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issue 331 | 18 Nov 2019

Africa Business in Brief

 


Africa

African oil states offer new deals to lure more selective investors

Lower prices and increasing competition for investment are driving many African states to make it easier and cheaper for overseas companies to keep their oil and gas output flowing. From Ghana to Gabon, governments are adjusting terms to lure picky investors who are also increasingly concerned about long-term demand for fossil fuels as renewable energy gains ground. The shift follows declining oil production in Angola and Cameroon and disappointing bid rounds in Ghana. It also marks an recognition that the era of USD100 per barrel oil is over. “Because of increased competition for investment in Africa, we are changing our strategy,” Mohammed Amin Adam, Ghana’s deputy minister for petroleum, said at last week’s Africa Oil Week in Cape Town. As renewables and efforts to cut fossil fuel consumption gain ground, there are also growing concerns that the world will not need all of Africa’s oil.

Source: Reuters

Africa

Estimating investment needs for the power sector in Africa 2016-2025

How much investment is needed to realise the African Development Bank´s (AfDB) New Deal on Energy for Africa (the New Deal)? This is the overriding question that is thoroughly analysed from the bottom-up for 54 countries in Africa, covering generation, inter-connectors, transmission and distribution (T&D), mini-grids and off-grid access options. Underlying the analysis is an unprecedented collection of data, high-resolution regional power investment optimisation and a tailor-made access expansion model for the continent. The answer to this question is an average annual investment of USD29-billion – USD39-billion until 2025, depending on the continent’s ambition as to avoided greenhouse gas (GHG) emissions. In total, USD230-billion – USD310-billion is required until 2025, while an additional USD190-billion – USD215-billion is required for the period 2026-2030. The total average annual investment from 2018 to 2030 is estimated at USD32-billion – USD40-billion.

Source: African Development Bank Group

Africa

African has grasped the Fourth Industrial Revolution, according to African Development Bank report, but its role globally could be even bigger

A report compiled by the African Development Bank reveals a continent that is embracing the brave new world of the Fourth Industrial Revolution but needs to improve access to finance, skills and inclusive growth. The report, titled “Potential of the Fourth Industrial Revolution in Africa”, was launched at the Africa Investment Forum, the continent’s premier investment marketplace, organised by the African Development Bank and its partners. It found significant uptake already in Africa of the Internet of Things – a market that could be worth as much as USD12.6-billion by 2021 – and strong investment growth in new technology-led areas of AI, Big Data Analytics, blockchain, additive manufacturing and drones. This is not surprising given, as the report highlights, the broad and transformative effect these new technologies can have across all sectors from agriculture to manufacturing, and from health to education and government. Despite the progress, Jehiel Oliver, founder and CEO of Hello Tractor, said the African start-up ecosystem was under-capitalised. Rob Shuter, CEO of Africa’s largest mobile telecoms network operator, MTN, told the panel that telecoms operators invested USD10-billion annually in Africa, but this figure could be doubled if African governments and regulators made more spectrum available.

Source: African Development Bank Group

Africa/BRICS

BRICS: Ramaphosa hopes AfCFTA will be revolutionary for Africa’s investment future

The implementation of the African Continental Free Trade Agreement (AfCFTA) will create opportunities for the BRICS investment partners to develop infrastructure on the continent, says President Cyril Ramaphosa. South Africa, he says, sees an important role for the BRICS formation to contribute to these efforts. “We seek to build a more inclusive partnership between the leaders of BRICS countries and the elected leaders of African institutions. Apart from the BRICS Framework of Cooperation, BRICS countries have worked individually to promote cooperation and development with Africa,” the President said. President Ramaphosa said the partnership pursued through the BRICS-Africa outreach is rooted in a firm belief in the political, economic and social potential of the African continent. “As African nations, there has never been a better time to deepen our collaboration to ensure the African Continental Free Trade Area, our most ambitious collective venture yet, is a success.”

Source: The South African

Africa/EU

African Development Bank, EU reaffirm partnership, ambition to de-risk business environment, create jobs in Africa

The African Development Bank and the European Union (EU) shook hands on a renewed commitment to unlock hundreds of millions in financing for African infrastructure and development needs. Collaboration between the two institutions would focus on de-risking the business environment in Africa, providing equity, guarantees and other types of non-grant support, African Development Bank President Akinwumi and European Union Commissioner Neven Mimica said at a news conference held on the sidelines of the Africa Investment Forum. Both men stressed the central role of investment in the transformation of Africa. Mimica said the EU whose goal is to move from billions to trillions in investment over the next decade, was encouraged by the Bank’s recent capital increase. “The Bank is our strategic partner – it important that it is well capitalized,” Mimica said. The parties spoke on several areas of joint collaboration, including EU commitment for investments in Africa and its role as a major partner of the Africa Investment Forum. Mimica said the EU would be supporting risk-sharing guarantees of EUR70-million set to unlock hundreds of millions and creating 175,000 jobs. Supporting investments in job creation in alliance with Africa over the next five years, the EU would disburse EUR60-billion in one of the largest guarantee funds created, creating 10 million jobs.

