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Uganda’s emerging BPO market to create employment

23 Wednesday Oct 2013

Posted by theinvesmentman in Africa, banks, BPO, Business, Business process outsourcing, Get rich quick, Ghana, India, investment, Kampala, Outsourcing, Tanzania, Uganda, Uncategorized, World Bank

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BPO, Business process outsourcing, India, Kampala, Outsourcing, Tanzania, Uganda, World Bank

Reflex Eco Group – Uganda News

by Stephen Otage (Local Journalist)

sotage@ug.nationmedia.com

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

 

Uganda’s youthful population, its computer literacy and the good command of the English language, are special attributes which have been identified as potential factors to steer Uganda into a global business process outsourcing destination.

According to James Saaka the executive director National Information Technology Authority, India is currently the leading global destination for business process outsourcing jobs where companies in the developed world contract out non-core business processes to cheaper and effective service providers because of rising labor costs in Europe.

Speaking at the third annual BPO Conclave in Kampala last week, Mr. Saaka said India currently is the largest BPO employer where it now creates 100 million jobs per annum because it has proved to be the most cost effective because most companies have capitalized on business models to outsource.

“ICTs have linked the entire globe. Time and distance are no longer a problem. In 2006, the global outsourcing revenue stood between $120bn-150bn and most of it was offshore business with India alone taking between 5%-6% of the business,” he said. Currently, it is estimated that the global revenue from the business stands at $952bn.

Last week, government commissioned a 250 BPO incubation center at statistics house where 3,000 graduates are currently undergoing training. According to Rogers Karebi the Secretary General Uganda Business process outsourcing association, currently, there are only 48 registered members of the association and three operators running the incubation BPO training center. He said the main services they offer include tele-sales, which involve calling customers and conducting customer surveys, transcription services, and software development.

“We want to partner with local companies like Uganda National Examinations Board, Uganda National Bureau of Standards, The Uganda Registration Services Bureau so that we can help them to digitize all their records,” he said.

Among the possible job openings in the IT sector are services management which include managed operations, customer experience management, value added services business support systems, business intelligence and analytics data and cloud services. Other possible areas include telemarketing, out and in bound sales, in-bound helplines, help desk and trouble shooting, product installation, frequently asked questions creation and hosting, data processing and entry validation, document management, order management and e-mail responses among others.

According to industry experts, the Tanzanian public service is currently the best example in East Africa where government has benefited immensely from outsourcing the cleaning of its payroll. In an interview last week, Selva Kumar the chief executive officer Greeno Tech Solution, the World Bank and the Tanzanian government outsourced a pilot project to clean up the civil service payroll and the results have saved government and the civil servants time and the pain they previously went through.

“Today in Tanzania, government has weeded out ghost workers because the system automatically weeds them out when they die because they are supposed to be verified physically every three month,” he said.

He added that the system has been able to plug gaps like absenteeism amongst civil servants, failure to report to new duty stations when they are posted to work and it has also made it easy for civil servants to receive their salaries promptly.

“We found that some people were benefiting from salaries of dead workers, government did not know the exact number of workers in its payroll but now the system requires that for every 100 workers, there is human resource officer to manage them and the workers have to report every three months to be verified physical and their recent photographs taken,” he said.

According to Anand Nagarajan the head of the India national association of software service companies (NASSOM ) government must take advantage of the literacy of Uganda’s youthful unemployed population because most of them are computer literate and can speak excellent English saying it is one of the qualities that outsourcing companies lookout for.

“The entire world is doing business using English. You are lucky here that your children start speaking it when they are still young. In India speaking and learning English is a challenge because we speak our mother tongue all the time and the English sometimes has an accent,” he said adding that India earns $108bn from exporting services which contribute 8% of GDP and 70% of the foreign direct investment.

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Africa Focused News

14 Monday Oct 2013

Posted by theinvesmentman in ACCRA, Africa, Angola, Bank of Ghana, banks, Barack Obama, Barclays, Brazil, Business, Cape Verde, china, Emmanuel Armah Kofi Buah, EU, European Union, Get rich quick, Ghana, Government, investment, Kenya, Mozambique, Nigeria, Nkroful, Oil, Road Fund, Rwanda, Somalia, Sub-Saharan Africa, Tanzania, Turkey, Uganda, Uncategorized, United States, usa, World Bank, World Tourism Day

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Africa, Angola, Bank of Ghana, Barack Obama, Barclays, Brazil, Cape Verde, China, Dacian Cioloş, Emmanuel Armah Kofi Buah, EU, European Union, ghana, Government, Kenya, Mozambique, Nigeria, Nkroful, Oil, Road, Road Fund, Rwanda, Somalia, Sub-Saharan Africa, Tanzania, Turkey, Uganda, United States, World Bank, World Tourism Day

REPORT OF LAST WEEK (from 07/10/13 to 11/10/13)

by Dario Galluccio

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

Kenya: CFC Stanbic Bank partners Aeolus to build wind power plant

Kenya’s CFC Stanbic Bank has partnered Aeolus Kenya (AKL) – a member of the Power Africa initiative led by the United States President Barack Obama- to build a Sh12.9 billion ($150 million) wind power plant in Kinangop, Kenya. The proposed power plant will be the largest wind power generation project to be built in sub-Saharan Africa to date, outside of South Africa. It is expected to come on line in mid-2015. The wind project has already been registered under the United Nations’ Clean Development Mechanism.

The Kinangop Wind Plant which will provide electricity to approximately 150,000 Kenyan households, will add a further 60MW to Kenya’s 1,672MW national power grid.

According to CfC Stanbic Bank’s East Africa Head of Debt Solutions and Infrastructure Finance, Kwame Parker, “The project is designed to provide a clean source of electricity to Kenya. It will not only contribute to the social and economic development of Kenya, but will also significantly help ease the energy supply deficit that the country is grappling with.”

Ghana: Improved energy will push forward growth

Mr. Emmanuel Armah Kofi Buah, Minister of Energy has said that the vigorous expansion of various energy programmes is to increase power production as well as support the growth and expansion of all the weak sectors of the national economy. He said government is rolling-out the various programmes and projects, particularly in the Western Region, as part of the energy expansion drive — which is geared toward positioning the sector to play the critical role expected for directing Ghana’s effort toward industrialisation.

Speaking at the World Tourism Day at Nkroful in the Ellembelle District of the Western Region, he noted that the country’s oil and gas sector is currently underdeveloped. According to him, the discovery of oil and gas in commercial quantities on the Western Region culminated in an influx of people — the stage is set for integrated tourism development in the region, so that instead of a potential threat from oil and gas activity to our environment, oil and gas activities will be made conducive to our situation and be a blessing to our environment.

Ghana: EU to support agriculture production

The European Union (EU) is to support Ghana to revolutionalise its agricultural production.

Mr Dacian Ciolos, EU Commissioner for Agriculture and Rural Development, who made this known in Accra, said the support would be in the form of financial and technical interventions.

Agriculture is not only an economic issue, but also a social issue and this calls for the support,” he said. Stressing that the EU would take Ghana’s agricultural development objectives into consideration.

Dr Yemi Akinbamijo, Manager of Forum for Agricultural Research in Africa (FARA) said the partnership between EU and Ghana, which is under negotiation would take place from 2014- 2020. He said, it is a period for the promotion of agriculture and security.

Dr Akinbamijo said : agriculture would provide greater help to reduce poverty if done properly; pointing out that production, trading, finance, as well as infrastructure, education, science and technology and regional integration; are the seven pillars of FARA, which would be used to develop Ghana.

Ghana: Oil production hits 115,000 barrels daily

Daily oil production hit 115,000 barrels per day in June 2013, significantly higher than the projected average for the year, the African Center for Energy Policy (ACEP) report on Government Compliance with the Oil Revenue Management Act in the 2013 budget has revealed. Total oil revenue of GH¢1.15 billion also far exceeded the projected target by GH¢362.3 million.

The report urged government to initiate discussions with Sabre Oil and Gas to recover the capital gains tax from the sale of its stake in offshore blocks. It also indicted the 2013 budget for failing to capture capital gains tax as one of the revenue streams. It added “the Petroleum Income Tax Law should be harmonized with the Internal Revenue Act.” Released by the Executive Director of ACEP Mohammed Amin Adam, the report also said the projected transfers to the Ghana Petroleum Holding Fund will be exceeded when the data on petroleum is released.

Ghana: Government commits GH¢350 million towards road sector

Government has since June released GH¢ 350 million for the road sub-sector out of the GH¢ 706 million allocated in the 2013 budget. Alhaji Amin Amidu Sulemani, Minister of Roads and Highways, said the Ministry has also improved upon revenue generation into the Road Fund for maintenance works. The total fund accrued from January to June was GH¢ 126 million, an increase of GH¢ 9 million over the amount recorded during the same period in 2012.

Alhaji Sulemani, who made this known during the inauguration of the Progressive Road Contractors Association (PROCA), urged members as well as the Association of Road Contractors to unite for the growth of the industry.

Alhaji Sulemani told members of PROCA: “As a result of the many interventions that have been made in the sector since the last couple of years, the condition mix of the road network has improved from 29% good, 27% fair and 44% poor in 2000, to 43% good, 25% fair and 32% poor as at end of 2012.

Mrs Joana Adjei, National President of PROCA promised to run an open door policy as well as an all inclusive administration to make the association stronger. She said the new administration would help revive the training programmes of the Association. Mrs Adjei said majority of contractors are suffering as a result of delayed payment for work done. Mr Michael Aidoo, the outgoing President of PROCA advised the new executives to take criticism in good faith.

Ghana: Omega Capital launches 2 funds

According to Nana Kumapremereh Nketiah, Chief Executive Officer of Omega Capital Limited, a private equity and investment management firm, the capital market is currently underserved and it behoves industry regulators and fund managers to adopt a results-driven approach in order to bridge the gap.

Speaking in an interview on the sidelines of the launch of the company’s twin funds — Omega Income Fund and Omega Equity Fund — in Accra, he said the capital market has huge potential which calls for result-driven measures in order for such potential to be fully tapped.

On the way forward, Nana Nketiah called for improved investor education to, among others, enlighten the public on the benefits of investment as a means to financial and socio-economic development. He said introduction of the funds onto the market is the company’s way of empowering the general public to secure their future: “The funds seek to empower investors to secure their future. By encouraging them to invest, we are helping them to link their future to investments.”

Omega’s income fund is a medium-term open-ended mutual fund that seeks to achieve growth in income while conserving principal by investing in a diversified portfolio of fixed income securities. The equity fund targets superior long-term returns by investing in stocks and fixed income securities. Both funds will be managed by Omega Capital Limited, which is a licenced investment fund manager, with HFC Bank as fund custodian. It targets individuals, pension and provident funds, and other corporate institutions.

Tanzania: It Is All Rosy for Tanzania

It is good news for Tanzania as the economy grows impressively above the region’s projected rates, inflation is well controlled and the foreign investments pour in thanks to macroeconomic stability maintained over almost a decade and institutional and policy reforms.

The 2013 African Economic Outlook report launched last week, confirmed the impressive performance of the economy which grew to 6.9 per cent in 2012 and is estimated reach seven per cent this year and 7.2 per cent in 2014. The projected rates of the sub-Saharan region are 4.8 per cent in 2013 and 5.3 per cent in 2014. Mining boom, particularly gold production, tourism, construction transport and communication activities have been the main drivers of the growth.

The future looks ever brighter, with an impressive series of offshore gas discoveries set to further boost the economy and propel the country into a middle income status by 2025 as envisaged in the national development roadmap, the vision 2025. The mining portfolio is performing equally impressive with gold production going on well despite a slump in price at the world market and uranium extraction set to commence soon. With this kind of picture, it is hard to complain about the economy. Everything looks so rosy, albeit at the face value, that it covers the weak areas.

