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THE AFRICA REPORT
The
N° 107 • APRIL-MAY-JUNE 2019
In this issue:
PROFILE Ramaphosa’s agenda
QUARTERLY EDITION • N° 107 • APRIL - MAI - JUNE 2019
DEBATE Is Magufuli’s economic nationalism working? INVESTIGATION Nigeria’s OPL 245 net widens DOSSIERS Bayelsa, East Africa, Logistics
most influential Africans
A constellation of the celebrated: barrier-busting business folk and power players on the continent. From the stars of the moment to those imagining Africa’s tomorrow JEUNE AFRIQUE MEDIA GROUP
INTERNATIONAL EDITION
Algeria 610 DA • Belgium €7.90 • Canada CA$ 12 • Denmark 80 DK • Ethiopia 200 Birr • France €7.90 • Germany €7.90 • Ghana GH¢ 35 • Kenya KES 900 • Morocco 45 DH • Netherlands €7.90 • Nigeria 2000 NGN • Norway NK 95 • Rwanda RWF 7,500 • Sierra Leone LE 67,000 • South Africa R75 (tax incl.) • Sweden SEK 100 • Switzerland 10.90 FS • Tanzania TZS 20,000 • Tunisia 15 DT • Uganda UGX 30,000 • UK £7.2 • United States US$ 15.99 • Zambia 80 ZMW • Zimbabwe US$ 6.20 • CFA Countries 3,900 F.CFA • Euro Zone €7.90
Experience the Progress.
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EDITORIAL
SIGNS OF AN AFRICAN SPRING By PATRICK SMITH editorial@theafricareport.com The mobilisation of hundreds of thousands of young people on streets across the continent demanding economic and political rights challenges traditional oppositionists as much as incumbent regimes. In each case, the demonstrators in Algiers, Bamenda, Harare, Kampala, Khartoum and Kinshasa are taking on systems of vested interests and dysfunctional politics that are holding them back. They are calling for sweeping change, not just different party colours in the presidency. Even in South Africa and Nigeria or countries where politics seems quiescent or dominated by competition between ideologically identical parties, these new movements send important messages. First is that the economic downturn has exposed the jobless growth of Africa’s boom years. The demographic reality of the world’s youngest continent means this issue will dominate African politics for the next three decades. Although most policymakers talk of structural reform, very few have a strategy and can implement it. Second, when regimes try to reform after years of stasis, they are at their weakest point. They have neither the legitimacy nor the resources to change the policy course. The protesters’ grievances run the gamut
of economic and social demands. The main targets are the spiral in youth unemployment, stagnant economies held prisoner by international commodity markets, together with deteriorating provision of education and training – a key ingredient to revive dynamism. Activists are finding new ways to organise and avoid the attentions of the police. They have brought together students, professionals, and trade unionists of all ages – even feuding family members – into a sprawling movement. Innovation is key to the organisational power of the new groups. Activists in Algeria are using WhatsApp groups of football fans to mobilise support. It worked. On the evening of 3 March, hundreds of thousands marched through the streets to call on President Abdelaziz Bouteflika to refrain from standing for a fifth mandate in April’s elections. In Sudan and Zimbabwe, the governments have tried to shut down services like WhatsApp, so activists use virtual private networks to share information and send messages to the outside world. All this has prompted easy comparisons with the rebellions that swept across North Africa in 2011. The protest movements in Egypt, Libya and Tunisia started that way, so the argument goes, but ended in a new autocracy, bloody chaos or frustration and disappointment. There are parallels between today and 2011 but more importantly there are lessons. Above all, demonstrate in peace, is the message circulating relentlessly among activists in Algeria and Sudan. Many hope the form of the demonstrations themselves, heterogenous with a strong, sometimes majority, participation by women, can shape the political transitions. This may prove the hardest task: for a popular movement to take on the responsibilities and limitations of political power without betraying its supporters.
THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
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CHAIRMAN AND FOUNDER BÉCHIR BEN YAHMED
Ramaphosa is working on his image as ‘an enigma’
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PUBLISHER DANIELLE BEN YAHMED publisher@theafricareport.com EXECUTIVE PUBLISHER YVES BIYAH EDITOR IN CHIEF PATRICK SMITH MANAGING EDITOR NICHOLAS NORBROOK editorial@theafricareport.com ASSOCIATE EDITOR MARSHALL VAN VALEN PRODUCTION EDITOR OHENEBA AMA NTI OSEI To find the full editorial team, all our correspondents, and much more on our new digital platform, please visit: www.theafricareport.com SALES A JUSTE TITRE
03 EDITORIAL 06 MAILBAG 08 COFFEE WITH THE AFRICA REPORT / Bob Collymore 10 THE QUESTION 12 Q2 / April 14 Q2 / May 18 Q2 / June
63 EAST AFRICA FOCUS Policymakers are not yet looking at the many concerns of business and ordinary citizens in order to avoid the pitfalls that have hobbled other integration projects
FEATURES 22 PROFILE / Ramaphosa’s destiny Ahead of 8 May’s general elections The Africa Report talks to close contacts of the president over the years to build a picture of the man who says he can get South Africa out of its current mess
86 100 MOST INFLUENTIAL AFRICANS The Africa Report’s inaugural ranking of the top Africans who control the levers of power across politics, business and the arts: from billionaire barons to unpredictable peacemakers and soft-power superstars
122 INSIDE BAYELSA New projects are taking root in the Nigerian state after years of despoliation
36 INVESTIGATION / Nigeria’s billion-dollar oil scandal An investigation in Nigeria has turned into the country’s biggest corporate bribery case, with nine executives from Eni and Shell now on trial in Milan
146 LOGISTICS DOSSIER
48 WIDE ANGLE / The youth wave
Ethiopia has high hopes for exports, and has made improving logistics a priority
Sudan street protests, Bobi Wine, #FeesMustFall and #NotTooYoungToRun – a demographic tide is pushing back against outdated politicians, so how long before the bulwark crumbles?
56 DEBATE / Is Magufuli’s economic nationalism working? The threat of a $190bn tax bill became a $300m payment. The Africa Report looks into whether the Tanzanian government’s barnstorming style will revolutionise the economy or scare away investors
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THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
156 ART & LIFE African designers are in the limelight when Black Hollywood stars choose their labels for red carpet ceremonies
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MAILBAG
Introducing a more technical curriculum doesn’t do enough to address the root cause of the failing education system, as technology alone won’t fix our public schools [‘Yemi Osinbajo: Selling our crown jewels isn’t the solution’, TAR106 Dec./Jan. 2019]. What ails our educational system ranges from poverty in early childhood to underfunded districts and poorly designed incentives for an overburdened faculty, all of which feeds the unequal access to quality education for the teeming population of schoolage children. Recruiting more qualified teachers into service requires more funding than the sector currently gets. The proposed reform of the school curriculum will level the playing field of access, but level fields do not necessarily translate to improved player skills, which is the entire point of education. Maryam Bello, Ibadan, Nigeria
62 COUNTRY FOCUS | NIGERIA
NIGERIA’S OBY RAISES CRUCIAL QUESTIONS
Obiageli ‘Oby’ Ezekwesili
Presidential candidate, Allied Congress Party of Nigeria
The old order has delivered misery
STEPHEN LOVEKIN/SHUTTER/SIPA
THE POINT OF EDUCATION
For all your comments, suggestions and queries, please write to: The Editor, The Africa Report, 57bis rue d’Auteuil Paris 75016 - France or editorial@theafricareport.com
The Nigerian presidential candidate talks to The Africa Report about the education crisis and the need for the politics of ideas rather than personality
B
lunt-speaking and a passionate advocate for women’s r ights, Obiageli ‘Oby’ Ezekwesili has launched a groundbreaking run for the presidency, which looks like a logical stepin her professional and political career. Standing for the small Allied Congress Party of Nigeria (ACPN), she is shaking up the election by running a grassroots campaign with a dedicated band of young volunteer helpers. Oby, as she is widely known in Nigeria, should not be underestimated as a campaigner. What she lacks in establishment backers and corporate donors, she could make up for in her own enthusiasm and that of her young supporters. She shot to global fame as one of the founders of the #BringBackOurGirls campaign in 2014 demanding
that the government of Goodluck Jonathan find and rescue the more than 270 schoolgirls kidnapped from Chibok in Borno State by the Islamist Boko Haram militia. Oby and Hadiza Bala Usman, co-founder of the campaign, used social media to get the message around the world, and even US First Lady Michelle Obama was
“I would do a much better job than [Atiku] because government is not monolithic” pictured on social media brandishing a #BringBackOurGirls placard. That campaign was a major reason why Jonathan lost the 2015 election. An accountant by training, with amaster’sinpublicadministration from Harvard University, Oby has worked on development projects THE AFRICA REPORT
DOUBTFUL DOUBLING FOR MAURITIUS
•
for much of her career. She joined then-president Olusegun Obasanjo’s government in 1999 as head of its Budget Monitoring Unit, where she earned the sobriquet ‘Madame Due Process.’ She later served as minister of mines and then of education before leaving government to join the World Bank as vice-president for Africa. Oby is a fiercely independent campaigner. At the launching of the now governing All Progressives Congress (APC) in 2013, she warned its members that they should stand for more than chasing the People’s Democratic Party (PDP) out of power. But she is also critical of Atiku Abubakar, the PDP’s presidential candidate, with whom she clashed in government. She tells The Africa Report that Atiku did “everything to undermine due process” when he was in government. N ° 10 6
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D E C E M B E R 2 018 - J A N U A R Y 2 019
Mauritius is keen to double the size of its financial sector in 12 years, but how will it find the growth strategies to achieve its dream in today’s global economic turmoil? [‘Mauritius: Offshore on the radar’, TAR105 Nov. 2018]. Various forecasts against a backdrop of new US government measures to impose tariffs on steel and aluminium have resulted in Turkey’s currency significantly
Oby not only has the educational qualification, she also has enough professional experience to be president [‘Obiageli ‘Oby’ Ezekwesili: The old order has delivered misery’, TAR106 Dec./Jan. 2019]. It is sad that Oby was not seen as a major contender. Instead, Nigerians were focused on two men who have been in power before and have shown that they have nothing to offer. Is it because Nigerians cannot yet wrap their heads around a female president? Lucia Edafioka, Feminist and brand communications manager, Nigeria
losing its value. Four countries – Egypt, Jordan, Argentina and Barbados – have suffered from high debt and deficits. Will Mauritius be successful in its expansion of its financial sector with new international investments when the general global economic outlook seems negative? Kokil Shah, Kenya
HELL BREAKS LOOSE IN ZIMBABWE It surely never rains in Zimbabwe. President Emmerson Mnangagwa’s
attempts to turn the economy around are yet to bear fruit [‘Zimbabwe 2019 Country Report’, TAR106 Dec./Jan. 2019]. Fuel shortages have loomed, doctors are going on strike, teachers are going to work twice a week and there has been a sharp increase in the prices of basic goods and services. New uncorrupt blood is needed, human rights laws need to be respected and in a nutshell, a new government is needed. Jeff K. Chakanyuka, Zimbabwe
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THE QUESTION
SELORM BRANTTIE
MICHAEL K. SERCHIE
Global Strategy Director, mPedigree Network
Project Manager, Ghana Institute of Linguistics, Literacy and Bible Translation
YES
NO
The National Cathedral serves an aesthetic and Ghana’s National Cathedral offers more than a house of prayer. It is a critical avenue for social superfluous purpose. It does not directly reflect the nation’s founding goals. It is a piece of architecture transformation in enhancing the prophetic, advocacy and educational role of the church as a corporate body. For that is just going to change the skyline. In a country which has a majority Christian religious orientation, there are a country with an estimated 70% Christian population, the National Cathedral would serve as a sacred space for already mega-auditoria that seat, in some cases, three governance of the nation, host times the proposed capacity of the cathedral. These auditoria state and religious functions, serve as a convening centre for have hosted and still have capacity to host events of a national interfaith dialogue to improve nature. To date, there has been the cohesive relationship beno explanation for the cost of retween government and religious placement of structures that will leaders and create a visible and be demolished for this edifice, organic unity of the different which will cost tens of millions Christian denominations in the of dollars at least. While the country. Our commitment to somega-pastors are running around cial justice in encouraging social with statesmen to raise funds, no integration requires initiatives to building the needed various inGhanaian even knows the cost of the whole project, and the govfrastructures at all levels – local, ernment itself is not disclosing regional and national – so that Ghana’s government-backed its interests. For a monument our nation can develop faster multimillion-dollar project has to a religion that has truth and than it is currently. Building the received backlash for being transparency as its core virtues, cathedral and tackling the other a misplaced priority in the face this cathedral’s very foundations socio-economic challenges in show a contradictory attitude. the country are not mutually of harsh economic conditions exclusive. Monuments like the Ghana has done very little to protect its heritage, and yet revels National Cathedral, in addition in the imposition of a foreign religion, whose main propoto its tourism potential and socio-economic revitalisation nents shackled our forefathers and condemned our ways of the city, will create jobs, revitalise the landscape of as barbaric. So while the national museum steadily breaks Accra, serve as a catalyst for technology and skills transfer down in ruins just five kilometres away, a monument that into our country, and will play an important cultural role celebrates our mental slavery rises in its wake. in cultivating pride for our heritage and past.
Are national cathedrals a waste of resources?
