On the quality of higher education (and human capital development) in Africa

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Africa, African Development Bank, Arab Maghreb Union, Association of African Universities, East Africa, East Asia, Germany, Human capital, IBM, Kenya, Liberia, Makerere, Nairobi, Pan African University, Southern Africa, Tanzania, Tertiary education, Times Higher Education World University Rankings, United States, Vocational education, World Bank

Reflex Eco Group – Africa News

by  Kennedy Opalo (Kenyan journalist)

This Blog is sponsored by http://www.reflexecogroup.com

According to The Times Higher Education World University Rankings 2012-2013, the highest ranked university in Africa, the University of Cape Town, is 113th in the world. The ranking system employs 13 performance indicators that take into account universities’ core functions, including “research, knowledge transfer and international outlook.” Among the leading 400 world academic institutions, there are only four from Africa, all in South Africa. As a region, Africa only has 35 scientists and engineers per million inhabitants, compared with 168 in Brazil, 2,457 in Europe and 4,103 in the United States. The region is clearly behind as far as knowledge production and dissemination is concerned, producing only 1.1 percent of the world’s scientific knowledge, despite comprising more than 13 percent of the global population.

At barely over 8 percent, Africa’s gross enrollment in tertiary institutions of learning is the lowest of any region in the world (UNESCO, 2011). The average enrollment rate for developing countries is 23 percent, and that for advanced countries is 74 percent. Africa’s poor showing in the higher education sweepstakes is both a cause and effect of the region’s poor economic environment. The massive cuts in higher education funding in the wake of the structural adjustment programs of the 1980s and 1990s, even as enrollment more than tripled between 1991 and 2005, have had an adverse impact on quality. And in turn, the lack of high quality tertiary level education has starved the region of high skills needed for efficient allocation of factors of production thereby stunting improvement in productivity, high value addition and research and development. Africa devotes less than 1 percent of its GDP to research and development.

Data from 33 countries for which it is available show that tertiary education financing in the region has declined from a high of US $6,800 per student per year in 1980 to just about $981 in 2005. Over the same period the World Bank decreased its education lending from 17 percent in 1985-89 to just 7.5 percent currently (this is despite the fact that the World Bank nearly doubled its education lending between 2008 and 2009). The decline in public funding in the face of increasing demand for higher education has led to the proliferation of private universities of dubious standards and a bias towards perceived “soft” fields. In 2004 a meager 28 percent of students were enrolled in perceived “hard” disciplines in the sciences and engineering.

A 2008 study of 12 countries showed an increase in public universities from 113 to 188 between 1995 and 2008. Over the same period private universities ballooned from 14 to 107. This rapid increase in the number of universities in the region has not been matched by an increase in the number of trained teaching staff or facilities such as laboratories, libraries, and the like. Indeed, most of the new universities have tended to specialize in vocational subjects that require very little capital and human resource investment. To put it mildly, there is a great mismatch between the region’s development needs and the type of graduates it produces each year.

The shortage of skills permeates nearly all skill levels, and could get worse as the region’s economy continues to grow over the next two decades. The case of Kenya is illustrative. The country has an ambitious plan to be the information and communication technology (ICT) hub of Eastern Africa (dubbed the “Silicon Savannah”) complete with a proposed $10 billion techno-city (Konza City) situated about 60 kilometres southeast of Nairobi. Already ICT multinationals, including IBM, Microsoft, Google and Intel, have their regional headquarters in Kenya. All this sounds good, except the lack of local skills. IBM’s research lab in Kenya has had to source for top talent among graduates in computer science, electrical engineering, mathematics, and data scientists from American universities. There is still a shortage of required skills among graduates of Kenyan universities. Quality assurance is also lacking, as recent news reports of “theses for hire” have demonstrated.

As the Kenyan case suggests, the lack of sufficient investment in high quality tertiary education has adversely impacted Africa’s ability to realize its economic potential. A 2005 study showed that a one-year increase in the higher education stock of the region could boost growth rate by about 0.63 percentage points. This adds up to an overall increase in income by about 12 percent over five years. For the region to take off economically there is need for greater investment in quality higher education that will train workers for the 21st century economy. But improving the quality of higher education in the region will be a very costly affair. On their own, the region’s countries lack both the resources (on account of their small economies) and demand (on account of their population sizes) to justify the types of investments required. This is where regional cooperation comes in.

Cross-border educational exchanges are not new in Africa, and go back to the pre-independence era. For generations non-Senegalese francophone students have studied in Senegal, seen as a cheap way of getting quality education at par with diplomas from France. Uganda, with East Africa’s top university, Makerere, hosts legions of Kenyan students, eager to avoid congestion and high costs back home. South Africa, with its many quality institutions is also a preferred destination for students from across the continent. These historical cross-border exchanges have led to the formation of regional associations of higher education – the francophone Conseil Africain et Malgache pour l’Enseignement Superieur (CAMES); Inter-University Council of East Africa (IUCEA); Southern African Regional Universities Association (SARUA); and inter-university cooperation under the Arab Maghreb Union (AMU). Continent-wide, the 208-member Association of African Universities (representing 45 countries) is the umbrella organization of the region’s institutions of higher learning.

These associations need to be strengthened and empowered as drivers of regional harmonization of higher education both to facilitate cross-border inter-university mobility of both teachers and students and guarantee quality assurance. As a 2007 World Bank report aptly noted, “regional quality assurance networks are particularly relevant to Africa because of human resource constraints.” On this score the European Higher Education Area provides a possible model. The just over 10 years old Bologna process is working towards ensuring inter-university mobility (in terms of courses, qualifications, and periods of study) as well as a uniform quality assurance standard. In the African context, a continent-wide area of higher education is infeasible because of language and logistical constraints. However, sub-regional areas of higher education, based on the existing associations, provide a possible avenue to invest in a few good institutions of higher learning that can have a demonstrative effect on national institutions as well set high standards of learning. The associations themselves can also serve as certification bodies to ensure a uniform quality assurance standard (see here).

The announcement in late July 2013 of the creation of a new US $154.2 million multinational science, innovation and technology Pan African University (PAU) in the next five years is therefore welcome. (The African Development Bank (AfDB) has pledged a $45 million grant towards the effort.) PAU will be structured around existing institutions of higher learning across Africa’s five sub-regions. Basic sciences, technology and innovation will be based in East Africa; earth and life sciences including health and agriculture in West Africa; governance, humanities and social sciences in Central Africa; water and energy sciences including climate change in North Africa; and space sciences in Southern Africa.

Thus far, discussions over regional integration of systems of higher education have tended to view tertiary institutions as tools for regional economic and political integration – be it in East Africa, Europe or East Asia. However, the creation of stronger regional areas of higher education – especially in a region like Africa – can also be an economically efficient way of facilitating greater investment in higher education to match the demands of a 21st century economy. It is encouraging that current trends signal a move in this direction. University systems in Africa’s sub-regions would be a good place to start.

I conclude with a caution. The rapid increase in the number of public and private universities in Africa over the last two decades has come at the expense of other post-secondary institutions of learning such as polytechnics (this shift has occurred to a lesser extent in francophone Africa than anglophone Africa). In many countries governments have simply converted polytechnics and other constituent colleges into fully-fledged universities. This trend is worrying, especially given the fact that the vast majority of high school leavers on the continent do not make it to university. The low quality of high school education in the region (as demonstrated by the recent mass student failures in Liberia and Tanzania) is yet another reason why these “bridge” tertiary institutions are needed, both to prepare students for university and to impart valuable skills for those that do not eventually make it to university.

The rush to invest in university education should not distract from the fact that vocational post-secondary institutions, such as polytechnics, are an important component of human capital development, even in advanced countries as is the case in Germany (with its impressive “dual system” of training codified in the Vocational Training Act of 1969). As African economies move from dependence on primary commodities to manufacturing and technology, there will be need for skilled workers at all occupational levels. Doing away with vocational post-secondary institutions will only serve to further inhibit the development of adequate and relevant human capital to match the increased demand for skilled workers.

Related articles

• In the news (indigotrust.org.uk)
• Despite growth reports, Africa mired in poverty (eurekalert.org)
• The Political Economy of Brain Drain and Brain Gain – Part l (spyghana.com)
• Despite Growth Reports, Africa Mired in Poverty (yubanet.com)
• Investment and Economic Development in Africa: An Investor’s Perspective. (malawiace.com)
• Tertiary education would be indeed supported. (manisalex.wordpress.com)
• Elders in Africa (fullmoonafrica.com)
• The West Didn’t And The East Won’t Make Africa Rich…We Can’t Run Away From Doing Our Own Heavy Lifting (nakedchiefs.com)
• Africa grain experts to explore the continent’s potential as the next frontier in global grain supply at 5th African Grain Summit (appablog.wordpress.com)
• Five reflections on Africa’s higher education in science (scidev.net)

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REPORT OF LAST WEEK (from 26/08/13 to 30/08/13)
by Dario Galluccio – This Blog is sponsored by http://www.reflexecogroup.com

Kenya: Barclays agrees to $13m oil exploration deal
With Kenya on its way to becoming the first East African oil producing nation after discovering oil last year, petroleum exploration companies are vying for a position in the race to secure local production fields. This became evident as Barclays bank agreed to fund, Marriot Drilling Africa Limited (MDAL), an oil exploration company and subsidiary of UK-based Marriot Drilling Group in a $13 million oil exploration financing agreement and said the funds will be used to acquire an oil drilling rig.
According to some analysts, the 5 year deal makes Barclays bank the first in East Africa to finance an oil exploration project, though other investment houses have struck deals to finance other oil support servicing projects. Recently, Kenya-based multi business investment company, TransCentury, provided a Sh1 billion ($11.43 million) war chest for its engineering Civicon Group, to provide oil field services (OFS) support. Similarly, Nigeria’s GT Bank acquisition of 70 percent stake in Fina Bank can be linked to a strategic foresight into penetrating Kenya’s oil and mineral sectors.
These alliances will help fasten the growth rate of the East African oil and gas industry as well as provide financial institution sand oil firms with a mutually beneficial collaboration.

Ghana: Government will sell long-dated bonds to finance projects
Government will soon begin selling 15 and 20 years bonds specifically to finance infrastructure projects in the country. The sale of these long-dated bonds by government is part of plans to reduce the country’s heavy dependence on donors and local banks for infrastructural projects.
Finance and Economic Planning Minister, Seth Terpker, told his outfit is analysing how these bonds would fare on the market before issuing them. He notes that a careful analysis of the long-dated bonds market will guide government towards making the best returns on them.

Ghana: Government will transform districts into industrial hubs
The government has initiated moves to turn the various districts in the country into industrial hubs. The initiative under the Rural Enterprises Programme (REP) together with related services is intended to drive the expansion of economies, nurture entrepreneurship, create technological dynamism, foster productivity, generate employment and contribute to increased agricultural productivity. The Minister of Trade and Industry, Mr Haruna Iddrisu, announced this when he distributed some vehicles and office equipment to 31 selected districts in the country.
The REP provides an opportunity for the districts to provide the enabling environment for rural enterprise development. The items distributed were mainly funded under the International Fund for Agricultural Development (IFAD) loan. The total cost including handling charges of the vehicles was US$980,000 while that of the computers was US$175,000.

Ghana: Ghana-US trade equals $817m in first-half 2013
Ghana and the United States recorded a two-way bilateral trade worth $817 million during the first-half of 2013. The US exported into Ghana, traded goods worth $594 million and imported $223 million value of goods during the first six months of the year, according to the figures compiled by the US International Trade Commission from official statistics of the US Department of Commerce.
Ghana’s trade export to the US during the period was mainly under the African Growth and Opportunity Act (AGOA) as the trade balance between both countries reduced to $370.9 million from $540 million during the same period in 2012. The trade balance between Ghana and the US in the first-half is the highest among countries in sub-Saharan Africa (SSA) that trade with the Americans.
In 2012, during the same period, trade between Ghana and the US was $856 million.

Liberia: Government concludes deals with China and India 
The Liberian Government says it has concluded financing deals for some of its major construction projects here with the Governments of China and India. Finance Minister Amara Konneh and delegation returning from separate bilateral talks with Chinese and Indian Export-Import (EXIM) Banks said discussions were fruitful and that all is set to fast track the loans for the project.
The discussion in India looked at the terms and conditions of a US$144 million concessional loan facility intended to finance a 373 km of transmission and distribution lines, and 2 power sub-stations. The lines will run from the Liberian border with the Ivory Coast through Ganta to Gbarnga, and from Gbarnga to Zorzor, Kakata and Buchanan.
In China, the delegation met with the President of China EXIM Bank and the heads of Corporate and Concessional banking departments to discuss the possibility of securing a loan package to finance key infrastructure projects including the pavement of the Gbarnga-Mendicorma and the Ganta-Fishtown highways; a new terminal and runway for the Robert International Airport (RIA), and the consolidation of power transmission and distribution (T&D) lines in the Monrovia area.
The Government has decided to work exclusively with the China EXIM Bank on this financing instrument because it has facilities that are more suitable to the needs of Liberia. These facilities include concessional loans not tied directly to the awarding of any concession.

Ghana: GSE records good performance for first half
The Ghana Stock Exchange (GSE) for the first six months of the year has recorded a very impressive performance as against the whole of last year. The two market indices, the GSE Composite Index and the GSE Financial Stock Index which are used to measure the performance of the market have recorded remarkable upward movements. From January to July 2013, the GSE Composite Index stands at 61.39 per cent, as against 6.06 per cent for the whole of 2012. The GSE Financial Stock Index equally stands at 61.66 per cent, as against 0.53 per cent for the entire 2012.
Total market capitalisation of the bank for the period under review stands at GH¢55.78 billion as against GH¢54.95 billion in 2012 with domestic capitalisation doubling from GH¢5.57 billion to GH¢10.57 billion. Total volume of trade is equally on the rise. At the close of business on July 31, total trade stood at 209.16 million as against 218.13 million, for the whole of last year. In terms of value, total trade stands at GH¢230.51 million, as against GH¢102.2 million for the whole of last year.
Reviewing the market, Bloomberg and other international news wire service described the market as “best performing market in Sub-Saharan Africa”.
Listed companies also recorded significant price increases during the first half year. Out of the 34 companies, CAL Bank Limited led the gainers with 194 per cent followed by Enterprise Group Limitedwith 191 per cent, BENSO Oil Palm Plantation LIMITED, 150 per cent, Ghana Commercial Bank Limited, 134 per cent, and PZ Cussons Ghana Limited, 122 per cent. Seven companies gained more than 50 per cent in their share price while eight companies gained above 10 per cent. Eleven companies maintained their prices with only four recording some level of depreciation.

Nigeria: World Bank will assist with GDP rebasing
Nigeria will be assisted by the World Bank, International Monetary Fund (IMF), Africa Development Bank, and other world development partners to produce a current and accurate GDP figure, the country’s Statistician-General, Dr. Yemi Kale has said. The proposed GDP rebasing will help correct Nigeria’s fiscal planning and economic policies at the Federal, state and local government levels which have been consistently hinged on an obsolete Gross Domestic Product (GDP) baseline carried out since 1990.
Rebasing, which is the process of replacing the present price and quantity structure of the base year used to compile real measures of GDP with a new or more recent price structure, involves changing the price and quantity base for individual process and quantity relatives, updating weights used in aggregating individual quantity relatives into sub-indexes and aggregating these sub-indexes into more aggregated indexes.
According to Statistician-General, the proposed rebasing will help Africa’s second-largest economy plan and measure development better. According to reports, Nigeria is poised to overtake South Africa as Africa’s largest economy after the exercise.

Ghana: Government seeks PPP for Boankra Port project
The government has renewed the search for private investors to partner it to build and operate the Boankra Inland Port and the Eastern Railway Line projects. The Chief Executive Officer of the Ghana Shippers’ Authority (GSA), Dr Kofi Mbiah, said the government had brought the two projects under its private public partnership (PPP) initiative.
The PPP initiative is being coordinated and executed by the Ministry of Finance and Economic (MoFEP) and the newly established ministry at the Presidency in-charge of PPPs.
A successful of the projects is expected to help decongest the Tema and Takoradi Ports, leading to a rise in the country’s maritime trade.This is because more cargo, especially those on transit to the sub-region as well as goods moving from the two seaports to the eastern, central and northern parts of the country, will be transported on the railway line to the Boankra Port prior to distribution.
A search for a transaction advisor to the proposed PPP for the two projects has already commenced and is expected to be concluded in August. Once this is done, Dr Mbiah said the government would now start the process of getting investors interested in partnering it to operate the two projects.

Nigeria: Transcorp boosts Obama Power-Africa initiative with $300m plant acquisition
President Barack Obama’s $7 billion US-backed Power Africa initiative has received a major boost with the announcement of the complete payment for the $300 million Ughelli power plant in Delta State, Nigeria by Transcorp Plc, the publicly quoted conglomerate managed by Tony Elumelu’s Heirs Holdings.
Transcorp Ughelli Power Limited (TUPL) which made an initial deposit of $75 million (25 per cent) for the plant, announced last week a $225 million balance payment to Nigeria’s Bureau of Public Enterprise (BPE) for the 1000 megawatts capacity plant.
TUPL, which has American company Symbion Power as an equity investor in the project, plans to increase the power generation of the plant from 300MW to over 1070MW over the next five years.
United Bank for Africa Plc (UBA) and the Africa Finance Corporation (AFC) as co-arrangers, and First City Monument Bank Plc (FCMB) and Fidelity Bank as co-financiers provided the debt financing facility for the acquisition of the plant, which is one of the six power generation companies unbundled as part of the privatization of the Power Holding Company of Nigeria (PHCN).
Last month, Heirs Holdings committed $2.5 billion toward the Power Africa Initiative, a multi-stakeholder partnership between the US government and seven sub-Saharan African countries, including Nigeria; with the purpose of accelerating investment in Africa’s power sector over the next five years.

