Africa’s economic trajectory is often compared to that of China. The Asian country’s ascent to 21st century economic superpower is rooted in its steel production and coal mining industry that began more than a thousand years ago.
As Cecil John Rhodes attempted to consolidate the South African mining industry in the late 19th century, the economic reverberations of the mineral discoveries cemented the importance the mining sector has and continues to play in the economic development of South Africa.
The production of the many commercially viable solid mineral deposits scattered across West Africa is key to the economic development of the region. A successful marriage of policy reform and privatization is fundamental in ensuring the full economic potential of the region is realized.
To date, interest in West Africa has been negligible. According to many of the governmental mining agencies across the region, a lack of geological information available to prospective investors incapacitates their ability to determine the intrinsic value of the deposits. Wildcat miners indulge in a practice known as concession flipping where discoveries are sold at a profit to larger companies who have the technical and financial capacity to develop the mines.
Globally, the mining sector is integral to the development, diversification and sustainment of many economies and is the rock on which a number of industries – from construction to petrochemicals – are built. Like a phoenix arising from the ashes, Liberia and Sierra Leone, both once ravaged by civil war, are keen to develop their mineral reserves. Along with Burkina Faso and Mali, they have been successful in attracting foreign investment for the funding of a number of mining properties.
Located in Guinea, the Simandou hills boast what is thought to be the world’s largest deposits of untapped iron ore. Economic growth in Guinea has been driven by its mining sector. Although the country has high grades of iron ore and low processing costs, infrastructural challenges remain the greatest hurdle to the production of the many reserves. Railways are often the preferred choice of transportation but provide many restrictions in moving for the mined material. In spite of these challenges, political unrest has abated and with mining titans Vale and Rio Tinto setting up in the region, a slipstream has been created for other mining companies to follow suit.
Ghana has managed to develop a stringent fiscal regime that encourages the production of its mineral wealth. Bauxite, limestone and manganese are mined in large quantities, in addition to gold. In the tragicomedy of Nigerian economics, if black gold is the protagonist, the yellow kind and its kin are the antagonists. Beneath Nigeria’s earth sleeps a giant of huge economic potential. Policymakers have thus far tiptoed around the issue of stimulating the sector. Coupled with a lack of geological data, it remains to be seen whether or not the solid mineral sector will have its rude awakening.
As the West averts its gaze towards Africa, proper resource governance will be essential to ensuring prospective investors operate within a legal and fiscal framework to sustain both economic and community development in the countries they operate.

Unearth The TITAN

The World Economic Forum’s Annual Meeting of the New Champions takes place on an annual basis in China, alternating between the cities of Dalian and Tianjin. The forum is affectionately known as the Summer Davos and is quickly building in stature attracting business, government, academic and civil society voices from across the globe. The event focuses on technology and innovation. CNBC Africa first attended the Summer Davos in 2013 with just a handful of African delegates. This year, however, saw a much bigger African contingent with representatives from Rwanda, Mali and South Africa out in full force. This despite the Ebola epidemic which caused many delays in the granting of Chinese visas and resulted in a number of cancellations, most noticeably from the usually sizeable Nigerian delegation.
The gathering involved three days of intense debate over the latest and greatest technological solutions aimed at creating a better world for all. Many of the innovations are specifically focused on solving some of the developing world’s most pressing problems such as health, education, energy and infrastructure deficits. With many of the globe’s brightest young minds wrapped up in intense conversation, the event itself is nothing short of an innovation frontier.
With hundreds of technological innovations on display it’s easy to reach the conclusion that developing economies have the opportunity to leapfrog the developed world by deploying new state of the art technology solutions rather than upgrading old, existing infrastructure. This is particularly true when it comes to solving the energy deficits in emerging markets. Global energy infrastructure is dated in many developed markets, having been rolled out as far back as the 1960s and 1970s. When it comes to deploying new, efficient and cost effective solutions, emerging markets can deploy best-of-breed solutions from the outset. Smart grids, nano batteries and off the grid renewable energy solutions are trail blazing when it comes to electricity provision.
The digital world we now live in is fast paced and ruthless. You simply can’t ignore the tsunami of technological innovations facing both individuals and businesses on a daily basis. Adapt or die was the phrase often repeated at the Meijiang Convention Center where the conference was hosted. New businesses have appeared out of nowhere, think Alibaba, Amazon and Uber, all of which challenge traditional models and use digital savvy to come out on top. Traditional business models, now more than ever, face extinction. Businesses are scraping at the coalface, trying to stay close to their customers where innovation is forcing a consumer revolution. Customers have the upper hand in a world where information is ubiquitous and fast eliminating competitive advantage.
One of the key discussion points in Tianjin focused on the skills needed to survive in this ever changing world, where robotics are becoming the norm and automation a necessity. Science, technology, engineering and maths skills (STEM skills) are a must for children growing up in this digital jungle. It’s all about blended learning of practical applications for the real world and less about reciting facts day in and day out as many traditional education systems are premised on and that have very little to do with equipping an individual for this dynamic work environment. Don’t forget this is a world where a couple of kids in a garage piece together a new app that, overnight, launches them into the billionaire stratosphere.
Everywhere automation is impacting traditional jobs, but just as those jobs are being lost they are being supplemented by job creation in the digital and technological space. The revolution in the retail market has been created by online shopping. McKinsey recently released a report indicating that 80% of all purchases are now researched online before they are bought. Widespread comparisons are quickly being made and prices are being forced down – the customer, now more than ever, is king.
Innovation is also forcing companies to look at how they are internally wired. Digital supply chains are improving internal efficiencies and fast eliminating hybrid supply chains, consisting of part paper and part digital elements. Information is ubiquitous and in some instances carries very little value because it is so widely disseminated.
For me, perhaps most striking is the reality of 3D printing. Imagine being able to print a bicycle and cycle off into the mountains. Brace yourself, this is our new reality.

