The panic created by ebola is hurting business - but what is to be done?
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african DECEMBER 2014/JANUARY 2015
PROMOTING BUSINESS IN AFRICA
The panic created by
ebola is hurting business
– but what is to be done?
SEE PAGE 18
Africa’s infrastructure needs are
bringing in tons of heavy equipment
SEE PAGE 22
Africa is bridging the information
deficit part of the digital divide
SEE PAGE 28
Partnerships allow African farmers
to break out of the poverty trap
SEE PAGE 54
Covering Western Africa
9 77199 9 872 0 08 27
SEE PAGE 67
ADVERTORIAL ADVERTORIAL
African Trader December 2014 / January 2015 December 2014 / January 2015 African Trader
Africa’s City of Gold
city. Since its promulgation in 2004, the inner city has become a
CREDIT: City of Joburg
site of massive investment, attracting over R10 billion in cumulative
investment. This has had a transformative effect upon the city’s
investment climate and contributed to the establishment of many
new small and medium-sized businesses in the heart of the City of
Gold.
The City of Johannesburg is an economic powerhouse on the African continent. As The City of Joburg is further gratified by investor confidence
South Africa’s largest and wealthiest city, Joburg accounts for 16% of the country’s GDP manifested by recent development trends that have created dynamic
and provides headquarters for the nation’s largest corporations, financial institutions, thematic and speciality precincts in the inner city such as the
Southpoint University District, Maboneng Precinct, and the ABSA
media houses, law firms and many other organisations. campus – the largest investment in green building on the African
continent. Other important private sector investments include Fox
Although the Joburg Inner City faced what can only be described Street precinct, Ghandi Square, FNB’s Bank City expansions, the
CREDIT: City of Joburg
as accelerated degeneration from the early 1990s, today it can Atkinson Building and 120 End Street, Turbine Square, and the Zurich
celebrate a turnaround as demonstrated by the precincts of Bank Building to name but a few.
Newtown, Brickfields, Marshalltown and the Art on Main in The significance of the inner city to the economy and position of
Doornfontein. Joburg is further demonstrated by the fact that real estate investors
In his State of the City, the Executive Mayor of Johannesburg, have been showing a healthy appetite for buildings in the city centre.
Councillor Mpho Parks Tau cited the reflections of the renowned These range from the Carlton Centre, which is more than 95% fully
philosopher and political scientist Achille Mbembe on what the utilised by Transnet, SARS and others, to many other smaller office
new developments mean to the city, who wrote: “The meaning blocks.
of the Nelson Mandela Bridge lies in the city’s transformation Together with partners, Joburg has made significant strides
(transmogrification) from a racist society to a future motivated in revitalising the inner city by attracting new investment and
by the celebration of freedom and prosperity under the banner of significantly reducing impediments to investment attraction. Thus the
democracy...” inner city continues to grow as the economic core and the character
of the CBD is changing from being exclusive and conservative to an
The Fox Street precinct is another of the important private sector investments in the City
inclusive, vibrant, multi-cultural African city centre. The city invites
Investors are invited to come stake their of Joburg.
you to join in partnership by investing in Joburg CBD’s economically
claim and be part of progress, joining transformative UDZ-anchored initiatives envisioned over the next has never been brighter, with the emerging initiatives that involve
“the 2nd Gold Rush into the heart of the three- to five-year horizon. development and roll-out of commercialisation concepts for the UDZ
These include the roll-out of UDZ investment precincts along the transit-oriented precincts at Fordsburg, Newtown, Joubert Park,
City of Gold”.
African continent’s most dynamic railroad corridor in the heart of the Doornfontein and Ellis Park. Additionally, the City intends to harness
city, running from Fordsburg in the west to Doornfontein in the east. the energies of investors to create a new region of high value, the
Like all global dynamic mega-cities, Johannesburg has taken Contemporary African Precinct, incorporating the new Gautrain
cognisance and positioned itself to take advantage of the current Vibrant transformation station at Park Station in collaboration with Prasa and Transnet.
and emerging globalisation trends. The city intends to be a strong A decade ago, when the UDZ was launched, the degree of success These UDZ precincts will unleash unimaginable returns for the
contender in the global economy, taking advantage of its robust it would achieve could not be imagined. Now, as the inner city investors, the City of Joburg and the residents of the City, as well as
physical infrastructure and advanced technological developments – transformation begins to take on a life of its own, the City is inviting the country and the entire African continent. The City thus invites you
particularly in terms of broadband connectivity. domestic and international investors to take advantage of the many to partner with it in this endeavour.