No!! These resources in question are meant for the wellbeing of the citizens and the development of the nation. Religious beliefs are entrenched in Ghanaian society and form part of the national identity. Yes, a national cathedral may not be in the interests of the entire population, but it captures most of the citizen’s religious affiliation, which is Christianity.
It appears the project does not have universal appeal in Ghana, even among the Christian community. It is more a matter of political mobilisation for short-end electoral purposes rather than Christian ends. State support is not universally agreed, since many court cases are ongoing regarding the presidential donation of prime government land. Besides, all so-called national cathedrals are denomination-based or -owned.
Randolf B. Hackman, Email
Colin Essamuah, WhatsApp
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THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
It is a vanity project. It’s management will be chaotic and at the taxpayers’ expense. It is the height of misplaced priorities. Kobi Annan, Twitter
ALL RIGHTS RESERVED
To respond to this month’s Question, visit www.theafricareport.com. You can also find The Africa Report on Facebook and on Twitter @theafricareport. Comments, suggestions and queries can also be sent to: The Editor, The Africa Report, 57bis Rue d’Auteuil, Paris 75016, France or editorial@theafricareport.com
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Quarter
The Africa Report’s exclusive guide to the quarter ahead features key events from the worlds of politics, business and culture. Find out more about how to plan your April, May & June, whether it is to find out who is planning for life after Bouteflika (see page 13), what happens next in the fallout from Steinhoff International’s accounting irregularities (see page 14) or understanding the battleground fights in South Africa’s election (see page 16). THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
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Q2
/ APRIL
‘We want to know how much debt Kenya is paying in pending bills and we want this done this year’
INVESTMENT Oil
interest
Despite low prices, several African countries are seeking investment in oil exploration in the months ahead 1 GABON The 12th licensing round is set to close in April 2019. 2 GHANA Its first formal licensing round should be complete in May. It has reportedly got the attention of 16 oil companies, including majors.
2
1 3 4
3 REPUBLIC OF CONGO Licence round phase II is due to close in June 2019. 4 ANGOLA The Marginal Fields Bid Round will be launched at the Africa Oil & Power conference in Luanda in June 2019.
World Bank leadership contest ALL RIGHTS RESERVED/ZUMA/REA; CAMILLE MILLERAND; ATUL LOKE/THE NEW YORK TIMES-REDUX-REA
PAUL ABUOR Kenyan MP calls the government to account over opaque debts as the government seeks to roll over big loans in April
POWER PLAYERS After president Jim Yong Kim’s surprise resignation, the race is on to name a replacement. Nominations ended in midMarch and a vote is due before the Spring World Bank/IMF meetings in Washington. Early talk was about breaking the US stranglehold on the presidency.
DAVID MALPASS The US Treasury official – a critic of multilateralism and former Bear Stearns boffin – is US President Donald Trump’s pick.
NGOZI OKONJO-IWEALA The former finance minister of Nigeria has said that she would run for the World Bank presidency if nominated.
RAGHURAM RAJAN The former Reserve Bank of India governor could be a strong candidate for the Asian grouping of countries.
ARTWORK
Up for sale
SOTHEBY’S
Pieces from renowned artists such as El Anatsui and Chéri Samba are going under the hammer at Sotheby’s London on 2 April. Contemporary African art continues to do well on international markets. Congolese artist Samba’s piece (pictured) sold for £31,250 ($42,000) in an October 2018 auction at Sotheby’s, which netted £2,274,625 in total.
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$100m
Tech-focused Andela raised a large sum in January, and Africa-focused investors will be discussing that deal and others at the African Venture Capital Association in Nairobi 1-5 April
SAMIR SID
Thousands of protestors have marched in Algiers and other cities across the country
‘A combination of economic discipline and vibrancy will ensure that we will not have to be rescued’ KEN OFORI-ATTA
ALGERIA ELECTIONS
Ghana’s finance minister decribes what is needed when the country’s programme with the IMF ends in April
The street speaks
MO IBRAHIM FOUNDATION The Mo Ibrahim Governance Weekend at the Sofitel hotel in Abidjan, Côte d’Ivoire on 5-7 April will play host to a new edition of The Africa Report Debates, with the question: “The new tech era: job killer or job creator?”
APPOINTMENT
SYDNEY MBHELE
SANLAM
The powerful clique behind President Abdelaziz Bouteflika may have waited too long to resolve their disputes about who should take over from the ailing 82-year-old president. They backed Bouteflika to run again in the planned 18 April elections, leading to hundreds of thousands of protesters – young and old – taking to the streets in late February and early March to send a message scrawled on handwritten posters and chanted by throngs of protesters that ‘enough is enough’. The economy, which is largely dependent on oil and gas projects, is hurting. Nearly everything had seemed on course for a non-event election where Bouteflika would win a fifth five-year term: the opposition is weak and divided, the regime holds a tight grip on the military and security services and Algeria’s young people were seen as disaffected and perennially frustrated by the country’s gerontocracy. Those around Bouteflika are now scrambling for a strategy. As The Africa Report went to press, the street had gotten wheelchair-bound Bouteflika to agree to a national conference on reforms and promise to step down before the end of the next term. In the days and weeks ahead, the protesters are seeking to press their advantage now that they have gotten the regime to make concessions. But questions remain as to how this generational change in the wind will eventually take shape. The Arab Spring examples of neighbouring countries show the pitfalls and possibilities. Will the opposition be able to rally around a candidate in time for the vote, if it will be free and fair? If Bouteflika steps down before the vote or his party fractures beyond repair, will oppositionists be able to exert enough pressure to push through generational change in the armed forces, many of whose leaders earned their pedigrees in the country’s war of liberation from France and the crushing of the Front Islamique du Salut group in the 1990s?
The new chief executive of brand at Sanlam takes up his post on 1 April. Sanlam’s focus has been on its 2018 acquisition of Moroccan firm SAHAM. Mbehele brings experience from rival insurance firm Liberty to the table.
THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
13
/ MAY
DWAYNE SENIOR/BLOOMBERG VIA GETTY IMAGES
Q2
STEINHOFF INTERNATIONAL
Awaiting the auditors
ALIKO DANGOTE His $9bn Nigeria oil refinery is due to begin test production in May 2019. The investment is set to more than double Dangote’s annual revenue and allow large investments outside of Nigeria.
JACOB ZUMA South Africa’s former president will be back in court in May on corruption charges relating to a multibillion-dollar arms deal in the 1990s. He faces charges of fraud, racketeering and money laundering.
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THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
ERIC LARRAYADIEU/AFRICA CEO FORUM/JA; CIA PAK/UN
The reckoning for Steinhoff International, an Africa- and Europe-focused retailer backed by South African billionaire Christo Wiese, depends in part on the audited results for its group and subsidiaries in 2017 and 2018, due to be released in April and May 2019. Under the leadership of chief executive Markus Jooste, Steinhoff’s share price crumbled when accounting irregularities were discovered in December 2017. Auditing firm PwC is carrying out the investigation into Steinhoff’s recent operations, which will reveal the extent of the company’s problems. Since the 2017 crisis and writing down an estimated $12bn in assets, the company has been limping along as it conducts the restructuring of some subsidiary operations and preparing for court cases seeking billions of dollars in damages due to investor losses. The Amsterdam Court of Appeal – Steinhoff International is headquartered in the Netherlands – will hold a crucial hearing on 23 May to determine if it will go ahead with an investigation into the company. Steinhoff’s difficulties are also playing out in South African politics, where the opposition Democratic Alliance has been calling for the speedy launch of criminal investigations once the audited results become public. Authorities in the Netherlands, Germany and South Africa could take years to complete their probes. Restructuring specialist Louis du Preez has been leading Steinhoff since November 2018 with the goal of saving the company from collapse. Plans for new stores – Steinhoff owns Mattress Firm in the US, Conforama in France and the Pep and Ackermans brands in Africa – have largely been put on hold until the company is on sounder footing. Steinhoff’s unaudited results for the last quarter of 2018 showed 3% total revenue growth from existing stores, with a 5% jump in Africa and a 4% drop in the US.
‘Whether we have accomplished fully what we had set up to accomplish? The answer is no. Corruption is worse […] It’s politics of patronage and appeasement.’ SAULOS CHILIMA Malawi’s former vice-president is running against his one-time ally, President Peter Mutharika, in May. Corruption and the economy are high on the political agenda.
Q2
/ MAY
$1bn
Ivory Coast plans to sell at least $1bn in eurobonds by May 2019 in order to finance the construction of new infrastructure projects.
‘It means having the law affirming our existence and validating that we – like all Kenyans – are protected under the law.’
SOUTH AFRICA
Poll pressure In May’s general election, President Cyril Ramaphosa desperately wants a strong turnout in favour of the governing African National Congress (ANC) so that he can sweep out corrupt officials linked to former president Jacob Zuma and clean up ailing state-run enterprises like Eskom and South African Airways (see page 154). Support for the ANC has been waning in recent years. It took 61.95% of the vote in 2016’s municipal elections, and an Ipsos opinion poll estimated its support in November 2018 at 61%. Another Ipsos poll released in February 2019 found that 59% of adult South Africans do not believe the government is handling the economy well, and only 29% believe the country is moving ‘in the right direction’. But the two main opposition parties, the Democratic Alliance (DA) and the Economic Freedom Fighters, do not seem to be making headway on the pocketbook issues that voters have been worried about the most. Here are three key provinces to watch:
MERCY NJUEH The Kenyan LGBTQ+ activist hopes the High Court will strike down a colonial-era law on 24 May that she says conflicts with the protections of the 2010 constitution.
ALL RIGHTS RESERVED; LOBNA TAREK/AP/SIPA
WORLD PRESS FREEDOM DAY
MOHAMED AL-GHEITI & MAHMOUD ABU ZEID World Press Freedom day will be celebrated in Addis Ababa in May. Last year, Egypt ranked among the top three countries for imprisoned journalists. AlGheiti got 12 months in January 2019 for interviewing a homosexual and Abu Zeid got a five-year term in 2018 for taking photos at the Rabaa massacre in 2013.
Phase II
The second phase of Kenya’s standard gauge railway, being built by China Communications Construction Company to link Nairobi to Naivasha, is due to be finished in May or June.
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WESTERN CAPE
GAUTENG
KWAZULU-NATAL
Poll watchers are not yet sure how much support former Cape Town mayor Patricia de Lille – who founded the Good political party last year – will pull away from the DA after her falling out with the party leadership. Western Cape is the DA’s strongest support base.
Voters in and around Johannesburg are critical of the ANC’s record on the economy and service delivery. The ANC lost control of the Joburg mayor’s office in 2016, so the vote in Gauteng will show if the opposition can make stronger inroads.
Zuma has been lobbying hard behind the scenes for his home province to split the vote, voting for his ANC allies in the provincial vote and against the ANC on the national level. The province is the biggest vote pool for the ANC.
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Q2
/ JUNE AFDB
Let’s meet in Malabo The African Development Bank (AfDB) president Akinwumi Adesina has about another year left before he could be up for re-election as head of the continental financial institution. He came into office in 2015 promising to transform the AfDB, but at the last general meeting, the bank’s governors said they wanted to see more evidence of reforms and the efficient use of resources before they would agree to Adesina’s request for a general capital increase to allow the financing of more projects. The AfDB is preparing for its annual general meeting in the Equatorial Guinean city of Malabo on 11-14 June as the continent’s growth engine continues to recover from a low in 2016. The AfDB predicts that growth will reach 4% in 2019, up from 3.5% in 2018. Those numbers hide regional variations, with the oil producers and mineral exporters of West and Central Africa performing relatively poorly when compared to the economies of Senegal and Ethiopia. Economic giants Nigeria and South Africa have been struggling to cope with lower commodity prices and other economic strains, and the new administrations in both countries will be looking for ways out of their current troubles. So Malabo makes a fitting backdrop for discussions about how natural resource-dependent economies can diversify and attract more investment – something the government of President Teodoro Obiang Nguema has been talking about for quite some time. With an annual infrastructure financing gap estimated at between $68bn-$108bn, attendees at the Malabo conference will be debating how African governments can raise more internal revenue, how to implement the planned continental free trade area and how to improve the mobility of the continent’s population in pursuit of better economic outcomes.
Japan will host its first G20 summit, which assembles the biggest economies in the world. South African diplomats will be present to represent the continent, and topics to be discussed include agriculture, health, green energy, trade and the digital economy.
‘What we want is a mindset change from everybody.’ ISMAIL MOMONIAT The National Treasury deputy director-general said in December that the planned introduction of a carbon tax in South Africa would force companies to think differently about their environmental impacts.
12.88 MTPA
‘We will (…) eliminate need for importing electricity from Uganda’ JOSEPH NJOROGE Kenya’s energy principal secretary announces a transmission line for June 2019.
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EMRE DORTER/TABANLIOGLU ARCHITECTS
US firm Anadarko is due to make an investment decision by June 2019 on two natural gas plants in Mozambique’s Offshore Area 1 with a capacity to produce 12.88 MTPA. The plants make up the key piece of infrastructure to the country’s planned gas boom.
Q2
/ JUNE SOUTH AFRICA
National Arts Fest ALET PRETORIUS/FOTO24/GALLO IMAGES/GETTY IMAGES
Art in nearly all of its forms will be centre stage in what is billed as Africa’s largest arts festival 27 June to 7 July. Amongst the singers, actors and painters, politically engaged South African photographer and multimedia artist Berni Searle will be in the spotlight.