Brace Yourself For A New Reality

Positive news is flowing out of Africa these days. The global consultancy Ernst &amp; Young, now EY, ranks Africa as the world&#8217;s second-most attractive market after North America.
If anyone had asked me, I would have pointed at China as the world&#8217;s second-most attractive market after the United States (US).
Okay, forgive me. China is the world’s biggest factory yard. Can Africa be a base for a global factory and one day rival China’s manufacturing might? Yes it can.
Let’s start with the obvious. African governments certainly need to invest more in healthcare, education and innovation. They need to promote more public and private capital into infrastructure – roads, modern railways, power plants etc. These steps should – all things being equal &#8211; further facilitate intra-Africa trade which also needs to grow. Presently, African nations conduct only about 10% of their trade with each other, according to the World Bank, which also reports that the continent’s share of global trade in value terms currently stands at less than 5%.
A substantial share of the world’s timber, diamonds, gold, cobalt, copper and platinum come out of Africa. Transforming Africa’s raw materials into finished goods before exporting them to the rest of the world would also help.
South Africa already exports German technology (BMW sedans) to the US. Ethiopia has excellent leather and coffee. Kenya produces world-class tea and horticulture. Beyond its crude oil and liquefied natural gas (LNG) exports to international markets, Nigeria’s movie and music industry has practically displaced European and American pop culture across the continent, helping to rekindle African pride, local talent industries and worldwide appetite for indigenous African content.
Foreign firms are all over Africa, scrambling for opportunities. In China’s case, its direct investment in sub-Saharan Africa has jumped from virtually nothing in 2002 to $18.2 billion in 2012. The EYs and McKinseys of this world are only stating the obvious: Africa is a very safe bet for Western and Asian companies, European private equity firms and fund managers from Silicon Valley looking for superior return of investment (ROI). The counterpoint to this fact is to ask how well Africa will harvest its ROI delivery capabilities.
Will Africa take advantage of its unique spot in global trade to improve its society and environment?
Africa’s business and political leaders attending the US-Africa Summit in Washington last August came away with more than $14 billion in investment pledges by American firms.
According to the Brookings Institution, cumulative foreign investment in sub-Saharan Africa grew from $33.5 billion in 2000 to $246.4 billion in 2012. Former New York City mayor, Mike Bloomberg, says it is now factually incorrect to refer to Africa as an emerging region.
“Africa has finally emerged,” he says.
We all, however, need to look beyond the continent’s sweet and sour stories to see this emerging reality. The harsh reality of life in Africa for so long has been one of stagnated growth and arrested development fueled by endemic graft, penury and scarcity in the midst of affluence, painful and unprogressive politics, career militants, religious and ethnic strife, wars, cross-border epidemics, currency constipations, illicit trade, human trafficking and the sheer reluctance of Africa’s elite class to confront the bogey of nepotism.
Thankfully, these harsh realities are being attenuated – at national and sub-national levels – by positive exemplars of economic and social progression and by a new wave of afro-centric thinking which seeks to locate and redefine Africa’s role and position in the evolving global polity.
Practically every corner of the African continent today is adding value to Africa’s new growth story. A McKinsey report released in August 2014 states that the continent is home to eight of the world&#8217;s top 15 fastest-growing economies between 2000 and last year, with growth topped only by East Asia, which includes China.
Several sectors – the entertainment, financial services, telecommunications, information technology and agriculture sectors – have helped to galvanize this growth spurt.
Responsible for most of the foreign investment streaming into Africa, their cumulative contributions to social and economic transformation will continue to spur growth and new jobs. They have been the most receptive to the disruptive influence of innovation. They have helped to define the new picture of Africa rising out of the development woods.

