The world economy is set to enjoy a very good year. In that, it will be much like 2018 and 2017 and most probably like 2020 and 2021. Economic growth will be fairly strong in most of the countries where such expansion does the most good. While rich countries worry about objectively tiny setbacks, poor people are overall gaining more of the dignity that comes with adequate material comfort. 



Consider extreme poverty. The World Bank draws the line between the wretched of the earth and everyone else at daily consumption of goods and services worth $1.90. The Our World in Data website at Oxford University estimates that 72 percent of the world’s population lived below that line in 1950. The World Bank’s preliminary estimate for 2018 is 8.6 percent, down from 10 percent in 2015.



Fewer very poor people means more are enjoying better lives. The proportion of the global population without access to electricity is declining by about 0.3 percentage points a year. The number of children not enrolled in school is shrinking by about 5 million annually. Almost every indicator of basic prosperity shows the same trend.



The good news is pretty much global. Even Africa, long the lagging continent, is starting to catch up. The proportion of African children that die before they turn five has declined from 21 percent in 1975 to 8 percent in 2015, the most recent year for which data is available. Better health comes from &#8211; and with &#8211; greater wealth. Real per person income in sub-Saharan Africa has increased by 40 percent in the last decade.



Not all the news is good. Due to war and civil conflict, primarily in Africa, the proportion of the world’s population that is undernourished has risen by 0.2 percentage points in the last two years. Still, at 11.9 percent, it is 2.2 percentage points lower than a decade ago.



The prediction of more global gains in 2019 is pretty solid. There are also good reasons to believe that 2029 will be fine. Economic growth in very poor countries is becoming a virtuous circle. More education and better health creates better workers, who support stronger institutions, which make larger and more effective investments, which produce the money needed to pay for even better schooling and health.



That pattern has held in country after country for at least two decades. Bad governments do slow progress, but it takes war or total state failure, as in Venezuela, to reverse the progress.



The almost unstoppable global retreat of misery and ignorance is arguably the best news ever in economic history. For political history, however, the trends are far less clear. The old belief that greater wealth would naturally bring more open societies looks flawed. The populace of many countries, both richer and poorer, seem pretty happy with autocratic and extreme nationalist governments.



China is the prime example. The oppressive and fairly corrupt Communist Party has presided over rapid and widespread increases in prosperity. Its cross-border ambitions, both civil and military, have expanded as well.



That is worrying for many reasons. One of them is that war is probably the only force destructive enough to stop the upward march of global economic good news. The great question, for both 2019 and 2029, is whether progress will threaten prosperity by leading to the use of the world’s ever-larger supply of ever more deadly arms. -Reuters



-Edward Hadas

gettyimages-645015088-170667a

World Will Improve Where It Matters Most In 2019

The revival of Nigeria’s economy has gained momentum under the guidance of President Buhari’s ERGP programme; its ambitious targets yield results that seem to indicate that they will soon be superseded.
In spite of difficult times, Nigeria has been rated as the top 10 most improved economies in 2016/2017.
“Nigeria is a very resilient country in terms of economy,” states Mr. Venkatapathy Venkataraman Group MD at NIPCO.
<a href="https://www.forbesafrica.com/wp-content/uploads/2018/04/PENRESA-FINAL.pdf">DOWNLOAD FULL REPORT HERE</a>
<img loading="lazy" decoding="async" class="alignnone size-medium wp-image-35858" src="https://www.forbesafrica.com/wp-content/uploads/2018/04/MAKING-NIGERIA-224x300.jpg" alt="" width="224" height="300" srcset="https://cms.forbesafrica.com/wp-content/uploads/2018/04/MAKING-NIGERIA-224x300.jpg 224w, https://cms.forbesafrica.com/wp-content/uploads/2018/04/MAKING-NIGERIA-300x402.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2018/04/MAKING-NIGERIA.jpg 446w" sizes="(max-width: 224px) 100vw, 224px" />
This has been a result of the ERPG programme and its emphasis on industrialisation and diversification policies which boost capital inflows and encourages ease of doing business.
In November 2017 Godwin Emefiele Governor of the Central Bank of Nigeria CBN’s presented Nigeria’s economic outlook for 2018, predicting that national forex reserves will hit US$ 40bn in 2018. In introducing I&amp;E forex the improvement in the ease of doing business is guaranteed.
“The Central Bank of Nigeria (CBN) played an extensive role in ensuring relative price stability and in managing the dearth of foreign exchange,” declares Mr Obeahon Ohiwerei, Managing Director at Keystone Bank.
<a href="http://www.forbesafrica.com/focus/2018/01/19/nigeria-needs-new-national-carrier/" target="_blank" rel="noopener noreferrer">READ: Why Nigeria needs a new national carrier</a>
“If the tight monetary policy continues, and the Central Bank continues to manage the liquidity that makes FX, the economy may grow more than the 1.8% projected,” claims Mr Abubakar Jimoh, CEO at Coronation Merchant Bank.
Although energy sales in Nigeria account for up to 80 percent of all government revenue and more than 90 percent of the country’s exports, Agriculture and ICT sectors have flourished, providing steady growth, employment and investment opportunities.
The ERGP’s shift towards becoming import dependent has been particularly successful in Agriculture. Proforce MD, Mr Ade Ogundeyin declares, “the government is serious and committed about made-in-Nigeria goods. They are saying that if it can be produced in Nigeria you don&#8217;t import it.”
The government&#8217;s intention to use telecoms and ICT for economic development and financial inclusion is auspicious for the industry. Executive Vice Chairman of the Nigerian Communications Commission, Mr Umar Danbatta states that “telecoms contribution to GDP is now close to 10% and has been contributing 1.4 trillion naira to the economy.”
Minister of Power, Works and Housing Hon. Fashola confirms the commitment to IT, “We&#8217;re installing more broadband and connectivity across the country,” which in turn enhances a definite entrepreneurial spirit at play amongst the people.
The government has made it extremely clear that it will be pouring funding into infrastructure. Minister of Power, Works and Housing Hon. Fashola declares, “the investment in infrastructure is driving the value chain of the economic diversification.”
The government’s plans to modernise and restructure the country’s public transport system has proved a great opportunity for investors and the economy.
<a href="http://www.forbesafrica.com/investment-guide/2017/05/01/nigeria-needs-industrialization-now/" target="_blank" rel="noopener noreferrer">READ: Nigeria Needs Industrialization now</a>
Nigeria remains a highly appealing destination for investors. Mr Tunde Fowler, Chairman at FIRS elaborates, “Nigeria is an investor’s heaven with so much potential; from industry to agriculture to telecommunications. There&#8217;s so much room for expansion and the ease of doing business ensures that anyone who has a business, or who intends to start a business, will not have to face any bureaucracy, roadblocks or hindrance.
Nigeria’s government is determined to provide profound and long-term change in economic prosperity and stability; there remains little doubt that it is Nigeria’s destiny to uphold the title of largest economy in Africa for a long time yet.

LAGOS-cv2

FOCUS ON NIGERIA: Making Nigeria

Africa’s most robust and developed economy is on the cusp of an economic revival after the long-awaited change of guard at the top.
South Africa’s economy has struggled against downgrades by the ratings agencies and a flight of foreign investors in several difficult years that have left the country with miniscule growth.
The big obstacle to change was President Jacob Zuma whose unpopularity and poor management of the economy, amid clouds of corruption allegations, threatened to bury the once all powerful African National Congress (ANC). In the good times, a decade ago, when the economy was growing at a healthy 5%, the leaders of the ANC boasted they would rule until Jesus came back. The penny slowly dropped for the party faithful that if economic times got steadily harder, feeding a rising opposition, the party may struggle to rule until the end of the next elections in 2019.
Pressure for change came from even the most die-hard ANC members for Zuma to resign. He refused; the party bigwigs gave him a deadline and at the eleventh hour, just before midnight on February 14, he did so live on TV. In many ways, he had little choice; his party comrades were plotting to throw him out through a humiliating vote of no confidence in Parliament, in Cape Town, also live on TV. He would also have lost his pension, security and benefits in the process.
<a href="http://www.forbesafrica.com/politics/2018/02/15/zumas-time-mean-south-africa/" target="_blank" rel="noopener">READ MORE: Zuma&#8217;s time is up &#8211; but does it mean for South Africa</a>
For a former head of intelligence, Zuma appeared strangely out of touch with what people were thinking.
“What have I done?” was his reaction to the decision by the ANC to recall him. A cursory flick through the business pages of the newspapers would have told him: Job losses and unemployment running at more than one in four; falling business confidence and tales of millions of taxpayers’ money slushing into private pockets rather than public projects.
Into the breach stepped Cyril Ramaphosa, the former deputy president who was sworn in as the country’s new leader, in Cape Town on February 15, with a promise to clean up and pep up the economy. He is seen as the business friendly president and a pragmatic negotiator with vast experience from the picket line to the boardroom.
“Issues to do with corruption, issues of how we can straighten out our state-owned enterprises and how we deal with ‘state capture’ are issues that are on our radar screen,” says Ramaphosa as he was elected as president, unopposed, in Parliament.
<a href="http://www.forbesafrica.com/politics/2017/08/16/lack-accountability-marikana-says-zumas-government/" target="_blank" rel="noopener">READ MORE: What the lack of accountability for Marikana says about Zuma&#8217;s government</a>
Many of the business leaders I have spoken to, from Davos to Johannesburg, agree that if Ramaphosa turns his words into action they will invest with confidence.
“You are going to see millions of dollars flooding into this country in the next six months,” says Gary Booysen of Rand Swiss in Johannesburg.
The markets appeared to agree and surged with the rand. The currency reached highs not seen since May 2015, the last halcyon days of the economy. Three days of madness, in December 2015, put paid to that when Zuma sacked respected finance minister, Nhanlha Nene, replaced him with rookie Des Van Rooyen the next day and him, under duress, with former finance minister Pravin Gordhan the day after. The president sacked Gordhan in March 2017 and replaced him with another rookie Malusi Gigaba – the rand and confidence plunged, as did the ratings.
Ramaphosa – a multi-millionaire who has made his money from black empowerment and shrewd business decisions – wants a legacy of being the man who helped his country out of the mire. He has deep roots in the liberation movement and anyone who knows him will tell you he would want to be remembered as the best leader of his country since Nelson Mandela.
Anyone who has their money and pension tied up in South Africa will hope that he does so.