AFRICAN CUP OF NATIONS Cairo
$2.5bn
cup
After high drama about which countries will host the next two tournaments, African football fans are preparing to visit the land of the pharaohs for matches between 21 June and 19 July. As The Africa Report went to press, the qualifying matches had not yet been completed. But there were already some early favourites. Egypt, which came in second in the 2017 tournament, is expected to put in a strong showing. Fans of the home team, which automatically qualifies for the final tournament, will be cheering on Mohamed Salah, who scored a goal in each qualifying match.
Stanbic Bank Uganda, lead arranger for the East African Crude Oil Pipeline’s $2.5bn funding, expects the deal to close in June 2019.
‘Energy subsidy (cuts are also) a positive measure’
CAMEROON
NIGERIA
SENEGAL
Last year’s winners are expected to put in a good showing in Egypt. The team will need a good performance out of winger Christian Bassogog, who was the 2017 tournament’s best player.
Shanghai Shenhua’s Odion Ighalo was in fine form in the qualifiers, scoring six goals in four matches. But the side was in a pool of relative lightweights, so the Super Eagles will have to prove their mettle in the next rounds.
Star Sadio Mané, rated one of the continent’s top footballers, is a key player for the team, which was on course to qualify for the final tournament with the highest number of points.
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UG CO. K/SHUTTERSTOCK/SIPA; PRESSFOCUS/SIPA; ANDREW MEDICHINI/AP/SIPA
HASSAN AMIN Acwa Power’s director for Egypt says his firm will sign off on three solar projects by June.
Indian telecoms company Airtel Africa plans to raise additional funds of about $1.5bn by June in order to invest more and to help pay its debts. It raised $200m in early 2019 from the Qatar Investment Authority and $1.25bn in late 2018 from Warburg Pincus, Temasek, Singapore Telecommunications and SoftBank. Plans are underway for an initial public offering.
THE YEAR OF REFUGEES, RETURNEES AND INTERNALLY DISPLACED PERSONS: TOWARDS DURABLE SOLUTIONS TO FORCED DISPLACEMENT IN AFRICA. Every year, the Heads of State and Government of The African Union decide upon a theme which focuses on a key issue facing the continent and which constitutes a focal area upon which the key activities and messages of the African Union will be anchored. In 2019 the annual theme of the African Union will be “The Year of Refugees, Returnees and Internally Displaced Persons: Towards durable solutions to forced displacement in Africa. The 2019 AU Theme is driven by the need for greater commitment by Africa to address the plight of its citizens in forced migration situations, by implementing strategic and relevant programmes and working towards the ratification of the various AU treaties and legal instruments addressing the plight of refugees and displaced persons to ensure we achieve the goal of Aspiration 4 of Agenda 2063 to provide a peaceful and secure environment for all Africans on the continent. Various AU treaties governing issues related to refugees, human rights, governance and promoting peace on the continent include the OAU Convention Governing the Specific Aspects of Refugee Problems in Africa, African Charter on Human and Peoples’ Rights, OAU Convention for the Elimination of Mercenaries in Africa, OAU Convention on the Prevention and Combating of Terrorism and the African Charter on Democracy, Elections and Governance. Find out more about these treaties as well and their status of ratification by African states by visiting www.au.int About the 2019 Theme Logo: The logo for the Theme of the Year has been built around the crisis facing refugees in Africa. Whereas migration is a common phenomenon as people have always relocated for various reasons, in the case of Africa the continent is often painted as a miserable place because migration is as a result of civil strife, poverty and a myriad of other factors thereby promoting the narrative that Africa cannot care for its people. Africans and their governments have always opened their borders and welcomed into their communities their brothers and sister fleeing their homes for various reasons providing a safe haven as long as it is required. The 2019 AU theme logo shows a mother embracing Africa with its child which encompasses love and affection. Africa knows how to take care of its own in each regard no matter what.
www.au.int
African Union Headquarters P.O. Box 3243, Roosvelt Street W21K19, Addis Ababa, Ethiopia Tel: +251 (0) 11 551 77 00 Fax: +251 (0) 11 551 78 44
DANIEL HAYDUK/AFP
Features
22 PROFILE Ramaphosa’s destiny Does the formula that is Cyril Ramaphosa add up for South Africa? Contacts of the president help to build a picture of the man who says he can get the country out of its current mess
36 INVESTIGATION How Dan Etete’s billiondollar deal ended up in court An investigation in Nigeria has turned into the country’s biggest corporate bribery case, with nine executives from Eni and Royal Dutch Shell now on trial in Milan
48 WIDE ANGLE The youth wave Sudan street protests, Bobi Wine, #FeesMustFall: A demographic tide is pushing back against outdated politicians, so how long before the bulwark crumbles?
56 DEBATE Is Magufuli’s economic nationalism working? The threat of a $190bn tax bill became a $300m payment. The Africa Report looks into whether the Tanzanian government’s barnstorming style will scare away investors
THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
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FEATURES /
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THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
Is Magufuli’s economic nationalism working? The threat of a $190bn tax bill became a $300m payment. The Africa Report looks into whether the Tanzanian government’s barnstorming style will revolutionise the economy or scare away investors
President John Magufuli has a trademark ‘us against the world’ message
DANIEL HAYDUK/AFP
By NICHOLAS NORBROOK There was a certain optimism when John Magufuli became president in 2015. Here was a man, as the early skirmishes on social media revealed, who was not afraid to get his hands dirty to get things done: surprise visits on hospitals and government offices to reveal who was slacking off work; a push for discipline and austerity in public office; and an anti-corruption drive known as ‘lance the boils’. Even some of his most trenchant critics – like opposition politician Zitto Kabwe – say that Magufuli is making progress. Kabwe tells The Africa Report: Magufuli is doing the “right thing, but in the wrong way.” What is this ‘right thing’? At its core it concerns the role of government, the mediator between the interests of capital on the
one hand, and citizens on the other. “Let us stand as one. Tanzania belongs to us all and we should put interests of the country first,” Magufuli told parliament in 2015. It is also a political fault line of our time. And Magufuli has certainly changed the rules of the game in Tanzania. Passed in 2017, the Natural Wealth and Resources Contracts law allows officials to trawl back through two decades’ worth of contracts to see if any of the terms are unfavourable to the government. Equinor, which has invested more than $2bn in developing Block 2 off the coast, says that the production-sharing agreement it has with the government is still valid, but has been unable to get any further in negotiations over building a $30bn gas plant in Lindi. Other legislation pushed the royalty rate on gold from 4% to 6%, gave the government 16% of the stock of mining companies and
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made it illegal to export concentrates and unprocessed minerals. It was accompanied by a major confrontation with the biggest mining company, Acacia Mining, which had revenue of $751m in 2017, is owned by Canada’s Barrick Gold and is listed on the London Stock Exchange. In March 2017, the government halted the company’s cargos at the port. It claimed that Acacia had been understating the value of exports to avoid tax since 2000 – something Acacia denied. The Magufuli administration then slapped a tax bill of $190bn on the company.
Loud rhetoric
“The country has been shortchanged and continues to be cheated out of the much-needed revenue that would greatly boost our health sector, infrastructure and others,” Magufuli declared, and in what appears like a victory for his tough stance, Barrick Gold announced that a deal had been struck – whereby it handed 16% of the company to the government, promised to share profits 50:50 and agreed to pay a fine of some $300m. The coal sector has seen intervention, too. A ban on importing coal to stoke domestic mining raised howls across the private sector in 2016, especially with Dangote Cement. Owned by the continent’s richest man, the firm argued local coal was too expensive and poor quality. But it is not just in mining. Late last year, Magufuli stepped in to support a higher price
for farmers. When private buyers baulked at the price, he forced a government-controlled bank to step in: “We will buy the entire crop, then we will look for buyers, and we will eat anything that is not sold,” he said, ordering troops into the fields to protect the crop from black market operators. Telecoms has not escaped his attention. In 2017, Magufuli claimed that Indian company Bharti Airtel had swindled the government out of its rightful share. The presidency announced in January this year that it had upped its stake in Bharti Airtel from 40% to 49%, and that the telecoms operator would be paying the government more dividends. So how has Magufuli executed his systemic rejig? It is a highly centralised approach – heavy on loud rhetoric, light on parliamentary or societal checks and balances. "There is rampant looting in the mining sector," says Magufuli one day. “We are in an economic war (…) billions in revenue have been lost,” he will say the next. “Even the devil is laughing at us over our own self-inflicted level of poverty amid natural wealth given to us by God,” another. Dismissals of what he sees as corrupt or inept officials, and a rewiring of responsibility back to the presidency are also a feature. “The wide discretionary powers of the Minister for Energy and Minerals have been removed,” explained Stein Sundstol Eriksen in a 2018 report for the Norwegian Institute of International Affairs. The Ministry of Energy and Minerals has certainly been a locus of corruption. But Magufuli has also changed the dynamic in the tax collection wing of government. Tax is the fuddy-duddy at the development party. It can be seen lurking round the edges of the room, while newer, more shiny development strategies take centre stage: Mobile money! Business environment! SMEs! Microlending! Crypto currencies!
‘Reforms by Tanzania since the late 1980s […] created an enclave economy’ JAPHACE PONCIAN
Aliko Dangote, seen here with Magufuli, saw a ban on importing coal in 2016. His firm Dangote Cement argued local coal was too expensive and poor quality
ALL RIGHTS RESERVED
Drive against tax evasion
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But building a solid tax base remains a core job, the tough slog of good governance. And in Tanzania, similar to African peers, the tax-to-GDP ratio base is consistently in the low teens. Magufuli has delivered here. “The tax-toGDP ratio has increased by about 1.5% of GDP since FY2014/15, supported by President
ZITTO KABWE
President of Tanzania
Tanzanian opposition lawmakker
‘I want to immediately start investigating staff [...]. The country has been shortchanged and continues to be cheated out of muchneeded revenue that would greatly boost our health sector, infrastructure and others’
‘People always want to compare us; either to South Korea, or to Rwanda, or to Ethiopia. But you can’t, because the context is just so different – we are not a country developing after a genocide, nor are we in a violent civil war’
Magufuli’s drive against corruption and tax evasion,” reads the June 2017 International Monetary Fund report on Tanzania. And at a contract-signing ceremony for the building of a new hydropower dam in the middle of Selous game reserve in December 2018, Magufuli hammered home his trademark ‘us against the world’ message. "When we asked for financing for this project, the lenders refused to give us money, but thanks to improved tax collection we are able to finance this project using our own resources," Magufuli said. East Africans with long memories will remember another politician who said similar things: Meles Zenawi, a former Ethiopian premier. Ethiopia is an interesting case for Tanzania because Addis Ababa consciously tried to copy the Japanese and South Korean state-juiced development model. The great commentator on South Korea, the late Alice Amsden, wrote about how it flouted economic orthodoxy during the period of its economic rise. Rather than allowing the market to set prices freely – a core tenet of free-market capitalism – officials would deliberately “get the prices wrong” by, for example, lending to industry at below market rates or using the powers of the state to distort costs for inputs.
ALL RIGHTS RESERVED
JOHN MAGUFULI
“The neoliberal economic reforms undertaken by Tanzania since the late 1980s in the mining and other economic sectors have largely created an enclave economy in which a few wealthy individuals and multinational corporations benefit at the detriment of majority poor people in rural and urban areas,” says Japhace Poncian, a lecturer at Mkwawa University in Tanzania, who says Magufuli is riding on the public backlash against this – as well as Tanzania’s own socialist past under Julius Nyerere – to promote his vision.
Drift into authoritarianism
So it seems clear that Magufuli has chosen his side of the debate – he will use ‘economic nationalism’ to ‘get the prices wrong’, be that for cashews, gas or gold. But will Magufuli make Tanzania rich? Or will it slide into mismanaged, debt-burdened trouble? Three great obstacles lie in his path. The first is a reckoning with capital. The second is the ineffective bureaucratic tools with which he wants to execute his great leap forward. And the third is a drift into authoritarianism that disconnects the executive from the best available righting mechanism for development: the public. The first is best summed by the negotiations over Acacia Mining. For Kabwe, this is a classic
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FEATURES / DEBATE / Is Magafuli’s economic nationalism working?
example where posture is more important than the result. Some $300m is not enough to launch an industrial revolution and efforts to hook industries such as gas and mining to local operators – known as ‘local content’ in the business – seem patchy at best. Then take, for example, the cashew confiscation: while Amsden vaunted South Korea’s ability to ‘get the price wrong’, there was always a final goal in mind, more often than not the upskilling of a particular industrial subsector. “There are a few examples involving the president himself and some of his government officials taking initiatives to bring private operators closer by convening meetings to learn of their challenges and issues,” says Poncian. “The impact of these initiatives in terms of moving up the value chains is yet to be seen.” Here, the cashew price bump is good politics. But is it good economics? Reports have emerged about a shadowy company called Indo Power Solutions, which has entered into a $180m deal with the government to buy 100,000tn of cashews, despite lacking any experience in the commodity.
‘Question mark’
Certainly, the threat of $190bn tax bills and the prospect of the army guarding cashews have made foreign investors circumspect about whether or not to put money into the country. “We believe that there is a question mark about future policies around ownership of businesses,” says Konstantin Makarov of StratLink, a boutique investment adviser for East Africa. But Tanzanian officials are adamant they are not attempting to make a hostile environment for foreign capital. “It’s not the aim of the government to frustrate investors but we want to have a win-win situation. We want to prove to stakeholders that nobody is missing out,” Charles Sangweni, the acting director general of the Petroleum Upstream Regulatory Authority tells The Africa Report. His institution is in charge of looking at contracts signed under previous administrations. “We are doing the review for two purposes. First is to clear the environment by proving that whatever was agreed was good. But second, we are laying the baseline for establishing a new production-sharing agreement for future investments,” he says.
