It is widely accepted that for many countries on the continent gross domestic product (GDP) is understated. The question is by how much.
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Ghana created quite a stir when revisions to its GDP data announced in 2010 showed that the country’s economy was 60% bigger than previously believed. Ghana was thus transformed overnight from a low-income to a middle-income country. This happened as GDP per capita, an important measure of wealth, rocketed from about $550 to $1,100.
The news prompted the World Bank’s chief economist for Africa, Shantayanan Devarajan, to declare Africa a “statistical tragedy”. Granted, it is an overstatement. But his comment emphasizes the implications of this shortcoming – if the data is inaccurate, those governments and development agencies could be making poor decisions.
What happened was that Ghana changed the base year for its data from 1993 to 2006, taking into account the deep structural changes in the economy during that period.
The base year is the reference year in terms of GDP, expressed at constant prices, and it determines the importance which various sectors have for the economy. In Ghana’s case, the country’s registry of business was out of date and the national accounts failed to capture the output of these companies. According to the Ghana Statistical Service, the share of services in the economy rose from 36.1%  to 51.1%, while the contributions of industry and agriculture both fell.
Many economies in the region have base years which are more than a decade old – which compares poorly with the international best practice of revising the base every five years. This is particularly significant in the case of Nigeria, the continent’s second-biggest economy, which has announced it is in the process of changing its base year from 1990 to 2010. The new GDP figures will be announced next year. There is a general perception that after taking telecommunications and entertainment into account, the economy will be about 40% bigger than it is at present.
According to the regional research head for Africa at Standard Chartered, Razia Khan, the revision means that Nigeria’s economy will be just 10% smaller than South Africa’s. With its economy growing at around 7% a year, compared with South Africa’s pace of less than 3%, the Nigerian economy is likely to be the biggest on the continent by 2015. The revision will also affect the whole of sub-Saharan Africa. Nigeria’s economy already accounts for nearly one-fifth of the region’s total output, so an upgrade means that the combined economies of sub-Saharan Africa will be significantly bigger than estimated at present.
This poses the question: how many other economies on the continent are also bigger than the current data suggests? According to Kim Zieschang, the Division Chief of the Statistics Department at the International Monetary Fund (IMF), the Washington-based lender anticipates providing technical assistance to a “large number” of sub-Saharan African countries, and in fact is already doing so. This means that many countries have asked the IMF for help in upgrading their economic statistics, just as Ghana and Nigeria have done.
According to Lyal White, Director of the Centre for Dynamic Markets at the Gordon Institute of Business Science, there are two problems, one is the absence of data and the other is the poor quality of data presently available. Many sub-Saharan African economies have large informal sectors which are notoriously difficult to cover.
It is likely that that there will be upward revisions of GDP data in other countries in the region, but the magnitude of those changes are difficult to assess ahead of the conclusion of their processes, Zieschang says. What is certain is that the revisions will radically alter the ranking of sub-Saharan African countries by size.
So what do the changes mean for countries in the region? Global investors are likely to sit up and take note of bigger economies, which will be more attractive destinations for their capital. There will be more information on which sectors to invest in, and governments will have a better idea of what to do to foster development and growth. Some of the ratios which gauge the quality of a country’s economy will improve – debt to GDP ratios will fall, as will budget deficits, which are also measured as a ratio of the size of the economy.
On the downside this could encourage governments to spend a bit more recklessly. At the same time, the ratios of official revenue to GDP will fall, putting pressure on governments to increase their tax base. A significant drawback is that richer countries may no longer qualify for aid or concessional loans from international agencies. Nonetheless, IMF officials say there would be a good case to revise upwards the thresholds for this type of support.
On the upside the pending upward revisions to GDP data will present sub-Saharan Africa as a more significant player in the global arena.

Can Africa shrug off  the resource curse?

Is Africa a statistical tragedy?

