating power and will be on commercial load in September, with up to 1,600MW coming onto the grid each year for the next five years.
Keep your gas cylinders full and your camping lights charged – there’s more to this story!
South Africa has a 40GW-headache to cure in the next 20 years. The first 10GW is merely to match current demand. Generation capacity is 40GW with only about 30GW available due to the UCLF (unplanned capacity loss factor) being high. The national demand is over 40GW as mines and smelters have shut down to help Eskom. Medupi and Kusile will merely tick this box.
The second 10GW is needed to replace the old coal plants before 2025. They have been run hard well beyond their time. The third 10GW is needed to attract investment for growth and the fourth 10GW is for reserve capacity to allow for maintenance.
Coal may be easier and cheaper, but it’s dirty stuff and our economy has to be environmentally attractive to foreign investment. Few investors will stump up if it will worsen their carbon footprint.
So, 40GW in the next 20 years! Simply put, double Eskom. It has to be greener than ever before too – no dirty coal. That means nuclear topped up with clean coal IPPs. Wind and solar may be very sexy but they don’t deliver the big base load power that we need.
Like it or not, nuclear is the leading renewable energy source and South Africa is in play on the global nuclear stage to procure 9,600MW of nuclear power.
Contrary to the naysayers, nuclear energy’s lifetime cost is lower than most technologies, it’s expensive at the start, but cheaper to run.
South Africa’s nuclear regulatory body has defined that only the safest technology will meet the environmental and safety specifications for any new build program.
Russia, France and China are likely frontrunners, but who has the better and safest kit and who can offer a compelling financial deal? That’s where technology, money, politics and common sense meet in a witches brew.
The International Atomic Energy Authority (IAEA) Integrated Nuclear Infrastructure Review (INIR) sets the readiness criteria for building nuclear plants. A nuclear power plant is split into three main sections: The Nuclear Island, The Conventional Island (Turbine) and the Balance of Plant. South Africa is ready to manufacture and construct on the last two sections, which are similar to the local content of Medupi and Kusile, with some nuclear safety alignment.
The nuclear codes and quality standards take a quantum leap in the Nuclear Island and that is where the nuclear certified contractors like Group Five, Lesedi Nuclear Services and the South African Nuclear Energy Corporation (NECSA) are qualified. The country’s industry will have to partner with the successful vendors to hone those skills, train a workforce and learn from the build program in Europe, China and Russia.
There’s a buzz again. Nuclear vendors expected a request for proposals in August with a preferred Nuclear Vendor Country announced by March. Next year will see tendering for the local manufacturing and construction sector, with contracts signed in 2017 and construction starting in 2018.
The capital expenditure for 9,600MW will be approximately $40 to $50 billion, plus government costs and interest on capital. All this leads to trillions being spent over 15 years. That’s a big number that will reignite local industry and a knowledge economy after the last seven years of power cut misery.
Could we “boom” again?
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Additional reporting from Des Muller, head of Group Five Nuclear Construction Services.

double or quit?

Time and again, we read of celebrities who have made and lost huge fortunes. Behind the veil of celebrity, are ordinary people that make mistakes with money just like everyone else; however their mistakes can appear to be more pronounced, as they cannot be easily reversed. Here are some important celebrity money lessons for us all.
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<h4>Overspending</h4>
Celebrities are under enormous pressure to keep up appearances and often live a lifestyle far beyond their means. But spending excessively over a period of time without corresponding inflows can have dire consequences. Celebrity is almost synonymous with luxury; it is a lifestyle that is associated with visible success, not financial stability. Building wealth is not about how much you make, but how much you keep.
<h4>Poor investment choices</h4>
Seeking professional advice is always recommended, as advisors have a plethora of information with which to make informed decisions. However, not all financial advisors are honest or appreciate the fiduciary duty that comes with money management. Many celebrities delegate total responsibility to “advisors” who may end up mismanaging their money, defrauding them or making some poor investment choices. It is important to do thorough due diligence before engaging any professional.
If you pay little attention to your investments and do not understand what you are getting into, you become very vulnerable. Even though you might not have the time or expertise to manage your own finances, you ought to have a basic understanding of what you are investing in as well as the implications of doing so.
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<h4>Not paying taxes</h4>
Tax laws can be confusing and are constantly revised. Whether you are the ordinary worker or a celebrity, tax obligations cannot be ignored or they will come back to haunt you. Many celebrities have fallen foul of tax laws as they have not kept abreast of this important aspect of their financial lives. Remember that you are obliged to pay tax and if you fail to do so, the law will eventually catch up with you.
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<h4>Not having a prenuptial agreement</h4>
The pressures of celebrity, in the full glare of the media and the public, can put tremendous strain on relationships. If you bring substantial assets to a partnership, particularly where this might be a second or third marriage, it is worth considering a prenuptial agreement to protect assets before getting married. It may not be romantic, and it might not feel right to keep assets and properties separate, but it can save a couple from drawn out agony during a divorce.
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<h4>Not reviewing an estate plan</h4>
An estate plan should be updated to address any major life event, such as the birth of a child or grandchild, a marriage, or a divorce. If one fails to do this, beneficiaries that you planned to bequeath assets to might end up being left out of a will or trust.
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<h4>Not having adequate insurance</h4>
A serious illness or disability can obliterate one’s finances, especially if you have a career in sports or the entertainment industry. People tend to overlook the financial implications of a serious illness and ignore the need for insurance until a major mishap occurs; it is only then that the impact of inadequate insurance coverage or emergency savings is glaring. No matter how meticulous you are with your finances, failure to purchase adequate insurance can impair your financial future and put you in a desperate situation in an instant.
You may not be a celebrity but there are countless lessons to learn from their lifestyle. Plan for what could be an uncertain future by diversifying earning streams, investing and protecting the large sums of money earned today for tomorrow to avoid the road from riches to rags.
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For more personal finance tips, follow Money Matters With Nimi on Twitter: @MMWITHNIMI and Facebook: MoneyMattersWithNimi