Africa: Samsung says it has high hopes for Africa’s development
Samsung remains extremely positive about the ongoing developments within Africa, despite challenges such as transport/logistics and inadequate electricity infrastructure, George Ferreira, Vice President and Chief Operations Officer at Samsung Electronics Africa, has said.
A statement from Samsung Ghana said Samsung Electronics Africa was actively involved in providing resources to the ICT sector and had also introduced a number of products that would result in an increasing adoption of higher levels of primary, secondary and tertiary education levels.
The statement said: “Africa is considered the best continent for solar/bio-fuel. However, in order to see the projects brought to fruition, energy investment is immediately needed in the form of FDI and this is exactly what we are doing with our R&D into Solar Powered solutions. Samsung Electronics Africa will continue to identify and support projects that add to the economic and social growth of the continent by analyzing the very specific needs promoted by the often remote and rugged environment. It’s time for Africa to shine.”
The statement said while Foreign Direct Investment (FDI) into Africa dipped somewhat over the past two years, it has been forecasted that it would increase by more than 10 per cent in 2013.
Investment into Angola, Mozambique and South Africa appears to be the most prominent, according to the African Economic Outlook 2013 report.

South Sudan: Approved bill for oil sector regulation
After years of deliberations and consultative meetings, South Sudan has passed the long-awaited petroleum bill which will transform its mode of operation and attract investors. According to Reuters, the bill, pending President Salva Kiir’s approval, will afford the war-torn nation improved transparency by regulating how the government spends its revenues, making it more investor friendly.
Since it gained its independence from Sudan in 2011, the country has struggled to establish concrete laws to help stimulate growth. However the persistent push from western nations to ensure greater security for investment in the oil sector seems to be yielding positive dividends.
Western nations formerly ignored the country’s oil sector for development, citing not only the gripping violence but the lack of data on how oil proceeds were managed by the government. The landlocked Central African country is hopeful that this bill will encourage investors to embark on operational projects which will propel infrastructural development needed for the Sector’s growth.

Nigeria: To export technology to African countries
According to the Minister of Science and Technology, Prof. Ita Ewa, Nigeria would soon start exporting technologies to other African countries. During a courtesy visit from a team of UNESCO expert, the minister said the Sheda Science and Technology Complex (SHESTCO), Nigeria’s version of the United States’ “Silicon Valley”, in Kwali, FCT, would be a zone where technology would be exported to other African countries.
The minister stated that the ministry was working in collaboration with UNESCO and other experts in developing a roadmap for the valley. He further said that the would be where solar technology value chain could be used in promoting the technology in Nigeria.
The leader of the UNESO team, Dr Voslan Nur, reiterated that the organisation had agreed to collaborate with the Federal Government to establish the valley. Nur described the initiative of the ministry on the project as the right step in the right decision to make the nation’s technology park a productive centre.
Prof. Deog-song Oh, the Secretary-General, World Technopolis Association, Korea, said the establishment of the valley would make Nigeria one of the world technology giants in the nearest future.

East Africa: Kenya removes trade barriers
Kenya has moved to tear down some of the barriers that were responsible for slowing down the movement of persons and cargo along the Mombasa – Kampala trade corridor. As such, traders in the East Africa Community (EAC) are to witness smooth flow of goods and services after the introduction of the single border territory (SBT).
Uganda Revenue Authority (URA) Commissioner for Customs Richard Kamajugo said they had ordered the removal of all weighbridges on the Uganda side too.
Speaking at URA consultative forum in Kampala last week, Kamajugo said Kenya had been with the highest number of weighbridges between Mombasa and Malaba border, but all have been removed except one at Mombasa port. He also said that the 10 roadblocks that Kenya had between Mombasa and Nairobi have all been removed. SBT means goods will only be checked at the main port of entry, and once cleared, they will move with less interruption.

Ghana: US$1bn Eurobond listed on Ghana Stock Exchange
The government has successfully listed the US$1 billion Eurobond issued earlier this month on the Ghana Stock Exchange. This makes it the first Eurobond to be listed on the exchange of a country in sub-Saharan Africa (SSA). The bond is now being traded on the Irish Stock Exchange (ISE) at a rate of 8.17 per cent.
The Minister of Finance and Economic Planning, Mr Seth Terkper, symbolically listed the bond on the GSE, making it possible for foreign and domestic investors to buy and trade in the Eurobond on the Accra bourse. This is expected to help increase investor appetite on the local bourse while deepening capital market activities in the country in general.
Mr Terkper, who led a team of experts from the country to issue the bond on July 25, said the listing and subsequent trading of the bond on the GSE added to government’s commitment to develop the capital market. The country requires an estimated US$1.2 billion annually to fund its infrastructural needs, and the minister is confident a well-developed capital market would help mobilise the needed funds to support these capital expenditures.

Ghana: 170 percent oversubscription of Ghana’s first 7 year bond
The Government of Ghana through the Ministry of Finance and Economic Planning sold its first seven-year bond and it was over-subscribed by 170%. Government received GH¢ 270 million Ghana cedi offers from local and foreign investors but took GH¢102 million cedis. It would be paying those who participated in the bids, an interest or a yield of 17.5%. Most of the bids that government is likely to accept are from local investors.
Proceeds from the bond, would be used to finance infrastructure projects and settle some maturing debts. Government is however expected to receive the money by next Monday.

Ghana: AFD says it will keeps to financing power projects in Ghana
Mr. Yves Boudot, Director of Agence Francaise de Development (AFD) for Africa, said his office would continue to finance power projects in Ghana. He said the AFD had a wide range of financing options to support government’s efforts at achieving its power sector objectives.
A statement made available to the Ghana News Agency in Accra, by the Ministry of Energy and Petroleum, said Mr. Boudot made the promise at a meeting with the sector Minister, Mr Emmanuel Armah-Kofi Buah. Mr. Boudot said the AFD had demonstrated that efficient public companies could have access to direct international financing without state guarantee.
“AFD is financing the reinforcement and extension of the power grid in Northern Ghana and Burkina Faso, which would allow the Ghanaian national electricity transmission company, GRIDCO to scale up development in the region”, the statement said. It added that the extension of power grid in Northern Ghana would have substantial economic, political and environmental benefits for the West African sub-region.
“The programme’s main objective is to make Ghana’s existing power grid more reliable, and to scale up its capacity by reducing the current imbalance between the North and South of the country and support the development of Northern Ghana”, it noted.
Mr Buah, the sector Minister, said the relationship between Ghana and France would continue to grow from strength to strength, recalling the visit by President John Mahama to France.

Nigeria: AFC co-arranges $215m financing for Ughelli Power
Africa Finance Corporation (AFC) in conjunction with some Nigerian banks has provided a USD 215 million debt financing facility for the acquisition of Ughelli Power Plc.
Ughelli Power Plc is a gas fired thermal power plant acquired by Transnational Corporation of Nigeria Plc (Transcorp) in the first round of the Federal Government of Nigeria’s privatisation of power generation assets formerly owned by the Power Holding Company of Nigeria (PHCN). Ughelli Power Plc was incorporated in 2005, is situated in Delta State and has an installed capacity of approximately 900MW.
AFC, a multilateral finance institution established in 2007, was created to address the infrastructure investment deficit and as an African private sector investment solution, to drive economic growth and industrial development in Africa.
Commenting on the deal, Andrew Alli, President & CEO of AFC, said “AFC’s long term vision is to help address Africa’s infrastructure deficit and ensure sustainable economic growth for the continent. Growth of the Nigerian economy cannot be fully realised without an efficient and functioning power sector. Power is one of AFC’s high priority sectors for investment, and arguably Africa’s most significant need.

Ghana: WB committed to strengthening partnership
The World Bank says it is committed to strengthening its partnership with Ghana. According to the Bank, the architectural work of its new office in Accra, underscores its determination to continue with its pursuit of openness and accountability in its dealings with Ghana.
These assurances were given by Yusupha Crookes, World Bank Resident Representative in Ghana, during the commissioning of the Bank’s new office, located off the Independence Avenue, Accra. “I see the new building as a partial materialization of the Bank’s commitment to work as one institution and as a strong statement of dedication to our partnership with Ghana. The transparent glass exterior should be seen as our invitation to our clients, government and the general public to expect not only more efficient, one-stop service, but also to expect a more open, frank and accountable World Bank Group.”
The IFC Vice President for Sub-Saharan Africa, Latin America and the Carribean, Jean-Phillipe Prosper observed that the World Bank had provided more than $8 billion in funding to help the Government of Ghana to deliver services and build institutions. Similarly, the IFC had provided private sector investment of more than $2 billion within the past two fiscal years.

Africa: China’s investment in Africa increases 20.5% annually
China has been striving to enhance the investment in and financial cooperation with African countries, to improve the quality and level of China-Africa cooperation. China’s direct investment in Africa increased from 1.44 billion U.S. dollars to 2.52 billion U.S. dollars, with an annual growth of 20.5 percent from 2009 to 2012, says the paper on Sino-Africa economic and trade cooperation published by the Information Office of the State Council.
Currently, over 2,000 Chinese enterprises have invested in more than 50 African countries and regions, covering the industries such as traditional agriculture, mining, construction, resource product processing, industrial manufacturing, finance, commercial logistics and real estate.
By the end of 2012, China had signed bilateral investment treaties (BIT) with 32 African countries, and established joint economic commission mechanisms with 45 African countries.
At the 4th FOCAC Ministerial Conference in 2009, China announced the establishment of a special loan for small and medium-sized African businesses, of which the contract loans totalled 1.03 billion U.S. dollars by the end of 2012, with 666 million already granted. As a key investment sector, China’s manufacturing enterprises had directly invested 1.33 billion U.S. dollars in the 2009-2012 period towards African countries, including Mali, Ethiopia and other countries lack in resources.
Meanwhile, African enterprises started increasing the investment in China as Africa’s economic growth strengthened recently. Africa’s direct investment in China stood at 14.24 billion U.S. dollars by the end of 2012, up 44 percent from 2009.

Ghana: India-Ghana trade hits record $1.2b
Trade between India and Ghana has crossed the $1 billion mark, reaching $1.2 billion at the end of 2012, an increase of over 63 percent over the previous year. India’s exports to Ghana stood at about $800 million against imports of about $404 million.
A statement from the Indian High Commission said, “For the first time, the total trade between the two countries has crossed $1 billion and there exists much more potential to take the India-Ghana commercial engagement further to mutual advantage”.
The statement said India’s export strategy is aimed at helping Ghana establish developmental projects with a combination of investments, grants and loans, complemented by projects and exports to provide inputs for these projects and not to dump cheap products. It said these projects are undertaken under proposals authored by the Ghana government, according to its own development priorities, adding, “Where technology and knowledge-based items such as pharmaceuticals are exported from India, these are meant to bring down the cost of life-saving drugs and equipment.
The statement said India has so far extended and approved $230 million in credit lines to support various projects in Ghana including the construction of the Flagstaff House Presidential Palace, establishment of a Foreign Policy Training Institute and financing a rural electrification project. Other projects, it said, are the supply of agricultural and irrigation equipment, a fish processing plant and supply of waste management equipment.

Nigeria: Nigerian billionaire Aliko Dangote to borrow $3.3 billion for refinery project
Dangote Group, the West African conglomerate founded by Africa’s richest man, Aliko Dangote, has announced plans to borrow an additional $3.3 billion to invest in a $9 billion oil refinery and petrochemical complex in Nigeria.
According to a company official, a consortium of local and foreign banks will finance the project. The Dangote Group and the consortium of financial institutions will officially sign the term loan agreements on Wednesday, September 4.
The refinery, which will be located at the Olokola Liquefied Natural Gas (OKLNG) Free Trade Zone in Nigeria’s southwest region, will be Nigeria’s first private and Africa’s largest petroleum refinery, with a projected daily production output of 400,000 barrels a day. The refinery is expected to decrease Nigeria’s dependence on oil imports and boost Aliko Dangote’s fortune significantly in the medium to long term.
The refinery is expected to be fully operational by 2016.

Ghana: John Mahama remains President, Supreme Court affirms
The Supreme Court has upheld the validity of President John Mahama’s election as President of the Republic of Ghana, a decision of the court pronounced moments ago has affirmed.
Justice William Atuguba, presiding, read the decision as the parties sat attentively in open court.

Ghana: Producer price inflation drops
Ex-factory prices reduced from the 7 percent recorded in July 2012 to 5 percent in July 2013 year-on-year, representing a decrease of 2.0 percentage points.
According to Government Statistician, Dr Philomena Nyarko, who officially launched the producer price index (PPI) for July 2013, the month-on-month change in producer prices between June 2013 and July 2013 was also -0.5 percent.
Dr. Nyarko said the producer price inflation in the Mining and Quarrying subsector decreased substantially by 11.7 percent. She noted that producer price inflation for the manufacturing sector which constitutes more than two-thirds of total industry increased to 10.9 percent from a rate of 10.6 percent in June this year, adding that the rate for the utilities sub-sector decreased marginally by 0.39 percentage points in July 2013.

Ghana: Public debt stock up by 39.8 percent
Ghana public debt stock has increased by 39.8 percent over the 12 month period ended June 2013. The figures from the Central Bank show that cumulatively, the stock of total public debt stood at GH¢39,053.3 million representing 43.9% of Gross Domestic Product (GDP) at the end of June 2013. This represents an increase of 39.8 per cent over the GH¢27,942.6 million recorded at the end of June 2012. Of the total public debt, domestic debt constituted 53.4 per cent and external debt 46.6 per cent.

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• Transitioning Nigeria’s state owned electricity sector to a private power market (appablog.wordpress.com)
• Ghana officially lists ten-year Eurobond on local bourse (ghanabusinessnews.com)
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Africa Focused News

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REPORT OF LAST WEEK (from 19/08/13 to 23/08/13)
by Dario Galluccio – This Blog is sponsored by http://www.reflexecogroup.com

Ghana: Non-traditional export to hit 5.0 billion dollars
The Ministry of Trade and Industry (MOTI) is to increase the country’s non-traditional export from the current export value of 2.64 billion dollars to 5.0 billion dollars by 2017. This will enhance the Gross Domestic Product to increase the national income. The country also aims at generating considerable number of jobs and incomes, which will be translated into improved standard of living and welfare of the people to consolidate the middle-income status.
Mr Gerald Nyarko-Mensah, Director of Export Trade of MOTI said the strategy formed part of the national strategy for the non-traditional export sector from 2013 to 2017.
He said the country needs an investment capital of 600 million dollars to implement the National Export Strategy document, which among other things, would build the capacities of the Ghana Export Promotion Authority and the Metropolitan, Municipal and District Assemblies to enable the country achieve the goal. He also said the country would no longer depend solely on the export commodities but would over the period invest in fresh and processed fish, vegetable oils, root crops, grains and legumes, natural rubber and products of the creative arts.
Mr Nyarko-Mensah said the strategy would put Ghana on the global map as a world class exporter of competitive products and services to reduce poverty promote sustainable environmental development and improve the balance in spatial and regional development. He indicated that the strategy would strengthen and resource export development related institutions to ensure that the export culture is imbibed nationwide so that every district would be able to have at least one significant commercial viable agro-based export product.

Ghana: World Bank says economy is expected to grow
Mr. Jean Phillipe Prosper, the Vice-President of the International Finance Corporation for sub-Saharan Africa, Latin America and the Caribbean, says the current glitch in government’s finances is only temporary as the country’s economy is expected to continue its growth in the coming months. Government is aiming to cut the fiscal deficit from 12 percent of Gross Domestic Product in 2012 to 9 percent in 2013, through a combination of revenue and expenditure measures.
“Africa is turning heads around the world, while developed countries still find their footing after a devastating crisis and emerging markets in other parts of the world face new challenges after years of torrid growth. Ghana is leading the way. Ghana’s growth in the first decade of this century averaged more than six percent. Today that growth is even higher and expected to continue,” he said.
The World Bank has provided about US$10billion in funding to the government of Ghana since it joined the Group in 1957; with most of the funds coming from the Bank’s facility for the world’s poorest nations — the International Development Association (IDA). About US$8billion of the total funding came as grants and interest-free credits to the government.

Kenya: President Kenyatta arrives in China on first state visit
President Uhuru Kenyatta arrived in Beijing on Sunday morning on his first State visit to China, which will focus on growing Kenya’s business and investment with the East. African ambassadors accredited to China greeted President Kenyatta and First Lady Margaret Kenyatta on arrival at Beijing Capital International Airport. They told him Kenya’s agenda of seeking transformational projects in infrastructure, technology, agribusiness and finance resonated with the continent. Discussions this week with Chinese President Xi Jinping and other government officials, as well as the China business community will focus on investments mainly in infrastructure, energy, technology and protecting Kenya’s wildlife. President Kenyatta will also press for greater market access for Kenyan exports.
He said his visit would cement and deepen the strategic partnership between Kenya and China.

East Africa: China tops Kenya’s FDI sources
China has become Kenya’s biggest FDI source with 474 million U. S. dollars invested in the East African country, as a result of the development of bilateral trade and economic cooperation, according to Chinese Ambassador to Kenya Liu Guangyuan.
Statistics from the Chinese Embassy in Nairobi show that the bilateral trade has boomed in recent years with an annual surge of 30 percent to 2.84 billion U. S. dollars. China has become the second largest trade partner to Kenya.
Meanwhile, Kenya has become more and more popular with Chinese tourists, whose arrivals hit 40,000 in 2012 and are expected even higher in years to come.

Ghana ranked 10th export country to China
Ghana has been ranked second after Nigeria as an ECOWAS country whose exports is in higher demand by China. It was however ranked 10th among sub-Sahara African countries that export to China.
Angola, South Africa, Congo, DR Congo and Zambia were the top five countries that China imported from. The rest were Sudan, Equatorial Guinea, Nigeria, Cameroon and Ghana.
According to Ecobank Research, sub-Saharan Africa has emerged as China’s biggest bilateral trade partner. The export trade rose to $1.2 billion last year, up from $945 billion in 2008.
Ghana’s exports to China reduced from 2008 to 2012. The country mainly exports minerals and cocoa to one of the fastest growing economies in the world. China has increased its investments in Africa in mining, energy, construction and manufacturing. However, there is an increasing move towards investments in the services sector particularly finance and tourism.

Ethiopia hails Dangote’s investment in cement plant
Nigeria’s Dangote Group has seen rapid expansion across the continent and has received yet another commendation, this time by the Ethiopian government, after the establishment of a new cement plant in the East African country.
The commendation, conveyed through a letter, acclaimed the effort of the President of the conglomerate, Aliko Dangote and promised to provide the enabling atmosphere for the success of the venture.
Dangote Cement had launched a 2.5 million metric tonnes per annum plant in Mugher, Adaberga District in Ethiopia with a pledge by the company to ensure that it was completed on schedule.
Dangote, Africa’s richest man, has pledged to spend up to $15 billion pursuing investment opportunities around the continent in the next 4-5 years. He earlier revealed that his company has invested approximately $8 billion in an oil refinery and another $2 billion in fertilizer in Nigeria alone, aside other billion dollar investments outside the country.