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‘It’s not the aim of the government to frustrate investors but we want to have a winwin situation’ CHARLES SANGWENI
The second key stumbling block is the tool Magufuli is wielding to effect change: the bureaucracy. Japan had its legendary cadre of technocrats in the ministry of trade and industry. But in Tanzania, “there is total confusion,” says Kabwe. This is partly because of the 180-degree turn in focus, from the more free marketdriven years of presidents Mwinyi, Mkapa and Kikwete to the more state-driven economic turn of Magufuli. But it is also due to a lack of investment and discipline that has eroded the professionalism of the civil service. “We need a new generation of bureaucrats now,” argues Kabwe. It matters, partly because of the complexity of economic planning, but also because of the dangers of ‘state capture’, as the South Africans euphemistically call the purchasing of top government officials by corporate interests. “Yes, we may have a highly trained bureaucracy, but this is rarely insulated from political and economic interference,” says Poncian. The final obstacle that may trip up the attempt to make Tanzania rich using economic nationalism is the creeping violence that characterises the regime. “At lunchtime on 7 September 2017, I was followed home from
later told me that I lost my entire stock of blood three times over.” “Magufuli has led a sharp authoritarian turn. This gives him freedom to manage and perhaps curtail rent-seeking, but it will undermine the institutional checks on it too,” according to Dan Paget of University College London. “Worse still, it will leave an inheritance of centralised power to his successor.” And the data is in arguing that democracies grow faster, according to the data in a new report, Africa: A Divided Continent by the Bertelsmann Foundation. It says democracies outperform their authoritarian counterparts nine times out of 10.
Reports have emerged about a shadowy company entering a $180m deal to buy 100,000tn of cashews
EMMANUEL HERMAN/REUTERS
Changing relationships
parliament,” wrote Tanzania’s chief whip Tundu Lissu in the pages of The Africa Report. “Outside my home, two gunmen emerged from a car and opened fire at close range with sub-machine guns. My car was sprayed with 38 rounds of bullets, 16 of which hit my body. I was flown to the Nairobi Hospital in Kenya for emergency treatment. My lead surgeon AVERAGE EFFECTIVE TAX RATE FROM A GOLD PROJECT WITH DEVELOPMENT COSTS OF $420M, PER UNIT OPERATING COSTS OF $600 PER OUNCE AND A GOLD PRICE OF $1,300 PER OUNCE*
74%
Tanzania 2017
61%
Guinea
58%
Ghana
51%
Tanzania pre-2017
48%
Chile Peru
45%
Western Australia
45%
Zambia Kyrgyzstan
44% 39%
*Based on a 10% discount rate, assuming that the government continues to treat gold doré as a raw mineral and therefore not eligible for VAT refunds
SOURCE: NATURAL RESOURCE GOVERNMENT INSTITUTE
59%
South Africa
In fact, argues Kabwe, Tanzania needs a form of mild economic nationalism coupled with vigorous democratic practice – Mauritius, Morocco and Botswana all show what can be done when the state gets involved in the economy and the people get involved in politics: “People always want to compare us; either to South Korea or Rwanda, but the context is just so different – we are not developing after a genocide, nor are we in a violent civil war”. Kabwe points to the 1967 Arusha Declaration as a foundational national moment. This allowed Tanzania to get beyond much of the tribalism that plagues much developmental progress on the continent, with its distributional fights between various groups who want to monopolise resources. Those challenges – capital, bureaucracy, autocracy – are sizable hurdles. Can Magufuli clear them? Perhaps – certainly his relationship with investors is changing. He desperately needs revenue to fund big infrastructure projects he has promised, and Roskilde University fellow Thabit Jacob says that Magufuli has realised that he cannot do that if he alienates foreign partners: “Even the language has changed now. He once called foreign miners thieves, but he recently referred to them as genuine partners.” And a mild economic nationalism balanced with investor interests is not just a romantic notion, either. Jacob points to Chile as a “good example where a mix of resource nationalism, a credible state-owned company and respect for investors has proved successful”.
Additional reporting by JOSEPH BURITE
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FOCUS /
EAST AFRICA
EAC
The East African Community was formed two decades ago, but rivalry and diverging national interests threaten to curb progress
The trade ties that bind
The region has a long agenda for cooperation in the years ahead, but policymakers are not yet looking at the many concerns of business and ordinary citizens in order to avoid the pitfalls that have hobbled other integration projects THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
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EAST AFRICA FOCUS / The trade ties that bind
By JOSEPH BURITE in Dar es Salaam Uganda’s Allen Namagembe typifies the emerging East Africa. On a hot February afternoon, she is travelling on a Rwandan airline to catch a doctor’s appointment at a Kenyan hospital. It is very much a realisation of the vision the East African Community’s (EAC) founders had: closer integration and the elimination of barriers for the benefit of citizens. But Namagembe is perturbed that, having misplaced her yellow fever vaccination certificate, airport officials had insisted on her acquiring another before they could let her through. This even as the stamps that dot the pages of her passport show the history of this same routine itinerary, proof that her vaccination is in order. She is an epidemiologist who researches clinical skills, and Namagembe is lucky to be allowed to proceed where many are blocked. At Uganda’s Entebbe airport, travellers regularly miss flights as airport officials shove them back to the end of queues for lack of vaccination certificates.
A well-meaning screening policy has morphed into something of a non-tariff barrier to trade in services, in a region rated as the most advanced economic bloc on the continent. Among eight regional economic organisations recognised by the African Union, EAC stands tall in terms of integration above the Arab Maghreb Union; the Community of Sahel-Saharan States; the Common Market for Eastern and Southern Africa; the Economic Community of Central African States; the Economic Community of West African States (ECOWAS); the Intergovernmental Authority on Development (IGAD); and the Southern African Development Community.
Cracks showing
The six-member EAC – having established a free trade area, a customs union, a common market, partially attained free movement of people and looking to establish a monetary union by 2024 – is an especially high-performer on two elements, trade and productive integration, according to the
Geneva-based International Trade Centre. On the other hand, IGAD and ECOWAS outperform on infrastructure and free movement of people, respectively. The EAC also boasts of the fastest-growing
East African flashpoints A hill at the border of Burundi’s Ngonzi region and Rwanda’s Gisagara district. A rocky patch the size of a football field on the Lake Victoria border between Kenya and Uganda. A water source in the Omo-Turkana basin between Kenya and Ethiopia. Cross-border incursions between the Democratic Republic of Congo and Uganda over shared lakes, Albert and Edward. A strip of land between Uganda’s Lamwo district and South Sudan’s
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Magwi county. A Lake Nyasa/ Malawi dispute between Tanzania and Malawi. Or, it could be an Indian Ocean maritime border dispute between Kenya and Somalia. East Africa just cannot seem to solve its border conflicts, with some running over decades. Most of these disputes have not been a cause for concern as they are unlikely to lead to outright conflict. But shrinking resources and the effects of climate change are increasing the likelihood of
THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
strife. Kenya’s protest to Somalia’s auction in a disputed maritime area is a sign of what the future presents – a contest for resources. “How do we deal with these dysfunctional post-colonial states?,” asks Kenyan economist David Ndii. Regional bodies like the East African Community (EAC) were created in order to support conflict resolution and peaceful cooperation between member states. Overlapping ethnic groups
and colonial-forged boundaries have caused problems across the continent. For some Europeans – especially those living uncomfortably in the straitjacket of nation states that were created roughshod over previous identities – the idea of a supranational federation that could bind together the Welsh, the Catalans and the Danes into a whole may make perfect sense. “That is what the EAC could be at its best,” suggests Ndii.
A $3.5bn crude oil pipeline will pump Ugandan oil to Tanzania’s Tanga port
But regional rivalries loom behind the barriers to trade. Domination by Kenya is a real fear of the smaller economies, and Kittony acknowledges the need for some concessions: “You see the economies are very different in scale. […] There should be some concessions given to the landlocked countries by the larger economies, like Kenya and Tanzania, that will benefit say Rwanda and Burundi. That will create a feeling that it is a level playing field for everybody.”
STRINGER/XINHUA-REA
Similar problems
intra-regional payment systems on the continent, data from payments firm SWIFT shows. But trade among member states is estimated at 20%, much lower compared to intra-regional trade in the European Union (EU) – at 67%. As it approaches 20 years since its formation this November, cracks are starting to show within the EAC. A mixture of rivalry and diverging national interests are driving the creation of non-tariff barriers, which curb progress. This is disappointing for Kiprono Kittony, the chairman of the Kenya National Chamber of Commerce and Industry, the most powerful business lobby in the region’s largest economy. “We still have quite a few non-tariff barriers that are in place,” Kittony tells The Africa Report. “I see a weakness in terms of the bureaucratic capacity to follow up on the resolutions of the summit,” he adds, referring to the annual meetings where heads
of state assess progress and issue directives. The last one took place in February of this year amidst tensions related to Burundi, which is in the middle of a grinding conflict related to President Pierre Nkurunziza’s strong grip on power (see page 80). “At the high level of the summit, you see a lot of goodwill towards the customs union. But when it comes to implementation, you still find – even up to the summit – a lot of obstacles, that the same themes keep recurring,” Kittony argues. “I would actually recommend that we need to have more implementation committees, both at the high level of the summit, and even at the lower level of the bureaucracies.”
Trade among member states is estimated at 20%, much lower than trade within the EU
Kenyan companies are continuing their expansion into the region. Many investors are putting money into Kenyan companies that have succeeded in fixing problems in Kenya “because you tend to have very similar problems across the region,” says Konstantin Makarov of StratLink, a Nairobi-based advisory company. “We are also big believers in the food value chain that starts with primary farming and ends with restaurants, and everything in between.” Should current issues, like the failure to implement the customs union, persist, there are fears the remaining parts of East Africa’s integration agenda will get derailed. “The customs union came into force in 2005 to facilitate the establishment of the common external tariff so that we can have the removal of the intra-regional issues. But up to now we must appreciate that the customs union is not fully operational,” says Peter Mathuki, acting chief executive of a regional business lobby, the East African Business Council. “Without a fully fledged customs union, the common markets protocol – which is the second level of integration – will not work,” Mathuki adds. “A common market must work fully to allow monetary union.”
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EAST AFRICA FOCUS / The trade ties that bind
Indeed, this trend feeds into an emerging pattern of problems. In 2005, the EAC commenced negotiations with the EU on the Economic Partnership Agreement. Having failed to reach consensus through 14 years of talks, the EAC leaders at their February summit decided it was time each country engaged the EU on its own.
‘Waiting and observing’
Mathuki says things would have turned out different if the region’s private sector was not isolated by politicians. “All along, we have been observers. We don’t want to be observers any more. We want to be partners in sorting out issues because non-tariff barriers mostly affect the private sector,” he explains. “Once you leave it to the government alone, it will be the same story as for the last many years. But once we now become part of it, we will be offering solutions that are practical but not just waiting and observing.” For all its weaknesses, the EAC has many supporters. One of them is Ian Clarke, a Ugandan of Irish origin who first arrived in Uganda as a missionary doctor in 1987. He went into business in 1994, setting up a private clinic, the International
COMPARE TO OTHER REGIONAL BLOCS
ECOWAS POPULATION (million)
339.8
GDP per capita ($)
2,130
EAC 168.5
918
716.7 GDP ($bn)
board of the regional private healthcare lobby, East Africa Healthcare Federation. “But it’s not as if all the barriers have gone down. There are still a lot of issues. “What has happened in the last five to eight years, you get local players like myself who have started a company, a hospital or whatever, and then you get the private equity guys to come in and they acquire your hospital in this country and then a hospital in another country,” Clarke says. “They are looking to see if they can build up brands, if they can build up chains. That’s what’s going on. It’s early stages yet, but it’s in process. How successful it will be depends on the economy.”
SADC 327
1,834
600 918
TOTAL IMPORTS ($bn)
113.2
TOTAL EXPORTS ($bn)
138.7
40.2
13.6
193.9
176.3
SOURCE: UNECA 2014, SADC 2016
Medical Centre (Group). By 2015, when Clarke sold about 91% of his holding to Ciel Healthcare of Mauritius, it had grown into a healthcare group spanning 22 clinics, Uganda’s largest private hospital, a medical insurer and a health sciences university. Now Clarke’s holdings include the health sciences university, elementary education services, agriculture, a sterilisation start-up and a hotel on the Tanzanian island of Zanzibar. “I do feel very much that I am an East African, and there are good signs,” says Clarke, who sits on the
New members
DEEPAK TOLANGE/ALAMY STOCK PHOTO
The EAC has partially attained free movement
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Kittony, a media tycoon back in Kenya, says he hopes the EAC will lead the continent. “For me, I think we should really do everything possible to make it a success. It’s the most successful bloc we have, and it should be the paradigm for the African economic blocs as they step forward towards the Continental Free Trade Area,” he argues. Fortunately for the EAC, it is not short of courtiers that want to join it. Somalia has submitted an application to join and awaits a verification exercise. The Democratic Republic of Congo’s new leader, Félix Tshisekedi, has also expressed interest in his country’s membership to foster trade ties. But the EU stands as a stark example of what can happen when a regional grouping expands too fast and pays too little attention to its impact on politicians, businesses and citizens. It will take a lot more than an annual summit to address that, so proponents of continental integration will be watching keenly to see if Kampala, Nairobi and Dodoma can make cooperation work better from the grassroots back up to the top.
