In the last two years, a steady decline in the price of gold has brought the operations of many mining companies in Ghana to an abrupt halt. As a result, job losses and a reduction in royalties and tax revenues have been felt. Ghana is Africa’s biggest gold producer after South Africa, and with the mining sector contributing to 5% of Ghana’s economic output, the downturn in the sector has served a serious blow to the nation’s coffers.
Chinese investors, often depicted as parasitic investors, are keen to tap into this opportunity. The Chinese owner of the Akroma Gold project recently completed the purchase of Viking Mines in Ghana for $10 million. There are other new discoveries taking place and, while the sector might not be buoyant now, requisite preliminary studies should be done to mechanize deposits there.
Despite the tough economic climate, gold mining companies are able to meet their obligations, with Goldfields recently paying a $4.5-million dividend to the Ghanaian government and a total of $25.3 million since 2010. The fiscal framework that governs the mining sector in Ghana is a shining example to mineral-rich countries with a porous system due to a lack of transparency and regulation.
The Chinese have pumped billions into the Ghanaian economy. Mining in Ghana is integral to the development of communities; it brings jobs and economic vibrancy. But, for all the synergistic Sino-African trade partnerships being developed, an ability on the part of the Chinese to disregard the honesty and statutes that govern Ghana, especially in the mining sector, raises concerns over whether these agreements are lopsided.
Also, the Ghanaian government’s clampdown on illegal mining has only been marginally successful. Chinese companies use locals to front their mining activity, thus appearing to be credible operations. The lack of rehabilitation done by these companies also further exacerbates the problem. Many sites are left abandoned with no consideration for the environment.
Many large firms neglect their duties to rehabilitate the areas they have worked in, making them inhabitable. Companies, surveyed between 2009 and 2012, failed dismally to keep in line with the environmental protection agency requirements – a damning indictment of the attitude adopted by many foreign firms.
The inability of most locals to get finance to start their own enterprise ensures that development remains at an artisanal level.
Other areas in West Africa are showing promise though. Both Liberia and Sierra Leone are showing signs of reviving their mining sectors. Sierra Rutile is a company that was able to withstand the pressures brought by the Ebola epidemic. They recently raised $44 million to construct a dry mine at Gangama in Sierra Leone. The funds will be used to expand the existing mine. Rutile is used for the production of metal, specifically titanium. The investment will increase production and will provide more jobs.
Another mining company, Aureus Mining, has also signaled its intent to bring a new mine in Liberia into production. With the relative successes emerging in the region, there is confidence being shown by investors to reignite their interests in the mining sector and with it the hope that the sentiment spreads to other countries across West Africa.
The next step for the region is to engage stakeholders to develop concessions and form strategic partnerships. With industry being the buzzword for Africa to reach its full economic potential, the fact remains that infrastructural challenges are still an obstacle. Poor roads affect the transportation of materials. A lack or railways reduces the amount of goods that can be transported. The lack of power is another thorn in the side. The Economic Community of West African States (Ecowas) must integrate by encouraging free trade between the regional countries. By identifying the above issues, governments can make a concerted effort to tackle them.

Work To Be Done But There Is Hope

In Nigeria, citizens, businesses and investors are struggling to come to terms with the absence of a cabinet to run Africa’s largest economy. When President Muhammadu Buhari took office, from Goodluck Jonathan on May 29, few would have imagined that there wouldn’t be a cabinet in place, or awaiting parliamentary approval, by the end of June.
Buhari himself hasn’t said much, leaving the explaining to his aides. At the beginning of July, Spokesman Femi Adesina said that “at the fullness of time, the ministers will be appointed.”
There has been speculation that there won’t be a cabinet in place until September. If that is true, it will mean that the new ministers will spend the last quarter of the year coming up to speed with their new assignments, and real work will not start until 2016.
The only presidential staff appointments made by the second week of July were three spokespersons (two for the president; one for the vice president), a State Chief of Protocol, and his principal security aides – one of which was replaced weeks later, for undisclosed reasons.
On July 13, six weeks after the inauguration, the President replaced all the military chiefs and the National Security Adviser (NSA). The key positions of presidential Chief of Staff and a Secretary to the Federal Government, who serves as Secretary to the Cabinet, as well as a liaison between the presidency and the sprawling government bureaucracy, however, remain unfilled.
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Team Austerity
Amid the uncertainty about the president’s team, there are, however, things one can bet on. One is that it will be a smaller cabinet than his predecessor’s, which had 42 ministers. But, the degree to which it will be smaller is constrained by a constitutional provision that says there must be at least one minister from each of Nigeria’s 36 states.
The Transition Committee that Buhari set up in May, to liaise with the outgoing government and prepare a smooth handover for the new government, recommended a reduction in the number of ministries from 28 to 19. Going by that proposal, only nine of the existing ministries will not be merged or scrapped: Defence, Federal Capital Territory, Education, Trade and Investment, Finance, National Planning, Labour, Justice, and Foreign Affairs.
Ambitious as the plan might seem, it’s not unfamiliar territory for Buhari. As Head of State 30 years ago, he presided over a wide-ranging regime of cuts: laying off thousands of civil servants and freezing wages, abolishing hundreds of local government areas, and rolling out an austerity budget that slashed government spending by 15%.
Considering that the economy he is inheriting is in straits just as dire as then, chances of another austerity-inflected outing are high. Indeed there’s a cost-saving element to a delay in the appointment of a cabinet and advisers, who will have to be paid generously in housing and travel allowances, and armored convoys.
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Speculation, Inc.
In the weeks following Buhari’s unprecedented electoral victory, the rumour mills were running with news of expected appointments. Documents regularly circulated on social media, purporting to list the persons who had been nominated for appointments. All of them turned out to be false. Early into the new administration, it was reported that Chief Ogbonnaya Onu had been named Secretary to the Government of the Federation, Nigeria’s designation for Cabinet Secretary. Weeks later, the speculations shifted to the still-vacant position of Chief of Staff. News filtered out that retired Colonel Hammed Ali, Buhari’s long-time personal Chief of Staff, had been appointed. Again, it turned out to be false.
The two men have been close to the president since he joined partisan politics in the early 2000s and are still very likely to bag important roles in his government. Other long-time associates tipped for important positions include Tam David-West, who served under Buhari as the petroleum minister when he was military head of state in 1984-85, and Abdulrahman Dambazau, a former army chief and head of security for the presidential campaign. Dambazau, widely expected to be named National Security Adviser, may now be in the running for Defence Minister.
Former state governors, Kayode Fayemi (Ekiti), Babatunde Fashola (Lagos) and Rotimi Amaechi (Rivers) are also expected to be named to cabinet or presidential staff positions. The trio played prominent roles in the Buhari presidential campaign – Amaechi as campaign director-general, Fayemi policy director, while Fashola oversaw fundraising.
Party leaders, like former Governor of Lagos State, Bola Ahmed Tinubu, and former Vice President Atiku Abubakar, are also expected to nominate candidates for presidential consideration, but there is no doubt where the final decisions lie.
Policy Direction
Apart from the 800-page report of the Transition Committee, the new government can also count on another 73-page one; the outcome of a two-day summit that the ruling party’s policy directorate, under Fayemi, convened in May; bringing together technocrats, politicians and public officials.
With the support of the United Nations Development Programme (UNDP) and management consulting firm, Bain &amp; Company Nigeria, the summit produced detailed recommendations on several sectors of the government: oil and gas, education, healthcare, security, agriculture and foreign affairs, among others. The reports outlined specific plans for the incoming ministers to implement in the short term, medium term  and long term. As things stand, it’ll be more than 100 days from May 29 before a cabinet is in place, and the incoming ministers will have some recalibrating to do.
For business executives and investors, the reassessing will be an unending obligation. As soon as the cabinet is named, the next round of tea-leaf reading – this time for policy direction – begins.

2016? NO!

The current spate of opportunities in the Nigerian mining sector is predicated on a true spread of federal powers. Potential investors must be hoping that newly-elected President Muhammadu Buhari gives the mining sector the much-needed attention it deserves.
The sector has been neglected with swaths of red tape preventing it from developing. Crucially, if the mining sector is to succeed then the recently privatized power sector is integral to its success. Ask any Nigerian about the problems they face on a daily basis, you will find it hard to find one who won’t mention the infamous power outages.
When those concerns are transferred to industry it deters any serious mining activity taking place. Unless a mining company develops its own independent power plant it is highly unlikely that Nigeria will be considered as a mining hub despite its mineral wealth. Erratic power supply does not encourage mining companies that want to increase profits while decreasing production costs, especially when commodity prices, such as gold and iron, are trading at record lows.
Having spent the last year as Africa’s biggest economy and touted to have the 19th biggest economy in the world by 2030, Nigeria is expected to employ robust resource governance in accordance with international best practices. India has implemented a policy of backwards integration which has been met with success. Industrial behemoth, Jindal Steel &amp; Power, is a glowing example of how backwards integration can result in financial growth for a company.
It would be remiss of me to not commend the efforts of the previous government to transform the petroleum industry with the proposed Petroleum Industry Bill. Although delayed, it was a sign of the government’s willingness to change what has been a mismanaged government sector. The mining sector has until now failed to develop a legal and regulatory framework that will keep up with international best practices. Like an unwanted puppy, it struggles for care and attention. Instead it is neglected and imposed with an archaic tax regime.
The government must impose trade tariffs, as seen with the ban on the importation of poultry products to entice prospective participants. Additionally, fiscal federalism is necessary so that powers are devolved to the state. At present, the constitution states the federal government owns all resources.
Opportunities in the mining sector are vast due to the untapped deposits that are yet to be mined. Furthermore, the prospect of backwards integration allows for companies to effectively manage their resources.
In its ability to harness an effective framework, Ghana recently hosted a delegation from Zambia to advise the country on how to manage its resources. The government is also talking to the 13 multinational mining companies that operate in the country over the possibility of embarking on underground mining operations.
No man is an island. Despite its economic prowess, Nigeria must seek the help and advice of other countries with developed mining industries. Just like Ghana sought help from Nigeria about managing its oil production, Nigeria must extract knowledge from Ghana as to how to run its mining sector efficiently. Mistakes of the past should not be repeated. Nigeria also needs industrial stakeholders to promote, research and develop the mining sector.
Nigeria does not need to import raw materials for many of its industries. The ingredients can be found in the deposits scattered across the 36 states, all of which can be used as agents of change to satiate local and international appetite for finished products. This is added value but it something that is proving difficult to harness due to porous infrastructure.
If talk is cheap, then the labored rhetoric of diversification without the expense of action will prove costly in the long run.

