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African
The B est selling Pan-Af r ican Bu siness Maga zine UFC brings the fight to Africa
MTN: New CEO, new era
Zambia’s spiralling debt crisis
Will Africa protect its citizens abroad?
BUSINESS
SPECIAL REPORTS
Africa’s Top 100 Banks 2020
Oil and gas industry
An IC Publication | 54th Year | N° 477 | October 2020 reels under Covid-19
FIVE MORE YEARS?
Tanzania faces the future
l Euro Zone €5.00 l UK £4.00 l USA $6.50 l Algeria DA 500 l Canada $6.50 l CFA Zone CFA 2 900 l Egypt E£ 60 l Ethiopia R 150 l Gambia GMD 200
l Ghana GH¢ 20 l Kenya KShs 350 l Liberia $5 l Mauritius MR 150 l Morocco Dh 40 l Oman OR 2.00 l Qatar QR 20 l Rwanda RWF 3000
l Saudi Arabia Rls 20 l Sierra Leone LE 40,000 l Singapore $7.50 l South Africa R49.00 (inc. tax) l Other Southern African Countries R43 (excl. tax)
l Sweden SKr 33 l Switzerland SFr 8.70 l Tanzania TShs 6,500 l Tunisia DT 5 l Turkey TL 10.000Y l UAE Dh 20 l Uganda USh 15,000 l Zambia ZMW 50
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C O N T E N T S
Contents October 2020 Issue Nº 477 www.icpublications.com
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Silvia Salvetti Ollennu Covid-19 gamble pay off?
Top Reports
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NORTH AFRICA 23 Priorities for MTN’s new CEO upstream oil and gas
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Meensesteenweg 300
8800 Roeselare
34 Opinion: Making the off gold exports
Belgium WTO work for Africa 72 Central bank governor
sacking sparks worries
Africa’s Top 100 Banks 2020
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Octobre 2020 ISSN 0142-9345 42 Rankings: Africa’s Editor’s View
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44 Regional rankings Sudan from the cold
©2020 IC Publications Ltd
4 African Business October 2020
Business Intelligence Deals
Former board members
and executives to buy
out Comair Nigeria approves $1.9bn Zambia set to
rail link with Niger enter default
South African airline
Comair, which entered Nigeria has approved a $1.9bn Zambia has asked inves-
bankruptcy protection amid rail line to neighbouring tors in $3bn of its US dollar
The US Power Africa scheme the coronavirus pandemic, Niger, confirmed transport bonds to accept a six-month
has announced $2.6m of grants is to be bought out by minister Rotimi Amaechi at delay in interest payments
to solar energy companies to former board members and a weekly cabinet meeting beginning in October. If
provide reliable and affordable executives in a restructuring in Abuja. The goods line confirmed Zambia would be
off-grid electricity to 288 process. The board members will join Kano and Katsina the first African country in
healthcare facilities across nine and executives of the British in northern Nigeria with the Covid era to enter debt
countries in sub-Saharan Africa. Airways franchisee and Maradi, a city in southern default. Zambia is struggling
Firms in Nigeria, Zambia, owner of Kulula.com will Niger. A presidential from the global plunge in
Rwanda, Ghana, Mozambique invest fresh equity of R500m spokesman said that it will commodity prices, spiralling
and other countries were ($30m) in return for a 99% transport raw materials and debts and a lack of investor
selected. shareholding. agricultural produce. confidence (see p72-73).
Power Africa
announces grants
for solar energy
companies
6 African Business October 2020 October 2020 African Business 7
Business Intelligence News Business Intelligence News
World Bank launches Kenya unveils diaspora Angola negotiates Boeing nor the FAA can discounted this test data
Africa climate change investment fund debt relief shirk their responsibility for and ignored this evidence,
strategy developing and certifying assuming that all pilots
Kenya has introduced its first Angola is negotiating $6.2bn an aircraft that was not would respond quickly and
The World Bank has licensed investment fund of debt relief over the next safe to fly for all pilots,” effectively to uncommanded
launched a multi-billion for citizens living overseas three years with three of congressional Democrats MCAS activation. Those
dollar Africa climate change in a bid to channel diaspora its major creditors, which Peter DeFazio and Rick assumptions were drastically
strategy for the next six funds into development include Chinese banks Larson said in the report. wrong.”
Boeing plane
years in a bid to kick-start projects. Kenyans abroad and government agencies, The report noted
green growth hampered can now make investments according to the IMF. The Safety system at fault that allegations made by an
Facebook will open a software by Covid-19. The Next through the African Diaspora country has been hit hard The 18-month investigation Ethiopian Airlines former
in Ethiopian
programming office in Lagos Generation Africa Climate Asset Managers which by the decline in oil prices found the 737 MAX was chief engineer could not be
in 2021. The move marks the Business Plan aims to train has been granted the first and has sought relief from unsafe because the FAA had proven.
first time the US social media 10m farmers in climate- licence of its kind. Almost the G20. “To the extent approved a faulty safety “A whistleblower with
Airlines crash
giant will have a team of smart agriculture, expand 3m Kenyans living mostly in that unforeseen risks to system called MCAS due to knowledge of Ethiopian
engineers on the continent, landscape management North America and Europe achieving the medium-term what investigators said was Airlines’ actions in the
five years after it opened its over 60m hectares in 20 sent an estimated $3bn debt target materialise, we an overly close relationship aftermath of the March
‘not safe’says
first advertising office in South countries, increase renewable in remittances to Kenya will act to mitigate those between Boeing and the 2019 crash alleged that staff
Africa. The new office will energy generation capacity last year. The fund allows risks, including by seeking regulator. of the carrier accessed the
focus on building “products for from 28 GW to 38 GW, and payments to be made using additional debt relief from MCAS, which is designed airplane’s maintenance
US investigation
the future of Africa, and the equip at least 30 cities with Kenya’s mobile money a wider group of creditors,” to automatically counter a records the day after the
rest of the world, with Africans low-carbon, compact urban platform M-Pesa, enabling the Angolan government said tendency in the 737 Max accident. Such action
at the helm,” Facebook said. planning. investments as little as $5. in a statement. to turn upwards, was not is contrary to protocols
mentioned in crew manuals. that call for records to be
Facebook
Boeing also sought to immediately sealed following
convince regulators not to a crash. However, while it
A report released by US (FAA) blamed “foreign- mandate simulator training is not known how, if at all,
to open
investigators into two deadly trained pilots” for “not as a requirement for Max the records were altered,
Boeing 737 MAX crashes, following procedures” and pilots, as it would incur extra the whistleblower contends
including the crash of discounted technical design costs. that this action was part of a
Lagos office Ethiopian Airlines Flight 302
from Addis Ababa to Nairobi,
said that Boeing and the
flaws in the 737 Max.