Source: African Development Bank Group

Africa/EU

Africa-Europe Alliance: two new financial guarantees under the EU External Investment Plan

In the margins of the 2019 Africa Investment Forum in Johannesburg, South Africa, the European Commission signed two guarantee agreements with two Member States' development finance institution: the Dutch 'Financierings-Maatschappij voor Ontwikkelingslanden N.V' (FMO) and the Italian 'Cassa Depositi e Prestiti' (CDP). These guarantee agreements are part of the implementation of the European Union (EU) External Investment Plan, the financial arm of the Africa-Europe Alliance for Sustainable Investment and Jobs. The two guarantees will significantly boost investment and access to finance for small businesses (MSMEs), especially in the technology sector, in the countries covered by the Plan. This EUR40-million guarantee agreement is a partnership with FMO, the Dutch development bank. It targets sub-Saharan Africa and the EU Neighbourhood. The EUR30-million Archipelagos guarantee agreement is a partnership with Cassa Depositi e Prestiti (CDP), the Italian Development Bank, and the African Development Bank (AfDB). It will support access to finance across Africa for high potential small businesses. The EU External Investment Plan is using EUR4.5-billion in public funds to leverage EUR44-billion by 2020 in public and private investment for development in countries neighbouring the EU and in Africa.

Source: European Commission

Africa/Germany

Germany's EUR1-billion push into Africa

This year, as the government began rolling out programs under its EUR1-billion (USD1.1-billion) Development Investment Fund for Africa, Germany's development strategy for the continent is finally coming into focus – and it looks a lot like private sector growth. Most of the fund is dedicated to easing the entrance of German businesses into African markets or helping African businesses grow. In announcing the launch of the first of the fund’s programs in June – the EUR400-million "AfricaConnect" initiative, which will provide loans to German businesses looking to expand to African markets – development Minister Gerd Müller explained: "The demand for good governance, a strengthening of private investment, and fair trade – these are the three pillars of the new development cooperation with African countries."

Source: Devex

Botswana

Diamond market faces uncertainties

Uncertainties in the global diamond market, underpinned by geopolitics in the United States (US) and China trade war and the relentless unrest in Hong Kong, continue to pose a risk to diamond sales, economic think tank, Econsult Botswana, says in its latest research, the 2019 Third Quarter Economic Review. Headed by Managing Director (MD) Dr. Keith Jefferis, Econsult says weakness continued during the 2019 third quarter, with overstocking and a lack of profitability in the midstream (diamond trading, cutting and polishing), a shortage of bank liquidity for financing diamond stocks, and market uncertainty in the US and China due to macroeconomic developments and their continuing trade dispute, now compounded by unrest in Hong Kong.  “As a result, sales of diamonds through De Beers have been very weak, with sales in the third quarter down by almost 50% on the same period last year,” Econsult says. According to the think tank, De Beers’ strategy is to maintain prices but take some of the pressure off sightholders by reducing the amounts they are required to buy, hence easing financing pressures. Further, De Beers is also buying back some diamonds in a manner that indirectly reduces the prices that sightholders have to pay, thereby responding to market pressures for price reductions to restore margins in the mid-stream. Dr. Jefferis says both the pre-election economic doldrums and diamond weakness will eventually show in economic growth numbers for the third and fourth quarters this year.

Source: The Botswana Gazette

Ethiopia

Construction of GERD’s Saddle Dam completed

The construction of saddle dam of the Grand Ethiopian Renaissance Dam (GERD) has been completed, according to the Ministry of Water, Irrigation and Energy. The completion of the 50m high and 5.2km long concrete faced rockfill dam (CRFD) is an important milestone for the project, said Dr Engineer Seleshi Bekele, Minister of Water, Irrigation and Energy. The construction of GERD project has now reached over 68% completion status. Works on the two turbines that could begin producing electricity in 2020 is nearing completion. Ethiopia envisaged finalising the project, which is being built in Benishangul Gumuz regional state on Abay (Nile) river in 2023. At the end of the works, it will be the largest dam in Africa. Ethiopia, Sudan and Egypt recently reached a consensus to continue the trilateral technical discussions on the dam. The three countries reached the agreement following the meeting hosted by the United States Secretary of the Treasury and the President of the World Bank in Washington DC.