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BPR’s journey to become Rwanda’s Largest banking Giant
A completed ultra-modern building in Kigali to serve as BPR’s new Head office
Banque populaire Du Rwanda Plc. (BPR)’s journey started in 1975 when the people of Nkamba, a village in the current Eastern province of Rwanda saw the need to have a savings and credit scheme to help them grow financially and achieve better livelihoods.
cluding Botswana, Zimbabwe, Zambia, Tanzania, Mozambique, Rwanda and Nigeria.
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Subsequently, other community based savings and credit schemes were born in other areas of Rwanda becoming various autonomous “Banques populaires.” In 1986, as these autonomous savings and credit schemes grew bigger and stronger, an umbrella bringing them together was put in place, with its headquarters in Rwanda’s capital Kigali under the name “Union des Banques Populaires du Rwanda” (UBPR) In 2008 UBPR was transformed to become a fully-fledged commercial bank focusing mainly on retail (consumer) banking activities offering payment and lending services to various sectors of the economy. Early in 2015, BPR became Part of Atlas Mara group which is a rapidly growing financial services group in the sub-Saharan African region that has acquired significant stakes in banking operations in seven sub-Saharan African countries in-
Banque Populaire du Rwanda Plc. P KN 67 Street, 2 PO Box 1348 Kigali, Rwanda
Over the years, the bank has refined its digital strategy that saw increased investments in new technologies where currently all its operational processes are automated and banking services digitised, with various digital banking solutions such as Internet and Mobile Banking. BPR customers now have the luxury of accessing banking services conveniently on their mobile phones, computers or any other form of electronic gadgets.
“We believe in the Government of Rwanda’s bold ambitions of achieving a cashless economy by 2024. We want to play our part by increasing our focus on our digital banking strategy which goes with accelerating the development of different digital banking platforms to solve our different customers’ banking and financial needs. This will offer a clear opportunity to broaden our customer reach and depth and keep growing the bank and also be a positive disruptive force.” Maurice K. Toroitich, Managing Director
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With its soon to open magnificent utra-modern headquarters in Kigali, BPR is presently the widest banking network in Rwanda with nearly 1,000 employees, over 180 branches and more than 98 ATMS in different parts of the country, offering a wide range of banking and financial services to more than 630,000 retail and corporate customers. Also known as the neighborhood bank, BPR is not only keen on growing its business but has always had a philosophy to grow with the people from the neighborhoods it serves. The bank has over the years been one of government’s development partners e contributing over 5 % of its profc itts to CSR activities ranging from building schools, model villages, b offering financial support to the o ssurvivors of the genocide against tthe Tutsi among others. BPR is a proven financial instituB ttion woven into the fabric of the Rwandan peoples’ lives and has R progressively continued to impact p lives of many Rwandans becoming part of their success stories, with its clear vision of “Becoming w tthe best bank in Rwanda and the only true universal bank which is o ttrusted as a bank of choice for its Retail, SME, corporate and under R banked customers”. Its growth b into a giant bank in Rwanda and tthe region is undoubted.
E info@bpr.rw Swift Code: BPRWRWRW
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JAMG - PICTURES: D.R.
Maurice K. Toroitich
EAST AFRICA FOCUS /
Patrick Njoroge ‘For every Japan, there is a mistake’ The governor of Kenya’s central bank is wary of stateled drives for economic growth, preferring to nudge the private sector towards better business models By NICHOLAS NORBROOK in Nairobi Independence is what you want from a central banker. And Kenya certainly is not afraid of being a contrarian. In September 2016, the government pushed through popular legislation to control the rate of interest banks can charge for loans. Patrick Njoroge, the central bank governor, recalls the torturous negotiations as the central bank tried to convince the administration that this would be counterproductive. “But as when you are a hammer, everything looks like a nail; when you are a legislator, to solve anything, use a law,” he says.
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Njoroge says he was worried that the interest-rate cap would lead to significant rationing of credit, “exactly to the segment they were most concerned about: small and medium-sized enterprises, but also small and medium-sized people”, like those trying to add on to their houses or prepare for the arrival of a new member of the family. The result of the law has been a lot of informal and predatory lending, says Njoroge. “The economy is paying a steep price for it, without a doubt.” While the bottom of the market might be frozen, at the top the government has borrowed massively for various sources, with total debt
THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
now standing at KSh11.9trn ($12bn). Some critics of the government, like economist David Ndii, warn of the crowding-out of private-sector borrowers: banks, unwilling to lend to risky companies, are happy to lend to government – a safe bet. Njoroge says that while local banks have indeed lent a great deal – roughly $6bn – there are statutory limits on each bank’s exposure to government debt.
Spending less
The central bank governor is relatively relaxed about Kenya’s debt levels, saying they do not pose a systemic risk to the economy. The government, says Njoroge, “have stuck to their deficit targets” and very little is due for repayment over the next two years. While the average maturity of Kenya’s debt has come down from 20 years to just under 17 years, that is
PATRICK MEINHARDT FOR TAR
INTERVIEW
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Meet the man committed to delivering the next wave of large-scale housing for Africa
M. Andrew CHIMPHONDAH Chief Executive Officer Managing Director
Shelter Afrique was founded in 1982 when the Charter establishing the institution was signed by founding shareholders in Lusaka, Zambia. The company’s current member-states include: Algeria , Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Congo, Democratic Republic of Congo, Djibouti, Gabon, Gambia, Ghana, Guinea, Guinea Bissau, Guinea Equatorial, Ivory Coast, Kenya, Lesotho, Liberia, Madagascar, Mali, Malawi, Mauritania, Mauritius, Morocco, Namibia, Niger, Nigeria, Rwanda, Sao Tome & Principe, Senegal, Seychelles, Sierra Leone, Somalia, Swaziland, Tanzania, Togo, Tunisia, Uganda, Zambia, and Zimbabwe. It also has the African Development Bank and the African Reinsurance Corporation as Institutional Shareholders. Its headquarters are in Nairobi, Kenya. We have financed over 17,572 housing units since inception and have disbursed over $1 billion in financing.
Tell us about yourself
“Building housing is about building families and nations. It's our commitment to the African people.”
I am Zimbabwean national; I hold an MBA with a focus on International Finance from the Durham University Business School (UK). I am a member of the South African Institute of Chartered Accountants (SAICA). I am currently completing my PhD whose thesis is based on “Innovative Finance Solutions for the Affordable Housing Market”. I have over 20 years Finance and Business executive leadership experience spanning real estate finance, retail and wholesale banking. Most recently I was the Group Chief Executive of Old Mutual Home Finance subsidiary called Housing Investment Partners (PYT) Limited which is based in South Africa. I joined Shelter Afrique late in 2018; I am very passionate about development on the affordable housing market on the continent. I see housing as the most significant catalyst for growth and economic transformation. This becomes more pronounced as we begin to develop capacity and expertise within the affordable housing sector.
For more information:
What is your leadership philosophy?
Visit www.shelterfafrique.org or email boyateru@shelterafrique.org
I believe primarily in spotting talent and providing it with a conducive environment to flourish. I believe in building and workingg with a team that can internalise the com-
pany’s vision and drive its realisation through a meaningful, heartfelt conviction that is premised primarily on the moral obligation as opposed to the financial rewards.
What can we expect different from Shelter Afrique under you? Shelter Afrique will focus on its mandate in terms of the provision of affordable housing that must benefit our member states and will not creep into commercial buildings, offices and high-end properties. We have developed a 5 year strategy for 2019 to 2013 which is built on three key strategic goals. These are: 1. 2. 3.
Financial Stability Stakeholder Value & Development Impact Organisational Stability
Our delivery engagement model will change from previously supporting small scale developers to focusing on supporting large scale developers through public-private partnerships. We want to develop at scale and get involved in housing projects more than 1,000 units per project. This is to address the supply side of the housing value chain. We will also develop a Centre of Excellence (“CoE”) which will be the first-ever on-Line portal that will benefit the member states, developers, housing beneficiaries and other stakeholders with interest in the affordable housing sector.It will be a repository of data for the member states and regions. It will share best practice principles in topical issues such as innovative housing finance solutions, alternative building methods and green housing products et al. We want to use the Shelter Afrique funding catalytically to leverage mezzanine and senior debt into housing projects across the continent.
Why Shelter Afrique We have over 36 years of professional experience and history in the affordable housing space; we are a product of a joint mandate, a collective ideal and a realisation that Africa needs to address its housing emergency and make no mistake, it is an emergency. Part of that experience is learning and unlearning how to deliver affordable housing, and that is where we are different. We are not trying to know, we already know. We will be embodying this in the new Centre of Excellence, which will be a repository of all our knowledge over the years.
JA AMG - Pictures: D.R.
Tell us about your organisation
EAST AFRICA FOCUS / Patrick Njoroge
still high for its African peer group. The country also has some $8.2bn in reserves, more than five months of import cover. But Njoroge is less sanguine about contracting new debt. He would prefer the government looked more at non-debt spending like public-private partnerships and reducing the fiscal deficit to ensure that Kenya will have space to meet future debt repayments. “The borrowing pattern is also driven by the fiscal stance, meaning, ‘how big is the deficit’. So a key element going forward is to moderate that, to consolidate the fiscal deficit,” says Njoroge. In other words, ‘please spend less and raise revenue’. On the issue of the sustainability of projects such as the standard gauge railway, which represents a significant chunk of the recent borrowing, Njoroge recommends checking with the relevant ministry. It is certainly a touchy subject. Countries traditionally stumble into difficulties when there is a mismatch between their debt and their currencies. Having borrowed so much in US dollars, it could be a calamity if Kenya’s shilling depreciated strongly.
Economic openness
So when the International Monetary Fund accused Kenya of overvaluing the shilling by 17.5% in October 2018, the pushback was immediate. For Njoroge, the problem was in a new methodology. “It was a watered-down version of the external balance assessment that they do for advanced economies. So this was the first time that they were bringing it to economies such as ours.” And Njoroge says the calculations were not accurate. Still, some look at the shilling-to-dollar rate and see a long straight graph at 100 to 1 for many months. To those sceptics,
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ECONOMIC EXPERIENCE 1961 Born in Kenya 1983 Earned a bachelor’s in economics from the University of Nairobi 1993 Graduated with a doctorate in economics from Yale University in the US 1995 The IMF hired him as an economist December 2012 Became an adviser to the IMF’s deputy managing director 19 June 2015 Became the governor of Kenya's central bank
Njoroge suggests a more empirical approach: “Look at the market. If you had an overvaluation by that margin, you would have parallel markets coming out of the woodwork. And the shilling is accepted not just here but around the region.” He says the central bank only intervenes to smooth out volatility and to prevent sudden appreciations or currency crashes: “We lean against the wind, but where it goes is the market’s decision.” On top of that, he argues, Kenya regularly tops rankings of economic openness in East Africa. That openness is something that he is more philosophically inclined towards. Ethiopia is attempting an Asian-style developmental burst using protected markets – “for every Japan, there is a mistake,” he says. While a strong state directing credit can work, Njoroge says he would prefer a system in which Kenya nudges its private sector towards better governance. Companies need “better business models to make themselves more resilient to shocks,” he says. “Banks may have made money for 50 years lending to trade, but there may be a day when trade goes
THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
down. So they need other sources of income.” Njoroge argues that the current round of consolidation in the banking sector is a sign of just that – the creation of banks that have several strings to their bows and resilient capital bases.
‘Cautionary tales’
Shocks are no doubt a possibility in a world where the US is ramping up a trade war with China and the UK is exiting the European Union (EU) with little grace. A growth shock – such as the one Kenya endured in 2017 when drought crashed the agricultural sector – is high up the list of the central bank’s concern. The travails of the EU in particular ring alarm bells in Nairobi. “There are cautionary tales” for the East African Community, such as free movement of labour, says Njoroge, who wants nonetheless to highlight the success and benefits of EU trade and capital movements. Another is the difficulty of how to deal with an idiosyncratic shock in one country in a currency zone, given that monetary policy – the ability to devalue, for example – is off the table as a lever. “But does that mean we should be paralysed? Probably not,” says Njoroge, who sees regional integration as the best way of dealing with a volatile world. “We have a stake in Brexit,” explains Njoroge. It is not just about tariff barriers, but ‘ease of doing business’ concerns such as the documentation of goods. Take the case of a Kenyan exporter. “For now, we export goods bulk. They go to Rotterdam, are broken up and then shipped to the UK.” In the future, will these need to be two separate shipments? Does that extra logistical hoop make Kenyan goods more expensive in the UK? “We didn’t get a say in it, but we have a stake in how it goes.”
US$ 3.9 BILLION
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INVESTED IN TRADE AND PROJECT FINANCE
JOBS CREATED
TRANSFORMING AND INTEGRATING THE REGION’S ECONOMIES By providing different types of financing,TDB fosters trade, regional economic integration and sustainable development, prioritizing projects with cross-border impact.
www.tdbgroup.org
EAST AFRICA FOCUS /
NOOR KHAMIS/REUTERS
Peop e to watch East Africa has dynamic economies. Here are a few of the business leaders with big ideas for their home markets and the wider region
Tabitha Karanja
Bullish beer brewer keen to expand
The chief executive of Kenya’s only locally owned brewery, Keroche Breweries, has her eyes on the region. In November 2018, Karanja announced that the firm is interested in expanding its operations to Rwanda, Tanzania and Uganda. Global giant AB InBev announced plans for a $100m plant in Tanzania in March 2018, so the competition is set to be tough.