But the report from
the US Congress’s House
The report issued by
the US House Committee
on Transportation and
pattern of faulty repairs and
erroneous records that call
into question the reliability
US aviation regulator were Committee on Transport Infrastructure also found of Ethiopian Airlines’
responsible for developing and Infrastructure said that that Boeing had withheld maintenance practices,” the
and certifying an aircraft the 737 Max aircraft used in testing data from the FAA. investigators said.
that was not safe to fly, both accidents was unsafe for “Boeing had information Ethiopian Airlines did
writes Shoshana Kedem. pilots regardless of their level from its own test data not respond to requests
Following the Ethiopian of training. suggesting that some pilots, for comment. Boeing said
Airlines accident on 10 “While both Boeing and even US-trained Boeing it had improved its safety
March 2019 that killed 157 the FAA have pointed to pilot test pilots, would need culture and incorporated
people, and the crash of Lion performance as a factor in more training on the MAX, many of the report’s
Air Flight 610 in Indonesia the MAX crashes and while particularly to respond to recommendations. Ethiopia’s
five months earlier, both pilot performance is often an erroneous activation of Civil Aviation Authority is
Boeing and the US Federal a contributing factor in any MCAS effectively. However, preparing its own accident
Aviation Administration aircraft accident, neither Boeing appears to have report on Flight 302.
A crew working with
investigators clears the site after
the crash of Ethiopian Airlines
Flight 302 in March 2019.
Deal Tracker powered by
Deal Tracker
Proparco and Energy access to integrated health expected to be substantial. was raised from investors
Access Ventures services, including health ARIES Investissements acted including KfW on behalf of
back Solarise Africa programmes for managing as financial advisor in this the German Federal Ministry
investment round chronic illnesses, discounts transaction. for Economic Cooperation
Energy Access Ventures at pharmacies and drug and Development, the Small
(EAV) announced a follow-on delivery. Its health wallet for PAYG solar company Foundation and the Men-
investment in Solarise Africa, funding medication-based Greenlight Planet raises nonite Economic De-
a pan-African clean energy expenses has been extended $90m for expansion velopment Association.
and energy efficiency leas- to masks and hand sanitisers Greenlight Planet is set to EFTA’s shareholders, includ-
ing company. The round was during the pandemic. expand its pay-as-you- ing AgDevCo and Equity for
led by French development go (PAYG) solar consumer Africa, will become share-
finance institution Proparco Postal Bank of Congo financing business and holders in EFAfrica Group.
which invested the dollar obtains medium-term consolidate its debt port- EFTA’s financing has directly
equivalent of €4m in quasi- financing from BDEAC folio after raising $90m in or indirectly supported over
equity through the AFD Postal Bank of Congo (BPC) new financing. Development 10,000 jobs, with 64% of
Group EU-funded African has obtained medium- finance institutions including its borrowers in rural and
Renewable Energy Scale-Up term financing of over CDC, Dutch FMO and Nor- mixed-rural areas.
facility, alongside existing €15m ($17.5m) from the way’s Norfund contributed to
investors EAV and EDFI Elec- Development Bank of Central the equity and debt funding DFC provides $35m
triFI, an EU-funded impact African States (BDEAC). round as did impact investors financing to Nigerian
investment facility. The loan marks the first ResponsAbility, SIMA Funds, solar energy company
collaboration between the Symbiotics, Global Partner- Solar home systems provider
Digital health provider banks and will help support ships and private equity firm Lumos has secured $35m in
BIMA raises $30m from the private sector in the ARCH Emerging Markets new financing from the US
CreditEase, LeapFrog and Republic of Congo. With Partners’ Africa Renewable International Development
Allianz X the support of BDEAC, BPC Power Fund. Finance Corporation (DFC).
BIMA, a Stockholm and Lon- will increase its loans to The financing will enable
don-based provider of digital traders, businesses and EFAfrica Group raises Lumos to deploy 160,000 new
health and insurtech solu- SMEs, in a context where acquires Tanzanian solar home systems, which
tions in emerging markets, the economic and social equipment finance will be used to power house-
has closed a $30m equity impacts of Covid-19 are business EFTA holds and small businesses
investment round. The com- EFAfrica Group has raised across Nigeria.
pany, which claims to have Below: Inauguration of a $12m for regional expan-
reached 35m people in Asia solar power plant at Zaktubi sion and acquired Tanzanian The news on this page was
in Burkina Faso. Three of
and Africa, has a health hub this month’s deals feature equipment finance busi- brought to you by Orbitt
approach, giving customers investment in solar energy. ness EFTA. The funding www.orbitt.capital
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Deal of the Month
as well as international markets, says Ben Malongo,
Mbasira’s business adviser.
The company sources a variety of grains from
AfricInvest Private Credit’s $4m local smallholder farmers and sells them to bulk
facility for Tanzanian maize trading buyers in the domestic market as well as to export
markets in Kenya, Rwanda, Democratic Republic of
company Mbasira Food Industries Congo, Burundi and other East and Southern African
was unique for several reasons, as countries.