Zuma’s gone. Let’s go!

For much of 2017, two of Africa’s biggest economies, Nigeria and South Africa, have struggled. Nigeria is only just stuttering out of a recession, while South Africa’s economy has just returned to stability following several quarters of turbulence. Against this background, there is a need to ponder the implications of such periods of economic turbulence for entrepreneurs in these countries.
I have always said that Africa is the business frontier of the future, the market that holds out the most promise for investors. However, in Nigeria, where the bulk of my business takes place, I have watched entrepreneurs struggle since our economy took a dip. I have seen promising businesses closed down. Some of these could have survived if there were avenues for entrepreneurs from different African states to exchange ideas and collaborate.
As an entrepreneur that operates a real estate business in Nigeria and South Africa, I have never found a more important moment to reflect on my own experience, and to highlight how a transnational collaborative platform can offer entrepreneurs from these two African economic powerhouses an opportunity for substantive engagement.
<a href="http://www.forbesafrica.com/investment-guide/2017/09/13/tech-can-close-gap-africa/" target="_blank" rel="noopener">READ MORE: How Tech Can Close The Gap In Africa</a>
I have come to appreciate the peculiarities of the Nigerian and South African business environments, with each presenting their own challenges and opportunities.
In Nigeria, I have to rely on wealthy individuals to pay the full sum on any of my buildings. Yet, in South Africa, anyone with a good credit rating can acquire a payment plan and get backing from a financial institution.
In Nigeria, the challenge of not having a reliable and standardized database system and inability of banks to offer a payment plan for clients makes it harder to trade a property. It also means that more Nigerians were willing to pay a full once-off sum.
The downside, however, is that when there is slow growth in the economy, fewer people buy properties. With a payment plan, there could be adjustments that allow them to continue the financing, or in the worst-case scenario where they cannot make payments, the bank repossesses. Either way, the entrepreneur’s business is never in serious jeopardy.
I feel that many businesses in Nigeria would’ve survived the country’s economic stutters if opportunities for a payment plan existed. Invictus Real Estate, for example, has like many other Nigerian businesses suffered the pinch of the time. The company had to rely on its energy offering, Invictus Energy, to weather the storm.
<a href="http://www.forbesafrica.com/focus/2018/01/19/nigeria-needs-new-national-carrier/" target="_blank" rel="noopener">READ MORE: Why Nigeria Needs A New National Carrier</a>
Meanwhile, uncertainties about the South African economy have led to a lack of confidence from entrepreneurs to start new ventures. But there is no entrepreneurship if one isn’t prepared to take some risks. What these periods of economic volatility emphasize is the need for a platform for entrepreneurs to cross-pollinate ideas and enrich each other’s perspective.
The transnational entrepreneurship collaboration would set the agenda for a promising Rwandan entrepreneur to learn about the resilience of their Nigerian counterpart; the Nigerian entrepreneur would be able to tap into the experience of their South African colleagues in attracting venture capitalists, and so on. Each would bring their knowledge, experiences and expertise to bear. With this, there is an opportunity for important ideas to be shared and joint ventures to happen. The Forbes Under 30 Summit in Israel in April introduced me to forward thinking young entrepreneurs. One in particular was interested in doing business in Nigeria, and we discussed establishing a joint venture. Unfortunately, we discovered that the Nigerian Central Bank had imposed restrictions on outbound dollar transactions, making it difficult for foreign firms to repatriate their profits.
This could have proven an end to our project until I suggested that there might be a way to establish the venture with my company in South Africa. But, if I had no registered company in South Africa, wouldn’t it have been an opportunity to pitch the venture with a South African who would also take into account my own interest? This would be some of the opportunities a transnational entrepreneurial collaboration would create.
The time to create a transnational collaborative platform for African entrepreneurs, one that provides a guided approach for sustained collaboration, is now.
This transnational collaboration would guarantee a broadening and enriching of the imagination of the African entrepreneur. It would free the African entrepreneur from the shackles of borders, time and space. It would redefine business for the African entrepreneur. &#8211; Written by Obinwanne Okeke

Tear Down Africa’s Walls

One major unfulfilled campaign promise from the President Muhammadu Buhari’s administration is the creation of a new national carrier. The talk about its creation sparked heated debate. It led to stakeholders examining what led to the collapse of Nigeria Airways (the defunct national carrier), as well as the pros and cons of creating a new national carrier.
Although the debate currently tilts in favor of the naysayers, there are still sound reasons why Nigeria should float a new national carrier. Most of the reasons canvassed against its creation are rooted in the failures of the defunct Nigeria Airways.
Nigeria Airways was liquidated in 2003 for many reasons, including mismanagement, corruption, and a spate of plane crashes from the 80s.
Since the disappearance of the national carrier from the aviation space, Nigeria has suffered a loss of around $2 billion in capital flight.
Despite this, those against the creation of a new national carrier believe that it is not a logical step for the aviation industry in Nigeria. They propose an alternative, which is opening up Nigeria’s airspace for more direct and frequent flights to and from African cities. They say this has the potential to boost the economy by $128 million and create over 17,000 jobs.
<a href="http://www.forbesafrica.com/focus/2017/06/14/time-tax-nigerias-churches/" target="_blank" rel="noopener">READ MORE: Is It Time To Tax Nigeria&#8217;s Churches?</a>
The loss of $2 billion in capital flight is further exacerbated by the domination of the Nigerian aviation space by foreign airlines and the weakness of local insurance companies to effectively handle issues of aviation insurance. If the proposed alternative is adopted; this capital flight could double, as this will lead to more foreign participation in the sector.
Also, the establishment of a national airline will encourage the establishment of maintenance, repair and overhaul (MRO) facilities in Nigeria which can help block further capital flight and inevitably create jobs. Nigeria’s MRO facilities disappeared with the country’s national carrier, along with the $190 million that came with the facilities.
The third problem of not having a national carrier is the underutilization of the Bilateral Air Service Agreements (BASA) that the government has signed. These agreements allow international commercial air transport between territories. Nigeria has signed 78 of these, but they favor other countries, partly due to the lack of national carrier in Nigeria to reciprocate. A national carrier will make it possible for more players to fly competitive routes, which in turn will reduce the exorbitant airfares in Nigeria’s aviation sector.
<a href="http://www.forbesafrica.com/technology/2017/11/09/uber-wants-bring-flying-taxis-traffic-congested-los-angeles/" target="_blank" rel="noopener">READ MORE: Uber Wants To Bring Its Flying Taxis To Traffic-Congested Los Angeles</a>
Floating a national carrier is also a useful way for the government to earn foreign exchange. This can be done by privatizing a majority stake in the airline. This helped the national carriers of Ethiopia and Singapore to thrive.
There are also examples of national airlines being vital in boosting tourism. Kenya doubled the growth of its tourism industry through Kenya Airways by promoting its tourism sector on all flights on the national carrier.
A new national carrier will also result in an increase in jobs and development. Job opportunities for positions such as engineers; pilots; flight attendants; cleaners; booking agents; and caterers; will be created. The national carrier will also help to train Nigerians for the jobs created in the sector. This is important when most pilots and engineers in the industry are foreigners.
A new national carrier can kick start the renovation and activation of the over 26 airport facilities in Nigeria. The ripple effect of this is an increase in air travelers, which leads to a decrease in road travelers and a significant reduction in road accidents in Nigeria.
There are very few national projects with this potential. Nigeria should do everything within its power to make it succeed. &#8211; Written by Daniel Godson Olika