Source: Fana Broadcasting Corporate

Ethiopia/Czech Republic

Ethiopia, Czech hold business forum in Addis Ababa

The Ethio- Czech business forum and business to business (B2B) meeting was held at the Hilton Addis on 13 November 2019. The forum was organised by the Addis Ababa Chamber of Commerce and Embassy of the Czech Republic, according to the Ministry of Foreign Affairs. More than 75 Ethiopian and Czech companies have participated in the forum that aims at attracting foreign direct investment (FDI) and strengthening business linkages. In his opening remark, Ethiopia’s State Minister of Foreign Affairs, Dr. Aklilu Hailemichael said conducting such kinds of forums will help further strengthen the economic and political relations between the two countries. The State Minister said Ethiopia eyes in attracting FDI and he urged Czech business persons to invest in the Ethiopian government priority areas for investment – agriculture, agro-processing, tourism and information technology sectors.

Source: Fana Broadcasting Corporate

Ghana

Government secures USD250-million to establish National Development Bank in 2020

Government has secured USD250-million from the World Bank as initial capital to kick-start the operations of the National Development Bank (NDB) in 2020. Presenting the 2020 Budget in parliament, Finance Minister Ken Ofori-Atta said, “In view of the high level of interest generated, other Donors such as DFID, KFW, AfDB are expected to provide additional capital for the Bank once it becomes operational in 2020.” According to Mr Ofori-Atta, the government has completed a feasibility study for the establishment of National Development Bank envisioned to refinance credit to industry and agriculture as a wholesale bank; and also provide guarantee instruments to encourage universal banks to lend to these specific sectors of the economy. He said, “The National Development Bank (NDB) will be an independent institution with a strong corporate governance framework, and would be globally rated to enable it to leverage foreign private capital for industrial and agriculture de  velopment in the country.” According to Mr Ofori-Atta, the development bank will also lend through specialised banks to key anchor industries at the Metropolitan, Metropolis and District Assemblies level to support the governments IDIF initiative.

Source: Joy Online

Kenya

What the Data Protection Act, 2019 means for you

After a long wait, Kenya has now passed comprehensive data protection legislation – the Data Protection Act of 2019 which was assented to by the President of the Republic of Kenya on 08 November 2019 (the “Act”). The Act brings into play comprehensive laws that protect the personal information of individuals. It establishes the Office of the Data Protection Commissioner, makes provision for the regulation of the processing of personal data, provides for the rights of data subjects and obligations of data controllers and processors. Until such time as the Data Commissioner is appointed and specific regulations, thresholds and rules are published, the full implementation of the Act will be constrained. Nonetheless, two critical aspects which responsible parties should consider as part of demonstrating accountability are the appointment of a data protection officer and ensuring that accountability documents (i.e. policies, procedures and practices) and trade documents (contracts with customers and suppliers) are drafted, implemented, monitored and maintained in compliance with the Act. It would also be prudent that your organisation complies with the Act by means of risk assessments being conducted and sufficient data protection policies, procedures and practices having been implemented.

Source: ENSafrica 

Madagascar/Australia

BlackEarth Minerals begins trial project in Madagascar

Australian mining company BlackEarth Minerals has announced the launch of a large-scale mining pilot programme at Maniry in southern Madagascar. The project has already shipped an initial 250kg of graphite to Beijing General Research Institute of Mining and Metallurgy’s (BGRIMM) facility in China, and is set to excavate an additional 60 tonnes of bulk material. The testing is expected to start shortly in order to establish beneficial operating conditions ahead of the second stage of the pilot plant program. The outcomes from the second stage of the plant programme are essential for finalising the company’s process development work and bankable feasibility study, which is due to be completed in H2 2020. The full trial mining and piloting project includes the understanding of early mining conditions, final process design criteria, final equipment sizing and power draws, analysis and test work on the final tailings, and concentrate sampling to finalise binding offtake arrangements prior to the commencement of construction.

Source: Mining Technology

Rwanda

Government issues double RWF15-billion bonds for end of year

Rwanda’s Central Bank (BNR) is set to issue two bonds consecutively with a chance for potential investors to tap into both. One of the bonds will be for three years and another for seven years, worth RWF15-billion (USD16.149-million) each. The Central Bank announced that both bonds will be issued at an interest (subject to 5% withholding tax) to the year 2020 on competitive and non-competitive bids worth a minimum of RWF50-million and RWF100,000 respectively. The market will be open from Monday, 18 to Wednesday, 20 November 2019, the Central Bank said in a recent public communiqué, adding that investors can bid in one or both bonds. So far, 21 bonds (worth billion francs) in total have been rolled out to the public since 2014 when the government took a firm commitment to issue bonds on a quarterly basis with various maturities periods ranging from five, seven, ten, fifteen and recently introducing a 20-year lifespan bond. The issuances were aimed at financing the country’s major infrastructure projects such as the construction and upgrade of the Bugesera and Kigali International airports, road networks, among others.