I remember the first thing I bought when I received my first professional pay check in Belgium: it was a shiny black Golf GTI—a big deal in those days! In those times, I spent every cent I earned, every month. The last of my worries was tomorrow. In fact, during the three and a half years I spent in Belgium, I did not save a cent and I did not study anything. I thought the school of life and football was enough.
As players we are used to instant results. We play a game: we win, draw or lose. The results are there for all to see after the game. Salaries are high, we live for the moment, the future is for, well, tomorrow, or even next week. The problem is that football careers do not last long. Our window of earning opportunity is short.
I knew that after my career as a footballer, I still wanted to be involved in the game. I made sure I took coaching to the highest possible level by achieving a UEFA ‘A’ license to enable me to understand the technical side of football. Because of my qualifications I went home, to Zambia, to be technical director of the Chipolopolo in September 2003, then won elections, as vice president, in March 2004. I then became president of the Football Association of Zambia; a FIFA coaching instructor; a member of FIFA committees and FIFA task teams and grew to understand the administration side of football.
My climb to football administration was gradual. But all the while, my business ventures continued. If you want to go far in football administration, you best have other business interests, since administration is not a money-making profession. One does this for the love of the game.
Very few players continue to make a living from football after the final whistle has blown, unless they become a highly successful professional coach. But even coaching requires study and qualification. A former player does not automatically make a good coach. Those days are gone. With today’s game, you need to be qualified to understand the technical elements of the game.
It becomes important to think about one’s future on your first day of professional football. In Belgium, retirement annuities are compulsory, the club paid the full amount as part of my salary. In the Dutch Eredivisie, retirement funds, which are tax deductible, are compulsory and as such after 20 years, I am still enjoying regular payments from my playing days in Holland.
We can only hope that the clubs in Africa can follow the European model. There should be mandatory pension schemes for footballers in Africa. Clubs should seriously look into this for both the well-being of their players as well as their own good reputation.
Today, players have football agents who should be guiding them better.
So many former players are faced with difficult times, you read and hear about them all the time. It makes me very sad and it is a question of lack of knowledge, which, as we all know, is power. Maybe it is also upbringing, education and the lack of thinking about the future.
When I was growing up, you thought that you would play forever, the limitations were non-existent. Retirement is not even in your mind. You live a day at a time and you want to have the best gadgets, the best car, the best clothes—and those become your key priorities.
You have too much time on your hands, you’re too young and you’re earning way too much money. Temptations are all around you and you become greedy for the now and it is difficult to see an end in sight. The last thing on your mind is that one day your career will end.
Medical insurance should be on the top of the list—it’s not easy to determine when you are going to stop playing because you can sustain a career-ending injury and without medical insurance your earning days are over.
On our continent for example, in early 1980s, it was common to see a very good talent sustain a small injury like a meniscus problem, a ligament injury or an ankle injury and end their career after a year. Instead of getting the appropriate medical attention, which was hard to come by, you would find that their career would be short lived because the problem would persist for longer than it should have and they ended up not being the player that they should’ve been.
In my school team in the 1970s,when I was just trying to break in, the important players would not come to class during the day, but attend school in the afternoon just so they could play the match. Unfortunately, today’s society tends to encourage the talent you have on the field rather than couple it with academic skills and qualifications. If you look at the American model with scholarships for top athletes, this is hugely successful. Education is encouraged and, even in Zambia, you hear most of the professional parents discourage their kids from too much sport, saying that they want them to concentrate more on education.
This can be a double-edged sword, as this often deprives a talented player of much needed practice time. The key is a balance of the two. It is imperative for young players to ensure they attain their education goals whilst living their sporting dreams.
My advice to current professional players is two-fold; career planning and studying in your spare time.
In Belgium, I spent three-and-a-half- years not knowing Flemish, and not doing anything about it, because I could get by as everyone tried to speak to me in English, so I just got by. Yet the first day I arrived in PSV Einhoven in Holland, they assigned a teacher to me, so I could study Dutch twice a week. Within six months I was fluent. The day I arrived in Mexico as a player for one of the biggest team in Mexico, Club America, I made it a priority to find a tutor to teach me Spanish. By the end of the first year I was fluent in Spanish. These talents are of immense value to me today. Besides my mother tongue, Bemba, I also studied French at high school for four years and can converse in the language comfortably. I used to be the official translator when the team travelled to West Africa during my national team playing days. My Italian improves every day thanks to my wife and mother-in-law, so all in all I can say I am a polyglot—a talent, which comes in very handy in the international football environment.
I did a technical directorship badge in Mexico from 1996 to 1998, which effectively made me a qualified technical director. By the time I ended my professional career, I walked away from football with two professional qualifications and four extra languages.
My advice to young career footballers is to be wise and not to get caught up in self-importance of the now, but rather to picture yourself where you want to be in the future. Don’t just train your body, train the brain at the same time. Unfortunately, you cannot be a player forever and when the final whistle blows you better have a new game plan.