Why Nigeria Needs A New National Carrier

After the United Kingdom narrowly voted last year to leave the European Union, predictions swirled that the British economy would collapse. Yes, the pound plummeted 9% versus the dollar the day after the surprise result and remains down, but the economy as a whole has held up relatively well. Gross domestic product grew 1.8% in 2016, a tick behind only Germany’s 1.9% growth among the Group of Seven industrialized nations. Economic growth has continued in 2017, home prices are up and unemployment has sunk to a 42-year low at 4.3%.
Much uncertainty remains with the official exit from the EU scheduled for March 2019. Some U.K. companies are holding off on investments to see how Brexit effects trade relations, and growth is forecasted to slow in 2018, but Britain’s business climate remains attractive. The U.K. ranks first for the first time in Forbes’ 12th annual survey of the Best Countries for Business.
The U.K. ranked among the top 25 countries (out of 153 measured) in each of the 15 metrics tracked, outside of political risk where it ranked twenty-eighth. Great Britain ranked fifth overall last year.
Wells Fargo and Apple both made substantial moves within London since the Brexit vote. Wells Fargo spent $400 million to buy a new European headquarters in London&#8217;s financial district. Apple announced plans to open a new London campus in 2021 that covers nearly 500,000 square feet of space. Facebook is also in the market for 700,000 square feet to accommodate 9,000 employees. &#8220;These commitments signal a belief across industries in the long-term strength of the U.K. economy,&#8221; says Jeff Lessard, who helps companies with location strategies as a consultant for Cushman &amp; Wakefield.
The U.K. scored particularly well on technological readiness (fourth) and the size and education of its workforce (third). Its $2.6 trillion economy is the fifth largest in the world. London serves as the central hub for European financial services and is home to financial giants like HSBC, Prudential and Barclays. “The best thing going for the U.K. is that London is one of three global hubs for financial services,&#8221; says Lessard. &#8220;Post-Brexit, a few European cities have the opportunity to challenge London but each has deficiencies.”
Britain&#8217;s reign as the top country could be brief as companies&#8217; plans for Brexit unfold. London <a href="https://www.bloomberg.com/graphics/2017-brexit-bankers/" target="_blank" rel="noopener">might lose 10,000 banking jobs</a> as a result of Brexit, according to think tank Bruegel. Citigroup, Morgan Stanley, Nomura and Standard Charter are moving their EU headquarters to Frankfurt, with Paris and Dublin landing spots for other banks looking to ensure access to the single market.
“The single biggest issue Britain will face is the frictionless participation in their economy of highly educated global talent. Talent is the key that unlocks innovation, growth, and competitiveness,” says Matthew De Luca, a strategic consultant with Cushman &amp; Wakefield.
We determined the Best Countries for Business by rating 153 nations on 15 different factors including property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape and investor protection. Each category was equally weighted.
We tweaked our methodology this year for the first time in a decade after conversations with multiple site-selection experts. Stock market performance is out, and we added workforce, infrastructure, market size, quality of life and political risk to provide a better gauge of how attractive a country is for capital investment. The data is based on published reports from Freedom House, Heritage Foundation, Property Rights Alliance, United Nations, Transparency International, World Bank Group, Aon, Marsh &amp; McLennan and World Economic Forum (click <a href="https://www.forbes.com/sites/kurtbadenhausen/2017/12/19/best-countries-for-business-2018-behind-the-numbers/" target="_blank" rel="noopener">here</a> for more details on the methodology and the best and worst country on each metric).
New Zealand ranks second overall for the third straight year. The island country in the southwestern Pacific Ocean is home to only 4.5 million people, but the economy has been on a roll, up 3.6% last year. Among the countries in the top 20, only Ireland&#8217;s economy expanded faster.
New Zealand has transformed from an agrarian economy to an industrialized, free market one over the past four decades. The Kiwi nation privatized dozens of industries like airlines, insurance, banking and telecommunications previously controlled by the government. It scores first overall for red tape, corruption and property rights.
Rounding out the top five are the Netherlands, Sweden and Canada.
The U.S. previously went on a decadelong slide in our ranking from the top spot in 2006 to No. 23 last year thanks to rising levels of red tape and bureaucracy, along with falling scores on trade and monetary freedom. But the $18.6 trillion economy moves up to 11th this year thanks to improved scores relative to the rest of the world on technological readiness, innovation and trade freedom.
“The U.S. has excellent access to both European and Pacific Rim economies, a highly educated and diverse workforce, companies that lead the globe in innovation and a stable business environment,&#8221; says Lessard. &#8220;And the new tax bill will only increase the favorability of basing profitable businesses in the U.S.”
The U.S. also benefits from methodology changes with the additions of workforce (size and education level) and market size (gross national product). The U.S. ranks first in both categories.
&#8220;Foreign direct investment in the U.S. has been strong in recent years as international companies have sought to be closer to their customers and better control over their supply chain in the world&#8217;s richest market,&#8221; says Chicago-based site selection consultant Jerry Szatan.
The world’s second (China) and third (Japan) biggest economies rank 66th and 21st, respectively, among the Best Countries for Business. China is held back by a lack of trade and monetary freedom. Japan has cut its corporate tax rate by eight percentage points since 2012, but its tax burden still lags the vast majority of developed nations, per the World Bank. Japan rates among the 10 nations for innovation and infrastructure.
African nations populate the worst countries for business with six of the bottom 10 (Haiti is the worst performer among non-African countries). Most of these countries fare poorly on innovation, trade freedom and investor protection. Chad ranks last for the third straight year. The landlocked African nation suffers from a lack of infrastructure and trained workers, as well as high levels of bureaucracy and corruption.
<a href="https://www.forbes.com/best-countries-for-business/list/#tab:overall" target="_blank" rel="noopener">READ MORE: Best Countries For Business List</a>
<h2>Africa&#8217;s Rankings</h2>
#41 Mauritius
#48 South Africa
#76 Botswana
#79 Rwanda
#82 Seychelles
#85 Ghana
#86 Namibia
#89 Senegal
#90 Cape Verde
#91 Kenya
#95 Zambia
#96 Tunisia
#101 Egypt
#105 Uganda
#110 Burkina Faso
#114 Tanzania
#115 Nigeria
#118 Niger
#119 Cote d&#8217;Ivoire
#121 Madagascar
#124 Algeria
#125 Lesotho
#126 Mali
#127 Mozambique
#128 Swaziland
#129 Angola
#130 Gabon
#131 Sierra Leone
#133 Cameroon
#136 Malawi
#138 Ethiopia
#139 Liberia
#141 Democratic republic of the Congo
#142 Mauritania
#143 Togo
#145 Zimbabwe
#146 Burundi
#147 Guinea
#149 Libya
#152 Gambia
#153 Chad
&#8211; Written by <a href="https://www.forbes.com/sites/kurtbadenhausen/" target="_blank" rel="noopener" data-ga-track="contrib block byline">Kurt Badenhausen</a>, FORBES STAFF