Ghana: Mining sector to reach US$774m

The value of the country’s mining sector is anticipated to reach US$774million in 2017, up from US$669 million in 2012, as bauxite and gold production see substantial increases.

This is a significant break from the past decade, when the mining sector value barely rose as gold output declined — offsetting much of the increases in price. “We expect gold to be the main driver of growth, but see bauxite playing a growing role,” Ghana Mining Report quarter-four survey conducted by the Fast Market Research, an online aggregator and distributor of market research and business information has revealed.

Figures from the Minerals Commission indicate that the mining industry attracted US$1.0billion of total investment inflow into the country in 2012. These investments came from producing, exploration and support Service companies. The multiplying effect of this investment in the country’s economy cannot be overestimated. The Bank of Ghana also reported that the mining industry’s contribution to total merchandise export earnings was about 43 percent in 2012.

Data from the Ghana Statistical Service show that the mining sub-sector grew by 23.5 percent in 2012. This compared favorably with the 18.8 percent it achieved in 2011. Furthermore, the Ghana Revenue Authority (GRA) has stated that the mining sub-sector maintained its position as leading contributor to the authority’s domestic tax contribution in 2012.

Africa: World Bank boosts outlook for Sub-Saharan African economies

Sub-Saharan Africa’s economic growth should increase to 5.3 per cent next year, with strong private and public investment underpinning the region’s robust performance, the World Bank said yesterday. The bank lifted its forecast for 2014 from the 5.1 per cent projected earlier this year. The region was expected to grow 5.5 per cent in 2015, up from a previous forecast of 5.2 per cent.

Growth for this year is forecast at 4.9 per cent, higher than last year’s 4.2 per cent. The figure is more than double the bank’s 2.3 per cent estimate for global growth in 2013, underscoring the attractiveness of the continent for investors. But African countries could be vulnerable to declining commodity prices and the eventual tapering of the US Federal Reserve’s bond-buying stimulus, the organisation said.

Although strong export growth has also contributed to the region’s economic advance, many countries are prone to major swings in their fortunes because they rely on a single commodity for more than 50 percent of export earnings.

Foreign direct investment flows to Sub-Saharan Africa are expected to rise 24 percent to around $40 billion in 2013. Governments in the region, such as Ethiopia, Ghana, Nigeria and South Africa, have also increased spending on public investment, much of it geared towards transport and power infrastructure.

Angola: Access to Banking Services May Reach 30 Percent By Year-Rend

The National Reserve Bank (BNA) pledges to work toward increasing the access to banking service rate among the Angolan population by at least 30% by the end of 2013, against 23% achieved in 2012, Angop has learnt. The information is expressed in a press release from the Southern Regional Delegation of National Reserve Bank, comprising the provinces of Benguela and Kwanza Sul. In order to achieve this goal BNA intends to resume in November its financial education programme, reads the document, signed by the regional delegate, Luis Henrique da Silva.

Mozambique: Investment to create 172,000 jobs over three years

Mozambique is to receive ten billion US dollars in investment over the next three years, creating 172,000 jobs, according to the government’s Investment Promotion Centre (CPI). CPI Deputy Director Godinho Alves explained that 900 projects have already received approval for implementation over the period.

The daily newspaper “Noticias” reported on Monday that foreign investment has stimulated economic development, with Mozambique being one of the world’s fasted growing economies.

Despite these positive developments, the Maputo Corridor Logistics Initiative (MCLI) has warned that investors continue to be concerned about minimising risk and maximising returns. This is because the country has a history of some projects not reaching their promised potential.

Sub-Saharan Africa: To attract 33.8 million visitors from tourism in 2012

Sub-Saharan Africa earned over $36 billion from tourist visits in 2012, a new World Bank report says October 3, 2013. According to the World Bank, the continent attracted 33.8 million visitors in 2012, up from a low 6.7 million in 1990.

The report, “Tourism in Africa: Harnessing Tourism for Growth and Improved Livelihoods”, indicated that the amount earned from tourism in 2012 was 2.8% of the region’s GDP.

The report showed that Africa’s tourism is set to boost economic growth, create new jobs and will “now outpace other regions for new tourism investment”. The report highlighted the potential of African countries to improve and expand their tourism sector, and suggested that 33 of sub-Sahara Africa’s 48 countries currently have the capacity for tourism success through establishing strong political support for developing the industry and attracting increased private investment to help finance and sustain it. The industry is expected to directly employ 6.7 million people in the region by 2021, according to the World Bank report.

Ghana: Pension savings seen rising fivefold driving sales

The end of a monopoly by Ghana’s state-owned pension fund is poised to boost savings fivefold by 2017, helping revive the nation’s corporate bond market and end a drought in initial public offerings.

According to Ekow Fynn-Aikins, regulations officer at the National Pensions Regulatory Authority in Accra, the retirement industry, with assets of 1.06 billion cedis ($484 million) in 2012, may jump to 5.5 billion cedis over the next four years. While the Ghana Stock Exchange’s Composite Index (GGSECI) has climbed 68 percent this year, the best performance in Africa, the bourse’s last IPO was more than two years ago. No company has sold bonds on the domestic market since 2008. 

There’s a perceived demand out there for new issues,” Sam Mensah, chairman of the Ghana Stock Exchange and an adviser at the Finance Ministry, said in an interview. “It’s still early days and we’ll have to wait for the pension industry to grow to know exactly what their impact can be.”

Since Ghana implemented a 2010 law in December compelling employers to commit more toward workers’ pensions and set aside contributions for private money managers for the first time, volumes on the bourse surged 75 percent as of June. The number of pension managers increased to 45 from zero when the authority began registering last year.

Tanzania: Isles courts Chinese investors

The Zanzibar First Vice- President, Seif Sharif Hamad, has asked investors from China to establish businesses in the Islands, saying there are ample opportunities in the tourism sector.

“We would love to have investors from China to invest in tourism including eco-tourism in Pemba Islands. The investment climate is conducive,” said Hamad to China Councillor General in Zanzibar, Mr Xie Yun Liang.

The Vice-President informed the ambassador that Zanzibar also welcomes investments in deep-sea fishing. Liang, who was recently appointed to the post, visited Hamad for familiarization.

“The government has been improving infrastructure which include expansion of the Zanzibar International Airport, roads, and having stable supply of electricity,” he said.

Ambassador Liang welcomed the offer saying that the historical relationship between China and Zanzibar would be further cemented by the coming of investors from China.

Uganda: To seek investor to build $2.5 Billion oil refinery

Uganda is looking for a lead investor to develop a refinery estimated to cost $2.5 billion, two weeks after issuing its first production license to China National Offshore Oil Corp. as it seeks to exploit reserves.

The investor, either a company or a group of them, will be named by April and will take an interest of as much as 60 percent in the facility, which is proposed to have capacity of 60,000 barrels a day, Robert Kasande, an assistant commissioner in the Energy Ministry, said today by phone from Entebbe, near the capital, Kampala.

Uganda, classified as one of the world’s poorest nations by the World Bank, discovered oil in 2006 and has an estimated 3.5 billion barrels of crude, according to the Energy Ministry. London-based Tullow Oil Plc (TLW), Cnooc and France’s Total SA (FP) are jointly developing the finds. The country has sub-Saharan Africa’s fourth-biggest oil reserves.

The government’s stake in the facility will account for as much as 40 percent, and the nation has invited Kenya, Rwanda, Burundi and Tanzania, which are partner countries in the East African Community, to buy an interest of as much 10 percent in the facility from Uganda, he said.

Tanzania: Inflation down to 6.1 percent

The inflation rate went to over two and half years’ low rate of 6.1 per cent last month, showing that the country’s economy is on the right track. National Bureau of Statistics (NBS) indicates that the inflation descended from 6.7 per cent of August to 6.1 per cent in September, this year. The decline, according to NBS, was supported by all four major measures of inflation index – energy, food and non-food and non-energy – that also decreased satisfactorily in September.

The new National Consumer Price Index released by NBS for September also indicated that the Annual Inflation Rate for energy and fuels has decreased to 9.6 per cent in September compared to 15.2 recorded in August.

While the Tanzania rate descends to a pleasing level, in Kenya and Uganda the inflation rate climbed up in September to 8.29 per cent and 8.0 per cent from 6.67 per cent and 7.3 per cent in August respectively.

Tanzania’s inflation rate averaged 7.72 per cent from 1999 until 2013. It reached an all time high of 19.8 per cent in December, 2011 and a record low of 3.4 per cent in February, 2003.

Nigeria, Brazil: To sign MoU on trade, investment

Nigeria and Brazil in Abuja signed a Memorandum of Understanding (MoU) to strengthen their bilateral cooperation on trade and investment. The Minister of Industry, Trade and Investment, Mr Olusegun Aganga, signed on behalf of Nigeria, while Mr Ricardo Shaefer, his Brazilian counterpart on Development, Industry and Foreign Trade, signed for his country. The News Agency of Nigeria (NAN) reports that the agreement aims at strengthening bilateral cooperation on the promotion and facilitation of trade and investment between the two countries.

According to Aganga, the agreement goes beyond trade and investment to include industrial cooperation and financing as well as how both countries can double their trade volume. The minister listed the sectors covered by the MoU to include infrastructure, power, automobile, agriculture and sugarcane to sugar among others.

“This agreement will cover cooperation in all these areas including how we double trade between the two countries, and of course how we attract investment into strategic areas of the economy.”

Nigeria: Dangote plans U.S.$34.7 Billion fresh investment in economy

The President of Dangote Group, Alhaji Aliko Dangote, has said that the Group is poised to make an additional investment totaling $US 34.7 billion in the economy by 2017. He also said the cement arm of the group will commission an additional 10 million metric ton capacity in Nigeria by mid 2014 with an additional plan to also invest US $4.7 billion over the next four years in order to ensure that cement supply stays ahead of demand.

In a keynote address during the just ended Nigeria’53rd Independence Anniversary Lecture, organised by the Lagos Chamber of Commerce and Industry, LCCI, Dangote said, the Nigerian financial sector has demonstrated its ability to support big ticket industrial projects – the most recent being the US$9 billion refinery project by Dangote Group and is poised to invest $US 34.7 billion by 2017.

Dangote said in setting an agenda for the next decade, government should improve the business climate and continuously benchmark our business environment against “best-in-class” investment destinations, implement the recently unveiled Nigeria Industrial Revolution Plan, support the new investors in the power sector to ensure they “hit the ground running” and provide the kind of outcomes Nigerians desire. He said their investment in agriculture is driven by our desire to create jobs for thousands of Nigerians and that It will increase their workforce from its present level of 26,000 employees to 750,000 employees .

Somalia: Oil and gas discovery offers ‘hope’ for investment

Somali Minister of Finance and Planning Mohamud Hassan Suleiman encouraged foreign investors to “seize the opportunity” to invest in Somalia during the Somalia Oil and Gas Summit in London Monday (October 7th).

“The discovery of oil and gas in Somalia opens up an array of hope and opportunities for the new Somalia, enabling it to influence the pace of economic recovery and the future stability of the country,” Suleiman said. “International investors and multi-national corporations are turning their attention to Somalia and we must now seize the opportunity and work with them.” Suleiman added that the government recently revised the Investment Law to make Somalia “investment friendly”, while at the same time ensuring that a fair portion of profits from the industry are re-invested in the country’s economic growth.

Ghana: Indonesian investors confer with Chamber of Commerce

A delegation of investors from Indonesia have held bilateral discussions with the Ghana Chamber of Commerce and Industry (GCCI), aimed at strengthening business relations cooperation between the countries. The delegation was led by the Director for African Affairs at the Ministry of Foreign Affairs of the Republic of Indonesia, Mr Lasro Simbolon.

Mr Lasro Simbolon underscored the need for the two nations to forge ahead in business by creating opportunities that can help increase cross-border investments.

He said was particularly impressed with the country’s development agenda, especially in areas such as infrastructures, agriculture, technological development and capacity building, which, he said are geared up to meet the expansion plans of the country.