Africa Is A Safe Bet

Bitcoins were worth nothing in 2009, when the digital cryptocurrency was first minted on the computer of its mysterious creator, Satoshi Nakamoto, who claimed to live in Japan.
Four years later the value of one Bitcoin surpassed $1,100, thanks in large part to a surge in speculative interest from China. A little-known Shanghai company called BTC China met the demand and quickly became the world’s largest Bitcoin exchange, with more than 100,000 of the virtual coins, or $100 million, traded on a single day, nearly double the market share of its closest competitor, Japan’s Mt. Gox.
BTC China attracted headlines and a  <img loading="lazy" decoding="async" class="alignleft size-medium wp-image-2491" src="/wp-content/uploads/2017/04/FO012014_086-222x300.jpg" alt="" width="222" height="300" />$5 million investment in the fall from Silicon Valley’s Lightspeed Venture Partners as well as its China arm. But its rapid growth, and that of Bitcoin, also attracted the attention of the Chinese government.
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Unwanted attention, as it turned out. In December the People’s Bank of China decreed that merchants may not accept Bitcoin and forbade banks and payment processors from converting Bitcoin into yuan. The price of Bitcoin fell below $500 in response.
Bitcoin is still widely embraced by technophiles and libertarians (and porn and pot-dealing websites) because the currency is all digital, easily transported across borders and resistant to state controls. A Bitcoin is “mined” on privately owned, specialized computing equipment and passed around by a global, peer-to-peer network of computers. Transactions are trackable, but the parties to each transaction are not. Bitcoin has attracted entrepreneurs and investors excited about its legitimate use: cutting out the middlemen in online payments. In December venture capital firm Andreessen Horowitz placed the biggest Bitcoin bet so far with a $25 million investment in San Francisco’s Coinbase, a platform for buying, selling and storing Bitcoins in the U.S. “As the world becomes more digital, paying physically with bills, gold or credit cards will seem archaic. Everyone will have Bitcoins,” says BTC China CEO Bobby Lee.
But China’s actions over the past weeks have put BTC China’s future in doubt. After Chinese regulators held a closed-door meeting to warn financial companies against working with exchanges, BTC China was swiftly abandoned by two payment processors. “There are 300 payment processors in China. We’re going to go down the list and find one that will work with us,” says an optimistic Lee. He doesn’t think the government is trying to put him out of business but rather put the screws on Bitcoin to cut down on the rampant speculation. “They haven’t declared exchanges illegal. That gives us room to maneuver, so there’s still hope.”
Lightspeed’s Jeremy Liew is keeping a distant focus. “Anyone investing in Bitcoin companies and Bitcoin specifically should be doing so with the expectation that there will be a lot of volatility driven by regulatory announcements. We invest over 5- to 10-year horizons, not over two-week horizons,” says Liew. “For Bitcoin to be credible, we need executives who have the gravitas to make its case to regulators. That’s Bobby.”
Lee, 38, was born in the Ivory Coast to parents who had moved there from China to set up a flip-flop factory. He was sent to an elite boarding school in the States, graduated from Stanford and spent eight years as an engineer at Yahoo in California. He moved to China in 2006 to work as an engineer at EMC. In 2011 he became Wal-Mart’s chief technology officer in China, charged with helping to build its commerce site.
Lee first heard about Bitcoin in the spring of 2011 while visiting his family in California. Lee’s brother, Charles, was using some of his computer equipment to mine Bitcoin at home. Lee thought he would do the same back in China and bought a bunch of graphics cards from his brother. He started mining in July, the same month he started at Wal-Mart. Neither lasted long.
“It was a hot summer, and the computers created a lot of heat,” says Lee. “My wife said it was too noisy and hot, and so I turned it off in October.” He mined 25 coins, which struck him as a “waste” because they were worth just $300 total at the time and he had spent $1,000 on mining gear.
When Wal-Mart decided to partner with an existing e-commerce site in 2012 rather than build its own, Lee found himself jobless. His mind returned to those Bitcoins gathering digital dust on his computer. His brother had founded a competing cryptocurrency called Litecoin, but Lee wanted to focus on bringing Bitcoin to China. BTC China had popped up two years earlier as the country’s first site for Bitcoin trading. “It was just two guys working part-time on it,” says Lee. They were charging a 0.3% trading fee, but seeing just a few hundred trades per day. Lee sought out its cofounders to convince them it could be bigger. Lee became CEO in April.
They relaunched the site in June and went out looking for venture capital. When they landed the round from Lightspeed in September, they eliminated their fee. That kicked off a bidding frenzy fueled also by the free Bitcoin p.r. that came when the FBI took down Bitcoin-only drug site Silk Road and Baidu announced it would accept Bitcoin for security services, plus the positive buzz around U.S. Senate hearings on the digital currency.
But then the People’s Bank of China, responding to what it says was a wave of consumer concerns, declared in December that Bitcoin wasn’t a recognized currency and shouldn’t be used in the market, prompting Baidu and other Chinese firms to stop taking it as payment. As the extent of the real-world ban became clear, the price of a Bitcoin dropped to $345 on BTC China.
Lee initially saw the declaration as just a speed bump. Chinese citizens were still free to trade Bitcoin. BTC China stayed on the good side of the government’s concerns about money-laundering by asking customers for official identification. BTC also reinstated trading fees to cut down on the frenzy. But days later the government crushed hopes of a thriving trading business when it unofficially barred payment processors from working with Bitcoin exchanges. Suddenly BTC China and others would no longer be able to move their customers’ funds from yuan to Bitcoin and back—which is what exchanges exist to do. “We’re reading the tea leaves,” says Shanghai Bitcoin entrepreneur Jack Wang. “But it looks like they’re going to squeeze the exchanges until they’re not able to operate.”
China’s move is not without precedent. Eleven years ago Chinese Web service Tencent created a virtual currency called Q Coin for use in games. It became increasingly valuable offline and started trading on exchanges along with renminbi and gold. The government declared such use illegal in 2007, sending its real world value crashing to nothing.
China is still letting people play with Bitcoin in its country, but by cutting off ways to convert it to real money, it is turning it into the digital Monopoly money that skeptics have always dismissed it as being. “If necessary, we’ll go into other Bitcoin services,” says Lee. The company plans to launch a secure online Bitcoin wallet called Picasso at the end of December. “This is not the end. It may be the end of a chapter, but it’s not the end of our company.”

