The Democratic Republic of Congo (DRC) is immensely rich in resources but past conflict has held back the realization of this wealth, leaving its people amongst the poorest in Africa. The country is expected to be home to the world’s eleventh largest populationa by 2050. Raw mineral deposits are estimated to be worth in excess of $24 trillion but lay idle as fighting plagues the country.
It has seen at least four million people killed and another three million displaced.
Government forces continue to fight the rebel group M23 in the east, and recent peace talks have been suspended. Rene Abandi, leader of the M23 delegation, was quoted saying that negotiations are meaningless.
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This could jeopardize the economic foundations that have already been laid. Eustache Ouayoro, country director at the World Bank, says that over the past few years, the DRC has been able to make significant progress to restore security across most of the territory, political reconciliation and economic recovery with the support of international partners, including the World Bank. So the world waits with bated breath.
Experts look to the country’s vast untapped wealth to pave the way to economic freedom, but say the road to this is likely to be a long one. Ouayoro says that positive signs are there, albeit tentative. The DRC may be emerging from instability and taking its first steps towards a new development era.
The country’s citizens suffer from poor healthcare, limited education and poverty. According to the World Bank, the DRC ranks last among the 187 countries in the Human Development Index. Poverty is widespread, with 71% of the population living on $1.25 a day.
The DRC, however, has been making steady strides in economic growth. Inflation was under control and in single figures in 2012, compared to 500% in 2001, and the World Bank says that with economic growth of 7.2% in 2012, and 8.2% expected in 2013, the DRC is among the countries experiencing some of the fastest levels of growth in the world at a time when it is non-existent in Europe.
Debt relief has helped. DRC was granted an estimated $16 billion debt relief under the World Bank and IMF’s Heavily Indebted Poor Countries (HIPC) Initiative. The write down has helped improve the country’s fiscal position and has allowed it to invest its debt savings in to development opportunities.
The World Bank reports that only a mere 10% of the DRC’s huge tracts of arable land are farmed, and only 13,000 hectares are irrigated. The country has four million hectares, but is currently importing at least 30% of its food. The World Bank believes its land could feed a billion people.
Ouayoro says that for the country to realize its full potential, there needs to be: improvement to the business climate; progress on anti-corruption measures; economic governance and stronger government institutions. It will also have to address the large infrastructure gap and prioritize food production and agriculture.
“We must promote inclusive growth in the DRC by making its economy more irresistibly competitive and helping to spur the creation of new, well-paying jobs, especially for the country’s growing ranks of young people,” Ouayoro says.