The unexpected ban of maize grain exports in
Richard Ndem reports 2017-18 required the company to devise a strategy
AfricInvest
to hedge the risk of another ban on the company’s
export revenues, leading the firm to add maize flour
processing to the business plan via the establishment
of a milling facility. With this new line of business
arranges $4m
and based on the projected demand for maize flour,
the company’s earnings before interest, taxes, de-
preciation, and amortisation (EBITDA) margin is
expected to increase four-fold by 2022.
finance for
The life of SMEs seeking investment can be bumpy,
particularly in emerging markets, and adequate fi-
nancing is necessary to maintain these companies
on their route of viability and sustainability. On one
Tanzanian
hand, APC’s objective is to support the immediate
financial needs of its clients and prepare the long-
term horizon of its clients. This can be achieved
through personalised financial service along with a
grain
deep review of the company’s management opera-
tions, Tnani says.
APC starts from scratch for each new transaction
and prepares a fit-for-purpose solution to its client,
manufacturer
she adds. In practice, this translates into personalised
debt repayment patterns to shadow clients’ cash flow
profiles or an adapted security package to prevent any
operational encumbrance with other company debt
providers. APC can also offer cross-border facilities
for entities that are part of the same group.
Most SMEs are family owned and as such, operate
with an informal management structure. APC requires
its clients to develop a clear management organisa-
S
tion, and supports them in reaching international
mall and medium-sized e rprises (SMEs) standards of governance. A review of the client’s also benefits from secured off-take agreements Above: A woman Tanzania has not suffered from restrictions in the
represent an essential component of the organisational management allows APC to monitor its with international buyers, guaranteeing the sales harvests maize cobs movement of food commodities since the beginning
on a commercial
sub-Saharan Africa (SSA) economy and clients’ performance while it prepares the company’s volume and ensuring a fixed price. This allows APC farm in Tanzania. of the pandemic and Mbasira does not expect any
represent nearly 90% of all businesses in internal structure for the potential of a subsequent to predict Mbasira’s revenues. The presence of a disruption in its supply chain.
the region, according to the International larger debt- or even equity-raising exercise. collateral manager allows for close monitoring of “Further, although we have seen some level of
Finance Corporation. Mbasira Food Industries provides a key opportunity the company’s operations and stock volume, and restrictions in terms of international logistics, the
The SME space is at the heart of AfricInvest’s for APC to support a vital link in the SSA food therefore the potential to adapt the facility. handling of food commodities is prioritised by gov-
strategy, says Samia Tnani, head of credit origina- security chain, says Daniel Cremer, regional head of ernments as population food security cannot be
tion at AfricInvest Private Credit (APC), the debt origination at APC. The addition of the flour milling The impact of COVID 19 jeopardised at any cost. Therefore, we do not expect
vehicle of the AfricInvest group. The group provides business segment and the resilient demand for maize Although local banks in the region have been sup- Mbasira’s business model to be affected by the COVID
equity and debt services and targets SMEs across the grains and flour could provide the company with portive of local companies, Covid-19 has had a detri- 19 situation,” says Malongo.
African continent. steady cash flows, he says. mental impact on the banks’ appetite in terms of new This transaction was unique for several reasons.
APC focuses on sectors including light manufac- APC has designed a $4m facility for the company loans. Banks are busy in portfolio restructuring and It was originated via the electronic platform Orbitt,
turing, healthcare, hospitality and agribusiness, with to support its expansion plans and new activity. Part are not ready to open or increase new lines of credit which acted as deal facilitator, says Tnani. With
loans ranging from $1.5m to $5m, she says. It targets of the facility will be used to finance the new milling to SMEs, says Sonal Sejpal, partner at Anjarwalla & restrictions on international travel, the Orbitt plat-
SMEs with annual revenues below $15m and total as- process facility and new warehouses. The remaining Khanna LLP, the legal adviser to APC. form creates bridges between financial institutions
sets of $15m maximum with less than 300 employees. part is structured as a working capital facility that Tnani sees Covid-19 as a challenge as well as an and SSA corporates seeking finance. It may redefine
Tanzania’s Mbasira Food Industries is a grain will be used to increase grain purchase volumes. The opportunity for APC. Movement restrictions have had the approach to conducting business in the region.
trading company with a need for financing. APC revolving credit facility (RCF) will allow the company an impact on businesses, but from a credit perspec- “APC remains open for business and we keep
was able to develop solutions for both capital ex- to substantially increase its purchasing power and tive, there is opportunity to assess the resilience of working on new transaction opportunities. To sup-
penditures and working capital, granting the nec- thereby provide a route to market for small-scale businesses and the quality of their management in port our activities, we are increasing our local pres-
essary flexibility to support the envisaged growth farmers, says Cremer. time of crisis. This real-life test will define the credit ence to get closer to businesses and we aim at being
of Mbasira. From a foreign currency risk management per- approach of tomorrow, she says. more active in the coming years,” Tnani concludes. n
The company was incorporated 18 years ago in spective, the transaction benefits from a natural From a business perspective, the situation re-
Tanzania, and has been engaged in grain handling, hedge as most of the export revenues are denominated mains challenging globally, given both health and The article on this page was brought to you by Orbitt
sourcing local grains and supplying to the domestic in US dollars, says Cremer. The financing structure economic considerations, says Malongo. However, www.orbitt.capital
12 African Business October 2020 October 2020 African Business 13
Cover story: Tanzania
Tanzania’s President John Magufuli has gained a negative reputation for his treatment of
international investors and his controversial approach to the Covid-19 pandemic, but does
the criticism conceal real progress in the economy since he took office in 2015? Tom Collins
reports from Tanzania on the eve of its parliamentary and presidential elections
Five more years?
Business prepares
for Magufuli’s
second term
I
n the last five years, Tanzanian President One term in, his overall impact on the economy,
John Magufuli’s combative approach to in- however, is far less clear. With the president facing a
ternational business, aggressive domestic crucial re-election battle in October and the prospect
policies and unusual response to coronavirus of a second five-year term, Magufuli’s business and
have made him one of the most high-profile economic record is coming under increasing scrutiny.
and controversial presidents on the continent. Foreign direct investment (FDI) fell by 43% in the
The 60-year-old’s blunt approach – which includes year after Magufuli entered office in October 2015,
a willingness to intervene in domestic markets – has but Tanzanian GDP continued to grow at an average
attracted strong domestic support but spooked some of around 6% a year, backed by a strong performance
foreign investors and drawn condemnation from in sectors including light manufacturing, mining,
Tanzania’s East African partners. agriculture and logistics.