China Bites  Into Bitcoin

China has long-standing links with Africa and has become an important trading partner. Now it wants to play football with us.
Africa’s footballers have been making steady inroads into the Chinese Super League in recent times, where new-found riches have been used to lure some top names to the competition.
It is a policy that has worked in part, though the more high-profile signings have not enjoyed lengthy stays in the country.
Cote d’Ivoire great Didier Drogba is the biggest name to have been lured to the Chinese league when he signed for Shanghai Shenhua in 2012 and earned a reported $1.3 million salary.
He joined former Chelsea teammate Nicolas Anelka at the club in what was viewed as a show of financial muscle by the team’s owners.
Despite these riches, Drogba stayed just six months before taking a pay cut to join Galatasaray in Turkey. The striker found it difficult to settle in a wonderful country that is unlike anywhere else on earth.
I saw it first hand when I traveled to Beijing in my role as president of the Football Association of Zambia for a friendly international against Brazil at the famous Bird’s Nest Olympic stadium. Next year’s World Cup hosts, Brazil, were made to work hard to beat the African nation 2-0.
There is much to enjoy in China, the sights, sounds and smells mesmerize the senses, but it is a culture that is very different to our own, and far, far removed from what you experience in the west. I was very impressed with Beijing. It is a bustling hive of activity and while everything from the west is available, the Chinese have clung on to their culture.
I have a new found respect for this nation since I scaled the Great Wall of China in Badaling. I realized the tenacity and strength of spirit that this great Nation has and I was mesmerized. We were lucky to be guided by my good friend Mr Yang because not much English is spoken. That does make it difficult to adapt. It is one thing to enjoy a few days holiday in an unfamiliar environment, but another living there.
That has not stopped a sizeable number of African players from making the move to the Super League though—21 African nations have been represented in the league down the years.
The influx of players started as a small trickle, when the Super League was formed in 2004, becoming a flood in the last three or four years.
It has become an alternative to Europe for some, and is financially more attractive than other options in Asia, such as Indonesia and Vietnam that had been popular destinations for African players in the past.
Zambia has been represented there by national captain Christopher Katongo, who has been with Henan Construction FC since 2011, as well as Isaac Chansa and Billy Mwanza, while James Chamanga has played for Liaoning Whowin for the last five years. All have stories to tell.
The biggest exporter to China from Africa has been Nigeria, who have had 20 of their players in the league since 2004. Brazil has the most players in China, with 122 players in the same period of time.
But teams have also scoured the rest of African continent, signing players from Angola, Cape Verde, DR Congo, Gambia, Mozambique and Sierra Leone, along with the more established football nations that you would expect on the continent.
It shows that their reach is long, and that all styles of African football appeal to them—the technical quality of the north, the power and physicality of players in the west and the skillful trickery of the players in Southern Africa.
There would no doubt be more, but the Chinese authorities have sensibly restricted the number of foreign players in the league, mindful of the need to develop young Chinese talent. Each team may register five foreign players for a season, and can field four of those on the field at any one time.
When you look at the infrastructure of the country, the massive population and the passion that they have for football, it is difficult to understand why China has failed to make the same strides on the pitch as the likes of Japan and South Korea.
In fact, in March this year they reached an all-time low on the FIFA World Rankings of 109th position and by October had improved slightly to 97th.
Within their own Asian Confederation they sit a lowly ninth, behind the likes of Oman, Jordan and the United Arab Emirates, countries you would think they could beat easily given their resources.
China’s one and only FIFA World Cup appearance came in 2002 when the tournament was held in South Korea and Japan, but ended in three defeats and not one goal.
Having just completed its 10th season, it will be incredibly interesting to see how the Super League develops and whether the growing strength of the league does translate into greater success for the national side.
The two are not certainties, but you feel that China has great potential as a football nation. All of the ingredients for success are there; they just need to knit them together.