Nigeria: Apex Bank launches $1.2m MSME fund
The central bank of Nigeria has launched a N220 billion ($1.2 million) Micro, Small and Medium Enterprise (MSME) development Fund to fill the vacuum accessed in the small business sub-sector. The Fund, which would be given to Micro Finance Banks (MFBs) and Micro Finance Institutions (MFIs) to strengthen their operations (the credit component, the guarantee component and the refinancing component for the sector to work) will provide wholesale funding requirements in their operations and ensure that the un-served and under-served clients in Micro, Small and Medium Enterprises (MSMEs) sub-sector are now covered.
The fund was set up in accordance to Section 6.10 of the revised Microfinance Policy, Regulatory and Supervisory Framework for Nigeria which stipulates that “a Microfinance Development Fund shall be set up, primarily to provide for the wholesale funding requirements of MFBs/MFIs.”
The development fund will be available for disbursement as from next year. 60 percent of the fund has been earmarked for the provision of financial services to women entrepreneurs. This is as a result of the challenges they faced in accessing financial services in Nigeria.
Special consideration will also be given to institutions that will provide financial services to graduates of the CBN’s Entrepreneurship Development Centers (EDCs).

Kenya: from nowhere plans East Africa’s first Oil exports
Kenya is headed to become the first oil exporter in East Africa, moving in less than five years from being a have-not nation to the regional leader in cutting reliance on energy suppliers such as Royal Dutch Shell Plc.
After Tullow Oil Plc (TLW) discovered oil last year, Kenya is set to start shipments in 2016, overtaking neighboring Uganda, where Tullow found crude more than seven years ago. The U.K. explorer plans to start pumping in Kenya as soon as next year, Chief Operating Officer Paul McDade said in an interview. Kenya’s deposits may top 10 billion barrels, according to the company, more than three times the U.K.’s remaining reserves.
Oil will allow Kenya to “diversify export earnings and act as a catalyst for infrastructural spending, especially on the transport network,” Phumulele Mbiyo, regional head of macroeconomic research at Nairobi-based CfC Stanbic Bank Ltd., a unit of Standard Bank Group Ltd., said . “The shilling is expected to benefit from inflows of foreign exchange and reduced spending on fuel imports.”

Sierra Leone: Diamond exports sees 43% increase in H1
African diamond exporter, Sierra Leone says it shipped out diamonds worth $102 million in the first half (H1) of the year, a 43 percent rise as compared to the $71 million gained from exports during the same period last year. According to the country’s National Mineral Agency (NMA), the increase – which provided the government with a tax windfall in excess of $5 million – was largely influenced by the improved level of productivity from its major diamond miner, Koidu Holdings and further highlights the growing advancement in channeling diamonds through the government.
“At the end of the first half of 2013, exports exceeded those of 2012 by 42.95 percent, an improvement of $30.71 million,” Ibrahim Mohmed, who oversees the diamond sector at the NMA, told. “The total diamonds exported amounted to 331,471 carats valued at $102 million,” he added.

Kenya: International acquisition of local firms profit entrepreneurs
Recent acquisition of Kenyan companies by foreign multinationals will provide multi-billion-dollar windfalls for local entrepreneurs, experts reveal.
Findings suggests that several billionaire entrepreneurs are selling their stakes in local companies to foreign firms eager to tap into the East African market and have a preference for acquisition as a faster and cost efficient medium of entry into the region.
According to Business Daily, sporadic deals in the past year have attracted multinationals from across Africa, Asia and Europe with concluded acquisitions involving firms such as Fina Bank, Mercantile Insurance, Kenya Data Networks (KDN) and Swift global. Other potential buyout deals include that of AccessKenya, Scangroup, KenolKobil, CMC Holdings, and Resolution Insurance.
Analysts have noted that most agreements are aimed at generating capital for cash-strapped firms or at providing expertise in resource and operational management to ensure sustainable business development for the growing economy.

Ghana: Trade between Ghana-Germany is pegged at €1.25b for 2013
Trade between Ghana and Germany currently stands at €1.25 billion as at the end of March 2013. This was made known by President John Mahama last week when he hosted the outgoing German Ambassador to Ghana, Dr. Renate Schimkoreit.
Germany is one of Ghana’s biggest trading partners in the European Union.
According to President Mahama, Germany has given Ghana €132 million out of the total portfolio of €184 million support pledge it made for the period between 2012 and 2015, reports the Ghana News Agency.
Germany’s funding in Ghana has been in major areas such as renewable energy, health, agriculture, land administration project among others.

Nigeria: To Sign $3.7bn coal project deal with Chinese firm
Nigeria’s president, Goodluck Jonathan says nothing stops the country from exploiting its abundant coal reserves for quality power generation if properly harnessed.
“Nigeria is endowed with abundant coal reserves of the required quality necessary for power generation. And so there is no reason why we should not exploit that sector.”
Nigeria’s coal reserve is put at about 360 metric tonnes.
The president also stressed on the importance of the solid mineral sector and the need to harness it in order to create jobs, wealth and increase the foreign direct investments in the economy.
During the workshop, HTG-Pacific Energy Consortium and Ministry of Mines and Steel Development signed a $3.7 billion deal for a coal to power project at Ezimo Coal Block in Enugu State and a 1,000 megawatts coal power generating plant. The MoU represents the first step to building plants that will generate additional 1200 mega watts of electricity to the national grid.
Nigeria’s Minister of Power, Prof. Chinedu Nebo, said a greater part of the funds required to carry out the project will be borrowed from foreign banks.

Africa: Standard Bank will open offices in Ethiopia, Ivory Coast 
Standard Bank, Africa’s biggest lender by assets, is poised to open up representative offices in Ethiopia and the Ivory Coast, it merged earlier this week. Banks first open representative offices in the targeted countries before setting up shop and opening up a branch network offering a suite of their products.
By the time Standard Bank decides to go full steam ahead and start full-suited operations in the two countries, the lender would have increased its African operations to 20. It currently has operations in 18 African countries.
The lender is paying more attention to Africa because it is planning to take advantage of opportunities that will be proffered by the growing middle class in the continent. Standard Bank has disposed of its operations in the United Kingdom, Russia and Argentina to focus on the African continent.
In the past couple of years, Ethiopia has been seen as having great prospects for foreign banks. This is in view of the fact that it is Africa’s second most populous country.

Ghana: DHL to expand in Africa
Leading international express and logistics company, DHL Express has stated that it will continue to invest in Sub-Saharan Africa. To strengthen its 32-year relationship with Ghana, DHL’s Sub-Saharan Africa Managing Director, Charles Brewer last Friday met key stakeholders, customers, employees and the media to explain the company’s future direction.
“Despite the current global economic uncertainty, DHL expects the African region to deliver,” said Mr. Brewer.
He also said “As we see the continent ‘surge’ as a result of sector investment, increased consumer spending and economic activity, the future is still bright for the continent. Ghana is an attractive market for us and with the GDP growth rate 7 percent presents a major opportunity. The opportunity for us is to expand our footprint within the country and service semi-urban and rural areas so that anyone-from a student to a small business- can access our network and the over 220 countries and destinations that we serve.”

Ghana: 1st Made in Ghana exhibition in Nigeria
The first ever Made in Ghana Solo Exhibition to be hosted in Nigeria, which is part of efforts aimed at strengthening the bi-lateral trade relations between Ghana and Nigeria as well as introducing Ghanaian manufacturers to the largest market in Africa was declared launched in Accra by the President of Ghana Manufacturers Association, Nana Owusu Opare. The press briefing which was held in the boardroom of First Atlantic Bank; the major sponsor of the program, was said to be the first solo exhibition platform that will be strictly for Ghanaians to showcase their products in Nigeria.
First Made in Ghana Solo Exhibition which is under the theme: “Promoting Ghana’s Export Potentials To West Africa’s Largest Market” was put together by Vintage Visions, Ghana.
The exhibition is expected to take place at the LTV. Ikeja, Lagos, from 2nd of September to 7th.

Nigeria: Nigerians abroad, biggest investors
Nigerians abroad have been identified as the biggest investors into the country’s economy, which is seen as one of the fastest growing in Africa.
The chairman, House of Representatives Committee on Diaspora, Hon. Abike Dabiri-Erewa disclosed this at the just concluded Nigerian Diaspora Direct Investment Summit in London where she urged the Nigerian government to ensure that Nigerians abroad are given the necessary support needed to have a smooth inter-business transactions in their various countries of abode.
Moreover also the Secretary to the Government of the Federation (SGF), Senator Anyim Pius Anyim, has lauded the contributions of Nigerians abroad to national development, saying, ” Remittances of over $21 billion in the last one year, appears the highest so far in Africa.

Kenya: Kidero signs Sh90 billion deal with investors
Nairobi Governor Evans Kidero has signed deals worth Sh90billion with Chinese investors to be used for infrastructure development. Speaking in China yesterday, Kidero said that he had held a fruitful meeting with the executive chairman of China Investment Bank, on the prospects of funding the urban re-generation of Eastlands housing estates, Nairobi’s transport system and nine transport corridors to open up traffic in the county.
“The China Investment Bank is willing to invest in Nairobi county. Its chairman Hu Huai Bang will soon visit Kenya,” he said. He said some Chinese investors want to fund the second phase of the Digital Traffic and Security Control where cameras will be installed in 253 major junctions in Nairobi from Mowlem area in Embakasi West to Karen. We also got commitments for the health care sector where statistics show that there are 7.6 million hospital visits per year in Nairobi while there are 83 hospitals, clinics and dispensaries. This will be upgraded to digital imaging systems,” Kidero said.

Nigeria: MoneyGram, eTranzact sign money transfer deal
International money transfer company, MoneyGram, has finalised agreements with electronic transaction and payment platform, eTranzact’s PocketMoni, that will allow accessibility to Nigerian mobile users all over the world.
PocketMoni – which works on all GSM networks the partnership – would enable customers carry out their transactions with ease, without having to face the often “touted inconvenience” of funds transfer.
The companies said the deal which would allow 24/7 access to money transfer transactions is a step in building a comprehensive suite of mobile services.
The Regional Director for North West Africa MoneyGram International, Mr Francois Peyret noted that the partnership was another effort aimed at driving the cashless policy directive of the Central Bank of Nigeria (CBN).

Ghana: Reserve stands at $5.7billion
Dr Kofi Wampah, the Governor of the Bank of Ghana (BoG), has announced that Ghana’s external reserves stood at $5.7 billion as of August 20, 2013.
This translates into more than three months of import cover, meaning that the country’s external reserves can pay for more than three months of imports.
Dr Wampah added that the current reserve level was an appreciation of the one recorded last month; in july the country’s external reserves were $4.9 billion but rose to the current level due to the various gains chalked up in the economy over the period.
The governor attributed those gains to the numerous interventions the government introduced into the economy, such as the Eurobond and improvement in the energy sector.

Ghana: To save $279 million from crude oil revenue
Ghana has been able to save close to $279 million from revenue earned from crude oil export for the first half of 2013. This is contained in the Ghana Petroleum Funds report on the country’s earnings from crude oil export since it started exporting crude.
According to the report, $77 million will be set aside for future generations in the Heritage Fund, while $202 million has accrued to the Stabilisation Fund to cushion the country in times of crude oil price volatility.

Africa: CDB invests $2.4 Billion in infrastructure projects
China Development Bank (CDB), the largest policy lender in the country, has invested over $2.4 billion in Africa’s infrastructure development, the bank’s president, Zheng Zhijie, has revealed.
According to the president, the bank, through its wholly owned subsidiary fund, China-Africa Development Fund, has financed several economy-enhancing projects in mineral resources development, power generation, agriculture and machinery manufacturing across 30 African countries, and has also offered loans worth a reported $18.9 billion.
With the economic crisis threatening Europe and parts of North America and a quest to find cost friendly markets for trading and business development, western countries have started turning their attention towards African nations, with predictions that the continent will be the next region to enjoy an economic boom. Top economic giants including the US, UK, Japan, Russia, France and Germany are all pushing for investment opportunities in the fast growing continent, but China seems to be leading the pile.
In 2009, China became Africa’s biggest trading partner, with trade deals from $10 billion in 2000 to over $200 billion this year, thereby outdoing the US.

Nigeria: IFC invests N60bn in infrastructure development
International Finance Corporation, IFC said it has invested 25 per cent, about N60 billion of its 2012 total investment in Nigeria on infrastructure. Vice President, Sub-Saharan Africa, Latin America and The Caribbean, Jean Philippe Prosper stated this in Lagos while interacting with news men during his visit to Nigeria.
He said that IFC has invested a total of $1.5bn in Nigeria within the organization’s last fiscal year that ended in June, 2013.
According to him, the infrastructure and natural resources sector got 25 per cent, about N60bn, while manufacturing and agribusiness got 25 per cent. The financial markets got N120bn about 50 per cent of the total investments.

Tanzania: Dar es Salaam Business prospects attract Singaporeans
Prospective investors from Singapore are in the country to explore business opportunities, thanks to President Jakaya Kikwete’s recent tour of the Asian nation. The visiting Singaporeans have expressed interest to invest particularly under the Export Processing Zones Authority (EPZA) managed Export Processing Zone (EPZ) and Special Economic Zone (SEZ) programmes.
The arrival of the strong business delegation from Singapore is linked to President Kikwete’s tour of Japan and Singapore early last June to lure prospective investors from the highly industrialised Asian nations.

Angola: To urge diversification amid stable oil prices
Angola, Africa’s largest oil producer after Nigeria, needs to cut its reliance on crude to buffer the economy as prices for the commodity are set to remain stable over the next three years, a central bank official said.
The economy is forecast to expand 6.5 percent this year and between 7 percent and 8 percent in 2014, while oil trades at about $106 a barrel, Antonio Andre Lopes, a vice-governor of the Banco Nacional de Angola, said. Crude oil makes up 97 percent of the country’s exports and 80 percent of tax revenue.
“The price of oil is a big threat so we need to diversify the economy to mitigate this,” Lopes said. “However, the economy is getting better and I think the oil price will be stable.”
The government is seeking to increase lending from banks to businesses in industries including construction, mining and agriculture as the southwest African country recovers from a 27-year civil war that ended in 2002.
Angola’s $116 billion economy is forecast by the World Bank to expand 7.2 percent this year. Crude oil has gained 12 percent in New York in the past six months and was trading as high as $104.72 a barrel today.

Ghana can generate power for West Africa
Alhaji Inusah Fuseini, Minister for Lands and Natural Resources says Ghana has the potential to establish power-generation plants to feed the West African sub-region.
He said investment in relatively cheap gas-fired power plants through gas that would be made available by the Ghana Gas Company ‘would significantly enhance the competitiveness of products of Ghanaian companies and facilitate the generation of the targeted 5,000KV by 2016 for export to countries in the sub-region.’
Alhaji Fuseini made the observation when Mr. Kimihiko Inaba, Executive Director of Japan External Trade Organization (JETRO) led a three-man South Africa-based team comprising himself, Mr. Yasuto Suzuki, Deputy General Manager of Toshiba and Mr. Nozomu Sasaki, General Manager of Mitsubishi Corporation to pay a courtesy call on the minister. The three-member JETRO delegation is currently in Ghana to explore investment opportunities particularly in the natural resource and power generation sectors in a bid to boost investment of Japanese companies in Ghana.

Ghana: BoG issues 7-year bond
The Bank of Ghana on Thursday, 22th of August, issued its first seven year Government of Ghana bond. Proceeds from the 100 million Ghana Cedi bond is expected to be used to settle maturing debts as well as finance some infrastructure projects. This is contained in the Government of Ghana’s Securities Calendar from July till the end of the year.
A total of 1.7 billion Ghana Cedis will be raised this month from short and long dated instruments. This will bring to a total of 14.7 billion Ghana Cedis of debt instruments raised by government this year.
The Central Bank will also issue a 600 million Ghana Cedis bond next month. Another seven year bond will be issued in November

Tanzania: Vodacom will invest $124m for network expansion
Tanzania’s largest mobile network operator, Vodacom, said it is investing 200 billion shillings ($124 million) to develop and grow its business in Tanzania, but complained that rising taxes could stifle the sector.
Vodacom spent 230 billion shilling ($142 million) last year to build over 890 network sites.
Vodacom hopes the service expansion will help pull more subscribers despite stiff competition from the likes of Airtel Tanzania, India’s Bharti Tigo Tanzania, Millicom International Cellular and Zantel.
Telecommunications is the fastest growing business sector in East Africa and the government is determined on getting a bigger share of revenues. However, taxation in East Africa’s second-largest economy had become difficult for mobile phone operators.

South Africa: Gold Fields acquires Barrick’s interests in Western Australia
JSE-listed gold miner, Gold Fields, said it had acquired Barrick Gold’s interests in Yilgam South Assets in Western Australia for $300 million. Gold Fields’ purchase of these assets will give the South African gold miner an extra 452.000 ounces in yearly gold production. The transaction will also offer the gold miner 2.6 million standby ounces for $115 an ounce and 1.9 million reserve ounces.
It has been disclosed that Gold Fields may pay for these assets in cash or partly in shares offered to Barrick Gold. If Gold Fields opts for cash payment for these assets, it may use its money generated in Australian operations. It may also use money from its bank facilities. And perhaps obtain funds from the capital markets.
The purchase is dependent on a number of conditions being met, one of them being the approval by the South African Reserve Bank for the transaction. The deal will have to get the blessing of Australia’s Federal Treasurer. Lastly, the Western Australian Minister for Mines will also have to put his signature to the transaction.
Barrick Gold is the world’s biggest gold producer which has been struggling in recent years.