Lessons To Learn From The Rich And Famous

As democracy gradually spread around the world, capitalism was favored over the more repressive feudal system. It meant that those who were not born of royalty, nor had genetic ties to nobles, could amass their own fortunes through innovation, hard work, perseverance and a bit of luck. It finally meant that peasants could elevate themselves from the depths of poverty to unfathomable heights of wealth.
Many would argue that there has never been an economic system in modern civilization that has liberated more people from poverty and created more millionaires and billionaires than capitalism. However, in some circles, particularly among the socialists and labor unions, there is an argument that this wealth has been accumulated through the exploitation of others. They argue that the bearers of capital offer workers lower than acceptable compensation and they in turn receiving preposterous amounts in profits.
We ought to bear in mind that no one is forced to work; every individual in the free world has the choice to be a part of the labor market and join an organization to work for in exchange for remuneration. A major proponent of capitalism is that it provides an environment for entrepreneurship. After all, all the colossal corporations of the past two centuries started small and over time grew. Today, they consistently post higher annual earnings than the entire GDP of smaller nations.
At the helm of capitalism lies the CEO, the captains who steer their companies. CEOs bring vast knowledge and experience to the party – many having studied in some of the most prestigious universities and business schools around the world.
The reality is that the CEO has one of the most challenging jobs. They are tasked with the laborious task of driving revenue for shareholders; representing the firm as its head; ensuring that all the divisions of the company function effectively, notwithstanding defining the corporate culture of the firm and instilling it in its employees.
Then there’s the socialist ideology that affirms that capitalism is a modern form of slavery masqueraded as the archetype economic system that was founded in principle on human liberty. Evidence has shown that socialist states have failed to address inequality and have compounded the issue by creating elitist factions who benefit at the expense of the majority.   It is almost paradoxical that CEOs are viewed as employees of the organization when there is a level of self-interest at play. CEOs are often granted equity in the firms they represent as a part of their remuneration packages. They then have the added incentive to protect their stake by enacting management policies and tactics that will drive profitability, sometimes at the expense of the ordinary worker. The mining sector is a prime example: when the price of commodities such as gold and platinum rises, the shareholders benefit from the increase in profits. However, when demand subsides and prices fall job cuts become the order of the day.
Several years ago, my management lecturer said the compensation that CEOs receive ought to be globally competitive.
“Great CEOs are in high demand and as such their remuneration should reflect this, but more importantly should perturb them from seeking better opportunities abroad.”
This is the world that the capitalist system has created. Instead of asking whether it is fair that CEOs earn vast amounts of money compared to others, the question should be whether this system of self-interest masqueraded as capitalism is one that is just and equitable, especially in South Africa, where there are skewed levels of income between low-income and high-income households.
Despite capitalism’s faults, there has never been a system that comes closer to benefitting all. Until such a system is conceptualized, we will continue to debate the exorbitant salaries of CEOs and why capitalism continues to fail us.