The Great Call of China

He calls himself an African optimist; in the coming days, he faces a test of this comforting belief.
Iqbal Survé has made millions investing in the continent, turning himself, in less than a decade, from a medical doctor into one of South Africa’s top entrepreneurs. Now, he faces controversy and opposition around his newest deal to buy a clutch of Africa’s most powerful newspapers.
At the same time, he will promote the continent in the global economy, as a member of the recently launched BRICS business council. South Africa came late to the party. It joined the group of significant emerging economies in April 2010, turning BRIC into BRICS, nine years after its inception. Today, the southern African nation plays an important role within the forum. It acts as a gateway to the continent for China, Brazil, India and Russia; as a catalyst for African integration. BRICS launched a business council in March, which consists of five key business leaders from each nation.
“The council is an important development to foster intra-BRICS economic ties. It will not only focus on trade, but also on technology transfer, skills development, banking, manufacturing and industrialization,” says Survé.
He will direct South Africa’s role within the BRICS council together with mining magnate Patrice Motsepe, Business Unity SA CEO Nomaxabiso Majokweni, Zungu Investment Company executive chair Sandile Zungu and Transnet CEO Brian Molefe.
“The members of the business council are people who understand the nexus between business, politics and economic growth,” says Survé, who serves as an economic advisor to South African president, Jacob Zuma.
The business council will work to boost trade, encourage entrepreneurs in member countries to pool capital and form joint ventures; while the five governments will usher in market access by easing visas, registration of companies and exchange controls.
“Our purpose is to create the smoothest possible interaction between companies,” says Survé.
Already, trade between BRICS and Africa has increased tenfold since 2002, with an estimated current value of $340 billion.
But there’s more to it. South Africa wants to use the BRICS business council to advance, not only, its own agenda but also that of the continent. Part of this will be moving trade relations with China, India, Brazil and Russia away from the narrow focus of commodity exports.
Africa’s progress is something close to Survé’s heart. The former ‘struggle doctor’ cared for political prisoners and victims of detention and torture during apartheid, including former South African President Nelson Mandela. He left medicine, in 1997, to launch investment holding company Sekunjalo Group, which is known for purchasing controlling stakes in firms to empower black workers.
Sekunjalo has investments in more than 170 companies and is South Africa’s top-rated black empowerment company. It comes as little surprise that Survé, from a poor family in Cape Town, has made a fortune from investing in oil in Africa and is regarded as an entrepreneur who is shaping the continent’s future.
“At Sekunjalo, we pay serious attention to skills development, corporate social investment, enterprise development and transformation. It’s a gentler form of capitalism that puts people before profits,” he says.
The newest acquisition by Sekunjalo could prove a test of these words. A consortium, led by Sekunjalo, bought the South African arm of Irish Independent News and Media for $200 million.
The deal means that Sekunjalo will acquire newspapers such as The Star, Pretoria News, Sunday Independent, Cape Times, Cape Argus, Mercury, Daily News, which employ around 1,400 people. There has been an uproar about the failure to disclose the identity of the other funders. Survé was sworn to secrecy by the Irish media house but revealed the funders in late June after a general meeting of the sellers, when it emerged that the Congress of South African Trade Unions (COSATU) and some of its affiliates comprise a major portion of Sekunjalo Independent Media’s (SIM) shareholding and that employees of Independent News and Media South Africa (INMSA), would get 10% of shares in the company. It has been reported that if the sale goes through, banks could write off €100 million ($133 million) of the group’s debt. Sekunjalo Independent Media, will claim 75% ownership, while the remaining stake is reported to be held by the Government Employees Pension Fund. But Survé has refuted this statement. Staff at the media group—who formed a trust to acquire the remaining 25%—say it is being bought by a newly formed company with no records, turnover or assets.
Away from acquisitions, Survé believes BRICS presents an opportunity for Africa to attract more foreign direct investment (FDI).
“FDI is key for development. Our continent is on the threshold of dramatic change. For the first time, we are at a point where all people might be able to access capital,” the black empowerment pioneer and philanthropist reckons.
This economic growth is closely tied to the continent’s fortunes, Survé stresses: “BRICS is not a South African exercise. It’s good for the whole of Africa and will lead to stronger bridges between South Africa and its African counterparts, too,” he says.
If all goes to plan, Africa could emulate the Asian tigers.
“Some African countries, like Mozambique and Ethiopia, do it already. Thirty years ago, China was in exactly the same place where Africa is today. It has seen enormous development from not being among the top 100 of the gross domestic products in the world to being the world’s second largest economy,” he says.
A key role of the BRICS business council, which will convene twice a year, is to examine business models.
“The idea is to learn the lessons of how some of the countries, such as Brazil and China, have achieved their phenomenal economic growth. How do they support the private sector? What policies and capital initiatives were put into place? What are the lessons in terms of infrastructure development?”
Survé stresses the fact that the formation of the BRICS business council does not mean trade relationships with western countries will be put on the back burner.
“From our perspective, we need the African economy to grow. For that to happen we need to do business with multilateral partners, whether they come from BRICS, North America or Europe.”
With his foray into newspapers, Survé may need nerve as well as optimism.