The unwanted Puppy In Need Of Rescue

At last, Nigeria’s rough ride through the dark tunnel is coming to a slow but steady end. Slightly over 10 years since successfully privatizing its telecommunications sector, the country looks set to repeat the feat in its moribund power sector.
Ongoing power sector reforms have now given birth to lingering pains on the sector’s value chain, generating anxiety, high hopes and renewed expectations from a citizenry that has become accustomed to living in the dark ages.
A few years ago, Nigeria’s investment climate was considered not attractive enough for inclusion in the BRIC (Brazil, Russia, India and China) group of nations. Fair enough. Today, the latest buzz word is MINT, for the grouping of Mexico, Indonesia, Nigeria and Turkey. The target year for MINT is 2050. All of this is fancy talk for most people in Africa’s most populous nation. Why wait for 2050? What matters most to them is the short-term fix. They yearn for the simple bliss of a regular and affordable supply of electricity, as they continue to ask why a resource-rich country should continue to lack light. They reckon that regular power supply would unleash their enterprising spirits and catapult their nation’s fortunes well ahead of the BRIC or MINT states within a decade. And they could be right.
Jim O’Neill, the man who coined the BRIC acronym and the former chairman of the asset-management division of the Goldman Sachs Group, agrees. The size of the Nigerian economy would double in six to seven years if the country’s perennial power outage is sorted out, he says.
Aliko Dangote, Africa’s leading industrialist and president of the Dangote Group, can only imagine what Nigeria could achieve with a consistent power supply.
“Can you believe that this country has been growing at seven percent with no power, with zero power? It’s a joke,” he says.
Nigerians have lived with the ‘no power or poor power’ status, in part due to a lack of political will by previous governments and the Nigerian factor—a euphemism for graft, nepotism, neglect of state-owned assets and underinvestment.
Industrial, commercial and domestic consumers of electricity have therefore resorted to producing their own electricity using gas, generators, solar panels and inverters. The Federal Ministry of Power estimates that these off-grid methods account for up to 6,000 megawatts (MW), against the 4,500MW generated and supplied by the grid. Global Business Intelligence estimated that Nigerians spent around $455 million on generators in 2011. Added to this ignoble expense is the negative impact to health, wellbeing and the environment.
The successful sale and handover, last November, of 11 distribution companies (Discos) and four generation companies (Gencos), formerly owned by the defunct Power Holding Company of Nigeria (PHCN), to Nigerian and foreign investors completed the first phase of the power sector privatization process.
Following the positive market reaction to this, the Nigerian government decided to partially privatize a further 10 Gencos with a combined installed capacity of 5,000MW, located mostly in the Niger Delta region and known as the National Integrated Power Project (NIPP). The federal, state and local tiers of government own these Gencos and have invested more than $8 billion in them through a special purpose vehicle, The Niger Delta Power Holding Company (NDPHC). The sale of an 80% stake of these Gencos is expected to be completed by the end of 2014.
For the Nigerian authorities, the ongoing sale of its power sector assets is expected to rake in more than $10 billion and new regulatory responsibilities, as successor companies struggle to comply with Post Acquisition Plan and budget agreements.
For the new investors, industrial spats, costly infrastructure revamps, bank debts, consumer agitation and hopefully, consumer satisfaction and corporate profits lie ahead.
For consumers, the entire exercise has resurrected hope. Their angst and heightened expectations has now been redirected to the new players.
For starters, the $24.7 million, three-year contract given to a Canadian firm, Manitoba Hydro International (MHI) in 2013, to manage the country’s electricity transmission system is being reviewed by the authorities over allegations of non-performance and over extension of MHI’s management. MHI is expected to upgrade the human and technical assets of the Transmission Company of Nigeria (TCN), one of the successor companies of the unbundled PHCN.
Transmission is crucial to the success of the industry. The last time there was a grid enhancement was in 1987. The Transmission Company of Nigeria (TCN) is the only PHCN company still owned by the government and is considered the weakest link in the country’s electricity network. The network currently has the capability to distribute less than 6,000MW of electricity and covers less than 40% of the country’s land area. Experts have warned that unless the government revamps the transmission leg of the value chain, the entire privatization exercise might end up in a cul-de-sac.
Upon completion of MHI’s work schedule in 2016, Nigeria’s transmission network should be capable of moving about 20,000MW of electricity and cover more than 80% of Nigeria’s land area. The minister of power, Chinedu Nebo, says around $3.7 billion in funding is needed for the transmission system to reach this target.
Alex Oti, managing director of Diamond Bank, says Nigeria’s banks are willing to lend more cash to the industry, notwithstanding the bank’s collective contribution of over $4.5 billion to the sector since the commencement of the privatization exercise.
The government says it needs $2.8 trillion (N464 trillion) for infrastructural development in the power sector in the next 30 years, under its National Integrated Infrastructure Master Plan.
Government has also stated that the energy sector will require $880 billion (N144 trillion) during the period while the power sector will need $10 billion (N1.6 trillion) for generation and distribution in the next five years to add 5,000MW to the national grid. It added that the transmission network needs $1.5 billion (N240 billion) over the next five years.
To overcome investors’ fears about the technical capability and credit worthiness of the PHCN successor companies, government has created the Nigerian Bulk Electricity Trading Plc (NBET), a state-owned independent off-taker, underpinned by an $800-million partial risk guarantee from the World Bank. Capitalized with $550 million and chaired by finance minister Ngozi Okonjo-Iweala, the NBET will purchase power from Gencos before reselling to Discos, thereby avoiding potential defaults. This is, however, meant to be a short-term measure, as successor firms begin to enforce new electricity tariffs driven by their respective investments and market forces.
Adeola Adenikinju, the director at the Centre for Petroleum, Energy Economics and Law at the University of Ibadan says Nigeria is moving into uncharted territory.
“Very few countries have surrendered their power sector to the private sector the way we have done. We cannot afford any regulatory laxity or incompetence. We must learn from some of the regulatory lapses that we currently experience in the telecommunication and airline industries.”
The next three to five years will be the litmus test for the sector. Success will be determined by how well new investors navigate through the maze of gas supplies, gas prices, political risks, the domestic and international economic climate, access to capital, revenue projections, the quality of inherited assets and liabilities, and interest and exchange rates.
Nigeria is expected to benefit from United States president Barack Obama’s Power Africa initiative, a five-year, $7-billion partnership between the US and the governments of Ethiopia, Kenya, Liberia, Nigeria, Tanzania and Mozambique. An additional $9 billion is expected to be added by the private sector. Already, Nigerian businessman and chairman of Heirs Holdings, Tony Elumelu has backed the plan with a pledge of $2.5 billion.
The Africa Development Bank (AfDB) has also earmarked close to $3 billion for Africa’s power sector over the next five years.
In February 2014, the Nigerian government signed a $350 million power financing deal with General Electric to support the construction of small-scale power projects across the country.
The Nigerian power industry may be awash with funds but no one can predict if projections to generate over 10,000MW of electricity by 2015 and 40,000MW by 2020 will be met. The director-general of the BPE, Benjamin Dikki, has given the market a two to three year period before power supply stabilizes.
“Expectations will need to be managed for the public to understand that the power sector cannot be built overnight and that this country is recovering from decades of underinvestment and corresponding crumbling infrastructure,” he says.
“This will be a defining year for this sector and one in which Nigerians will either begin to applaud the emergence of the proverbial light at the end of their tunnel or curse their stars,” says Peju Adebajo, the managing director of Mouka, a Lagos-based manufacturer of foam products.
“Whichever way the pendulum swings, both realities will not be cheap. Billions of dollars will either have been money well spent or lost, and the opportunity to improve the political economy and human development index of a fourth of Africa’s population may also have been either fast tracked or stunted.”