equity and  equality

Kenya’s nascent mutual fund industry is becoming an important component in the country’s financial landscape. With increasing international focus on frontier economies, the country is slowly emerging as an investment destination for foreign investment funds seeking exposure in East Africa.
Moreover, the emergence of a thriving middle class is also creating capital flows for local asset managers. The industry, which is regulated by the Capital Markets Authority (CMA), now commands $430 million in assets under management, having grown at a compound annual growth rate (CAGR) of 21.2% since 2010, according to PricewaterhouseCoopers’ (PwC) Africa Asset Management 2020 report.
For a long time, growth in Kenya’s mutual fund industry was subdued due to an underdeveloped capital market. Until 2006, equity transactions were still being done through the floor-based open outcry system, share certificates still served as proof of ownership, trading hours were limited to two hours, trade settlements took four days and less than 50 entities were listed at the Nairobi Securities Exchange (NSE). As a consequence, by the close of 2005, only five investment funds operated and total market capitalization accounted for less than a third of its gross domestic product (GDP). This state of affairs seriously hampered Kenya’s capital markets as an important investment destination.
However, since 2006, all this changed drastically with the number of listed companies increasing to 63 and the total market capitalization rising to nearly 41% of GDP by the end of last year. Between 2006 and 2014, equity turnover doubled to $2.15 billion, Kenya managed to successfully issue its first sovereign bond which raised a total of $2 billion, the number of operating investment funds grew to 71 and the NSE received approval to demutualize and self list on the exchange. In April, the top foreign investment funds investing in Kenya had at least 25% of their funds allocated in the country, according to PwC research.
Despite this growth, the fund industry has a long way to go as it still accounts for an extremely small share of GDP at 0.7% and 0.8% of total financial sector assets. Among other reasons, a poor savings culture in the country has been blamed for the small size of the industry. The World Bank puts Kenya’s saving rate at around 12 to 13% of GDP which is half the average for all low-income countries (at 26% of GDP) and slightly lower than Africa’s rate which stands at around 17%. Furthermore, with wealth distribution highly unequal, the fund market has relied almost entirely on institutional investors. The young industry also has to deal with rising competition from other alternative investment vehicles such as the real estate sector and private equity.
Nonetheless, a combination of certain fundamental factors are likely to drive the mutual fund industry’s speedy growth in the coming years. These factors are stable economic growth, strong market performance, widespread adoption of mobile technology which makes delivery of new products cheaper, introduction of new asset classes, cross listings, loosening of regulations, political stability, investor education and the emergence of the middle class. The latter, which now stands at 44.9% of Kenya’s total population, is projected to grow at an average of 5% every year. The expansion of this group will be instrumental in driving demand for mutual fund products such as equity and fixed-income funds.
In addition, government’s agenda to grow the financial sector as stated through the Vision 2030 development program will also boost the mutual fund industry. Through the recently launched Kenya Diaspora Policy, funds can expect to tap into the ever increasing diaspora remittances. Since the CMA has been keen to market Kenya’s financial markets through diaspora conferences, mutual funds can expect to be a major beneficiary. According to the CMA, remittances inflows have risen from $408 million in 2006 to $1.43 billion in 2014, or the equivalent of a CAGR of 15%. Average monthly remittances now stand at over $100 million. Kenya’s government estimates that 15% of the remittances are used in productive investments.
The future is indeed bright and there is little doubt that Kenya’s mutual fund industry will grow to become a strong player within the finance sector and the economy at large.

Growing In Leaps  And Bounds

When Henri Nyakarundi shut down his trucking business in the United States, he decided to return home to Rwanda. Back on the continent, his entrepreneurial instincts drove him to a novel business venture – solar-powered mobile phone charging kiosks.
Rwandans that return home with dollars in their pocket usually venture into businesses with a degree of comfort. Others prefer white-collar, eight-to-five jobs that the rapidly expanding Rwandan economy offers the western-educated young professionals.
Despite the pitfalls that start-ups face in Africa, Nyakarundi chose a different path. He is at the forefront of developing an energy business that few of his fellow Rwandans understand.
The light-bulb moment that gave birth to his latest venture occurred at an unlikely place for the 37-year-old metropolitan entrepreneur. In 2011, he noticed the difficulties that people in rural areas faced while trying to charge their mobile phones. The supply of electricity is expensive and often unreliable.
“Not only did it hit me that charging mobile phones in places that were not served by the national electricity grid offered me a unique opportunity to serve our people, I also realized that the lucky ones  to be connected to the national grid were finding the power supply to be expensive,” he says.
In Rwanda, electricity consumers are charged $0.22 per kilowatt hour (KWh). This is one of the highest electricity tariffs in the East African region where tariffs are usually between $0.08 and $0.10, according to the World Bank.
Rwanda’s high energy costs are partly attributed to the country’s dependency on expensive thermal resources. Experts say that Rwanda depends on diesel and heavy fuel oils for approximately 40% of the country’s 110MW installed energy capacity. The country imports 14.5MW. Hydropower accounts for 59% and methane gas 1%.
Armed with the statistics of the challenging energy situation in his country, Nyakarundi’s instincts told him that something needed to be done to help rural businesses.
After visiting family in rural areas, he decided to start the green energy company African Renewable Energy Distribution Co Ltd, otherwise known as ARED.
“My company seeks to offer stable and reliable energy solutions, using innovative solutions such as mobile solar cell chargers,” he says while sitting in his office in Kiyovu, a leafy suburb in Kigali.
His belief in his new venture was so strong that he invested more than $120,000 of his hard-earned cash into developing four prototypes of his solar-powered mobile phone charging kiosk.
“My solution serves as a one-stop kiosk for people who want to start a business but are unable to,” he says as he leads FORBES AFRICA to one of ARED’s latest prototypes, recently brought from the company’s contracting manufacturer in China.
To drive sales, ARED developed a cheap franchise model for its clients, who are largely low-income earners.
“The franchise model seeks to empower those languishing at the bottom of the economic pyramid using a technology that is simple, cost effective and has a flexible acquisition plan,” he says.
The mobile kiosk generates its own power, enabling a franchisee to sell airtime as well as provide other telecoms services such as the transfer of mobile money. The charging of phones or other electronic items is done for a minimal fee.
With the success that ARED has had so far, the next prototype will introduce extra features such as internet Wi-Fi technology. ARED charges franchisees $1,000 for the business unit. This includes the mobile kiosk, a point-of-sale system, phone charging accessories and a branded overall.
Franchisees are also given hands-on business training and offered transport. After acquisition of the kiosk, franchisees are expected to pay ARED a $50 monthly fee for after-sales services.
Although breaking into the market was not easy for Nyakarundi, he stuck to his guns. He knew he had something unique and vital to offer Rwandans.
His tenacity is paying off. ARED signed its first commercial deal with pan-African telecom operator Airtel. This will allow ARED to spread across Africa.
Nyakarundi expects to sell more than 500 units of his product over the next three years.
“Though the model has a social component attached to it, the business aspect was designed to be scaled for the entire continent,” he says.
Nyakarundi is part of a growing army of entrepreneurs emerging on the continent.
“Entrepreneurship is gaining momentum in Africa. Innovation is being scaled up and advances in ICT, and what telecoms operators are offering, is testimony that Africa’s enterprise culture is improving.”
He is fortunate that Rwanda is able to offer him a favorable launch pad for his business. Nyakarundi hopes to increase his mobile kiosks from 20 to more than 100 by next year.
Nyakarundi has grand visions for ARED. With the telecom sector booming in Africa, he is set on selling over 50,000 units over the next five years. South Africa, Nigeria, Ethiopia and Kenya are his key target markets.
Like the sun shining over Africa’s plains, Nyakarundi’s future looks bright.

