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Ismael Cissé - Why Africa’s Job Numbers aren’t Growing
ISMAEL CISSÉ
Why Africa’s Job Numbers aren’t Growing ISMAEL CISSÉ, CEO SIRIUS CAPITAL
Africa’s population has continued to grow rapidly in the last 20 years and currently stands at about 1.2 Billion according to worldometer.com. Current projections put the numbers at 2.5 Billion by 2020 – and of this number, about 60% are within the ages of 16-28, making the continent home to the world’s youngest population. However, Jobs appear not to be growing at a commensurate level. In this exclusive interview with African Leadership Magazine, Ismael Cisse, Chief Executive Officer, Sirius Capital, a leading investment Bank in the continent, talks about Job creation, Investment Banking and other important issues. Excerpts: According to a report by the World Economic Forum in 2019, 6 of the fastest growing economies are in Africa. However, this has not positively influenced Job growth, as unemployment numbers continue to grow. What in your view can be done to change the trend?
Most of Africa’s current economic growth is based on massive investments on infrastructure and exports of raw materials. As such, this growth rarely translates to lasting job creation for the local populations. One of the solutions would be to push for a massive industrialization, focused on labor intensive sectors where we can leverage Africa’s young and dynamic population as a competitive advantage.
A sector where we can further illustrate that assumption is Agriculture for example; SubSaharan Africa is said to have the potential of becoming the food attic of the world with more than 60% of the global arable land, and count among its countries the #1 producers of several key agricultural commodities(cocoa, cashew, …) however very little of that production is transformed locally thus very few jobs are created in that sector. Let’s remember that 70% Africa’s population is in the rural world and are relying on agricultural revenues for survival, massive investments into industrialization of this sector would not only generate more value for our economies but also create a large number of higher quality jobs for our populations.
to be successful, we need to deeply rethink our educational systems in order to create a workforce with the skills that are needed to develop our countries and with the entrepreneurial mindset that will allow us to create a strong private sector which is an undeniable pillar of lasting job creation. Another reason why the growth of these economies doesn’t currently produce the results expected in terms of social inclusion, reduction in the poverty rate and job creation is that a big share of the wealth created is not reinvested in the local economies. We need to establish a more fluid capital market where the wealth created is used to support a stronger private sector and used to fund a more inclusive growth.
You founded Sirius Capital an investment Bank committed to raising funds for high-impact projects in Africa. Can you share some of your successful ventures since inception?
Sirius Capital is a very dynamic investment bank working closely not only with the private sector but also with the public sector. For the public sector, we have successfully arranged and raised fund by issuing bonds totaling more than 1 billion dollars for several West African countries like Mali and Côte d’Ivoire. We have also been active and raised funds internationally for several ventures in education and infrastructure.
We have several references with the private sector in real estate, industry and financial services. We are however particularly proud of our work alongside the private and public sectors in rethinking the industrialization model for key agricultural resources like cashew nuts for example. Sub Saharan Africa is the #1 cashew producer in the world and we currently transforming less than 10% of our production. Although the project is still in its early phases, the “inclusive transformation” model we helped conceive and engineer is proving very
efficient in creating more value and thousand jobs for the local farmers. This project illustrates our DNA at Sirius Capital, we take pride in our ability to leverage our deep understanding of the local economies in order to find pragmatic solutions and structure transactions that bridge the gap between high impact ventures and the adequate level capital.
As a leading investment banker in Africa, what are your top 10 picks of sectors of interest for would be investors in the continent?
The top 5 sectors I would highlight as nursing the best growth opportunities are
• Agroindustry: as discussed earlier this sector is one the strongest lever Africa can base its growth upon, more than 30 Billion dollars currently used to fund food imports in sub Saharan Africa when all the fundamentals for self-sufficiency are present. • ICT: innovation and technology are birthing a wealth of new disruptive business models that can show exponential results, the growth in internet accesses and mobile penetration are unparalleled in the world • R eal Estate: the need for adequate housing a basic need for a large majority of Africa’s fast-growing population • C onsumer goods: we need to cater to the needs to Sub Saharan’s Africa’s soon to be 2 billion population with an emerging middle class • Financial servic es: Financial inclusion is one of the biggest challenges we are currently facing with less than 10% of the population in the formal banking system.