The Poor Rich Country

If Zimbabwe’s economic problems hang like a cloud, you could argue that mining is the platinum lining. Platinum investment has poured into Zimbabwe—a country where mining contributes 13% to the GDP and accounts for 60% of export earnings.
Zimbabwe may be rich in resources but it is poor in policy. Most Zimbabweans have seen little of the wealth mined from beneath their feet. The irony is the unpredictable policies aimed at tackling this problem are putting off the foreign investors needed to fuel the long-term, capital-intensive business. Zimbabwe has, for the past decade, recorded among the lowest foreign direct investment (FDI) inflows in the sub-Saharan Africa region. In 2011, it didn’t even see $400 million in investment, compared to South Africa, Zambia and Angola, which received more than $1 billion apiece.
Platinum claims by government under the Mines and Minerals Act are a prime example. This year, the government acquired nearly 28,000 hectares of platinum claims held by Zimplats—a subsidiary of South Africa’s Impala Platinum—in the Mhondoro-Ngezi district. Earlier, the state had acquired Anglo American Platinum claims, in Shurugwi, to pave way for Todal Mining—a Russian-linked subsidiary of Central African Mining and Exploration Company. Government heavyweights are linked to the acquisition.
“It’s pointless to grab claims that you can’t make good use of,” says a mining engineer based at neighboring Zimasco chrome mine, which was taken over in 2007 by the Chinese.
There is talk that Chinese investors have been eyeing Anglos Unki Mine in the heart of the mineral-rich Great Dyke. This talk, along with the grabbing of the platinum claims, is enough to cause disquiet among investors.
“It will send a negative signal on security of investments in the country and will likely result in a slowdown in FDI into the sector. Mining is generally a long-term investment and investors want security that they will be able to recoup their investments without fear of repossession of their assets. The impact of this uncertainty has already been seen on the local stock market, where mining firms have struggled to raise funding from both local and foreign investors, while trading in these stocks has been quite subdued as the sector sometimes goes for days without recording a single trade,” says Isaac Isaki, head of sales and trading desk at EFE Securities.
With the benefit of foresight, perhaps none of the companies would have invested in the first place. Instead of taking the claims, Isaki argues that the government should have traded the excess claims in partial fulfillment of the indigenization laws, rather than force companies to comply with indigenization laws and then take away the claims.
Zimbabwe has the second largest platinum reserves, which Anglo, the world’s largest platinum producer, tapped into. While it is divesting in its core operations in Zimbabwe, it will keep its gold and platinum production going. Recently, Anglo ceded around 51% of its stake to black Zimbabweans, in a move that created ructions in the financial sector.
Impala Platinum, Zimplats’ owner, and Mimosa Platinum have also conceded to government’s indigenization demands. Once Anglo American had pumped $300 million into its Unki Mine operation, the government cajoled them into an empowerment deal, which, according to legal experts and analysts, had many holes.
Under the empowerment deal: the Tongogara Community Share Ownership Trust; the Unki Employee Trust; and the ‘strategic indigenous investors’ will receive 10% each of the shares. The government will acquire 21% through an indigenous empowerment board through decade-long loans. The Tongogara Community Share Ownership Trust, launched in 2011, was also given $10 million, with $1.3 million spent so far on schools, mortuaries and irrigation schemes.
Harare-based economist John Robertson, who has been studying mining in Zimbabwe for more than four decades, criticizes the empowerment laws.
“I regret that community share ownership schemes will probably make only modest contributions to rural societies, given the fact that their funds will be derived from dividends that will be paid only if and when the companies whose shares are owned by the schemes make profits big enough to justify dividends. If these dividends can be accumulated for long enough to pay for needed social infrastructure, such as roads, schools, dams, water purification plants and hospitals, the benefits will be important, but the word transform might be too extravagant to use to describe the benefits,” he says.
There is a strong perception in the market that the indigenization demands amount to legalized theft.
“Government has passed a law that states all foreign investors have to hand over 51% of their shares. What is the difference between this and a mugger demanding that you let him take half the money out of your wallet? It is wrong and passing a law to legalize it does not make it right,” says Robertson.
Despite these economic setbacks, the country’s future appears to lie in platinum. According to Anglo general manager, Walter Nemasasi, Unki Mine produced 62,692 equivalent platinum-refined ounces in 2012, with projected annual increases.
So far, Anglo has pumped in nearly $350 million into the operations, with the bulk going into a new raw water supply dam and a 17km-long tar road to the mine. At the very least, this investment is turning remote villages into booming towns.
The question is whether these government-brokered empowerment share ownership deals will bring the much needed development and give Zimbabweans a share of the wealth of their land. That is a question likely to be asked ahead of this year’s elections.
<h4>REFERENDUM</h4>
Hope, fear, optimism and change. These are some of the things that precede the Zimbabwean elections expected to be held later this year following the successful signing of a constitutional referendum that saw the three parties in the country make compromises.
With reportedly 3.3 million Zimbabweans having cast their vote in a referendum on a new constitution that seeks to curb presidential powers and strengthen human rights in their country, the spotlight is on Zimbabwe to see if democracy and change will be attained. 
Leaders in the country are seeing the agreement as a stepping stone to new beginnings but political commentators are not convinced it will yield the desired results. Gabriel Shumba, a human rights lawyer and political analyst from Zimbabwe is not celebrating just yet. 
Shumba believes if the Southern African Development Community (SADC) does not step in to assist leading to the elections, history could repeat itself and violence could erupt. 
“We are going to see violence preceding the next elections if precautionary measures are not taken by SADC to prevent violence that is already evident on the ground. The arrest of the human rights activist [Beatrice Mtetwa] is evidence that the next elections won’t be different from those of the past. We have to keep in mind that it is not a constitution that prevents violence or rigging, it is political will,” he says.

A Fair Share Or Legalized Theft?

Since its return to democracy in 1999 with the election of Olusegun Obasanjo, successive administrations, that have led this West African giant, embarked on a series of economic reforms that aim to increase the role of the private sector in the process of economic development. The current administration, headed by the fedora-wearing President Goodluck Jonathan, has made the reform of the country’s power sector the anchor program in its “transformation agenda”. The power sector reform program aims to substitute the hitherto government-controlled model—which is widely agreed to be one of the greatest impediments to its development—with a wholesale competition model that is private sector driven. Power supply in Nigeria is abysmally low, leading most households and businesses to rely on power generators and other alternatives to supplement the shortfall in supply from the public grid. At present, Nigeria generates around 4,000MW for its population of more than 160 million. The ambitious plan for power generation as contained in its Vision 20: 2020 national development blueprint, is a tenfold increase from the current level of power generation to 40,000MW by 2020. Despite the power shortage, the country has recorded an impressive rate of Gross Domestic Product (GDP) growth, which averaged 6.8% over the past five years. The minister of finance, Ngozi Okonjo-Iweala—who was the former managing director at the World Bank—recently predicted that an improvement in power generation will lead to double digit GDP growth for the country.
Nigeria possesses substantial oil reserves—estimated at more than 37 billion barrels—in the vast mangrove swamps of the Niger Delta. Since the discovery of oil in 1956, at Oloibiri village in present day Bayelsa State, the government has generated more than $600 billion worth of revenue from daily production, which peaked at 2.7 million barrels per day in August. However, much of this revenue had been frittered away over the years by corrupt government officials. The country has also been unable to leverage this abundance of oil to the benefit of its populace as it has often encountered challenges in ensuring the availability of petroleum products despite subsidies on fuel. A recent attempt by the federal government to do away with the subsidies, ostensibly to free up funds for re-investment into critical areas of need, was met by stiff opposition from the citizenry.
One positive factor that contributed significantly to the strong growth that has recently been recorded by the country was the successful deregulation of the telecoms sector in 2001. This led to the shift from government domination of the sector to a market-driven system. The effect of the policy reform was instant as teledensity rose from a mere 0.73% in 2001, to over 68% in 2012. The mobile subscriber base grew at record rates to over 95 million at present. The revolution in telecoms has also unlocked opportunities in mobile banking as the financial sector seeks to leverage mobile technology to further deepen banking among the country’s population. It is reported that an estimated 46% of the population do not have access to formal financial services.
In terms of its macroeconomy, the International Monetary Fund notes that Nigeria’s economy will grow at an estimated 7.1% in 2012. This growth, it says, will be driven by high commodity prices. Regarding sovereign debt, the country has a relatively low debt profile with its debt to GDP ratio estimated at 17.8%, a figure that is below the 30% target set by the government, and well below the global benchmark of 60%. International ratings agencies, Fitch and Standard &amp; Poor’s, rate Nigeria respectively at BB- and B+, with both maintaining a stable outlook for the country. In terms of the country’s sovereign bonds, the annual yield on Nigeria’s 10 year Eurobond which was issued in January of 2011 has been fluctuating around 5% for most of the year. The minister of finance recently announced that the country may consider issuing another Eurobond in 2013 to raise funds for the power sector and gas sector reforms, following indications that J.P. Morgan could include the country in its emerging market index. Nigeria has also recently launched a sovereign wealth fund after concerns by state governors, who had initially opposed the idea of the fund, were allayed. With the constitution of the board and the appointment of the CEO, the fund, which has a start-up capital of $1 billion, is expected to become operational in the coming months.
Consequently, it is apparent that the Nigerian government is taking commendable steps towards developing the country’s economy and effecting a redistribution of income among the country’s citizens. In a country where public officials are known to lack the political will that is required to see policies and programs through, it remains to be seen how the current chapter in this dominant nation’s history will play out.