Ally Edha Awadh
BRUNO LEVY FOR JA
Smooth growth trajectory
Mohammed Dewji Baron on the back foot
A string of troubles have hurt the Tanzanian magnate, who is keeping a lower profile after his kidnapping from Dar es Salaam under mysterious circumstances in October last year. In February, the MeTL chief executive was in the crosshairs of President John Magufuli’s government for not developing his company’s farmland. The government took some land back last year and threatened similar actions in February. Magufuli’s administration has been taking a tough stance on businesses through its anticorruption campaign and other policies (see page 56).
Mohammed Hamid
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JACK DABA GHIA
With interests in agribusiness and transport, the Sudan-born and Uganda-based businessman has made a big move into tourism. The 20-storey luxury Pearl of Africa Hotel, opened in 2017 at a cost of $320m and managed by the US firm Wyndham Hotels since October 2018, takes pride of place in Hamid’s Aya group of companies. Next on his list of projects is an industrial park.
N
Pearl picker
Young businessman Awadh’s Lake Oil Group, based in Tanzania, is making moves to become a bigger player in the petrol and lubricants market in East Africa. It agreed a deal in 2017 to take over the retail operations of Kenya’s Hashi Energy and set up a $20m lubricants factory in Dar es Salaam in October 2018.
Tribert Rujugiro Ayabatwa
Up in smoke
With Pan African Tobacco Group, Ayabatwa is one of the few big Rwandan private-sector business leaders to have a strong presence outside of his home country. Pan African, which celebrated 40 years of operations late last year, launched a $20m processing project in Uganda through its Meridian Tobacco subsidiary in 2017. It is also active in Angola, Nigeria and the Democratic Republic of Congo.
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YOUR PERFECT FINANCIAL BUSINESS PARTNER Bank of Kigali has been shaping the country’s economic landscape foor over half a century. Recently it was restructured into a group with 4 subsidiaries. The Africa Report sat with Marc Holtzman, its chairman off the board of Directors; as he reflected on the company’s journey and leegacy, as well as its vision for the future.
The h Bankk off Kigalil is among the h oldest ld companies in Rwanda. Any achievements you feel especially proud of? Yes there are, one of them being our longevity. BK was among the very first banks opened in Rwanda. It was incorporated in 1966 and started operations a year later, so we’ve been serving Rwandans for almost 52 years. We’re very proud of the position we have consolidated as the leading and biggest bank in Rwanda by market share, assets and double-digit profitability, even with fierce competition from 11 other banks. Our achievements also include being the first Rwandan bank to, in June 2011, list on the Rwanda stock exchange; and becoming the first Rwandan company to cross-list on the Nairobi Securities Exchange last year. Ishouldalsomentionthatwe’vebeennamed“Best Bank in Rwanda” by EMEA Finance for 9 consecutive years, and Euromoney Awards for Excellence awarded us the same recognition last year.
The Bank has recently seen a big shift towards digital service provision. Why is that? Rwanda adopted a vision to become a middle-income country, not by industrialization, but rather by building a robust knowledge-based economy, following in the footsteps of countries like Estonia where digitization has played a crucial role in that transformation. As Bank of Kigali, we want to take advantage of the immense potential that Digitization holds and lead this transformation; instead of reacting to it.
In our bid to be the best bank in terms ofcustomer experience, digitizing all our banking services alllowsustoprovidecustomerswithmeanstoaccess personalized services seamlessly, instantly, comfortably and from anywhere; therefore, significantly reducing footfall and queues at our branches. To achieve that, our working strategy aims at developing digital solutions that cater to specific segments of the population while also driving behavior change in the way that people approach banking. And so far, we have seen successes, evidenced by increased uptake of our debit and credit cards, use of our mobile app, internet banking platform, and other digital products.
“We have aligned our strategy to capitalize on Rwanda’s untapped economic potential” Marc Holtzman, Chairman of the Board, BK Group Plc.
We’re now implementing a Digital Transformation Roadmap that will see the delivery of new products and experiences, especially to underserved segments of the economy and key population demographics like the youth and the unbanked. I’m really excited to see the results of these changes.
In 2018, a structure change saw BK become a group of companies. What drove that change? Like I said before, Rwanda’s economic landscape holds so much untapped potential, so we’ve aligned our strategy to capitalize on it. Our priority is expanding our financial services portfolio
to make our brand into a One-Stop Center under which those services are available to customers, instead of expanding regionally. Our new structure allows us to do that. BK Group now has 4 main subsidiaries: The Bank of Kigali provides corporate and retail banking services. BK TecHouse’s task is to drive digital innovation through providing connectivity solutions and software & analytics products. BK General Insurance offers insurance packages including motor, fire, transport & money insurance and more. The recently launched BK Capital offers Securities Brokerage and Market Research, Corporate Finance and Advisory services, and Investment & Wealth Management.
What has been your personal experience, working with a leading company in this market? It has been very exciting! For over 30 years now, I’ve worked all over the globe in various capacities, and gained extensive experience as an investor in emerging markets, an investment banker, owner of my own firm, vice chairman of Barclays Bank and more. But I have never seen a more exciting, dynamic and transformational market than the one existing in Rwanda today. I’m very privileged to work in Rwanda and with BK Group, And I’m proud to be a Rwandan citizen i 2016! since KN 4 Ave Kigali/ Rwanda, No12 Plot No 790 q 4455 (Local Call Center) q (250) 788 143 000 E info@bk.rw Y P.O. Box 175, Kigali/RW SWIFT Code: BKIGRWRW
www.bk.rw
JAMG - Pictures: D.R.
Marc Holtzman, Chairman of the Board, BK Group Plc.
EAST AFRICA FOCUS / People to watch
Patrick Bitature
James Mworia
Bitature, owner of Uganda’s Simba Group, may not be winning friends in the Kampala government due to his outspoken positions. He told a conference there in February: “Corruption and weak institutions are killing our economies.” He leads the Private Sector Foundation Uganda and has been encouraging the government to get all major multinationals to list on the stock exchange to promote local ownership and make sure profits are not disbursed to other jurisdictions.
Under the leadership of chief executive Mworia – who has been in the position for nearly a decade – Kenya’s Centum Investment wants to invest in big infrastructure projects, especially in the power sector. Centum is going ahead with testing of geothermal sites in Naivasha after years of delays, and is shopping around for the finance for a $2bn coal-fired plant due to be built by General Electric in Lamu. Centum turned a healthy profit of $24m in the first half of 2018.
Power player
LUIS TATO/BLOOMBERG VIA GETTY IMAGES
Roaring opinions
Vimal Shah
Dual-paced developments Shah is the chairman of top Kenyan fast-moving consumer goods company Bidco Africa, which is trying to convince governments in the East African Community to focus on key business problems like non-tariff barriers (see page 59), the lack of cheap electricity and poor infrastructure. One of Bidco’s main focuses since 2018 has been in improving its logistics supply chains. Elsewhere, Shah is fighting with other investors in the Tatu City development, and legal proceedings have stopped the big urban development project outside of Nairobi from advancing.
R. GANGALE/BLOOMBERG/GETTY
Juliana Rotich
Having co-founded crowdsourcing platform Ushahidi and router company BRCK, Rotich remains focused on innovation. Her day job since May 2018 is as the boss of giant German chemical company BASF’s East Africa office, which is located in Nairobi. The firm focuses its activities there on sectors like agriculture, construction and plastics. But Rotich keeps busy. She was a member of Kenya’s Distributed Ledgers and Artificial Intelligence Task Force last year and serves on the government’s 2030 Vision Delivery Board to help to plan a developmental strategy for the country. Her interests and skills are not limited to tech and science, as she serves on the board of the Standard Group media house since March 2018.
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BASF
At the Kenyan tech forefront
James Mwangi
Change-maker with an eye on digitisation Kenya’s Equity Bank, the country’s largest bank by market value, continues to innovate under Mwangi’s leadership. The bank is embracing agency banking and mobile banking, reporting 108m transactions outside of its branch activity in the first quarter of 2018. Mwangi wants the bank to dive deeper into digitisation. While Mwangi has been vocal in his opposition to Kenya’s cap on interest rates on loans because it depresses lending, the bank recorded an 8.1% rise in profits over the first three quarters of 2018, hitting KSh15.8bn ($158m).
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Create wealth, Improve lives
These various investments make CVL a one-stop center for several sectors including infrastructure services (construction, mechanical, electrical engineering), food processing and hospitality (beverages, coffee), security services, and aviation solutions. “Our infrastructure subsidiary companies include NPD, Real Contractors, Ruliba Clays Ltd., East African Granite Industries (EAGI), Stonecraft, and Sawmill. Through these we offer services from planning, engineering to construction and finishing products.” CVL CEO, Kok Foong Lee says. “We have grown over the years by offering more advanced products and improving the quality of our services.” He adds. NPD is capable of constructing roads, bridges, stadiums, power supplies/grids and valley dams among many others, while, Real Contractors can develop turnkey solutions with products from Ruliba Clays, EAGI, and Sawmill that offer world-class Rwandan-made finishing products. Such initiatives position CVL as a preferred partner in Rwanda for public and private infrastructure projects.
CVL has invested in state-of-the-art machinery across its subsidiary production companies and prioritizes best practices. This is exhibited by Real Contractors’ and Inyange’s ISO certification over the last seven years. Inyange is a leading Rwandan food processing company that produces locally sourced juice, milk, and mineral water products. Together, Inyange and EAGI have recently embarked onto the export markets to compete with international products. ISCO is another of the ISO-certified companies. Having started in 1995 solely as a guarding services company, it has, overtime, evolved into a comprehensive security services company offering Logistics Services, Security Monitoring Equipment and the first privately owned Cash Processing Center in Rwanda. The group operates a chain store brand, Bourbon Coffee, with a local and global footprint incorporating six locations in Rwanda, and six coffee shops in USA; Washington D.C. and Boston. The brand, birthed in Rwanda as a pioneer local sustainable chain coffee shop concept, is now an international brand ready to engage with partners interested in franchising it globally for the world to enjoy Rwandan coffee. CVL has for several years partnered with local and international business entities on various lucrative infrastructure projects and continues to value and invite partnerships with the world. A large portion of their investment portfolio is currently co-owned with both local and international partners. Such partnerships include the NEXUS Group, which is a global aviation company offering flight operations services, aviation training, and safety audits. These investment initiatives include bringing state-ofthe-art technology and aviation training that are positioning Rwanda as the next African aviation hub. CVL is one of the largest private single employer in the country. The Group is continuously improving its operational processes and capacity to achieve total effectiveness, remaining a preferred partner for local and international players. All CVL investments in the various sectors will continue to help build export value, showcase Rwandan products, and foster the building of new alliances.
Contact CVL Group Grand Pension Plaza Building, 14th Floor P.O. Box 1287 Kigali, Rwanda Tel: (+250) 280 333 444 E-mail: info@cvl.co.rw
www.cvl.co.rw
JAMG - Picture : Adobestock
Crystal Ventures Ltd (CVL) is the largest investment company in Rwanda. It was established in 1995 as a trading business and later rebranded to its current name in 2009. The company was founded to spearhead the challenges of economic recovery and nurture growth opportunities in what was then a virgin environment. The economic climate in Rwanda has since then experienced double-digit growth. CVL’s vision is to be the leading investor partner in Africa delivering value and profitability to its shareholders. The company takes pride in its portfolio that is greatly contributing to the economy of Rwanda. By investing in a diversified portfolio, these initiatives propelled CVL to the forefront of the Rwandan private sector, spurring its growth to 10 subsidiary companies to date and still growing.
EAST AFRICA FOCUS /
INTERVIEW
Clare Akamanzi By NICHOLAS NORBROOK Modelled on the coordination institutions seen in East Asian Tigers, the Rwanda Development Board’s mission is to ensure that the myriad of economic actors and institutions are all on the same page, from overseeing publicprivate partnerships to supporting companies, foreign or domestic. TAR: How are you positioning the 1979 Born in Uganda country to meet the economy 2004 Sent by the of tomorrow? Rwandan government Rwanda has been as a negotiator to the building itself since World Trade Organisation 1994, and we have now built the platform to 2006 Appointed deputy be able to address an director general of the ambitious economic Rwanda Investment and agenda. We are a stable Export Promotion Agency country, we grow at an 2016 Earned a master’s average of 7-8% and in public administration we have tackled key from Harvard University economic issues such as zero tolerance for 4 February 2017 Became corruption. We have the chief executive officer made it easy to do of the Rwanda business and are ranked Development Board 29th in the world. And that is why we are thinking very ambitiously about the next phase of economic development. It is to diversify, modernise and transform our economy substantially – and that means looking at sectors that can drive productivity much more than in the past and The government-run Rwanda Development Board is position the country as a global a key tool in Kigali’s drive to boost manufacturing and hub for anyone thinking of doing business in Africa. exports in order to reduce the country's import bill
PAUL KAGAME /FLICKR
CLARE'S CAREER
‘We have made it easy to do business’ 76
THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
MESSAGE
B
Philippe Kubwimana Umuhizi
45, IDL’s Managing Director and Shareholder
Think comforti Think calmi Think Izuba Cityi Izuba City Phase 1 (64 apartments), at cost of US$ 8 million including an investment of US$ 3 million in infrastructures and landscaping, will be launched in quarter 2019.