Bold government-induced initiatives such as the modernisation opportunities still available.
of public transport through the introduction of the high-speed railway
project Gautrain and the Rea Vaya Bus Rapid Transit (BRT) system
The City of Joburg vision for the Inner City is an economically
vibrant and modern, structurally transformed landscape and skyline,
Contact
adds to the appeal of Joburg as an African business hub. to be achieved through synchronised and coordinated innovative Lebo Ramoreboli,
interventions, strategically anchored on the UDZ tax incentive. The Deputy Director, Integrated Regional Economic Development
Revitalised growth City government appreciates the investor commitment that has 5th Floor, Jorissen Place, 66 Jorissen Street, Braamfontein
One of the most effective government-induced economic created the attractive “Dynamic UDZ”, and invites both existing and Phone: +27 11 358 3437
development tools is the highly successful Urban Development new investors to join in the exciting world of opportunity that will Mobile: +27 82 372 3174
The Ghandi Square upgrade exemplifies the private sector commitment to the Zone (UDZ) tax incentive that has spurred property development open up with the extension of the UDZ deadline to 2020. E-mail: lebor@joburg.org.za
revitalisation of the Inner City. and contributed to physical and economic revitalisation of the inner The economic future of the inner city and the whole of Joburg www.joburg.org.za/UDZ
Editor’s Note
A bit of this and that
Editor: Brian Bakker This issue of African Trader is chock-full of the sorts of
editor@africantrader.co stories you’ve come to expect. From governance to data,
Sub-Editor: Narike Lintvelt
competing with China to economic development, business
Contributors:
Simon Allison
optimism to the political agenda, ebola to heavy equipment,
Michael Atit and infrastructure to the digital divide – and that’s all in the
Brian Bakker
first 30 pages.
John de Villiers
Hannah Edinger Then we get to the regional news where we have over 2013. But in the month leading up to the exhibition,
Zlatica Hoke
all-encompassing stories addressing the likes of some 100 exhibitors pulled out,
Glenneis Kriel
the Deloitte CFO Report (which reveals a disparity For most Africans this is nonsensical, given that
Jaco Maritz
of sentiment between different regions of Africa) Johannesburg is some 5 500km, as the crow flies,
Kira McDonald
and the PwC analysis of South African advances from the epicentre of the outbreak. Dr Peter Salama,
Dinfin Mulupi
Samantha Perry
across the continent. We also have territory- UNICEF’s Global Ebola Emergency Coordinator, has
Vanessa Rogers specific articles from or about Angola, Cape Verde, an explanation: “This is a twin epidemic. It is the
Paul Runge Côte d’Ivoire, Morocco, Nigeria, South Sudan and epidemic of a virus, but also an epidemic of global
Anne Thomson Uganda. fear and ignorance. And with fear and ignorance sadly
Rodney Weidemann And in the Agribusiness & Food section we have comes stigma and discrimination. We must tackle both
Inside Africa: Narike Lintvelt
two features for your this issue, one dealing with fruit epidemics to be successful.”
farming across Africa and the other catching up with Indeed. Our feature story on ebola is on page 18
Design: Frank Matthysen
the latest developments in poultry production on the and illustrates that, while ebola is indeed a very scary
Cover Design: Carla-Lee Lawrence continent. And if that’s not enough, the project news disease, it is also quite difficult to become infected with it.
Cover Artwork: pages in that section touch on initiatives planned for or But back to the Fair: despite the disappointing
Subscriptions: Lahlekile Precious already rolling in Algeria, Angola, Côte d’Ivoire, Egypt, exhibitor numbers, there was much to see – products
Ndebele Ethiopia, Ghana, Kenya, Lesotho, Liberia, Mauritius, of almost every conceivable kind were on show. The
subs@africantrader.co Morocco, Mozambique, Nigeria, Sudan, Tanzania, business sector that appeared most susceptible to the
Advertising: Dean Thomson Tunisia and Uganda. ebola panic seemed to be the fashion industry; unlike
dean@thomsonpub.com Add the Inside Africa section, which in this issue last year, only a very few stands featured clothing and
covers our western region, and you can see that textiles.
Publisher: Thomson Publications
we’ve been busy. But that’s not all [did that sound like One manufacturing sector that seemed, if anything,
Tel: +27 (0) 11 886 8606
Fax: +27 (0) 86 530 9501
a TV infomercial?] There are a ton of stories we didn’t over-represented, was that of wire goods and fencing
Website: www.africantrader.co have space for in this issue. With luck and resources products. Which seemed strange to your correspondent:
Postnet Suite 77 permitting, we’ll post some of those on the website over this would indicate that it is cheaper to manufacture
Private Bag X10015 the next month or so. these heavy items in China and ship them to Africa than
Randburg 2125 Meanwhile, one event we weren’t able to cover it is to make the products locally. Clearly governments
South Africa in much detail inside the magazine was the recent that have lately been vociferous about the need to build
African Trader is an independent journal China Sourcing Fair in Johannesburg, where your homegrown manufacturing industries need to do some
focusing on business conditions and correspondent was an interested spectator given the serious soul-searching if they ever want to realise those
opportunities in Africa. Published five times yearly, rather dramatic reduction in size compared to previous ambitions.