Treading  A Difficult Path

The South African government has taken a big step towards fracking in Africa’s biggest economy that is likely to lead to months of heated debate and court battles.
Hydraulic fracturing, or fracking, involves extracting natural gas from shale rock layers deep within the earth. The process requires vertical and horizontal drilling and the injection of pressurized fracking fluids, water and sand to extract the gas.
Oil companies see fracking as a potential boost for energy exports, jobs and foreign investment. Conservationists argue it will destroy ecosystems found in the semi-desert landscape of the Karoo, where much of the shale gas is located.
On April 29, 2011, the minister for mineral resources, Susan Shabangu, placed a moratorium on applications to explore fracking in the Karoo while her department conducted investigations. That ban on exploration was lifted on September 7 and the Investigation of Hydraulic Fracturing in the Karoo Basin of South Africa report, which the cabinet based its decision on, was released four days later.
Derek Light, an attorney for farmers in Graaff-Reinet, was unhappy with what he called a hasty decision to lift the moratorium.
“The task team could not have effectively performed its function in such a short a time. It should have performed a strategic environmental assessment in the broadest possible terms which would have enabled them to make a well-informed decision that would be in the best interests of the people of this country,” says Light.
Light was pleased to see that the report recognized the importance to revise the country’s regulatory framework, in order to control fracking.
Jonathan Deal, chairman of Treasure The Karoo Action Group—the official opposition to fracking in South Africa—says that the country’s first reaction was “let’s frack” instead of investigating other forms of energy.
“There is natural gas, offshore, in reservoirs which do not need to be fracked in order to remove it,” he says.
“We plan to lodge an appeal if and when exploration licenses are issued,” Deal says.
Ferrial Adam, a Greenpeace Africa climate and energy campaigner, also believes that the country should consider other forms of sustainable energy.
“Greenpeace’s research on ‘Advanced Energy Revolution’ scenarios shows that it is possible to create 50% of electricity from renewable energy by 2030, if we have the same political determination that government seems to put into fossil fuels,” she says.
Adam says that in a dry country like South Africa this decision by government is short-sighted.
“Contamination of groundwater aquifers and surface waters can occur due to fracking operations and through the disposal of waste waters. Small amounts of carcinogenic hydrocarbons are harmful to humans. In some cases, this waste water is minimally processed before being dumped into surface waters feeding public water supplies, or is held in ponds that may lead to releases of the chemicals into the environment.”
The head of Living Planet Unit, WWF South Africa, Saliem Fakir, says we can only see the outcome of fracking by looking at extractive industries at present. The track record for communities is rather dismal. The national coffers and private industry may benefit but the problem of impoverishment could be the inheritance of the local setting. Fakir pointed to countries like Nigeria, a country where Shell is active, to show how countries that are rich in oil can be poor.
“Extractive industries have boom and bust cycles. They often attract lots of labor and people from outside that leads to conflict, social pressure and displacement of local interests, the truth is that resource rich countries tend to have high levels of inequality. Elites tend to capture the rents and leave out the poor. We may see a similar phenomenon with shale gas if the extractive process suffers from poor governance and oversight,” says Fakir
Bonang Mohale, chairperson for Shell South Africa, was pleased with the details of the report.
“The suggestions made by the task team are in line with our exploration plans for the Karoo Basin,” says Mohale.
“South Africa needs energy now. Approximately 10 million people in South Africa do not have access to electricity. At the moment, South Africa is a net importer of energy. This means that South Africa needs the full range of energy sources. In combination with other energy sources, including renewables, gas could help secure South Africa’s energy future, while creating sustainable and permanent jobs for South Africans.”
Shell is preparing to submit a comprehensive environmental, social and health impact assessment (ESHIA) that is in line with the National Environmental Management Act. Shell promises to continue working closely with the people of the Karoo and South Africa to address concerns and ensure that they benefit from shale gas exploration.
Group Media Manager for Sasol Limited, one of the biggest energy companies on the continent, Alex Anderson, says that Sasol gave up its fracking license last year.
“We concluded an extensive technical study of the area and then decided not to pursue further exploration activities in the assigned TCP area. The decision was based on subsurface technical and operational considerations and was unanimously taken by the partnership,” said Anderson a few months back.
“Sasol has taken note of the decision by the South African government to lift the moratorium on shale gas exploration in the Karoo region. We continue to be very interested in the upstream oil and gas business landscape, which includes the shale gas in the Karoo and elsewhere. As a consequence we continue to monitor these developments with interest and if new opportunities present themselves we will actively evaluate and pursue if they are attractive from a technical and commercial perspective,” says Anderson.
The report commissioned by the department of mineral resources indicated that during the exploration phase, only normal exploration, would be allowed. This excludes hydraulic fracturing but instead includes a process whereby drilling, geophysical and geochemical mapping can take place.
The report spoke of the economic potential fracking would bring to the country. According to the United States Energy Information Administration there is an estimated 485 trillion cubic feet (Tcf) of gas in the Karoo Basin, which could reduce the national dependence on other fossil fuels. It mentioned the environmental and socio-economic implications of water use. and the disposal of the fracking fluids. The task team said that due to the high volumes of water to be used and the possible contamination of water with the fracking fluids, they would need to conduct further research into water sources.
The report called for aa re-evaluation of South Africa’s regulatory framework to ensure that any possible negative impacts would be alleviated. A monitoring committee will be appointed to ensure a comprehensive and coordinated framework and the supervision of operations.
Now the conservationist and protestors await the application for the first exploration license and will see the applicant in court.