Nigeria: Shekau’s death excites BRIC investors
According a report published in Forbes the death of Abubakar Shekau, the leader of the Boko Haram insurgency, is making foreign investors look favourably towards investing in Nigeria. Such investors are said to be frustrated by the low level of profit they are currently making from the BRIC nations of Brazil, India, Russia and China.
The report said success in cracking down on security threats in the Niger Delta is also changing the security situation for the better. And while terrorist disruption recedes, money keeps flowing into Nigeria.
In the last six months, U.S. corporations like Procter & Gamble PG -have committed at least $700 million to build new factories and agricultural facilities in the country while the Nigerian government itself announced a $1 billion fund to nurture the local software industry, which officials think can ultimately capture $20 billion a year from rivals like India.
Forbes also said Nigeria was one of the world’s four best-performing markets last year with a 35.45 per cent gain and is the biggest and most dynamic frontier economy in Africa, with a GDP at par with global capitals like Hong Kong and Singapore.
Moreover the Nigerian economy is growing at an annualised rate well above six per cent, faster than any of the top-tier emerging markets.

Ghana: First seven year bond oversubscribed by 170 percent
The country’s quest to raise funds for development through the issuing bonds has received massive interest from investors. The Government of Ghana through the Ministry of Finance and Economic Planning sold its first seven-year bond and it was over-subscribed by 170%.
Government received GH¢ 270 million Ghana cedi offers from local and foreign investors but took GH¢102 million cedis. It would be paying those who participated in the bids, an interest or a yield of 17.5%. Most of the bids that government is likely to accept are from local investors.
Proceeds from the bond, would be used to finance infrastructure projects and settle some maturing debts. Government is however expected to receive the money by next Monday, 26th of August. Some analyst says this would encourage some corporate institutions as well as government agencies like Volta River Authority (VRA) to issue long-term bonds to finance their operations.

Related articles

• President Kenyatta arrives in China on first State visit (capitalfm.co.ke)
• From Indian Ocean to Uganda: China will build Kenya’s new rail line (csmonitor.com)
• Why China is investing $5 billion in Kenya’s infrastructure (smartplanet.com)
• Ties with Kenya ‘not just about resources’ (chinawatch.washingtonpost.com)
• Kirubi joins Uhuru’s business entourage in China (capitalfm.co.ke)
• Africa Attracting Technology Firms (voanews.com)
• China’s Trade with Ghana Eclipsed that of the US (atlantablackstar.com)
• Uhuru says China to help Kenya combat poaching (capitalfm.co.ke)
• Ghana-US trade equals $817m in first-half 2013 (ghanabusinessnews.com)
• IFC to Expand Nigeria Investments to $2 Billion by 2014 – Bloomberg (bloomberg.com)

Africa Focused News

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2013 West Africa Business Expo, Africa, African Economic Outlook, Carrefour, CFAO, East Africa, ENI, Eurobond, First Quantum Minerals, ghana, Ghana Commercial Bank, Ghana Stock Exchange, gold, Government, Inflation, Investment, Isuzu, Japan, Kenya, Mine, Mozambique, Nigeria, Oil, Russia, Rwanda, South Africa, Tanzania, Uganda, UK, Water projects, World Bank, Zambia, Zimbabwe

REPORT OF LAST WEEK (from 12/08/13 to 16/08/13)
by Dario Galluccio – This Blog is sponsored by http://www.reflexecogroup.com

Zambia: ABB Wins $32 Million order to power Africa’s biggest copper mine
ABB, the leading power and automation technology group, has won an order worth around $32 million from Kansanshi Mining PLC, a subsidiary of Canadian mining and metals company First Quantum Minerals Ltd. (FQM), for the construction of a new substation and upgrade of an existing one. The facilities will help to provide reliable power supplies to Africa’s biggest copper mine, being built in the northwestern province of the country. The order was booked in the second quarter.
Global demand for raw materials is one of the main growth drivers in Africa. The Zambian economy is highly dependent on the copper mining industry, which accounts for around 80 percent of the country’s gross domestic product. The new copper mine will be the biggest of its kind on the African continent and will help reinforce the country’s number eight global position in terms of copper production. The mining project is also expected to bring employment opportunities in the Zambezi Basin area, with a completely new town being built to support it.

Ghana: 2013 West Africa Business Expo launched
The 2013 West Africa Business Expo to be held in Accra would on September 5th and 6th next month has been launched under the theme:’Kick Starting and Sustaining Business Growth’.
The organizers stated that their overriding objective is to drive growth in Ghana’s private sector by bringing together key industry players across a wide spectrum of the business environment in a bid to build networks and foster co-operation among participants.
The West Africa Business Expo 2013, will see banks, insurance companies, venture capital groups as well as institutions in the public sector such as the Registrar General’s Department, Ministry of Trade and Industry among others on exhibition.
Also, the Nigerian High Commission and the Togolese Embassy will be present at the event to offer participants information on viable business opportunities in their respective countries.
The event, which is also made possible by Geovision is the first of its kind in West Africa.

Tanzania: Japanese investment plan for the country
Tanzania could become a reputable business hub on the continent if the envisaged technical cooperation with Japan comes to fruition. An agreement signed recently prepares the ground for an economic boom.
The upgrading of the Central Railway line will be a major stimulus to economic prosperity. The railway, whose gauge will be expanded to international standards, will resume its role as the key link to upcountry regions. The Japanese support will also see the all-important Port of Dar es Salaam expanded. Naturally, this expansion will improve service delivery.
The Asian nation has also agreed to invest in cotton farming and make a rigorous revival of textile factories hence promote consumption of locally manufactured garments.

East Africa: New railway to connect Uganda, Kenya and Rwanda
Three East African countries Kenya, Uganda and Rwanda are implementing a joint $13b project for the Standard Gauge Railway (SGR) from Mombasa via Kampala to Kigali. The project, to be jointly financed by the three countries, is expected to be completed by 2018.
It will ease trade and reduce road traffic. Each member state will meet its loan liabilities differently. Eng. Abraham Byandala, the works minister said Kenya is already ahead of Uganda and Rwanda since they charge 1.5% of the railway cargo value for financing the project.
He said the preliminary designs for Mombasa- Nairobi (SGR) have been completed and the ground breaking is expected by November this year. The feasibility study and preliminary designs for the 511km Nairobi-Malaba section is being undertaken in-house by Kenya Railway Corporation strengthened by local experts and is expected to be ready by December this year.
Byandala said the designs for 250Km Nakuru-Kisumu is also expected by December 2013. For Uganda, the preliminary engineering designs for 250km Kampala- Malaba SGR is being undertaken by a consultant and is expected to be ready by October this year.

South Africa: Royal Bafokeng’s earnings soar
Royal Bafokeng Platinum (RBPlat) said its interim earnings soared on the back of weaker South African currency. JSE-listed platinum miner said headline earnings a share surged 103 percent from 43 cents to 87.2 cents in the six months ended June this year.
According to Reuters, mining companies gain from a shakier South African currency as they pay for costs in rands and sell output in dollars.

Mozambique: New railways will bring development to Mutarara
Mozambican President Armando Guebuza declared that the new railway lines that will cross Mutarara district, in the western province of Tete, will bring new socio-economic development to the area – but this will only be possible in an environment of peace.
Currently the mining companies export their coal along the Sena line to the port of Beira. But this railway cannot handle more than around six million tonnes of cargo a year, and within a few years it is hoped that up to 100 million tonnes a year will be exported from the Moatize coal basin.
One of the plans to diversify the coal export routes is to build a new line branching off the Sena line in Mutarara, and passing through Zambezia province to a new deep water port to be built at Macuse. Another line will cross Mutarara, and head through southern Malawi before it joins the existing northern railway to the port of Nacala.
These new routes, Guebuza said, will improve the situation in Mutarara, and the life of people living in the district who will be directly or indirectly linked to the major mining and transport projects.

Ghana: Carrefour CEO follows stock surge with African expansion
Pent-up demand from African shoppers has lured Carrefour SA to enter the region of a billion people set to grow at three times the pace of the U.S. next year. The Boulogne-Billancourt, France-based retailer, which spent much of the past two years exiting markets it failed to dominate, has partnered with distributor CFAO SA to open shops in eight African countries by 2015.
After the boom and eventual bust of the past three decades of retail growth (Carrefour had to pay 220 million euros ($294 million) to get out of Greece alone last year) Chief Executive Officer Georges Plassat chose a safer route for Africa by partnering with CFAO, a distributor and the continent’s biggest supplier of cars, trucks and pharmaceuticals. With the venture, he’s hoping to avoid the roadblocks competitors including Wal-Mart Stores Inc. have faced expanding beyond South Africa: a lack of distribution and available real estate.

Ghana: Jubilee partners export almost 19 million barrels of crude for half year
Oil firms operating on the jubilee field have exported almost 19 million barrels of crude Oil from January to June this year. The country’s share of these exports was however almost 2 million barrels. Ghana also earned 391 million dollars in terms of taxes and royalties from its share of the crude exports. The country on the average earned 98 dollars for each barrel sold in the second quarter, down from the 108 dollars secured in the first quarter of 2013.

Ghana: Government receives Eurobond proceeds
The government has received proceeds from the $1 billion Eurobond to facilitate the speedy implementation of projects and programmes under the 2013 budget.
The Minister of Finance and Economic Planning, Mr Seth Terkper, said the $102 million (GH¢204 million) allocated for counterpart funding would facilitate the disbursement for committed funds from the development partners for the implementation of existing projects.
The counterpart funding projects include the Afram Plains Irrigation Project; rice projects in the northern and southern parts of the country; rural electrification project – Self Help Electrification Project (SHEP 4) as well as the completion of the Bui Dam. Major road networks which are at various stages of completion will also attract part of the counterpart funding.
The minister said $307 million (GH¢614 million) had been earmarked for new projects in the 2013 budget, $250 million to refinance the 2007 bond while $341 million (GH¢682 million) for refinancing maturing domestic debts.

Nigeria: Dangote promises more investment
The president and CEO of pan-African conglomerate, Dangote Group, Alhaji Aliko Dangote has promised to invest and create more jobs opportunities in Nigeria. Dangote, who recently ventured into Nigeria’s petrochemical and agricultural sub-sector stated that the nation’s economy rests more on the shoulders of the private sector, and if more Nigerians were economically empowered through gainful employment, the poverty level would be reduced to a minimal level.
While speaking to a business group, the Africa’s richest man, Dangote said his venture into the petrochemical and agricultural sub-sector was his personal contribution towards reducing unemployment in the country.
Expressing optimism on Nigeria’s economic revival through the private sector, Alhaji Dangote reinstated: “I have always said that Nigeria is a good place to invest. We have all in abundance. God has blessed this country. What we have naturally in abundance is what other countries are looking for to buy. Good enough, Nigeria has the resources and the market for any company to survive, only in few other areas government should intensify efforts to ensure to make the sector attractive to investors”.

Nigeria: Britain will strengthen investments in Nigeria
The British Deputy High Commissioner to Nigeria, Peter Carter, said Britain would strengthen its existing investments in the country. Speaking during his visit to Guinness Nigeria Plc’s factory in Ogba, Ikeja, Lagos State, Carter called for closer business relationship between Nigeria and Britain.
While receiving the envoy, Mr. Babatunde Savage, Chairman, Guinness Nigeria Plc, highlighted that “Guinness is the biggest UK-parented Nigerian company quoted on the Stock Exchange, in terms of capitalization, turnover and profits and we are indeed very proud of our British heritage.”
The British Deputy High Commissioner commended Guinness Nigeria for sustaining the legacy of the parent company, Diageo by providing consumers in Nigeria with the quality and premium brands the company is known for worldwide. Guinness Nigeria Plc was established in 1950 and got listed on the Nigerian Stock Exchange in 1965. The company built its first brewery in Ikeja in 1962, and currently has facilities in Ogba, Benin City and Aba.

Ghana: GCB interest income rises by 41.5%
The interest income of the GCB Bank Limited rose from GH¢150.29 million in the first half of 2012 to GH¢256.76 million in the first half of this year, its half year results released last week showed. This represented a 41.5 per cent growth in the bank’s interest income over the six month period.
It further showed that net profit for the period increased to GH¢90.43 million compared to GH¢50.21 million recorded in period before.

Ghana: GOIL makes positive gains in first half
The half year results of Ghana Oil Company Limited (GOIL) released late July showed that the company made positive gains in the six-month period. GOIL, which markets refined petroleum products to players in the aviation, mining and transport sectors, recorded a pre-tax profit of GH¢8.16 million in the first half of 2013 compared to GH¢7.07 million posted in the same period last year. After a tax deduction of GH¢2.04 million, GOIL’s net profit closed the period at GH¢6.12 million, higher than the 2012 first half figure of GH¢5.30 million.
These positive showings were influenced by a 20 per cent rise in the company’s gross revenues for the six-month period. Its revenues rose from GH¢374.102 million in the first half of last year to GH¢472.96 million in the period under review.

Zimbabwe: Russian firms target Darwendale platinum
A consortium of companies including Russia’s Rostec and Vneshekonombank is buying a 40% stake in a project to develop one of the world’s largest platinum fields in Zimbabwe. The companies will invest in Ruschrome Mining, a Russian-African joint venture licensed to mine the field.
The parties hope to exploit the Darwendale platinum project’s 19 tons in proven reserves and 775 total tons of metals including palladium, gold, nickel and copper.
Ruschrome is partly owned by the Zimbabwean government and the Centre of Business Cooperation with Foreign Countries, an association of machinery and defence firms that will retain a ten per cent stake in the project.

Africa: Isuzu enters Africa with left hand drive
After covering 1.3 million kilometers of testing, mostly on the roads of the Eastern Cape, the new Isuzu left hand drive 4&4 and 4&2 was launched in the city of Port Elizabeth and expected to be roll out across the continent in the coming months. ‘This will obviously be in a staggered approach country by country but our anticipation is that we can grow a lot with this vehicle,’ ‘ according to Mario Spangenberg, president and managing director of GM Africa
Last year GM sold 180,493 vehicles on the continent, a growth in sales of 17.5 per cent from 2011. With new Isuzu product coming to market, General Motors is expecting exponential growth. GM spent R250 million (US$27 million) in setting up the facility and with all the vehicles the company turn out vehicles such as Chevrolet, Opel and Isuzu. GM has also invested R1 billion ($109 million) into their South African manufacturing facility in Port Elizabeth, where the new Isuzu pick-up will be assembled. In addition, the company has a manufacturing plant in Kenya, which builds Isuzu trucks and buses to supply the East African market, and one in Egypt, their second biggest African market after South Africa.

Ghana: Indices register more gains
The benchmark Composite Index (CI) as a result rose 30.47 points to close the last week (Friday 09/08/2013) at 1,965.55 points. This gain saw the year-to-date return of the CI improve to 64.65 per cent. The Financial Stocks Index (FSI) was also bullish as it jumped 36.44 points to close the week at 1,717.23 points. The return on the financial index stands at 66.22 per cent.

Ghana: Government will source cheaper funds for SMEs
Obtaining funds remains a big challenge for most SMEs in the country as most of them are not able to provide the requisite collateral for loans, while those who are able to do so get them at higher interest rates. The Minister of State in Charge of Public Private Partnerships, Mr Rashid Pelpuo, said the government would be financially innovative in finding cheaper ways of getting money for SMEs. According to Mr Pelpuo, the growth of an economy is in question if it cannot create jobs for its people, hence the need for investment by both public and private workers, adding, ‘It is through investments that you can create jobs.’
Meanwhile, the 2013 Budget Statement of Government hinted that it would revamp existing credit schemes alongside new schemes, such as the Youth Entrepreneurship Development Fund, to provide funds for start-ups and SMEs.

South Africa: Sibanye gold shares gain 7% on good results
The share price of gold miner, Sibanye Gold gaining 7 percent during early trade on the JSE.
This showed that the market liked the results which saw headline earnings for the six months to June surging to R880 million from R453 million during the previous reporting period.
The company said during the period under review it posted a 63 percent surge in operating profit to R3.3 billion ($363 million). This was despite a marked collapse in the price of gold since mid-April this year.
Neal Froneman, the CEO of Sibanye Gold, said the improved performance in the second quarter of this year had become evident even in the third quarter of this year. Froneman said the company has begun the process of containing falling gold production and was also managing high costs that have beset some of the company’s assets. He also said the company remained positive about the outlook of all operations.
Sibanye Gold is a South African gold mining firm consisting of three principal operations. These include Kloof and Driefontein in the West Wits region and Beatrix in the Free State Province. Sibanye Gold is one of the largest gold producers in South Africa and among the top 10 largest gold producers in the country.

Kenya: KWS launches Sh20 million Taveta Water Project
The Kenya Wildlife Service will launch water projects worth more than Sh20 million in Taita Taveta county. Speaking to the press at his Voi office, KWS assistant director, Robert Obrien said the projects will improve the livelihoods of communities in wildlife prone areas. “We want to ensure people get direct benefits from the wildlife resources around them and reduce poverty levels,”Obrien said. He said KWS is drilling a bore hole worth Sh4.2 million at Mwatate .
“We shall install a water pump and a generator. We are also undertaking a water project at Bura worth Sh1.3 million,” he said. Obrien said they have spent Sh6 million for a water project in Wundanyi constituency. He said other projects include rehabilitation of Mlughi water pipeline at Sh4 million and excavation at Kasighau for Sh4 million. Obrien said the projects will help encourage residents to protect the wildlife that is currently facing the challenge of poachers.

Ghana: To seek more concessionary loans
The Minister of Trade and Industry, Mr Haruna Iddrisu, has said the government is seeking for strategic investors, both locally and foreign, to partner and to finance some key projects in the country. The projects include infrastructure-energy, construction of health facilities in the Western and Central regions, building of commercial markets, reconstruction of the Ghana Trade Fair Centre, road construction in the Western and Eastern corridors, industrial zones (parks). Public, Private Partnership (PPP) arrangement to execute those projects since that formed part of the key policies of the government to get projects done faster.
Mr. Iddrisu said government will support foreigners who invest in Ghana to boost the economy and create jobs for the people.
He said the Government of Ghana is looking for concessionary loans to execute some projects, adding that the Public Private Partnership initiative will be pursued.