Ease The Power Pain Please

Munhava, an area in Beira, Mozambique, is tense. The protests begin at midday with burning tires and the opening of the first shebeens. Acrid smoke hazes across the sky in the searing heat. By 2PM the mob has resorted to violence
Now, in the humidity of dusk, it is eerily calm as we wait patiently for darkness and the first wheezes of diesel generators from the more upmarket dwellings in the near distance.
The air is rich with fried fish, excrement and kerosene. A vivid stench of poverty framed by the sea. Across the slum, in a small landfill, scavengers rake over debris and waste before burning the rest. The laundry swinging on the line in front of me is trackmarked with soot.
A small riot on the ragged edge of Mozambique’s second largest city may not seem like a big deal but the dispute, aimed at the local municipality, was over what is arguably the most contentious issue facing African slums today—electricity.
It echoes a pattern of unrest we are seeing from Kibera in Kenya to Khayelitsha in South Africa and across the Sahel. Electricity is fought for and fought over in the poorest corners of the world. All around us in Munhava, makeshift cables and wires hang dangerously from tin shacks, so tightly packed they blend into each other. For those without the savvy to misappropriate electricity from the local provider, EDM, there is little option but unreliable and inefficient sources of energy. Somali store-owners pile their wares high with firewood, charcoal, candles, kerosene, battery-powered flashlights and palm oil. The deeper scandal is evident on these humble wooden counters across which the poor hand over the little they have for scant solutions. According to some estimates, the poorest of the world pays 20% of the world’s lighting bill, but receives only 1% of the benefits.
Kerosene and paraffin swallows 25% to 30% of a family’s income in Munhava. There are other costs too. Across from where I sit, the one-room shack, lit by kerosene at dusk, will probably have concentrations of pollution up to ten times the level that is considered safe.
At dusk each day, throughout sub-Saharan Africa, some 600 million people, or around 66% of the region’s population, prepare for the darkness and life without electricity. In rural communities, that number climbs to a remarkable 85%.
Sipping a warm beer from a broken refrigerator, I reflect that darkness has dogged even my recent travels across the world. On the road into Beira, I  reflect on the need for mainstream debate around energy poverty in Africa.
Energy is needed to reduce the world’s greatest child killer, acute respiratory infection. Up to 1.6 million people worldwide die from exposure to excessive levels of smoke in their homes from cooking fires. A quarter of all these deaths occur in Africa.
When I travel across Africa and ask people from all backgrounds what they need from electricity, the answer is often as simple as a light at night or a simple stove.
Yet when I sit in squatter homes in Kinshasa, where power is available but subject to rolling blackouts that can last days and weeks, and ask the same question, I am given insight into the new Africa. There is a need to power laptops, televisions, refrigerators and air conditioners.
No two situations are the same in Africa. But whose needs get priority? It appears the latter, the aspiring consumers. Today, the direct link between economic growth and electricity on the continent is finally placing this issue on the international agenda.
Last year, the United States president, Barack Obama, launched Power Africa, an initiative that will commit $7 billion over the next five years to support the energy needs of Ethiopia, Ghana, Kenya, Liberia, Nigeria, and Tanzania.
The human cost of work productivity in Africa due to the lack of access to electricity cannot be underestimated. If a population lacks adequate access to power it blocks any significant economic progress and in turn stability. It’s an issue that makes me think about the burgeoning youth population. With the competitive edge that technology provides, unreliable access to electricity hinders African youth.
Today, young people in Africa make up almost 40% of the working population, yet 60% are unemployed. Increasing energy access has the potential to boost sustainable development, as well as build human capital on the African continent. Without electricity, hopeful entrepreneurs are not able to gain access to market information and technologies to expand their businesses and schools are not able to prepare students for a knowledge-based economy.
In many ways, Africa has two key energy problems: there are many millions of people who have no grid extended to them, and won’t have in the foreseeable future, and the energy production in most countries is insufficient to meet the demand of those already on the grid, let alone those not yet connected. That is why power failures are so common in developed Africa.
But what are the solutions? Accelerating access to energy, particularly clean, renewable resources such as wind, water, the sun, and biomass among others, is ideal. It reduces pollution that contributes to climate change, while promoting Africa’s productivity and economic growth.
Such initiatives have the potential to make a difference in the lives of millions of Africans but it still isn’t enough. Collectively, the private and public sectors must work together more to strengthen Africa’s technical infrastructure to expand access to energy.
Everywhere, I read of radical solutions, from oceanic wind farms to mass solar power programs in the Sahara and hydropower on the Congo River to a scheme initiated by Harvard University alumni to extract energy from ordinary soil.
Some investors are backing jatropha, a plant whose seeds produce an oil for burning in generators. There is also an effort to tap geothermal energy. The Great Rift Valley, from Eritrea to Mozambique, could produce 7,000 megawatts. Kenya hopes to get 20% of its energy from geothermal sources by 2020.
To understand the existing and realistic scope of alternative energy solutions, I recently visited the Bisasar Road landfill site in Durban, South Africa. I was there to produce a short film around a project that converts landfill waste, a form of biomass, to methane gas and in turn electricity.
In Durban, trash is quietly and effectively making enough energy to sustain 3,800 households. Peter Seagreen, the sprightly 74-year-old mechanical engineer in charge of the Durban site, says converting trash to electricity would have been beyond imagination when he was growing up as a ships engineer. Bounding around the site like a teenager, he marvels at the technology at his disposal but bemoans the lack of knowledge around its potential.
“We are converting rubbish into electricity yet the local community barely realizes we can achieve this. It’s a miracle if you ask me. It also makes me wonder why this is not being expanded across Africa. We are the only ones doing this, yet Africa isn’t short of landfill waste.”
Arguably the most exciting thing about the prospect of creating electricity from gas is the dividend it could provide for gas-rich nations like Mozambique, Tanzania and potentially South Africa. The possibility of gas pipelines powering and empowering remote communities with electricity from similar turbines is attractive. It is a game-changing dynamic that could liberate rural areas.
Of course the argument between robust and pragmatic solutions to energy poverty, and the role gas could play in it, are tempered by the debate around global warming and fossil fuels.
But, time is not on our side. Over the border from Mozambique, in Malawi, the booming charcoal trade is relentlessly damaging the nation’s reputation as an evergreen country. Malawi has the highest deforestation rate in the Southern African Development Community (SADC) region. The disappearance of forest cover has also resulted in massive soil erosion and siltation in low-lying areas, leading to flooding that has been disrupting operations at Malawi’s biggest hydroelectric dam, the Nkula Hydroelectric Power Station.
Then again, in Malawi and elsewhere in the SADC region, charcoal’s attractiveness to impoverished locals is not difficult to understand. A sizable bag in an urban area costs around $7. For an average family of seven, this might last them nearly a week, but if they were to use electricity for all their cooking and heating, they would probably spend more than $15 during this time. Not to mention the high cost of electrical cooking appliances such as hotplates and heaters. A new hotplate costs around $30, beyond the reach of ordinary Malawians, most of whom live below the poverty level of $2 a day. In contrast, charcoal stoves, made in China, are around $2.
What the success of the Durban project shows us is that we should be looking towards expanding energy solutions that are already in place. Landfills, often in the heart of African cities, form a center point for the poorest of the poor. Using them to generate electricity, a proven science, could open the door for other more practical solutions.
Today, the fundamental obstacles to energy have been researched and established. The barriers, while complex, can be overcome, and international co-operation can help. Technology is also on our side. We do know how to build power systems and meet energy demand efficiency. What is required is a political prioritization. Energy access must become a continent-wide priority.
Innovation could provide the best chance we have to transform the energy landscape but it is also sobering to think that around 90% of the world’s designers, our greatest minds, spend all their time working on solutions to the problems of the richest 10% of the world’s customers. What if they were to use their expertise to solve the greater problem in the developing world?
African townships draw in and absorb young people from rural areas. They are also places of unbridled ambition and hope, not necessarily idleness and squalor.
In ‘Shadow Cities’, a book that describes a tour of slums across the globe, Robert Neuwirth recalls that New York’s Upper East Side was once a shantytown. He suggests that all cities start as mud. But, in the modern connected technological world we know, the odds are stacked against the slum dwellers when there is no energy to power ambition.

In Need Of A Miracle

The world’s leading industrial goods manufacturers are turning to resource-rich nations in Africa, Latin America, Asia and the Middle East for their next phase of growth.
Industrial behemoths like 3M, ABB, Alstom SA, Caterpillar, General Electric (GE) and Siemens AG have all built up their presence in these fast growing territories. The economic logic for both countries and companies is simple: development, trade, more market share, more revenue and more profit.
In GE’s case, African countries that produce large amounts of oil, natural gas, metals and other commodities also need electric turbines, oil production gear and other heavy equipment to improve the petroleum, energy, healthcare, transportation and water sectors. Company-to-government and joint venture (JV) agreements have been GE’s preferred method of doing business here. A raft of manufacturing and manpower training facilities aligned to its projects across the continent are expected to benefit from GE’s global research and development spend, which totaled $3.9 billion, $4.6 billion and $4.5 billion in 2010, 2011 and 2013 respectively.
The Connecticut-based company acknowledges that its growing footprint in Africa and other emerging markets is not entirely risk-free but is nevertheless critical to its long-term growth objectives.
John Rice, GE’s vice chairman, has stated on several occasions that GE likes to cast a wide geographic net because orders for its products come intermittently. GE currently generates more revenue from Latin America than in China and India combined.
The company’s order book in Africa may soon rival its Latin America portfolio. Its focus appears to be just in time as African governments search for credible global players with core engineering capabilities to help develop state-controlled assets in critical economic sectors.
Nigeria’s local supplier base is expected to grow from 10 to 100 over the next decade and it is working with the government and private sector to add 10,000 megawatts of power to the national grid. These sectors are also helping to modernize and expand Nigeria’s railway fleet and network. And guess which engines run on most of Africa’s smoky locomotive trains?
“The big change for GE in Africa occurred when we bought a company called Vetco Grey (in 2005), which is the oil and gas equipment business,” Jay Ireland, the president and CEO of GE Africa tells FORBES AFRICA.
“That gave us a footprint in Nigeria and Angola that we didn’t have before. That’s now part of GE Oil &amp; Gas.”
The IMF forecasts sub-Saharan GDP growth of 6% in 2014, up from 5% in 2013. Inflation is forecast at 6.3%, the lowest annual average for the region in 30 years. According to the World Bank, consumer spending accounted for more than 60% of sub-Saharan Africa’s economic growth last year. For the first time in memory, the rewards of doing business in Africa seem to outweigh the risks.
GE’s recent investment in Nigeria reflects its grand ambitions on the continent. According to Ireland, the company’s proposed manufacturing facility in the south eastern coastal town of Calabar will eventually cost the firm $1 billion and an additional $750 million will be pumped into the project over the next five years to galvanize local sourcing of goods, services and labor, including an expansive human capital management and development agenda that will have a positive impact on the host community and country.
Eventually, more than 2,300 direct and indirect jobs are expected to evolve out of the new factories. Calabar is a historic location, known for its annual month-long carnivals. With GE in tow, the calm, rustic town will lose its serene mood. And as the local economy begins to boom, centuries-old agricultural practices will give way to engineering and manufacturing jobs.
“We want to be in Nigeria… we will be part of a duty-free zone in Calabar… where we can attract employees and impact the community and the environment positively,” says Ireland.
These are grand ambitions. GE’s work on the continent is cut out and the competition to repair Africa’s decrepit infrastructure is fierce. But, Ireland is a laconic but thoughtful man. This trait may be what the company needs to tackle the difficulties of doing business on the continent. It is an interesting time to be in Africa.