14 African Business October 2020 October 2020 African Business 15
Cover story: Tanzania
Some believe that the president’s campaign 50km north of Dar es Salaam, Magufuli said only a
against corruption, although understandably popular “madman” would accept the terms.
with ordinary voters, has restricted liquidity. With While the aggressive approach has stunted invest-
the state the largest employer in the market, any ment in key sectors and projects, Tanzanians applaud
blockage to illicit channels necessarily affects the Magufuli’s uncompromising attitude, in which he
individual wealth of Tanzanians and their ability paints himself as a regional champion against neo-
to spend. colonial interests. His tough approach finds unlikely
The president’s supporters in the business com- Magufuli’s first term Acacia Mining’s
allies in the country’s private sector.
munity argue that the lack of confidence in Tan- North Mara “There are many countries where foreign investors
zania’s economy is misplaced. They say that nega- has been marked by a gold mine in enter with huge capex, but they don’t pay corporate
tive political headlines, a controversial coronavirus strained relationship Tanzania. In 2017,
the company
tax and they leave big holes in the economy,” says
response (see p20-21) and well-documented tension with business, with was issued Mohammed Dewji, CEO of Tanzania’s largest con-
with multinational firms have led to an international with a $190bn glomerate, MeTL, a producer and trader of agricul-
reputation lacking nuance. several incidents sending retrospective tax tural and industrial goods.
Despite economic reforms that weigh on the pri- shockwaves through the bill, which many
investors saw as a
“Initially Barrick was a bad thing in terms of
vate sector, including the crackdown on corruption investment community shakedown. sending out shockwaves, but now the confidence is
and tax rises, many businesspeople in Tanzania tell coming back. The government has clamped down
African Business that they will vote for Magufuli in on exemptions and it has strengthened its revenue
October. collection. Our budget support over the last five years
has reduced tremendously. These are all the good
Pragmatist or populist? things not being talked about.”
Magufuli’s first term has been marked by a strained Indeed, Magufuli may be more pragmatic than
relationship with business, with several incidents observers think. Although it still remained below the
sending shockwaves through the investment com- $1.5bn recorded in 2015, FDI had risen to $1.1bn last
munity. year. And along with reaching a deal in the mining
In 2017, Acacia Mining, Tanzania’s largest gold- sector, Magufuli’s government has made concessions
miner, was slapped with a $190bn retrospective tax to companies looking to develop Tanzania’s offshore
bill for failing to pay royalties on alleged undeclared gas industry. Estimated reserves stand at around 58
exports. In January this year, Canada’s Barrick Gold – trillion cubic feet – just under half of the estimated
which gained full control of Acacia Mining in 2019 – potential in neighbouring Mozambique.
agreed to settle the dispute by paying the Tanzanian
government $300m and ceding 16% ownership of its Laws delay investment
three mines in the country. In 2017, the government introduced legislation for the
Barrick agreed to create a joint venture with the extractive sector that raised taxes, established arbi-
government, Twiga Minerals, to manage the com- tration in Tanzania and deemed that “unconscion-
pany’s assets and to oversee a 50/50 economic benefit able” contracts could be unilaterally renegotiated
sharing deal, but outstanding issues are still being by the government. These laws delayed any possible
worked out, according to Barrick. deal between gas companies Shell and Equinor and
Though the deal has restored a degree of con- the government, further prolonging development.
fidence in Tanzania’s business environment, the However, the government has quietly rescinded
episode – which some saw as a shakedown – has some of its earlier demands, says Thomas Scurfield,
had a long-lasting impact on an investor community Africa economic analyst at the Natural Resource
that covets predictability. Governance Institute.
“After the announcement, some people who were “Early this year the government started to in-
planning to invest in Tanzania decided to relocate troduce an arbitration act that essentially allows
to Uganda, the DRC and elsewhere,” says Donath international arbitration with an international body
Olomi, CEO of the Dar es Salaam-based Institute of to take place, so long as arbitration is physically tak-
Management and Entrepreneurship Development. ing place in Tanzania,” he says.
Magufuli’s combative attitude to the natural re- This may help to move forward the $30bn project,
sources sector can be traced to his experience grow- which has been floundering since 2014. Still, with
ing up in a poor village in a mining area near the low gas prices and unfavourable regulation, analysts
shores of Lake Victoria in Tanzania’s northwest. It is do not expect the project to come online for several
also a legacy of the socialist past of Magufuli’s ruling years – delaying an important foreign currency
Chama Cha Mapinduzi (CCM) – which translates as earner for Tanzania.
Party of the Revolution - in which the market and While Mozambique’s terms are more conces-
its companies are tightly regulated to ensure that the sionary, according to Scurfield, some observers
state is the main vehicle for development. argue that Tanzania’s approach is consistent with
Despite its controversy, the Barrick saga set the the country’s historical scepticism towards free
stage for how Magufuli would engage with foreign market capitalism.
companies in Tanzania. He has since overturned two “Certainly, it slows down foreign investment –
agreements with China negotiated by his predeces- some investments would have happened earlier if
sor Jakaya Kikwete, arguing that they were not good the process were quicker,” says Jens Reinke, IMF
deals for Tanzania. Commenting on a $10bn develop- representative in Tanzania. “But I think that is a
ment to build East Africa’s biggest port in Bagamoyo, cost Tanzanians are willing to pay.”
16 African Business October 2020
Cover story: Tanzania
has begun to emerge on Dar es Salaam’s Bagamoyo
Road, consisting of 10 innovation hubs and several
large telecoms companies.
“Things are happening here. Young people are
running innovation spaces and successful businesses,
but our biggest challenge is that we are not telling our
stories right. That is one of the strategic advantages
they have in Rwanda and Kenya – they know how to
tell their stories. I can tell you I have worked with
some amazing startups but some of them don’t even
have a website.”