Ghana: To restore the Ghana Trade Fair Centre
The government is seeking strategic investors, both locally and foreign, to partner it to restore the deteriorating trade fair centre in Accra to its former glory.
According to the Director of Communication at the Ministry of Trade and Industry, Nana Akrasi Sarpong, the move forms part of the government’s Public Private Partnership programme
The Ghana Trade Fair Centre, the once magnificent edifice meant to host major local and international fairs has been left to rot, a situation which makes it unattractive and safe to host any major fair or exhibition. Built some five decades ago, the Centre, which is placed in the care of the Ghana Trade Fair Company under the Ministry of Trade and Industry, was meant to be a site to showcase the works of industrialists in the country as part of efforts to promote made-in-Ghana goods as well as serve as a platform for other countries, mostly from the sub-region to exhibit their products and services to promote the sub regional integration agenda.

Tanzania: CTI Nods to Japan plans for Dar es Salaam
The business community in Tanzania has welcomed the nomination of the country as Japan’s new investment centre to serve the East African region saying it is a real opportunity to transform Tanzania into an industrial economy. The Confederation of Tanzania Industries sees the new Japanese plan for Tanzania as consisting of abundant opportunities to boost the growth of local businesses and spur economic development of the East African country.
Japanese Minister for Economy, Trade and Industries, Toshimistu Motegi announced that his country had nominated Tanzania to be the centre for investment that will serve the East African region and the continent at large.
With the implementation of the plan, the CTI Chairman, Mr Felix Mosha, said the industrial contributions to the Gross Domestic Product (GDP) which is currently below 20 per cent would definitely go up to more than doubling. The industrial growth will be supported by the improved power availability.
The venture is meant to strengthen the economic base and creation of job opportunities. Among the projects lined up for implementation include refurbishment of the central line railway network which will be replaced with the international gauge and expansion of the Port of Dar es Salaam to help increase efficiency in service delivery.

Ghana: World Bank support vital for economic growth
The Vice President Kwesi Amissah-Arthur says the country’s economic growth can be linked to the tremendous support from the World Bank.
The Breton Wood institution over the years has assisted the country with funding and technical support for majority of government’s projects since country’s independence. Speaking at the opening of the World Bank Groups’ new corporate office in Accra, the vice president said the country could not have come this far without the bank.
“Ghana’s partnership with the World Bank Group has been long and fruitful,” Mr Amissah-Arthur said, noting that the IFC’s portfolio in Ghana, he learned, is the third largest in Africa, “that is something we are grateful for”.
The 28 million dollar structure would house the private sector arm of the World Bank, IFC and MIGA. Since joining the group in 1957 Ghana has benefited from close to 20 billion dollars.

Ghana: July inflation rises to 11.8 per cent
Ghana’s inflation rate rose to 11.8 per cent in July, compared with 11.6 per cent in June, Dr Philomena Nyarko, Government Statistician. Dr Nyarko said the July 2013 inflation main drivers were clothing and footwear, which were largely influenced by the cedi exchange rate.
Food inflation was unchanged at 7.3 per cent in July, same as in June while the non-food inflation ticked slightly higher at 15.4 per cent from 15.1 percent. Clothing and footwear contributed 18.1 per cent to the rate of inflation while miscellaneous goods and services added 17.7 per cent. Housing, water, electricity, gas and other utilities recorded inflation of 16.6 per cent whilst the communications sub-group had the lowest inflation rate of 1.3 per cent.
At the regional level, the year-on-year inflation rate ranged from 4.6 per cent in the Upper East Region to 15 per cent in the Western Region. Four regions namely Western, Ashanti, Eastern and Volta recorded inflation rate above the national average of 11.8 per cent.

Africa: Financial flows to Nigeria and others will hit $203.9 Billion in December
Financial flows to Nigeria and other African countries through external sources are projected to increase by 9.5 percent to a new record of $203.9 billion by end of 2013, compared with $186.3 billion in 2012. A report by African Economic Outlook disclosed this, adding that the expected increase would be boosted by projected contributions of remittances, Official Development Assistance (ODA) and investments respectively.
Emerging economies such as South Africa, Nigeria, Saudi Arabia and some Asian countries are predicted to grow much faster than the G7 – France, Germany, Italy, Japan, the UK, the US and Canada – over the next four decades.
Global economic turbulence, the report stated, still posed significant risks to the outlook for external finance of all kinds, resulting in scepticism from some investors in the West, stressing that uncertainty on the recovery might have a negative impact on trade and investment. This however has not had any major negative impact on investment projections for the continent.
A host of black nations have become home to some of the world’s fastest-growing economies and offers high returns on foreign direct investment among emerging economies.
While mining and oil remain the bigger businesses, telecoms, banking, and retail have become sectors that are also showing great promises bringing about an increase of investors worldwide who are vying for a piece of the action.

Ghana: Oil industry will yield $20b in 5 years
Public sector players in the minerals industry are meeting in Accra to find ways of reducing the impact of falling gold prices on the Ghanaian economy.
Organized by the Mineral Commission, the workshop is part of a series of brainstorming sessions to ensure that the economic shocks that come with falling gold prices – unemployment and revenue loss – have little impact on the Ghanaian economy. It brought together participants from the Minerals Commission, the Ministry of Trade and Industry, the Ghana Revenue Authority, civil society, and the Bank of Ghana.
After a rather interesting two years of soaring gold prices in 2011 and 2012, the price of the powerful metal has taken a nosedive in 2013, forcing the government to abandon proposed windfall taxes. Currently, gold is trading between $1300 and $ 1350.
With 2012 Ghana Revenue Authority figures showing a $5.6 billion in export revenues and a total foreign direct investment of more than $12.5 billion from 1983 to 2012, the mineral sector currently contributes 27 per cent of government’s revenue.

Kenya, Tanzania: Partnership to exploit geothermal energy
Kenya plans to partner with Tanzania in production of geothermal power in efforts to increase energy production in the East African region. A delegation of senior government officials and members of Tanzania’s parliamentary Committee on Energy and Mining has been on a one-week experiential visit on geothermal development in Kenya with the aim of understanding capacity building, licensing and how to attract investors for the partnership.
Tanzania, which has the longest rift stretch in Eastern Africa, has about 52 identified sites with a geothermal potential of 650MW that have not been fully exploited.
Tanzania’s commissioner for energy and petroleum affairs Hosea Mbise said the exploited energy in Tanzania is about 600MW, which is low considering that the demand of the resource is about 900MW. To kick off the project, the African Development Bank — key financiers of the Menengai Geothermal project — is sponsoring a few experts from Tanzania to train on geothermal science.
The key prospects of the project include Lake Ngozi, River Mbaka and Songwe around the Mbeya region.

Ghana: Eurobond proceeds rescue domestic projects
Seth Terkper, Minister of Finance, has stated that the partial use of Government’s bond issue proceeds to refinance maturing domestic debt will reduce reliance on the short-end of the market, especially for domestic capital projects. He said it could also reduce the long lead times being experienced in sourcing and implementing of some projects related to multilateral and bilateral funds.
‘In addition, given that access to concessional funds will dwindle as a result of the country’s attainment of a lower middle-income status, the tapping of the global bond market and provisioning for existing bonds will strengthen Ghana’s credentials as a regular and responsible borrower in those markets.’
‘Secondly, the availability of the Eurobond proceeds will speed up the implementation of development projects in the 2013 Budget. In particular, counterpart funding can be made available for previously approved projects to enable these projects to be completed.’
Mr Terkper said the early redemption of Ghana’s debut 2017 Eurobond will reduce the rollover risk of refinancing the entire $750 million bond when it matures in 2017.

Mozambique: ENI will pay $400m tax to Maputo
ENI, the Italian energy giant, on Thursday disclosed it will fork out $400 million to the Mozambican taxman. Paulo Scaroni, the CEO at ENI, reportedly said this money will be in the form of capital gains tax (CGT). He also indicated that the decision was made after a meeting with Mozambican President, Armando Guebuza, in Changara.
On March 13 this year, ENI had agreed to sell its 28.57 percent stake in Area Four to the China National Petroleum Corporation (CNPC) for $4.21 billion.
However, according to ENI, it was discovered in March this year that ENI was capitalizing on a seeming tax escape route and allegedly planned to avoid paying capital gains tax through this deal.
ENI is the leader of the a group of companies searching legally for hydrocarbons in Area Four of the Rovuma Basin in the northern province of Cabo Delgado, Mozambique. In this region, large amounts of natural gas deposits have been found. They reach some 80 trillion cubic feet.
ENI is the biggest utilities firm in Europe, with a diversified gas supply portfolio and a strong position in the industrial, power generation and retail markets. It is one of the largest integrated energy companies in the world, operating in the sectors of oil and gas exploration & production and international gas transportation. Eni is active in 90 countries with 78,000 employees.

Tanzania: TIC registers 106 projects in Kilimanjaro
Tanzania Investment Centre (TIC) has registered 106 projects in Kilimanjaro Region, between January 2008 and December last year, with a total value of 265.26 million US dollars, TIC Acting Northern Zonal Manager, Mr George Mukono revealed.
He said that the projects created 8,646 jobs and he mentioned the sectors involved: agriculture (11), commercial buildings (4), human resources (9), manufacturing (28), tourism (47) and transportation (7). According to Mr Mukono, the manufacturing sector employed 2,439 people, followed by the following sectors: agriculture (2,427), tourism (2,315), human resources (887), transportation (417) and commercial buildings (161).
He mentioned lack of water for agricultural activities and difficulties involved in acquiring water rights and scarcity of land for agricultural purposes as some of the challenges facing potential investors in Kilimanjaro Region. Other challenges include lack of industrial sites as well as real estate development sites, power rationing, lack of investment and reliable market and transportation of vegetable crops and flowers as well as other crops.

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How to achieve energy security for growth in Africa

Tags

Africa, COMESA, Common Market for Eastern and Southern Africa, EAPP, East Africa, Electricity generation, Ethiopia, Middle East, North Africa, SAPP, South Africa, Southern African Power Pool, Sub-Saharan Africa, United States

Reflex Eco Group – Africa News

by  Kennedy Opalo (Kenyan journalist)

According to a recent survey by Ernst & Young, 44% of business people in Africa identified inadequate infrastructure as one of the key constraints to doing business in the region. This means that as Africa continues to grow in the next two decades, infrastructure development must top the investment agenda. General infrastructure development will be especially crucial as African economies undergo structural transformation from being primarily resource-driven to having bigger manufacturing and service sectors. Indeed Ernst & Young estimates that in 2012 43.1% of investments in capital in Africa went to manufacturing as opposed to 12% that went to the extractive sector.

A key area that will require greater and smarter investment to fuel the region’s economic growth will be the energy sector.

Everyone knows about the energy woes of many an African country – from Nigeria’s infamous generators to the total lack of functional national grids in some African states. A few countries have initiated plans to boost their energy sectors through investment in power generation (Ethiopia’s 6000MW Great Renaissance Dam on the Blue Nile), oil refining (Angola’s planned 200,000 bbl/day refinery in Lobito), and aggressive prospecting for fossil fuels (especially in eastern and southern Africa). Despite these national efforts, for African states to ensure energy security for their growing economies, they must also think regional (and to some extent continental) when developing their respective energy sectors. As intra-Africa trade grows in the next two decades, there will be pressure to integrate energy markets as well.

The reasons for a regional/continental approach to energy sector development are twofold. Firstly, investment outlays in energy infrastructure development are often prohibitively expensive (because their viability relies on economies of scale), thus necessitating the pooling of resources. Ethiopia’s newest dam, for instance, will cost $4.7 billion. Not many African countries can afford such massive investments on one project.

Secondly, there is the issue of markets. With 12% of the world’s population, Africa consumes a meager 3% of the world’s electricity. Of this 75% takes place in North Africa (33%) and South Africa (45%). The remainder is shared out among the rest of Sub-Saharan African states. Furthermore, electricity connectivity on the continent remains relatively low, with rates averaging 43% (North Africa stands at 99%, with the other sub-regions between 12-44%).

This means that for projects like Ethiopia’s to make sense, access to international markets must be guaranteed. A key part of the Ethiopian project is the planned interconnector line linking the power station to the Kenyan grid. Joint investment and taking advantage of economies of scale will also help lower the cost of power in Africa. At present the average tariff per kilowatt-hour in the region is US $0.14, compared to US $0.04 in Southeast Asia. It is estimated that investing in regional grids and hydropower will save the region up to $2 billion annually. This is music to the ears of sugar millers, cement manufacturers and many small factory owners across the continent.

Existing and Planned Power Pool Connections in Africa

With this in mind, African states have begun the process of integrating their power sector infrastructure, via regional power pools (see map above of existing and planned power interconnector links). The South African Power Pool (SAPP, established in 1995); North African power pool (COMELEC , 1998); West African Power Pool (WAPP, 2000); the Central African Power Pool (CEAPP, 2003); and the East Africa Power Pool (EAPP, 2005) are all initiatives to establish regional power markets and help harmonize energy policy.

The COMELEC sub-region (27.4 GW, largely thermal, in 2009) has the highest connectivity and the best infrastructure. The region is also linked to the Middle East via the Egypt-Jordan interconnector line and Europe via the Morocco-Spain line (part of the future Mediterranean Electricity Ring, MEDRING). SAPP, with a capacity of 50GW (78.4% coal; 20.1% hydro; 4% nuclear and 1.6% diesel), is next in terms of infrastructure development. The remaining pools have 13 GW in the WAPP; 29 GW in the EAPP. There is a plan to link the EAPP to states outside of East Africa as part of COMESA. The 19-state COMESA bloc has an installed capacity of 52MW (69% thermal and 30% hydro) and has since 2009 initiated a process to harmonize regulation and energy policy. In terms of regional (intra-power pool) trade in power, SAPP is ahead with 7.5%, WAPP 6.9%, NAPP 6.2%, EAPP 0.4% and CAPP 0.2%. Clearly, there is a lot of room for improvement in levels intra-pool trade in power.

All these developments are encouraging. But a lot more needs to be done. For starters African states must work harder to harmonize their energy policies. This will necessarily involve greater liberalization of their power sectors, especially with regard to power generation and distribution. There is also an urgent need to invest in interconnector infrastructure to ensure that power can be transmitted efficiently to market. In the Day Ahead Market (DAM) of SAPP, for instance, trading is limited by between 40-50% of the potential level due to lack of efficient transmission capacity. Lastly, there will be a need to connect the regional power pools. This will reduce their overreliance on regional “anchor” economies (the best example of this is SAPP’s overreliance on ESKOM of South Africa, which has its own integrated resource plan). It will also create even bigger markets, including potentially the Middle East and Europe.

Ultimately, whether or not the dream of regional and continental power interconnectivity is achieved will depend on politics. Unfortunately, so far things do not look good. Almost a decade after the idea of regional power pools set in, governments are yet to harmonize their power sector regulatory policies. In many countries state monopolies dominate, with attendant inefficiencies. And across the continent power supply master plans are still very nation-centric and under the tight control of local vested interests. Moving forward, the challenge will be to convince governments and stakeholders (private sector and consumers alike) of the benefits of having an Africa-wide power market – which will necessarily require the liberalization of national power sectors. The alternative will be more roundtable discussions and promises of policy harmonization that never get fulfilled.

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How Eastern Africa can avoid the resource curse

Tags

Africa, African Peer Review Mechanism, East Africa, East African Community, European Union, Kenya, Mozambique, South Sudan, Tanzania, Uganda

Reflex Eco Group – East Africa News

by  Kennedy Opalo (Kenyan journalist)

Eastern Africa is the new fossil fuel frontier. In the last few years Kenya, Uganda, Tanzania and Mozambique have discovered large quantities of commercially viable oil and gas deposits, with the potential for even more discoveries as more aggressive prospecting continues. There is reason to be upbeat about the region’s economic prospects over the next three decades, or at least before the oil runs out. But the optimism must be tempered by an acknowledgment of the dangers that come with the new-found resource wealth. Of particular concern are issues of governance and sound economic management.

We are all too aware of the dangers of the resource curse. This is when the discovery and exploitation of natural resources leads to a deterioration of governance, descent into autocracy and a fall in living standards. Associated with the resource curse is the problem of the Dutch disease, which occurs when natural resource exports (e.g. oil and gas) lead to an appreciation of the exchange rate, thereby hurting other export sectors and destroying the ability of a country to diversify its export basket. The new resource-rich Eastern African states face the risk of having both problems, and to avoid them they must cooperate.

In many ways Eastern African states are lucky to be late arrivals at the oil and gas game. Unlike their counterparts in Western and Central Africa, nearly all of them are now nominal electoral democracies with varying degrees of institutionalized systems to ensure transparency in the management of public resources. Across the region, the Big Man syndrome is on the decline. But challenges remain. Recent accusations of secrecy, corruption and bribery surrounding government deals with mining companies suggest that there is a lot of room for improvement as far as the strengthening of institutions that enforce transparency (such as parliaments) is concerned. It is on this front that there is opportunity for regional cooperation to improve transparency and resource management.

While it is easy for governments to ignore weak domestic oversight institutions and civil society organizations, it is much harder to renege on international agreements and treaties. A regional approach to setting standards of transparency and accountability could therefore help ensure that the ongoing oil and gas bonanza does not give way to sorrow and regret three decades down the road. In addition, such an approach would facilitate easier cross-border operations for the oil majors that are currently operational in multiple countries, not to mention drastically reduce the political risk of entering the region’s energy sector. It would also leave individual countries in a stronger bargaining position by limiting opportunities for multinational firms to engage in cross-border regulatory arbitrage.

The way to implement regional cooperation and oversight would be something akin to the African Peer Review Mechanism, but with a permanent regional body and secretariat (perhaps under the East African Community, EAC). Such a body would be mandated to ensure the harmonization of laws to meet global standards of transparency and protection of private property rights. The body would also be mandated to conduct audits of national governments’ use of revenue from resources. The aim of the effort would be to normalize best practices among states and to institute a global standard for states to aspire more – more like the way aspirations for membership in the European Union has been a catalyst for domestic reforms in the former Yugoslavia and Eastern Europe.

Regional cooperation would also provide political cover to politicians with regard to economically questionable fuel subsidies. The realities of democratic government are such that politicians often find themselves forced to concede to demands for fuel subsidies from voters. But history shows that more often that not subsidies come at an enormous cost to the economy and instead of benefitting the poor only benefit middlemen. In addition, as the case of Nigeria shows, once implemented such policies are never easy to roll back both due to politics and the power of entrenched interests. Regional agreements capping any fuel subsidies at reasonable levels would be an excellent way to tie politicians’ hands in a credible manner, while at the same time providing them with political cover against domestic criticism.