The President of the GCCI, Hon Seth Adjei Baah, who received the delegation, said it is time to review and explore new areas of cooperation that the two countries can share experience and benefit from. He said the two countries’ interest should be in line with national development plans which are geared towards enhancing economic growth for the welfare of their people.

Nigeria: Barclays to expand operations ‘cautiously’

Barclays Bank CEO, Anthony Jenkins said the British banking group is planning to expand its footprint in Africa’s second largest economy, Nigeria without making a large or expensive acquisition in the country.

We have a rep office there. We do some business in Nigeria and we are going to grow that business and I think quite cautiously over time, and then we will see what opportunities present themselves,” Jenkins said.

Although Barclay does not have much representation in Nigeria, it is likely to launch corporate banking in Nigeria like it did with First Rand’s Rand Merchant Banking (RMB) in order to tap into the opportunities being presented by multinational companies looking to invest in Africa. RMB previously had a representative company but was awarded a merchant banking license in Nigeria last year.

Jenkins said all options are still open as the bank has not decided whether to apply for a license or acquire some business in the country. He also noted that there are opportunities for corporate banking. “We have quite a footprint from the African continent and so bringing our corporate customers to Africa is going to be a very important strategic focus for us and that’s the unique advantage of Barclays because we have got a global footprint and we have got the presence. If you put those two things together it’s a very powerful combination. So a lot of this is about execution and accelerating the pace of execution within the context of the aspiration to be the Go To Bank,” Jenkins said.

Ghana: Petroleum sector to see a $20 Billion investment over the next 5 years

Ghana’s Oil and Gas Industry is projected to attract a $20 billion investment in the next five years on the many discoveries that have been made. This was disclosed by the deputy Minister of Energy and Petroleum, Dr. Ben Dagadu, in Accra at the launching of a book titled ‘Oil and Gas Ghana’.

He stated that the government, since the discovery of oil, had taken measures to see to it that the petroleum sector was run efficiently to ensure that the resource benefits all Ghanaians.

In this wise, the deputy Minister said several legislations such as the Petroleum Revenue Management Act and the Petroleum Commission Act had been worked out to provide direction and clarity for the management of oil revenues and for regulating the sector. The Minister noted that in order to build the capacity of Ghanaian entrepreneurs, small and medium scale enterprises – which form major stakeholders in the industry – for the realization of this goal, the Ministry together with the Jubilee Partners had established the Enterprise Development Centre (EDC).

Rwanda, Uganda: Ties Stronger

Uganda has made economic progress over the years both as a country and as a core believer in the region’s integration process, especially as its ties with Rwanda gets ever stronger, Amb. Richard Kabonero has said.

The Ugandan High Commissioner to Rwanda was hosting his compatriots working and living in the country as well as well-wishers at his residence in Nyarutarama, Kigali, to celebrate Uganda’s 51st Independence anniversary.

“We have been growing despite some shocks and challenges. We have made tremendous investments in infrastructure and energy. At regional level, Uganda has played a big role in promoting peace in the region, including hosting nine summits that seek peace in the DR Congo,” Amb. Kabonero said.

He said bilateral ties between Uganda and Rwanda will always remain strong through collaboration on several development projects.

Nigeria: To plan regular Bond sales in bid to build yield curve

Nigeria is planning to raise debt abroad regularly as Africa’s largest oil producer seeks to develop a benchmark for borrowers, Finance Minister Ngozi Okonjo-Iweala said.

The government returned to international debt markets for the first time in two years in July, issuing $1 billion in five-year and 10-year Eurobonds. The country now plans to raise $100 million by selling so-called diaspora bonds targeted at citizens living overseas.

If it succeeds, we’ll do more,” Okonjo-Iweala said, adding that the sale will take place in the first quarter of next year. “We intend to enter the market on a regular basis because we’re trying to build a yield curve.”

Nigerians abroad would have sent $21 billion home by the end of 2013, according to World Bank figures, and the government wants “to tap some of that,” Okonjo-Iweala said. The nation is stepping up debt sales to finance infrastructure as it faces inadequate budget allocations for capital spending.

The yield on Nigeria’s $500 million in Eurobonds due July 2023 dropped 18 basis points this month to 5.94 percent yesterday, the lowest level since July 23, according to data compiled by Bloomberg.

The Nigerian economy may expand 6.75 percent next year, compared with an estimate of 6.5 percent in 2013, Okonjo-Iweala said. The budget deficit will stay little changed at 1.9 percent of gross domestic product, she added.

Ghana: Turkey to build industrial parks

Turkey is to construct two industrial parks at Accra and Kumasi respectively beginning next year at a cost of over $300 million.

Outgoing Charge d’Affairs of Turkey Embassy in Accra, Simay Erinoglo, speaking to journalists in Accra, said the two projects, which are designed to attract many Turkish investors into Ghana would be funded by the Turkish Exim Bank.

The Ankara Chamber of Industry and the Ghana National Chamber of Commerce & Industry signed an agreement to that effect recently. Ms Erinoglo said Turkish exports to Ghana last year recorded $223.5 million while it imported $303.5 million worth of goods from Ghana. For the first six months of 2013, Turkey exported $103.6 million worth of goods to Ghana while it imported $128.9 million worth of goods from Ghana.

Ms Erinoglo said Turkish investors were eyeing a number of projects in the various sectors of Ghana’s economy, including construction. Also, it intends to help with the construction of an international airport. In the health sector, Turkey wants to assist with the construction of eight pre-fabricated hospitals at a cost of $118 million.

The Turkish Development Agency (TIKA) is working on a lot of projects in Ghana, she indicated. Turkish investors are hesitant to come over to Ghana to invest because of the monstrous land acquisition challenges, she stated.

Cape Verde: AfDB approves $24m budget support loan

The Board of Directors of the African Development Bank Group, approved a €15-million general budget support loan for Cape Verde, to help the country finance its Public Corporate Governance and Investment Promotion Support Programme (PAGEPPI). The Programme aims to help Cape Verde consolidate its macroeconomic framework and foster growth by improving public corporate governance in State-owned enterprises and promoting private investment.

The PAGEPPI’s operational objectives are to improve public corporate governance so as to streamline public expenditure and promote private investment to spur economic growth and foster job creation.

On completion, the Programme is expected to strengthen public corporate governance and improve the operational and financial performance of State-owned enterprises. This will help to reduce the burden on the State budget and corresponding risks on public finances. The Programme is also expected to clarify the State’s role as both a shareholder and a regulator as well as to implement international and local investment promotion measures that will create a more attractive environment for economic activities and private sector development. The Programme will enhance Cape Verde’s overall development strategy which rests on economic diversification based on competitive clusters. In particular, it will support governance and private sector development reforms that constitute two main pillars of the government’s Growth and Poverty Reduction Strategy Paper (GPRSP) 2012-2016.

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  • GMOs Are “Neo-Colonialist”, Security Threat To Ghana – Group (modernghana.com)
  • Ghana to boost economic cooperation with Indonesia (spyghana.com)
  • Ghana to become hub of drug production in Africa (ghananewsagency.org)
  • EU urges Ghana to step up agricultural production (ghanabusinessnews.com)
  • Road Fund Jumps Up By GH¢9m Within Six Months (thechronicle.com.gh)
  • Ghana achieved first MDG ahead of deadline: Lessons for other African Countries (mdginafrica.wordpress.com)
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  • African Infrastructure Boom To Boost Syndicated-Loan Growth – Bloomberg (bloomberg.com)

Africa Focused News

07 Monday Oct 2013

Posted by theinvesmentman in ACCRA, Africa, Angola, Bank of Ghana, banks, Barack Obama, BoG, Botswana, Business, china, Debt, Egypt, Ethiopia, Foreign Direct Investment, GDP, Get rich quick, Ghana, investment, Ireland, Mozambique, Nigeria, Petroleum, Reykjavik Geothermal, South Africa, Tanzania, Treasury bills, Uganda, Uncategorized, Unilever, United States, usa, World Bank

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REPORT OF LAST WEEK (from 30/09/13 to 04/10/13)

by Dario Galluccio

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

Ghana: GIPC is working to promote the growth of local businesses

The Ghana Investment Promotion Council (GIPC) has explained that the centre is not only interested in Foreign Direct Investment but is also seriously interested in promoting Ghanaian businesses to attract investment and grow the economy.

Speaking at a general meeting of the Sekondi-Takoradi Chamber of Commerce and Industry (STCCI), he explained GIPC is providing direct promotion support to identified local investment project sponsors to solicit international as well as local investment partnerships.

>Our mission is to attract private domestic and foreign investments and to transform Ghana into a broad-based industrial and export-led economy through aggressive investment promotion activities,” said Mr. Isaac Ebo Newton, an Official of GIPC.

Ethiopia: Reykjavik Geothermal to build 1000MW power plant

US-Icelandic geothermal development company, Reykjavik Geothermal (RG), has agreed to build a 1000MW geothermal plant in Ethiopia to help the East African nation harness its energy potential. The power plant which will be built in Ethiopia’s Corbetti Caldera region is part of President Barack Obama’s $7 billion Power Africa initiative which seeks to double electricity supply on the continent. The geothermal plant will be Ethiopia’s first independent power plant project and it is expected to be one of the world’s largest geothermal power plant.

The deal will also make Reykjavik Geothermal Ethiopia’s first independent power producer, while the Corbetti project will be the largest single geothermal plant ever built in Africa, RG Chairman, Michael Phillip said.

Reykjavik Geothermal, a company that has helped build power plants in about 30 countries globally expects to invest $4 billion over an 8-10 years period. It has been working with Ethiopian Electric Power Corporation (EEPCO) and various government ministries for the past two years to finanlise the purchase agreement. The geothermal development company will build and operate up to 1000Megawatts of geothermal in two 500MW phases. While the first 10MW of power will be online in 2015 with an additional 100MW in 2016; the full 500MW will be operational in 2018.

Ghana: Industrialization process depends on energy sector

Government intends to use the energy sector as a springboard to develop other sectors of the economy, Mr Armah Kofi Buah, Minister of Energy and Petroleum, has stated. Mr Buah was speaking at a durbar to celebrate this year’s World and National Tourism Day at Nkroful in the Ellembele District of the Western Region at the weekend. The celebration was under the theme: “Tourism and Water: Protecting our Common Future”.

Mr. Buah said the tourism sector must take advantage of the numerous oil and gas projects in order to strengthen its position as a critical sector of the economy. He said the hospitality industry could take advantage of the oil and gas projects to expand and create jobs for the country’s teeming youth.

Nigeria: China to build $1.3 Billion Zungeru power plant

Nigeria has signed a $1.3billion deal with two Chinese state companies, China National Electrical Equipment Corporation (CNEEC) and Sinohydro Consortium, to build the Zungeru power plant. The deal will help to put an end to the chronic electrical power supply shortages that continues to slow growth in Africa’s second-biggest economy. The plant, which is scheduled for completion by 2018, will help add 700 MegaWatts (MW) electricity to Nigeria’s current 4600MW.

The Zungeru power plant in Niger state (about 150km to federal capital, Abuja) was first conceived in 1982, but was abandoned due to lack of funds. Now, 75 percent of the fund needed for the project will be supplied by China’s Exim bank while Nigerian government will foot the rest of the bill.

This project will create thousands of jobs for Nigerian engineers, technicians and artisans during the construction phase…. it will also boost the economy,” Nigeria Finance minister, Ngozi Okonjo-Iweala said at the signing of the deal.

According to Nigeria’s Finance Minister, Ngozi Okonjo-Iweala, the loan being finalised was part of the $3bn approved by China at interest rate of less than 3 percent.

President Jonathan and Chinese president, Xi Jinping had met in July 2013 over the signing of the accords between the governments to facilitate $1.1 billion in low interest loans for infrastructure projects in Nigeria.