The U.K. Tops Forbes’ Best Countries For Business 2018

Africa is charting a new path towards a single continental market – and it’s going to be an economic revolution.
Nigeria’s President Muhammadu Buhari recently drew the world’s attention to the anticipated single market during a visit to Ankara where he said, “In Africa, we are on the threshold of finalizing negotiations to establish the first ever single market for trade in goods and services on our continent, in the Continental Free Trade Area for Africa.”
What is the Continental Free Trade Area (CFTA) for Africa and how will a single market unleash Africa’s economic might?
According to the African Union, the CFTA will create a single market, which enables the free movement of goods and services, businesspersons and investments within 54 African countries with 1.2 billion people and a combined GDP of over $3.5 trillion. The agenda is extended to broaden intra-African trade, and accelerate regional and continental integration processes.
Africa has the least percentage (18%) of intraregional trade, lagging far behind the 70% in Europe, 55% in North America, 45% in Asia, and 35% in Latin America. The implications are nothing short of jeopardy. However, analysts state that Africa is marching forward, citing the CFTA, among other developments, as a remarkable indication.
An <a href="https://www.uneca.org/sites/default/files/PublicationFiles/era2015_eng_fin.pdf" target="_blank" rel="noopener">estimate</a> by the United Nations Economic Commission for Africa notes, “The CFTA could increase trade between African countries by as much as $35 billion, an increase of more than 50% from current levels.”
The CFTA will also make Africa the <a href="https://www.cnbcafrica.com/zdnl-mc/2017/08/14/africa-soon-largest-free-trade-area-world/" target="_blank" rel="noopener">world’s largest free-trade area</a>.
Economic development is impossible without trade. It is a missed opportunity that African states do not trade enough with themselves.
As much as the CFTA will disrupt demand and supply barriers, a single market will help align trade policies, regulations and institutions of all African countries to promote continental trade that will benefit businesses, consumers and governments. This will lead to structural transformation, industrial development, diversification, productivity boost, and new wealth that will give Africa a competitive edge.
<a href="http://www.forbesafrica.com/investment-guide/2017/10/30/west-africa-less-attractive-investors/" target="_blank" rel="noopener">READ MORE: Why Is West Africa Less Attractive To Investors?</a>
“The single market for Africa policy can push regional trade levels from up from 15% to 25% within a decade and this will in turn significantly increase and strengthen the continent’s annual economic growth, create wealth more inclusively and reduce poverty,” says Oby Ezekwesili, the former Vice President of Africa at the World Bank.
Africa’s aviation sector contributes around $72.5 billion in GDP and creates more than 6.8 million jobs. This is despite the challenges that abound in Africa’s 54 countries, dealing with 54 different civil aviation authorities and 54 sets of rules relating to travel, trade and tourism.
Never mind the ease of doing business, it can be a nightmare trying to travel to another African country with all the red tape. Imagine the massive gains if all 54 sets of rules were collapsed into one, dealing with only one regulatory framework and being able to move goods and services in one market.
“Regulation, or more accurately, de-regulation, has the opportunity to turbo-charge African aviation, through improved market access across the continent,” says Segun Demuren, Managing Director and CEO of EAN Aviation.
“The immediate impact in just 12 out of 54 key markets across Africa would provide a potential 5 million extra passengers a year with the opportunity to travel and trade and create an additional 155,000 jobs and potentially increase the GDP of those 12 countries by an additional $1.3 billion. That’s just a quarter of the countries; imagine the impact across the continent,” adds Demuren.
<a href="http://www.forbesafrica.com/homepage/2017/09/06/china-really-helping-africa/" target="_blank" rel="noopener">READ MORE: Is China Really Helping Africa?</a>
One of the key problems hindering intra-African trade is the tariff barrier. It makes trade extremely difficult and raises the price of imported goods as well as transaction costs.
To jump-start Africa’s economic potential, a tariff reduction or total elimination of custom duties levied on imported goods from within the continent is required.
“The CFTA will create a more stable trade regime, continental market access, huge increase in investment rate, and trade liberalization – all which are strong catalysts for economic prosperity and sustainable development,” says Benedict Peters, Founder and CEO of Aiteo Group.
With a single market African economies will be on the move. &#8211; Written by <a href="https://twitter.com/akorive001" target="_blank" rel="noopener">Shakir Akorede</a>, writer, agenda contributor to the World Economic Forum, and founder of <a href="http://501words.net/" target="_blank" rel="noopener">501Words</a>

Business In Africa Is An Art Not Science

Single Market A Windfall For Africa’s Economy

For many, a morning doesn’t start until they’ve had a cup of coffee. The hot beverage has become a ritual, in homes and businesses, across the continent. But not just in Africa; the global coffee market is worth an estimated $100 billion and is projected to grow at 4.7% per year up to 2019.
In South Africa, hidden in the hills of the KwaZulu-Natal province, overlooking Port Edward is Beaver Creek Coffee Estate. This is where 10 to 15 tons of coffee is produced annually, on 14 hectares of land. The farm imports a further 35 to 40 tons, with a large portion of that coming from Africa.
“There is a growing demand for the high-end, specialty coffee. People are looking for coffee that is distinct in its character and that they know exactly where it is grown. This region is one of the best to grow coffee in the world, a combination of latitude, altitude, and ocean currents create ideal climatic conditions to produce world-class coffee,” says Dylan Cumming, a farmer, roaster, barista and Managing Director of the Arabica coffee producing family business, Beaver Creek.
Established in 1984 with just four trees, Beaver Creek has gone through three generations. The founders Ed Cumming and Doug Tupper planted the first crop in 1986 and three years later they harvested the first few kilograms of Arabica coffee. Now the farm boasts more than 60,000 trees, and brews R12 million ($915,000) annually.
“People are looking to try coffee from a specific origin which is of high quality in terms of its taste. We grow and harvest from three cultivars – SL28, Catuai and Catimor F6 – with each day’s harvest and cultivar being tracked from field to roast with our lot tracking system,” says Cumming.
Producing coffee is a lengthy process, says Cumming. They collect the fruit from February to October and start selling once the coffee completes the curing process, which includes fermentation, drying, hulling and grading.
<div id="attachment_33952" style="width: 308px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-33952" class=" wp-image-33952" src="https://www.forbesafrica.com/wp-content/uploads/2017/10/Dylan-Cumming-198x300.jpg" alt="" width="298" height="452" />Dylan Cumming, the Managing Director of Beaver Creek Coffee Estate. (Photo supplied)</div>
Beaver Creek keeps it old school.
“A lot of the equipment that we use is over 50 years old. The technology that was used then is still very efficient. We continue to develop our processes and methods around these machines to maintain the quality that our trees produce,” says Cumming.
The farm supplies retailers and coffee shops around South Africa, as well as exports to countries, such as Japan, the United Kingdom (UK), the United States (US), Denmark and Germany.
Around 800 kilometers down the east coast of South Africa, in Port Elizabeth, is another family business, Masterton’s Coffee and Tea Specialists. The founder of Masterton’s, Ronald John, known as Jock Masterton, was an immigrant from Scotland who came to South Africa in the 1920s. He served as an officer in the Black Watch regiment during the First World War.
According to his grandson, and director of the roastery, Ryler Masterton, a fellow officer from South Africa was the reason for Ronald’s immigration.
“He then worked as assistant manager on the farm Three Rivers in Vereeniging, where he met his wife Marjorie, who at the time was visiting her uncle, the farm manager,” he says.
The couple relocated to his wife’s hometown, Port Elizabeth. In pursuit of being an entrepreneur Ronald went to Sri Lanka [formerly Ceylon] to study tea tasting. When he returned to Port Elizabeth, he opened the first tea and coffee house in the city center. Months later, the roastery moved to where they have been for the last 93 years.
“Both the global and South African coffee industry has grown and developed in leaps and bounds, since we first opened our doors. We like to think of coffee as not just a product, but an experience. Global trends and developing coffee cultures, as people want to know more about coffee, experience greater varieties and enjoy the different experiences, have really been the driving factors in this rapidly growing industry,” says Masterton.
<a href="http://www.forbesafrica.com/investment-guide/2017/07/20/tough-times-cocoa-bean-counters/" target="_blank" rel="noopener">Tough Times For Cocoa Bean Counters</a>
Finding the right blend can make all the difference in these tough economic times.
“Someone once jokingly told me that there are only three consumer items that are recession-proof: alcohol, tobacco and coffee. Although not entirely accurate, we have fortunately found the coffee market to be quite resilient in times of economic hardship. In most cases the consumer is prepared to continue to buy their preferred brand of coffee during these tough times. It seems that the value associated with a good coffee experience can outweigh the financial cost,” he says.
Technology has been the catalyst for change in the industry.
“Aided by the advance in technology and greatly improved supply chains, more people want a good coffee experience, and now have access to it. This has all seen many new entrants to the market in its various sectors, further accelerating the industry’s growth, value and reach, especially over the last 10 years,” he says.
<div id="attachment_33953" style="width: 322px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-33953" class=" wp-image-33953" src="https://www.forbesafrica.com/wp-content/uploads/2017/10/Ryler-Masterton-243x300.jpg" alt="" width="312" height="385" />Ryler Masterton of Masterton&#8217;s Coffee and Tea Specialists. (Photo supplied)</div>
Despite the new technology, Masterton’s continues to roast Arabica coffee using the same process his grandfather used almost 100 years ago.
“We use sight, sound and smell to bring out the best characteristics of every coffee bean, for our customers’ ultimate enjoyment. However, sourcing superior quality green beans is a big part of it. But it’s the roasting process itself that has the biggest impact on the end product, and where experience really comes into play,” says Masterton.
They import green coffee beans using brokers. Currently, Masterton’s has two stores in Port Elizabeth – a roastery and a coffee equipment store, which they also use as a barista training center. Masterton’s has 38 employees and they plan to expand.
Masterton believes the quality of African coffee has improved as the market has increased.
“There most definitely is significant growth potential on the African continent for the many sectors of the coffee industry. We’ve seen an increase in the volumes of green coffee being grown and exported from many African countries, but most importantly here, we’ve also noted an increase in the quality of this coffee,” he says.
“The global development of a coffee culture, with a greater demand for higher quality coffees, has trickled down to the source, with farmers, co-operations and others involved in the supply chain realizing that a quality focused approach can only be beneficial, both financially and reputational, while also boosting their respective countries’ coffee industries, Growth Domestic Production (GDP) and foreign investments received.”
In Africa, there is a growing appetite for good quality coffee.
“This is especially evident in the younger generations and the upwardly mobile, who are viewing a quality coffee experience, high-end coffee shops and boutique retailers as points of interest and social hubs respectively. Organizations, such as the Specialty Coffee Association of Southern Africa, the African Fine Coffees Association, and the East African Fine Coffees Association, are all playing their part in developing the industry, making it more accessible to new entrants and the consumer alike, while inspiring passion within those already involved in the industry. Although there may be the occasional wobble in the market, the trend is positive and Africa has much to look forward to when it comes to great coffee,” he says.
Africa’s coffee exports increased 1.5%, to 22.3 million 60-kilogram bags in 2016 from 22 million bags in 2015, according to Gilberto Biacuana, Research Analyst: Commodities at the Land &amp; Agricultural Development Bank of South Africa.
In 2016, the major African exporters by volume were Uganda (15.9%), Ethiopia (13.5%), Ivory Coast (6.7%), Tanzania (4.1%) and Kenya (3.3%). Uganda exported $371.7 million in roasted or decaffeinated coffee husks and skins, and coffee substitutes. Ethiopia exported $725.4 million.
“The global production of coffee comprises of Arabica and Robusta coffees, which include Colombian milds, Brazilian naturals and other milds. Global coffee production is dominated by Arabica, which accounts for 63% of total global coffee production in 2016/17,” says Biacuana.
Brazil, with 28.8% of volume, and Vietnam, with 23% of volume, were the major global exporters last year. Coffee prices are expected to remain under pressure due to increased output from the two countries.
“Global coffee prices have seen a sustained downward trend since November 2016, influenced by abundant global supplies. With the exception of Robusta coffee, global coffee prices were generally lower compared to a year ago,” says Biacuana.
Coffee production is sensitive to weather patterns, such as drought and frost, which affects the amount and quality of beans produced.
“The 2104 drought in Brazil led to a global shortage 6.4 million 60kg bags, which caused the Arabica futures in the New York Stock Exchange to increase by approximately 50%,” he says.
Consumption however has been rising in countries such as India, China, Latin America and Africa due to the rapid growth of the middle class and the high pace of urbanization.
The International Coffee Organization estimates that the global demand for coffee will increase by 175 million 60kg bags of coffee by 2020.
The next time you are enjoying a cup of coffee, remember that it is a commodity driving growth in Africa.