Charged With An Idea  To Make A Fortune

Aschool bag that doubles as a solar-powered light? You could expect the inventor to be a scientist.
Think again. Thato Kgatlhanye is a 22-year-old who studied art in high school and obtained a brand management degree at Vega School of Brand Leadership without studying a day of science. Kgatlhanye’s company, Repurpose Schoolbags, has won about $40,000 in competitions.
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“The start-up capital came from a business grant of $23,433 that I won in the first competition. I entered the business into the South African Breweries Foundation Innovation Awards and we came second. I’ve recently been selected as a sub-Saharan Africa finalist for the Cartier Women’s Initiative Awards, so in September I’ll be in Paris to attend that,” she says.
Kgatlhanye grew up in Mogwase, one of the townships near the mining town of Rustenburg, in South Africa’s North West province. Her father is a taxi owner and her mother is a nurse.
The idea for her bag came in the second year of college when her class was tasked to find ways of doing more with nothing. She decided to make a bag out of recycled plastic bags. The solar-powered light idea only came after a conversation she had with her mother where she was told to channel her creativity towards helping others.
“My mother told me about how she grew up and used candles to study. If she had one candle for the week and it burned out on Wednesday, she wouldn’t be able to study on Thursday and Friday. That inspired the idea,” says Kgatlhanye.
Her company in Rustenburg, which employs 17 people, designs schoolbags out of recycled plastic and integrates a solar cell which can be charged during the day and used as a study lamplight in the evening.
They make these bags for banks and companies who give them to schools. She doesn’t make more than 500 bags at a time, with one bag costing $20.
“Some of our giving partners include Red Bull, Standard bank, PricewaterhouseCoopers, SAB, ABSA/Barclays, MTN Foundation and CPSI,” says Kgatlhanye.
At a time when power cuts, so-called load shedding, loom in South Africa, Kgatlhanye’s company is well timed.
“Thank heavens for what’s playing out,” chuckles Kgatlhanye.
“Load shedding has made the business an easier sell. The big guys that sign the cheques that didn’t understand before the kind of environment we were talking about, now understand because guess what, their child gets affected by load shedding. They’ll be like ‘oh because of load shedding’ and I’m like, almost, except they don’t have electricity at all,” says Kgatlhanye.
Kgatlhanye is looking to shed light in 24 African countries.
<h4>A Spark In The Nick Of Time</h4>
The flow of renewable energy from the REIPPP couldn’t’ve come at a better time, says energy expert Chris Yelland. Eskom’s aging fleet of power stations, many built more than 30 years ago, cannot meet the demand. They have also been burdened by delays in other power generating projects in South Africa, like the Medupi and Kusile coal-powered plants.
“When Medupi and Kusile are online they will add 25% capacity to the grid. This is great. The only trouble is it should have happened 10 years ago. Between 1999 and 2004, there was a delay as a result of policy decision. Construction started in 2007 and 2008,” says Yelland.
When Medupi’s first unit came online, it was four years late. The cost keeps growing; initially it was expected to cost $2.5 billion, but is now forecasted at more than $23 billion. Kusile (4,800MW) has also failed to escape. Its first unit was expected in 2013, but has been pushed to 2017, and will cost around $92 billion, excluding the interest on delays.
Yelland is a Johannesburg-based electrical engineer turned energy journalist and entrepreneur. He has had a lot to talk about over the last 10 years, but his favorite story is the work of renewable energy dreamers.
“That’s the only success story we have to tell. The success stories are not government success stories, they are private: private capital, private technology – built, owned and operated privately, and generated into the grid,” he says.
Yelland warns that renewables should not be South Africa’s only solution.
“It costs less to produce coal-fired electricity than renewable if you compare apples with apples. If you look at the existing fleet of power stations, the cost per kilowatt hour is certainly lower than the cost to produce renewable energy. But the cost of electricity from a new power station, like Medupi, is a lot higher than the average costs. Because that capital cost is higher.”
For Africa, energy at any price is welcome.