Between A Rock  And A Hard Place

The bad news came down the telephone to the chair queen of Nigeria. Ibukun Awosika, just home from a business trip to Barcelona, sat on her bed in her Lagos home, working on her computer, when the telephone rang on January 7, 2004—her worst day. On this day her furniture business, that had taken years of suffering to build, hung by a thread.
It was a body blow even for an entrepreneur as feisty and resilient as Awosika. To say Awosika is a formidable woman is a bit like saying Usain Bolt can run. Her company turns out 500 chairs-a-week; if you are reading this in an office in West Africa, there is a very good chance you are sitting on one of them.
“I am not frightened of anybody,” she says during our meeting at her luxury home and you can quite believe her.
This tenacity reaches back to her roots in Ibadan, Oyo state, where she was born on December 24, 1962. Her parents, a food technologist and a fashion designer, worked away, so Awosika was brought up by her grandmother, who ran a salt shop. This was where she learned her first lessons in trading, bargaining and being an entrepreneur.
“I actually didn’t grow up wanting to be an entrepreneur. That was never part of the dream. I wanted to be a doctor when I was in secondary school, later on an architect but I eventually ended up in university graduating with my first degree in chemistry. I also took many free electives in accounting as I had a keen interest in banking,” she says.
A banking job took its time to materialize, so Awosika filled her days by working in sales at a furniture company. The job lasted a mere three months, but the passion for the furniture game has lasted a lifetime. Awosika saw a gap and set up her own operation, the first step on the way to a net worth of more than 3 billion naira ($18.6 million).
“It was called Quebees Limited. We started operations in January 1989 with two carpenters, two sprayers and two upholsterers. We worked from the back of my father’s house, then in an incomplete building next to my chief-carpenter’s house, for a while until we were able to find alternative working space… I had no money to start with. The carpenters came with their own tools, I rented the machines we used to spray. All I needed to do, was find my first job. My first job was from a bank to make wooden paper trays, wooden dustbins and computer stands,” she says.
Awosika needed a big contract to establish her business and took the chance of exhibiting at a furniture show where her chairs caught the eye of Texaco Nigeria Ltd, which was looking for a company to furnish its headquarters. To close the deal, Awosika put on her high heels and headed for the Texaco head office in Lagos.
“I walked into the office of the secretary of the chairman of the executive committee of Texaco on the day we had to sign for the contract. The secretary said to me, ‘We’re waiting for the MD of Quebees furniture’ and I responded ‘Yes, that’s me”. She called her boss and said, ‘the MD of Quebees is here”. He walked in, looked at me with a very surprised expression, ‘You are the MD of Quebees?’ he asked. I said, ‘Yes”. He asked: ‘Are you sure you can do this job?’ I responded, ‘Yes, I can,’ she says.
“I had learnt to be confident as I had always received the same reaction from people, being a young lady who was running her business. I noticed he had a business card on his desk with a familiar surname. I immediately asked if he was related to one of my peers back at school. It turned out he was my mate’s father. Doing that job and delivering on it, opened a lot of new doors and opportunities for us.”
Awosika was on a roll and on the way to a dominant position in the market. The final piece in the jigsaw was a deal with French chair manufacturer, Sokoa, a company with a €10 million ($12.3 million) capitalization, to import furniture raw material into West Africa. It made her a fortune until, she received a phone call one night in January 2004, like a bolt from the blue…
“I got a call from the former manager of Guaranty Trust Bank saying that furniture material importation had been banned. I took a breath, paused for a minute, and then said, ‘It is well”. He responded, ‘It is well? How can it be well? They have just shut your business down!’ I responded, ‘I’m sure, God has me covered, one way or the other,’” she says.
Awosika had to think fast. The government was adamant that the ban on furniture material imports—in the interests of stimulating Nigerian industry—was there to stay. For Awosika, to delay was to risk another manufacturer stepping in to take her hard-won customers.
“It was do-or-die for us… It posed a threat to the manner in which we handled our business, as we either had to resort to smuggling goods into the country, which I was not going to do because of my value system, or change our strategic direction in terms of how our production was done. Hence, we approached the French company to join forces with us in producing and assembling furniture pieces in Nigeria.”
It took months of negotiation to tie up a deal with Sokoa and Guaranty Trust Bank to build a €3 million ($3.7 million) factory in Lagos. Production resumed 11 months after the government had thrown a spanner in the works. The factory, which employs 300 people, made a profit in its second year and is expected to have paid for itself in five.
“It turned out to be a blessing in disguise,” she says.
Awosika survived her worst day and has thrown herself into helping other Nigerian entrepreneurs navigate the choppy waters of business.
“Nigerians have great tenacity. In spite of the government’s presence, Nigerians have learnt to accept many limitations, which help them think and work outside of the box to create the solutions we desire. This makes us highly productive and this ingenuity is the reason I love my country. Nigerians are fast thinking; they are dynamic. Once you create an enabling environment, you’ll be shocked at what they can achieve.”
Awosika has set up a center in Lagos for the training of entrepreneurs called The Afterschool Graduate Development Centre and is launching a television series in September aimed at helping people to turn their ideas into a business.
“This country produces graduates by the million every year, without room for them to express themselves. We don’t have enough jobs nor an incubating environment to help them manifest, as entrepreneurs. They have a lot of great, fresh ideas, but no medium of expression, they also lack knowledge. There is also a disconnect between the financial institutions and the people who make the money.”
Wise words from a formidable lady who sits on several boards of big companies in Lagos and is never likely to be short of a chair.