Beyond issues of governance, there is need for cooperation on regional infrastructure development in order to reap maximum value for investment and avoid unnecessary wastes and redundancies. Landlocked Uganda and South Sudan will require massive investments in infrastructure to be able to access global energy markets. The two countries’ oil fields are 1,300 km and 1,720 km from the sea through Kenya, respectively. One would hope that as these projects are being studied and implemented, there will be consideration for how to leverage the oil and gas inspired projects to cater to other exports sectors – such as agriculture, tourism and light manufacturing – as well. KPMG, the professional services firm, recently reported that transportation costs eat up as much as 20 per cent of Africa’s foreign exchange earnings. There is clearly a need to ensure that the planned new roads and railways serve to reduce the cost of exports for all outward oriented sectors in the region. Embedding other exports sectors (such as agriculture, timber, domestic transport, etc.) in the process of developing new transportation infrastructure will minimize the likelihood of their being completely crowded out by the energy sector.

In isolation, each country’s resource sector policy is currently informed by domestic political economy considerations and regional geo-politics. There is an emerging sense of securitization of resources, with each country trying to ensure that the exploitation of its resources does not depend too much on its neighbours. Because of the relatively small size of the different countries’ economies, the risk of ending up with economically inefficient but expensive pipelines, roads and railways is real. South Sudan is currently deciding whether to build a pipeline through Kenya (most likely), through Ethiopia, or stick with the current export route for its oil through Sudan (least preferred due to testy relations). For national security and sovereignty reasons, Uganda is planning on a 30,000-barrel per day refinery in Hoima, despite warnings from industry players that the refinery may not be viable in the long run. Some have argued for the expansion of East Africa’s sole refinery in Mombasa to capture gains from economies of scale, an option that Uganda feels puts its energy security too much in Kenya’s hands.

In the meantime, Kenya and Tanzania are locked in competition over who will emerge as the “gateway to Eastern Africa,” with plans to construct mega-ports in Lamu and Tanga (Mwambani), respectively. While competition is healthy and therefore welcome, this is an area where there is more need for coordination than there is for competition among Eastern African governments. The costs involved are enormous, hence the need for cooperation to avoid any unnecessary redundancies and ensure that the ports realize sufficient returns to justify the investment. Kenya’s planned Lamu Port South Susan Ethiopia Transport Corridor (LAPSSET) project will cost US $24.7 billion. Tanzania’s Mwambani Port and Railway Corridor (Mwaporc) project will cost US $32 billion.

Chapter 15 of the EAC treaty has specific mandates for cooperation in infrastructure development. As far as transport infrastructure goes, so far cooperation has mostly been around Articles 90 (Roads), 91 (Railways) and 92 (Civil Aviation and Air Transport). There is a need to deepen cooperation in the implementation of Article 93 (Maritime Transport and Ports) that, among other things, mandates the establishment of a common regional maritime transport policy and a “harmonious traffic organization system for the optimal use of maritime transport services.”

The contribution of inefficient ports to transportation costs in the regional cannot be ignored. Presently, the EAC’s surface transportation costs, associated with logistics, are the highest of any region in the world. According to the African Development Bank’s State of Infrastructure in East Africa report, these costs are mainly due to administrative and customs delays at ports and delays at borders and on roads. Regional cooperation can help accelerate the process of reforming EAC’s ports, a process that so far has been stifled (at least in Kenya) by domestic political constituencies opposed to the liberalization of the management of ports. The move by the East African Legislative Assembly to pass bills establishing one-stop border posts (OSBPs) and harmonized maximum vehicle loads regulations is therefore a step in the right direction.

Going back to the issue of governance, more integrated regional cooperation in the planning and implementation of infrastructure development projects has the potential to insulate the projects from domestic politics and patronage networks that often limit transparency in the tendering process. Presently, Uganda is in the middle of a row with four different Chinese construction firms over confusion in the tendering process for a new rail link to South Sudan and port on Lake Victoria. The four firms signed different memoranda with different government departments in what appears to be at best a massive lapse in coordination of government activities or at worst a case of competition for rents by over-ambitious tenderpreneurs. This does not inspire confidence in the future of the project. A possible remedy to these kinds of problems is to have a permanent and independent committee for regional infrastructure to oversee all projects that involve cross-border infrastructure development.

In conclusion, I would like to reiterate that Eastern Africa is lucky to have discovered oil and gas in the age of democracy, transparency and good governance. This will serve to ensure that the different states do not descend into the outright kleptocracy that defined Africa’s resource sector under the likes of Abacha and Mobutu in an earlier time. That said, a lot remains to be done to ensure that the region’s resources will be exploited to the benefit of its people. In this regard there is a lot to be gained from binding regional agreements and treaties to ensure transparency and sound economic management of public resources. Solely relying on weak domestic institutions and civil society organizations will not work.

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Africa Focused News

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Africa, AGOA, Alluminium, Angola, Barack Obama, Brazil, Brong Ahafo Region, Burundi, Congo, DuPont Pioneer, East Africa, Ecobank, Ethiopia, Eurobond, Fitch, ghana, Hauwei, India, Japan, Kenya, Mondelez, Mozambique, Nairobi, Nigeria, Rwanda, Singapore, South Africa, sugar, Tanzania, Thailand, Uganda, Upper West Region, Vivo Energy, William Ruto

REPORT OF THE LAST WEEK (from 29/07/13 to 02/08/13) 

by Dario Galluccio

Ghana: Eurobond to fund 157 road projects

A part of the $1 billion raised from the international capital market in New York on Thursday will fund one hundred and fifty seven road projects; additionally, the government will use part of the money to build infrastructure in all the new 46 districts. 

To be precise a Deputy Minister of Information and Media Relations, Mr Felix Ofosu Kwakye, said $284 million from the money would be used to fund road projects and other projects captured in the 2013 budget. He mentioned the Apam-Akam road in the Central Region, the Fian-Wahabu road in the Upper West Region, the Goaso-Kukuom road and the Berekum town roads in the Brong Ahafo Region as some of the projects that would be funded from the money. The deputy minister said general infrastructure, including clinics, schools and offices, would be executed in all the new 46 districts.

Ghana: Japanese investors explore opportunities in Ghana

Dr Omani Boamah, Minister of Communication, received a 20- member Japanese delegation, so he has pledged Government’s commitment to deepen relations with Japan. The minister said the two countries have enjoyed fruitful working relations in the past and expressed the hope that this would continue as Japan has expressed its resolve to support Ghana’s Information and Communication Technology (ICT) sector. 

The delegation is in the country to explore investment opportunities in the areas of ICT, Energy, Transport and other sectors of the economy.

Mr Takeshi Hata, NEC Corporation Manager for Europe, Middle East and Africa and a member of the delegation, expressed the desire to provide ICT expertise to the GMSD. He lauded Ghana for its strides especially in the areas of good governance and economic stability. The delegation is in Ghana following the investment opportunities President John Dramai Mahama presented at the 5th Tokyo International Conference on African Development.

Tanzania: Bank M assets expand, hit half trillion

Bank M Tanzania, the fastest growing bank in the market, has marked its sixth anniversary with a big bang as its total assets hit the half a trillion mark.

The bank, which opened its doors on July 27, 2007, celebrated its sixth anniversary on Saturday, with 532bn/- assets. “We are marking six years of growth, growth in all aspects”, the bank’s Deputy Chief Executive Officer, Ms Jacqueline Woiso.

She said during the past six years, the bank has grown in terms of not only balance sheet but also profitability, citing this year’s impressive performance. The bank has in seven months of operations posted a profit of 9.13bn/-, indicating that the 2013 will be a highly profitable year for the bank.

The bank, priding itself as among the fastest growing financial institutions in the domestic market, has grown geometrically from the balance sheet of mere 31.19bn/- at the end of 2007, to 67.59bn/- in 2008 and 106.51bn/- in 2009. The bank assets swelled to 193bn/-, 310bn/- and 421bn/- in 2010, 2011 and 2012, respectively.

India, Nigeria: To enhance economic partnership

Utility service provider, Umeme, is targeting the capital markets to raise over $170 million (about Shs438 billion) to finance its investments.

The energy utility firm last week said it needs to make significant investments worth $440 million (about Shs1.1 trillion) in the next five years, part of which will be raised during the this season.

Kenya: New infrastructure to ease city traffic

The government says it has finalized plans to upgrade the city’s infrastructure to ease traffic congestion and improve the living conditions of the residents. Addressing at St James ACK Buruburu, Deputy President William Ruto said key stakeholders in the Nairobi County met last week to map out ways of implementing the ambitious project that will see at least 100,000 new and modern housing units constructed for the low income earners.

“We want to transform the city within the next three years and we have already identified development partners with whom we intend to roll out the project in Ziwani, Mbotela, Bahati ,Maringo and other estates in Nairobi’s Eastland’s suburb,” he said.

He revealed that the government had developed a road map to ease traffic congestion in major city routes to reduce the time workers lost while commuting to their duty stations.

The Deputy President added that the government had introduced a Railway Development Levy to revive and improve the rail network in the capital.

Ghana: Benefits from Cuba relations

Mr Kwesi Quartey, Deputy Minister for Foreign Affairs over the weekend said government benefits from her bilateral relations with the Cuban government especially in the area of health and education. Mr Quartey said thousands of African students have received medical and educational support in Cuba and had returned to the continent to help their communities.

South Africa: H&M signs lease for store

South African weekly Sunday Times said in an article re-run on daily Business Day’s website that the Swedish retailer has signed a lease for a store in a mall that is due to open in 2015 in Johannesburg.

An H&M spokeswoman, which has yet to open a store in Africa, said South Africa is one of many markets it finds interesting but declined to comment further. The company opened its first store in the southern hemisphere in Chile earlier this year.

Sunday Times, which is part of the same media group as Business Daily, did not disclose its sources. H&M was also searching for suitable store locations in Cape Town, it reported.

H&M’s biggest rival, Zara owner Inditex (ITX.MC), opened its first Zara store in Africa, in South Africa, in 2011.

Ghana: Fitch rates Ghana’s Eurobond B+

Fitch has rated Ghana’s newly issued $750 million Eurobond B+. The rating is in line with Ghana’s ‘B+’ Long-term foreign currency Issuer Default Rating, on which the Outlook is Negative, Fitch said in an email July 26, 2013.

>Fitch on February 15, 2013 revised Ghana’s Outlook to Negative, affirming it ‘B+’. It was to reflect the country’s worsening trend in public finances. During 2012 Ghana’s fiscal deficit widened to 12.1% of GDP in the run up to the December election, the ratings agency said.

Ratings agency, Moody’s also rated the ten-year bond ‘B 1’.

This second sovereign Eurobond was issued last week with a coupon of 7.875%.

Nigeria: Ecobank will exceed $310m agricultural sector loan

Ecobank Nigeria says it plans to grow its agricultural sector loan to over N50 billion ($310 million) by 2014. Citing it’s policy to support the growth and development of the industry. Ecobank Country Head, Agric and Export Finance, Abel Ajala, said the bank had introduced “concessionary interest rates” for its agriculture financing scheme.

He added that the bank has developed a robust agriculture and export unit operated by high quality professionals to ensure for an easy risk assessment of loans and adequately provide measures to guarantee beneficiaries utilize funds diligently.

The reason behind the bank’s focus on the sector, according to Mr Ajala, stemmed from its need to checkmate the impending food crisis on the continent, noting that the pan-African bank’s support cuts across the entire agricultural value chain.

Ethiopia: Hauwei sign $700m mobile network deal

Ethiopia has signed a $700 million mobile phone deal with China’s Huawei Technologies to improve the telecoms infrastructure in the country. The agreement, which is half of a $1.6 billion project split between Huawei and ZTE is expected to double phone users in the country to 56 million.

Ethiopia’s Minister of Communications and Technology, Debretsion Gebremichael stated that “this deal will deliver 4G high-speed broad band network. Although our target is 40 million, now including 3G, we will get to 56 million by 2015”, he said.

World Bank posits that Africa’s rapidly expanding telecoms industry has come to symbolize its economic growth, with subscribers across the continent increasing from a mere 25 million in 2001 to 650 million in 2012.

Before now, Telecoms in Ethiopia was considered a monopoly with only Ethio Telecoms as its only mobile phone operator in a country of more than 80 million people. The new deal with the Chinese firm is expected to boost the sector.

According to the minister, other operators like South Africa’s MTN Group have been granted operation licenses.

Ghana: Singapore consolidates trade ties

Investors from Singapore have strengthened bilateral trade ties with their Ghanaian counterparts following the signing of a Memorandum of Understanding (MoU) and the opening of its Overseas Centre in Accra.

The Singapore investors are in the country by courtesy of their external trade facilitating agency, the International Enterprise (IE) Singapore, and were led by the Singapore Senior Minister of State for Trade and Industry and National Development, Mr Lee Yi Shyan.

The IE Singapore’s Accra Overseas Centre aims to boost economic collaboration by accelerating trade and investment cooperation in the ECOWAS sub-region focusing on the logistics and oil and gas consumer sectors. Also, the Singaporean investors are focusing on infrastructure, oil and gas and the manufacturing sector to help drive the growth of the Ghanaian economy.

Mozambique: Thailand seeks to double trade

Mozambique and Thailand have agreed to a series of measures to strengthen bilateral cooperation. The accords cover technical cooperation, diplomatic visa exemptions, hydrocarbon development, economic cooperation and tourism. Currently, trade between the two countries stands at 180 million US dollars a year. These new measures could see trade double over the next five years.

The signing of the accords in Maputo on Monday followed the arrival of the Prime Minster of Thailand, Yingluck Shinawatra.

The Prime Minister will also visit Tanzania and Uganda before returning to Thailand to attend the new session of parliament on Thursday.

Ghana: To create 2.3 million jobs in Aluminium sector

Ghana is set to create more than 2.3 Million jobs under the Integrated Aluminium Project, which has been described as the key to growing the economy with a capital injection of about $8 billion. Under the Integrated Aluminium Project, an Aluminium refinery is to be constructed to refine the rich bauxite deposit at Nyinahin into alumina, would then be processed into aluminium by VALCO, and sold to the several downstream industries as aluminium ingot and billet.

It is believed the project hold the key to transforming Ghana’s economy by bringing in benefits, far more than the nation currently receives from oil.

The Nyinahin mine with bauxite deposit of 700MT, valued at $17.5billion , is estimated to create about 98,000 jobs whiles the aluminium refinery expected to produce about 350metric tones of alumina, will generate about 19,000 jobs.

Ghana: First Rand still interested in acquiring a bank

South Africa’s biggest finance group, First Rand says it is still interested in acquiring a bank in Ghana despite failing to take over Merchant bank.

This is because Ghana remains a priority for the group’s expansion drive.

The Social Security and National Insurance Trust (SSNIT) last month announced that it was unable to reach an agreement with First Rand over Merchant Bank’s sale. The Trust added that it is now looking for new suitors for the Bank.

Kenya: Brazilian entrepreneurs ready to invest

The businessmen, representing multi-billion dollar operations, included oil and gas company Queiroz Galvao, aerospace conglomerate Embraer Defense & Security, diversified engineering, construction and chemicals outfit Odebrecht, manufacturers Randon and Agropeucaria Foletto & Alimentos, the globe’s largest private rice farmer.

An executive from Argentinian agriculture products firm Rizobacter, which is looking to expand to Kenya, accompanied the Brazilians who held an exhibition in Nairobi this week as part of their exploration of business opportunities in Kenya.<

The entrepreneurs are keen to use Kenya as a major regional hub and launching pad for their enterprises in this part of the world.

Nigeria: To attract N480 billion investment for sugar production

In line with the country’s desire to grow the industrial sector, the Minister of Industry, Trade and Investment, Olusegun Aganga, has said the country attracted $3 billion (about N480 billion) investment into the sugar sector since the implementation of the National Sugar Master Plan (NSMP). The approval of the NSMP by the Federal Executive Council (FEC) on the 19th September 2012 had raised the country’s profile, making it to rank among the top five exporters of sugar in Africa.

Aganga also noted that the gains made through the development of the manufacturing sector had led to a reduction on the country’s dependence on oil and gas, saying N305 billion was generated from non-oil export within the first quarter of 2013.

NSMP has stimulated investments of $3 billion thus far. NSMP is targeting the production of 1.7 metric tonnes of sugar; creation of 117,181 direct jobs; generation of 411.7 megawatts of electricity; total forex saving of up to $565.8 million annually from savings from sugar production and fuel importation.

Ghana: To list Eurobond on local exchange

Ghana will list the second Eurobond it secured this week on the country’s local bourse next month, says the chairman of the governing council of the Ghana Stock Exchange (GSE), Dr Sam Mensah. Speaking in New York after Ghanaian finance officials concluded the Eurobond sale, Dr Mensah said the decision will give local investors an opportunity to actively trade in the bond as well as helping to boost the development of the GSE.

South Africa: Mondelez ventures into South African market

Food group Mondelez International has announced that it will start business operations in South Africa. A possible competition in South Africa’s food and beverage sector seem likely as it has been controlled by JSE-listed Tiger Brands and AVI. Mondelez manufactures Cadbury sweets and chocolates, Oreo biscuits and Stimorol.

This news comes shortly after another the world’s second biggest clothing retailer, Hennes & Mauritz (H&M), announed that it is poised to set up shop in Johannesburg, South Africa. Last week, it was reported that H&M will open up a new shop in the Mall of Africa in Johannesburg and plans are already afoot to open another in Cape Town’s V&A Waterfront.

Nigeria: To begin online business registration

Nigeria is a step closer to launching its global online business registration platform, as it moves closer to divesting from the oil and gas sector. The soon-to-be-launched platform will allow Nigerians living in the diaspora or foreigners planning to register their businesses in Nigeria to register their businesses in Nigeria from any part of the world within the next two months.

Nigeria’s Minister of Industry, Trade and Investment, Olusegun Aganga confirmed this at the 2013 Ministerial platform in Abuja on Tuesday, saying, “Global online business registration will take off in two months’ time. This will ensure that anyone can register their businesses in Nigeria from any part of the world and also make payment without necessarily coming to Nigeria.”

Studies have found that the creation of new businesses is a significant indicator of the level of economic growth and development of a country; in addition to the job creation and wealth generation that come with it.