How Dying Candles Kindled A Bright Idea

Ageneration of small-sized nuclear plants will revive Africa and give it all the energy it needs. This is the solution of nuclear physicist Kelvin Kemm. He is the CEO of Nuclear Africa and an old hand in the energy game.
“Three quarters of African countries can become nuclear countries within the next half a dozen years. I would advise they do it,” says Kemm.
They call them high-temperature gas-cooled reactors (HTGR); a generation IV reactor that uses helium instead of water. It means that nuclear can produce energy without the need for large amounts of water to cool uranium pebble beds.
“Nuclear is the cleanest, safest and most reliable form of electricity. This is proven… work done at North West University has shown that nuclear power is cheaper than coal in South Africa, if you look at the lifetime cycle and you apply the same interest rates. What tends to happen is that in loans for coal you get a certain interest rate and then suddenly when you get a load for nuclear they up it, because suddenly it’s nuclear and it’s more risky. It isn’t more risky.”
Unlike South Africa’s 2,000MW-Koeberg Nuclear Power Plant, which was completed 30 years ago, the HTGR can be built a lot smaller at 100MW, according to Kemm.
“I am not advocating that a small African country tries to embark on a massive project, because those need to be on the coastline or on the side of very large lakes to utilize the water for cooling,” he says.
Nuclear projects loom large for South Africa. The government is at an advanced stage in its plans to build at least three plants that will produce 9,600MW by 2023.
“To my mind that’s not enough. We should be looking at 12,500MW,” says Kemm.
He believes that the waste produced by the plants is in safe hands.
“It is time for people to think and not get swept into the emotion in the press. The waste problem is not a technological problem, it is a public relations problem. The technical problem is solved. The public hasn’t been solved.”
Low and intermediate level waste from Koeberg – the gloves, paper or anything else that goes into a nuclear zone – is transported by road in steel and concrete containers to a remote disposal site at Vaalputs, 600 kilometers away in the Kalahari Desert.
High-level waste is stored on site in special pools equipped with high-density racking.
“High-level waste is spent fuel. They are balls, with uranium, that can kill in one minute. All the high-level waste that has come out of Koeberg for 30 years is still on the site. There is no legally determined thing to do with it. Only two countries in the world have a permanent plan. That is Sweden and Finland. They both dig underground tunnels, in very wet conditions, pump all the water out. Put in copper cylinders that are about a meter diameter and slide the fuel in and weld the cylinders shut. [They then] slide these cocoons down the tunnel. When the tunnel is full, they release the pumps and move up a level.”
“Their solution is to bury it in water logged tunnels. I would like to see South Africa be the first country to come up with a dry storage solution. You can very easily. South Africans are the best hole diggers in the world with a hundred years of mining to draw on.”
“Sometimes there is this offensive element where overseas people say, ‘they are only a country in Africa with African type standards and these are the same people that have never been here. How can they expect to run nuclear?’”
Kemm answers there is nothing in a reactor that South African scientists do not understand. After all, they’ve run a nuclear power station for 30 years without a hitch.

Nuclear  is the way

Wind, solar and hydro energy have all been highlighted as sources of energy that help meet Africa’s growing power needs. Ghana’s Dela Wosornu is using garbage.
Decomposing organic material, known as biomass, releases gas that can be used to create energy in the form of biofuels. In Ghana, a country with a vast amount of degradable material, it is a viable option for alternative energy.
In Ghana, energy is costly and scarce; this hinders economic growth.
Biomass, such as wood and charcoal, is Ghana’s main energy source, supplying around 60% of the total energy used in the country. Biomass resources cover about 20.8 million hectares of land mass in Ghana. Most of this land is made up of crops and plants that can be converted into solid and liquid biofuels. Wosornu, a renewable energy entrepreneur, is taking advantage of this by transferring landfill gas to energy.
He is involved in the Oti Sanitary Landfill Gas-to-Energy Project, which eliminates the emission of harmful greenhouse gases as well as the spread of disease from the waste. The project reduces the reliance on producing power from fossil fuels by producing energy from the waste that would have otherwise been buried in the landfill.
The solution is quite innovative.
When organic material, such as food waste, is buried in the landfill, it is deprived of oxygen. In this condition, the organic material will decompose and turn into methane gas. The methane will slowly be released into the atmosphere, causing global warming. The project at the Oti landfill doesn’t let this happen. They cover the landfill with soil and drill holes into it. Pipes are then inserted and the gas is sucked out into a generator which makes heat and electricity.
“It’s really a matter of just bringing pipes to where the gas has collected and pumping it out through a vacuum process and then directing that gas to a generator,” says Wosornu.
According to Wosornu, the project is the first of its kind in Ghana. As cities grow and produce more waste, the environmental impact from open dumps becomes increasingly intolerable. The conversion of dumps to engineered landfills like the Oti project is essential.
“Our solution can be applied at any landfill that has received at least 400 tons a day of municipal solid waste and is in reasonably good shape. As there are many landfills in Africa and around the world that are not capturing gas, the future for landfill gas to energy projects is bright,” says Wosornu.
Landfill gas to energy projects have underperformed relative to projected gas and power output. Bearing this in mind, the projected output of the Oti project has been discounted by 70% so that its actual output will meet or exceed the projected output. The Renewable Energy Act in Ghana ensures that there are set prices for each class of renewable energy. It also offers an opportunity to redirect future investments into green energy.
The challenge for Wosornu, is finding reliable buyers for the project’s output. The high cost of doing business in Africa also makes the development costs of these projects higher than the rest of the world.
“There is no doubt that, if properly exploited, renewable energy resources in Africa can make a significant contribution to the continent’s energy supply. In particular, the potential of biofuels on the continent is huge. Within the context of the current financial crisis, stakeholders including policy makers, international partners and the UN should lead the debate on and collectively seek strategies for scaling up renewable energy use so as to increase access to energy and enhance energy security among the many potential benefits of these technologies,” says Kandeh Yumkella, Director-General of the United Nations Industrial Development Organization (UNIDO).
Wosornu is playing his part.