You Had Better  Sit Down For This One

It’s no secret that South Africa, the biggest and most power-rich country in Africa, faces an energy crisis. It has left the country’s growing industry and mining sector lagging. Government says the 485 tcf (trillion cubic feet) shale gas reserve, could be an answer.
Hydraulic fracturing, also known as fracking, involves horizontal drilling to create fissures. The insertion of pressurized water, sand and fracking fluids release the gas. The tight-rock shale gas reserve is compared to extracting small pockets of gas from cement. Conventional fracking requires a high volume of water, up to 20 million liters per well. The process is heavily criticized for its potential environmental damage such as water usage and contamination; the pollution resulting from the production process and spoiling the biodiversity and aesthetics of the Karoo—a vast, largely untouched, landscape just to the north of Cape Town.
“The focus has been on the bad things, but there are many good things,” says Rob Jeffrey, managing director of Econometrix, who presented their economic predications for fracking at the Fossil Fuel Foundation conference on May 29, in Johannesburg. Organizers were disappointed that no government officials or policy-makers attended.
“South Africa is an energy-intensive country… If we want high growth, we need more energy. Fracking will encourage local industry development and create many jobs because the gas industry will be built from the bottom up, unlike in the States. It will result in poverty alleviation, by building downstream and upstream industries,” says Jeffrey.
The National Energy Regulator of South Africa (NERSA) is in charge of licensing; Petroleum Agency South Africa (PASA) is in charge of gas production and the government would be in charge of distribution. The time is now, says Ethel Teljeur of NERSA.
“South Africa [might] miss the window of low gas prices if it doesn’t invest in gas infrastructure,” she says.
Teljeur gave the example of missed opportunity in South Africa when home-grown energy company, Sasol, bought shale gas interests in Canada (Talisman) worth over $2 billion and would invest R10 billion ($1.17 billion) over the next five years; money that could have been invested at home.
An argument for fracking could find favor with the government. Dipuo Peters, South Africa’s Energy Minister, was one of the cabinet members who placed a moratorium on fracking. She says fracking should go ahead, if it can be done in a safe and responsible manner.
“The government is cognizant of the controversies associated with shale-gas extraction processes such as ground water and soil contamination, however with on-going developments I am confident that these challenges will in the not-so-far future come to pass,” she said in late March.
In her budget vote speech at the end of May, Susan Shabangu, Minister of Mineral Resources, said the investigation into the feasibility of shale gas in the Karoo will be presented to Cabinet in July.
“We should not have to sue the minister [Shabangu] to get the information which each citizen is entitled to know,” says Jonathan Deal—chairman of the Treasure the Karoo Action Group (TKAG). He took legal action, when in spite of letters and applications, little information was forthcoming. The TKAG won the case.
“When it was being established we needed to know who was on the task team; what they were investigating; who they were consulting; what reports they were considering; whether they had visited America or not or anywhere where fracking was happening. And essentially, what their activities were. We were concerned that it was being manipulated, or orchestrated. We wanted transparency, in revealing the information,” he says over a telephone interview from his Karoo farm.
Deal is an entrepreneur who is not opposed to economic development, as he has often been accused; on the contrary, he supports it, if it is done in a sustainable and responsible manner. He notes that there are more than 140 places worldwide, where fracking is under a moratorium, restriction or a ban.
Deal claims he has attended more public participation meetings than any other South African. He has sat with lobbying gas companies and their consultants.
“They are misleading and side-step the real issues. They have obfuscated and clothed it [public participation meetings] in technical details. And then they are allowed to tick a box to say they have visited wherever and consulted with the local community,” he says.
“One of the fatal flaws gas companies face is the millions of people in this country who will be directly affected by fracking but know nothing about it. They are the rural people that work on the farms, who do not have email, cellphones, telephones or a car to the nearest library to digest Shell’s technical English EMP [Environmental Management Plan].”
The energy industry is trying to get around these fears, with new technology. Andrew Kinghorn, of Shava Mining Enterprise, spoke about GasFrac’s Liquid Petroleum Gas (LPG) gel. The American-based company has eliminated conventional fracking fluids and the use of water for fracking. They pride themselves in being friendlier to the environment.
The waterless LPG gel remains liquid throughout the stimulation process. After the frac closes the gel returns to a low viscosity and supports sand in the fractures. When using water, around 20% to 50% of the fracture never contributes to gas production because it is in contact with water.
“Nearly 100% of the LPG gel is returned with the flowback in a much shorter time, 10 to 15 days, than conventional fracking methods,” says Kinghorn.
The gel’s properties include low surface tension; low viscosity and low density. It is soluble in hydrocarbons, which enables 3 to 5 times longer fracs; higher long-term production and quicker time to the market.
“It results in the elimination of water, water wells, ponds, handling facilities, frac tanks, additional cartage, disposal costs and the reduced flowback cost due to quick clean up. By using LPG, we are able to realize a higher yield of oil or gas and we don’t take water away from other uses or have the demanding logistics of transporting millions of gallons of water to a well,” he says.
Another positive advancement in the industry, as pointed out by Doug Bentley, of Schlumberger, is that all hydraulic fracturing chemicals are biodegradable. The only question which remains is, are gas companies willing to pay for the more expensive, environmentally friendly fracking fluids? Bentley emphasizes that: “Well placement is the number one issue for improved production. Drilling needs to be planned in 3D as soon as possible.”
There are numerous factors to be considered: the social, economic and ecological. Philip Lloyd, research professor at the Cape Peninsula University of Technology refers to gas as the “beautiful fuel” which provides an opportunity to develop our power system in a clean, relatively low-carbon way.
The reserve might be overestimated, due to the disappearing of gas through volcano-like cone escape structures over billions of years, according to Professor Maarten de Wit from Nelson Mandela Metropolitan University. Scientists are unsure of the amount of escaped gas and how much remains.
“The South African landscape differs vastly from that of the United States because of the dolerite outcrop and needs to be assessed in a different way,” he says.
For now, gas companies and South Africans, alike, are holding their breath ahead of the outcome of the task team’s findings later this month.