Activist Doctor  Turned Capitalist

A new generation of African entrepreneurs and businesses is emerging. They are challenging the old way of doing business and driving cross-border growth.
Kenya’s ICT companies are investing in Rwanda and are now looking to enter Nigeria, while United Bank for Africa and other Nigerian banks are rapidly expanding into Africa. In 2009, South Africa invested $1.6 billion (FDI outflows) into other African countries. MTN, a South African mobile giant, operates in 21 African countries; and Glo, a Nigerian mobile operator, operates in the Republic of Benin, Ghana and Côte d’Ivoire.
Africa’s statistics speak of tremendous potential: the continent is the size of China, Mexico, Europe, India, the States and Japan combined. The population will soon surpass China, with a middle class as big as India’s. Africa has enjoyed more than a decade of sustained GDP growth, which has often outstripped many other parts of the world.
There is frustration in that Africans are not reaping the rewards of the current global investor confidence. The mass export of commodities doesn’t see wealth trickle down.
Home-grown investments, focused on value-adding industries, are the key to changing this dynamic.
Africans still seem to choose products and investments from outside the continent. They prefer to export outside Africa rather than to trade, manufacture and add value within. Many African countries continue to trade raw materials but they don’t have the capability to refine or process, so they import the finished products from outside of Africa.
We need to understand what is preventing Africa from being home to value-adding and value-creating businesses. Why, for example, is Africa’s agricultural richness not generating an integrated growing and processing industry as it has done in Brazil?
Africa requires an environment that facilitates investment and greater market integration. The current weaknesses—corruption, high start-up costs, poor infrastructure—are well-known. But our study will also shed light on the legal, social and cultural differences within Africa that restrict cross-border investments.
There need to be integrated regional production chains within Africa, where Africa’s raw materials are processed into finished goods to be traded. Regional trading blocs— including the Tripartite Free Trade Area, which encompasses the East African Community, the Common Market for Eastern and Southern Africa and the Southern African Development Community—would thus thrive, paving the way for a Continental Free Trade Area, that would produce and trade high value-added goods internally.
Greater market integration in Africa will lead to a significant reduction in the cost of doing business and alleviate some of the problems associated with securing work permits and labor mobility.
Over the long-term, Africa’s competitiveness will hinge to a great degree on how well we educate our young people. Often, the most talented Africans have sought educational advancement and careers overseas, but a combination of transformational educational technology, growing opportunities at home and the poor global economic climate could see this brain drain becoming a brain gain. Retaining talent, home-grown or otherwise, is critical. Policy that enables skilled Africans to work across our borders more easily will help achieve this goal.
Never have circumstances been more propitious for African business. A rise in disposable incomes, high rates of urbanization and a fast-growing working-age population speak of an emerging class of purchasers of consumer goods, financial services and infrastructure, as well as a potential source of manpower for industrialization and agricultural development.
Africans must explore ways to move beyond regional differences and competition to build Africa together from within, so that Africans at all levels become the primary beneficiaries of the continent’s growth.

Unite And Prosper

Adrian Gore, South Africa’s undisputed king of health insurance, has done pioneering stuff before—as a matter of fact that’s all he has done since the day he founded Discovery 20 years ago—but none as daring as his latest venture.
In a world where Africa has become China’s happy hunting ground, Gore is hunting in the opposite direction.
Discovery recently bought 20% of Ping An Health Insurance, a wholly-owned subsidiary of China’s biggest, and the world’s second largest, insurance company.
“It could have been a much bigger stake, were it not for the strict Chinese foreign ownership rules that prescribe that outsiders can own a maximum of 20%,” says Gore.
Discovery is hungry for global expansion. It surpassed expectation in their forays into the United States of America and Britain, buying up Destiny Health in the US and 50% of Prudential Health in London.
China offers a compelling opportunity and a vast number of customers. China has more than 1.3 billion people, compared to the 50 million in Discovery’s home territory of South Africa. China spends R2 trillion ($237.6 billion) a year on health, South Africa’s R250 billion ($29.7 billion) pales by comparison.
Gore is the first to admit, though, that medical insurance is not something the Chinese do, or know, but all this is about to change.
“The health market in China is going to be huge, one gets a sense that if you get in early you can help shape the system,” says Gore.
His confidence stems from the Chinese government’s plan to introduce major health reforms, including health insurance.
“Chinese private companies are already buying health insurance in huge quantities, while individuals are already starting to buy what they call social health insurance. There are many Asians that understand this stuff. It’s more effervescent.” And sure to help the situation is the strong culture of self-medication and check-ups among the Chinese, what Gore says is an established “prevention mindset”.
Discovery’s entry into China is through its flagship Vitality product, which according to Gore, is the world’s largest incentive-based wellness program.
Vitality encourages healthy behavior that reduces long-term healthcare costs by rewarding members who do things that improve their health by going to the gym, eating healthier and getting regular health assessments. Gore believes Vitality helps to reduce both the occurrence and severity of diseases like obesity, diabetes, heart disease and cancer.
“I feel very strongly that business must have a social purpose. I don’t mean that in a soft, CSI [corporate social investment] way. Business is about progress. We try to create progress for society. A business must straddle innovation and prudence at the same time.”
“I actually think—and I’m not drawing parallels—the Apple obsession with products, is similar to ours. When we started out, our competitors in the medical aid space used to go to boardrooms. We sold our products on the road. I’m a product junkie. I find that inspiring. I’m an actuary by training, but I’m not inspired by money, but by progress.”
Also, he says, gone are the days where people put money in, and never got something out. In China, Discovery and Ping An have already struck deals with China Airlines and fuel retailers for discounts.
“Health and life insurance are typically grudge purchases. Our fundamental success in this market has been making health insurance sexy, cool, accessible and different,” says Gore.
To mark their entry into the market, Discovery and its partners are targeting in excess of 100 million Chinese who are in the middle to affluent bracket; 80% of whom pay for healthcare out of their own pocket. The good news is that Discovery is not going to do the on-the-ground slogging; the potential risk may come with vast cultural differences.
Ping An—which has 70 million customers and is serviced by close to half a million brokers—will do all the selling. Discovery will focus on building the underlying insurance company.
Gore maintains there’s no pressure to make this venture immediately profitable.
“Our approach, generally, is that you don’t bet family jewels in any one transaction. So, at end of the day, if something goes wrong, it doesn’t dramatically affect us. We haven’t committed huge amounts of capital. It’s as aggressive as we can go, but on the other hand, if it’s a complete and total failure, it doesn’t dramatically affect us.”
“If you’re building the underlying insurance company, that takes time. We’ve grown our earnings per share at 25% a year for 20 years. If China takes time, I won’t be concerned.”
Put to him, that his shareholders may have gotten used to quick gains and may no longer be the patient bunch they once were, when they started, Gore maintains: “Our shareholders—and I’m one of them—are long-term focused.”
One of few African successes in China has been Tencent, an internet business owned by South African multinational Naspers. Last year, China alone contributed R2.1 billion ($251 million) to Naspers’ core headline earnings of R5.3 billion($634 million). Interestingly though, Naspers CEO Koos Bekker could only attribute his company’s success to “simply, bloody luck.”
Gore says his industry “is slightly different. You’ve got to do the basics well, build quality relationships with your partners, regulators, and so on. It’s a tough market, and you’ve got to be brilliant”.
“We’ve spoken to a lot of people. We’ve done a lot of work. We’ve got a good feel for all the issues. In China, the relationships and trust are very important. The advantage of being an African company is that you do those things anyway.”