Control Your Life  And The Ball

It proved a hellish journey to see Pascal Dozie at his Lagos office on a Tuesday afternoon. The nightmare ride across the city, through dense traffic, bumped along to the parp of angry horns and the lurch of battered vehicles. Everyone seemed to veer towards each other in the fight for inches. It is hot and everyone is bothered.
To make matters worse, the pink-shirted traffic police stepped in to slow the lumbering vehicles even more by pulling over cars—including ours—with what looks like trumped-up charges. At one point, the traffic cop and our driver are hurling rapid fire insults at each other inches from my nose. Bizarrely, the traffic cop—who was far from pretty in pink—kept walking away, as if the fight was over, before turning on his heel to launch another finger-jabbing tirade. I felt like a monk in Gomorrah.
“They just want money,” our driver scowled as we drove off.
Then we arrived at the gate of Dozie’s business to find the rain had left a puddle wide enough to breed fish in. The wet welcome ended a torrid hour on the road with a metaphor of which writers dream. The failings of Nigeria, that Dozie wants to put right, lead right up to his door.
“Lagos is the only place in the world where you can utilize all the faculties God gave to man,” chuckles Dozie as we stand in his plush, air-conditioned office.
This is the office from which Dozie commands his investment and finance empire, which has made him one of the richest men in Nigeria. He is a gentleman, in the literal sense of the world, who loves Mozart and Bach, a man who is close to his roots and his family of five sons and 10 grandchildren.
“We didn’t see my father that often when we were growing up but when he came home to see us it was really quality time. We would sit outside for hours while he told us stories and sang us the songs of his ancestors,” says Uzoma Dozie, one of his sons, with a smile.
The polished office contrasts starkly with the dog-eat-dog poverty and chaos a stone’s throw away in the streets of Lagos. After half a century of business, as his own boss, Dozie could be forgiven for shutting out the problems of Nigeria behind his tall gates and high walls—but he says he can’t. He believes crumbling infrastructure and corruption are Nigeria’s heaviest shackles and hopes entrepreneurs will help shrug them off.
“Many people see Nigeria as an entrepreneur’s gold mine—the opportunities abound. Every single disadvantage you see—the traffic and the infrastructure—is an opportunity, but you can only change once the government goes hands-off,” he says.
I counter this with the words I heard Ugandan President Yoweri Museveni utter a few years back, in Kigali, that it was easier for a camel to pass through the eye of a needle than it is to keep government out of business. Of course, Dozie disagrees.
“In Nigeria, we have been moving towards this for a long time. If the government had not been hands-off they would not have a number of major cellphone companies in the country. Some of them got their operating licences on the same day. This hands-off approach has helped us leapfrog communications technology,” says Dozie.
“We won’t get anywhere until we, in Nigeria, can say anything can be done in 24 hours.”
The other big concern for Dozie is corruption. The multi-millionaire says he has been campaigning against it since the dark days of military dictatorship under Sani Abacha.
“This is the only country in the world where people ask what business are you in and you say politics.”
“The clock is ticking, as massive strikes in January showed Nigerians,” says Dozie.
“Nigerians are waking up and the civil society in the country is coming alive. Nigeria is a country that is skewed towards the youth.
The Blackberry generation is using their Twitter and Facebook and you should see the things they are writing. In January, this country was besieged by angry youth when the government removed the fuel subsidy. Nobody could go to work. It is no longer business as usual and things are changing. Look at the number of probes into corruption, before it would have been covered up, but now it is no longer easy to cover corruption.”
Outspoken and salty, Dozie has reaped a fortune through his work and wits on a long and difficult journey from Owerri in Imo State. This is where he was born, the son of a country court interpreter, on April 9, 1939.
“We did not have many modern facilities, but we had the village set up. If you were hungry someone would feed you. If your neighbor caught you doing something wrong they would punish you. When your parents found out they would talk to the neighbor to make sure they had given you a proper spanking. Modernity has changed all of this.”
Along with a generation of idealistic Africans, from newly independent nations, Dozie headed for Europe to drink from the fountain of knowledge.
Dozie went to the London School of Economics where he rubbed shoulders with Mick Jagger, the louche singer who was soon to drop out of college to form the Rolling Stones. Legend has it that Jagger stood up during an economics lecture and shouted: “Eureka!” before walking out to a life of rock and roll.
In reality, it was less dramatic. Jagger studied Economics, British Government, Economic History and Political History, earning mediocre grades. He hedged his bets, by studying in the library, before leaving in 1963 when the Rolling Stones cut their first record.
“We thought he was different. We were very conservative and he had long hair. Me, as an African, coming from Nigeria, I couldn’t believe he was leaving what he was doing to go off and play music, it was against the grain to me,” says Dozie.
Dozie wasn’t the only one to wonder.
“My father was furious with me,” Jagger told a journalist decades later.
“But I really didn’t like being at college. It wasn’t like it was Oxford and it had been the most wonderful time of my life. It was really a dull, boring course I was stuck on.”
Unlike Jagger, Dozie earned his degree in economics and followed it up with a Masters in administration from City University in London in 1963. He went to work in London and consulted in Croydon where he worked at the National Economic Development Office.
Dozie wanted to go home, but his people, including his two brothers in the army, were fighting the Biafran War against Nigerian forces in the cause of secession for the Igbo people. It was a bloody war waged between 1967 and 1970 that cost 30,000 Igbo lives and those of an estimated one million civilians.
“It was a very traumatic period for us. Bombs were going off everywhere and you didn’t know what was the truth. People were being shunted from one place to another and at times I didn’t even know where my own mother was,” he says.
It meant Dozie had to take a job in Uganda until the war was over. When peace came, he moved home in September 1971, at the request of his mother, who was by then in poor health.
In Lagos, Dozie set up his own consultancy, the African Development Consulting Group. He never worked for anyone else again. In the early years, he was fortunate enough to gather consultancies for the big guns like Nestlé and Pfizer. In his spare time, he wrote about economics for the respected publication Business International.
In the 1980s, the road to real riches opened up thanks to a simple idea. Dozie had noticed traders from the remote villages in the east of the country, where he grew up, faced the problem of carrying huge bundles of cash when they trekked to Lagos on business.
“Sometimes they would be waylaid by rogues on the road,” he says.
Dozie pioneered electronic transfers in Nigeria so traders could transfer their cash to Lagos instead of having to carry it. It saw the creation of Diamond Bank, which opened its doors in 1991.
“The first customer was my wife,” laughs Dozie.
The bank started from a third floor office in Victoria Island with 20 people and $5 million.
“The assumption was we were going to come by money easily—it wasn’t easy.”
The problem was most companies, at that time, would not deal with a bank less than three years old. So the small staff at Diamond Bank went out to persuade everyone, from traders to car dealers, to part with their money to generate cash through deposits.
“In my view he is brilliant, driven and a great manager of talent—qualities which helped him in establishing Diamond Bank, especially through the 5 year period, from 1985 to 1990, when nothing was happening, and the early years from 1990 when he says they had it really tough,” says Akintola Akinbamidele of Renaissance Capital in Lagos.
The bank blossomed into a $240 million concern, but this was merely one step on a difficult path. In 2005, disaster struck when a new law that said all banks had to hold a minimum of 25 billion naira ($158.3 million) in share capital. Diamond Bank had a mere 6.4 billion naira ($ 40.5 million) in share capital—so it had to list to raise more, which led to a severe dilution of the family stake.
In the years leading up to this, Dozie had been busy with a deal that was to make his name and a large chunk of his fortune.
A South African cellphone company, MTN, approached Dozie with the idea of setting up a cellphone network in the vast Nigerian market. The South Africans wanted to pump millions into a 60% stake in MTN Nigeria, with Nigerians owning 40%. Dozie set off with high hopes to London and the United States to raise capital among the big money men and Nigerian expatriates. When he got there, it was as if he was trying to sell sand in the desert. Many people saw the struggles of the government telecoms company, NITEL, with its wobbly and sparse landlines. Investors said that if the state couldn’t set up a cellphone network in Nigeria, no one could.
“It was very disappointing. You have a good project and you are turned down. You start to question yourself and start to question your head,” he says.
Dozie could raise merely enough for a 20% stake in the new company. Through debt funding, MTN poured in millions to make up the difference. It was a huge risk, at the time, but MTN prospered and the rest is history. To this day, Dozie is chairman of a solid MTN Nigeria.
“Most of the people I asked to invest now regret not investing—I even regret it myself. They would have enjoyed returns of 20 times their money.”
More than a decade on, Dozie sits atop a family-owned investment company, Kunoch, worth $50 million, which pours money into everything from power generation to gas processing, oil exploration, real estate and banking. One of its investments is in a pilot project that could revolutionize the way power is provided in Nigeria—a country that needs electricity like a thirsty man needs water. The country’s economic progress is slowed by the fact that it produces a few thousand MW for tens of millions of Nigerians—around a tenth of what South Africa produces for a third of Nigeria’s population. Not for nothing do Nigerians call the state power company, PHCN, Please Hold Candles Near.
Dozie is investing in a pioneering independent power project, the Aba Power Project, in the south east of the country near Port Harcourt and not too far from the border with Cameroon. It will generate a minimum of 188 MW, from gas turbines, with plans to expand. In a region which has 20% of the power it needs, it will be like manna from heaven. The company running the project was founded by the former Nigerian minister of power, Bart Nnaji, who resigned in August over a conflict of interest. He was meant to sell his six power generating companies and 11 distribution companies.
It is part of the infrastructure that Dozie believes could be the salvation of his country. Travelers to Nigeria will be cheered to hear that this grand old man of Nigerian business has the crumbling Murtala Muhammed Airport in Lagos on his agenda.
“It erodes the image of the country. When you come through our airport you say, ‘Is this the Nigeria I have flown to see?’” he says.
Dozie reckons the government will concession the airport to private business in a bid to spruce it up. Others, close to the aviation industry in Lagos, believe the government will be loath to relinquish any control over the airport as it is the only one in the country that brings revenue into state coffers.
“I will give it a long shot… it will happen in the next five years,” says Dozie.
What about corruption? Even the pink-shirted traffic police on the way were a heavy hint that it permeates Nigerian life right down to the streets.
“It is very solvable. When we start seeing politics as a sacrifice, when it is a self-sacrificing exercise from those who want to serve… We need strong institutions with integrity and political parties with a well-known ideology.”
A stable political environment could clear the way for the virile entrepreneurs of Africa.
“I think they are counting on the political will of African leaders to smooth logistics, the factors of production and the movement of people. There are a lot of bottlenecks that need to be removed. People like Aliko Dangote have done us well and created a lot of employment. For me, what is lacking here is that we don’t have that critical mass in the genuine middle class, which is the bulwark of democracy. Once this happens we could start absorbing more young people into employment and our creative forces will be unleashed,” says Dozie.
“We all worry about food, shelter and health and until those things are made accessible to all people we will never change… Be patient don’t expect miracles to happen.”
In this yearning for a new Nigeria, Dozie draws on one of the entrepreneurs he admired, the late Steve Jobs.
“I loved his never quit spirit, he lost his position in the company, but did not despair,” he says.
A new Nigeria may have been a tall order, even for Steve Jobs. It is an ideal worth cherishing, but it does help if you believe in the sound of generators disappearing from Lagos forever, taking 15 minutes from the city to the airport, or fairies.