Renewed Focus In Africa

This generation of young African women is the most ambitious yet. They are eager to build industries, reform societies, save lives, rewrite history, and transform the continent.
Our annual “20 Young Power African Women” list illuminates the brightest stars and Africa’s most outstanding female game changers. We enlisted a group of young, professional African women to help identify the most innovative, courageous, daring and successful young women aged 45 and under. It is a subjective list, no doubt, but it is the closest you will get to a definitive list.
Meet the 2013 class of 20 Young Power Women in Africa: the continent’s emerging power brokers, the Amazons to watch, and the custodians of tomorrow.
<h5>Isabel Dos Santos</h5>
<h5>Angolan. Investor</h5>
The daughter of Angola’s President, Jose Eduardo Dos Santos is Africa’s richest woman. She is also one of the continent’s most powerful businesswomen. Through her various holding companies, she controls a 25% stake in Angolan mobile telecom operator Unitel, a 25% stake in Angola’s Banco BIC, 25% of ZON Optimus, a listed Portuguese cable TV company, and just under 20% of Banco BPI, one of Portugal’s largest publicly traded banks. She is also partnering with Sonae, Portugal’s largest retailer, to launch 5 new food hypermarkets in Angola in 2014.
<h5>Mimi Alemayehou</h5>
<h5>Ethiopian. Executive Vice</h5>
<h5>President of the Overseas Private Investment Corporation (OPIC)</h5>
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In 2010 U.S. President Barack Obama nominated Ethiopia-born Mimi Alemayehou as the Executive Vice President of the Overseas Private Investment Corporation (OPIC), the U.S. government’s development finance institution. She helps manage OPIC’s $16 billion war chest, channeling American capital to fund investment opportunities in emerging markets. Prior to her OPIC appointment, Alemayehou served as the United States Executive Director at the African Development Bank.
<h5>Lupita Nyong’o</h5>
<h5>Kenyan. Actress and Filmmaker</h5>
Nyong’o is a Kenyan actress and filmmaker who made her Hollywood debut in acclaimed film director Steve McQueen’s “12 Years a Slave” as Patsey. Nyong’o was born in Mexico, raised in Kenya and educated in the U.S. She is a graduate of Yale University’s School of Drama. In 2009, the breakout actress was also the lead in MTV’s award-winning drama series, Shuga. Nyong’o’s cousin, Isis Nyong’o was named one of Forbes 20 Youngest Power Women in Africa in 2011. Another cousin, Tavia Nyong’o, is a professor at NYU’s Tisch School of the Arts.
<h5>Hadeel Ibrahim</h5>
<h5>Sudanese. Mo Ibrahim Foundation</h5>
Hadeel Ibrahim is the daughter of Sudanese-born British mobile telecoms billionaire Mo Ibrahim. She is the founding Executive Director of the Mo Ibrahim Foundation, which was established in 2006 to support leadership and good governance in Africa. She also serves on the Boards of the Mary Robinson Foundation for Climate Justice and the African Governance Institute (AGI).
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<h5>Minoush Abdel-Meguid</h5>
<h5>Egyptian. Private Equity Investor, Entrepreneur, Investment Banker</h5>
The Egyptian-born investment banker is the cofounder of Union Capital, an Egyptian investment firm primarily focused on small and medium-sized enterprises. Abdel-Meguid is also founding president of the Egyptian Young Bankers Association, an organization that mentors young banking professionals.
<h5>Monica Musonda</h5>
<h5>Zambian. Chief Executive Officer and Founder of Java Foods</h5>
Musonda is the founder of Java Foods, a Zambia-based food processing company that manufactures the eeZee brand of Instant Noodles. Musonda previously worked with Africa’s richest man, Aliko Dangote, as the director of legal and corporate affairs at Dangote Group, where she led a project to build a cement plant in Zambia. She currently serves on the Boards of Dangote Industries Zambia Limited and the Central Bank of Zambia. Musonda is also the Chairperson of Kwacha Pension Trust Fund, Zambia’s largest single employer pension fund. She is an Archbishop Desmond Tutu Leadership Fellow and was named a 2013 Young Global Leader by the World Economic Forum.
<h5>Lindiwe Mazibuko</h5>
<h5>South African. Politician &amp; Parliamentary Leader for Democratic Alliance (DA)</h5>
Mazibuko, 33, is a Parliamentary Leader for the Democratic Alliance (MP for North Durban) and Leader of the Opposition in the National Assembly in South Africa. As the country’s fourth youngest parliamentarian, Mazibuko is already being touted as a future leader of the Democratic Alliance. Mazibuko was named South Africa’s Most Influential Woman in 2012 and a Young Global Leader by the World Economic Forum in 2013.
<h5>Tara Fela-Durotoye</h5>
<h5>Nigerian. Founder, House Of Tara</h5>
The Nigerian-born entrepreneur and lawyer is the founder of House Of Tara, Nigeria’s leading beauty and cosmetics company. House of Tara develops a wide range of African-themed beauty products and perfumes and also operates Nigeria’s foremost beauty academy. In 2013, Fela-Durotoye was nominated as a Young Global Leader by the World Economic Forum (WEF).
<h5>Claire Akamanzi</h5>
<h5>Rwandan. Chief Operating Officer, Rwanda Development Board</h5>
Akamanzi, 34, is the Chief Operating Officer of the Rwandan Development Board (RDB), a government institution tasked with accelerating economic growth and development in Rwanda by enabling private sector growth. Akamanzi has had a successful career in public service, serving as Rwanda’s commercial diplomat in London and as a trade negotiator in Geneva for the Rwandan government at the World Trade Organization. She was also previously the Deputy Director-General of the Rwanda Investment and Export Promotion Agency (RIEPA).
<h5>PROSCOVIA Alengot Oromait</h5>
<h5>Ugandan. Member Of Parliament</h5>
Proscovia Oromait, 20, is the youngest parliamentarian in Africa. In 2012 she was elected Member of Parliament for Usuk County, Katakwi District in Uganda. Her father, Michael Oromait, served as the MP for the same Parliamentary seat before his death in July 2012. She is a member of Uganda’s ruling National Resistance Movement party.
<h5>Sibongile Sambo</h5>
<h5>South African. Chief Executive Officer and Founder of SRS Aviation</h5>
Sambo is the founder and Managing Director of SRS (Sibongile Rejoice Sambo) Aviation – the first black female owned aviation company in South Africa. SRS is an integrated provider of private aviation services offering South African and international clients VIP Charter, tourist charter and helicopter services. The company also provides maintenance, sales and fleet management services to private jet owners.
<h5>Vera Songwe</h5>
<h5>Cameroonian. Country Director, World Bank, Senegal</h5>
Vera Songwe, a Cameroonian national, serves as the World Bank’s Country Director for Senegal, Cape Verde, Gambia, Mauritania and Guinea-Bissau. She is also a non-resident senior fellow at the Brookings Institute with the Global Economy and Development and Africa Growth Initiative.
<h5>Angellah Kariuki</h5>
<h5>Tanzanian. Politician</h5>
Kariuki, 37, is a Special seat Member of Tanzania’s Parliament and the country’s Deputy Minister for Justice and Constitutional Affairs.
<div id="attachment_5969" style="width: 209px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-5969" class="size-medium wp-image-5969" src="/wp-content/uploads/2017/05/83362281-199x300.jpg" alt="" width="199" height="300" />Artist Wangechi Mutu attends the 2008 Whitney Museum of American Art&#8217;s gala</div>
<h5>Wangechi Mutu</h5>
<h5>Kenyan. Artist and Sculptor</h5>
Considered one of the most important contemporary African artists of recent years, Mutu’s first major solo exhibition in the U.S., Wangechi Mutu: A Fantastic Journey, opened at the Nasher Museum of Art at Duke University in Durham, North Carolina in March 2013. Mutu’s work has achieved much global acclaim with exhibitions at museums and galleries worldwide including the San Francisco Museum of Modern Art, the Miami Art Museum, Tate Modern in London, the Studio Museum in Harlem in New York, Museum Kunstpalast in Düsseldorf, Germany the Centre Georges Pompidou in Paris. Her first solo exhibition at a major North American museum opened at the Art Gallery of Ontario in March 2010.
<h5>Ola Orekunrin</h5>
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<h5>Nigerian. Medical Doctor &amp; Founder, The Flying Doctors</h5>
Orekunrin, 25, is founder and Managing Director of Flying Doctors Nigeria Ltd., an air ambulance service based in Lagos, Nigeria. Orekunrin’s company is the first air ambulance service in West Africa to provide urgent helicopter, airplane ambulance and evacuation services for critically injured people. She is a 2013 New Voices Fellow at the Aspen Institute and was named a Young Global Leader in 2013 by the World Economic Forum.
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<h5>Rapelang Rabana</h5>
<h5>South African. Entrepreneur</h5>
One of Africa’s most recognizable young entrepreneurs, Rabana, 29, is the CEO and founder of Cape Town-based Yeigo Communications, which develops software for telecoms-related services including Voice over IP, instant messaging, SMS messaging and push email services. In 2008, Telfree, a Swiss mobile telecommunications firm, acquired a 51% stake in Yeigo. In December 2012 she founded Rekindle Learning, a company that provides adaptive mobile learning solutions.
<h5>Folake Folarin-Coker</h5>
<h5>Nigerian. Fashion Designer</h5>
Coker is the founder of Tiffany Amber, one of Africa’s leading fashion labels. She is the first African-based designer to showcase for two consecutive seasons at New York Fashion Week. In 2009, she won Designer of the Year at African Fashion International in Johannesburg, South Africa followed by Fashion Brand of the Year in 2011 at the Arise Fashion Week in Lagos, Nigeria.
<h5>Valentina da Luz Guebuza</h5>
<h5>Mozambiquan. Investor</h5>
The 33 year-old daughter of Mozambique’s President Armando Guebuza heads Focus 21 Management &amp; Development, a large family-owned investment holding company with interests in banking, telecommunications, fisheries, transport, mining and property. Focus 21 owns significant stakes in Beira Grain Terminal and Chinese Pay TV Company StarTimes’ operations in Mozambique.
<img loading="lazy" decoding="async" class="alignleft size-medium wp-image-5971" src="/wp-content/uploads/2017/05/valentina_guebuza_20120505_32-Edit-200x300.jpg" alt="" width="200" height="300" />
<h5>NoViolet Bulawayo</h5>
<h5>Zimbabwean. Author</h5>
Zimbabwean-born author NoViolet Bulawayo is the first Black African female and the first Zimbabwean to be shortlisted for the prestigious Man Booker prize for her debut novel “We Need New Names”. She is the author of the short story Hitting Budapest (2010), which won the 2011 Caine Prize for African Writing. NoViolet Bulawayo is currently a Stegner Fellow at Stanford University in California.
<h5>Amini Kajunju</h5>
<h5>Democratic Republic of Congo. President &amp; CEO,</h5>
<h5>Africa-America Institute</h5>
<div id="attachment_5967" style="width: 226px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-5967" class="size-medium wp-image-5967" src="/wp-content/uploads/2017/05/181837445-216x300.jpg" alt="" width="216" height="300" />Amini Kajunju speaks during the Africa-America Institute 60th Anniversary Awards Gala at New York Hilton on September 25, 2013 in New York City.</div>
A native of the Democratic Republic of Congo, Amini Kajunju is the President &amp; CEO of the Africa-America Institute, and the first African woman to serve at the helm of the oldest non-profit organization of its kind in the United States. Kajunju joined the Africa-America Institute in October 2012 from the New York-based Workshop in Business Opportunities (WIBO) where she had served as Executive Director for 10 years. Under her leadership, Kajunju has bolstered the organization’s programming and served more entrepreneurs than any other institution of a similar size in New York City.
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20 Young Power Women In Africa 2013