Fracking At Face Value

There was one issue at the Hotel Investment Conference Africa (HICA) that had everyone shaking their heads. The big question was: why isn’t there one visa that can get you across Africa? Its lack is choking business and progress.
If you have ever wondered why travelling in Africa is often so expensive and painful—blame it on rigid government policies.
Even though it makes business sense, the idea of a visa that will get you across many borders is as far away as a single currency in Africa, or Europe for that matter.
They call it the UNIVISA—the passport to an entire region—but not even the SADC region (Southern African Development Community) has managed to get one, the conference in Durban heard.
In 14 years there have been many talks, but no fruit. In that time, North Africa has seen three revolutions, East Africa has forged an economic community and Mozambique has built a gas industry.
The first countries which took up the gauntlet were Botswana, Mozambique, Namibia, Swaziland and Zimbabwe. South Africa—the most powerful country on the continent—has joined in, but hesitancy all round is leaving the industry frustrated.
According to Marthinus van Schalkwyk, South Africa’s Minister of Tourism, the issue is close to being settled with merely a few countries—which he could not disclose—still needing to sign the agreement. He said that 80% of the countries were for it. Fernando Sumbana, Mozambique’s Minister of Tourism agreed.
There is more business travel than ever on the continent, so why is it still so difficult to navigate Africa? It is cheaper and simpler to fly to London than it is to Addis Ababa.
Elize Petersen, Namibian Airways’ Manager of Government and  Protocol Relations, says government process is very slow when it comes to expanding regional routes. Allan Moore, CEO of Board of Airline Representatives (BARSA), says getting politics out of aviation is not easy as government policies are rigid.
When it comes to accommodation it is even worse. Hotels are scarce and expensive. Investing in new ones is often prone to fears over political instability and the high cost of infrastructure.
“Expanding out of South Africa is not easy, it is expensive, but it is not impossible. It is a different environment,” says Graham Wood, Managing Director of Tsogo Sun.
South African economist, Chris Hart, says if Africa was an easy place to invest, people would have done so years ago.
“Political risk in Africa is coming down and rising in the western world. Difficult obstacles are not nearly as bad as uncertain ones,” says Hart.
It is a sign of the times that Lonrho Hotels, which has hotels in Botswana, DRC, Mozambique and Zimbabwe, are also stakeholders in a Kenyan airline.
“Hoteliers are more optimistic than airlines, aviation is not moving fast enough [and] we want to boost regional business travel,” says Ewan Cameron, Lonrho Hotels CEO.
One of the biggest stumbling blocks is likely to be the absence of a UNIVISA. Last year there were reports that a SADC UNIVISA would be established by 2013. Most people at this conference hoped there would not be subsequent reports predicting 2020.