Caffeine Boost For Africa’s Economy

It’s a business that has seen blood and conflict. It’s an industry that’s blocked the streets in anger. Yet, with more than 15 million customers a day, it can make you a fortune. That’s why people in South Africa are fighting over the taxi industry.
In Johannesburg, known as the City of Gold, the taxi business can mean gold for the grandchildren… or can it? As South Africa goes through tough economic times, the owners of this industry are also feeling the pinch. Conflict is brewing. Most drivers are angry with the threat of a strike looming nearer each day.
The customers aren’t happy either. Every day, millions of South Africans move through the thousands of taxi ranks around the country. They may struggle to do so in future. Many are struggling as the cost of using taxis keeps increasing.
“If you’re looking from one where I’m from, it’s already R18 ($1.35), so that makes it R36 ($2.70) a day just to get to Johannesburg. Sometimes I catch two taxis, so we’re talking plus minus R60 ($4.50), R70 ($5.30) a day,” says a commuter at the Noord Taxi Rank, one of South Africa’s busiest.
“If the taxi fare were to go up I would cry because that means everything will go up as well,” says another.
<a href="http://www.forbesafrica.com/focus/2017/04/01/ride-taxi-driver-legal-eagle/" target="_blank" rel="noopener">A Ride From A Taxi Driver To Legal Eagle</a>
The numbers tell the story: 40% of 56 million South Africans use public transport.
Nine million people take buses, two million use trains, and the taxis get the lion’s share, with over 15 million customers a day. Sixty nine percent of all homes use minibus taxis. That’s almost a staggering 5.5 billion taxi trips every year.
In an office far from the honking horns of the streets, Sihle Mkhize is fighting for his fellow taxi drivers. Mkhize owns six taxis and is the face of the biggest taxi association in the country, Faraday Taxi Association.
“I can’t give you the exact number but we have over 3,000 taxis, because we have 114 taxi ranks and routes. Because of the capacity of the routes we have, we are the biggest association in South Africa,” says Mkhize.
<div id="attachment_33907" style="width: 511px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-33907" class=" wp-image-33907" src="https://www.forbesafrica.com/wp-content/uploads/2017/10/Taxi-594-e1508395960509-300x199.jpg" alt="" width="501" height="332" />Toyota Quantum taxis drive through Johannesburg. (Photo by Motlabana Monnakgotla)</div>
The Toyota Quantum is a four-wheeled fly in the ointment. It came to South Africa from Japan in 2006 with its price tag around R220,000 ($16,700). The government encouraged everyone to buy them to modernize the industry. By 2008, it escalated to R300,000 ($22,800), which was a worry for drivers.
“There was a complaint that because the Quantum is too expensive at R300,000, Toyota should rather build them from scratch here in South Africa. They agreed and there was a six-month period where the Quantums were out of the market. They then came back in November 2015 at a heftier price tag of R360,000 ($27,400). At the beginning of this year, in January, it was R400,000 ($30,400),” says Mkhize.
<a href="http://www.forbesafrica.com/focus/2017/06/14/time-tax-nigerias-churches/" target="_blank" rel="noopener">Is It Time To Tax Nigeria&#8217;s Churches?</a>
It’s even worse now. The Toyota Quantum is now manufactured in Durban, with its price around R500,000 ($38,000). Not too far shy of the price of a house.
“There’s no difference now, whether they assemble it here or not. We wanted Toyota to build it here so it can be cheaper; instead it’s more expensive now. It’s a burden because it now wants a R15,000 ($1,150) instalment. In our line of work, it’s difficult to increase taxi fare because we understand that the commuters using our taxis get paid next to nothing where they work,” says Mkhize.
The organization that fields these complaints in the taxi industry is the South African National Taxi Council (SANTACO). It represents more than 100 taxi associations in the Gauteng region alone, and is the biggest taxi union in the country. Ralph Jones, its Chairman in Johannesburg, is threatening to strike.
“Let us have a strike which will target SA Taxi Finance, where they were charging a lot of interest rates at 28%. Their repayments were over six years, at R15,000 ($1,150), so when you calculate that it’s an amount over R1 million ($76,000). How can you buy an asset that costs around R500,000 for over R1 million?” says Jones.
The man whose job it is to try to help people afford these taxis is David Hurwitz, the CEO of Transaction Capital, which provides financing for the taxi industry.
“Our cost of funding to our clients is higher, our offering is higher than a bank&#8217;s. Our finance would be at about 24.9%, that would be the interest rate. We are about 6% higher than a bank,” says Hurwitz.
<div id="attachment_33908" style="width: 510px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-33908" class=" wp-image-33908" src="https://www.forbesafrica.com/wp-content/uploads/2017/10/Taxi-575-e1508396103497-300x200.jpg" alt="" width="500" height="333" />Taxis in Johannesburg. (Photo by Motlabana Monnakgotla)</div>
Hurwitz says this is due to financing people who banks wouldn’t fund, which makes the risk higher. In negotiations, lower rates will come at a cost.
“What we’ve said to the taxi industry is that we will drop our rates slightly. Unfortunately what that means is that a certain segment of our customer base that typically would be able to qualify for funding, now won’t,” says Hurwitz.
<a href="http://www.forbesafrica.com/focus/2017/08/17/boom-come-fighting/" target="_blank" rel="noopener">Boom! Come Out Fighting</a>
Then there’s government. Many claim that all of this is merely government trying to phase out taxis by the backdoor.
“At the forefront of all of these issues, we are certain that this is another way that government is trying to phase out taxis. They want us to struggle paying for these cars so they can be repossessed. In order for us to be able to afford them, we have to increase prices for our passengers, who will then run away from us and go on buses, the very buses government is introducing,” says Mkhize.
“We carry the same passengers, same as buses. But because government wants to see us defeated, it puts us together with private cars on the roads and we face heavy traffic, while buses have designated lanes. All this to take away passengers from us and send them to buses, another way of phasing us out because no passenger wants to be late to work,” says Mkhize.
FORBES AFRICA made repeated attempts to get the government’s side of the story, but unfortunately these attempts proved fruitless.
It’s the biggest mover of people in South Africa, and across the continent. Millions depend on it for transport to and from work. It could be heading for chaos and conflict. A taxi strike could halt business in South Africa, losing the country billions. If not faced head-on, the industry that moves most African people could be remembered as the industry that caused all the trouble.