The Nairobi Securities Exchange (NSE) 20 Share Index closed last year at an enviable 19.2%, settling at 4,927 points. Similarly, investors’ wealth rose from Ksh1.27 trillion ($14.7 billion) to Ksh1.92 trillion ($22.2 billion)—an equivalent of 51.2%. With government debt and real estate yielding an average of 8.2% and 6% respectively, equities easily became the top performing asset class.
Therefore, with an average inflation of 5.7% throughout last year, it means equities gave the best return in real terms. Persistent foreign investor interest, falling interest rates and general favorable economic conditions are some of the main factors that supported the rally. Notwithstanding the heightened political tension early in the year and the almost 100% rise in overall inflation, the market proved to be more robust than expected.
The top five counters, Centum Investment Company, British American Investments, CFC Insurance, Pan Africa Insurance and Safaricom, all doubled in price within the 12-month period on the back of stellar returns. Laggards of the year included Mumias, Kenol Kobil and Scangroup, which all lost more than 25% of their value due to difficult operating environments and negative sentiment. Safaricom became the first NSE-listed company to rise to a capitalization of Ksh400 billion ($4.6 billion) when its share price went past the Ksh10 mark for the first time.
Foreign investors piled into big caps like East African Breweries, Bamburi Cement, Equity Bank and KCB Bank, as appetite for African equities improved. The Capital Markets Authority (CMA) now indicates that foreigners account for 22.4% of investors’ holdings, up from a low of 7.9% in 2008, according to its third quarter Statistical Bulletin 2013. This group now averages 50% on investors’ monthly participation in the market. Net cash inflows from this investor category for the nine months ending last September amounted to Ksh22.6 billion ($262 million), almost matching the total sum for the full year in 2012, which stood at Ksh21.7 billion ($251 million).
NSE saw its total listings go up to 61 following the listing of Home Afrika, a real estate developer which joined the market by way of introduction. The firm floated 405 million shares on the NSE’s Growth Enterprise Market Segment. There were no delistings during the year. CMC Holdings remained suspended, pending the resolution of corporate governance issues and a take-over bid by the Al–Futtaim Group. Access Kenya and Rea Vipingo were also suspended from active trading following take-over notices.
This year the market is poised to keep up with the trend of the overall economy, in effect setting the stage for the continuation. The former major resistance at the 5,000 level may soon turn into a support area, especially if first quarter numbers are solid. The country is projected to grow by 6.2% this year according to the International Monetary Fund (IMF), an improvement from 5.9% in 2013 and 4.6% the year earlier. However, IMF’s managing director, Christine Lagarde, warned that the gradual tapering of the United States monetary stimulus program in coming months could temper equity returns and massive outflows could ensue as a result.
Nevertheless, one of the sectors expected to do well is the energy sector owing to the confirmation of higher amounts of recoverable oil, over and above the 300 million barrels so far reported; a scenario likely to spur additional capital expenditure into the country. In this regard, Transcentury is best placed to attract investor attention as it is the only listed stock closely involved in oil and gas exploration. Civicon, one of its important subsidiaries, was recently awarded a lucrative contract involving the building of supporting infrastructure around oil exploration blocks in northern Kenya.
Other sectors anticipated to deliver good returns include the banking and consumer sectors according to risk and research firm Stratlink Africa. It argues the two sectors will experience robust growth, fueled by increasing demand for financial services and technology, especially in the mobile banking arena. In this regard, Kenya Airways, Cooperative Bank, NIC Bank and Barclays Kenya provide a potential hunting ground. However, the firm cautioned that there is risk to this outlook, stemming from the uncertainty surrounding the International Criminal Court cases against the president and his deputy.
Nonetheless, the market multiple stands at 16, meaning there are opportunities to be found. I therefore would like to wish all the bargain hunters out there all the best investing in 2014.