The country’s foreign direct investment currently stands at $7 billion.

East Africa: Uganda builds new refinery, Kenya upgrades

Plans to construct a new refinery in Uganda and upgrade an existing one in Kenya are already afoot, according to an oil and gas analyst. Jeffrey Kerr, the managing oil and gas analyst for GlobalData, said this has led to an amazing corporation between Kenya, Uganda, Congo, Rwanda and Burundi and improved relations between the countries.

Kerr added that government delegates from these countries and three global oil firms have agreed to corporate in the erection of this 30 mbd refinery in Hoima, Uganda.<

The construction of the new refineries in Uganda and the improvement of an existing one in Kenya has been prompted by estimates that the need for “aggregated” processed oil products in East Africa could more than double in 2025.

Ethiopia: FDI to Ethiopia second best in Africa

Japan says the fact that Ethiopia achieves 1 billion dollar Foreign Direct Investment (FDI) flow in to the country shows how focused the government is to develop the sector.

Hiroyuki Kishino, Ambassador of Japan to Addis Ababa, says Ethiopia has given priority to food security, infrastructure development, human resource development and FDI to make significant transformation as part of its 5 year strategic plan. The Ambassador takes the development of the FDI to show the progress happening saying in just a couple of years Ethiopia’s FDI grows from 300 million dollar to 1 billion dollar, which he labeled as significant upward spiral.

FDI is expected to facilitate technology transfer in the industry sector, bring in huge capital and machineries, create employment opportunities and increase global market share.

Ghana: Bank of Ghana stays policy rate at 16%

The Bank of Ghana (BoG) has maintained the policy rate at which it lends to commercial banks at 16 per cent for the third quarter of the year. This was after it assessed economic activities in the country and policies put in place to prevent prices of goods and services from rising constantly.

The Monetary Policy Committee of the bank, chaired by the Governor, Dr Henry Kofi Wampah, told that the bank was satisfied with the policies put in place by the government to check increases in general price levels, hence the decision to maintain the rate at 16 per cent.

Angola: Be promoted to list of middle-income states

According to a United Nations (UN) official, Angola, Africa’s biggest oil producer behind Nigeria, may be promoted to a list of middle-income countries that get better terms from international lenders such as the World Bank.

“Angola will make it to the middle-income category because it has a growing economy, the government is moving toward the right direction and it has the financial capacity to invest,” the director of the UN Africa Division for Least Developed Countries, Tesfachew Taffere, said.

Angola, a member of the Organisation of the Petroleum Exporting Countries, wants to diversify its $114bn economy away from crude, which makes up almost all of its exports and 80% of tax revenue. Middle-income status will help it rebuild from a 27-year civil war that ended in 2002 by gaining access to risk and credit guarantees that lower the cost of public investments containing private funding.

South Africa: DuPont Pioneer acquires 80% stake in a seed company

DuPont said that it completed its purchase of an 80 percent stake in South Africa-based competitor Pannar Seed Limited, giving the chemical and agricultural giant an opportunity to expand its reach throughout Africa.

DuPont said the acquisition of Pannar by DuPont Pioneer, its agricultural seed unit based in Johnston, Iowa, would allow it to tap into Pannar’s insight into Africa while giving the U.S. firm access to the company’s corn genetics that have been specifically tailored for the region. Pannar would be able to use Pioneer’s genetics library and corn breeding and biotechnology work.

Financial terms of the deal were not disclosed.

Ghana: Vivo Energy adds Shell Ghana Limited to its group

Vivo Energy, the company formed by Vitol, Helios Investment Partners and Shell to distribute and market Shell-branded fuels and lubricants across Africa, has acquired a majority shareholding in Shell Ghana Limited.

The company, which will be renamed Vivo Energy Ghana, will be headed up by Fred Osoro as Managing Director. He will take over from Vincent Richter, the former acting Managing Director

Christian Chammas, CEO of Vivo Energy, said: ‘Ghana is an important market and a growing economy which is set to benefit from significant developments in the energy sector. We are acquiring a business with great potential; a long history in Ghana, a high calibre workforce and a large and diversified customer base. Vivo Energy is looking forward to serving our Ghanaian customers and investing in the business, to ensure it realises its full potential under Fred Osoro’s leadership.’

The Shell brand has been in Ghana for 85 years and Shell has been the leading marketer of fuels and lubricants. Vivo Energy Ghana has a storage capacity of 8,300m³ and 124 retail stations with the majority offering Shell Cards and convenience retail stores. Over the years, the company expanded its portfolio by acquiring Texaco in 1988. Vivo Energy Ghana employs 134 people but the business provides indirect employment to over 1,000 people. The company is recognised as the leader in the oil industry especially championing and setting standards for safety in sales and distribution.

Africa: Obama works to extend AGOA

The Obama administration has indicated that it is working with the United States Congress to extend the Africa Growth & Opportunity Act (AGOA) programme, which is set to expire by 2015.

Florizelle Liser, Assistant U.S. Trade Representative for Africa in the Office of the United States Trade Representatives, stated: ‘We recognize that AGOA can do so much more. We have to look at how we can fulfill its promise and potential, and as AGOA is extended, we want to make sure that Africans are in a position to compete in the global economy.’

The African Growth and Opportunity Act (AGOA) was enacted in 2000 and permits 39 eligible African countries to export most products duty-free to the United States.

AGOA aims to promote economic development and better integrate African economies into the world trading market. Additionally, it intends to create a platform for governments, the private sector and civil society to expand business links and build trade capacity between the United States and Africa.

Total exports under AGOA have risen more than 300 percent since the programme began.

Though 84% of the United States’ AGOA imports were petroleum products, its non-oil imports from sub-Saharan Africa amounted to $4.7 billion in 2012 more than a 250% rise since AGOA’s start.

Ethiopia: Hailemariam confers with Kenyan investors

Prime Minster Hailemariam Desalegn meets Kenyan business delegation at his office to look into interest of Kenyan investors wanting to invest in Ethiopia. They are here to see the opportunities for themselves to decide their involvement in investment. Mr. Hailemariam explains how Kenya and Ethiopia are working to integrate their economies after a special economic agreement signed recently to ease business transaction between the two neighborly countries.

The electric transmission line, the road and rail lines under development are evidences of the ambitions between these two countries, and businesses in both countries can benefit from such developments, Hailemariam remarks.

Nigeria: Airtel and FirstBank launch mobile payment platform<

Telecommunication service provider, Airtel Nigeria has partnered FirstBank Plc to launch Firstmonie Talkmore, a mobile payment service platform, for the country’s citizens. The platform, which was made official after the signing of an MoU on Tuesday, in Lagos, will allow subscribers on the Airtel network to send and receive money, buy airtime, pay bills and carry out other forms of transactions without owning a bank account. And the mobile operator has stated its confidence that the innovation will revolutionize the mobile payment industry

The partnership, according to both firms, is the first major collaboration between leading operators in the nation’s telecom and banking industries and follows a recent partnership between Airtel and the bank’s insurance company, FBNLife Insurance, on the unveiling of PAD14Life.

Tanzania: Investors exhibit high appetite for treasury bills

Despite the end of month obligations, the twelve-month Treasury Bills auction that the Bank of Tanzania (BoT) conducted on Wednesday was oversubscribed by 63.6 per cent. According to the auction results, the total amount tendered jumped to 237.34bn/- against 145bn/- sought by the central bank at an average interest rate of 14.18 per cent.

However, despite the oversubscription, the government ended up taking only 210.32bn/-. It is common that most investors fulfil end of month obligations including the disbursement of tax, salary and other statutory payments, cutting down the share of investments in the government papers. But the situation was contrary and the auction was oversubscribed, a sign of excessive liquidity in the market. The bank report states further that there was a higher appetite for 364-day bills but there was no appetite for 35 day.

Rate of return has been one of the major determinants in drawing attention of investors’ appetite on the treasury bills auction although in some past tenders, little changes were noticed despite hiked interest rates leading to under subscription.

Commercial banks have remained to be the giant investors in government securities, contributing over 60 per cent of the total market share. Pension Funds, insurance and few micro-finance institutions firms are among the key investment players in the instruments.

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East Africa: Can Pipeline Dreams Become Reality?

Tags

Democratic Republic of Congo, East Africa, Kenya, Lake Albert, Rwanda, South Sudan, Sudan, Uganda

Reflex Eco Group

by Raluca Besliu (Columnist of ThinkAfricaPress)

http://thinkafricapress.com/

At the end of June, the presidents of Uganda, Kenya and Rwanda signed a memorandum of understanding regarding the construction of two pipelines across East Africa.

One pipeline would connect South Sudan with Kenya’s Lamu port. The other would extend a pipeline that currently runs between Mombasa port and Eldoret – both in Kenya – across to Uganda and Rwanda.

The agreement remains in its embryonic stages and does not yet have a timetable or calculated cost for construction. But the three parties argue that once it is built, the pipelines will strengthen regional cooperation, reduce energy costs and transform East Africa into a major energy exporter. South Sudan would be freed from its dependency on Sudan’s infrastructure to export its resources, while Kenya and Uganda would be able to more easily exploit their newly-discovered oil reserves.

However, what is good for South Sudan, Kenya and Uganda – and even perhaps most East Africa – might be seen as detrimental by some of their neighbours excluded from the agreements, especially the Democratic Republic of Congo (DRC) and Sudan.

DRC-Uganda: sharing and caring?
Uganda and Kenya currently import their oil from the Gulf region via the Indian Ocean to Mombasa, where it is refined. However, with the new pipeline, these two East African nations could exploit their own resources and provide energy for much of the region.

According to some estimates, for example, Uganda could become a key global oil producer thanks to the 3.5 billion barrels of crude oil reportedly discovered close to its border with the Democratic Republic of Congo (DRC). Exploiting these resources rather than having to import oil would eliminate tanker transportation, reduce production costs, and lower the price of fuel for consumers.

However, tapping into this natural resource wealth may not all be plain sailing. Much of Uganda’s oil is around Lake Albert which is sits on the border with the DRC, and since 2007, tensions have escalated over the demarcation of this region with both sides moving their militaries to the border at one point. Tensions defused with the signing of the Ngurdoto Accords, which established a system for regulating disputes, and earlier this year, the two neighbours agreed to avoid military presence in oil areas and to respect each others’ territorial integrity. But with diplomatic relations delicately balanced, proposals of a pipeline could re-ignite the situation.

To begin with, it is unlikely Kinshasa has forgotten Uganda’s previous involvements regarding natural resources in the DRC. Amidst the insecurity and instability of the two Congo Wars, Uganda occupied areas of north-eastern the DRC and extracted the country’s mineral wealth, a period for which the International Court of Justice (ICJ) in 2005 condemned Uganda.

More recently, Uganda was accused in a 2012 UN report of providing weapons and technical support to the M23 rebels, a group fighting against the Congolese government, and allowing M23’s political unit to operate from Kampala. Uganda denied these accusations.

With relations frayed, trust a scarce resource between the neighbours, and border disputes unresolved, the perception that a new pipeline might exploit the oil around Lake Albert to benefit Uganda at the expense of the DRC could be dangerous – especially given the ongoing insecurity in the eastern DRC region.

Sudan and South Sudan: separating the Siamese twins
The other recently-proposed pipeline – from South Sudan to Lamu port in Kenya – is as, if not even more, controversial.

When South Sudan seceded from Sudan in 2011, it took with it nearly 75% of the oil reserves. However, the infrastructure for refining, transporting and exporting the oil is in Sudan. The two Sudans are thus tied in a symbiotic relationship whereby South Sudan owns the oil, but must pay Sudan transit fees for using its pipelines, refineries and export terminal at Port Sudan to sell these resources.

South Sudan relies on oil for 98% of government revenue and has no alternative to this current arrangement. Much of Sudan’s revenue similarly depends on oil transit fees. This dependence on oil and co-dependence on each other was as tragically exemplified when South Sudan stopped oil production in January 2012 in retaliation at Sudan confiscating oil citing unpaid transit fees. Both countries’ economies plummeted.

Oil production only restarted in April 2013 when a shaky compromise was reached, and since then relations have remained precarious with both sides continuing to accuse the other of supporting rebels in the disputed border regions.

Given this perpetually volatile relationship between the two long-standing nemeses, and the Sudans’ economic co-dependence under the existing arrangement, it is little wonder South Sudan is interested in finding alternative ways of exploiting its oil wealth. However, if a new pipeline was built that bypassed Sudan, South Sudan would have everything to win and Sudan everything to lose. This is not something Sudan would allow to go ahead easily and – given the already long-term low-level conflict simmering in the border regions and the frequent barbed accusations thrown in each direction between the Sudans – it is not difficult to imagine a significant step-up in hostilities were a pipeline to go ahead.

Building the EAC
The proposed pipeline projects are just two of several initiatives being undertaken by Kenya, Uganda and Rwanda as part of the East Africa Community (EAC), which also comprises Burundi and Tanzania. The Community has already established a Customs Union in 2005 and a Common Market in 2010, while it is intending to produce a Monetary Union and, purportedly, eventually transform into a Political Federation of East African States. Some of the other projects to be implemented include establishing an EAC e-identity card, boosting tourism, enhancing electricity generation and rehabilitating a railway line between Kenya and Uganda into Rwanda.

Many of these projects might be successfully carried out and lead to positive results. But for those outside the circle of collaboration, the view is very different. There is a strong possibility that the two pipeline projects could prove to be double-edged swords and re-inflame tensions between hostile neighbours. Once again, oil could prove to be a curse rather a blessing for East Africa.

Related articles

• South Sudan arrests two Uganda journalists (sudantribune.com)
• East Africa: Can Pipeline Dreams Become Reality? (phantomreport.com)
• South Sudan to shut down oil industry next week (thehindu.com)
• The Battle for Oil in Central Africa (opinion-maker.org)
• Thousands Hiding, Hungry in Bush in South Sudan’s Pibor (voanews.com)
• South Sudan’s Kiir calls for investigation into Jonglei army abuses (sudantribune.com)
• Middle East, Sudan Turmoil Cuts Into World Oil Supply (worldnewscurator.com)
• South Sudan set for new oil pipeline (bbc.co.uk)
• Ecobank gets affiliate in South Sudan (ghanabusinessnews.com)
• Uganda, Kenya, Rwanda agree on oil pipelines (bostonherald.com)

Uganda gets Social Impact funding

Tags

Acumen Fund, Collective investment scheme, East Africa, Ethiopia, Kenya, Rwanda, Tanzania, Uganda

Reflex Eco Group – Uganda News

by Stephen Otage (Local journalist)

 

The Acumen Fund, an American social impact investment fund, using poverty as an investment product has launched operations in Uganda targeting peasant farmers as beneficiaries.

The fund which is already operating in Kenya, Rwanda, Tanzania and Ethiopia, is coming to Uganda with a $367m investment to finance the capital needs of the poor particularly along the agricultural value chain so as to spur growth of enterprises. It is anticipated that the fund will facilitate the production of agricultural in puts, increasing access to health care as well as affordable and renewable energy.

According to Duncan Onyango the fund director for East Africa, the fund is financed by the Melinda & Gates, Rockefller and the Soros family Foundations. He adds that the fund is implementing the aspirations of its funders among which include providing affordable solutions in water and sanitation, education, housing and financial services like agricultural micro-finance to the poor.

In an interview, Mr. Onyango said the fund is already operating in the Northern district of Gulu where it has invested $5million in cotton ginning benefiting 55,000 farmers already.

“We are looking at attracting entrepreneurs who will be game changers by building businesses which are impacting on communities. We also want to attract investors in leadership to change the way communities tackle poverty,” he said.

He added that in Kenya, the fund invested $30m in a seed company producing high yielding hybrid maize that has had an impact on 300,000 farmers, while in Rwanda, the fund has invested in a coffee processing firm while in Ethiopia, the fund has got approval to start poultry and animal feeds production.

He said the overall desire of the fund is to ensure that there are industries along the value-chain.

“We would like to see more investments in agriculture, water and sanitation. We would like to see people who operate toilets as businesses through turning waste into fertilizer, businesses providing clean water solutions for cooking and drinking,” he said.

According to Mr. Onyango, J.P Morgan the leading global financial services firm last year estimated that for the last four years alone, social impact funds as an emerging financial market targeting the rural poor have reached $4bn and close to 300 impact investors have been registered across the world.

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Africa Focused News

Tags

Africa, Bank of Central African States, Burundi, Central Africa, East Africa, Ethiopia, Eurobond, Fina Bank, ghana, gold, Guaranty Trust Bank, Hilton, Kenya, Marriott, mines, Mozambique, Nigeria, Oil, Rwanda, Singapore, South Africa, South Sudan, Stanford Graduate School of Business, Starwood, Sub-Saharan Africa, Tanzania, Turkey, Uganda, West Africa, World Bank

REPORT OF THE LAST WEEK (from 22/07/13 to 26/07/13) 

by Dario Galluccio

West Africa: Sifca invests $417 Million for palm-oil expansion

Sifca Group, which owns Africa’s biggest palm-oil refinery located in Ivory Coast, plans to spend $417 million in the next five years on plantations and factories in Ghana, Nigeria and Liberia.

The company, which is also West Africa’s largest rubber producer, plans to boost palm-oil output 33 percent to 400,000 metric tons annually over the next four years.

Ghana: GTBank acquire 70% stake in Kenyan bank

Parent company of Guaranty Trust Bank (Ghana) Limited, Guaranty Trust Bank Plc has reached an agreement to acquire a 70 per cent stake in Kenya’s Fina Bank Limited for $100 million.

The new acquisition will increase the number of countries that GTBank has presence from seven to ten, since Fina Bank, headquartered in Kenya also operates in Rwanda through its 92 per cent owned subsidiary Fina Bank Rwanda Limited and in Uganda through its fully owned subsidiary Fina Bank (Uganda) Limited. GTBank currently operates in Ghana, The Gambia, Sierra Leone, Liberia, Cote D’Ivoire and the United Kingdom and the acquisition forms part of the bank’s strategy to increase its international footprints across Sub-Saharan Africa.

Ethiopia: Mines earn U.S. $593 Million revenues

The revenues of mines this year shows decrease by 61 million US dollar compared to earnings of same period last year. According to Sinkinesh Ijigu, Minister of Mines, the decrease is down to price of gold reduction in the global market, which causes companies in Ethiopia to hoard their gold mines.