The Rolling Stone That’s Never At A Loss

It was just like the old days in South Africa. Marching, police and protest. This was not a protest against an oppressive regime; this was a free people unwilling to pay for new roads.
Investment, economy, Protests, employment, South Africa, National Union of Mineworkers, April 2012
It was a dull, cloudy day over Lagos. On the ground it was dazzling speed and skill as the Lagos Polo Tournament—the sporting event of the year in Nigeria—thundered to its climax. For two weeks, the finest players in this polo-mad country have vied for the glittering prizes of this rich tournament that costs a million dollars merely to sponsor.
They’ve been playing at the Lagos Polo Club, in the exclusive Ikoyi district, where British Army cavalry officers laid down the turf in 1904. As the years go by, it is getting more and more expensive to assemble a winning team. It will cost you around $40,000 for a good polo pony and many thousands more to import top professionals from polo playing nations like Argentina. This is a game that carries status and most of Nigeria’s tycoons have a polo club or team.
<div id="attachment_589" style="width: 484px" class="wp-caption alignleft"><img aria-describedby="caption-attachment-589" decoding="async" loading="lazy" class="size-large wp-image-589" src="/wp-content/uploads/2017/04/IMG_6261a-1024x770.jpg" alt="" width="474" height="356" />Better luck next time: Prince Albert Esiri, the Captain of Ashbert Raiders collects the runner up trophy</div>
The final, on March 4, was between teams led by two of the richest men in Nigeria. Entrepreneur, Prince Albert Esiri, who was ranked  one of the top 10 polo patrons in the world by the Financial Times, led his Ashbert Raiders against the Lagos Ironclad Mandarin team—led by Obafemi Otudeko, the chairman of Bharti Airtel in Nigeria. Both teams are veterans of the big occasion and have also played at the British Open and the Royal Windsor Cup.
The Ashbert Raiders were the favorites as they had a two-goal start, through the handicap system, plus Argentinian professionals, Bruno Cipponeri and Hugo Caesar. The favorites raced into a 4-0 lead with power and panache, by the end of the first Chukka, as Cipponeri scored two penalties. It should have sealed the game, but it didn’t.
<div id="attachment_591" style="width: 484px" class="wp-caption alignleft"><img aria-describedby="caption-attachment-591" decoding="async" loading="lazy" class="size-large wp-image-591" src="/wp-content/uploads/2017/04/IMG_5708a-735x1024.jpg" alt="" width="474" height="660" />Ashbert Raiders (in blue-and-white) tussle with Ironclad Mandarin in the final</div>
The feisty Ironclad team fought back to level at 5-5 before scoring the decisive goal, late in the fourth Chukka, to secure a memorable 6-5 victory. A packed grandstand cheered as organizers handed trophies and medals to the victors Kwame Musa and Bashir Dantata of Ironclad.
The elite of Nigeria then retreated to marquees pegged out on the polo grounds and the party began. Behind the scenes, players took off their helmets and knee guards before slipping into more comfortable clothes.
The softly spoken oil and gas tycoon, Prince Albert Esiri, said proudly: “For me really it is to have had a chance to play with my son, because he has been wanting us to play together. He wasn’t very keen about polo and he only took up polo two three years ago which is quite late…” Someone in the background said that the game is certainly growing in Nigeria, but conversation was lost when the music went up and the party started. Celebrations went on into the night. In 108 years, Lagos Polo Club has seen f
<div id="attachment_588" style="width: 484px" class="wp-caption alignleft"><img aria-describedby="caption-attachment-588" decoding="async" loading="lazy" class="size-large wp-image-588" src="/wp-content/uploads/2017/04/IMG_5883a-1024x683.jpg" alt="" width="474" height="316" />Champagne on the sidelines at the Lagos Polo Club</div>