Uganda: China wins $2 billion oil deal

China’s state-owned CNOOC has secured a $2-billion deal to develop a petroleum field in Uganda and help propel the east African nation into the club of oil-producing countries, an official said Friday. “This is a major breakthrough as a country,’ Uganda’s junior energy minister Peter Lokeris told AFP, confirming that a deal had been reached earlier this month with the China National Offshore Oil Corporation.

Uganda has oil reserves estimated at 3.5 billion barrels but the path to production has been a bumpy one since deposits were discovered in 2006 near its border with the Democratic Republic of Congo. Such reserves have the potential to radically alter Uganda’s economy and could eventually as much as double the national income.

Ghana: Petroleum prices to go down

Motorists will experience a little over 4 percent decrease in the price of fuel at the pumps. Diesel users will save a little over 2 percent at the pumps. The latest move follows a revision of the prices of petroleum products by the National Petroleum Authority (NPA). Petrol is now GHC 2.22 a lite while Diesel is going for GHC 2.18 a lite.

However prices of premix fuel and kerosene have been revised upwards. A litre of premix fuel is now going for about 98 pesewas which is up by almost 23 percent. While kerosene is now GHC 1.59 up from the GHC 1.28 leading to almost an 8 percent increase.

Ghana: GDP Pegged At 7.4%

Ghana’s economy is expected to grow provisionally at 7.4 percent for the year, the Ghana Statistical Servic (GSS) said. Speaking at a media conference, Dr Philomena Nyarko, Government Statistician, said it is likely government could achieve its target growth in 2013 due to expected increases in oil production.

Dr Nyarko stated that the real quarterly Gross Domestic Product (GDP) growth for the second quarter of the year was 6.1 percent year-on-year. Non-oil GDP was 5.8 per cent while the total value and services amounted to $44.2 billion with a per capita income of $1,667, she said.

Dr Nyarko added that the services remain the largest sector, contributing about half of the GDP. The services sector growth rate however fell to 9.2 per cent from 10.2 per cent in 2012 on the account of positive increases in information and communication activities, real estate, professional, administrative and support service activities. This was followed by the industry sector 2.5 per cent while the agriculture sector showed a negative growth of 3.9 per cent.

Meanwhile, the annual producer price inflation fell for the fifth consecutive month to 4.7 per cent year-on-year in August from 5.0 per cent in July.

Tanzania: Northern Zone invites investors

Tanzania Investment Centre (TIC) has reaffirmed its continued commitment to support local and foreign investors who want to invest in Northern Zone regions and other places in Tanzania. The TIC Executive Director, Ms Juliet Kairuki told journalists during a recent Northern zone Investment Forum that her centre is ready to receive and help all those with interest to invest in the Northern regions of Manyara, Tanga, Kilimanjaro and Arusha.

She noted that the forum has enabled investors, business community and entrepreneurs to learn about the investment opportunities available in the Northern Zone and the government’s role in initiating investment projects. She said that during the past 12 years, Tanzania has performed well in attracting huge investment projects in agriculture, tourism, industries, communication, infrastructure and transport. Within that period, a number of those projects have risen from 178 to 869 in 2012; 53 per cent of these projects are wholly owned by Tanzanians. The projects have contributed on the increase of capital from 874 million US dollars up to 12 billion dollars within that period.

The two-day forum that was opened by Premier Mizengo Pinda attracted over 1,500 international and local investors plus officials from the government, private sector, religious leaders, ambassadors and high commissioners and other development stakeholders.

Ethiopia: Premier called Western companies to invest

PM Hailemariam Desalegn has called upon western companies to take part in the positive investment regime in Ethiopia. Noting that investors from Africa, Asia, and the Middle East have already established themselves, the PM urged representatives of American businesses he met in New York to consider investing in Ethiopia’s untapped investment potential.

Prime Minister Hailemariam has also explained Ethiopia’s investment policies, regulations and incentive; and responded to questions raised by the attendees of the event regarding ICT, banking services and privatization of state owned public enterprises. In a study presented in Prime Minister Hailemariam’s meeting with representatives of American businesses, manufacturing, mining, construction, hotel and tourism, and healthcare were identified as areas of engagement promising to the American businesses.

Routinely praised for its pro-poor development policies, Ethiopia has been one of the fastest growing economies in the world for the past ten years. And although the share of Foreign Direct Investment to as a share of the GDP growth has not been satisfactory, recent trends have shown a significant hike in the amount of annual foreign direct investments. The government’s focus on attracting FDI as a means of stocking up capital and technology transfer has paid off dramatically. FDI stood at 300 million USD in 2010, and three years on it has now reached at an incredible 1 billion USD, making Ethiopia the second biggest destination for FDI in Africa, next to South Africa.

Among the countries of origin in Ethiopia’s inflow of foreign investment, emerging economies and other countries from Africa, Asia and the Middle East hold the lion’s share. And western companies are expected to enter Ethiopia and invest in the numerous possibilities shortly.

Mozambique: Government open to French investment

Mozambican President Armando Guebuza declared in Paris on that Mozambique is open to new French initiatives in various spheres of cooperation, particularly in economic matters, and in security in the Mozambique Channel.

Briefing the Mozambican journalists accompanying the visit, Deputy Foreign Minister Henrique Banze, said it had been agreed at the meetings to deepen cooperation between Mozambique and France in various spheres. ‘This is a very fruitful and promising visit’, said Banze. ‘Our President has shown openness and the two sides have agreed that cooperation should be deepened. The assessment is that relations are good, but there is space to expand them’.

During his meeting with the business representatives, Guebuza praised the work of some of the French companies already operating in Mozambique, said Banze. He also noted that others want to enter the Mozambican market, including Air France. Should Air France decide to re-open the Maputo-Paris route, this will give travellers to Europe a convenient alternative to the current routes (via Lisbon, Johannesburg, Nairobi or Addis Ababa).

Ghana to net-export power in four years

The President of the republic of Ghana, John Dramani Mahama has revealed that, Ghana will become a net-exporter of power within the next four years given the pragmatic and practical measures the government is putting in place to solve the energy crisis in the country. The President assured the Independent Power Producers, willing to invest in the energy sector of his unflinching government commitment to create an enabling environment for their business to flow efficiently, which would help mitigate the current energy crisis the country is facing.

The President made these remarks at a town hall meeting hosted for him at his hotel in New York City, to interact with Ghanaians across the United States. Speaking on the current state of the various sectors of the Ghanaian economy President Mahama noted that, the Ghanaian economy is moving at a faster pace, hence the government is targeting 8 percent growth rate per year. And expressed hope and optimism that, “Ghana will progress to a middle income status in the next eight years.” Touching on the transport sector, he disclosed that, “95 percent of our transports are dominated by the road sector, and there is the need for the government to revamp the rail sector, which adds to the GDP of any country.” He noted that the government has taken over the Tema Shipyard from the Malaysian investors, with the intention to revamp and re-invigorate it, so that all the ships in West African will use it to dry-dock in Ghana.

He also expressed government commitment to revamp Tema Oil Refinery to enable Ghana’s crude oil be refined right within the Ghanaian shores which will create more jobs for the unemployed youth.

Angola: To lead investment attraction in SADC

Angola is in a privileged position as compared with the other countries of the Southern Africa Development Community (SADC) regarding attraction of Foreign Direct Investments (FDI), as it combines its economic potential with political stability.

This was said Tuesday, 1st of October, in Luanda by the economist Fiel Constantino.

Speaking to Angop, Fiel Constantino, who was speaking about the country’s FDI, said Angola’s political stability places the Democratic Republic of Congo in a second position, despite the neighbouring country’s huge economic potential. As to the continent’s strongest economy, South Africa, with an also stronger political stability and recognised established democracy, the specialist said it has not an economy as great as the above mentioned countries, as it is nearing exhaustion and more and more becoming an FDI emission economy.

Nigeria: Irish firms to invest in Nigeria

Various Irish companies would soon invest in Nigeria, Irish High Commissioner to Nigeria, Mr. Patrick Fay has said. Fay, who disclosed this during a recent launch of a premium product – the Irish Mayor – in Abuja, said efforts are being made to boost commerce between Nigeria and Ireland. He stressed that, as part of efforts to enhance the economic ties between both countries, the Irish Minister for Trade and Development would, in November 2013, lead a trade delegation to Nigeria.

He said: “We are trying to develop the link and make it stronger. To do that, we are working closely with the Nigerian Ambassador in Dublin and the Department of Foreign Affairs to work together to develop our trade.”

Africa: India wants early trade pact with African nations

India has pitched for early conclusion of the preferential trade pact with African nations, which is expected to help enhance business ties between India and minerals rich countries of the continent. Commerce and industry minister Anand Sharma urged his South African counterpart Rob Davies to expedite the much delayed India-SACU preferential trade pact that will reduce tariffs on several key products. Sharma is in Johannesburg for the third Indo-Africa Trade ministers meet. The Southern African Customs Union (SACU) consists of Botswana, Lesotho, Namibia, South Africa and Swaziland.

India has been waiting for the response from the African side on its proposal of an average margin of preference of 70%. This means imports from SACU will be subject to a tariff 70% lower than the most favoured nation rate.

The bilateral trade target of $100 billion by 2015 and $200 billion by 2020 is a modest one and is certainly achievable, Sharma said. Air connectivity and visa related issues were the two other concerns raised at the second India-Africa Business Council ( IABC) meet here, co-chaired by Bharti group chairman Sunil Mittal. Indian business chamber FICCI is the institutional partner of the council.

Sharma assured that the air connectivity issue has been taken up at the highest level and that Air India will resume its flights to Africa from 2014 onwards.

South Africa: Debt could grow to 63% of GDP by 2020

South Africa should set a debt target to improve the credibility of its fiscal policy as slower economic growth makes it difficult to keep the budget deficit under control, the International Monetary Fund said.

Government debt may stabilise at about 47% of gross domestic product in five years, with a 10% chance that the ratio can reach 63% by 2020, the Washington-based lender said in its annual Article IV country report, published on its website today.

Determining an appropriate debt benchmark remains highly controversial,” the IMF said. “Given South Africa’s outlook, the magnitude of macroeconomic and fiscal shocks, and cross- country comparisons, reducing the debt-to-GDP ratio to around 40 percent by 2020 would allow the country to rebuild adequate fiscal space.”

Falling tax revenues and spending pressures contributed to a widening in the budget deficit to 5.1 percent of GDP in the year through March, prompting the government to increase borrowing. Finance Minister Pravin Gordhan forecast gross debt will reach 45 percent of GDP in the year through March 2016 from an estimated 42 percent last year.

While the state’s agreement to limit wage increases for the next three years to 1 percent and to set explicit expenditure ceilings were positive, “the government’s poor record in controlling the wage bill and potential spillovers from high wage demands in other sectors represent downside risks,” according to the report.

Angola: Huila invests AKZ 950 Million

The government of southern Huila province will invest in 2014 roughly AKZ 950 Million Kwanza (about 10$ million) for construction of cultural and religious infrastructure in the municipalities of Lubango, Chicomba, Chibia and Caluquembe. The information is part of a report from Huila government that reached Angop on Thursday, 3rd of October, which says that the construction of this infrastructure is part of the Public Investment Programme.

The report adds that 60 million Kwanzas will be spent on rehabilitation of the head Office of Evangelic Church Sinodal of Angola (IESA) in Lubango and the construction Catholic Church in Kola, Caluquembe Municipality. It is also part of the Public Investment Programme for 2014, the construction of regional museum of Huila/Lubango), house of Culture, as well as the rehabilitation of boarding school from catholic church in Chicomba.