NSE’S AMAZING  BULL RUN

After terrorists were rooted out of the Westgate shopping mall, a group of dignitaries flocked to the site of the siege. One of the first to visit the shopping mall was Phyllis Kandie, the cabinet secretary for East African affairs, commerce and tourism.
After laying a wreath, she turned to the swarming media and declared: “The country is still safe for tourists.”
<div id="attachment_2274" style="width: 310px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-2274" class="size-medium wp-image-2274" src="/wp-content/uploads/2017/04/NM_00001208-300x201.jpg" alt="" width="300" height="201" />NAIROBI, KENYA &#8211; SEPTEMBER 23: Heavy smoke is seen from the site of the terrorist attack, Westgate Mall, on September 23, 2013 in Nairobi, Kenya. The attack occurred on Saturday, 10-15 gunmen from the extremist group Al-Shabab entered the mall and opened fire at random on shoppers; 68 deaths have been confirmed. (Photo by Gallo Images / Nation Media / Salaton Njau)</div>
One day later, the country’s principal secretary of Kenya’s treasury, Kamau Thugge, emerged to assure investors of the country’s security. The officials’ sentiments reflected the uncertainty over the effects the attacks committed by the terrorist group, Al Shabaab, which left 67 dead and dozens missing, on the Kenyan economy.
While government spin doctors insist that the siege will not have any effect, analysts predict a slight dent on economic growth. The most immediate impact was the closure of stores in Westgate, which housed international brands like Deacons, Clarks and other businesses, such as banks.
On a larger scale, global credit rating firm, Moody’s, predicts that Kenya’s economy will lose 0.5% of potential GDP growth this year. In an advisory to investors, the firm noted that the attack will affect Kenya’s growth and fiscal revenues, most directly through its effects on tourism.
This industry accounts for 2% of Kenya’s GDP and earned the country more than $13 billion last year, in addition to creating millions of jobs.
Moody’s could have been onto something. Barely a week after the siege, the governments of the United States, Britain, Australia and Sweden cautioned citizens against visiting Kenya, to the chagrin of Kenyan state officials who had pushed for the West not to do so. These countries account for half of the 1.7 million tourists who visited Kenya last year.
<div id="attachment_2276" style="width: 187px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-2276" class="size-medium wp-image-2276" src="/wp-content/uploads/2017/04/RTX13XVR-177x300.jpg" alt="" width="177" height="300" />Kenya Defence Forces soldiers comb the rooftop of the Westgate shopping mall, on the fourth day since militants stormed into the mall, in Nairobi September 24, 2013. Somalia&#8217;s al Shabaab Islamist group said on Tuesday its militants were still holed up in a Kenyan shopping mall they attacked at the weekend and there were &#8220;countless dead bodies&#8221;, raising fears the death toll could be higher than 62. REUTERS/Noor Khamis (KENYA &#8211; Tags: CIVIL UNREST CRIME LAW MILITARY) &#8211; RTX13XVR</div>
Kenya, which is known for exotic wildlife safaris and pristine beaches, is traditionally a tourism hotspot. The attack came at a bad time. The sector’s peak season is from July to December and many hotels and parks had hoped to benefit from the many bookings normally recorded in this period. After the attack, some have recorded cancellations as visitors adopted a wait-and-see attitude.
The sector is also still reeling from the election blues in March, when visitors stayed away due to fears of a repeat of the post-election violence that took place in 2008. Last year, the uncertainties over elections and the European economic crisis led to a 1.9% decline in the number of tourists.
The attack and any political instability brought about by the trial of the country’s president, Uhuru Kenyatta, and his deputy, William Ruto, at the International Criminal Court will hurt risk ratings, making it difficult to raise money in foreign markets. Any money that is raised will also attract higher interest rates.
Kenya plans to issue a $1.5 billion Eurobond this year to finance rail, road and port upgrades. The country has a favorable rating by various firms. For instance, Standard and Poor’s rating for Kenya is ‘B+’ stable and Fitch has graded it ‘B+’ positive outlook. Weakened by the terrorist attacks, the favorable rating is also being assaulted by politicians.
There have been calls by the Senate and the National Assembly to ratify a motion to pull out of the Rome Statute that creates the ICC, where Kenyatta and Ruto are on trial. Moody’s has warned that Kenya risks being downgraded from a stable rating of B1 if it goes ahead with this, signifying a higher risk for investors.
A lower rating may deter investors with plans to put their money in Kenya in addition to raising premiums that insurers charge for terrorism cover. George Otieno, the chief executive officer of Africa Trade Insurance Agency, an institution that insures investors against terrorism in different countries, told reporters that premiums are likely to go up for those taking terrorism and sabotage cover. However, he predicted that the costs will go down in the long run.
In addition to insurance, firms will also have to spend more on security by installing CCTV cameras, alarms and metal detectors. They will also have to train employees and arrange back-up for their data. All this will increase the cost of doing business.
The government, under pressure after analysts accused them of bungling the intelligence gathered before the attacks, is likely to increase spending on security and defense.
“This will have the consequence of raising the government’s gaping budget deficit,” noted Laura Chakava of investment firm Alpha Africa Asset Managers. Kenya’s budget deficit has grown from 6.5% of the GDP in the 2012/2013 fiscal year to 7.9% in 2013/2014, marking a 1.4% increase. This is against a target of 5%.
Though there are no reliable studies on the effect terrorism, like the Westgate attack, will have on the flow of foreign direct investment in Kenya, research by American scholars offers a glimpse.
In a paper published this year, Subhayu Bandyopadhyay of the Federal Reserve Bank of St. Louis, Todd Sandler of the University of Texas at Dallas and Javed Younas of the American University of Sharjah looked at how terrorist activity had impacted foreign direct investment (FDI) to 78 developing countries between 1984 and 2008. They noted that one domestic terrorist incident per 100,000 persons reduces net FDI between $323.60 million and $512.94 million for an average country. On the other hand one transnational terrorist incident per 100,000 persons reduces net FDI between $296.49 million and $735.65 million.
Kenya plans to attract $8 billion in foreign investments over the next five years.
However, both governments and analysts agree on one thing; the fundamentals of the Kenyan economy are sound. Unless other factors crop up, the attacks will only have a short to medium-term effect on growth.

The Cost of Terror In The Mall

As Zimbabwe gears up for elections later this year, there is optimism following a successful referendum signing for a new constitution. The referendum, which limits future presidential candidates to two five-year terms in office and allows for their removal if they are found guilty of serious misconduct, violate the constitution or are physically or mentally incapacitated. At least two million people cast their vote in the referendum on March 16.
The agreement is seen as a signal for investors to return to the mineral-rich country, which has been struggling for years. During a conference held over two days in Boksburg, South Africa, a delegation of high ranking Zimbabwean officials gathered to sell their country to investors.
It was led by deputy prime minister and famed rocket scientist Arthur Mutambara and the minister of economic planning and investment promotion, Tapiwa Mashakada. The aim was to lure investors and allay fears of the often violent confiscation of farms.
It is going to be a tough job for them as the country has no currency of its own. The use of the Zimbabwean dollar as an official currency was abandoned in 2009 as the Reserve Bank legalized the use of foreign currencies for transactions.
“Zimbabwe is open for business. The country offers serious investment opportunities in mining, manufacturing, tourism, construction, agriculture and consumer-facing industries such as ICT. In addition, attractive fiscal incentives are available to registered and licensed investors,” says Mashakada.
The Zimbabwean constitution has been a thorn in the side hampering growth and foreign investment in the past. Mutambara says that one of the problems they have had over the past 10 years has been the issue of the constitution. He says that most agreed that the problems were coming from a flawed and dysfunctional constitution.
“For the past 10 or so years there has been a movement to develop a new constitution. What we have done with this referendum is that now we have a new constitution adopted by the people of Zimbabwe. It might not be the best or the most desired constitution; it was a compromised document. Three major parties had to compromise but it is better than the old constitution. The positive thing is to say that now Zimbabwe has a new constitution, which the majority of people endorsed, that’s progress… We need to make sure the taxation is supportive of investors. The referendum and constitution are a starting point in the journey of the creation of an attractive business climate,” says Mutambara.
When questioned about the past, which saw farmers and investors driven away, Mutambara is confident that it won’t happen again. He says that the indigenization law, which says foreign companies must sell 51% of their stake to a Zimbabwean national, is not about expropriation or nationalization.
“We want to empower our people, we want our people to be involved in their economy but when we say we want 51%, the Zimbabwean player must pay fair value for those shares. That way we have a partnership that brings stability for the investor and for the Zimbabwean economy,” says Mutambara.
Gabriel Shumba, a human rights lawyer and political commentator from Zimbabwe, is skeptical.
“It is still premature to be talking about investors returning to the country as much as talking about exiled Zimbabweans returning home. Zimbabwe still has to adhere to electoral regulations and we need to see the results of the elections not being contested before investors can come,” he says.
In the fight for investors, the Zimbabwean people have support from the South African government. South Africa’s deputy minister of trade and industry, Elizabeth Thabethe, told delegates at the conference that Zimbabwe could feed the entire African continent.
“We have agreed with our partners, including Zimbabwe, that we must do more collaborative work in developing institutions, including access to finance. In 2010, the country only managed to attract about $105 million out of over $2 billion proposals submitted. They are however showing interest in moving forward,” she says.
Gauteng Department of Economic Development MEC Nkosiphendule Kolisile agreed that South Africa should encourage investors.
“They must think employment, job creation. If your neighbors are having instability in their economy, you don’t go around rejoicing because that will have a direct impact on your economy,” he says.
The question is whether investors will heed the call. It is clear that if Zimbabwe sneezes, Africa catches a cold.