Polo, Power  And Panache

As a multitude of the wealthy and powerful of the mining world rubbed shoulders in Cape Town, the picture emerged of what this year holds for the industry in Africa.
<div id="attachment_434" style="width: 484px" class="wp-caption alignleft"><img aria-describedby="caption-attachment-434" decoding="async" loading="lazy" class="size-large wp-image-434" src="/wp-content/uploads/2017/04/6830715115_459e9c16cd_o-1024x683.jpg" alt="" width="474" height="316" />Jonathan Moore, MD of Mining Indaba; Michael Katz, the chairman of ENS (Edward Nathan Sonnenbergs); Martin Kingston, executive deputy chairman of NM Rothschild’s local bank franchise and Trevor Manuel, Minister in the Presidency for the National Planning Commission at the Mining Indaba on Monday, February 6, 2012</div>
Mining represents 50% of total merchant exports in Africa south of the Sahara, says the World Bank.
From the scores of presentations, briefings and conversations it is clear that investors are still jumpy about the world economy and Eurozone contagion; they are nervous about resource nationalism—that is, people wanting a greater share of their country’s mineral wealth—and are wary of new mining regulations. The ruling African National Congress in South Africa proposes new taxes on mineral rights in South Africa, plus a windfall tax for returns over 22%.
Although South Africa’s former Finance Minister and now National Planning Minister, Trevor Manuel, conceded during the Indaba that “in the main the government has failed”, saying “we haven’t managed this process well”, he thinks the new tax proposals that were now being considered were a “sensible taxation” whose proceeds will be invested into broader development as the commodities boom was not poised to last forever.
As for beneficiation, which a lot of people thought would help create and sustain jobs, the minister thought it was a double-edged sword. Often beneficiation needed energy and capital that locals did not have.
“Nationalization is not a smart strategy,” Manual concluded.
<img decoding="async" loading="lazy" class="alignleft size-large wp-image-433" src="/wp-content/uploads/2017/04/6830713659_56e40368fb_o-1024x683.jpg" alt="" width="474" height="316" />
Zambia Chamber of Mines head, Frederick Bantubonse, thought there were lessons other African countries could learn from his country, which nationalized mining for 30 years.
Before nationalization in 1973, Zambia produced over 700,000 tons of copper, says Bantubonse. When it rolled back the nationalization program about 10 years ago, the country was producing a mere 257,000 tons. It has now gone back to the pre-nationalization production levels.
But now indigenous business people are finding it difficult to enter the industry because of the big capital investment needed.
It was small comfort that the investors’ nightmares of nationalization appeared to be put to bed by public utterances by the powerful at the conference.
“This whole nationalization story is going to be difficult to wash off. Investors won’t put another dollar into South Africa, they would sooner invest in gold in Eritrea,” says one disgruntled delegate.
Robert Besseling, senior Africa forecaster for Exclusive Analysis, said: “Gold in SA is over. It is too deep and expensive to get out of the ground and there are higher taxes on the way. Power is also a problem and the national power generator, Eskom, is warning that from April there could be new power cuts.”
“The growth of South African mining is going to be in platinum, coal and manganese, but when you bring up the idea of nationalization… the mid-level investors from Australia and Canada I have spoken to here have extreme worries.”
Rajat Kohli, the global head of mining and metals for Standard Bank, believes the Chinese will be among the main actors in resources in Africa and these worries may pass them by.
“I think they have a long-term view; the Chinese plan 10 to 20 years ahead so they do not share the same sort of short-term fears as western investors,” says Kohli.
Africa will continue to be vulnerable to market volatility, but the continent is poised to ride the storm, says World Bank operations officer, Miria Pigato. Favorable commodity prices were only one reason she felt that way.
“This confidence also comes from governments’ more sensible fiscal policies, more accountability, new ways of doing business, a new breed of younger and energetic leaders,” says Pigato.
Another cause for optimism at this mining gathering was the numbers.  In the dark days of the 2009 recession, a mere 3,200 delegates turned up in Cape Town. In 2010, the numbers improved slightly to 4,400 and this year, there were 7,000 delegates.
The organizers are encouraged enough to take the risk of expanding the Mining Indaba to Asia to take advantage of the growing interest in mining in the region.
Jonathan Moore, the managing director of the Mining Indaba, said around 500 delegates were expected to arrive at the first Asian gathering at Marina Bay Sands in Singapore on October 29.
Asked whether the name Indaba—which is an African word for gathering—will be understood in Asia, Moore says: “People there may not know what the word means, but they will know what the