Source: KT Press

Rwanda

Why IMF raised Rwanda’s economic growth forecast

The International Monetary Fund (IMF) has revised Rwanda’s economic growth projections to 8.5% from 7.8%. While winding up their two-week mission in Kigali, officials from the IMF said that economic activity in the first half of the year had outpaced expectations with real Gross Domestic Product growing by 10.3% in the first half of the year. With the second half of the year still fast-paced, the IMF projects that growth will be higher than was projected. “The uptick in construction reflects both public infrastructure projects and private investment. Growth is expected to remain strong, 8.5% in 2019 and around 8% for the next 2 or 3 years,” Laure Redifer the mission’s chief noted. Among the major construction projects that she noted had kept growth high include construction of the Kigali Arena, energy and sanitation projects, road construction projects as well as private sector projects such as commercial buildings and residential. The growth in the first half of the year was driven by the service sector due to growth in the tourism and transport sectors. The Rwandan economy grew by 8.4% in the first quarter of 2019 and 12.2% from April to June this year largely driven by services, agriculture and industry, according to the National Institute of Statistics of Rwanda.

Source: The New Times

Rwanda/South Africa

South Africa’s Sanlam takes over Soras Insurance Company

A South African insurance company, Sanlam has officially taken over 100% of Rwanda’s insurance company (Soras) making Rwanda the 40th country in its global expansion drive. The full merge was announced in Kigali by both officials of Soras and Sanlam following Sanlam’s entry into Rwanda in 2014, which was characterised by buying Soras’s shares through another insurance company-Saham. With 100 years insurance experience, operations in 40 countries, in 2005, Sanlam started an acquisition process of best insurance companies in Africa and Asia. It picked an interest in Soras Rwanda in 2014 making it the 33rd country of interest on the continent. In 2014, Sanlam insurance, bought some Soras shares (63%) and also bought the remaining 37% in 2018, but in February 2019, through its partner company Saham insurance, Sanlam managed to merge the two rival company (Soras and Saham) thus a rebrand to Sanlam.

Source: KT Press

Uganda

Uganda sugar stockpiles build as exports to neighbors disrupted

Uganda sugar producers are holding large stockpiles after exports to neighbouring Tanzania, Rwanda and South Sudan were disrupted, a lobby group said. Projected output of 500,000 tonnes this year may result in a surplus of 150,000 tons that would ideally be exported, said Jim Kabeho, Chairman of the Kampala-based Uganda Sugar Manufacturers Association. “Factories are holding too much stock because of limited exports,” Kabeho said. Tariffs have curbed shipments to Tanzania, while exports to Rwanda were halted when the main entry point was closed in February. Flows to South Sudan, previously the largest importer, have been cut by conflict. That leaves Kenya, which more than doubled its Uganda sugar imports in May, and the Democratic Republic of Congo as the main export destinations, Kabeho said.

Source: Bloomberg

Uganda/Kenya

Uganda Airlines’ Mombasa flight gives traders faster connection

The introduction of Entebbe-Mombasa direct flight by Uganda Airlines is set to boost trade and tourism between Kenya and Uganda as the route will cut the previous flight journey time by more than a half. The 110-minutes flight trip would play a vital role to thousands of Uganda traders who depend on the Port of Mombasa to do business considering more than 85% of Uganda imported cargo pass through the port. The route will add value to travellers who used to spend more than three to four hours to fly from Entebbe connecting in Nairobi to Mombasa. Mombasa is an important city for Uganda and the East African region as the port is a logistical lifeline for the greater hinterland as a much-sought-after tourism spot and the new air link would be a perfect boost for business travellers, traders and holiday makers and it will be a great opportunity for coastal tourism to link up with Uganda, the pearl of Africa. Uganda Airlines manager ground operations Harvey Kalama said the flights will ease doing business considering Ugandans play a big role in port business and in Mombasa tea trade auction. The airline will charge USD200 (UGX20,000) to travel between the two destinations one way and they expect to increase the flights per week in the next three months after the promotional period.

Source: Business Daily Africa

Zambia

Zambia Finalises the AfCFTA Strategy and Implementation Plan

Mr. Paul Mumba, Chief Economist,  Ministry of Commerce, Trade and Industry (MCTI) said that “the final draft of the African Continental Free Trade Agreement (AfCFTA) Strategy will be submitted to the Minister of Commerce, Trade and Industry by Friday 8 November 2019”. Once submitted it will be reviewed internally by senior management before submission to Cabinet. Once cleared, the Strategy  will be officially launched by Ministry. He further advised that, once the Strategy is approved, it is critical to undertake national sensitisation and continued advocacy so that the Zambian stakeholders own the document. He emphasised, the importance of micro, small and medium enterprises (MSMEs) being part of the AfCFTA and benefit from the opportunities that the agreement presents. “ECA [Economic Commission for Africa] is hoping to learn from Zambia’s experience as we work with other regional member states in providing support towards the development of strategies on the AfCFTA”, he said.

Source: United Nations Economic Commission for Africa