REFERENDUM AND INVESTMENTS

In the 1800s, Europeans referred to Africa as the “dark continent”, although the Victorian term has fallen from usage, until recently it accurately described the approach of foreign investors to Africa. Risk was thought to be too high, returns too low. A decade ago, the region’s share of FDI was less than one-tenth of the amount flowing into Asia or Latin America. Until a few years ago, a single company, Exxon Mobil, was worth more than all of Africa’s listed companies put together, excluding those of South Africa.
But what a difference a few years can make. Since the financial crisis hit in 2008, there has been a dramatic shift in how investors view Africa. One of the markets that has best epitomized this change is Ghana.
<img loading="lazy" decoding="async" class="alignleft size-medium wp-image-1598" src="/wp-content/uploads/2017/04/one-300x199.jpg" alt="" width="300" height="199" />
The West African county was near the top of worldwide tables in 2011 in terms of GDP growth with a rate of more than 14%. 2012 figures were equally robust, coming in at above 8.5% buoyed by strong growth in the non-oil sector of 8%. While the country is largely dependent on commodities for export revenues, increased activity in housing, construction and banking has spurred an expansion of the services sector, which makes up more than half of GDP.
Last year saw a gradual depreciation in the cedi, which fell by around 14% against the dollar, driven by increased demand for imports. While the country’s robust growth also stoked inflationary pressures, at least over the short-term, the CPI fell to 8.8% in December—its thirty-first consecutive month of single-digit inflation.
The country benefited from a statistical rebasing a few years earlier, which dramatically improved data collection and accuracy. As a result, the country was catapulted into middle-income status.
The biggest recent watershed moment for the country is as a result of its newfound oil and gas reserves. The offshore Jubilee field, discovered in 2007, began production in record time, with the first barrel being lifted at the end of 2010. The speed with which Ghana went about capitalizing on its new oil wealth, 42 months from discovery to production, led to a few hiccups. For four months, light, sweet crude flowed without a regulatory framework to determine how the revenue would be channeled and how future production would be handled. Eventually, the Petroleum Revenue Management Bill was put in place. It allocates a proportion of revenue to future generation funds and price stabilization funds and some $444 million worth of oil revenue flowed into government coffers by the end of 2011. The production, in relation to the country’s overall economy, is modest and by some estimates will work out to around $50 per capita annually but the rush of investment into the sector—and ancillary industries, such as construction and services—helped ensure the country was one of the largest FDI destinations in Africa last year.
Associated gas deposits in the field brim with equally promising potential, particularly in terms of domestic industrial and electricity production, although timing has been problematic. Currently, with a ban on flaring and no offtake infrastructure, gas has been re-injected into the deposits but at a certain point this will negatively affect oil production. As a result, the country has been racing over the past year to finalize infrastructure for its gas master plan, which will see the construction of more than $750 million worth of new processing and pipeline infrastructure by China’s SINOPEC. Gas is due to begin flowing to the newly-built Aboadze power plant over the next month or two—and none too soon, given the blackouts last year when the country’s alternative gas supply, the West African Gas Pipeline, experienced supply shortages.
While hydrocarbons dominate the headlines, Ghana’s traditional commodities have provided the bulk of revenues in recent years. Cocoa, which indirectly supports more than one-sixth of the population, had a successful year with an estimated production figure of 860,000 tons, down slightly from the previous year but enough to make it the world’s second largest producer. The distribution of more than 20,000 new hybrid seedlings and efforts to improve the ability of small farmers to tend and replace their crops, looks set to strengthen output over the medium-term.
Similarly, gold, which accounts for roughly 40% of exports, grew by double-digit figures over 2012. Although production fell slightly, higher prices on international markets helped keep prices afloat and fund new exploration in marginal deposits. Ghana has revamped its regulatory scheme, introducing a new bidding system and increasing the fiscal burden for operators, including a windfall tax and higher royalties.
Of course, with all this laudable growth comes a note of caution. This rapid change must be managed carefully, for the downside risks facing the country are sizable. Ghana was the third-largest recipient of FDI in Africa last year, but it remains worryingly dependent on commodities. Gold, cocoa and oil dominate exports and while Ghana is not as sensitive to price fluctuations as it was in the 1980s, when the economy seesawed according to international prices, volatility still impacts overall performance. Furthermore, labor-intensive activities such as manufacturing remain marginalized, exacerbating unemployment and weakening the balance of payments. The benefits of the economic boom have been disproportionately concentrated in the south and development in the north lags significantly.
However, Ghana has the ideal foundation for future growth. It has natural resources, policy stability and reasonable infrastructure and it has benefited accordingly. But exporting raw materials, by sending gold and cocoa elsewhere for processing, is a short-term solution. The country has begun aggressively encouraging increased value-added production in the secondary and tertiary sectors, to improve the sustainability and inclusiveness of growth and to ensure that the country’s current performance is not a temporary blip.

Gas And Cocoa Oils Ghana Growth

Virtually all that stuff has to be dug out of the ground. Mined. Then manufactured, transported, sold and consumed.
First, it has to be found, where it hides, mostly deep underground. So, exploration companies with their massive machines, technology, geologists, agronomists, hydrologists, geophysicists and acoustical engineers flock to the Mining Indaba at Africa’s Southern tip. As do prospectors, who tell exploration companies where to look.
Then come the investigative drillers, reserve definers, junior miners and risk assessors, metals analysers, remote camp builders and computer software writers. Feeding at the edges, as always, are the lawyers.  Next come those who do actual mine construction. Here, the big boys get involved: banks, investors, partners, governments, fund managers, engineers, employment agencies. Lawyers move in. And we still have nothing tangible, nothing yet taken out of the ground to feed metals and minerals to a hungry populace.
<div id="attachment_1586" style="width: 310px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-1586" class="size-medium wp-image-1586" src="/wp-content/uploads/2013/03/Minister_Shabangu-300x200.jpg" alt="" width="300" height="200" />Minister, Susan Shabangu</div>
Once gold, copper, coal, iron ore, bauxite and a hundred other elements surface from undergound, a new breed of people get involved, until the cars, jewellery, electricity or cellphone gets the stuff into consumer hands.
The extracted total of mining production is worth two trillion dollars, putting the worth of the whole industry and associated ones at about $2,000 trillion.
The Indaba itself? Probably worth $20 million. And its value to Cape Town? Ten times that.
There are 3,000 listed exploration and mining companies, half of them in Canada. The three deepest mines are in South Africa. Coal is easily the most valuable mined commodity, with 7,700 million tons a year worth an annual $693 billion. The next three are iron (2,000 million tons worth $238 billion), gold (257,000 tons worth $132 billion) and copper (16 million tons worth $122 billion). All these numbers from Chris Hinde of IntierraRMG, who ran “A three-hour PhD in Mining” at the 2013 Indaba.
Besides the 7,532 people registered for this year’s event, there were around that number again hanging around, often in suites near the venue, organising meetings with those who are registered.
One top chief executive of a mining company told me: “I don’t bother to go in anymore, otherwise I have to say ‘hi’ to a lot of people instead of just talking to the ones I need to meet. I take a room and get investors to see me privately.”
In the Cape Town International Convention Centre (CTICC) itself are hordes of people in black suits and red ties, anxious looking if they need money, urbane if they are investors or lawyers. Milling about, chatting, drinking, eating and of course networking.
Oh, and there are speeches as well. As a fraction of total delegates, the audience for scheduled addresses seldom exceeds half, which is still close to 4,000 listeners in the hall. Yet the talks are fascinating, especially the women this year. South Africa’s minister of mines, Susan Shabangu, tried to allay investors’ fears about real nationalization but failed to convince them that creeping resource nationalization in the form of taxes, labor laws, fees, licences, community demands and union demands were not a threat to investment. One mine owner muttered: “We’ve already been nationalized, we just didn’t notice it…”
Anglo American CEO, Cynthia Carroll, responded by telling the minister and her Cabinet colleagues: “Mining companies need to work in partnership with their employees and trade unions, to move on from conflict and to build positive relationships for the future. Partnership between business and government is also critical, particularly in ensuring that development objectives and initiatives are aligned. Partnership is essential. But it isn’t easy. Partnership is about dialogue—not monologue. It requires listening as well as talking. And above all it requires understanding and acceptance. Companies need to understand that in a vibrant democracy there will always be a lively political debate, in which not all the views expressed will be to the liking of business. In return, governments and political parties need to accept that business has an important role to play and a legitimate voice that deserves to be heard. Business is a partner, not a pariah.”
The third tough woman speaker was Mamphela Ramphele, who told delegates to be patient when asked if she was creating a new political party.
Her substantive address damned the current government by saying, to a ripple of laughter: “For the most, mining tax revenues vanish in the black hole that is the central fiscus and end up funding large rural estates for presidents.”
She took the audience on a tour of the key issues needing frank discussion if a viable and sustainable future for mining is to be forged. How do you build a mine to best share the resource? How do you deal with legacy issues to enable co-ownership of risk and reward? What needs to change to create sustainable economies and socio-political systems?
There were many speakers, each with platinum-plated wisdom to convey. It can get too much, so I took a tour of the 400 stalls in the exhibition center, mostly manned by Australians—who love Cape Town, seem to despise their government and see Africa as the future of mining globally.  Every single one told me they were happy to be at the Indaba ($12,500 per stand), would be back next year, and did not expect to do business but were there to collect leads for future business.
Jonathan Moore, MD of the Mining Indaba, said because it attracted investors and mining chief executives, it should probably not grow to be very much bigger as quality could suffer.
“It was started by a bright female entrepreneur, Sandy Lawrence, who realized when SA came out of apartheid there would be an opportunity. The first one only had about 200 people, but after it grew bigger she sold it to a private equity firm who held it for about five years, and Summit Business Media, based mostly in New York, bought it in 2007. She thought the intent of the event should be to drive foreign dollars into African mining.”
It has certainly done that.
“I bring 15 people from the USA but employ locals for PR, tech, IT, printing, signage, transport, bags, building stands, some 50 to 60 temps, security. We fill hotels, flights, restaurants, the CTICC, taxis, shops.”
“The CTICC is world-class, as are the staff. Everyone is happy to have it in Cape Town, and the city benefits big time. The world is still waking up to what this continent of Africa has to offer. The Indaba has moved in unison with that awakening and in a few decades things will be very different from now. We haven’t come close to tapping Africa’s mining resource.”
Levels of optimism are high, despite Marikana and the platinum recession. New finds everywhere, all bigger, better, richer, higher grade. Only the Australians seem unhappy, probably because they have to return to a depressed economy coupled with boring politicians.
Africa is on the move. Most of the stuff that has to be dug out of the ground, metals and minerals and increasingly oil and the gas, will come from Africa. Those who will reap the rewards of doing that are the people who people the corridors of the Mining Indaba. It is simply one of the world’s most successful conferences.