The Trouble With  Mining In Africa

For years, the late Colonel Muammar Gaddafi was a dog in a manger as far as Western business was concerned. They thought the Libyan leader was merely lying lazily on a fortune in natural resources.
It was only through a thaw in relations in the leader’s last years, that Libya opened up to investments from the West.
When the rebel National Transition Council (NTC) ousted Gaddafi in October 2011, there was the promise that the new broom would sweep the way clear for Western business—surely.
Think again. The country’s internal political divisions, the new rulers’ tenuous authority and China’s keen interest in Libya’s oil, may make the transition a mere milestone in a long legacy of rancor with Libya.
<div id="attachment_394" style="width: 484px" class="wp-caption alignleft"><img aria-describedby="caption-attachment-394" decoding="async" loading="lazy" class="size-large wp-image-394" src="/wp-content/uploads/2017/04/000_Nic6022212-1024x683.jpg" alt="" width="474" height="316" />Zawiya Oil Refinery, some 40 kms west of Tripoli</div>
Libya’s oil is the ultimate prize. Libya has the eighth  largest oil reserves in the world and the second highest natural gas reserves in Africa. Prior to the revolution, oil accounted for a quarter of the country’s total economic output, and 95% of its export earnings, grossing $44 billion in 2010. While the conflict forced 1.6 million barrels-per-day production to a standstill, government reports suggest that 90% of oil installations escaped serious damage. Still, it could take up to three years to achieve pre-conflict levels of production. The question now is who will gain control of Libya’s ’s oil.
Under Gaddafi’s leadership, the National Oil Company (NOC), and a cohort of cronies close to the Colonel, determined who got what, when and how. While the NOC remains in place, the NTC has indicated that it plans to split it into three entities—Exploration and Production, Refining, and possibly Natural Gas or Solar Power, making it a commercial organization.
The NTC said it will honor all contracts signed with the Gaddafi regime. The position betrays the anxieties of a still new and insecure leadership to manage the uncertainty of transitional politics, and significantly, keeps China and other Asian powers in the mix. Besides the Libyan companies already in the fray there are: ENI; Repsol; Gazprom; Total; China National Petroleum Corporation, BP, and Exxon Mobil, in Libya’s crowded field.
How things will play out in Libya’s oil sector will be determined at the intersection of geopolitics and the country’s internal politics. The physical and political proximity of Tripoli to European players—France, Italy and the UK—effectively throws Libya into the West’s sphere of influence, and reverses China and other Asian players’ good relations with Tripoli under Gaddafi. In the context of Libya’s unsettled political environment, such diplomatic influence provides a crucial lever in the country’s oil sector. At the very least, this influence will be felt in the reconfiguration of governance in the country as a whole, and in the energy sector in particular. Libya’s new rulers have already requested for technical support in the re-construction of the oil sector, and the West’s support is bound to involve re-stringing of dynamics of governance in the sector.
Politics will of course be king in shaping the dynamics of the energy sector in Libya. Besides lining the pockets of close allies, Gaddafi used oil resources to build a remarkable social welfare state that remains unrivalled across Africa. The upshot was to rocket Libyans’ expectations on the state. Beyond instituting a democratic system of government, in which citizens have a voice and enjoy political freedoms, the NTC government will be under pressure to match, if not exceed Gaddafi’s generosity among Libyans. Key to this will be appeasing anti-Gaddafi combatants and this might yet demand that the NTC offers, in material terms, more than Gaddafi did.
While appeasing anti-Gaddafi combatants will be essential in pre-empting disillusionment, a formula for inclusive governance and development will be critical for achieving stability in Libya. Regional and tribal loyalties remain strong amongst the country’s 140 plus tribes and clans. There is also an ethnic and linguistic fault line between the Berber minority and the Arab majority. The NTC’s ability to manage inter-regional rivalries between the East and the West however will be the ultimate political challenge for the NTC.
Ultimately, the NTC’s legitimacy will hinge around its management of the economy. The challenge for the NTC will be to raise, and even exceed pre-conflict economic growth rates, which in 2010 stood at 7.4% against 2.4% inflation. The NTC will no doubt be focusing on resuscitating oil production, for which it will need significant assistance from its international partners. This creates a strong entry point for China, which has muscled its way across Africa through development support for governments under significant economic pressure.
Still, the NTC has indicated its intentions to use Libya’s resources abroad—Gaddafi’s loot basically—to rebuild the economy. At least in the first half of 2012, the country’s top diplomats will be focusing on negotiating the full release of these funds, whose bulk, ironically, is in Western institutions. In the meantime, it is very unlikely that Libya will spurn any technical support from international financial institutions, or technical support from its new allies in the West. For now, it is safe to assume that who gets what of Libya’s oil resources is a question that will in large part be answered between Tripoli and Western capitals—London and Paris, to be precise.