The Taxi Tumult

Few countries enjoyed as much sustained growth in recent history as Uganda, which averaged 7% over the last three decades. And then came a slow turn.
Now expected to grow around 4% this year, among the slowest in East Africa, there is rising sentiment that forecasts may have been too optimistic.
“Since the downturn of 2009, successive forecasts have predicted a recovery in growth rates that did not materialize,” said a September IMF working paper that assessed medium-term budget frameworks of Uganda and five other sub-Saharan Africa countries. “The existence of separate functions and organizational arrangements for the preparation of countries’ multi-year national development plans and the budget remains problematic. In most sub-Saharan African countries, coordination of national planning and preparation of the budget remains challenging.”
Indeed, Uganda’s National Planning Authority (NPA), which aims for the nation to attain middle-income status by 2020, is expressing reservations about manufacturing, a key pillar of its current development plan.
“We thought by the end of the financial year 2016/17, industry would be contributing 27.4% but it only contributed 19.6%,” said NPA Chairman Wilberforce Kisamba Mugerwa in a speech on September 12.
<a href="http://www.forbesafrica.com/investment-guide/2017/07/19/smugglers-take-sheen-ugandas-bright-gold-refinery/" target="_blank" rel="noopener">Smugglers Take Sheen From Uganda Bright Gold Refinery</a>
Growth in East Africa’s third largest economy, driven by the service sector at the expense of industry and manufacturing sectors, has led to non-inclusive growth, according to Andrew Mold, Acting Director of the United Nations Economic Commission for Africa (UNECA) in Eastern Africa.
High power tariffs are a major factor curbing manufacturing.  The price is more than double the government’s target of $0.05 per unit for industrial consumers. The government, looking to cut the cost of Bujagali Power Station,  the country’s largest hydropower producer, is in talks with the African Development Bank and the International Finance Corporation to refinance its loan, extending repayment from seven to 15 years, according to Energy Minister Irene Muloni.
Even as industries consume about 70% of Uganda’s 860MW in power output, a 10% target of annual growth in demand for power is unlikely at the current economic growth rate, according to Selestino Babungi, Managing Director of Umeme, the country’s largest power distributor. The government’s aim to install 2,500MW by 2020 is also a “stringent target,” says Harrison Mutikanga, CEO of Uganda Electricity Generation Company.
While Uganda’s low electricity access levels of 22% are attracting global companies into utilities, a consumption risk exists as subsidies are necessary, says Sabine Dall’Omo, Siemens CEO for South and East Africa.
<a href="http://www.forbesafrica.com/focus/2014/06/01/gaddafis-empire-tuna-fish-hotels-uganda/" target="_blank" rel="noopener">Gaddafi&#8217;s Empire Of Tuna Fish And Hotels In Uganda</a>
Meanwhile, credit growth to manufacturing has been down this year, a trend that poses negative risks to private investment growth and recovery of domestic economic activity, says the Bank of Uganda in a June report.
Yet Uganda and India are seen as the fastest growing economies through to 2025 at 7.7% annually, according to Harvard University’s Atlas of Economic Complexity report, which attributes much of the prospective growth on rapid population increase.
Uganda, with a population of 41 million, is also looking to boost tourism and agricultural output. It’s targeting a million tourists out of China, which could increase overall arrivals from 1.3 million to four million by 2020, says Tourism Minister, Ephraim Kamuntu.
Production of coffee, the country’s largest export, is projected to rise from 3.5 million 60 kilogram bags to 20 million in 2020, says the Uganda Coffee Development Authority.
For Finance Minister Matia Kasaija, the country’s climate is key.
“The weather really cheated us, because we were not ready,” Kasaija tells FORBES AFRICA in reference to last year’s drought that saw growth slow to 3%.
“We shall go back to our growth rate of 5% and above this year,” he says optimistically. &#8211; Written by Joseph Burite

Power Woes Stall Uganda’s Rise

One of the world’s leading voices on business believes better times could be round the corner for the United States economy despite uncertainty over North Korea.
Steve Forbes – a dyed-in-the-wool Republican who ran twice for president – spoke to editors and publishers of the many versions of the magazine around the world, including Forbes Africa. The conference, at the Forbes Media center on Fifth Avenue in New York, was part of the 100-year celebrations of the world-famous business magazine. It was Forbes’ chance to show his stripes as the eternal optimist in US capitalism.
“I think you will see the US economy showing signs of life over the next three months, you will see a growth rate of more than 3%, maybe more,” says Forbes.
“I think there will be a big tax cut soon, there has to be. Republicans may not be the fastest thinking people in the world, but half the senate is up for re-election and not too many of them want to end up as an Uber driver.”
<a href="http://www.forbesafrica.com/extreme-execs/2017/09/21/mad-decision-paying-off-100-years-later/" target="_blank" rel="noopener">A Mad Decision Paying Off 100 Years Later</a>
Forbes believes that the politicians could come up with a vote-winning cut in corporate tax, from 38.9% to 18%, or even as low as 15%. He believes this could stimulate the economy.
“A little growth goes a long way. Bill Clinton survived all of his scandals as president because the economy was growing. By contrast, Richard Nixon was kicked out because the economy was struggling.”
On the trade front, the threats from President Donald Trump to slap tariffs on everything to protect business may not come to pass.
“I think the reality will be much gentler than the rhetoric, especially if the economy is growing,” says Forbes.
<a href="http://www.forbesafrica.com/focus/2017/09/20/forbes-magazine-100-years-hits-flops/" target="_blank" rel="noopener">Forbes Magazine: 100 Years Of Hits And Flops</a>
Yet the Editor-in-Chief of Forbes believes the US will be tough against the nuclear threat of North Korea.
“If they attack us they know they will be obliterated no matter what happens. The feeling is strong here that North Korea does not take us seriously. The US will increase sanctions, including cutting North Korea out of the world banking system. We have had sanctions before and they hurt North Korea.”

Cheer up, better times ahead for world economy – Steve Forbes

The past three decades have seen a marked step change in Africa’s international relations. While geography historically favoured a European focus &#8211; especially in North Africa &#8211; the continent has shifted its gaze to the East.
China has catapulted from being a relatively small investor in the continent to becoming Africa’s largest economic partner. Africa-China trade is poised to grow 20% year on year making it seem like dragons are the new king of the African jungle.
Investment in Africa has however been structured around Chinese ownership, with roughly 90% of firms either majority controlled or owned outright by Chinese nationals. There are estimated to be over 10,000 Chinese firms in Africa that have created work for several million Africans. This economic stimulus continues to have significant economic impact in communities riddled with historic economic disparities.
Chinese firms have shown remarkable prowess in sectors such as manufacturing, resources, and infrastructure. One of the first famous examples is the Tanzania-Zambia Railway built between 1970 and 1975, for which China provided a zero-interest loan of RMB980 million ($150 million). Sectors including agriculture, banking, insurance, transport and logistics, housing, information communications technology and telecommunications are poised to see significant shifts to Chinese firms. Chinese firms have the benefit of tried-and-tested business models which bear great similarities to the African marketplace.
<a href="http://www.forbesafrica.com/woman/2017/08/24/africas-time-animation/" target="_blank" rel="noopener">&#8216;It&#8217;s Africa&#8217;s Time For Animation&#8217;</a>
To ensure the sustainability of the Africa-China partnership, three key concerns need to be addressed: Corruption, personal safety, and language and cultural barriers.
Corruption has thrived in Africa’s current climate of political and economic impunity. Corruption creates and increases poverty and exclusion. While corrupt individuals with deep political ties enjoy a lavish life, millions of Africans are deprived of their basic needs like food, health, education, housing, access to clean water and sanitation. Violence and crime across the continent derail efforts to encourage community building and foreign direct investment. Language and cultural barriers can lead to clashes that lead to misunderstanding and ignorance of local regulations.
If these problems are left unaddressed, the misunderstandings &#8211; and potentially serious long-term social issues &#8211; could weaken the overall sustainability of the Africa-China relationship.
Chinese aid to Africa has been criticized as being a form of economic colonization. Politically aid has been used to create strong bilateral ties between African countries and China. Proponents highlight the structural benefits brought about by aid; downplaying the benefits to China in the form of profit, resource extraction, and the acquisition of service contracts to Chinese companies. In a nutshell, whichever country offers the greatest economic gains based on China’s growth strategy becomes a target for aid. Currently this strategy is geared towards partnering with resource-rich countries, which often lack the political and economic structures required to efficiently and effectively manage such bilateral trade opportunities.
The key challenge is to ensure that there is an effective political and economic strategy to piggyback off Chinese intervention to ensure broad based economic empowerment.
<a href="http://www.forbesafrica.com/investment-guide/2017/08/21/private-money-worth-weight-gold/" target="_blank" rel="noopener">Private Money Worth Its Weight In Gold</a>
Part of this strategy should include elements like building a middle class in Africa, developing African entrepreneurs, allocating factors of production, industry 4.0, innovative distribution, and public-private partnerships.
The current economic polarization in Africa needs to be addressed by actively creating a middles class. Clan-based economic feudalism needs to be replaced by an educated and economically engaged middle class. Economic empowerment in turn will promote political development leading to healthier international trade relations.
Entrepreneurship, while still in its African infancy, has made significant strides both domestically and internationally. Agriculture, manufacturing, retail, and tourism can act as an employment sponge for basic labour intensive work. While not a cornerstone employment strategy, it will lead to rapid, broad-based job creation, often requiring very basic skill sets. Further vocational training can be provided in these sectors to prevent generational skills gaps.
Effective allocation of factors of production &#8211; specifically land ownership &#8211; will be critical. It&#8217;s a sensitive subject given Africa&#8217;s colonial past, however it&#8217;s one governments need to address to start an ambitious national agricultural plan. The rapid growth of Africa&#8217;s population presents significant opportunities for our poultry and grain sector.
Industry 4.0 will make global manufacturing much more competitive in the future. Traditional industrial economies, such as Germany and the United States, expect the fourth industrial revolution to create many competitive advantages, reversing the trend to relocate manufacturing processes to low-cost countries and create new high-tech opportunities at home. Africa is ideally positioned to leapfrog into Industry 4.0 by adopting best practices seen in developed countries. This will enable African-owned manufacturers to effectively compete with Chinese companies.
Africa is at the tip of an economic renaissance that will see opportunities being created that were considered impossible a few decades ago. But, this requires strong leadership in both politics and business. Citizens in turn will have to hold their political leaders accountable, specifically promoting broad-based economic empowerment, to ensure that the maximum number of people benefit from this growth. &#8211; Written by Johan Hanekom
<div id="attachment_33408" style="width: 154px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-33408" class="size-full wp-image-33408" src="https://www.forbesafrica.com/wp-content/uploads/2017/09/Johan-Hanekom.jpg" alt="" width="144" height="144" />Johan Hanekom</div>
Johan is a globally recognized expert on strategy, innovation, and growth with an emphasis on corporate entrepreneurship. A believer in social entrepreneurship, his paper while at Oxford focused on developing a nation of social entrepreneurs in Africa.