Last fiscal year the country provided to the global market 12 thousand kilogram of gold, over 81 thousand tons of tantalum and over 25 thousand kilogram of gem stones among others.

Ghana: Stanford SEED West Africa Centre opens in Accra

The Stanford Institute for Innovation in Developing Economies (SEED) has opened its office in Accra. It is the first innovation centre in West Africa.

The Minister for Trade and Industry, Mr Haruna Iddrisu, expressed appreciation for the initiative undertaken by the Stanford Graduate School of Business, the alumni and foreign donors, noting that Ghana would be made a hub of private partnership investment, when the SEED project which primarily aimed to change lives and transform businesses in the country and the sub regions of West Africa took roots.

Central Africa: BEAC projects 6% growth rate in 2014-2016

The Monetary Policy Committee (CPM) of the Bank of Central African States (BEAC) is projecting a 6 per cent economic growth rate for the Central African Economic and Monetary Community (CEMAC) in 2014 to 2016. The Governor of BEAC, Lucas Abaga Nchama, who is also the Statutory President of the CPM made the disclosure last Friday July 19 during a press briefing that was preceded by the second ordinary session of the committee for 2013 at the BEAC’s headquarters in Yaounde.

The promising macroeconomic perspectives, Mr Abaga Nchama said, is based on the rhythm with which growth-induced projects are being executed in member countries. He said many giant projects in the mining, energy and infrastructure sectors are off the ground and raising hopes that upon completion, they would be able to fire the economies of the respective countries to boom.

Nigeria: State integrates infrastructure master plan to gulp U.S.$2.9 trillion

The federal government has said the implementation of a new blueprint on Nigeria Integrated Infrastructure Master Plan (NIIMP), would cost $2.9 trillion.

The Minister of National Planning, Dr. Shamsudeen Usman, stated the master plan had been designed to raise the nation’s stock of infrastructure from the current 35 to 40 per cent of Gross Domestic Product (GDP) to 70 per cent of GDP in 2043- that is, in 30 years. He also pointed out that according to the master plan, 48 per cent of the $2.9 billion would come from the private sector.

The NIIMP is a 30-year master plan for accelerating infrastructure development in the country. It focuses on core infrastructure, including energy (power and oil and gas), transport (roads, rail, ports and airports), housing, water and ICT. Other infrastructure classes include agriculture, mining, social infrastructure, vital registration and security.

The draft NIIMP contains a long term vision that sets the overall direction for the master plan and strategic objectives, such as per capita income and GDP growth. It also describes the overall investments required in infrastructure, over the next 30 years and contains a financing plan and sector and regional strategies, as well as a priority projects portfolio. As an actionable plan, the NIIMP also highlights enablers for implementation and an implementation plan.

East Africa: Delonex Energy will invest US$600 million

Delonex Energy Ltd, an energy sector company, plans to invest US$600 million in financing oil and gas projects in several African countries, including Mozambique.

One of the investment areas will be East Africa’s rift valley, which runs from the Red Sea through Ethiopia, Kenya, Uganda, Tanzania and Mozambique.

The main investor in this project is a consortium led by Warburg Pincus LLC, a private equity company, which previously financed Kosmos Energy allowing it to discover an oil field in Ghana.

Ghana: GPHA seeks 1.5 billion dollars for expansion

The Ghana Ports and Habours Authority, GPHA, requires $1.5 billion to expand the Tema Port.

The expansion, which is necessary to meet traffic growth, transshipment and transit demands will involve the dredging of the basin and access channel, construction of new break, dry and liquid bulk terminals and a new fruit container terminal among others. The proposed project is to be financed through commercial loans, government of Ghana funding and public-private partnership.

South Africa: Investec approves $813 million debt for renewables

Investec Bank Plc said it’s able to provide 8 billion rand ($813 million) in debt funding for clean-energy projects in South Africa as the country adds wind and solar output. The money would be used to finance plants in the nation’s third renewables bidding round.

South Africa, seeking to cut dependence on coal for power, intends to add 3,725 megawatts of renewable-energy capacity by the end of 2016 with five tenders. That may help state utility Eskom Holdings SOC Ltd. meet demand as it struggles to fund maintenance and expansion in the continent’s biggest economy. The second round attracted bids from Electricite de France SA (EDF), Tata Power Co. and Acciona SA (ANA). The deadline for submissions in the third is Aug. 19.

Investec has participated in about 20 billion rand of financing for South African clean-energy and renewable ventures so far, including 6.4 billion rand of debt.

Kenya: World Bank will finance Kenya, South Sudan road project

The World Bank has pledged to finance Kenya’s Lodwar-Nadapal link-road project to South Sudan, a key infrastructure that will boost trading activities between both nations.

In an official statement, the bank’s Lead Transport Specialist for Africa, Josephat Sasia, said the construction which is part of the Eldoret Napal 595-kilometre project embarked upon by the World Bank, will be administered by the Kenyan National Highways Authority as an initiative to improve Kenya’s infrastructure.

Sasai disclosed that the cost of the project is yet to be ascertained, pending the completion of designs – which is slated for September – but noted that the funds will be disbursed by the apex bank through its regional transport facilitation programme. He, also, expressed optimism over the quality and pace of infrastructural development in the country, stating that the economy stood a better chance of developing through infrastructural expansion.

Earlier this year, the World Bank partly funded a 960km stretch of road connecting the two East African states and has so far disbursed an estimated $1.2 billion for various infrastructural projects across the East African country.

Kenya: Boom for East Africa economy as Kenya removes roadblocks

The Kenyan government has removed roads blocks along its roads to Rwanda. The roadblocks have been a cause for delays when transporting goods to Rwanda. The presence of many traffic police officers in the over 25 roadblocks has also been linked to increasing bribery and other corrupt practices. The move is a boost to the East African common market which came into force in 1st July 2010. Known as The East African Protocol, the agreement was passed by heads of the five member countries; Kenya, Uganda, Tanzania, Burundi and Rwanda.

The removal of the roadblocks comes at a time when massive economic gains awaits the region with the discovery of oil deposits in Northern Kenya and Uganda. More gold deposits have also been discovered in Tanzania. Free flow of goods, labor, capital and services are some of the key pillars of a free market economy as envisaged in the East African Protocol.

Africa: Marriott, Starwood and Hilton increase their investments

Marriott International Inc. (MAR), Starwood Hotels & Resorts Worldwide Inc. (HOT) and Hilton Worldwide Inc. are turning to Africa, where a growing middle class and rising travel are fueling the fastest pace of hotel development in the world.

Marriott, that plans 3,900 rooms at 22 hotels, has increased the number of hotel rooms it plans on the continent by 55 percent from last year. For Starwood, which plans to increase its number of properties in Africa to 50 by 2016 from 38 today, the revenue per available room in Africa and the Middle East is the highest of any region worldwide, the average room rates were $209.87 in the fourth quarter. The high-end Transcorp Hilton Abuja, in Nigeria’s capital, commands some of the steepest management fees in the world for its operator, according to Lagos, Nigeria-based hotel-consulting firm W Hospitality Group, in fact in Abuja, a shortage of high-end hotels combined with rising demand allows Hilton to charge more than $400 a night for its rooms and lets the hotelier collect some of the highest management fees in the world.

Hotel investors and operators, finding growth slowing in mature European and U.S. markets, are expanding in Africa as the continent is buoyed by increasing trade with countries including China and rising demand for services such as lodging. More than half of Africa’s countries probably will post gross domestic product growth of 5 percent annually through 2016.

Ghana: GIPC targets huge investments from Singapore

The Ghana Investment Promotion Council (GIPC) is expecting high volumes of foreign direct investments (FDIs) from Singapore in the coming months, following recent increase in investor interest from that country in the Ghanaian economy.

The Chief Executive Officer of GIPC, Mrs Mawuena Adzo Trebarh, added that the investments were expected to go into light manufacturing, ports and logistics, agriculture as well as the ailing power sector.

Trade between Ghana and Singapore is currently around US$1 billion and FDI inflows amounted to US$250 million in 2012, information from the GIPC showed.

Mozambique: To invest up to $5 Billion in Rovuma Basin

The publicly owned Mozambican Hydrocarbon Company (ENH) plans to invest between 2.5 and 5 billion US dollars as it exercises its rights to participate in the Offshore Area 1 and Offshore Area 4 gas fields in the Rovuma Basin in northern Mozambique.

ENH has a 15 per cent stake in Offshore Area 1 (operated by the US company Anadarko) and a ten per cent stake in Offshore Area 4 (operated by the Italian company ENI). The latest estimate is that these two areas contain 170 trillion cubic feet of natural gas.

The economic model developed by the operators expects that the project will generate a total of 400 billion dollars. From this, the government would receive 119 million dollars from its share of production and from royalties.

Africa: Oil discoveries in East Africa attract West African banks

The recent discovery of substantially large amounts of oil deposits estimated at 2.5 billion barrels in Kenya and Uganda and has come as a shocker to the local banks which are now partnering with investors to exploit the liquid gold. There has been growing interest among investors especially from the West African banks and insurance companies in countries like Nigeria and Ghana. A similar interest in also growing in Tanzania following recent data published by the Ministry of Energy and Minerals on substantial amount of gas estimated at 33 trillion cubic feet. Gold has has also been discovered in the Republic of Tanzania.

South Africa’s banks and insurance companies had identified this opportunity a little more than three years back.

Insurance firms Ghana Re and Nigeria’s Continental Re have launched new wholly-owned firms in Nairobi in the past 12 months, paying more attention to the oil and gas sectors.

Ghana: BOST will build gas storage facility in Kumasi

The Bulk Oil Storage and Transportation (BOST) Company is looking forward to building a gas storage facility in Kumasi for power generation; there are also plans to build an oil pipeline from the Western region to the Kumasi oil depot as part of upgrade and expansion re-engineering to meet the energy needs of the country.

Uganda: exports hit $2.3billion

Uganda’s exports reached $2.3b (5.9 trillion) last year, up from $2.1b (sh5.4 trillion) in 2011, the executive director of the Uganda Export Promotion Board, Florence Kata, has said.

Top Uganda export markets include France for cotton and oil seeds, Sudan, Congo, Kenya, United Arab Emirates, Tanzania, Rwanda and Common Market for Eastern and Southern Africa (COMESA) partner states.

COMESA accounted for 46% of Uganda’s exports, while the East African Community market accounted for 22% of the total export earnings. Kata, however, said last year registered drops in export values for four important sub-sectors – coffee, fish, cotton and cocoa. She said the four sectors earned $590.7m in 2012, down from $678.7m in 2011.

She said that this drop in traditional exports can be attributed to a combination of factors, including the tough economic conditions in Europe, America and Asia which took a negative toll on the country’s exports.

Ghana: Turkish businessmen explore opportunities

A five-member Turkish business delegation which was in Ghana to explore investment opportunities has paid a courtesy call on the Minister of Trade and Industry, Mr Haruna Iddrisu in Accra.

The delegation also toured the Ghana Free zones area in Tema to explore opportunities in the construction, real estate, fertilizer production and manufacture of tomato paste and spaghetti sectors.

The leader of the delegation, Mr Suha Ozkan, who lauded Ghana’s political climate said they were determined to scale up trade between Ghana and Turkey.

South Africa: Union of mineworkers declared wage war

The National Union of Mineworkers (NUM), Solidarity and UASA on Wednesday, the 24^th of July, announced that they had declared a wage dispute with the Chamber of Mines. The deadlock has been referred to the Commission for Conciliation, Mediation and Arbitration (CCMA).

NUM said the “dispute comes amid the Chamber of Mines ‘s gold producers having further insulted mineworkers by putting a 1 percent increase, taking their offer to 5 percent”, moreover NUM wants surface workers to earn a minimum of 7000 rand a month, and underground and open-cast workers 8000 rand a month.

Mining remains the backbone of the South African economy.

Rwanda: Government and UN Sign U.S. $400 Million deal

The government and One UN Rwanda have signed a five year agreement aimed at helping the country achieve the Millennium Development Goals, the Economic and Poverty Reduction Strategy (EDPRSII) as well as Vision 2020.

The assistance, worth of US$400 million (Rwf264 billion), is a mid-term strategy running until 2018 under the United Nations Development Assistance Plan (UNDAP), through which the organization seeks to consolidate its support to Rwanda’s development strategies.

The US$400 million budget will be financed through funds that UN agencies will invest from their core and non-core resources, as well as through mobilization efforts headed by the resident coordinator.

UN announced in 2007 that it would explore new ways of enhancing its efficiency at country level, naming Rwanda, Albania, Cape Verde, Mozambique, Pakistan, Tanzania, Uruguay, and Vietnam as pilots in its “One UN” agenda.

Tanzania: Uranium project will attract Sh1.6 trillion investment

The Mkuju River Project (MRP), a uranium mining project in Namtumbo District, Ruvuma Region, is expected to attract foreign direct investment (FDI) amounting to US$ 1bn (about 1.6trillion) over the project’s life. The project is owned by Mantra Tanzania and operated by Uranium One Incorporation.

According to the Chief Executive Officer (CEO) of Uranium One, Mr Chris Sattler, if all goes as planned construction of the project should begin in the next dry season and take two years to complete. Before construction can begin, a nine month detailed engineering and design programme must be completed; moreover he said that uranium produced by the project will be supplied to electrical utilities solely for the generation of electricity.

When operations at the MRP commence, Tanzania would become Africa’s third largest producer of the mineral after Niger and Namibia. Some 1,600 people are expected to be employed during construction and there will be 750 permanent jobs when the mine starts operations. There will be even more indirect jobs created by the Mkuju River Project over its life. At present there are 120 employees who are involved in exploration activities.

South Sudan: Ecobank opens an affiliate

Ecobank Transnational Incorporated, a leading pan-African banking group, has opened a banking affiliate in South Sudan. The new banking affiliate, the 34th on the African continent, offers the opportunity to support the youngest African state in addressing the challenges in regards to its development, the group said in a statement. Ecobank South Sudan started operations on July 10 and it offers the suite of products and services of the group to individuals, small to medium enterprises, multinationals and institutions.

The Togo-based Ecobank Transnational Incorporated is the parent company of the leading independent pan-African banking group, Ecobank. It currently has a presence in 34 African countries, namely Angola, Benin, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Congo (Brazzaville), Congo (DR) , Côte d’Ivoire, Equatorial Guinea, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Liberia, Malawi, Mali, Niger, Nigeria, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, South Africa, South Sudan Tanzania, Togo, Uganda, Zambia, Zimbabwe.

Sub-Saharan: World Bank investment rises to $14.7billion

The World Bank Group’s financial assistance to sub-Saharan Africa rose by $2.5 billion in the 2013 fiscal year to a record high $14.7 billion. In a statement issued by the Group, its International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) credits, grants, and guarantees to the region increased by $800 million from the previous year to $8.25 billion.

The International Finance Corporation (IFC) committed a record of nearly $5 billion for private sector development projects in sub-Saharan Africa, its preliminary and unaudited data released July 23, 2013 showed.

About $1.5 billion political risk guarantees were issued by the Bank’s Multilateral Investment Guarantee Agency (MIGA) for projects in the region during the fiscal year which ended June 30, 2013.

The World Bank’s support for developing countries was worth $52.6 billion during the fiscal year.

According to the information, IDA commitments during financial year 2013 reached a record $16.3 billion, IBRD’s commitments totaled $15.2 billion while IFC investments were nearly $25 billion.

The Bank Group’s political risk insurance arm, MIGA, issued $2.8 billion in guarantees during the fiscal year. This included a $500 million financial guarantee for Angola.

Despite the slowly recovering global economy, the World Bank Group indicated that it supported an estimated 1,956 operations across all sectors such as governance, infrastructure, human development and the private sector.

World Bank Group President Jim Yong Kim said “the Bank’s performance has been strong during my first year as President, and we are well positioned to address the economic challenges developing countries face during these still uncertain times.”

Ghana: Fan Milk sees 14% rise in profit

Ghana’s Fan Milk Limited revealed yesterday that its first-half net profit rose nearly 14 percent to 14.85 million cedis ($7.12 million) as against 13.05 million cedis ($6.3 million) a year ago on lower operating costs.

Earnings per share increased to 0.13 cedis from 0.11 cedis compared with the first six months of 2012. However revenue fell to 71.41 million Cedis from 73.31 million cedis, the company said in a filing with the Ghana Stock Exchange.

Fan Milk is Ghana is the leading producer of dairy products including ice cream in Ghana.

Fan Milk International, the leading manufacturer and distributor of frozen dairy products and juices in West Africa, was acquired last month by Abraaj Group. The deal, that is expected to close by November, implies Abraaj would also take majority stake in Fan Milk Ghana Limited. Apart from Ghana, Fan Milk International currently also operates in Nigeria, Togo, Ivory Coast, Benin and Burkina Faso.

The company, which started as a family business more than 50 years ago, currently sells over 1.8 million products daily across West Africa through its fully integrated regional manufacturing and distribution cold chain network.

Ghana: Eurobond oversubscribed by US$1.2 billion

Ghana’s second bid to raise US$1 billion from the international capital market to finance key development projects has been oversubscribed by US$1.2 billion. The first bond of US$750 million was raised in 2007 with a coupon rate of 8.5 per cent and a maturity period of 10 years.

This current bond of US$1 billion has a maturity period of 10 years, with a coupon rate of 7.875 per cent which will be paid semi-annually. The bond will be listed on the Ghana Stock Exchange (GSE) and the Irish Stock Exchange (ISE). This will be the first listing of a sovereign bond on a local stock market in sub-Saharan Africa.

The over-subscription shows the level of confidence the international financial community has in the Ghanaian economy. The economy, over the past year, has received positive ratings from international rating agencies. Moody Ratings rated Ghana B1; Standard and Poor’s B, while Fitch rated the economy B+.

The foreign lead managers for the transaction were Barclays Bank and the Citi Bank Group, while SAS and EDC were the co-managers.

Proceeds from the bond are expected to be used to finance infrastructure projects and restructure maturing debts and interest payments. They are also to be used as counterpart funding for capital projects such as the Atuabo Gas Processing project, as well as to finance capital expenditure approved in the 2013 budget, with priority given to self-financing projects such as ports and power projects.

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