Politics Is The Game, Oil Is The Prize

It’s a warm, overcast, spring afternoon in Julius Nyerere Avenue in the heart of Maputo amid the hooters and rattle of people driving home from work through the potholes. On the side of the road in front of brand spanking new bank headquarters, a group of urbane bankers chat quietly and shift from foot to foot in expectation.
The building used to be a hotel as rundown as the streets that run by it. “This was a ruin; now look at it,” says one of the senior managers proudly. A small curious crowd has gathered. The word is out that one of the richest men in the world is about to arrive. A car sweeps in like a summer breeze off Maputo Bay; a group of people jump out. “Which one is he?” says someone nearby.
<div id="attachment_147" style="width: 484px" class="wp-caption alignleft"><img aria-describedby="caption-attachment-147" decoding="async" loading="lazy" class="size-large wp-image-147" src="/wp-content/uploads/2017/04/290-647-1024x683.jpg" alt="" width="474" height="316" />Banco Unico branch in Maputo, Mozambique; 15 September 2011 &#8211; Photo by Brett Eloff.</div>
Closing the door behind him is the man himself, dressed in grey suit, with a red-striped shirt and matching tie; Américo Amorim—the 212th richest man on earth, according to FORBES in 2010, worth an estimated $4 billion. With a gentle smile and handshake, he blends into the waiting crowd of bankers and could be one of them. If you are looking for a billionaire who wears his eminence lightly, look no further than this man; a man who not only admires Nelson Mandela, but also appears to subscribe to the great man’s approach to humility.
Make no mistake, there is an iron will behind the smile and a reputation in Maputo—born of his latest deal—as a tough negotiator. Amorim, who made a fortune from putting corks into the world’s bottles, was in Maputo to see where a chunk of his fortune has gone. The 77-year-old entrepreneur’s empire is in a joint venture with Portuguese conglomerate Visabeira, which owns 61% of Mozambique’s newest bank, Banco Unico, which has opened in Maputo with $20 million in initial equity share capital. The remainder, aside from a small stake for management, is owned by Mozambique-based private companies and pension funds.
<div id="attachment_166" style="width: 484px" class="wp-caption alignright"><img aria-describedby="caption-attachment-166" decoding="async" loading="lazy" class="wp-image-166 size-large" src="/wp-content/uploads/2011/11/290-76-683x1024.jpg" alt="" width="474" height="711" />High-rise construction in Maputo, Mozambique; 14 September 2011 &#8211; Photo by Brett Eloff.</div>
Amorim, speaking through aninterpreter, is not fazed by his lofty FORBES ranking: “I am indifferent to that. My passion is to build companies&#8230; My happiness is to be busy.” Amorim has certainly been busy for almost his entire adult life. He took over the management of the family cork business at the tenderage of 18, when his parents died; from that moment, according to his close colleagues, Amorim has worked at least 12 hours a day in more than half a century as an entrepreneur. The Amorim Group has its roots in a small family cork business started by Amorim’s grandfather in 1870. The business is based in the tiny town of Mozelos, 19 kilometers from Porto, near the Portuguese forests, which hold more than half of the world’s cork. The young Amorim took to the family business with a will and travelled the world to sell cork.
In 1958, he journeyed to the then unfashionable Soviet Union and Eastern Bloc to strike deals. It made his company Portugal’s biggest exporter to Eastern Europe. In 1962, Amorim invested 75,000 euros ($102,000) in the business, to modernize and mechanize; the company consolidated cork production in Portugal and down the years expanded into Spain, Tunisia, Morocco, Algeria and Sardinia.
Nearly 60 years on from the young Amorim’s first day in the office, the family empire declared sales of 457 million euros ($621 million) in April and posted profits of 20.5 million euros ($27.8 million) for 2010. The company is the world’s largest manufacturer of corks, making three billion a year. One in four corks popped around the globe is made by Amorim’s company. Like the corks, Amorim’s investments have also popped up far and wide, including: 33.44 % of GALP, Portugal’s energy company; a share in Spain’s third largest  financial institution, Banco
Popular; and in BIC, a commercial bank in Angola. Despite this vast wealth, Amorim has no time for fast boats and private jets—corks are his business and passion. In fact, rare passion flows in the interview when the thorny subject of plastic bottle stoppers comes up. “Plastic is not appropriate for wine.
Nature never spoils. The champagne industry has been in existence for 320 years and it has never stopped using corks. Corks are always preferred by people with good taste. It (plastic stoppers) is a bad taste idea,” he says. So why is this man, with a passion for corks, throwing millions into Mozambique’s often uncertain banking sector with its past allegations of corruption? Legendary investigative journalist Carlos Cardoso was gunned down in a Maputo street in 2000 while at the heart of an investigation into corruption in banking in Mozambique.
<div id="attachment_167" style="width: 484px" class="wp-caption alignleft"><img aria-describedby="caption-attachment-167" decoding="async" loading="lazy" class="size-large wp-image-167" src="/wp-content/uploads/2011/11/290-289-1024x683.jpg" alt="" width="474" height="316" />Portuguese billionaire &amp; majority shareholder of newly launched Banco Unico, celebrates the opening of the bank&#8217;s headquarters in Maputo, Mozambique; 14 September 2011 &#8211; Photo by Brett Eloff.</div>
A lot has changed in the last 10 years, but there is still talk among sources in the know in Maputo of murky goings on in the banks. But Amorim is unconcerned. “I don’t consider Mozambique a risk. It has stability and its institutions are functioning. It is a rich country with a lot of raw materials and minerals… I have investments in 37 countries around the world, including Europe, and even there, there is corruption. It’s not a thing that bothers me.” The rewards for risk in Mozambique could be high for those with light feet and an eye for a fast return. In the week that Amorim landed in Maputo, the first coal exports from the mighty Moatize project, near Tete in the north-west corner of the country, was railed down the Sena railway line and exported through the northern port of Beira.
The Moatize expects to ramp up to four million tons of thermal coal a year, for electricity production. It has a target of 52 million tons by 2026, according to consultants working on the project. On top of this, BHP Billiton runs the Mozal smelter, just to the south of Maputo; South African energy giant Sasol is investing $300 million into the Pande gas field 600km north east of the capital. In Maputo itself, foreign investors have brought the swinging construction cranes back to the skyline as they build offices and homes for the newly wealthy.
Mozambique, once the poorestcountry in the world, where less than two decades ago even food was scarce, is growing fast and the financial industry is growing with it.
A report by KPMG in 2009 said the banks of Mozambique were highly profitable, despite the international financial crisis, seeing a profit of $116.4 million for the year, up 17.9% on 2008. Revenue from loans grew by 13.3% and bad debts were less than 2%. New anti-corruption laws are on the way, even though they are greeted with scepticism by many Mozambican business people. “It will exist only on paper,” chuckled a young Mozambican entrepreneur over a beer in a nearby restaurant.
One Mozambican who is bullish about his economy, to say the least, is Joao Figueiredo, the home-grown CEO One of the many cranes operating in the heart of Maputo of Banco Unico. He predicts that the economy will grow at 10.5% by 2013, compared to the current growth of 6.6%. Even so, Banco Unico could struggle to lend in the early days in the face of high interest rates. The International Monetary Fund is urging Mozambique to keep a tight monetary policy to fight inflation of around 12.8%, even at the risk of a slowdown in the economy.
Despite this, the repo rate came down in August, but before anyone got too excited, it went down to 16%. Couldn’t this be a problem for the new bank on the block? Not exactly, says Figueiredo. “When you look at the market you have to look beyond the short term to the long-term possibilities of Mozambique… The economy appreciates in terms of long-term. There is potential for the future, especially in the mining sector. The stability of the inflation rate and itsdecrease from the beginning of the year is a good sign.” Banco Unico is trying a different approach to break into a market which is dominated by four major banks. Its branches are all designer furniture and soft background music, more airport lounge than bank; there are no queues and there’s coffee while you wait for your consultant to deal with you one-on-one.
It is clear that the bank is aimed at the moneyed middle class, which, the cynics point out, excludes most of the population. Fernando Lima, a veteran Maputo journalist, says: “There are inefficiencies in the banks here. They are expanding but don’t have the human resources to keep pace. There is a lot of poaching of top staff. People also want to see more competition among the banks.” Figueiredo says: “The four biggest banks have 90.2% of the market. It is a concentrated market. There is competition, but there is room for more.
Room to grow as a financial system… The system is not yet mature and that contribution we can give to the market. There is space for more banks, but there are things you need to know before coming to Mozambique. You can’t come with foreign concepts because they won’t work here.” Banco Unico plans to go regional in the future; it appears the world’s 212th richest billionaire is in for the long haul. The interviews in the offices overlooking Maputo harbor, conducted to the crash of waves below, are over. It is night now and the many colored lights of the ships in the harbor shine forth like beacons.
As I thank Amorim for his time and patience he says, through the translator: “You don’t get tired when you love what you do.” For now, Amorim loves putting foreign direct investment into Mozambique, an emerging economy that needs it more than most.