Gore The Mandarin

With six months to go before South Africa’s governing party, the African National Congress (ANC), goes to its elective conference, incumbent president Jacob Zuma looks set to get another term. And with that, a renewed focus on continental politics, for which his critics have chided him.
Zuma’s opponent, Julius Malema, the party’s rebellious youth league president, is not contesting the ANC presidency but is the spokesperson of a disparate group united in wanting the 70-year-old former political prisoner and intelligence operative removed from power. Their campaign though, has been dealt a huge blow.
Malema is facing several disciplinary charges and the party’s internal disciplinary committee has found him guilty on some, meaning that whatever the outcome, the young man looks set for the political rubbish dump. Unless a worthy challenger emerges between now and the December conference and goes on to defeat Zuma, he is set to remain at the helm of the 100-year-old political party and the head of Africa’s most powerful economy.
Among Malema’s most stinging criticisms of Zuma’s reign was that he had failed spectacularly where his predecessor Thabo Mbeki had done extremely well—in pursuing the African agenda. It was a criticism, and a comparison, that hurt Zuma and one that he has since looked eager to correct.
So, on March 20, when Zuma walked into the Sandton studios of pan-African television channel CNBC Africa for a live hour-long interview, with some of the continent’s CEOs and board chairpersons in the audience, he knew he had a mission to accomplish, or as his aides would have probably preferred to put it, he had a myth or two to debunk.
Sitting opposite CNBC Africa’s chief editor Godfrey Mutizwa, and occasionally fielding questions during crossings to CEOs in countries like Nigeria and Kenya, Zuma showed composure for someone who has countenanced perhaps harsher criticism than any post-apartheid president.
While some of the condemnation prior to his election had a lot to do with his indiscretions, which in turn led to sexual assault charges against him, others were in subtle ways questioning whether a man with only a primary-school education, would be able to fill the shoes of his Sussex-educated predecessor and intellectual, Mbeki. Was he best suited to preside over an ambitious country that not only likes to punch above its weight, and which likes to be loved, but is also the most sophisticated African economy?
The more Zuma sold his optimistic disposition of the continent to the CNBC viewers and the studio audience, the more friends he seemed to be making among the attendant captains of industry, many of whom wasted no time in praising him for his “insightful comments” and for “answering questions”.
One of the continent’s biggest “strides”, he said, was the formation of the African Union. “For the first time, we could define ourselves as one, as Africans and not as former British, Belgian, French colonies.”
The AU has been credited with bringing about continental political stability through promoting the culture of democratic elections as well as the principle of non-recognition of people who grab political power through coups d’état.
Zuma shared with his audience how the AU had advanced in getting member states to commit to investor friendliness, infrastructure development, better and responsible management of natural resources, environmental sustainability, education, and had now started talks about the integration of the continent’s five regional economic blocks. Asked to give timelines for the “practical implication” of the integration process, he replied: “It took two world wars before Europe could come together. Africa should be given a chance.”
A welcome sign of confidence in Africa’s future, Zuma added, was the inclusion of South Africa in BRICS, the increasingly influential group of emerging economies: Brazil, Russia, India and China. “Africa is now part of countries that are going to determine (the world’s economic) direction,” he said.
“I don’t see a crisis. I see prosperity in Africa,” he told the audience, and with a great deal of satisfaction, not to mention his trademark coy chuckle that usually signals cynicism. “Other people speak positively about Africa. Sometimes it’s Africans themselves who are negative; who feel Africa is in trouble.”