African Trader is essential reading for anyone years. But that’s enough verbosity from this corner. Have
involved in trade and development in Africa. Bill Janeri, GM of Emerging Markets at Global fun, enjoy the read and please, please, pretty please,
Disclaimer:
Sources, blames the ebola outbreak for the decline and visit our website www.africantrader.co for the stories
Although every effort is made to ensure the accuracy of informed yours truly that it caused a large number of you won’t find in these pages due to lack of space.
the information and reports in this magazine, the editor,
last-minute cancellations. With a month to go before
the publishers, printers and distributors do not accept any
responsibility whatsoever for any errors or omissions or for opening, he adds, the Johannesburg 2014 edition of Brian Bakker
any effect there from. The views expressed by correspondents
the event was on track to increase exhibitor numbers editor@africantrader.co
are not necessarily those of the editor or the publisher. All
rights reserved. No part of this publication may be reproduced
without written permission from the publisher. December 2014 / January 2015 03 African Trader
Regional News Advertorials
36 Morocco: A solar future beckons IFC Africa’s City of Gold
Morocco’s Solar Energy Agency says the northern African The City of Johannesburg is an economic powerhouse
country is set for its first solar power plant to begin operating on the African continent. As South Africa’s largest and
in 2015. By Zlatica Hoke wealthiest city, Joburg accounts for 16% of the country’s
GDP and provides headquarters for the nation’s largest
Eastern Africa corporations, financial institutions, media houses, law
38 Uganda: Changing fortunes firms and many other organisations.
Africa Exchange recently hosted a Uganda Focus seminar
at the KPMG office in Johannesburg, South Africa. 50 ND Engineering wins Stainless Steel Awards 2014
Continental News Features By Rodney Weidemann 2014 marks the 50th anniversary of the Southern Africa
Stainless Steel Development Association (Sassda). To
06 Slip-sliding away 22 Bringing in the heavies
Eastern & Southern Africa celebrate, Sassda commemorated the development of
The 2014 Ibrahim Index of African Governance was released Africa’s growing infrastructure needs are creating a ready
40 Regional disparities stainless steel in South Africa at its 2014 Stainless Steel
recently – and it makes for disturbing reading. By Simon Allison market for heavy machinery, despite current economic
The recently released seventh Deloitte CFO Report reveals Awards ceremony.
sluggishness. By Rodney Weidemann
a disparity of sentiment between different regions of Africa.
08 Africa rising, slowly
Business relies on all sorts of data to drive its growth, but in
Southern Africa Agribusiness & Food
Africa this data has been scarce and questionable of quality.
43 South Africa: Growing on the continent
By Brian Bakker
Recent PwC research suggests that South African insurers
have begun to target the rest of the continent for growth.
10 Serving the Chinese market
China is often viewed as a threat
Western Africa
to Africa’s manufacturers – but
44 Côte d’Ivoire: Seeking agribusiness partners
some people see it as a ready
Most African countries are seeking to transform economies
market for African products.
from an extractive model to one that allows local value-add.
By Dinfin Mulupi 26 Property, mining, roads and fertilizer
By Brian Bakker and Jaco Maritz
This review of development activity in sub-Saharan Africa 54 Partnerships are the secret to success
12 Hindering economic revisits previously mentioned African hotspots and touches Growing demand for especially tropical fruit is creating
development on some new ones. By Paul Runge opportunity for African farmers to break out of the poverty
Delegates at a recent event trap. By Glenneis Kriel
heard that development and 28 Bridging Africa’s digital divide
competitiveness in SADC are If the digital divide can be seen as the gap in access to 59 Poultry for Africa
hindered by high business and transaction costs. information, then Africa is well on its way to bridging that Rapidly growing demand for protein, especially from poultry,
By Hannah Edinger et al gap. By Samantha Perry is driving a boom in local poultry industries across Africa.
By Anne Thomson
14 Optimism abounds Regional News
PwC’s latest Africa Business Agenda report reveals African CEOs 63 Project News
to be optimistic about growth despite the challenges they face. Central Africa
In this snapshot of agribusiness projects across the continent,
32 Angola: Shaking the Dutch disease
we touch on initiatives in Algeria, Angola, Côte d’Ivoire, Egypt,
At first glance, a massive oil or gas find may seem like a good
NEPAD News Ethiopia, Ghana, Kenya, Lesotho, Liberia, Mauritius, Morocco,
thing – but this is not necessarily the case. By Brian Bakker
Mozambique, Nigeria, Sudan, Tanzania, Tunisia and Uganda.
16 Unpacking Agenda 2063
Much speculation has surrounded the African Union’s Agenda 33 South Sudan: Breaking the oil habit
45 Nigeria: Banking on growth
2063, but the initiative’s key goals were recently laid bare. As South Sudan tries to break its economic dependence on oil, Inside Africa
The Carlyle Group has taken advantage of a rights issue by one
it is looking to another resource it has in abundance: livestock.
of Nigeria’s top 10 banks to invest in the country.