Izuba Developers Ltd (IDL) is a Rwandan based private company specialized in real estate development. IDL is currently developing Izuba City, a neighborhood of 304 middle-class apartments on a 3 ha plot, to be constructed in 3 phases with amenities such as a commercial building, a common waste water treatment plant, a green area, a kindergarten, large drive ways, ample parking, street lighting, CCTV system, etc The housing complex is located in Kagugu cell, Kinyinya Sector of Gasabo District, along the road Nyacyonga-KaguguKinyinya-Free Zone.
We understand your housing needs. Why wait? Experience a better way of living at our apartments in Kigali. Call us now on +250 78 830 54 93 / +250 78 512 33 48 / +250 78 830 70 20 Email: info@izubacity.com or visit our website: www.izubacity.com
JAMG - Pictures : D.R.
This project is a co-investment of Kigali Batsinda Estate Ltd and the Pan African Housing Fund, managed by Phatisa (www.phatisa.com), harnessing international & local investment with the aim to build a better future for all.
EAST AFRICA FOCUS / Clare Akamanzi
How does that translate on the ground? Take for example Kigali Innovation City – which we have already started building – where you have in one place research, education institutions, innovation labs and global companies setting up. For people who are thinking about setting up business in Africa, and they are doing innovation, they can come here and build their prototype in Rwanda. We call it proof of concept. You can prove your concept in Rwanda and then expand to the rest of the continent. When Singapore wanted to do something similar in Asia, it brought its courts up to international standards. Is Rwanda working on its judicial system? We have the Kigali International Arbitration Centre (KIAC). It is still young, but the goal is to build it into an institution that is trusted by the business community. It is still a work in progress. But as we build the credibility of the KIAC, we are also very open to working with international arbitration with the
TBC TBC
‘YOU CAN PROVE YOUR CONCEPT IN RWANDA AND THEN EXPAND TO THE REST OF THE CONTINENT. ’ businesses that come to Rwanda. We have agreed to do settlements in Europe or Mauritius. So we are ambitious about building up our arbitration centre but realistic about the time it takes. Rwanda’s landlocked status makes it harder to try to attract manufacturing outsourcing from Chinese companies. Does that remain an opportunity? It’s a challenge, but we still believe manufacturing is a very good source of employment. It is a question of what exactly we can manufacture in Rwanda, rather than whether. So we have signed with a company which is going to build laptops, a high-value product that can absorb transport
costs. We also have a company which is going to start assembling mobile phones – products that can remain competitive. How are you helping Rwandan companies break into regional supply chains? We have something called the Export Growth Facility. And the idea is to do just that. We support businesses that want to export. For example, we give them grants for marketing. If they have an opportunity to export and find new buyers, these grants allow them to go and test new markets. And for those companies that are in priority sectors, we give them interest-free loans if they have an export orientation. We also have something called the Business Development Fund, which guarantees up to 75% of loans with other financial institutions. And this is regardless of whether they are Rwandan companies or foreign companies. We help them to become successful and help them to export and expand, and also to bring foreign earnings into the country.
Global GAP and SMETA/ETI certified, winner of Rwanda Development Board Business Excellence Award 2018 as the emerging exporter of the year. Garden Fresh is committed to providing its customers with safe, reliable and quality products.
ANKO Properties Ltd a real estate investment/development company with commercial and residential properties in Rwanda.
AFRISOL which deals in the manufacture of animal feeds for poultry, livestock and fish.
MK Consult Ltd which provides business advisory, financial services and project management.
Caferwa Ltd which exports Rwandan Coffee and operates several coffee washing stations producing fine high quality fully washed speciality coffee.
MFK Investment Ltd that holds equity in a number of other companies involved in diverse economic sectors, ranging from Information Technology, Tourism, Education, Gaming and Energy.
Garden Fresh Ltd which specializes in fresh produce including vegetables, fruits and herbs. It is also
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EAST AFRICA FOCUS /
DUARDO SOTERAS/AFP
African Union chairperson and Rwanda’s President Paul Kagame (R)
DIPLOMACY
Kagame’s games of chess Rwanda’s president tried to shake up the African Union. He is now head of the East African Community at a time of heightened tensions in the region By ROMAIN GRAS in Kigali for Jeune Afrique and HONORÉ BANDA Kigali’s diplomats are abuzz in following regional and continental intrigues, with President Paul Kagame having stepped down as chair of the African Union (AU) in February to take up the rotating leadership of the East African Community (EAC) in the same month. Kagame had launched his AU leadership bid on the basis of his reformist credentials and wrapped up with some victories but without transforming one of the institution’s key problems: money. Kagame has been in charge of the AU’s reform efforts since 2016 and has been championing the changes needed to achieve the body’s ambitious Agenda 2063, which targets strengthened integration and economic growth. “We have made significant progress in the reform process,” foreign affairs
80
minister Richard Sezibera tells sister magazine Jeune Afrique. “The AU’s priorities have been streamlined, the number of summits reduced. African countries have managed to speak with one voice.” Liesl Louw-Vaudran, a consultant with South Africa’s Institute for Security Studies, adds: “He held a radically different presidency from his predecessors. He was very ambitious, but also very impatient and tried to project the image of a progressive leader.” In March 2018, the AU convened
24
of the AU’s 55 member states are introducing a 0.2% tax on imports to finance the continental body under a proposal championed by Kagame
THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
an extraordinary summit in Kigali to sign the African Continental Free Trade Area agreement, which has been under discussion since 2012. Then, before the Nouakchott summit in early July, he had, together with AU Commission chair Moussa Faki Mahamat, issued an uncompromising report about the progress of the reforms. A final extraordinary summit in November 2018 in Addis Ababa focused on reform was not enough to achieve one of Kagame’s long-term goals: for African countries to become the main funders of the continental body. The issue does not have wide support and the subject did not even make it on to the summit agenda.
Lingering suspicion
It is closer to home that cooperation seems even less likely. The AU was unable to mediate in the fall-out of the disputed December 2018 polls in neighbouring Democratic Republic of Congo. Faced with the new regime’s intransigence and lines of division amongst heads of state, the AU backed down from its plan to send a mission to Kinshasa in late January. Nearby, Burundi’s President Pierre Nkurunziza says Rwanda is the country’s enemy. The EAC has failed to get Nkurunziza, who ran for a controversial third term in 2015, to engage in dialogue with oppositionists and rebel groups. Kigali and Kampala are also exper iencing heightened tensions, with foreign minister Sezibera telling Jeune Afrique: “There have been several worrying developments that we are trying to raise with the Ugandan authorities, including cases of arbitrary arrests and torture of Rwandans in Uganda.” With so much suspicion in the region, getting the six countries of the EAC to work together is likely to be a tougher task than getting the AU — known for its inertia — moving forward.
EAST AFRICA FOCUS /
INTERVIEW
Diane Karusisi PHOTOGENIX STUDIO
‘We still have the country to serve’
Financing strategic projects at home like cement plants and hotels is the goal of the chief executive of the Bank of Kigali By CLEMENT UWIRINGIYIMANA in Kigali Rwanda’s biggest bank by assets and market share has been raising funds to expand at home, eschewing the East African Community-focused plans of some of its regional competitors. Bank of Kigali raised $70m in November 2018 through a rights issue and then listed on the Nairobi Securities Exchange both to help it grow its insurance business and launch investment banking activities this year. TAR: What do you think about Bank of Kigali’s recent performance? Of late, the bank has grown into a group that offers financial services. Now we have a tech business, we have an insurance business and we have investment banking also. We haven’t yet released our financials for 2018 but it will be in line with the growth we have seen in the past, and we expect maybe 2019 to be a better year than 2018 because of the pipeline we have. We have a number of loans in the pipeline and the economy is actually performing very well. [...] We always promise and deliver double-digit growth not only on the balance sheet but also on the bottom-line profit after tax, which
82
is something we have delivered consistently. [...] We raised capital last year, so we have more capital to deploy and that’s why we are very optimistic. Your bank is getting involved in big projects. Which are most important to the bank and the country? When you look at the past, there are iconic projects in the country like the Kigali Convention Centre – the Marriott hotel is also one of our clients – and these have changed the landscape of our country in terms of making Kigali a major destination of conference tourism on the continent. Projects we are now financing: [...] a cement plant, and cement is one of the highest import bills. We’ve seen in the past crises where people did not find cement to complete their projects, and this is one very important project for the economy that we
‘WE HAVE MORE CAPITAL TO DEPLOY AND THAT’S WHY WE’RE OPTIMISTIC’
THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
are financing. Obviously Bugesera airport is one new project that we are financing. We are financing a number of big power generation plants. One that we are financing is a peat-to-power plant in Gisagara. We believe these are projects that are transformational but also profitable to the bank. For example, for 2019 we are expecting new loans of about RWF180bn ($202.6m). Your strategy targets Rwanda and not the region. Why? We believe we still have the country to serve. You know, we only have less than 30% of adult people in Rwanda with bank accounts. […] We believe it is not the case where people need to go to a branch to open an account and to get services. We want to offer all the services on the phone. That’s why we are investing much money in our IT infrastructure and we want to be not only a universal bank but also a universal financial services company. We want to offer all financial services seamlessly under one brand, be it an insurance policy, be it a loan. We are looking at an investment of $10m into the changes that are required in our core banking systems, in our data infrastructure. This will be considerable.
CONFIGURATION AREA M²
THEATRE
CLASSROOM
BANQUET
COCKTAIL
U-SHAPE
BOARDROOM
EXHIBITION BOOTHS (3M x 3M)
AD 3, Ground Floor, Main Building
31
30
12
-
-
12
12
-
AD 10, Ground Floor, Main Building
279
250
120
100
100
120
120
17
AD 10 +11 + 12, Ground Floor, Main Building
735
700
360
400
400
360
360
48
1 257
2 600
450
559
559
450
450
-
555
550
240
250
250
240
240
26
ROOM NAME
Auditorium, Level 1, Main Building MH 1, Ground Floor, Extension Building
Radisson Blu Hotel & Convention Centre, Kigali |
Located 5 kilometres from the bustling city
centre and Kigali International Airport, Radisson Blu Hotel Kigali offers exclusive hospitality facilities with 291 modern rooms and suites with private balconies, as well as free high-speed Wi-Fi, Restaurants and Bars. The hotel also offers a fully equipped Fitness Centre and outdoor swimming pool, an on-site Spa by Amani, and the iconic Kigali Convention Centre (KCC). A high-end event venue in Rwanda since opening in 2016, and a popular MICE destination in the East Africa region. This landmark can accommodate more than 5 000 delegates at a time, and includes business, leisure and event facilities. Kigali Convention Centre has received a number of international awards since opening in July 2016 by World Travel Awards (WTA), three awards in 2017 and another three awards in 2018. Kigali Convention Centre was also awarded by Haute Grandeur Global Hotel Awards in 2018, World Luxury Hotel Awards, Business Destination Awards and Africa Property Investments Awards. Kimihurura Roundabout, P.O. Box 6629, Kigali, Rwanda Reservations: t: +(250) 252 252 252
t: +(250) 252 252 252
e: reservations.kigali@radissonblu.com
Meetings & Events: t: +(250) 252 253 253 e: sales.kigali@radissonblu.com
e: info.kigali@radissonblu.com
EAST AFRICA FOCUS /
COMPANIES
Rivals in the region Kenyan firms dominate the East African Community, with 12 out of the Top 20 companies generating a combined turnover of about $13bn in 2017. Tanzanian and Ugandan companies followed behind, with $2.9bn and $1.1bn, respectively. According to statistics from the African Development Bank, Kenya's economy is projected to grow by 6% in 2019, driven by a significant expansion of the agriculture sector.
JUMUIYA YA AFRIKA MASHARIKI
TOP 20 companies in the East African Community (by turnover) RANK '17
TURNOVER (2017)*
NET PROFITS*
Telecoms
2,243,683
530,774
Kenya
Oil and gas
1,523,618
23,661
3 Mohammed Enterprises Tanzania
Tanzania
Retail
1,292,748
N/A
4 Total Kenya
Kenya
Oil and gas
1,069,666
26,287
5 Kenya Power and Lighting Co.
Kenya
Utilities
882,736
69,755
6 Kenya Airways
Kenya
Transport
775,670
-58,378
7 East African Breweries Group
Kenya
Agribusiness
674,372
81,740
8 East African Breweries Kenya
Kenya
Agribusiness
592,260
N/A
9 Vodacom Tanzania
Tanzania
Telecoms
458,475
86,090
10 MTN Uganda
Uganda
Telecoms
419,387
N/A
11 North Mara Gold Mine
Tanzania
Mining
408,213
N/A
12 Umeme
Uganda
Utilities
398,636
9,583
13 Tanzania Breweries
Tanzania
Agribusiness
386,112
21,374
14 Tigo Tanzania
Tanzania
Telecoms
348,000
N/A
15 Bamburi Cement
Kenya
Construction
345,350
18,941
16 Airtel Uganda
Uganda
Telecoms
311,858
66,154
17 Kenya Electricity Generating Co.
Kenya
Utilities
281,941
86,948
18 Jubilee Holdings
Kenya
Financial services
271,957
40,611
19 Kenya Pipeline Co.
Kenya
Oil and gas
241,295
76,431
20 Britam Holdings
Kenya
Financial services
223,664
18,318
COMPANY
COUNTRY
SECTOR
1 Safaricom
Kenya
2 Kenolkobil
*2017 RESULTS IN THOUSANDS OF US DOLLARS
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THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
ADVERTORIAL
EXPERTS ADVICE
1-
Hamish KEITH
Partner
2-
Roy GATHECHA
Associate
1
2
Interest rate cap: How Kenya’s economy has been affected In September 2014, Kenya amended its banking laws by placing a cap on interest rates chargeable by banks when lending. The amended law sets the maximum lending rate at no more than 4% above the Central Bank base rate and sets the minimum interest rate to be placed on a deposit held in an interest-earning account to at least 70% of the same base rate.