The failure to communicate Tanzania’s strengths
is partly a product of the Magufuli administration,
which too often shows an active disregard for its
international reputation. The president prioritises
his reputation among a support base of mostly lower
income citizens in rural areas. While journalists
writing a negative story about Magufuli in Swahili
risk jail time, the same story in English – which is
less widely spoken – will arouse limited attention.
Magufuli’s seeming carelessness towards his in-
ternational reputation has returned to the fore during
the coronavirus pandemic.
Unlike many other African countries, Tanzania
Failure of communication Above: Unshelled has downplayed the pandemic’s impact and avoided
Many companies argue that Magufuli’s ideological cashew nuts at a lengthy lockdowns (see p20-21). When Magufuli
warehouse. The nut
approach to the economy feeds a negative perception is one of Tanzania’s declared Tanzania “Covid-19 free” in June, he made
in the international press. main exports. no effort to rectify a torrent of negative press, even
“When you go after a conglomerate or multilateral, though some claim his statement was taken out of
they are going to push a story that what you are doing context. His bizarre claim that Covid-19 tests were
is not fair, that it is erratic and unpredictable,” says inaccurate due to a goat, papaya and paw paw testing
Fahad Awadh, co-founder of YYTZ Agro-Processing, positive in a lab was allegedly a joke made in Swahili
which processes up to 2,500 tonnes of raw cashew – but was perceived as a serious statement elsewhere.
per year from a factory in Zanzibar. Such gaffes have obscured real progress made in
However, like other businesses in the domestic Tanzania, some say. Local businesses point to Tan-
market that spoke to African Business, he points to zania’s recent graduation to lower-middle income
a faster and more accountable state under Magufuli status as defined by the World Bank.
– so long as you “play by the rules”. He explains The country also moved up three places in the
that a zero-tolerance policy on corruption has made World Bank’s Ease of Doing Business Ranking last
engagement with the local authorities much easier. year, although it still came 141st out of 190 countries.
“I just want to know what the rules are and know The difficult business environment is one of the main
that if I follow the rules no one will come to har- reasons that Tanzania’s economy has been gradually In association with
ass me and try to extort money and I’ve seen that dwarfed by that of neighbouring Kenya, which occu-
improve.” pied 56th spot in the Ease of Doing Business Ranking.
He says that an association of cashew nut produc- Despite its bountiful natural resources, its location
ers he set up persuaded the government to remove in a strategic position for facilitating trade to the rest
excise duties and VAT on vacuum bags used to pack- of East and Central Africa and its larger population,
age nuts within six months. Tanzania has not kept up with its more liberal neigh-
Taxes have been removed in key sectors to encour- bour. In 2019 Tanzania’s GDP was $63.2bn, almost a
age industrialisation, and the business community third smaller than Kenya’s $95.5bn.
argues that the government has introduced positive
reforms and made efforts to shed the less successful Politics as usual? On Marketplace Africa, The Profit Point features business leaders
parts of its statist DNA. While Magufuli’s battle against corruption is ap-
Jumanne Mtambalike, CEO of Sahara Ventures, an plauded by many – his tough approach earned him
from across the region on how they achieved success to make
accelerator and tech-consultancy based in Dar es Sa- the nickname “The Bulldozer” – his efforts have been their companies profitable.
laam, believes that Tanzania’s inability to broadcast framed by critics as a way to persecute political op-
its positives is a major reason why the country fails ponents. Since Magufuli came to power, opponents
to attract foreign investment. allege that he has disregarded the rule of law and Marketplace Africa covers the macro trends impacting the region
Tanzania only has around 60 tech Magufuli’s seeming subverted the judiciary by forcing legislation through and profiles the continent’s key industries and corporations.
companies due to a lack of foreign capi- parliament and using draconian statutes to harass
tal, rather than a lack of tech-led inno- carelessness towards his and imprison opponents.
vation, he says. Last year the company international reputation A local journalist, who wishes to remain anony- cnn.com/marketplaceafrica
held an industry event, Sahara Sparks, has returned to the fore mous, was imprisoned for 13 days for running an
which welcomed over 200 Tanzanian unlicensed blog after the authorities imposed a $900
startups searching for funding. A tech- during the coronavirus registration fee on all bloggers in 2018. “I wasn’t even
nology district known as “Silicon Dar” pandemic critical of the government,” he says.
CNN name, logo and all associated elementsTM & © 2020 Cable News Network. A WarnerMedia Company. All rights reserved.18 African Business October 2020
Cover story: Tanzania
about by one person, and in so doing they have weak-
ened some of the institutions,” says Olomi from
the Institute of Management of Entrepreneurship
Development.
“The media, the parliament, the opposition. If you
don’t institutionalise this period where Magufuli is
making government stricter and more straightfor-
ward, then what happens when you have weakened
institutions and that spirit is no longer there? Then
you have a worse situation.”
Regional issues
Tanzania’s political environment – and Magufuli’s
unapologetic stances on controversial issues – are
also straining relations with its regional partners in
the East African Community (EAC), creating prob-
lems for EAC businesses in trade, transport and
logistics.
When Magufuli first came to power it seemed he
had found a powerful ally in Rwanda’s President Paul
Kagame, taking his first international trip to stay
Accuracy
at his counterpart’s village retreat. The two leaders
agreed to co-finance and build a railway from Tan-
zania’s northwestern town of Isaka to the Rwandan
The concern for the private sector is that Magu- Above: Counting capital of Kigali, connecting the port of Dar es Salaam
fuli’s ability to enact laws and evade normal checks votes in semi- with the hinterland.
has never
and balances is forging an unpredictable actor that autonomous The relationship has since soured due to Magu-
Zanzibar in the 2015
can vilify certain sectors and impose his will on election, where the fuli’s support for Burundi’s late president Pierre
individual companies. The business community is result was cancelled. Nkurunziza and other disagreements, delaying the
closely watching October’s presidential elections for Critics allege this project and the possibility of boosting Tanzania’s
been more
was because the
signs of further erosion of the political environment. ruling CCM had lost.
main port.