By Michael Atit 67 Inside Africa
Features This chapter in the series deals with what we classify
18 Just the facts, please Northern Africa Conferences & Exhibitions as western African countries: Benin, Burkina Faso,
The panic created by the West-African ebola outbreak is 34 Cape Verde: Airport upgrades galore 47 Every attempt has been made to make this listing a Côte d’Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau,
hurting business across the continent – but what is to be The Cape Verdean government plans to invest US$62.2 million comprehensive snapshot of conference and trade show activity Liberia, Nigeria, Senegal, Sierra Leone and Togo.
done? By Vanessa Rogers in upgrading its four international airports. By Brian Bakker around the continent from December 2014 to April 2015.
African Trader 04 December 2014 / January 2015 December 2014 / January 2015 05 African Trader
Continental News Continental News
Governance Governance
Slip-sliding away
South Africa’s problem areas come in the categories of
CREDIT: Wikimedia Commons
Participation & Human Rights and Safety & Rule of Law – a
testament perhaps to its horrendous crime statistics, service
delivery failures and predilection for police brutality.
In his inimitable style, Ibrahim had a warning for the Top 5:
“Brothers, watch it – it doesn’t mean you are very good or you
The 2014 Ibrahim Index of African Governance For Afro-optimists, the results make for dispiriting reading. are perfect. You still have to really watch it, there are some
was released recently – and it makes for Overall, governance in Africa has improved marginally over
the past decade. So marginally, in fact, that while the trend might
slippages happening there. You need to erase that trend.”
disturbing reading.
Speaking of backsliding, the Arab Spring – hailed at the time
look good on press releases it is statistically meaningless, as as a victory for democracy – has had a catastrophic impact on
Mo Ibrahim himself well knows. “Africa is progressing, but the governance in Egypt and Libya, with Egypt dropping 14 places
By Simon Allison There was an unusually concerned tone emanating from the story is complex and doesn’t fit the stereotypes. Even if the in the overall rankings (from 12th to 26th) and Libya dropping
headquarters of the Mo Ibrahim Foundation in London when overall picture looks good, we must all remain vigilant and not 16 places (from 27th to 43rd). Interestingly, the revolution in
it released the latest iteration of its flagship Ibrahim Index of get complacent,” he said, hedging his bets. Tunisia didn’t have such dire consequences, with that country’s
African Governance. Yes, the foundation said, governance is indicators remaining relatively stable (it’s still in the top 10).
improving – but not by much, and not consistently. Good and bad It’s not all bad news, however. Several countries managed
The Ibrahim Index is a mammoth statistical undertaking that This is not altogether unexpected. Indices such as these must to arrest a serial decline, and their identities might surprise you.
collects tens of thousands of data points from 52 different African reflect positive and negative developments equally, and there “The greatest improvements in governance are happening in rise in domestic conflict easily compensates for the decline in Mo Ibrahim had a
countries, excluding only Sudan and South Sudan, as their recent have been plenty of both in Africa over the past 10 years. some very low-ranking countries,” said Ibrahim, singling out wars between states. warning for the Top
The reversals in split means there is no available data. [It also excludes Western Despite the popularity and undoubted appeal of the Africa Côte D’Ivoire, Guinea and Zimbabwe. Another unexpected trend is stagnation in the category of 5: “Brothers, watch it
good governance Sahara – Ed]. Rising narrative, it seems the good news is yet to outweigh “Those guys are very low in absolute ranking, but they are Sustainable Economic Opportunity, which measures states’ economic – it doesn’t mean you
witnessed in all five of The researchers at the Foundation plug these numbers into the bad. showing great improvement. What is interesting about these policies and their ability to provide the conditions necessary for the are very good or you
the continent’s best- their spreadsheets and algorithms to produce handy rankings More worrying is the reversals in good governance witnessed improvements is that it comes after a period of negative trends. pursuit of economic opportunities. Whereas five years ago this was are perfect.”
governed countries is that show which African countries fare best and worst in various in all five of the continent’s best-governed countries. Mauritius, These countries were going down, and then they started to move the main driver of the limited overall improvements in governance
a worrying feature of categories, and which countries are the overall best- and worst- Cape Verde, Botswana, South Africa and the Seychelles should up somehow,” he explained. in Africa, this progress has now stalled – raising yet more questions
the latest index. governed on the continent. be guiding lights – instead, they’re all in danger of backsliding. That “somehow” is, of course, conflict-related: all three are about that whole Africa Rising narrative.