Popping Millions Into Mozambique

Gabon has a population of about 1.5 million people and is an upper middle-income country with a $13.1 billion economy. It may be one of the wealthiest nations on the continent, but it suffers from gaping inequality. The richest 20% of the population accounts for 90% of income; a third live in poverty.
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According to the International Monetary Fund (IMF), growth in 2010 was 5.7%, following a contraction of 1.4% in 2009 due to the global recession. The IMF expects growth to remain relatively flat in 2011 at 5.6%. It also expects public investment and a rebound in mining to underpin growth this year.  On the other hand, the IMF sees a slowing global economy and the associated downward pressure on commodity prices as a downside risk to growth.
Gabon’s wealth relies on oil, which makes up over 70% of exports, with estimated proven oil reserves of two billion barrels at the beginning of 2010. With faltering oil prices and production constraints, Gabonese authorities are set on diversifying the economy away from this reliance on oil. The government plans to transform by creating a business-friendly environment. To achieve this goal, it is embarking on a public investment drive.
Manganese mining and logging are the economy’s other two key sectors. Gabon also has the world’s largest iron ore deposit, which is likely to attract further investment in the mining sector. Agriculture and tourism remain small sectors in the economy due to a lack of infrastructure.
Industry makes up nearly two-thirds of the economy, while services make up nearly a third. Agriculture is a mere 4.5% of the economy.
Gabon has a benign political environment. The incumbent president is Ali-Ben Bongo Ondimba from the long-ruling Gabonese Democratic Party (PDG). He was elected in 2009 following the death of his father, Omar Bongo Ondimba. Despite the opposition crying foul that the vote was flawed, Gabon has remained stable.
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The country is due to hold legislative elections in November. The current legislature’s mandate ends in January.  In May, the president asked the country’s constitutional court to delay the election for a year so that the country can focus on hosting the African Cup of Nations in January. Gabon is a co-host with Equatorial Guinea. The delay is also to allow for the introduction of a biometric voter system to avoid election fraud. With both the ruling party and opposition essentially in agreement for a postponement, the constitutional court is likely to grant the request.

Tag: Wealth

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