Public Outcry The law was amended following public outcry that the cost of credit in Kenya is excessively high and that banks were engaging in predatory lending behaviour. Implementation of the law was aimed at lowering the cost of credit and thereby increasing access to bank credit The Central Bank by the populace.
of Kenya has reported a significant shift in lending towards larger corporate clients and government.
I t wa s ex p e c te d , based on international experience and local reviews preceding the amendment of the law, that the interest rate caps would result in increased demand for loans as a result of the low interest rates, promote competition and innovation in the banking sector and curb predatory lending behaviour.
As a result of the interest rate capping, banks have now shifted from the traditional interest-income revenue structure and have now preferred non-interest income such as fees from mobile money transactions. This has seen a number of banks increase fees on loans in a bid to offset loss in interest income. While the interest rate capping has contributed to the growth of microfinance institutions and Savings and Credit Cooperative Organizations popularly known as SACCOs that were not directly affected by the policy change, small banks have experienced significant decline in profitability forcing them to re-engineer their business models. Recently, the minimum rate was removed in hope that this will allow for greater profitability and appeal to SMEs. This move has however not worked as depositors have sought for higher interest-earning forms of investments such as Treasury Bills.
Alternative Measures Following the reports on the effects of the amended law, it may be prudent for the Government to move from interest rate capping as a means to reduce cost of credit and explore alternative measures such as adoption of credit scoring and sharing systems and more efficient loan foreclosure procedures.
Effects of the capping Although the period since the law became operational may not be sufficiently long for the full effects on the economy to manifest, reports on the effects of the interest rate capping have been largely negative. The Central Bank of Kenya has reported a significant shift in lending towards larger corporate clients and government thereby shunning new and smaller borrowers such as the Small Medium-sized Enterprises (SMEs) which constitute a substantial percentage of all businesses in Kenya. The report revealed that the interest rate capping had not translated to easy access to credit by borrowers since borrowers deemed to be ‘high risk’ had been locked out.
DALY & INAMDAR ADVOCATES NAIROBI OFFICE ABC Towers, ABC Place,Waiyaki Way P.O. Box 40034 Nairobi-00100, Kenya Tel.: +254 (0) 204 297 000 +254 (0) 202 492 691 +254 (0) 711 064 000 Email: keith.h@dalyinamdar.co.ke gathecha.r@dalyinamdar.co.ke
www.dalyinamdar.com
The
100
most influential The Africa Report’s inaugural ranking of the top Africans who control the levers of power across politics, business and the arts: from billionaire barons to unpredictable peacemakers and soft-power superstars
By ALISON CULLIFORD, OLIVIA KONOTEY-AHULU, NICHOLAS NORBROOK, OHENEBA AMA NTI OSEI and MARSHALL VAN VALEN 86
THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
The Africa Report is transitioning to a quarterly magazine with a special focus on the decision makers, the money takers and the thought shakers who are not only in the spotlight for their skills and strategies today but will continue to be so for years to come. Our 2019 ranking is based on three criteria: global reach (40%), trajectory (30%) and influence (30%).
00 Africans Global reach takes into account how many countries their activities touch and how well known they are. Trajectory is defined to capture people whose careers are on the up and those involved in crucial industries of tomorrow, like manufacturing, fintech and the creative sectors. And finally, influence is measured as to how much their voices matter in local
and global debates, and how much they are able to change the political, economic and cultural playing fields. The names that follow – including a Nobel Peace Prize winner, officials helping to run global institutions, a highly sought-after architect and billionaires with hotly awaited stock IPOs – are examples of the heights
of African leadership in the world, both at home and in the diaspora. They are coming up with innovations to spur financial inclusion and leapfrog technological stages, tackling climate change and human rights abuses in Africa and across the world, and telling heartbreaking and beautifully imagined stories that make the world a richer place.
THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
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THE 100 MOST INFLUENTIAL AFRICANS /
Aliko Dangote
Chimamanda Ngozi Adichie
Money talks
The sun keeps rising PLANET PIX/ZUMA-REA
Nigeria
1
He’s the richest black man in the world and Africa’s richest man, with an estimated wealth of $10.3bn. Within Nigeria, Senator Ben-Murray Bruce called him “more influential and powerful than (President Muhammadu) Buhari”. The billionaire’s latest project is a $10.5bn oil refinery that will be Africa’s largest, so Dangote will not be sitting on the sidelines when it comes to oilsector reform debates there. He is investing in the continent’s manufacturing and agribusiness capacity, and plans to launch the long-awaited London IPO of Dangote Cement in late 2019. Meanwhile, his philanthropy is taking flight.
Elon Musk
Rocket man
South Africa
2
The yo-yoing of his company shares, his hirings and firings and off-the-wall tweets keep Musk in the headlines. He may be a maverick but his ideas are shaping the future, from reducing global warming with his electric cars to urban transportation on a cushion of air and plans to establish a colony on Mars. His Boring Company could help a boom in urban public transportation, and he is a big pessimist about the impact of AI. He donates to both the Democratic and Republican parties in the US, saying it is necessary to pay up in order to have a voice.
Koos Bekker
Go-getter in Asia South Africa
3
When China-based Tencent sneezed in August 2018, Naspers share price caught a cold. It didn’t last long, but it showed how tied the fortunes of the South African media and entertainment behemoth are to its largest holding (Naspers owns 31% of the Chinese internet giant). Buying a stake in Tencent in 2001 makes Bekker the Buffett of Africa: the initial $32m investment has grown to $116bn since then, and Bekker famously waived a salary to get paid in stock options when he was CEO. With the bulk of South African pension funds invested heavily in Naspers and allegations of Gupta-style influencing in a 2017 broadcasting deal, Bekker said the company would work on its transparency at the 2018 annual general meeting.
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THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
Nigeria
The Nigerian author-cum-public intellectual continues her stratospheric ascent and is as often seen behind a mic as in print these days – engaging audiences about racism, sexism and the human condition. She started the year 2018 slaying a French journalist for her lack of knowledge about Nigeria and ended it on stage with former US first lady Michelle Obama. Who’s next?
Business
4
Entertainer
Power player
Disruptor
Trevor Noah
Mic wrecker
South Africa
7
Davido
Naija pop idol Nigeria
S. DAWSON/BLOOMBERG VIA GETTY
He has riches (he’s worth $16m), good looks, fast cars and political clout. Using his music to inspire Nigerians to vote in the 2019 elections, he also lent his star appeal to presidential candidate Atiku Abubakar’s campaign, seriously upstaging the 72-year-old politician. His next act will be to crack the tough US market, with his eyes set on a gig at Madison Square Garden, having filled the 15,000-seat O2 Arena in London in January.
Tidjane Thiam
Master strategist Côte d’Ivoire
6 STEPHEN VOSS/REDUX-REA
TAYLOR HILL/WIREIMAGE/GETTY
5
One of the US’s most prominent voices critiquing the presidency of Donald Trump, Noah has brought millennial-inspired thinking and an astute outsider’s view to The Daily Show and taught some Americans that Africa is not a country. With the renewal of his contract in 2017 his job is secure until 2022, which will carry him through the febrile US election season. He is also quite funny.
Thiam’s turnaround of Credit Suisse since 2016 has left bankers and analysts awestruck. Ignoring naysayers, the Ivorian CEO relegated the derivatives traders and recast the bank as a wealth-management operation focusing on emerging markets. He explained his view to Euromoney: “This is a fabulous bank. Or let me be more precise: it has always had a fabulous bank within it.” But it faces big blowback for its role in the Mozambique tuna bond scandal.
Enoch Adeboye Sacred networker Nigeria
8
In 2017 Pastor Adeboye’s resignation from leading his five-million-member church in Nigeria was greeted with dismay by congregations around the country. Nigeria’s highest-profile pastor, who numbers the Nigerian vice-president Yemi Osinbajo among his followers, had to step down from running the domestic operations of the church he had built up almost from scratch after a new law put a 20-year cap and 70-yearold age limit on the leadership of non-profit organisations. Adeboye could have argued that The Redeemed Christian Church of God was not, strictly speaking, “non-profit”, with Forbes quoting the net worth of the man born into poverty at €39m, but he chose not to.
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LOGISTICS DOSSIER
Landlocked
blues
146 THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
Ethiopia has high hopes for manufacturing and exports, but the country will not be competitive until it solves its logistical problems. To that end, the state is starting to liberalise the sector
Hawassa Industrial Park is a flagship facility for the textile industry
NICHOLE SOBECKI/VII/REDUX-REA
By TOM GARDNER in Addis Ababa In January, it emerged that Ethiopian exports had once again disappointed, undershooting the government’s six-month target of $1.96bn by nearly 40%. It was a sobering reminder that, for all Ethiopia’s rapid, state-led growth over the past decade, exports have consistently shown few signs of improvement. “Logistics is the number-one bugbear for anyone in exports and manufacturing,” says Graham Parrott, head of strategy at Ethiopia Investments Limited, which invests in local businesses. His words are echoed by many exporters, who say this challenge is rivalled only by the shortage of foreign exchange. The figures are telling. To trans port a 20ft container of garments from Ethiopia to Germany costs 247% more than from Vietnam and 72% more than from Bangladesh. In 2016, Ethiopia scored 2.37 in the World Bank’s Logistics Performance Index – significantly lower than neighbouring Uganda, which is also landlocked. The country ranked 159th out of 190 in the World Bank’s Doing Business index in 2018; Uganda came 127th. In key export sectors, such as textiles, speed is essential to competitiveness. Slow and expensive imports, meanwhile, are bad for all businesses. According to Daniel Zemichael, chief executive
of Freighters International, a local logistics company, goods take an average of 20-30 days to reach an Ethiopian customer from the port in neighbouring Djibouti. A 20ft container costs an average of $2,660 to import from its source to Ethiopia. “This is probably one of the most expensive corridors in the world,” says Serge Tiran of Massida Group, another logistics firm.
Mojo rising
The government has made improving logistics a priority. A $2.5bn, 750km railway connecting Addis Ababa with the port in Djibouti launched last year and should cut a three-day journey down to 12 hours. In an ambitious road-building programme flagship projects include a 200km expressway connecting Hawassa, home to the country’s largest industrial park, with the capital. Two years ago, the government signed a $150m World Bank project to transform Mojo, a poorly equipped and heavily congested dry port near Addis Ababa that processes more than 70% of imported containers, into a state-ofthe-art logistics facility. Meanwhile, Addis is helping a Dutch consortium, Flying Swans, to set up a cold chain along the railway to the coast. With the appointment of Prime Minister Abiy Ahmed last April, logistics reform shifted up a gear. The new administration’s roadmap,
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147
SELORM (JAY) ATTIKPO/FULLISH ART FOR TAR
DAY IN THE LIFE
MOSHOOD BALOGUN in Accra I was born in Lagos in 1981. I got all of my formal education in the same city. Unfortunately, I did not get to complete my university education because I got into a series of troubles with the authorities and I eventually had to leave. My mother provided me with some money, and I travelled to Denmark in 2002. Over there, I got into a relationship with a Danish woman and lived with her for close to a year. We’d made plans to get married, but she betrayed me one day; she called the police on me and had me deported. Back in Nigeria, I reunited with my family: my parents, my children and their mother. Me and her are divorced now. We have five children in total. Two have passed. The eldest was born in the year 2000, on the ninth of July. In 2007, when my then wife was pregnant with our last child, I was involved in a very serious accident. I was seated behind a friend on a motorbike and […]
Searching for the right path Adebayo Hammed Ajibade’s passions and hopes have kept him going through lifechanging moments I don’t even know how the accident happened, but my friend lost his life in it. I came out of it with a broken leg. Although my life was spared, a lifelong dream of mine was killed. I could no longer play football. It had always been my dream to be a footballer. My father spent a lot of his money in pursuit of this dream of mine. After a few years, when things were not going so well in my life, my mother suggested once again
162 THEAFRICAREPORT / N° 107 / APRIL-MAY-JUNE 2019
that I travel elsewhere. So I came to Ghana in 2013. In my very early days here, I was robbed. My bag, which contained the little money I had, my passport and a few other essentials, was stolen. I had to hustle to get back on my feet. I sold pure water in traffic – dusters, too. And then I got into working as a labourer, but the work was so hard. I reasoned that I’d die young if I continued with it. So I stopped. For a while, I had nothing to do. Until a fellow Nigerian living here in Ghana introduced me to selling books in traffic. I choose to sell solely African books because I’m proud to be African. These books I sell help me manage myself quite well financially. I get them from a wholesaler with whom I split the profits after I’ve sold the books. I’ve suffered a lot, and things are still not easy. But I thank God for my life because when there is life, there is hope. My dream now is to be a musician because I believe I’ve got a message to deliver. I just pray to God to point the right path for me soon.