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Crocodiles, Money And Hope

Published 7 years ago
By Forbes Africa

It was the dual meaning of a few words that tripped off the tongue of the Somaliland foreign minister as he talked about the economic future of Africa that turned my blood cold.

“Africa shouldn’t miss the boat,” says Mohamed B Yonis.

The stark image that stabbed into my mind was that of Africans risking their lives on leaky boats crossing the Mediterranean in the desperate hope of a new life in Europe – a journey that has taken 2,000 lives this year. A new life? The odds are against it; even the survivors are likely to end up as sweated labour at best; trafficked labor at worst.

I was even more upset to see a magazine at the conference with a survey suggesting a large number of Africans say they would risk the tricky crossing of the Mediterranean even if it cost them their lives; a sad statistic close to the weeping heart of Africa.

A sobering thought amid the gathering of the rich and powerful in Cape Town where there were many signs of light and growth in Africa. Among the 1,200 delegates were investment fund managers from across the world.

“We like what we see and are here to invest,” says one partner of a $68-billion New York investment fund.

Infrastructure is likely to be the big business of the future; in the past, the World Bank estimated Africa needs at least $93 billion a year spent in infrastructure. Those in the know in Cape Town say this is barely enough to touch the sides of the infrastructure gap.

Former head of South African intelligence, Moe Shaik, has been doing his bit with the pan-African investment operation he is running for the Development Bank of Southern Africa (DBSA). Shaik says he gathered $404 million (R5 billion) in investments into everything from roads to oil and gas pipelines in the last year. Shaik also says the DBSA contributed $150 million in raising $750 million for a sovereign wealth fund in Angola that will be used to build roads and infrastructure as well as making plans for a new coal fired power station at Mamba, near the Zambezi River, in southern Zambia. He believes state coffers can no longer afford infrastructure.

“Government needs to create an environment where capital can come in and build. But African governments also need to set up mechanisms where they can supervise infrastructure projects in their country so they can be done properly,” he says.

Patrice Motsepe, Africa’s 14th richest man, worth an estimated $2.3 billion according to FORBES, agrees.

“I have always emphasized that we need to bring the private sector in and that the partnership be a partnership between the government, the investment communities, both local and international, and that always gives me comfort that these projects make sense, that they are sustainable,” he says. “The environment has been put in place and we are making progress in Africa in comparison with various other investment countries.”

The head of state in the host country, South Africa, believes the continent is well on the way.

“There is the issue of infrastructure, all types of infrastructure that is actually changing the face and the landscape of the continent. This is what we are attracting. Those huge sums of money; we were therefore discussing the financing of these projects, how ready the projects are; some of the projects have been presented and are now ready to be financed and there is an interest of all financing institutions both locally and internationally,” says President Jacob Zuma.

With the optimism in Cape Town came caution. There are still doubts about political stability and corruption. Now, I have heard corruption compared to many things down the years, but never to crocodiles in the Kenyan bush.

“You know, when wildebeest migrate north to greener pastures in the Masai Mara game reserve, the crocodiles lie in wait for them in the rivers. So the wildebeest have to know where to cross otherwise they are going to lose a leg. The crocodiles are corruption,” says Bharat Thakrar, the head of East African advertising giant, Scangroup.

“It used to be limited to the police and small government offices, but now corruption is creeping into private business in Africa.”

Blair Glencorse, is fighting corruption with his NGO Accountability Lab in Liberia and was at WEF Africa.

“Where there needs to be enforcement, the key issue is to make sure it is part of a larger strategy to build transparency, open up information and build channels of exchange between citizens and governments – so it is not politicized. There are countries of Africa which are making some progress along these lines like Botswana and Ghana,” he says.

Hope and crocodiles collide; Africa has its work cut out before WEF Africa in Rwanda next year.

The Fresh Face of $2 Billion

Africa is changing fast and has a fresh face. Ten years ago, it would have been unthinkable; 20 years ago, unimaginable in an often patriarchal Africa. One of the freshest, not to mention powerful, faces at the World Economic Forum (WEF) on Africa in Cape Town runs $2 billion in investment at the age of 38.

Ngugi Kiuna grew up in Nakuru in western Kenya, the son of a managing director of a company selling tractors and a mother who sold animal feed. He went to boarding school in England and studied chemical engineering at Imperial College, London, before earning a PhD in composite structures of aerospace applications.

In August 2013, Kiuna became the head of investment banking for Africa at Rand Merchant Bank. He runs $2 billion in assets in Nigeria, Kenya, Namibia, Ghana, Lesotho, Swaziland, Tanzania, Zambia Angola and Botswana.

“Most of the countries we deal with are single B rated by the risk people. We also do a lot of work with private entities. The sovereign element is there and if you have it there is less of a risk. The sweet spot for us is three- to five-year investments. Off our own balance sheet, we can do longer, with the support of development finance, up to 10 years,” he says.

It means Kiuna oversees the financing of aircraft for Air Namibia, the building of roads in Angola and investment in locomotives in Mozambique. It is investing in Cenpower – a new 300MW gas power plant – in Ghana. In Kenya, it has helped tie up a deal, this year, to plough $350 million into a new 450-kilometer oil pipeline between Mombasa and Nairobi. It will take over from the old pipeline that’s been pumping oil since the 1960s.

Most of the people Kiuna meets, in his extensive travels across the continent, are old enough to be his father.

“I was with the minister of finance in Gabon, we were talking about the government infrastructure plan and strategy about borrowing, you could see all along there was something in his mind he wasn’t comfortable with. I said ‘minister, I know I look too young…’ He burst out laughing. I said I am not as young as I look, it broke the ice. After that, the nature of the conversation changed,” he says.

“I think people are generally embracing but obviously some are surprised by how young I am, but people are much more open minded to the younger generation. I think it is also a function of the technology age, you have younger people becoming billionaires these days.”

At WEF in Cape Town, Kiuna rubbed shoulders with many others with billions to invest.

“We saw there is continued buzz and interest in Africa; a lot of new people, new faces and new companies ready to invest. There is also a lot more intra-Africa dialogue; people talking about projects, people collaborating on projects. The amount of trade in Africa is nowhere near what it should be. Thirdly, power in Africa, we need to get that right and let’s hope we can. There have been power projects too big and too complicated to execute. So, we need to scale down projects to a size where it’s easier to be financed and done.”

His greatest fear for Africa?

“Political stability and transparency; these are all matters we have to get right… The biggest fear is around transparency around elections cycles in Africa. The recent elections in Nigeria, Kenya, Zambia and Namibia show we are getting there.”

“Wherever I travel on the continent, I am always inspired by the number of people who have started their own business. I dedicate what I do to them.”

Words wise beyond their years.

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Related Topics: #Cape Town, #Delegates, #Economic, #Foreign, #Infrastructure, #Investment, #July 2015, #Somalila, #World Economic Forum.