A prominent lawyer, speaking on condition of Relations with neighbouring states have reached
anonymity in Dar es Salaam, says the president’s their nadir this year. After Tanzania failed to in-
goal is to secure enough ruling party candidates to troduce strong Covid-19 measures, neighbouring
amend the constitution to extend term limits. Zambia and Kenya, fearing overlapping transmission,
important.
But the president may not have everything his closed their borders with the country in May. Kenya
own way. Semi-autonomous Zanzibar, an opposition then banned direct flights arriving from Tanzania,
stronghold, remains a thorn in the side of the CCM and Tanzania retaliated by banning Kenyan carriers
party and is a crucial electoral target for the newly from its airspace.
formed ACT-Wazalendo party. At the last election, The deterioration in relations has impacted Tan-
the Zanzibar Electoral Commission (ZEC) overturned zania’s exporters and traders, who are desperate for
BBC News is the world’s most
the outcome of the vote when it became clear CCM diplomacy and a return to normality. Awadh reports
had lost, opposition figures allege. a fall in cashew export volumes and Dewji from
A video posted on social media in early September the MeTL conglomerate reports a slowdown in his
showed multiple army trucks packed with soldiers transnational logistics line.
driving through the island of Pemba, which is part
of the Zanzibar archipelago and falls under its ad-
While flights have resumed to Kenya, Magufuli’s
nationalist rhetoric – often imbued with hostility trusted and accurate news brand.
ministration. In the run-up to the national vote, to Tanzania’s neighbours – damages commerce for
the government has banned numerous opposition
candidates from running in key constituencies and
companies that are focused on the wider region.
Nonetheless, the broad perception of Tanzania’s Across all platforms the BBC
it has attempted to block thousands of Zanzibaris business sector is that Magufuli has made some
from being eligible to vote.
“CCM will do anything to claim victory,” says
Ally Saleh, a Zanzibari politician and ACT-Wazalendo
important government reforms on corruption and
easing some business regulations while pursuing
policies that secure Tanzania’s national interest.
reaches 128.4 million people in
party member.
According to the constitution, Magufuli needs a
two-thirds outright majority from both sides of the
The conduct and aftermath of October’s election
could prove a turning point in Tanzania’s economic
history. The expected decisive win for Magufuli could
Africa every week.
union to amend the constitution – mak- see his more pragmatic side prevail – or lead him to
ing these elections about far more than The conduct and double down on aggressive policies.
just the next five years. “Our opposition focus on a one-sided picture that
Along with the almost total subver- aftermath of October’s it is all bad,” says Awadh.
sion of an independent judiciary since election could prove “Like everything there is some bad and some good.
2016, the prospect of an enlarged execu- a turning point in I cannot say it is perfect. Are we better off – yes. Are
tive with the ability to amend the consti- things getting better – yes. Has he done some things
tution worries Tanzania’s private sector. Tanzania’s economic really well – he has. Does he have things he could
“We have changes that were brought history improve on? Of course.” n
Source: Global Web Index Q1 2019- Q4 2019 GAM, Global Audience Measurement, 2019. Based on ‘All BBC’20 African Business October 2020 October 2020 African Business 21
Cover story: Tanzania
With an economy that continues to proach has so far allowed Tanzania to avoid much of very few health measures. With the virus currently that are interlinked with outside markets like tour-
the economic disruption witnessed in other markets. having a low mortality rate in Africa relative to other ism, trade and logistics.
grow, Tanzania’s unconventional Lockdown opponents argue that with up to 80% of regions, the logic of shutting down the economy to Charles Itembe, managing director of Azania Bank,
approach to Covid-19 appears to be the economy in African markets within the informal prevent deaths is not so clear. For example, Uganda says that he has restructured repayments on loans
sector, any restrictions will lead to far greater finan- has only 63 reported Covid deaths while Spain, with for customers in the tourist industry from between
paying off, but the long-term effects cial ruin than in developed markets. a similar-sized population, has 8,500 three months to one year.
of the virus are hard to predict. Tom “Many other countries that went into lockdown On the other hand, Tanzania could be experienc- “Because of Covid-19 there was no more traffic
Collins reports from Dar es Salaam have suffered tremendously from an economic point
of view,” says Mohammed Dewji, CEO of industrial
ing an unreported health crisis, something that ob-
servers have feared following reports of clandestine
in the tourist industry and our clients say they have
been hit quite significantly,” he says.
Will Magufuli’s
conglomerate MeTL, Tanzania’s largest home-grown Covid-19 burials in May. Unlike most other countries, Tanzania does not
company. “Tanzania never went into lockdown and The worry is compounded by the government’s require tourists to quarantine for 14 days, which
that is why I believe it will perform far better than strict control of the Covid-19 narrative, which in- means the well-known safari destination is likely
all East and Central African countries.” cludes banning journalists from reporting on the to recover faster than its main competitor Kenya.
Covid-19
subject and creating an environment where NGOs However, it is unclear whether Tanzania’s reputa-
Balancing act and doctors are scared to talk to the press. tion in Africa for failing to take Covid-19 seriously
In fact, Dewji’s prediction may be too modest – Tan- While unsubstantiated by the lack of data, several will be picked up by potential visitors from North
zania’s economy could register one of the highest off-record conversations between African Business, America and Europe.
gamble
growth rates in the world for 2020. medical officials and opposition figures suggest A small number of tourists started to return in
The IMF predicts a drop in growth this year from that Tanzanian hospitals were not overflowing with July though most operators do not expect the sector
6% to 4%, compared with Kenya which will fall from Covid-19 patients in mid-September. to fully recover until a vaccine is in circulation.
6% to 1% and others like South Africa which are “If Covid-19 is here in our interwoven society in “Most of the travellers decided to postpone their
pay off?
headed towards recession. Zanzibar, we would know about it,” says one opposi- safari to next year,” says Rama Mohamed, founder of
“I don’t think that Tanzania is headed towards a tion politician. “The hospitals don’t have anyone in Gecko Adventure Tanzania, which had been organis-
recession, it has proven to be quite resilient,” says Jens them. They cannot hide it here in such a small place.” ing tours for around 60 families each month.