recovering from conflicts of varying intensity. In Zimbabwe’s
CREDIT: Mo Ibrahim Foundation
case, the improvements came during the tenure of the coalition
“Africa is progressing, but the story is complex and doesn’t fit the
Government of National Unity which followed the 2008 post-
stereotypes. Even if the overall picture looks good, we must all remain
election violence. It will be interesting to see if Zanu-PF, once
again in sole charge, can keep up the good work. vigilant and not get complacent.” – Mo Ibrahim
Continental trends As a collection of numbers, the Ibrahim Index can only tell us
Moving away from a country-specific lens, the Ibrahim Index so much. It can’t delve into nuances, it can’t explain contexts, and
reveals several continent-wide trends which are worth exploring. it can’t predict the future. But what it can do is provide an annual
The most remarkable is the improvement in the sub-category stock-take of a continent and the countries of which it is composed,
of National Security, which looks at cross-border violence an unusually comprehensive – and, it must be said, unusually
between states. The data indicates that there is almost no more impartial – snapshot of where we are and a hint of where we are
cross-border violence in Africa – by and large, conflict on the going. This year’s iteration tells us that we’ve still got plenty of work
continent is intra-state rather than inter-state, and indeed the to do. - The Daily Maverick
African Trader 06 December 2014 / January 2015
Continental News
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the tide has turned and costs are rising in China.
Perhaps one of the most outspoken of those holding Health and safety concerns have also affected
the latter view is Jas Bedi, the Kenya-based chairman buyer perceptions towards countries such as
of the African Cotton & Textile Industries Federation Bangladesh, where 117 people died in a textile
(ACTIF). He is unequivocal in his belief that the Asian factory fire last year.
giant offers a massive potential market for Africa’s
textiles and apparel. Renewed interest
Bedi cites demand from China’s growing middle “We see a renewed interest in Africa,” says Bedi,
class which is increasingly spending on everything adding there are several factors that work in favour
from cars to fine wines. of the continent’s textile industry. For one, it has
“Chinese consumption is going up. China is no significant production of cotton, although currently a
longer the factory of the world. China is becoming vast majority is exported in raw form. Hence there
the market of the world. Last year China bought the is room for value addition. Africa also has a big and
largest amounts of Mercedes-Benz cars, whisky, expanding young population.
wines … we have to think differently. China is not “That tells you we are going to have a big labour
competition anymore, if anything it is a market. So force in Africa,” he says. “In the 1900s everything was
how do we service that market?” made in England. Later trade moved to Hong Kong,
Korea, China, Vietnam, Bangladesh and Cambodia. Bedi says traditional Nigerian attire requires
Made in Africa Where will it go next? seven metres of fabric per outfit, rather than
Bedi co-founded ACTIF in the mid 2000s to lobby for “I say Africa. I call Africa the sexiest bride in the usual three metres.
the extension of the African Growth and Opportunity town. Everybody wants a slice of her.”
Act (AGOA) after its first expiry. Since inception, ACTIF He notes investment into Africa’s textiles manufacturers in Africa have access to a multi-billion
has focused on expanding market access and trade industry is also increasing. In the past few months dollar market in the US alone.
opportunities for African cotton, textiles and apparel new investments have been made in Uganda while “We have an opportunity to grow our business a
manufacturers. Africa’s garment industry is one of foreign investors have made commitments to pump hundredfold because we are allowed to export to the
the big beneficiaries of the programme. hundreds of millions of dollars into Ethiopia and US duty-free, while Asia is not. To me, that is massive
However, when AGOA came into effect in 2000, Kenya’s industries. opportunity waiting in front of us.”
Bedi recalls there was little faith in “Made in Africa”. “Industrialisation all over the world started He adds that African countries like Uganda,
“Initially we found it difficult to penetrate the with basic industries like textiles and apparel. It is which is a significant cotton producer, and Nigeria
market. They looked at Kenya and all they saw was a an industry that employs a lot of people. From here with its large population and big “national dress”,
great country for a wildlife safari. But they wondered we can continue with the industrial revolution and hold immense potential.
whether we could really make garments. So we move into other industries like electronics. That is “You and I wear three metres of fabric each, but
had to deal with our image, and after a while buyer how we will move up the ladder and become wealth in Nigeria the national dress is made of seven metres
perceptions towards Africa changed.” creators,” he predicts. of fabric. That is double per capital consumption… it
the premier boardroom is available at or tambo international airport
But in 2005 export restrictions on Asia were is like India. The Indian sari is seven metres long; no
lifted, allowing countries such as China to do as Future is bright wonder the textile industry is flourishing there.”
much export volumes as it could. Bedi says many While poor infrastructure and the high cost of Bedi says the picture is even more promising ContaCt lelanie on 011 390 1080
Africa-based manufacturers suffered as foreign electricity is a key challenge for manufacturers in globally, citing industry statistics which show that in www.bidvestlounge.Co.za
investment relocated back to Sri Lanka, China, India Africa, Bedi believes “not everything is gloom and 2012 the textile and apparel industry was valued at
and Bangladesh. doom here”. With AGOA in place, textile and apparel $1.7 trillion. – HowWeMadeItInAfrica.com we look forward to hosting
African Trader 10 December 2014 / January 2015 your next meeting
Continental News Continental News
IIIC 2014 IIIC 2014
Hindering economic development the region. Walvis Bay largely services the Americas, being the
Source: IIIC 2014
shortest distance to Brazil (7 days), while the Port of Maputo looks
towards Asia.