Full Steam Ahead

She is the fresh face of renewable energy in Africa. By a twist of fate, this young lawyer, who grew up with her grandmother by candlelight, is now spearheading Africa’s dash for energy.  Sometimes it hurts.
“It feels like I haven’t slept for four years, I have been so busy working on deals. But it was the deal of a lifetime.”
So says Linda Olagunju on her deals to put two wind farms and two solar photovoltaic (PV) farms onto the barren landscape of De Aar in the Northern Cape. Two deals she patched together that will contribute 254MW to South Africa’s energy grid.
“The wind projects reached financial close and are currently under construction. It’s a partnership between China Longyuan, Mulilo and DLO Energy Resources in De Aar. It’s been almost one year of signing documents. The legal fees on these sorts of transactions can go up to R20 million ($1.57 million) if you are lucky.”
It’s the fruit of the Renewable Energy Independent Power Producers Procurement (REIPPP) program. In short, Eskom, the country’s power generator, attracted bids for private business to apply for tenders. Under it, investors generate electricity for sale at a tendered rate. This brings the total committed private sector investment in the REIPPP, since 2011, to $13.25 billion (R168 billion). It is fierce competition.
“There about 85 solid IPP [independent power producers] developers in South Africa. In Round One to Four, there was 5,200MW on offer, the next rounds are 6,300MW. It’s a bloodbath. You are competing with international companies that are coming in dirt cheap,” says Olagunju.
This may be a drop in the ocean but it’s a very important one. Renewables have been a saving grace. According to Olagunju, 39 of these projects are up and running, supplying 2,050MW to the grid.
“It’s the first successful program since democracy. It’s not that there haven’t been any independent power producer programs on the continent. It’s just that this one is the largest one of its scale and being backed by government.”
Olagunju’s childhood was far from electricity. She grew up in Matatiele, a village in the Eastern Cape 782 kilometers from the boardrooms of Sandown where she now works and lives with her Nigerian-born husband.
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“It was rural, like candle rural… [My grandmother’s village] only got electricity in 2005,” says Olagunju.
This was in time for the power cuts of 2008, when Eskom admitted that it had run out of capacity to supply electricity. At this time, Olagunju had left home to follow in the footsteps of her father and study law. At the University of Cape Town she studied laws governing fossil fuels rather than green energy.
“I’ve always known I was going to go into resources. I just didn’t know if it was going to be mining or oil and gas. The biggest thing for me is why Africa, which is so well endowed in resources, remains the poorest continent. I always hated injustice, growing up in apartheid South Africa,” she says.
Olagunju struggled to find her niche and ended up as a lawyer for Mulilo, a startup renewable energy company in 2008.
“Mulilo needed a lawyer, but couldn’t afford any. So I said I would do the services in return for shares. I still had to pay for them. At the time, the company [owed] R11 million ($870,000) and the company is now valued at R5 billion ($394 million)… in three years,” she says.
This sparked her idea of entrepreneurship.
“I always felt the way to change things is through entrepreneurship. Through law I had the opportunity to see how government makes these decisions on large scale projects… I said ‘hang on a minute, we have a lot of wind in South Africa and we have a lot sun in South Africa, so why haven’t we put renewables on our grid?’ I started doing research,” she says.
The business of renewables can take years to see a profit.
“There is a lot of risk, anything can go wrong. You are in a contract for 20 years, governments can change and I know there are laws to take care of that risk. The wind may not blow for as long as you thought it would. Your sun may not shine as brightly as you thought it would. They are long-term projects.”
“You identify the land. You go into lease agreements. Do an environment impact assessment (EIA) process that can take three years if you are lucky. You then bid your process with a construction period. If everything goes right, [a farm] will be up in 20 months.”
“Then you start seeing a trickle dividend. A trickle dividend at connection in the first seven years is very minimal. It’s nothing to write home about. It’s not even enough to pay your operational expenses.”
Then, there are the hiccups.
“We have existing infrastructure. And then we have the [REIPPP]. The grid infrastructure hasn’t been expanded to accommodate the increasing demand on that particular infrastructure. It’s not Eskom’s fault necessarily. It’s a matter of planning.”
“One of the points we raised before we began these projects is getting the grid contacted properly before you have a program. But it’s always difficult how you spend on infrastructure not knowing where those programs are going to be awarded.”
“Eskom said that they have developed a map where they now know where the hotspots are for energy projects and where now they are doing their best to upgrade in those regions in anticipation of the other [REIPPPs] being built.”
Olagunju believes gas, coal and nuclear could all go the same way.
“You can go and leverage an asset and try and participate. The key thing about these deals is to learn from them. Once you do one, you have built a portfolio. You can go and knock on a door in Nigeria, rather than say you have an idea,” she says.
If you are Olagunju, at the tender age of 31, you could also argue it’s good to have a foot in the door.