Is China Really Helping Africa?

Anti-terrorism and transactional relationships are likely be the main features of US President Donald Trump’s Africa policy. But if Trump’s proposed cuts to the state department hold, the US will be less and less of a presence on the continent, according to <a href="http://www.businessofgovernment.org/bio/gregory-f-treverton" target="_blank" rel="noopener noreferrer">Prof Gregory F Treverton</a>, who directed the US <a href="https://fas.org/irp/nic/" target="_blank" rel="noopener noreferrer">National Intelligence Council</a> in the Obama Administration.
Treverton, who is currently Professor of Practice at the <a href="https://www.usc.edu/" target="_blank" rel="noopener noreferrer">University of Southern California</a>, is a world authority on security and intelligence. I put a number of questions to Treverton who visited South Africa recently to deliver the keynote address at a <a href="http://www.dirco.gov.za/docs/2015/dirco0714.htm" target="_blank" rel="noopener noreferrer">South African Council on International Relations</a> conference on South Africa’s relations with Africa.
Why is Donald Trump’s foreign policy so incomprehensible?
I wish I knew! It’s a continual struggle between, on the one hand, the true believers, the American firsters who are anti-trade and anti-engagement in what they see as an unfriendly world, and on the other more traditional conservative Republicans.
The pattern has been that the more traditional conservative Republicans, like the Secretaries of State and Defence, tug policy in a more familiar direction, only to have the president blow the process up with a tweet condemning the <a href="https://www.theguardian.com/environment/paris-climate-agreement" target="_blank" rel="noopener noreferrer">Paris climate agreement</a> or <a href="http://www.cnbc.com/2017/05/30/trumps-tweet-tirade-against-germany-could-backfire-on-us.html" target="_blank" rel="noopener noreferrer">labelling</a> Germany an unfair trader. The intensity of the struggle is reflected in the continuing haemorrhage of leaks, all from the very top of the administration.
Didn’t the post-Second World War liberal international order need a shake up?
Yes, and perhaps in that sense we’ll end up thanking Trump, if, and this is a big if, we get through the next years without a major crisis or too much broken crockery. Some of Trump’s complaints, like (America’s Western) allies bearing too little of the burden, have been true for a long time. And the reaction by Americans to the sense that they pay too much for the “public goods” of international economics and security has been going on for a long time.
Polls routinely show that Americans <a href="http://www.politifact.com/global-news/statements/2016/nov/09/john-kerry/yep-most-people-clueless-us-foreign-aid-spending/" target="_blank" rel="noopener noreferrer">think</a> the country spends on foreign aid 20 or 30 times what it actually does. So, too, the questioning of what we all too easily call the “liberal international order” has been growing over time.
You suggested that Russia under <a href="https://www.theguardian.com/world/vladimir-putin" target="_blank" rel="noopener noreferrer">Vladimir Putin</a>, is a declining power. Doesn’t the evidence point in the other direction?
It surely is a declining power, though Putin has played a weak hand extraordinarily well. It is in demographic decline, and far from modernising the Russian economy, Putin has only deepened its dependence on hydrocarbons. My fear is that as the country declines, it will be all the more tempted to turn to what tools it retains – cyber attacks and nuclear sabre-rattling.
How do you think Trump’s Africa policy will turn out?
In <a href="http://foreignpolicy.com/2017/01/11/rex-tillerson-pick-for-secretary-of-state-breaks-with-trump-on-key-issues/" target="_blank" rel="noopener noreferrer">testifying</a> before Congress, Secretary of State <a href="http://www.bbc.com/news/world-us-canada-38281954" target="_blank" rel="noopener noreferrer">Rex Tillerson</a> probably was as clear as the administration could be given its disarray. Africa was in the “turning to other countries” category, and he began with the fight against terrorism. He did, though, mention the economic opportunities in Africa, mostly in the sense of business that might be done. I suspect those will continue to be the emphasis.
So does this mean that anti-terrorism and transactional relationships will be the main features of Trump’s Africa policy?
I think they will continue to be the main drivers, for better or worse, though not the only drivers. The country will have to respond to major humanitarian crises whether the administration wants to or not. And some of the legacy programmes of the last two administrations, like the <a href="https://agoa.info/about-agoa.html" target="_blank" rel="noopener noreferrer">African Growth and Opportunity Act</a>, or the <a href="https://www.pepfar.gov/" target="_blank" rel="noopener noreferrer">President’s Emergency Plan for AIDS Relief </a> have had bipartisan support, so we’ll see how they fare in the congressional budget process.
And, if this is so, what are the long-term implications of this for US relations with the continent?
If Trump’s proposed cuts to the <a href="https://www.state.gov/" target="_blank" rel="noopener noreferrer">State Department</a> and <a href="https://www.usaid.gov/" target="_blank" rel="noopener noreferrer">USAID</a> hold, the US will be less and less of a presence on the continent. The main beneficiary, diplomatically, will be China, followed by the Europeans and perhaps even Russia, though it doesn’t have much to contribute except arms sales.
If there is any silver lining, perhaps it will be that Africans, and particularly South Africans, will realise they have to take more initiative on their own.
When it comes to the US itself, you raised the possibility that it might break up? Were you speaking in abstract terms, or is this a real possibility?
I meant it mostly as a metaphor and as a touchstone for thinking about the future. I don’t think it’s likely, but it does have to be considered.
What is certain is that the next few years will be a kind if a guerrilla war, one mostly fought in the courts, between the US federal government and the “blue” (read Democratic Party-controlled) states, led by California, over climate change, immigration and other issues.
What does the Trump presidency mean for these ideas?
So far it seems bound to increase the divide in America. Trump has talked and acted entirely to please his base. He has played on fear, fanning it by portraying the country in dire straits surrounded by a hostile world. So far that base – especially older and often poorer white Americans – seems to have been satisfied by word, words they see as validating them.
But we’ve known from the beginning that Trump can’t deliver on his promises: those “good” low-skilled jobs in manufacturing or mining (as he has portrayed them) aren’t coming back. So we’ll see, but I expect that realisation to only deepen the anger and disaffection. &#8211; Written by <a href="https://theconversation.com/profiles/peter-vale-189558" target="_blank" rel="noopener noreferrer">Peter Vale</a>
The co-hosts of the conference Treverton addressed were the <a href="https://www.uj.ac.za/faculties/humanities/JIAS" target="_blank" rel="noopener noreferrer">Johannesburg Institute for Advanced Study</a> (JIAS) and the <a href="https://www.wits.ac.za/wsg/" target="_blank" rel="noopener noreferrer">Wits School of Public Management</a>.
Originally published by <a href="https://theconversation.com/africa" target="_blank" rel="noopener noreferrer">The Conversation</a>
<img loading="lazy" decoding="async" src="https://counter.theconversation.com/content/81424/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1" />