Nigeria: FG, World Bank Micro Projects gulp N28.7 Billion

The federal government has revealed that it has spent over N28.72 billion in the execution of micro-projects, under a joint partnership programme with the World Bank and twenty six state governments in the country. The National Coordinator of the Federal Support Unit, an arm of the Presidency supervising the implementation of the scheme, Mr. Chidi Onuoha, while giving a recent update on the performance of the development initiative in Abuja, said about 5,464 community-driven projects have been completed since the inception of the programme in 2009.

He listed some of the benefiting states to include, Kogi, Benue, Imo, Abia, Ebonyi, Enugu, Cross River, Akwa Ibom, Edo, Bauchi Adamawa, Ekiti, Kwara and Ondo. Onuoha said the projects were executed based on eight sectoral interventions, including education, water supply, transport, health, rural electrification, socio-economic, gender and vulnerability, and environment.

According to Onuoha, the micro project initiative had received a start-off fund of $200 million from the World Bank, and it has since committed 98 per cent of the amount as part of the Bank’s counterpart funding of the various community development projects in the participating 26 states. Also as at June this year, contribution from the 26 states is N5.8 billion out of the expected N13 billion counterpart funding obligation.

Ghana: To rank first with highest yield on Treasury bills

Investors looking for higher return on their investment could turn to Ghana’s securities market. This is because the country has been ranked number one with the highest yield on its 91-day and 182-day Treasury bills among 12 countries surveyed.

Out of the 12 countries surveyed by Ecobank Research, Ghana recorded an interest rate of 21 and 21.34 percent respectively on its fixed income securities. Malawi and The Gambia followed suit with interest rates of 14.92 and 20.17 percent and 14.76 and 16 respectively on their 91-day and 182-day Treasury bills. Sierra Leone and South Africa recorded the least rates of 3.36 and 7.05 and 5.05 and 5.31 percent respectively on their 91-day and 182-day Treasury bill rates.

Meanwhile, the Bank of Ghana is expected to issue a new 7-year bond next month. This underlines the Central Bank’s aim of extending the yield curve to develop the bond market.

Interest rates remain high particularly at the short end of the yield curve, at around 22 percent for the weekly Treasury bills.

Ghana: Digicraft to explore new markets

Digicraft, an indigenous advertising and marketing communications company, has expressed its commitment to explore new markets beyond the boundaries of Ghana. According to the founder and Chief Executive Officer of the company, Mr Kwaku T. Danso-Misa, the move forms part of the company’s resolve to face new challenges and to increase its profitability.

‘We are willing and ready to take up the challenges of this new age, one that defines competition in a global setting and not just a local one. In moving forward, we will spread our wings wider and totally consolidate our gains or equity we have as a brand’, he said.

Mr Danso-Misa admitted to the competition within the industry but noted that the company only saw competition as one ‘for space in people’s minds. It is about creating something that is memorable, sustainable, coherent, flexible and ultimately adds value and we are ready for that at all times’.

On his part, the General Manager, Mr Kwasi Danso-Misa, attributed the company’s growth since its inception to hard work, dedication and teamwork. ‘Our strategy has always been aligned with the thinking of their client and their consumers. In effect, it explains simplicity and effectiveness in communication, as well as quick turnaround time is what separates Digicraft from the rest,’ he said.

Botswana: London-based De Beers Operation moved to Botswana

World’s biggest Diamond miner, De Beers, will move its entire $6 billion-a-year “sales operation” from London to the Botswana capital of Gaberone. The global newswire reported that this meant that 85 workers out of 300 staffers based in London would be moved to the country with a 230 000-strong population. The decision, taken almost three years ago, cost the company over $120 million, which included the construction of flashy offices in Gaborone.

This comes after many years of talks between the government of Botswana and De Beers, which is owned by the mining giant Anglo American.

The Southern African country of Botswana is the biggest producer of gem diamonds and it is where the world’s richest mines are located including the famous Jwaneng. It is believed that the move to Botswana will put to trial Botswana’s capability to advance people expertise and reduce jobless rate in the country. Unemployment rate stands at about 18 percent in Botswana.

Africa: Godrej to expand business In Africa with more acquisitions

Indian-based international conglomerate, Godrej Consumer Product Ltd (GCPL) has announced that it is in discussions to take over more businesses in Africa as part of its expansion plan on the continent. Godrej which already has manufacturing plants in four African countries including Nigeria, South Africa, Kenya and Mozambique wants to expand its manufacturing footprint to Tanzania and Uganda. GPCL Chairman, Adi Godrej confirmed this move saying the firm is in talk with some local firms in the country.

GPCL is betting on the African continent to drive its international sales via acquisition.

Africa accounts for majority of GPCL international revenue. In the year ended June 30, its revenue from Africa stands at R214 Crore. As at 2012, Godrej said the group is growing at 25-30 percent rate in Africa with an investment worth over $3.3 billion.

With presence across 14 African countries, Godrej has over 10,000 employees on the continent.

Ghana: BoG predicts 6% inflation in March 2014

The Bank of Ghana is projecting inflation within the band of 6 and 10 percent by the end of March next year. It has already projected 11.5 percent end year inflation while government is targeting between 7 and 11 percent rate. The Central Bank’s latest forecast is based on the exchange rate, energy prices, crude oil assumptions and the fiscal policy stance.

Inflation dropped for the first time this year to record a rate of 11.5 percent in August. The relative stability of the Ghana Cedi to the US Dollar appeared to have impacted on the decline of the price levels. This is because the non food inflation went down from 15.4 percent in July to 14.2 percent in August. However, the food inflation went up despite the beginning of the food harvest season. The monthly change for August was -0.7 percent.

Nigeria: World Bank approves $300m mortgage facility

The World Bank has approved a $300 million International Development Assistance (IDA) credit facility for Nigeria to aid low-income citizens own homes, through affordable mortgages. The World Bank, which disclosed this at its Abuja office, said the project would support the establishment of a mortgage liquidity scheme that will generate long-term funds for borrowers who fall in the middle and lower class categories in the country, guardian reported.

This project will directly benefit new home owners who struggle to find available cash to purchase long-term mortgage” said World Bank’s task team leader Michael Wong, adding that the project was expected to also create jobs in construction, designs, finance and other sectors throughout the country. Adding to this was Marie Francoise Nelly, World Bank’s Country Director for Nigeria who said; “The Nigerian financial system has quickly grown and is becoming increasingly integrated into a global financial system.

The coordinating Minister and Minister of Finance of the federation, Dr Ngozi Okonjo-Iweala had in April revealed that the Global body had agreed to assist Nigeria reintroduce mortgages and was ready to lend the Giant of Africa up to $300 million to realise the goal.

Kenya: To diversity exports to Egypt

The Exports Promotion Council (EPC) now plans to diversify the country’s exports to Egypt in order to increase trade and investment in both countries. Exports Promotion Council Director Bramwell Simiyu says Egypt is a medium sized economy and there is need to leverage on other opportunities available. Simiyu says tea accounts for 95 percent of exports to Egypt and the council is looking at introducing horticulture, livestock, beverages and services to export to Egypt’s exports.

“With the instability in Egypt in the recent past, unless we are able to diversify the product menu, we stand a risk of losing out on other opportunities that are there,” he said.

Simiyu says currently, Kenya’s imports almost double exports to Egypt, and the council is working to reverse the trade imbalance.

He says the council’s new strategy is to take advantage of the local and regional markets, pointing out the nearer markets are better, and expanding away from the traditional goods to products like human resources as well as sports tourism. He says the entry conditions for the regional market are much more flexible and by focusing on products produced by Small and Medium Enterprises (SMEs) achieving a 20 percent increase in exports every year will be realized.

Nigeria: Foreign investors plan U.S.$16 Billion investment in Delta

The Delta State government has attracted more than 16 billion dollars worth of investment for its export free zone, which is expected to create some 500,000 jobs. The state governor, Dr Emmanuel Uduaghan, said in Warri, Delta State that investors from Saudi Arabia and India are ready to invest in petrochemical and fertiliser plants. He also said that the Koko Export Free Zone had been approved by the Federal Government and the issue of approval for Warri Export Free Zone was still being pursued.

He said that it was the nature of Koko as an export free zone that attracted the investors since the Federal Government/NNPC Master plan approved three states, namely, Rivers State, Delta State and Akwa Ibom State for such projects.

The governor said that the Delta State government has done much in Koko by ensuring the approval of its status as an export free zone, ensuring peace and following closely the gas master plan. He said that already, the state government has prepared grounds for the free zone by putting in place the Asaba Airport, which would assist investors to fly their equipment into the state.

Uduaghan said that the strategic location of Koko also would assist cargo shipping through the Benin River. Uduaghan said that the Federal Government would tackle the dredging of the Benin River to allow bigger vessels to get to Koko, adding, “‘transport infrastructure is very critical”.

Kenya: Unilever plans Sh17 Billion investment

Unilever, the Anglo-Dutch manufacturer, plans to invest €150 million (Sh17.6 billion) in a new manufacturing plant in Kenya, global chief executive officer Paul Polman has said. Polman told President Uhuru Kenyatta at State House Nairobi that the planned investment will cater for the company’s expanding interests in the greater eastern African region, including in Ethiopia and Tanzania. The investment will also result in skill and technology transfer opportunities, as well as creating hundreds of jobs for Kenyans, he added.

The CEO said the company also planned to expand its existing factories in the lush hill-top farmlands of Kericho, to increase the amount of teas processed there to 50,000 tonnes per year from the current 30,000 tonnes. Unilever was also working with researchers on how to raise tea yield on Kenyan farms by up to 40 percent.

Related articles
  • GIPC investment drive gets results (cliffordagyemang.wordpress.com)
  • Ethiopian Government and Reykjavik Geothermal Announce 1,000 MW Geothermal Power Agreement (virtual-strategy.com)
  • Reykjavik signs agreement with Ethiopia to build 1GW geothermal project (geothermal.energy-business-review.com)
  • 1,000 Megawatts in Ethiopia over Next 10 Years (grapheners.com)
  • Djibouti has geothermal EOIs out; KenGen, USEA, UNEP seek candidates for positions in African geothermal development (geoenergist.wordpress.com)
  • Bill McKibben nightmare: Africa fossil fueling-up as Kenya to build 1,000 MW coal plant, 800 MW gas plant (junkscience.com)
  • Iceland to Help Develop Geothermal Energy in Ethiopia (dailyfusion.net)
  • Reykjavik Geothermal to develop 1GW power projects in Ethiopia (cleantechnology-business-review.com)
  • New Zealand Gets World’s Biggest Geothermal Plant (sustainablebusiness.com)
  • Nigeria signs agreement for Zungeru hydro plant development (hydro.energy-business-review.com)

Investment news: Ophir Energy, Tesco, Sainsbury, Dunelm & more

02 Wednesday Oct 2013

Posted by theinvesmentman in Africa, Andor Technology, banks, BG Group, Business, china, China Resources Enterprise, Get rich quick, Ghana, investment, KeyBank, London, Manchester, Ophir Energy, Patron Capital, Sainsbury, Soco International, Tanzania, Tesco, Uncategorized, United States, usa, Wolfson Microelectronics

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Andor Technology, BG Group, Business, China, China Resources Enterprise, KeyBank, London, Manchester, Ophir Energy, Patron Capital, Sainsbury, September, Soco International, Tanzania, Tesco, Wolfson Microelectronics

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

Today’s market overview

Investors are taking the opportunity to bank some recent profits with shares down sharply in London in early trading but The Trader Dominic Picarda remains convinced that we are merely consolidating ahead of a final quarter rally.

IC TIP UPDATES:

Ophir Energy (OPHR) has announced appraisal and flow test results from the Pweza-3 well offshore Tanzania, of which it owns 40 per cent withBG Group (BG.) holding the balance. The well flowed 150m cubic feet of gas a day and the work completed is likely to reduce the number of development wells required on the block, improving its economics. We keep our buy on Ophir.

Development Securities (DSC) confirms that its joint venture with Patron Capital has entered into an agreement to sell the Phones 4u Arena in Manchester although no further details will be released until the deal is completed. Buy.