Delegates at a recent event heard that development and competitiveness in SADC are The private sector plays an important role in driving port and
hindered by high business and transaction costs. maritime developments. The Maputo Corridor is an important case
study in this regard. After a PPP agreement, the corridor has made
By Hannah Edinger, The International Infrastructure & Invest Convention (IIIC) 2014 financing deficit that bedevils the region, or perhaps a lack of significant progress compared to before.
John de Villiers & took place in Johannesburg during September. Dr Martyn bankable projects and a need for greater resources to be committed Government needs to allow the private sector to drive growth
Kira McDonald Davies, CEO of the South African research, strategy and capital for project preparation. and development by creating a conducive business environment.
advisory firm Frontier Advisory, set the stage by citing high Certainly, increased support from development finance However, this is difficult when the government is both player and
business and transaction costs as hindrances to economic institutions (DFIs) and dedicated project preparation funds and facilitator in the port development space.
development and competitiveness in SADC. budgets would go a long way in assisting with the bankability of That said, governments need to commit fully to infrastructure
Efficient and effective infrastructure plays an important role projects and creating investment opportunities for the private projects; success is dependent on both software and “heartware”,
Source: IIIC 2014
in reducing these costs. SADC particularly lacks cross-border sector in infrastructure development. Rating agencies also play an as evidenced in Singapore. Although the Walvis Bay Corridor has
integrated transport, power and water infrastructure, which, when in important role as they impact the financing of large infrastructure suffered numerous setbacks, by integrating better with regional
place, can have a deflationary effect on regional economies. Across projects, instilling (or eliminating) confidence in external financiers. bodies and changing its market approach the port development is
infrastructure sectors, the World Bank has estimated that the largest Beyond investing in new transport, power and water assets, now moving in a more positive direction.
funding gaps exist in water (US$14.3bn per annum) and power as is often the case in SADC, maintenance of existing infrastructure In terms of connectivity and access, to date southern Africa
(US$29.2bn per annum). These sectors also have the largest social remains a key challenge. Much larger capital costs are incurred is in the best position it has ever been to facilitate the transport of
impact, he said. when infrastructure is left to fall into ruin versus the costs incurred equipment, materials and goods to land-locked states and projects.
when infrastructure is steadily maintained. However, lacking cooperation at border posts continues to constrain
Financing trade flows, resulting in project delays.
During the conference, delegates heard that project financing Power and energy Yet the dynamics of land-locked projects are changing as
plays an important role when addressing the basket of SADC’s The demand for power in the SADC region is expected to surpass numerous corridors within the region result in more competition
infrastructure constraints. Yet, raising finance and reaching financial supply at least until 2016, and could be intensified further with the and higher efficiency. Although countries are implementing plans The SADC Secretariat is particularly involved in regional water Top: Dr Martyn
closure for infrastructure projects in Africa is challenging. In an tapping of new mineral discoveries as well as implementation of to ensure smoother transactions of cargo at the national and and power projects. Even so, there is a lack of coordination and no Davies cited high
Held under the theme environment where tariffs and mineral concessions are arbitrarily industrialisation strategies. With vast potential power and energy regional level, these commitments are dependent on political will. effective platforms seem to exist for collaboration between public business and
“African Solutions for reviewed, ensuring financial stability of project funding is key. resources available − only 10% of SADC’s hydropower potential has Governments need to honour their commitments, especially with and private players. Heightened trust between the private and transaction costs
African Challenges”, These challenges are exacerbated at the regional level where been tapped, for example − the intention of the SADC region is to regards to one-stop border posts. public sectors also needs to be encouraged. as hindrances
the second biennial regulatory and policy frameworks are not harmonised. Export credit bridge this gap and create a functioning regional market. Projects to economic
edition of IIIC agencies, such as the Export Credit Insurance Corporation of South being developed or coming online are largely in the hydro and Water ICTs development and
attracted around Africa, play a vital role in mitigating the risks investors face. Project thermal sectors based in Botswana, the DRC and Mozambique. While the mining industry has been a key investor and consumer Looking ahead, beyond the impact power that water and transport competitiveness
200 delegates and financing also has to be structured effectively, with the presence of Governments need to become economic owners of power of infrastructure assets and services, the sector is increasingly infrastructure have on commerce, ICT infrastructure is also critical to in SADC.