Look to China for the main beneficiary of America’s likely retreat from Africa

Over the past two decades, Nigeria’s once thriving agriculture suffered as its oil industry boomed.
The United Nations Environment Programme (UNEP) estimates that, between 1962 and 1968, Nigeria&#8217;s major foreign exchange earner was the agricultural sector. Palm oil and groundnuts made up around 47% of the country’s exports. However, Nigeria’s position as an agricultural powerhouse has declined as oil gained prominence in Africa’s largest economy.
“The oil sector represents 10% of the gross domestic product (GDP) of Nigeria but accounts for 98% of the foreign exchange earnings of the country and 80% of the revenues for the government,” says the President of the African Development Bank (AfDB), Akinwumi Adesina.
<a href="http://www.forbesafrica.com/focus/2016/05/01/farmer-marathon-man-businessman/" target="_blank" rel="noopener noreferrer">Farmer. Marathon Man. Businessman</a>
Following the crash in crude oil prices, agriculture is slowly emerging as a remedy for the economic woes of Nigeria.
“We have to provide counter cyclical reports. Nigeria is too big to fail. We will support Nigeria with a $1-billion support program and a number of policy reforms that have to be done to rejig the economy and we have coordinated with others on this. This is actually a cheap source of financing, which will come with a 1.2% interest and a 40-year moratorium, so this is the cheapest source of financing you can get,” says Adesina.
The AfDB and other governmental agencies are pulling together to attract young entrepreneurs to farming once again. Rotimi Williams, a rice farmer, believes Nigerians need to be convinced that agriculture is a viable path to relieve current economic woes.
“The minute we found oil in the 70s, all our attention shifted from agriculture to oil and gas – it was easier for the government to make money from that. We became an importing nation because we didn’t have to do any work; we just had to pick finished goods from other countries. That is one of the reasons why there was a shift and now we are finding it difficult to shift back to agriculture because it needs a complete reorientation of the mindset here,” he says.
<a href="http://www.forbesafrica.com/focus/2015/03/01/farming-coming-town-near/" target="_blank" rel="noopener noreferrer">Farming Coming To A Town Near You</a>
Williams is the founder of Kereksuk Rice Farms. He has 45,000 hectares of land in Tunga, local government in Nasarawa state, close to Abuja.
“We are operating on 1,000 hectares which is expected to give us 8,000 tons of rice a year. I say expected because ideally I should be doing two crops a year but because of floods, which happen every September, I am only doing one crop. Government is yet to build appropriate dams in the right places. We have no accessible roads, no electricity and we have security issues, so all these things put together limits what we can and cannot do in agriculture,” he says.
Williams is not the only one who believes in shifting the way Nigerians think about farming.
“People first of all need to believe in themselves. The ‘I can do’ spirit must come up in you or else you will be wasting time. People must believe that once the passion is right, nothing is impossible and this is their time to realize their greatness. So we launched the Dakada campaign, which is entrenched into the main core values of our people,” says the Governor of Akwa State, Udom Gabriel Emmanuel.
“Through this process, we realized that a lot of the youth are interested in agriculture, so we said ‘fine, we are not going to give you money but we are going to give you all the resources and facilities to do what you need to do’. So we try to provide not just the environment but the input as well,” says Emmanuel.
According to Antti Ritvonen, CEO and Country Manager at Dizengoff West Africa (Nigeria) Ltd, “The main reasons why the youth are not farming are they have the wrong perception about farming, lack of technical know-how, lack of precise technical support and inadequate financial will power,” says Antti Ritvonen, CEO and Country Manager at Dizengoff West Africa.
Dizengoff claims to provide opportunities to Nigerians looking to move into farming.
“We provide greenhouses that we deploy as a tool for empowering youth and women across Nigeria. Since we started, our greenhouses have created employment for over 50 youths directly and over 700 people indirectly across the country, so agriculture is certainly a driver of economic change and growth,” says Ritvonen.
But they are not the only international company investing in the agriculture sector in Nigeria. According to Reuters, Old Mutual and Nigeria Sovereign Investment Authority (NSIA) joined forces to raise $200 million to spend on agriculture projects in the country.
There is, however, a limitation to how successful agriculture can become in Nigeria: land. According to the Federal Ministry of Agriculture and Rural Development (FMARD), about 95% of agricultural lands are not titled, effectively limiting their capacity to be treated as collateral for finance.
“In most developing countries that thrive in agriculture, like Thailand and India, the government gives them funding… but on the books of the government they write those loans off. This means they don’t expect the money back but they expect you to do a lot more with the money they have given you. In Nigeria, the government expects you to go to commercial banks to get funding and that is not going to fly because they require collateral which any young entrepreneur would not have. You need to create that enabling environment, which means land is easily accessible and the resources are also available for them to be able to thrive in the business,” says Williams.
As agriculture slowly becomes a beacon of hope for job creation and revenue generation, the government will need to spend more to help entrepreneurs get their hands dirty and grow.

Can Farming Ease Nigeria’s Woes?

As a fellow human being, I hated watching President Robert Mugabe shuffle to the umpteenth world stage for his umpteenth appearance in his 94th year. It seemed to take an age for the ruler of Zimbabwe, for more than 37 years, to struggle to his seat; it looked painful.
In my mind was the President Mugabe, then 72, who bristled physically and verbally in a tough interview I held him to at State House, in Harare, in 1994, when Zimbabwe had a thriving  economy. On that long sunny autumn day he had the clipped eloquence and mental agility of a university professor. Even as an open-minded new arrival, it was clear he was spinning his answers to questions about the economy and opposition, but at least he did it with polish and a dash of mischief.
“Who told you that?” he asked professorially whenever I caught him out.
<div id="attachment_31381" style="width: 1034px" class="wp-caption alignnone"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-31381" class="wp-image-31381 size-large" src="http://www.forbesafrica.com/wp-content/uploads/2017/05/GettyImages-631829258-1024x683.jpg" alt="" width="1024" height="683" srcset="https://cms.forbesafrica.com/wp-content/uploads/2017/05/GettyImages-631829258.jpg 1024w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/GettyImages-631829258-300x200.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/GettyImages-631829258-600x400.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/GettyImages-631829258-768x512.jpg 768w" sizes="(max-width: 1024px) 100vw, 1024px" />US actor Forest Whitaker (R) delivers a speech, flanked by Chairperson of the Schwab Foundation Hilde Schwab, during the Crystal Award ceremony on the eve of the opening day of the World Economic Forum, on January 16, 2017 in Davos.</div>
For a moment forget the criticism surrounding Mugabe; here was an elder of Africa, who spent 10 years in prison, dropping off now and again, before a thin crowd at WEF Africa on an early panel on fragile states.
First question: did he consider troubled Zimbabwe a fragile state? Mugabe mentioned his country’s vast resources, 14 universities and a 90% literacy rate.
“Zimbabwe is one of the most highly developed countries in Africa… We are not a poor country, you can’t call us fragile, I can call America a fragile state,” says Mugabe to chuckles from the audience.
“And yet my people back home are crying!” says one of the hundreds of Zimbabweans working in Johannesburg’s petrol stations when we discussed the story a few days later.
Mugabe blamed rival political groups for conflict in his country and had sharp words for Islamic states.
“If you look into the Islamic world and talk about Isis and various other groups, it will appear the belief is the more violence you inflict on the population the greater the people will listen to you and join your side. That is a dangerous one and I do not know how it is still to be remedied.”
At the other end of the age spectrum was idealistic fellow panellist 35-year-old Victor Ochen, the youngest African nominated for the Nobel Peace Prize. The former cobbler and charcoal burner grew up amid war in Lira, in northern Uganda, a fiefdom of the rebel Lord’s Resistance Army.  In FORBES AFRICA, in April 2015, the year he was nominated, Ochen told us how he wept and threw stones at soldiers as they tore up charcoal beds that he hoped were going to pay for his education. The shocked guerrillas let him live to speak truth to power at WEF Africa 2017.
“When young people complain it is called a protest; when leaders speak it is called an excuse,” he says.
<div id="attachment_31380" style="width: 1034px" class="wp-caption alignnone"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-31380" class="wp-image-31380 size-large" src="http://www.forbesafrica.com/wp-content/uploads/2017/05/HMcClintock_VU0D13181-1024x682.jpg" alt="" width="1024" height="682" srcset="https://cms.forbesafrica.com/wp-content/uploads/2017/05/HMcClintock_VU0D13181.jpg 1024w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/HMcClintock_VU0D13181-300x200.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/HMcClintock_VU0D13181-600x400.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/HMcClintock_VU0D13181-768x512.jpg 768w" sizes="(max-width: 1024px) 100vw, 1024px" />Victor Ochen</div>
“Every year, hundreds of Africans die in the Mediterranean Sea trying to escape Africa. Why do they leave, what is wrong? It is because of the lack of integrity of power.”
Sharing the stage was Hollywood star Forest Whitaker, a UNESCO Special Envoy for Peace and Reconciliation,  who played former Uganda President Idi Amin in the 2006 film The Last King of Scotland. Unlike other Hollywood stars, he helps African children on the ground, rather than adopt them.
“The people of South Sudan are resilient, they want to stay in their country, they don’t want to leave but they are forced to leave their crops because of the conflict.”
Whitaker, born in Texas and bred in California, has been working quietly in the dust of warring South Sudan where 50,000 have been killed and more than half the people have no food. No one knows him there, he says, which helps in his work. This includes helping child soldiers lay down their weapons, giving them a sense of purpose, by teaching them how to deal with conflict instead of perpetuating it.
“The youth are now negotiating conflicts in their communities. They are dealing with everything from negotiating with the army to stolen cattle,” says Whitaker.
Many African leaders could do well to listen to the passionate voices of Ochen and Whitaker.

Tag: Economy

FORBES AFRICA SOCIAL MEDIA