Digging For Profits

Forty years ago, if someone started a video game development company in Africa, investors would laugh him out of court. Today, America, Europe and Asia have turned the video gaming industry into a sub-culture worth billions of dollars, with millions of players worldwide.
In 2008, the Entertainment Software Association (ESA) reported a growth of $11.7 billion from video game software sales in the United States. In South Africa, the Xbox 360 Console sold an average of 3,000 units per month as of October 2006. According to Core Gaming, a South African Nintendo distribution company, the Wii console sold around 4,850 units per month by October 2007. The South African gaming industry grew to the R1.7 billion ($198 million) mark in 2011, according to the GfK Group.
There has been a lot of controversy about who created the first video game. In 1948, Thomas T. Goldsmith Junior and Estle R. Mann patented the Cathode-Ray Tube Amusement Device. It required players to overlay pictures of targets, such as airplanes, in front of the screen, making the term video game redundant.
By the 1950s, video game development became more popular. In 1952, Alexander S. Douglas, a computer science professor, created a version of Tic-Tac-Toe, which is rumored to be the first graphical computer game because unlike Goldsmith and Estle’s device, images were displayed onscreen.
In 1958, William Higinbotham, an American physicist, created Tennis for Two. Four years later, Steve Russell, a MIT scholar, spearheaded the team that created Space War.
Jonathan Musa, an avid gamer, remembers playing Pac-Man in the late 1980s. He owned an Atari console, which was operated by a control pad with a protruding joy-stick and one button.
“You could only play it for 30 minutes before the adaptor overheated,” says Musa.
His admiration for games was passed on to his younger brothers, Paul and Anthony, who were born shortly after the Nintendo Entertainment System (NES) outpaced the Atari in the early 1990s. The games were sold in the form of cartridges. The boys were introduced to the Sega Mega Drive games, which hit Kenyan shelves in the mid-1990s. Japan released the console in 1988 and the Sega Genesis, took the American market by storm the following year.
Musa was still enjoying the Sega Mega Drive when the Super Nintendo Entertainment System (Super NES) was released soon thereafter. Imagine Game Network (IGN) reports that the console has sold more than 49.1 million units worldwide since its conception.
In 1994, the Japanese company released the Nintendo 64 (N64), named after its 64-bit Central Processing Unit, which rivaled all other consoles. The N64 sold 32.93 million units worldwide and was named the 9th greatest video game console by IGN in 2009. Sony released the Play Station on December 31,1995 in Japan; it came to Kenya the following year.
Due to the high cost of Play Station games, piracy became rampant. A popular trend known as hot-swapping gave the market its hardest blow. The process entailed loading an original Play Station game and then quickly swapping the disk for a pirated one once the Play Station logo appeared on the television screen. In Kenya, gamers who wanted to save money would buy one original game and several pirated ones. Video gaming is a lifestyle for some. The Xbox 360 and the Play Station 3 (PS3) have an internal cooling system so that gamers can play for hours on end. On weekends Anthony plays Battlefield, a first-person shooter (FPS) in 1080 pixels on a High-definition flat screen; 64-bits seems like joke now that the PS3 is compatible with Blu-ray. The current generation of videogames has left veterans awestruck in its wake.
Sony and Microsoft have established social networks on their online platforms. Players are represented by glowing dots on a world map; South Africa is the brightest country on the continent.
The video gaming industry has shifted to a mass market model. According to Video Game Charts, Nintendo’s Wii console sold 95.85 million units worldwide as of March; while Sony’s PS3 sold 63.9 million units; Microsoft’s Xbox 360 sold 67.2 million units in April.
The real-time data from first-person shooters is mindboggling: millions of people play Call of Duty at any given time.According to Activision, one of the world’s leading producers of video games, 1.2 trillion virtual bullets have been fired since the game hit shelves. On August 3, 2011, the company confirmed that the game had sold more than 25 million copies worldwide, making it the best-selling game in the United States, the United Kingdom and Europe.
For the gaming industry in Sub-Saharan Africa, the proof is in the pudding. Stores like GameStop and Toy World have found the gaming industry to be very lucrative. The moment a popular game hits shelves, leaflets are distributed to shopping complexes. According to Toy World, Call of Duty is one of Kenya’s best-selling first-person shooters.
Today, your 12-year-old son is giving tactical commands in your living room. His friends are part of an elite squadron of soldiers, fighting a war on the Caspian border. Your neighbors are managing your favorite football teams. And your daughter is playing lawn tennis in the living room. Thanks to companies like Nintendo, Sony and Microsoft, millions of people around the world can do this from the comfort of their homes. Africa has yet to capitalize on the video
game market.

Let’s Play War  In Your Living Room

When, let’s call him Robert S, the CEO of Dutch multinational IT firm X, decides to open a branch in Kenya, he is enthusiastic about expanding into an emerging market that promises substantial return on investment. His firm teams up with a local shareholder to ease transition into the Kenyan business environment. With primary experience in developed markets, the choice of partner is largely financial, neglecting the shareholder’s political connections or ethical track record.
The local partner helps with raising finance, acquiring trading licenses, registering premises and managing the operational set-up including the supply chain. Issues like nepotism, fraud and bribery don’t cross Robert S’s mind until his company successfully tenders for a big contract and is promptly accused of corruption by the losing party. An internal investigation brings severe irregularities to light. Company X finds itself faced with reputational damage, threats from the local shareholders’ political connections and liability of hundreds of millions of dollars.
Two years later, Company X still operates successfully in Kenya, but Robert S wishes he knew back then what he knows now.
Bribery, theft, corruption and other types of fraud cost African governments and companies at least $11 billion last year, the first Africa Fraud Barometer, recently published by auditing firm KPMG, found. That’s a good 10% of the roughly $100 billion in foreign direct investment made on the continent in 2011.
The actual cost of fraud is likely to be much higher, since the barometer only takes into account cases reported in English-language media, and access to police and criminal justice statistics are unavailable in most African countries. More reliable corruption trends will emerge as KPMG updates the fraud barometer every six months.
“It’s very difficult to estimate how high corruption really is. The $11 billion might be quite understated,” admits the firm’s global forensics manager, Petrus Marais, who developed the barometer.
It’s a sobering reminder of the challenges facing the continent, which has, in recent years, attracted massive foreign investment due to impressive economic growth rates of up to 8%. Some of the continent’s largest economies—South Africa, Nigeria and Kenya—have the highest incidence of fraud, according to the barometer, showing clearly that with more economic activity and investment comes increased risk.
Everywhere on the continent, governments and the public sector were hardest hit, claiming about 40% of all fraud cases, closely followed by businesses with 17%. This shows that African business operations have practically experienced “a breakdown in the ethical and moral environment”, warns KPMG.
Investors need to be prepared for this. “It’s extremely difficult to turn the tide. If you don’t have a moral base to operate from, you will have to waste lots of money on checks and balances, on jacking up processes and systems to manage risk,” says Marais. That’s the tradeoff any company wanting to operate successfully in Africa needs to make.
The main culprit of fraud is white-collar crime. Almost every third employee commits some form of fraud, the study found, ranging from junior staff to top management. Perhaps unsurprisingly, the highest value of fraud—$3.3 billion in 2011—was committed by managers, who are generally in positions with authority to approve large transactions and override controls, followed by professional advisors.
“Fraud occurs most where money enters and exits a company or institution. At the interface of financial transactions, perpetrators tend to be most successful in defrauding funds,” says Marais, identifying procurement, recruitment and contracting as the biggest risk areas.
“We hear a lot of anecdotal evidence of corruption,” confirms Thomas Schultz, chief operating officer at Sanlam’s investment management arm in its Africa division, which has branches throughout the continent. But if companies plan well, they can avoid being drawn into corruption, even in Africa, he believes. Choosing a trustworthy local shareholder or auditing firm with the right code of ethics is therefore key.
That means expanding into Africa is not a simple step. Investors need to do a lot more homework before they decide to invest; be better connected to access inside information; consider weak infrastructure, from roads to electricity; and be aware that setting up operations, from administration to licensing, might take longer. “All those issues raise the cost of doing business. It’s not a bandwagon you can jump on,” says Schultz. “You have to be sure your profit margin is sufficient to cover those costs.”
But it’s not all doom and gloom. A 2011 Ernst &amp; Young survey predicts that Africa’s economic growth will outpace its Asian counterpart over the next five years due to increasing foreign direct investment. Africa has remained an attractive investment destination throughout the global downturn and stayed high on the agenda of global investors, with 42% of businesses considering investing further in the region and an additional 19% of executives confirming they will maintain their operations on the continent.
“Although the overall perception of Africa remains quite negative, investors recognize that the continent has a window of opportunity because of its economic growth potential,” says Marais. “Whoever wants to see good returns simply has to go to Africa. It’s a great place to invest if you have the ability to assess the risk involved.”
Another plus is that African governments have shown greater willingness to address fraud, and be more transparent and accountable by passing anti-corruption laws. But for now, this trend needs to be viewed with caution, as it remains mainly a commitment on paper, with little implementation and enforcement of those regulations. “Very few anti-corruption regimes have gone beyond rhetoric. There is lack of political will to implement them and they remain under-funded,” says Charles Goredema, a corruption expert at the Institute for Security Studies in South Africa.
Businesses should choose to invest in countries with regulatory and legal frameworks they can rely on to enforce contracts, says Goredema. That means taking a close look at a country’s real situation, not just skimming the paperwork. Rwanda, Mauritius and Nigeria, for example, have made “huge strides” in fighting corruption, he notes, while the situation in countries like the Democratic Republic of Congo and Zimbabwe remains “very bleak”.
In the end, investors must be careful not to tar the whole continent with the same brush.

The Truth About Fraud In Africa

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.

Tag: Investors

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