hosted 31 speakers an off-taker/anchor client being critical. projects in their countries. The most successful ones have been competing with the demands of an urbanising population and a rising development aspirations. In addition, social infrastructure, including
over two days. However, debate persists on whether it is an infrastructure those that have embraced public-private partnerships (PPPs) − middle class. This is particularly acute in the water sector, where education, is also key for the economic development of the region – Above: Delegates
Zambia stands out as an example of having attracted a number of mining competes with urbanisation, agriculture and construction, and particularly for the investment in human capital development. heard that project
Source: IIIC 2014
private sector players into the space. among other sectors, for limited water resources. With the ICT and mobile revolution in particular, new technologies financing plays an
The Independent Power Producer (IPP) programme in South Water wastage due to limited infrastructure and emerging are enabling the continent to deal with long-standing challenges in important role when
Africa also indicates a key lesson: project origination in the power issues such as climate change that results in severe droughts ways which were not possible before. The often cited example of addressing the
sector needs to be approved through this or similar mechanisms. urgently require SADC countries to invest in water supply and M-Pesa has brought millions of dollars into East Africa, particularly basket of SADC’s
management infrastructure. Kenya. infrastructure
Transport Regional water programmes that are trans-boundary in In order for technological “leapfrogging” to occur across constraints.
With major port expansions underway in the SADC region, the nature are central to water management progress. Stakeholder industries, governments will need to prioritise two sectors, namely
competitiveness of southern African ports is dependent on collaboration is required on practical projects that can make a ICT and power infrastructure developments.
integrated hinterland infrastructure corridors that are efficient, difference to the supply of water in the region – such as desalination Overall, it must be appreciated that infrastructure development
functional, reliable and timely. In this light, regional integration is key projects or more effective last-mile delivery of water. is a global challenge. Countries in SADC should, however, use the
to maximising the opportunities presented by port developments. Although a number of infrastructure programmes and projects international experience to develop local solutions based on the
While ports are competing with one another and competition exist in the region, a continuous criticism is the severe lack of successes and failures of others. This needs to be accompanied by
encourages efficiency, there is an element of complementarity implementation of plans and a deficit of information regarding the strong political will and leadership to adopt and implement medium-
which needs to be explored between ports and their functions within status of projects. term policies effectively.
African Trader 12 December 2014 / January 2015 December 2014 / January 2015 13 African Trader
Continental News
Business Agenda Protect your
Optimism abounds Perishable Products
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African Trader 14 December 2014 / January 2015
NEPAD NEPAD
African Leaders in African Leaders in
Dialogue Dialogue
Unpacking Agenda 2063
CREDIT: NBF
CREDIT: NBF
CREDIT: NBF
Much speculation has surrounded the African Union’s Agenda 2063, but the initiative’s key
goals were recently laid bare.
African Union Chair Nkosazana Dlamini-Zuma was the keynote Africa have open skies agreements. But at the same time, 24 African
speaker at NEPAD Business Foundation’s recent fouth annual countries have open skies agreements with countries outside Africa.
African Leaders in Dialogue dinner held in Johannesburg, And I think that’s scandalous,” she opined, to raucous applause.
South Africa. She took the opportunity to unpack Africa’s To put her thoughts into perspective, she recalled that when
Agenda 2063 for a diversified audience including African and Yamoussoukro was agreed, the share of the market for African
G20 ambassadors, embassy staff and leading lights in the airlines was 60%. “Today it’s 20% – and declining,” she noted.
private sector and media. The bottom line, says Dlamini-Zuma, is that failure to do Nkosazana Dlamini-Zuma stresses that Africa Dr Ibrahim Mayaki says Agenda 2063 is a Stanley Subramoney believes it is important
Dlamini-Zuma began by describing 2014 as a year of challenges anything will be disastrous. “[Air traffic is] an economic driver. If your needs to accelerate the modernisation and legacy-building initiative which scopes critical for Africa to set its own goals and targets
but also a year of opportunity. Despite the slow recovery from the airlines are not working then your economy will not reach its full mechanisation of its agriculture. development objectives for the continent. and be master of its own desitiny.
global recession, she said that African growth is still on the upward potential. But if we don’t do this, all the airlines in Africa will die,”
trajectory. “According to the African Economic Outlook 2014, 25 she stated bluntly. about 50 years [old],” said Dlamini-Zuma. She reported that during PwC Southern Africa; Mizinga Melu, chief executive of regional
African countries are projected to grow at a rate of 6% or above this She also spoke about the AU response to the ebola crisis and the the consultative phase of the formulation of Agenda 2063, many management, Barclays Africa Group; Michael O’Brien-Onyeka,
year,” she elaborated. participation of business, both in terms of helping to fund activities women told them that the back-breaking hand-held hoe needs to executive director of Greenpeace Africa; and Lawrence Ndambuki
and in leveraging their competencies on the ground. go into a museum. Muli, programme and policy advisor, African Observatory for Policy
Dragging Africa down Her point was that to attract young people into the business of Practice and Youth Studies.