More Freedom, Fewer Visas, Please

Crossing Pont Félix Houphouët-Boigny in Abidjan, you get to see Côte d’Ivoire’s dichotomy clearly. In front of you, mid-rise buildings glow with neon lights through the darkness: Pepsi, Mitsubishi, MTN create a mask that hints at prosperity. But the queues of young men waiting on street corners and the cranes pecking at the drifts of garbage on the water’s edge tell a different story.
Once the region’s most sophisticated economy, Côte d’Ivoire is now a case study for the economic impact of conflict and political paralysis. But even though its election descended into violence and the country teetered on the brink of another civil war, the much-delayed completion of the transition from post-war junta to democratic state has put Côte d’Ivoire back on the path to regaining some of its former glory.
A shaky cease-fire, signed in 2003 to hold the country together after an attempted coup, led to a government that controlled the south—under Laurent Gbagbo—and a north run by Forces Nouvelles rebels.
During that limbo, investors talked about the country’s potential and the build up of money that was waiting to be released once the election finally passed. But it was delayed, then delayed again, until it seemed as though the delay would be interminable. While regional neighbors, such as Ghana, saw their economies boom and attract international investment, Côte d’Ivoire was in stasis.
In November 2010, there was one last twist. The incumbent old warhorse Gbagbo refused to yield, leading to a violent standoff. The victor, Alassane Ouattara, formed a government within the compound of the Golf Hotel in Abidjan, protected by a ring of UN peacekeepers while militias fought in the city around them.
Escalating international pressure and financial sanctions eventually led to the collapse of Gbagbo’s support. Ouattara, a former International Monetary Fund official, took over in April last year but not before the country had defaulted on its bonds by failing to make coupon payments to international creditors London Club, while its assets were frozen.
His early achievements—in reassuring investors that the arrears would be repaid and getting backing for debt relief from France—were encouraging, and today in Abidjan there is a cautious optimism. The city is not visibly transformed from two years ago, but construction projects are restarting and traffic is building. Though the change has not been dramatic, the lifting of the deadlock means that companies can finally plan beyond the short term.
“There’s a sense that a lot of things are possible,” says the director of the private equity firm Emerging Capital Partners’ (ECP) Abidjan office, Brice Lodugnon. The security situation has improved and there’s some certainty over the direction of the government, which has pledged to increase spending on infrastructure and agriculture.
The good news is that at least around Abidjan, infrastructure and utilities still function. There are good companies in many sectors and a relatively strong system of governance. Key industries, including financial services, are competitive and the country is still the world’s largest exporter of cocoa. But while Côte d’Ivoire has some of the political risk of a post-conflict environment, it does not have an abundance of underpriced opportunities. That’s a problem for investors.
Even before the crisis, there were tentative expansions into previously politicized industries, including cement making and flour milling, with companies from North Africa, as well as the country’s large French and Lebanese expat communities, moving into manufacturing and processing. Agribusiness group Olam has pledged a further $200 million in investments, while ECP is expanding its portfolio in the power sector. Rather than looking for a new cohort of investors, Ouattara’s government might find more support from those existing players, now free to make long-term plans.
Many businesses were battered by the 2011 crisis but now stoically downplay the human cost of that period, talking instead of the relief at their newfound ability to plan beyond the short term. Still, the scars are there. At the height of the violence, pro-Gbagbo forces executed one of the country’s largest foreign investors—Yves Lambelin, the former president and patriarch of Sifca. That story gets told regularly.
International investors speak highly of Ouattara. One CEO of a multinational operating across the continent said that the president—while his ability to create a government is unproven—is one of the most accomplished leaders in economic planning in Africa.
Politics are bound to be difficult. An hour’s flight north of Abidjan is Ouattara’s hometown of Bouaké, until recently the headquarters of the Forces Nouvelles. There, the difference in development is marked. The roads are in worse condition and the security presence, in the form of UN peacekeepers from Pakistan, are far more visible. People living there refer to the country’s “reconstruction”.
Further up country the situation is worse, with an entire generation denied access to education after the southern government abandoned schools. An executive in a cotton company, with an extensive presence in the north, called the state of some areas “appalling”.
Making sure that the country’s redevelopment is even and that the government—headed by a northerner—does not re-open divisions that are still fresh, will be a massive task for the new president.