David Attacks Goliath

China is playing a big role in African oil through its exploration companies, like Sinopec and the Chinese National Petroleum Corporation, which are showing an increased interest in the commodity.
<div id="attachment_150" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-150" class="size-large wp-image-150" src="/wp-content/uploads/2017/04/Par1912664-1024x685.jpg" alt="" width="474" height="317" />UGANDA-CONGO-OIL-CONFLICT-FISHERMEN</div>
Duncan Clarke, chairman and CEO of Global Pacific &amp; Partners, and a leading authority on African oil, says that most of the BRICS nations, along with emerging economies such as Korea, have an interest in Africa. He says there are around 500 companies involved in upstream oil production on the continent, many opting for joint venture arrangements. Africa’s long-term oil and gas potential is huge but politics may hamper growth.
FORBES/FOCUS oil in Africa “The terms are getting tougher and what may appear demanding on the investor actually smacks of resources nationalism,” says Clarke. Political instability in the East Africa region has impeded any major developments over the past 20 years in countries like Somalia, Mozambique, Uganda and Ethiopia, according to research analyst at Frost and Sullivan, Ross Bruton. Aside from political instability, there is inadequate infrastructure, especially at ports. Refining capacity is lacking in many countries, including those with a long-established track record of reliable oil reserves such as Nigeria and Angola, according to Bruton. South Africa—which has no oil reserves to speak of—currently holds 80% of refining capacity in Southern Africa.
<h3>SOUTHERN AFRICA:</h3>
Southern Africa is not a major oil producer, with the notable exception of the Cabinda region of Angola which has reserves of over 5 billion barrels and surpassed the 2 billion barrel per day average production of African oil heavyweight Nigeria in 2008.
Oil companies with clout in Angola include the parastatal oil company Sonangol, Texas-based ExxonMobil, France’s Total and British Petroleum. California-based Chevron was the first multinational to be fined by an African country when Angola punished it for unsound environmental practices in 2002.
The Southern African scene may well change in the future through the discovery in July of 11 billion barrels of oil reserves o‑ the Namibian coastline. One of the key companies involved is a subsidiary of London-listed Chariot Oil, Enigma Oil &amp; Gas. “Much deep oil opportunity exists o‑ the coasts of Namibia and Angola,” says Bruton.
The DRC is a smaller oil producer with Total and Italian Oil Company Eni dominating. ExxonMobil and Chevron are also there. Mozambique is another exciting Southern African energy producer, according to Bruton. The country is a major developer of natural gas and supplies South African oil and gas heavyweight Sasol. Most recently, Mozambique’s oil authority announced that the US-based energy company, Anadarko Mozambique, had discovered a 200 billion cubic meter gas resource in the mineral-rich Rovuma basin, where Anadarko has significant investments.
<h3>EAST AFRICA:</h3>
Few strides in oil development have been made in East Africa because of political instability in the region. But the region has vast oil potential. Somalia alone has estimated reserves of around 10 billion barrels, but the country’s troubled political climate is scaring o‑ investment. Tullow Oil, which operates in 15 African countries, is the only significant energy company with interests in East Africa. Its most notable holding is in Uganda’s Lake Albert
Rift Basin where 1.1 billion barrels have been discovered, with a further 1.4 billion expected to be found. Tullow says that it could produce as much as 200,000 bpd in the country, but has run into difficulties. Some exploratory e‑ ort has been made in relatively stable Kenya, but with little success to recommend the country as a viable energy developer. However, mineral discoveries in Mozambique have spurred hope that black gold is lurking underneath Kenyan soil. Media reports from the country claim that small, independent developers are selling their licenses to Western-based energy giants, although details on these deals are not forthcoming.
<h3>WEST AFRICA:</h3>
Nigeria has the biggest explored oil reserves in sub-Saharan Africa with a presence by most of the major oil producers. It has an estimated 37 billion barrels worth of petroleum compared to Angola, which is the next biggest oil producer in Africa at 13 billion barrels. Both countries are restricted to 2 million bpd production by OPEC. Ghana is another potential rich producer in West Africa—40 billion barrels worth of reserves are estimated and these are located deep at sea. Bruton says attention has turned towards Ghana since the Gulf of Mexico oil spill disaster, which has prompted more regulation on deep sea oil exploration in the northern hemisphere. Tullow operates in Ghana’s Jubilee Fields, which are estimated at 1 billion barrels. Production is seen reaching 120,000 bpd this year.

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