German property specialist Sirius Real Estate (SRE) says that trading remains bang in line with expectations after demand from its core Small and Medium Enterprise market in Germany remained solid. The company is also making progress on its refinancing and repaying its various loans. We maintain our buy recommendation.

KEY STORIES:

Tesco (TSCO) has announced underwhelming results for the half year to 26 August with underlying pre-tax profits down by 7.4 per cent year on year to £1.47bn. Performance in the UK stabilised with total sales up by 1.7 per cent excluding petrol and like for like food sales up 1 per cent in the second quarter. But a slower expansion programme and changes to the general merchandise offering held back overall performance. Overseas markets were mixed with several European markets proving very tough. Tesco has also announced the formation of a joint venture in China with China Resources Enterprise which will fold Tesco’s 134 Chinese stores into CRE’s 2,986-strong estate. Tesco will also contribute £185m now, a further £80m on completion and another £80m in a year’s time in return for a 20 per cent stake.

In contrast, Sainsbury (SBRY) has continued to take market share in the UK grocery market. In a trading statement today it reported 5 per cent total sales growth in the second quarter with like for like sales up by 2.1 per cent, giving 1.5 per cent like for like sales growth for the whole of the first half. The company opened 31 convenience stores and five supermarkets in the period.

Pawnbroker Albemarle & Bond (ABM) says that talks with largest shareholder EZCORP over underwriting a fundraising to refinance its stretched balance sheet have failed. The company will now have to redouble its efforts to negotiate changes to its covenants with its banks having already agreed a 1 month extension to a 30 September covenant test which it would have failed. A chief restructuring officer will be appointed by 10 October.

Domino’s Pizza (DOM) traded well through the summer months, reporting UK sales up 10.4 per cent in the 13 weeks to 29 September. Year to date like for like sales are up 5.6 per cent in the UK with digital sales now accounting for more than 60 per cent of sales, almost half of which come from mobile phones. Operations in Ireland also performed well, like for like sales are up 5.2 per cent year-to-date, and the smaller German and Swiss businesses also solid like for like sales growth.

Homewares specialist Dunelm (DNLM) surprised the market with a reversal in like for like sales growth as it struggled during the recent warm weather and against strong comparatives. The 13 weeks to 28 September saw like for like sales dip by 5.3 per cent with the first few weeks particularly weak before like for like sales growth resumed on a week by week basis later in the period.

Wolfson Microelectronics (WLF) has said that the cancellation of orders from a major customer coupled with other orders slipping into next year means that revenues for the final quarter will be in the $40m-$50m range.

OTHER COMPANY NEWS:

Soco International (SIA) confirmed the positive performance of its test wells at the TGT-10XST1 exploration well offshore Vietnam, which flowed 27,600 barrels of oil per day.

Andor Technology (AND) expects to results for the year to 30 September in line with expectations. A restructure of its sales operations also appears to be bearing fruit with the company expecting to report record full year order intake, although timing of delivery remains uncertain.

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

02 Wednesday Oct 2013

Posted by theinvesmentman in ACCRA, Africa, African Development Bank, Arab Maghreb Union, Association of African Universities, banks, Business, East Africa, East Asia, Germany, Get rich quick, Ghana, Human capital, IBM, investment, Kenya, Liberia, Makerere, Nairobi, Pan African University, Southern Africa, Tanzania, Tertiary education, Times Higher Education World University Rankings, Uncategorized, United States, US, usa, Vocational education, World Bank

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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.

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Africa Focused News

09 Monday Sep 2013

Posted by theinvesmentman in ACCRA, Africa, Aggreko, Algeria, banks, Beijing, Botswana, Business, Cameroon, china, Dangote, Ethiopia, Eurobond, France, Gabon, Gambia, Germany, Get rich quick, Ghana, Government, IFC, India, International Finance Corporation, investment, japan, Kenya, Liberia, Libya, Mauritius, Morocco, Mozambique, NamPower, Oil, Rwanda, Senegal, Seychelles, South Africa, Sub-Saharan Africa, Tanzania, Tunisia, Turkey, Uncategorized, United Bank for Africa, United Nations Development Programme, United States, US, usa, Vision 2025, Zambia

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REPORT OF LAST WEEK (from 02/09/13 to 06/09/13)

by Dario Galluccio

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

Mozambique: Aggreko completes power expansion project

Temporary power supply solutions company Aggreko has completed the expansion of its gas-fired power plant at Gigawatt Park in Ressano Garcia, Mozambique. The expansion will add an additional 122 MW of capacity to the Ressano Garcia facility, bringing the total generation output from the plant to 232 MW and was formally inaugurated by the Mozambique Minister of Energy, The Honorable Salvador Namburete during a ceremony held, last week, at the project site.

Following the success of the first stage of Ressano Garcia, Aggreko announced in March 2013 that it had signed agreements with both EDM and NamPower, the Namibian power utility, to supply an additional 122 MW from the project.

Immediately, work began to more than double the generating capacity of the plant. As Aggreko designed and built the plant infrastructure to allow for modular increases in capacity, adding the additional power generation was achieved in just 12 weeks.

Tanzania: Government vows to support local investors

The government has pledged to support investment initiatives in the country to boost the country’s economy and well being of people; Deputy Permanent Secretary in the Ministry of Finance Prof. Adolf Mkenda said creating good investment climate would boost the economy.

“The Ministry of Finance understands the challenges facing the cement industry that includes poor infrastructure, competition and imports. We will continue working with other government ministries and agencies to ensure that the cement sector continues to play a pivotal role in economic development,” he said.

He also said the cement sector has for the last five years been growing at an average of nine per cent with its contribution to GDP increasing from 7.7 per cent in 2008 to 8.1 per cent in 2012 “Production grew from 2.4 million tonnes in 2011 to 3.42 million tonnes in 2012. If all the cement produced in the country is sold within in the country without exporting, demand will be met by 75 per cent,” he said.

Africa: Natural resources, oil to underwrite Chinese investment

Africa’s importance to China’s overseas investment agenda could become more significant as Beijing pursues a strategy of securing access to vital natural resources and takes big financial risks to get them. Last year, Chinese companies completed construction contracts worth US$40 billion in Africa, up 45 per cent over 2009, making up 35 per cent of all of China’s overseas contracts.

Zhang Zhiwei, chief China economist at Nomura in Hong Kong, reckons that number could jump as Beijing seeks to secure access to Africa’s oil resources. China became the world’s biggest net oil importer earlier this year, taking the position that had been held by the United States since the 1970s.

Chinese firms have invested billions of US dollars in the oil-rich nations of Angola and Sudan to secure access to oil. That means Beijing’s influence on the continent, relative to the US, is likely to grow. Africa, projected to grow 5 per cent this year, gets 1 per cent of US foreign direct investment.

The continent, home to six of the world’s 10 fastest-growing economies, has been China’s second-largest overseas contract market since 2009. The trend is likely continue, according to vice-minister of commerce, Li Jinzao, who said that China-Africa ties had reached a new historic high and would “enter the fast lane” this year. According to Li there were opportunities for deeper investment ties as African nations sought to upgrade their economic infrastructure.

Tanzania: New Project to view vision 2025 challenges

The Economic and Social Research Foundation (ESRF) and the United Nations Development Programme (UNDP) have launched a new project targeting to highlight the challenges Tanzania faces in realizing Vision 2025 goals. Titled ‘The Tanzania Human Development Report (THDR 2014),’ the project focuses on national perspectives on human development in addressing priority themes, emerging trends, opportunities and challenges the country encounters in reaching the Vision 2025 targets.

Ghana: Turkish trade expo finally in Accra

The fourth Turkish Trade Exhibition dubbed “Ghana Big 5 Show” has opened in Accra to showcase their products to their Ghanaian counterparts and create trade bridge between Ghana and Turkey. Over 40 Turkish companies and Ghanaian company like MBC Trading Company Limited, dealers in construction chemicals and Thetford Company, dealers in water flushing toilet begun a four-day exhibition.

The fair was to develop and broaden trade convergence between the two countries and ensure mutual protection of businesses: moreover the fair would showcase products including Turkish building and construction, Food and Agriculture, Fashion, Cleaning materials, iron and steel, mechanical appliances, electrical machinery and equipment.

Mr Seth Adjei Baah, President of Ghana Chamber of Commerce and Industry said the relationship between the two would boost trade and investment as well as lead to cultural and other exchanges. He said Ghana is a centre of peace and gateway to West Africa and that investing in the country would lead to increase results and assured them of the country’s readiness to collaborate and work with them during the exhibition.

Rwanda: French investors coming

A delegation of French investors will visit Rwanda early this month to assess business and investment opportunities, Chantal Umuraza, the chamber of industries executive director general, has said. She said the companies are interested in agro-processing, architecture, fabrication, IT and aviation sectors.Eusebe Muhikira, the head of trade and manufacturing department at the Rwanda Development Board, noted that Rwanda continues to attract foreign investments because of the business reform agenda started in 2009.

Rwanda is the third-best place to do business in Africa and ranks 52nd out 185 countries globally, according to the recent World Bank report. During the last quarter, the Rwanda Development Board (RDB) registered investments worth $1.2b (about Rwf800b), of these, 22 were foreign investments worth $406.9m and nine were joint ventures worth $338.1m.

Sub-Saharan Africa: Actis injects $278m

Private equity company, Actis, has injected an extra $278 million into “property developments” in Sub-Saharan Africa region. This latest capital injection takes the firm’s entire African capital spending in its funds to approximately $433 million.

Louis Deppe, a director at Actis, believes that there is a lot of activity in the “private equity space” particularly in the region. It is understood that the sub-Saharan Africa region, with the exception of South Africa, has insufficient investment in high profile estates (properties). JSE-listed funds have allegedly shown little attraction to injecting money into the continent. But the advancement of excellent stock by private equity companies is likely to attract bigger attention from the publicly traded sector.

Actis has two real estate development funds and it claims to be the only pan-emerging private equity firm. With $5 billion managed by 105 investment professionals, the company has put in money in 65 companies, employing 101,000 people.The private equity firm has invested $4 billion in emerging markets so far. The company has realised $2.2 billion from its investment since the company was started in 2004.

Ghana: SEC lauds IFC US$1bn domestic bond

Director-General of the Securities and Exchange Commission (SEC) Mr. Adu Anane Antwi says the International Finance Corporation’s (IFC) planned move to raise US$1bn from the domestic market will add to the local bourse’s growing credibility. “Once IFC starts issuing its bonds, then all the other institutions that issue bonds will begin to look at Ghana as a possible market, and that is good for us,” Mr. Anane Antwi said.

The IFC last week was given approval by the Ghana Stock Exchange (GSE) and the Securities and Exchange Commission (SEC) to issue regular cedi-denominated bonds worth up to US$1billion in Ghana’s market. “The consent from the Ghanaian authorities enables us to support deepening of the local capital markets and offer local-currency funding for priority sectors such as infrastructure,” IFC’s Vice President and Treasurer Jingdong Hua said in a statement.

The bonds will be sold to domestic and foreign institutional investors, and proceeds will be used to fund private sector projects in areas such as infrastructure and to increase access to finance for small- and medium-sized enterprises. The bonds are to be issued under the IFC’s Pan-African Domestic Medium-Term Note Programme that was launched last year, a statement from the IFC said.

The International Finance Corporation (IFC) last week successfully raised US$3.5billion from a five-year global bond to be used in lending support to private sector development. The five-year bond, according to the private arm of the World Bank Group, is its largest bond issue to date.

The bond issue generated an order book close to US$5billion and set the pricing benchmark for IFC’s 2014 fiscal year borrowing programme.

The IFC says it plans to raise US$16billion across a range of markets and currencies during its current fiscal year ending June 30, 2014. It also plans to issue debt in Botswana, Kenya, Namibia, Rwanda, South Africa, Uganda and Zambia under the programme.