Healing The  Divide Will Be  No Easy Task

Catherine Masinde had a front row seat—or rather, a front row tent—for the difficult birth of South Sudan. It was tough in Juba in the years leading up to statehood; there were three cars on the road, it was muddy and uncomfortable.
In the last year, both Masinde and South Sudan have moved onwards and upwards. South Sudan has secured statehood and Masinde has moved up to what she calls a “half star” hotel. It may be tiny, but at least it has air-conditioning. This Kenyan is the World Bank’s investment climate specialist in South Sudan.
The eyes of the world were on the birth of South Sudan when it became the world’s newest state in July 2011, a moment the people had longed for and voted for.
<img loading="lazy" decoding="async" class="alignleft size-medium wp-image-246" src="/wp-content/uploads/2017/04/C29R8E-300x200.jpg" alt="" width="300" height="200" />
So what does 2012 and beyond hold for a country with the odds stacked against it? It has suffered two civil wars and the economy is precariously dependent on oil. More than half a century of war has left the country frozen in time; building it up will take a lot of time, hard work and investment.
South Sudan is covered in dirt roads that turn to mud when it rains. Electricity is for the lucky 1% and comes from expensive diesel generators. Despite a combined GDP with the North of $30 billion, an estimated four billion barrels in oil reserves and a rich mineral base, 90% of the population lives below the poverty line.
Masinde, who is helping the government of South Sudan rebuild and reform to win investment, is seeing signs of economic recovery.
The three private cars rolling along the dirt roads of Juba in 2005 are now competing in traffic with more than 1,000 vehicles.
“It’s a huge task but as they say: surely surely, slowly slowly,” says Masinde.
Business registries have risen from 136 in 2005 to more than 12,000. About 65% of these are in the service industry, with half of those in construction. The country is a blank slate for the builder.
Excel Construction Ltd carried out the World Bank-funded construction of two education centers in Juba. South Sudan Logistics has been building lodges and clinics since 2005.
The government of the United States is paving a 200km road from Juba to the Ugandan border. Uganda is one of South Sudan’s major trade partners. Hotels have sprung up and Juba International Airport is buzzing. Investment is also going into regional airports.
“Any hand trying to lend to us cannot be denied,” says Peter Bior, South Sudan’s information officer.
Masinde agrees: “Government needs partnerships with private industry to builda country.”
Masinde’s team has helped establish a new Ministry of Commerce, Industry and Investment. The former Ministry of Investment has turned into an investment promotion agency. The Ministry of Justice is being used to strengthen the Business Registry.  The government has also instituted numerous Acts ranging from the Investment Promotion Act to the Personal Income Act.
“The business environment is catching up with the other East African countries. Registering a company takes 15 days and this will improve with time,” says Masinde.
<div id="attachment_245" style="width: 310px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-245" class="size-medium wp-image-245" src="/wp-content/uploads/2017/04/A80N9T-300x200.jpg" alt="" width="300" height="200" />Nile River in Juba, South Sudan</div>
South Sudan is also pushing to diversify its economy away from oil.
Agriculture is one industry that the country is looking to build. South Sudan is 644,000 sq.km, with at least 30 million hectares of arable land. Only 4.5% of this land is working.
South Sudan has formed bad habits—more than 50 years of war has created dependency on food imports and the World Food Programme.
South Sudan imports its fruit, vegetables and poultry from Kenya and Uganda. This raises questions about food security. Refugees flooding back into the country are putting pressure on an already delicate food balance. The country is prone to floods and drought, but with effective planning, maize, millet, cassava, rice and sesame seeds can be grown. There is also potential for sugar.
“We continue to encourage the civil population to utilize their minor skills [in subsistence farming] but we are looking towards larger operators for commercial farming,” says Bior.
Land grabbing has been a problem in South Sudan. This has prompted the government to create a progressive Land Act (2009). With plans to get the primary sector underway and the infrastructure up and running, there is a call for more manufacturing. There is already an increase in light manufacturing like brick making and the construction of doors, gates and frames.
A leading international company that has seen the immense manufacturing potential in South Sudan is SABMiller. It invested $37 million in its Juba operation, Southern Sudan Beverages Ltd. The brewery manufactures beer called White Bull, soft drinks and bottled water. South Sudanese took royalties from the deal. SABMiller received $1 million from the African Enterprise Challenge Fund, a $120 million private sector fund. This, along with
$2 million from the company will be used by FARM-Africa to work with local small-scale farmers who will grow the cassava SABMiller buys to make beer.
“This project will convert what is currently a subsistence crop into a cash crop, creating valuable and sustainable economic opportunities in a fragile region,” says Mark Bowman, managing director of SABMiller Africa.
<div id="attachment_244" style="width: 310px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-244" class="size-medium wp-image-244" src="/wp-content/uploads/2017/04/White-Bull-Lager-Pack-Shot-300x256.jpg" alt="" width="300" height="256" />White Bull Lager</div>
From land mines, to beer, to the second Garden of Eden—in the words of the marketing men. Tourism is a market that has yet to be tapped. The South Sudanese government took charge and deployed delegations to countries like Zimbabwe, which profit from tourism in adversity.
The country sits alongside the Nile and is rich in wildlife with a history of a large antelope migration. Al Ain Wildlife, an Emirati company, will be constructing, as per its lease agreement, luxury hotels and tented camp resorts within Boma National Park.
With all the possibilities in business, training and skills development, infrastructure, agriculture and tourism, all eyes are on the blank page that is South Sudan.
The country is counting on its acceptance into the Common Market for Eastern and Southern Africa (COMESA); the East African Community (EAC); the African Growth and Opportunities Act (AGOA); and the European Union to help it gain access to key markets. But most importantly, it is counting on the return of its people and their skills.
The people of South Sudan must band together to shape their country into a formidable one. It truly is a new beginning. Happy New Year, South Sudan and good luck—you are going to need it.
<h3>The Oil Question</h3>
The former Sudan’s oil lies in the South, with the distribution network and refineries in the North. This has always meant that the two nations at war with each other shared the oil revenue. With its dependence it would be ideal for the South to take charge of all its resources, but this is a delicate situation as the North also depends on the oil revenue and would not easily allow revenues to dry up.  Soon after its independence, South Sudan was in talks with Kenya to build a new pipeline between the two countries. This could take years to achieve.

Tag: Government

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