A Bloodbath In The Wind

With almost a year until the Olympic Games in Rio, athletes are preparing to perform on the world’s greatest sporting platform. Our weeks are not measured by days but by number of training sessions. Citius, Altius, Fortius is not just the Olympic motto, it is our lifestyle and we are doing everything to become ‘Faster, Higher, Stronger’.
Our training and competitions have been improving, quietly, over the past three years. Like gladiators working hard in the dungeons, we have been building our strength, shaping our bodies, and preparing our minds. As the time draws near for us to perform in front of billions, curiosity rises among the crowds, eager to know what they can expect to see.
Science in sport has increased dramatically and the older, more brutal, Spartan ways of training have been superseded by smarter methods of quality rather than quantity. Brute strength alone does not have a place in modern day competition. The athlete of today requires natural talent, an inborn competitive nature, instinctive decision-making abilities, and the strength of mind to continuously overcome difficult challenges.
In addition to the above, athletes need a passion for their sport and dedication to training. Over the last few years, I have been religiously building a strong physical foundation. My workouts have focused on full body and functional exercises to develop a base that will be strong enough to withstand the next phase of my training – perfecting my race. I don’t believe I have ever swum my perfect race and I am beginning to believe one can never swim a perfect race, but I aim to be as close to perfect as possible. This means every tiny detail must become as natural as breathing: the split-second explosive start, fast turns, efficient strokes, perfect technique and powerful kicking. There is no time to think what must be done; it should have already been done.
For this to happen every hour of the day must be accounted for. This includes:
Swim training: 50-60km per week
Gym Workouts: 4-6 hours per week
Other Workouts (Barre Class): 2 per week
Nutrition: 5 meals per day (plus snacks)
Sleep: 7-8 hours per night
Rest: 1-2 hours of sleep per day
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Unbelievable goals will be set to increase our failures, destroy our confidence, and reduce us to tears. We will be hammered into shape and mentally manipulated by our coaches to push us past our breaking points. It is physically demanding. Sleep is essential. I always arrive early, day after day to face the same grueling beat down. I will be drained by the thought of how much there is still to do and drained by my coach’s rigorous requests. But, suddenly, I will get the goal we are after and the tears will stop, the pain will go away, and my confidence will skyrocket. Then, my coach will tell me to do it all over again.
Athletes can generally handle pressure extremely well but as the Olympics approach, stresses need to be managed. They have to be reduced as these can have big impacts on our focus. Creating a good entourage will help manage these pressures, increasing the possibility of success. This includes:
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My friends and family helping to take the pressure off by having fun
My coaches ensuring I have the best program to follow
My teammates challenging me and keeping me focused
My sponsors ensuring I have the tools necessary to train and compete
My fans encouraging me
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It is because of this support; my passion and experience, that I have managed to go from no ranking to top 20 in the world this year. I even swam my fastest time in one of my events, breaking the African record, but this is still not good enough. I have to get stronger, I have to get leaner, and I have to be fitter than I have ever been in my life and that is just to make it into the semi-finals.
Enhanced training techniques, fierce competition, and the quest for glory have created athletes who are swimming faster, jumping higher, and performing stronger which could make the Rio Olympics quite possibly the most exhilarating Games ever; and I will be a part of it.