Ghana: Diversify investment of heritage fund

A petroleum economist has suggested to the government and the Bank of Ghana to diversify the investment of the country’s heritage oil funds to keep some investments locally.

Currently, the country invests funds meant for future generations, known as the Heritage Funds, abroad in ‚ “secured international investment environment.” Mr John Gatsi, who is also a lecturer in Finance at the University of Cape Coast, said although investing abroad could shore up the country’s reserves, the government should have confidence in the local investment fund managers and keep some of the funds locally to improve liquidity and check risk.

Mr Gatsi lauded the country’s Petroleum Revenue Management law which, he said, laid out clear guidelines on spending, investing and transparent accounting for the proceeds the country got from its petroleum resources. He also praised the accountability clauses in the law and its reporting in the Budget Statement and Economic Policy of government, adding that while the Stabilisation and Heritage funds were a good creation in the law, the best form of protecting the future was in investing heavily in social and economic infrastructure.

On local content, the economic analyst said it was important for the government to leverage the policy and first equip small and medium scale enterprises to take advantage of it.

South Africa: Bank of China and Nedbank partner to boost trade

One of China’s big four state-owned lenders, Bank of China (BoC) and South Africa’s fourth biggest lender, Nedbank Group, have partnered to lift business between the two countries. The partnership will assist BoC clients that want to inject money in South Africa and the rest of the continent.

The alliance will include currency exchange between the two banks. It will also provide more backing services to Chinese firms with businesses in Africa through the banks’ networks. There will also be an increased collaboration when it comes to injecting capital in infrastructure projects in southern Africa.

Ghana: Finance Minister Says Plan to Halve Deficit Succeeding

Ghana’s plan to trim its budget deficit by half over three years by containing public-sector pay increases and raising taxes is showing initial signs of success, Finance Minister Seth Terkper said. The government is on track to achieve its deficit-reduction target of 9 percent of gross domestic production this year from 12.1 percent in 2012 when spending rose in the run-up to elections.

As the economy grows faster than the sub-Saharan African average [expansion in West Africa’s second-largest economy is forecast at 6.9 percent this year versus 4.8 percent for the continent south of Sahara] and the government “moderates” salary increases for public servants, the fiscal gap is forecast to narrow to 5 percent and 6 percent of GDP by 2015, he said.

The world’s second-largest cocoa exporter and an oil-producing nation since 2010 is implementing austerity measures including the reduction of fuel and utility subsidies, combined with higher revenue by adding at least four new taxes. The state wants to lower the wage bill to between 30 percent and 35 percent of tax income by 2015 from 72 percent last year.

India-Africa ties energised with oil and other products

India and Africa are coming closer to each other faster than most realize. In the last few years India has diversified its energy procurement to African countries. In 2005, India did not import any oil from African countries. Just eight years later, more than 20 per cent of India’s oil and gas imports are from Africa. While much is being traded, India has also begun investing in the energy sector in Africa.

State-run Oil and Natural Gas Corporation (ONGC) has just acquired a 10 per cent stake in an offshore gas field of Anadarko Petroleum Corp in Mozambique for $2.64 billion.It’s not just Mozambique. India has increased its purchase of oil and gas from a range of African countries. The biggest sellers of petroleum products to India from the continent are Nigeria, South Africa, Angola, Egypt, Algeria and Morocco.

Within Africa also, India’s overall economic relationship is changing. In 2001 Southern Africa accounted for nearly 60 per cent of exports to India while West Africa accounted for just above 16 per cent. Now West Africa is the largest supplier with a share of 40 per cent, while the share of Southern Africa is 24 per cent.

A recent report by Confederation of Indian Industry has an interesting nugget. Investment from Africa to India is growing. “Morocco and South Africa are the next largest investors in India with investments worth US$137 million and US$112 million, respectively.While the figures may not appear high, this is a beginning of an important development. The growing economic interdependence of India and African countries will add confidence to their dealings with the rest of the world.

Ghana: Will take advantage of Japan’s $32b for Africa

The Minister of Energy and Petroleum, Emmanuel Armah Kofi-Buah, has disclosed Ghana’s willingness to take advantage of the Japanese government’s proposed $32billion intended to support developing economies in Africa in areas of infrastructure development and energy to improve living standards in the region.Hon Kofi-Buah who made the disclosure during a courtesy call on him by delegation from Sojitz Corporation, a Japanese company undertaking the $125 million seawater desalination project in Nungua, Accra to discuss progress of the project and other investments opportunities in the Energy sector, noted that Ghana’s excellent relationship with Japan could be further strengthened with increase investments.

The Teshie project, which will begin commercial operations in 2014, is expected to supply 60,000 m3 of drinking water to about 600,000 people in Teshie and surrounding communities. The desalinated water will be sold to Ghana Water Company Limited (GWCL) under a long term water sales contract of 25 years to ensure stable provision of drinking water on a long-term basis in the capital. The project is the first desalination project in sub-Saharan Africa, and also the first investment by a Japanese corporation in Africa.

Ghana: To consolidate its middle-income status with bonds

Ghana’s Finance Minister Seth Terkper says it is prudent to finance the capital component of the national budget with long-term bonds as the country consolidates its middle-income status. According to the Finance Minister, it is important for the country to develop its local capital market more especially to mobilize funds to finance the infrastructural gaps which constrains the development efforts of Ghana.

According to the African Development Bank‘s Financial Markets Initiative, Africa as a whole requires about $20 billion in infrastructure investment per year which can only be sustainably financed through long-term bonds. In Ghana alone, Mr Terkper says “our estimation is that the required financing gap is about $1.2 billion a year”.

Mr Terkper argues that a well-developed local bond market is critical in Government’s ability to mobilize the necessary funds to support capital expenditures. He added that such markets are necessary for enhanced financial stability and better integration in the global financial landscape.

Liberia: German investment encouraged

Highlighting Liberia’s numerous challenges rating from youth unemployment to lack of capacity and infrastructure amid vast natural resources, President Ellen Johnson Sirleaf has told newly accredited German Ambassador to Liberia, Mr. Ralph Timmermann that the country encourages German Private Sector to take a more active role as Liberia aims to manage its own resources efficiently. The Liberian Chief Executive said government’s aim was to grow the private sector to be able to manage the country’s resources efficiently to enable government support its own endowment and development agenda.

In a interview with journalists at the Foreign Ministry, Ambassador Timmermann said Liberia has many opportunities for German companies, especially where Liberia is a country rich in natural resources couple with infrastructure that has to be built.

Africa: Global Competitiveness Index – Mauritius the most competitive economy

Mauritius moved up nine places this year out-pacing South Africa in the Global Competitiveness Report 2013-2014, as the most competitive economy in Africa. The country benefits from relatively strong and transparent public institutions with clear property rights, strong judicial independence, and an efficient government. Financial markets also deepened based on the improved access to different modes of financing and financial services.

Mauritius which ranked 45th globally is followed by South Africa (53rd), Rwanda (66th), Botswana (74th) and Morocco (77th) – as the most competitive economy in Africa. Seychelles, Tunisia, Zambia, Kenya, Algeria, Libya, Gabon, Senegal, Ghana, Cameroon and Gambia ranks 80, 83, 93,96,100,108, 112, 113,114,115 and 116th positions respectively.

Although the report indicated that great efforts need to be made to improve Africa’s competitiveness, it says Sub-Saharan Africa continues its impressive growth rate of close to 5 percent in 2012, providing something of a silver lining in an otherwise uncertain global economy.

Ghana: Bank of Ghana rejects cedi pessimism

The Bank of Ghana (BoG) says it has substantial buffers to defend the cedi and “completely disagrees” with a forecast that the currency will depreciate by a further 10 percent against the dollar by year-end.

Reacting to the grim forecast, which was made by French bank Societe Generale SA on August 20, the BoG’s Head of Treasury, Adams Nyinaku, said the Central Bank expects to accumulate US$6billion of foreign exchange reserves by year-end, which will maintain the cedi’s stability. “Through the Eurobond, we increased the reserves to US$5.8billion; and later this month Cocobod will bring in US$1.2billion through its syndicated loan. These inflows will make up for the decline in commodity prices,” Mr. Nyinaku told the B&FT in an interview.

Nigeria: Dangote gets $3.3bn loan from 12 banks to build refinery

Nigeria’s diversified industrial giant, Dangote Industries, said it has won a $3.3 billion “term loan facility” from 12 local and global lenders to build Nigeria’s biggest Petroleum Oil Refinery & Petrochemical/Fertilizer Plants. According to Dangote, the factories will create about 9500 direct and 25 000 indirect posts.

These plants will cut the existing volumes of refined fuel that are imported by about half.

In total, the projects will cost $9 billion, comprising $3 billion equity and a $6billiion loan.

The $3.3 billion deal struck with the banks is the initial consignment of loans made available to Dangote. It is a “term loan facility” backed by a group of 12 local and global lenders.

The first loan facility was co-ordinated jointly by Standard Chartered, the global co-ordinator, and Nigeria’s Guaranty Trust Bank, the local co-ordinator.

The 2.8 million tonnes of urea that will be made at these factories will be directed into developing the Nigerian agriculture sector. The petrochemical plant will make polypropylene which is a usual element of many plastic and fabric products. Aliko Dangote, the president of Dangote Group, said these factories would showcase Africa as maker of refined oil products and fertiliser.

Ghana: Borrowing reduced to 25 years

Ghana cannot borrow long term funds which are more than 25 years. This is because of the country’s middle income status since 2009. Ghana’s economic growth of about 8.7 percent in 2008 culminated in the country’s middle income status. Prior to that, the country was borrowing long term funds of up to 40 years from the World Bank and other institutions. Finance Minister, Seth Tekper, said the country will no longer borrow short term funds for capital projects of five years or more. He reiterated that government will be returning to the international bond market to raise long term funds to finance capital projects.

Meanwhile, 16.5 million dollars of the 750 million dollar Eurobond listed on the Ghana Stock Exchange is held by local investors. Mr. Tekper said “the need to develop the capital market in Ghana cannot be overemphasized. More especially, the wide infrastructural gaps which constraints our developments efforts as a country can only be closed when we tap into long-term financing options such as the capital markets, both domestic and foreign.”

Ghana: Government sure of investments

The government has expressed confidence that economic activities and investment will soar in the country with the resolution of the election petition.

A deputy minister of Information and Media Relations,Mr Ibrahim Murtala Muhammed, said the election petition resulted in uncertainty as many investors were holding on to their investment. He was optimistic that the confidence of investors would be boosted in the economy after the Supreme Court had upheld the validity of President John Dramani Mahama’s election in the 2012 presidential polls.

The deputy minister also said with the completion of the election petition, the government had now focused on implementing its programmes and policies. The programmes would be geared towards creating jobs and improving the country’s socio- economic development.

Africa: IFC investment in Sub-Saharan Africa hits $5.3 billion

International Finance Corporation (IFC), a member of the World Bank Group , says its investments in sub-Saharan Africa has hit a record $5.3 billion. This was acknowledged in its year ending financials, which showed it carried out advisory services projects worth $65 million in Sub-Saharan Africa and committed funds towards supporting the upgrades of infrastructure, health and agribusiness. According to an official statement, the investment body offered $3.5 billion from its own account, while it spearheaded the mobilization of $1.8 billion from other investors.

“This has been a record year for us,” said IFC director for eastern and southern Africa Oumar Seydi.

The Washington-based institution believes such financial offerings will further enhance the development of vital sectors key to the growth of several economies across Africa. IFC strategically focuses its investment in areas where it makes the most difference, and as such turned its attention to Africa by investing in developmental projects to stimulate economic growth in nations mostly plagued with poor living standards.

Kenya: IFC has invested 39 Billion in Kenya

The International Finance Corporation invested more than Sh39.6 billion ($456m) in Kenya in the year to June 2013.