Reinke, the IMF’s representative in Tanzania. “Under- The most likely explanation for the pandemic’s Tanzania’s unique coronavirus policy has strained
lying this is a couple of factors. One is that Tanzania diminished effect in Tanzania and other African relations with neighbouring states who have pursued
was not hit by the public health side of the pandemic countries compared with developed nations is that stricter measures. Zambia and Kenya, fearing over-
as other countries might have been.” younger populations are more resilient to the virus lapping transmission, closed their borders with the
At the beginning of the pandemic, it seemed likely and dispersed as a result of limited transport infra- country in May.
that Tanzania would pay a heavy price for adopting structure. The median age in Tanzania is just 17.7 Kenya then banned direct flights arriving from
D
compared with an average age of 38.4 in Tanzania, and Tanzania retaliated by banning Kenyan
ar es Salaam, economic capital of the US – one of the worst affected coun- carriers from its airspace. The deterioration in rela-
Tanzania, September 2020. “There’s tries.
Though critics believe tions has impacted Tanzania’s cross-border exporters
no Covid here,” says the young tuk-tuk Whether through luck or design, Magu- Magufuli has misled and traders, and some observers believe the spat could
driver as he weaves through the dense fuli has, for now, managed to avoid the his citizens, the restrict further moves towards economic integration
traffic of this city of 7m inhabitants. negative impact to health and the economy controversial approach in the East African Community.
Since President John Magufuli boldly of Covid-19 during a period of extreme But elsewhere, the relative health of Tanzania’s
announced in June that Tanzania was “coronavirus turmoil in the rest of the world. has so far allowed economy is reflected by its engagement with multi-
free” it has become a commonly heard refrain across Tanzania to avoid lateral lenders.
the East African country. Positive shock much of the economic The IMF has provided emergency financing to 33
But a lack of Covid-19 cases is impossible. Tanzania Another aspect which has helped Tanza- sub-Saharan African countries, totalling more than
is surrounded by eight African countries, with con- nia’s economy is what the IMF’s Reinke disruption witnessed in $15bn. Neighbouring Kenya received $739m as part
firmed cases ranging from almost 40,000 in Kenya to calls a “dual positive shock”. other markets of the Fund’s rapid credit facility (RCF), and a similar
4,700 in Rwanda at the time of going to print. As a net importer of oil and exporter of arrangement is available for Tanzania.
The last time Tanzania’s government released gold, Tanzania has benefited from a substantial im- According to Reinke, although the IMF has been in
coronavirus data – on 29 April 29th – it reported 509 provement in the terms of trade during the Covid-19 discussion with the Tanzanian authorities they have
confirmed cases, around 150 more than Kenya at that period due to the fall in the price of oil and the rise decided not to access the emergency funds – opting
time. With similar demographics and a larger popula- in the price of gold . for $14.3m in debt relief instead.
tion, Tanzania might be expected to have an equal if While tourism revenues have diminished, fa- One possible reason is that after downplaying the
not greater number of cases than Kenya. The differ- vourable commodity prices have helped stabilise seriousness of the virus, Magufuli may be politically
ence, however, is that Covid-19 has hardly changed the government’s balance of payments and kept its reluctant to access emergency funding.
life in Tanzania whereas other African countries, earnings at an acceptable level.
including Kenya, have entered strict lockdowns. Tanzania’s National Treasury is predicting a Uncertain future
Bucking a global trend, Magufuli has repeatedly budget shortfall of only 2.6% of GDP this year. This Though Covid-19 could still spread rapidly through
downplayed the virus and implemented very few contrasts positively with Uganda and Rwanda, whose Tanzania’s population, especially if there are no
preventative measures. deficits are expected to widen to 7.9% and 9.1% government measures in place, the decision to keep
While masks are a common sight across Africa in respectively. the domestic market open has allowed the country to
cities like Lagos, Nairobi and Johannesburg, they are a Few businesses have gone bankrupt in Tanzania keep growing while most other countries face serious
rarity on the streets of Tanzania. Bars and restaurants compared with countries like Kenya, where hundreds economic contractions.
remain open, while large gatherings such as sports of small businesses have been forced to close in the “They have lockdown, we don’t have lockdown,
events and religious assemblies have been allowed hospitality sector due to a lockdown which still in- they are not working, we are working, they are not
to continue. The government is neither testing nor cludes a dusk-to-dawn curfew. recovering, we are recovering,” says Itembe from
releasing data on tests. Azania Bank. “This is the big difference between
Though critics believe Magufuli has neglected his Impact on tourism Tanzania and the rest of the world and East Africa.”
Left: Dar es Salaam,
duties as leader and misled his citizens by claiming With no restrictions on the domestic economy, the the economic capital Whether that continues to be the case remains to
that prayer will beat the virus, the controversial ap- main sectors under pressure in Tanzania are those of Tanzania. be seen. nOctober 2020 African Business 23
Technology
F
ollowing years of legal difficulties in chal-
lenging markets, MTN Group’s new CEO
Ralph Mupita is expected to turn over a
new leaf by capitalising on technologi-
cal growth and a demographic dividend
within Africa to cement its position as the
Ralph Mupita took over as CEO of continent’s largest telecoms provider.
MTN at the begining of September. The firm’s Middle East operations have underper-
formed in recent years, while legal and regulatory
Will McBain examines the challenges difficulties in Nigeria damaged shareholder confidence
he faces as the head of Africa’s largest in the overall expansion strategy.
Former chief executive Rob Shuter – who will be-
telecoms provider come CEO of BT’s Enterprise unit – had to deal with
MTN to refocus
a record $5.2bn fine, later reduced to $1.5bn, levied
by Nigeria’s Communications Commission after fail-
ing to disconnect 5.1m unregistered sim cards, while
grappling with the Nigerian government over an ad-
on Africa and
ditional $2bn tax claim, which was finally dropped
earlier this year.
Now it falls to MTN’s new CEO, Zimbabwean Ralph
Mupita, to extricate MTN from the Middle East, grow
mobile money
its mobile money platform, and invest in 5G.