“Only six countries, including South Africa and Egypt, are expected Agenda 2063 agriculture it will be necessary to mechanise and modernise the The panel’s brief was to deliberate on the theme, Africa’s
to record growth below 3% for the year. So they will be dragging Getting back to the topic at hand, Dlamini-Zuma explained that business. Agenda 2063: a 50-year road map to Africa’s economic integration,
the African average down,” she added. Agenda 2063 is the result of an extremely broad consultation process Furthermore, said Dlamini-Zuma, Africa also needs to add value and to offer the audience the benefits of their insight into the new
“On average, continental tax revenues between 2005 and 2012 – not an intergovernmental one, but a discussion with people on the to what it does in agriculture as well as in other industries. “Up to framework by the Africa Union.
have doubled,” noted Dlamini-Zuma. This she attributes to growth ground about their hopes and aspirations. now, we have been exporting raw materials. But when you export Dr Mayaki remarked that “Africa’s Agenda 2063 is a legacy-
but also, to a lesser extent, to improved efficiencies in tax collection “By the time we went to governments we had a pretty good raw materials, I don’t need to tell you that you are exporting jobs, building initiative which scopes the critical development objectives
in Africa. idea what Africans on the continent think,” she reported. you are exporting revenue. So we are the biggest donors of jobs and for the continent and identifies key participants, clearly outlining their
“Remittances and FDI also increased by over 40% in the same However, one of the concerns the AU has about Agenda 2063 revenue and yet we have millions of youth without jobs.” roles in a cooperative strategy aimed at achieving true economic
period, with remittances now being the largest single revenue flow is that governments will simply approach it the way all other plans To resolve this impasse, she suggested that a different development for Africa in 50 years.”
to Africa,” she added. have been approached – wait for donors to fund the initiative. conversation take place next year. “We should not only have a Similarly, Subramoney made the point that it is important for
Furthermore, Dlamini-Zuma reported increased appetite from “We must find resources to fund Agenda 2063. We have to conversation among businesspeople and ambassadors and the AU. Africa to set its own goals and targets for development and to design
home-grown investors. “African investors in 2012 represented 18% change that mindset in Africa. Let’s put something on the table. Then We must have a conversation between business, political leadership frameworks to manage indigenous-formed strategies for continental
of total green field projects on the continent in comparison to 7% the donors will be encouraged to come and help us,” she said. and academic leadership. Because these three components must growth. “Africa’s Agenda 2063 embodies the ideal of Africa taking
in 2008. The top five African investors in Africa since 2003 remain The goal, according to Dlamini-Zuma, is something that must be have the same understanding of where the continent must go ownership and responsibility for its future,” he said.
South Africa, Mauritius, Egypt, Nigeria and Kenya – in that order,” embraced by all Africans: to build an Africa of which our children and and how it must get there, and each one should then play its role,”
she elaborated. grandchildren can be proud. An Africa that is peaceful, prosperous, she said. The next 50 years
However, despite all the good news, she offered some sobering integrated and plays a meaningful role in the world. “Agenda 2063 is really just about investing in our people, The past 50 years of Africa’s story have been focused on increasing
statistics too. “Intra-Africa trade, though growing, remains low Part of this, she emphasised, is for Africa to invest in its people. modernising, industrialising, changing the mindset and telling political and social gains, but current trends point to a continental
in comparison with other regions. Thus, according to the African “We must invest in our young people – not only in health, but in their ourselves we can do it.” shift in priority with more focus being placed on regional strategies
Economic Outlook 2014, Africa is the world’s fastest-growing but education and skills. We must also focus on science, technology, centred on economic growth over the next half-century.
least globally integrated continent,” reported Dlamini-Zuma. engineering, maths, innovation, research. If we don’t do that, we will Panel discussion In her closing remarks at the dinner, Lynette Chen, CEO of the
always be a continent that will be behind everybody else.” Following her address, Dlamini-Zuma participated in a panel NBF, said, “Africa is poised to become the leading global supplier
Open skies discussion that also involved Dr Ibrahim Mayaki, CEO of the NEPAD of raw materials within a century and systems need to be put in
One of the reasons for this lack of integration, she said, is the lack of Modernising agriculture Agency; Bene M’Poko, ambassador of the Democratic Republic of place to safeguard Africa’s wealth and ensure equitable distribution
open skies agreements between African countries. “A decade after “We need, by all means, to accelerate the modernisation of Congo (Dean of Ambassadors to South Africa); Stanley Subramoney, of economic gains so that we can achieve sustainable livelihoods
adoption of the Yamoussoukro Declaration, hardly any countries in agriculture. Because the average farmer on the continent now is NEPAD Business Foundation (NBF) chairman and deputy CEO of and higher standards of living in the next 50 years.”
African Trader 16 December 2014 / January 2015 December 2014 / January 2015 17 African TraderYou can also read