IFC, the private development lending arm of the World Bank, put its money in energy projects, infrastructure and in the financial markets where it has partnered with 18 Kenyan banks to offer financial support to small and medium enterprises. IFC loaned Sh3.9 billion to Kenya Power to expand its network to reach over half a million new households by 2014. It has also invested in Gulf Power, Lamu Wind and made an equity investment in AAR to help it upscale operations in Kenya, Uganda and Tanzania.

Ethiopia: Turkey to set up an industrial zone in Addis Ababa

Turkey is preparing to create a Turkish industrial zone in Ethiopia’s capital, Addis Ababa, as part of its African policy which started in 2005 and has been showing marked development of its business assets. Turkish Foreign Minister Ahmet Davutoglu said that the Ethiopian prime minister had proposed the assignment of some land to establish a Turkish industrial zone in Addis Ababa, and that Turkey hopes to implement this plan.

Commenting on the new diplomatic steps, Davutoglu stated that Turkey has come a long way in the last ten years. Davutoglu explained that a Turkish firm invested $50 million in Ethiopia in 2005 while there are now 341 Turkish companies with a total investment of $3 billion in the country.

The Turkish foreign minister also mentioned the results of the Turkish government’s public diplomacy in Africa. “The amount of Turkish aid to the African continent, particularly to Somalia, has reached $750 million. If we hadn’t spent billions of dollars in public diplomacy and activity, we wouldn’t have the positive image and perception that we got from our humanitarian aid in Somalia,” Davutoglu said, reiterating that Turkey is reaping the rewards of its humanitarian foreign policy.

In the African continent, there are 30 offices of the Turkish Cooperation and Development Agency (TİKA) and 25 trade offices of the under secretariat for Foreign Trade, aiming to strengthen economic and bilateral relations between the two countries. The number of Turkish ambassadors in Africa has risen to 34 from 12 in 2005. Turkey has a Free Trade Agreement (FTA) with four African countries, as well as agreements to prevent double taxation and support mutual investments, and Turkey has also established a business council with 17 African countries.

Kenya: Eurobond advisors to be known in two weeks

The lead transaction advisors for the country’s first Eurobond will be known within the next one or two weeks. Cabinet Secretary Henry Rotich said once the advisors have been picked, it will take another two months to prepare all the document terms before the roadshows to market the issue kicks off.

Rotich said it has not been decided how much will be issued but it will be between Sh87 billion ($1 billion) and Sh174 billion ($2 billion).

The government is banking on the peaceful election early this year and favourable credit rating to issue the international bond for infrastructure projects.

Ghana: Consumers saved from possible fuel increase

Consumers of petroleum products have been saved from paying extra cost on fuel as government in the most recent price review has absorbed an increase in the product. This is the second time in the row that government is taking up the increased cost since the last increment at the beginning of August. These subsidies, however worsens government’s indebtedness to the Bulk Oil Distribution Companies, an impasse yet unresolved.

The National Petroleum Authority (NPA) in its most recent price review for the first half of this month, maintained prices of all petroleum products except industrial kerosene which increased marginally by 1.6%.

Petrol is being subsidised at 3% and Diesel less than 1%. Domestic kerosene continues to be the most highly subsidised, with government taking up to 42% of the cost. This was followed by Premix which is subsidised up to 19%.

Nigeria: UBA to invest $2 Billion in Africa’s power projects

CEO of United Bank for Africa (UBA), Phillips Oduoza, has revealed that the bank plans to invest an additional $2 billion into power projects across the continent over the next three years, aside the $700 million it has invested in Nigeria’s power sector this year. Of the proposed $2 billion, Oduoza said UBA will earmark about $1.2 billion to help Nigeria put an end to its chronic power shortages.

State-owned Power Holding Company of Nigeria has been broken up into 11 generation companies and six distribution companies, all being sold separately to private consortia, for about $2.5 billion.

Since Nigeria embarked on its power transformation projects, banks in the country have contributed over 70 percent (about N280 billion) of the money needed by investors for the 14 successor companies to the Power Holding Company of Nigeria. According to reports, about N400 billion ($2.4 billion) was realised by the Federal Government (FG) in the power sector privatisation project.

Nigeria: Arik operations inject U.S.$10 Billion annually into economy

Lloyds, world’s renowned insurance organisation, has said Arik Air realises about $10 billion annually from its operations for Nigeria’s economy

Arik last year engaged the services of Lloyds to assess its assets and also audit its transactions to know the expanse of its business and its worth. Lloyd in its report said with a fleet of 24 new generation aircraft, 43,000 flights per annum, airlifting over 2.4 million passengers in all its destinations in 2012, the airline injects $10 billion. The report stated the amount was inclusive of banking services and charges; the money expended on fuel, food and other supplies, aeronautical and non-aeronautical services; payment of salaries to over 2,800 employees, bills on hotel services, expenditure on training of indigenous pilots, engineers, cabin crew and other services.

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SMEs AS AN ENGINE OF SOCIAL AND ECONOMIC DEVELOPMENT IN AFRICA

27 Tuesday Aug 2013

Posted by theinvesmentman in ACCRA, Africa, banks, Business, Economic growth, GDP, Get rich quick, Ghana, Gross domestic product, investment, Small and Medium Enterprises, SME, Tanzania, Uncategorized

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Reflex Eco Group – Africa news

by Charles Yeboah Frimpong (Ghanaian Financial Analyst)

SMEs (Small and Medium-sized Enterprises) are very important to the growth of any nation. It is no surprise that developed countries enjoying a growing and booming economy attribute most of their achievements to a flourishing SMEs sector.
Empirical studies have shown that SMEs contribute over 55 percent of gross domestic product (GDP) and over 65 percent of total employment in high-income countries.
In the developed economies, small businesses are recognized as the main engines for growth and development because of their significant contributions to economic growth and prosperity.
The potential of SMEs to promote domestic-led growth in new and existing industries and to strengthen the resilience of the economy in a competitive and challenging environment is inarguable. According to the Department of statistics of Malaysia, the economic growth in developed countries such as Korea, Japan, Taiwan and many others, was significantly generated by SME activities. The percentage contribution of SMEs to Gross Domestic Product (GDP)/total value added ranges from 60 percent in China, 57 percent in Germany, 55.3 percent in Japan and 50 percent in Korea, compared to 47.3 percent attained by Malaysia. The SME growth is assessed by SME contribution to the three (3) main sectors of the economy; manufacturing, services and agriculture.

This shows that small and medium enterprises (SMEs) have been the backbone of economic growth and driving industrial development. Due to their sheer numbers, size and nature of operations, the role of SMEs in promoting endogenous sources of growth and strengthening the infrastructure for accelerated economic expansion and development has been recognized.

Small and medium-sized enterprises (SMEs) are increasingly being recognized as productive drivers of economic growth and development for African countries. For example, it is estimated that SMEs account for 70 percent of Ghana’s gross domestic product (GDP) and 92 percent of its businesses. They also make up 91 percent of formalized businesses in South Africa and 70 percent of the manufacturing sector in Nigeria. SMEs not only contribute significantly to the economy but can also serve as an impetus for economic diversification through their development of new and unsaturated sectors of the economy. In addition, innovative and technology-based SMEs can provide an interesting platform for expanding outside of domestic borders, and entering intra-regional and international markets.

In many African countries SMEs account for about 50% of job creation. In Tanzania for example, it is estimated that more than a third of the GDP originates from the SME sector. In South Africa on the other hand, it is estimated that 91 percent of the formal business entitles are MSMEs, contributing between 52 and 57 percent to GDP and providing about 61 percent to employment.

A study conducted by the University of Ghana in the past estimates that small enterprises in Ghana provide about 85 percent of manufacturing employment and also further states that SMEs are believed to contribute about 70 percent to Ghana’s GDP and account for about 92 percent of businesses in Ghana.

Small businesses contribute to local economies by bringing growth and innovation to the community in which the businesses are established. Small businesses also help stimulate economic growth by providing employment opportunities to people who may not be employable by larger corporations. Small businesses also tend to attract talents who invent new products or implement new solutions for existing ideas.
Larger businesses also often benefit from small businesses within the same local community, as many large corporations depend on small businesses for the completion of various business functions through outsourcing.

Irrespective of the awareness of the remarkable contribution of SMEs to the development of African economies, it has to be admitted that the growth of SMEs in Africa faces a number of generic challenges. The first and common challenge is the lack of access to appropriate capital from both the banking sector and the capital markets. There is a general perception in the financial sector that lending or provision of capital to SMEs is risky business due to a number of reasons: high mortality rates of SME businesses, suspect management capabilities and skills, poorly prepared business proposals, obscure historical records of the operations of the SMEs and the lack of reliable collateral or collateral mismatch between type of assets held by SMEs and type of assets required by banks for collateral.
Contrary to the developed world where SMEs enjoy a great deal of protection and pampering, Africa’s SMEs are said to be living on the edge as borrowing institutions dedicate much of their loan portfolios to big business. Besides, SMEs in African countries lack the needed infrastructure and strong government policies to protect and support them put up their best to contribute to economic development.
It is said that the contribution of SMEs to the national GDP of Nigeria is poor for myriad reasons, including inadequate infrastructural/financial support to businesses operating within the various sectors, limited application of innovation to operations within the segment, unfavourable competition with foreign goods and services among others.

Lack of credit access indeed places a heavy burden on entrepreneurs to raise large amounts of capital for business development themselves and makes it hard for ideas to grow into enterprises. Improving access to credit is thus crucial if SMEs are to reach their potential and allow businesses to move from start-ups to established businesses with growth potential. Credit is also essential for creating an entrepreneurship spirit as it allows businesses to fail and rebound rather than just fail. Indeed, it is common for a number of start-ups and small businesses to fail, and a climate that allows failure allows an entrepreneur to learn from that failure and start afresh. It is in such an environment that innovation and success can most thrive.
Although small businesses may not generate as much income as large corporations do, they are a critical component of and major contributor to the strength and growth of local economies. Small businesses present new employment opportunities and serve as the building blocks of the largest corporations in developed countries.
Economies that have had the SME sector make better contribution to GDP have shown consistent commitment to the development of the sector by implementing access to finance and financial incentives, basic and technological infrastructure, adequate legal and regulatory framework, and a commitment to building domestic expertise and knowledge.
In this context, a policy thrust to grow successful SMEs must take pre-eminence if long term sustainable economic development and transformation of Africa is to be realized.

Charles Yeboah Frimpong

University of Ghana

Member, The Institute of Chartered Accountants (Ghana)

Tel: +233-246-542-642

Email: fycharles.7@gmail.com

 

 

 

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Africa Focused News

27 Tuesday Aug 2013

Posted by theinvesmentman in ACCRA, Africa, Angola, Bank of Ghana, banks, Beijing Capital International Airport, BRIC, Cameroon, china, China Development Bank, China-Africa Development Fund, Congo, Democratic Republic of Congo, DHL, Diamonds, East Africa, Equatorial Guinea, Ethiopia, Germany, Get rich quick, Ghana, gold, International Finance Corporation, investment, Ivory Coast, Kenya, Made in Ghana Solo Exhibition, MoneyGram, Nairobi, Nigeria, Oil, Sierra Leone, South Africa, Sudan, Tanzania, Uncategorized, West Africa, World Bank, Zambia

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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

19 Monday Aug 2013

Posted by theinvesmentman in 2013 West Africa Business Expo, ACCRA, Africa, African Economic Outlook, banks, Carrefour, CFAO, East Africa, ENI, Eurobond, First Quantum Minerals, Get rich quick, 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, Uncategorized, Water projects, World Bank, Zambia, Zimbabwe

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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 Eastern Africa can avoid the resource curse

12 Monday Aug 2013

Posted by theinvesmentman in Africa, East Africa, Get rich quick, investment, Kenya, Mozambique, South Sudan, Tanzania, Uganda, Uncategorized

≈ 7 Comments

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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