“He has financial experience in the banking sector
and this is becoming increasingly important if not
critical for MTN, because of the growing size of mo-
under new
bile money,” says Dobek Pater of research consultancy
Africa Analysis. “Mobile operators are the biggest
threat to traditional banks, and Mupita knows the
changes that need to be made to steer MTN forward
CEO
in that industry.”
Mupita is an internal appointment, having joined
MTN in 2017 as group chief financial officer, after a
16-year career at Old Mutual, including a five-year
EYE ON
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Technology
stint as CEO at Old Mutual Emerging Mar- 49% minority holding in the Iranian government-
kets. He has less telecoms experience than By 2025, the mobile controlled Irancell, which drew the ire of a US gov-
his peers, yet has a wealth of financial money market across ernment which is sanctioning the Islamic Republic.
experience. With all eyes now back on Africa, MTN could tar-
An engineer and an alumnus of the
Africa could attract get an entry into Ethiopia if the government forges
Harvard Business School, Mupita has 850m customers, ahead with plans to partially privatise state telecom
been a key player driving MTN’s BRIGHT supporting $3 trillion provider Ethio Telecom and open the sector to foreign
strategy, a five-year plan to reach 300m in transaction volume, competition.
subscribers by 2022, and bolster new rev- “Ethiopia is a low-income market, with low mobile
enue streams in financial services, mobile and $30bn in yearly penetration levels, but that’s likely to change,” says
gaming and music streaming, to offset revenue Pater. “Ethiopia is one of the two highest growth
the falling margins in bread-and-butter markets from an economic perspective currently in
telecoms services such as phone calls. Africa, and the population will have more disposable
“Ralph’s experience as the group CFO, strong and discretionary income; and with MTN’s track re-
knowledge of our businesses and markets, as well as cord it’ll be relatively easy to gain market share once
successful background in financial services, M&A and they enter the country.”
emerging markets, place him in an excellent position Pater says MTN will also target a move into Angola,
to lead the growth and sustainability of the business having failed to win in the previous licensing round.
going forward,” said a statement from the firm. Withdrawal from non-African markets and con-
Although MTN has emerged from the worst of its solidation and expansion on the African continent
labyrinthine legal problems in Nigeria, its exposure will likely characterise Mupita’s early tenure, but
in risky markets like Iran, Afghanistan and Syria, overseeing MTN’s renewed efforts in mobile money
and investment in non-core businesses like Jumia and a continued push into Nigeria could define his
and IHS, contributed towards a share price plunge of legacy. By 2025, the mobile money market across
more than 50% during Shuter’s tenure. Africa could attract 850m customers, supporting $3
However, analysts say the corporate culture has trillion in transaction volume, and $30bn in yearly
improved in recent years. MTN took a leading role in revenue from financial transactions alone, according
financially supporting employees during lockdown to Boston Consulting Group.
and launched a coronavirus education campaign. M-Pesa, jointly owned by Kenya’s Safaricom and
“There’s no longer a cowboy-type culture, and South Africa’s Vodacom, has the biggest reach in
with that you have less legal issues,” says Michael Africa with 38m active customers, processing more
Treherne, portfolio manager at Vestact Asset Man- than 11bn transactions. In a bid to compete, MTN
agement. “MTN’s biggest problem is that currently has launched the MoMo mobile money app, which
their share price largely tracks oil, and they’ve been includes online shopping and micro loans in partner-
exposed in very oil-dependent economies. MTN’s ship with Ubank. The firm hopes the products can
other problem is that it costs a huge amount of money dig away at M-Pesa’s domination and the power of
to maintain its network, and 5G is now about to traditional banks.
roll out. That’s going to cost them billions, so some Mupita may try to convince the Nigerian Central
shareholders are thinking, ‘you’re going to need a Bank to further liberalise its roll-out of mobile mon-
lot of money to do these short-term investments in ey, but established Nigerian banks will resist extra
infrastructure, but will it be worth it long-term?’” competition and it remains to be seen whether the
South African telecoms regulator ICASA is pre- company can repair its damaged reputation in Lagos.
paring to issue an invitation for firms to apply for The firm is also expected to diversify in other
high-demand spectrum and its Wireless Open Access ways. In March last year, MTN launched a WhatsApp
One of the
Network (WOAN). Competitors MTN, Vodacom and opportunities channel enabling customers to buy airtime and data
Rain started rolling out 5G networks in major South MTN’s new CEO bundles through the messaging app, and also check
African cities this year, using temporary spectrum Ralph Mupita their balances. In August, it launched a prepaid data
allocated by the regulator to support communica- (pictured below) campaign called MyTown Offers, which allows cus-
could seize is
tions during lockdown. ICASA will hold auctions to expansion into tomers to get specific data bundles based on where
issue permanent high-demand spectrum licences logistics. they live, targeting people with vastly different
by December, and MTN is interested in a permanent economic circumstances.
contract to grow its broadband offering. Another sector MTN could target is the logistics
Despite MTN’s share price challenges, the com- industry, says Pater. The sector experienced strong
pany has grown to 262m subscribers in more than 20 growth during lockdown, as major African firms like
countries since it was founded in 1994, adding 11m in Jumia and Ethiopian Airlines managed to leverage
the first six months of this year. Covid-19 lockdowns existing infrastructure to make inroads.
improved the appetite for increased data within Afri- “All the booths they’ve got where airtime is being
can markets, with MTN South Africa’s data traffic up sold by their agents in different countries could be
77% and an increase of 14.1% in active subscribers to used as physical courier distribution points. [They
14.2m in the country, according to Shuter. could] send packages across the MTN network be-
cause they can deliver it in the middle of nowhere,
Middle East retreat and build their infrastructure around and
Outside Africa, MTN will exit Middle East operations through their agents. It’s not implausible
“in an orderly manner over the medium term”, af- that they will try to move themselves in all
ter growth in the region was hampered by security sorts of directions that will generate money
issues and controversy surrounding the firm’s for them.” nYou can also read