Drained, Weeping And In Pain Towards The Gain

Kenya’s economy is set to grow at a faster pace than previous years. The World Bank’s Kenya Economic Update (KEU) estimates that Kenya’s economy is poised to grow by 6% this year, 6.6% in 2016 and 7% in 2017, making it one of the fastest growing economies in sub-Saharan Africa. Similarly, in a review of Kenya’s economic performance, the International Monetary Finance (IMF) forecasts real GDP growth of around 6.5% this year, supported by rising infrastructure investments, lower energy prices and a dynamic private investment environment.
The country’s past growth has also had a strong showing, especially after rebasing its economy. Average annual growth for 2007 to 2013 was 5% in the new GDP series, up from 4.3% in the old series. This single event also increased its economic size by 25% to an estimated $55.2 billion making it the ninth largest in Africa (up from 12th, surpassing Ghana, Tunisia and Ethiopia) and fifth largest in sub-Saharan Africa (after Nigeria, South Africa, Angola and Sudan).
Relative growth comparisons also show an above average performance. Average growth between 2010 and 2013 stands at 6.2% compared to a 5.3% average for sub-Saharan Africa. The IMF’s latest Regional Economic Outlook: Sub-Saharan Africa projects regional growth at 4.5% this year, which is two percentage points lower than its Kenyan forecast. The World Banks’s Country Director for Kenya, Diarietou Gaye, cited the country’s expansive fiscal and monetary policies as having played a huge role in making Kenya the growth center of East Africa.
To add to the momentum, the recent renewal of the African Growth and Opportunity Act (AGOA) by United States President Barack Obama for a further 10 years further supports the growth story. Kenya, which is already a leading exporter of garments to the United States, expects to earn about $10 billion before the 10 years are over. With the new deal, Kenya also expects to offset sluggish demand from its traditional European export markets which have struggled in recent years. Through AGOA, Kenya can also hope to generate the much needed foreign exchange revenues to help narrow its widening current account deficit currently standing at about 10% of GDP.
However, risks exist. Security concerns have seriously affected the tourism sector, a key foreign exchange earner. Contraction in the sector is partly blamed for the slowed GDP growth. Data from the Economic Survey 2015 indicates that earnings from tourism were down 7.3% to 918 million. Agriculture, which accounts for around 25% of the economy, is another sector that has had mixed performance. Often vulnerable to bad weather and volatile world commodity prices, the sector frequently suffers from fluctuating production and revenue levels.
The manufacturing sector also had a less than optimal performance. Commenting on the KEU report, the World Bank’s Finance and Private Sector Development Specialist, and a co-author of the report, Maria Paulina Mogollon, cautioned Kenya on the need to increase competitiveness of its manufacturing sector so that the country can grow, export, and create much-needed jobs. In recent years, manufacturing’s contribution to Kenyan exports and growth has lagged.
Despite the challenges, Kenya still has a good chance to become Africa’s great success story. From its growing and youthful population, stable macro-economic environment, a dynamic private sector, a new constitution and its pivotal role in East Africa, Kenya is undoubtedly the new regional growth center.

Onwards and upwards

Will the announced nuclear program energize South Africa’s manufacturing and construction?
My background is power engineering. Building power plants across Africa generates as many stories as they do electricity. It is ironic that, in Africa’s most electrified economy, there are tales of powerless people and an economy running out of juice.
Eskom, South Africa’s national power generator, is cooking with gas (turbines) – at the cost of around $78 million a month – while grinding away at the late completion of the new 9,000MW Kusile and Medupi coal power plants. Medupi’s first 800MW unit is generating power and will be on commercial load in September, with up to 1,600MW coming onto the grid each year for the next five years.
Keep your gas cylinders full and your camping lights charged – there’s more to this story!
South Africa has a 40GW-headache to cure in the next 20 years. The first 10GW is merely to match current demand. Generation capacity is 40GW with only about 30GW available due to the UCLF (unplanned capacity loss factor) being high. The national demand is over 40GW as mines and smelters have shut down to help Eskom. Medupi and Kusile will merely tick this box.
The second 10GW is needed to replace the old coal plants before 2025. They have been run hard well beyond their time. The third 10GW is needed to attract investment for growth and the fourth 10GW is for reserve capacity to allow for maintenance.
Coal may be easier and cheaper, but it’s dirty stuff and our economy has to be environmentally attractive to foreign investment. Few investors will stump up if it will worsen their carbon footprint.
So, 40GW in the next 20 years! Simply put, double Eskom. It has to be greener than ever before too – no dirty coal. That means nuclear topped up with clean coal IPPs. Wind and solar may be very sexy but they don’t deliver the big base load power that we need.
Like it or not, nuclear is the leading renewable energy source and South Africa is in play on the global nuclear stage to procure 9,600MW of nuclear power.
Contrary to the naysayers, nuclear energy’s lifetime cost is lower than most technologies, it’s expensive at the start, but cheaper to run.
South Africa’s nuclear regulatory body has defined that only the safest technology will meet the environmental and safety specifications for any new build program.
Russia, France and China are likely frontrunners, but who has the better and safest kit and who can offer a compelling financial deal? That’s where technology, money, politics and common sense meet in a witches brew.
The International Atomic Energy Authority (IAEA) Integrated Nuclear Infrastructure Review (INIR) sets the readiness criteria for building nuclear plants. A nuclear power plant is split into three main sections: The Nuclear Island, The Conventional Island (Turbine) and the Balance of Plant. South Africa is ready to manufacture and construct on the last two sections, which are similar to the local content on Medupi and Kusile, with some nuclear safety alignment.
The nuclear codes and quality standards take a quantum leap in the Nuclear Island and that is where the nuclear certified contractors like Group Five, Lesedi Nuclear Services and the South African Nuclear Energy Corporation (NECSA) are qualified. The country’s industry will have to partner with the successful vendors to hone those skills, train a workforce and learn from the build program in Europe, China and Russia.
There’s a buzz again. Nuclear vendors expected a request for proposals in August with a preferred Nuclear Vendor Country announced by March. Next year will see tendering for the local manufacturing and construction sector, with contracts signed in 2017 and construction starting in 2018.
The capital expenditure for 9,600MW will be approximately $40 to $50 billion, plus government costs and interest on capital. All this leads to trillions being spent over 15 years. That’s a big number that will reignite local industry and a knowledge economy after the last seven years of misery.
Perhaps it will be “boom” again?
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Additional reporting from Des Muller, head of Group Five Nuclear Construction Services.

Category: Investment Guide

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