Several other sectors offer strong fundamentals and should be considered by investors such as:
• Infr astructure • Healthcar e • Ener gy • Mining • Telco
The African Continental Free Trade agreement aims to build one of the world’s most ambitious single market with about 27 billion people and a combined gross domestic product (GDP) of$2.14 trillion. How would businesses like yours benefit from this initiative?
This ambitious project yields huge opportunities for Investment Banks with a regional footprint like ours. It should translate in more south-south investment capital flows which we can catalyze to further bridge the financing deficit we are facing in our emerging economies. We need to see more investments by Africans for Africa, we share similar social, political and economic conditions, which should mitigate the perception of risks associated with projects in the continent and thus lead to significantly improved financing conditions for local promoters. Operating in a broader market will also bring its share of additional growth opportunities for local businesses. We should see more M&A and strategic partnerships in a push for increased competitivity, a context investment banks with our acumen and expertise thrive on. You have a rich history of building businesses, with successful ventures in real estate, ICT among others. With Africa rated as one of the worst places for start-ups to survive, how have you been able to sustain these businesses?
This situation a huge paradox considering the magnitude of business opportunities we have in the continent. The two main issues faced by local startups today are the adequate human capital and access to finance.
We address the first issue with a lot of coaching and working alongside the promoters to structure their businesses in order to face the challenges and increased complexities of running a successful venture in a very competitive and quickly evolving global economy. It takes a significant amount of additional work but in the end the results are even more rewarding on the economic and social standpoints.
The second issue is at heart of Sirius Capital’s value proposition in the market: making sure the high potential projects are met with sufficient capital at market conditions that can help them grow in a sustainable manner.
PRINCESS VICKY HAASTRUP
ENL: A One-Stop Shop for Logistics Solutions in Nigeria
PRINCESS VICKY HAASTRUP
With over 45,000 warehouses, 1,098 Human capacity, and over 152 equipment, ENL is arguably one of the continent’s one-stopshop for Logistics solutions. ENL, an indigenous company and operators of the Terminals C and D at the Lagos Port Complex, Nigeria, won an award for Terminal and Container Development in the 5th Edition of the Seatrade Maritime Award in 2015. The Consortium has continued to prioritize excellent service delivery and client’s satisfaction. The Executive Vice Chairman, Princess Vicky Haastrup in this interview with African Leadership Magazine, talks about, the company’s strides in the Logistics subsector in Nigeria, excerpts: The ENL boasts of many years of service and qualitative involvement in Nigeria’s business sector. Of great importance is the revolution coming up in the form of the smart shipping solutions. How is the ENL positioned for this?
Smart shipping means self-driven vessel. Vessels that are able to sail and operate completely by themselves. It’s considered to be the future of maritime industry, which has the potential to influence the shipping and port operation positively. It should be noted that smart shipping is far from becoming a reality because regulatory, technical and safety issues have not been addressed.
Current rules required vessels to be manned. This technology when put into operation in the future will be of great benefits to port operation as port value chain will be greatly enhanced. ENL has positioned itself to explore the opportunities the new technology will present in the future for improving operation and optimisation. This definitely will involve huge investment on the part of Terminal operators in new technology compatible with smart shipping revolution as well as training of personnel in this regard.
It has been very challenging giving the ugly gridlock that has bedevilled Lagos ports. However, we have made significant progress in cargo evacuation through the use of barges in the last two years of this novel idea. We’ve so far evacuated 60,073 metric tons of cargo equating about 2400 numbers of trucks. ‘‘
In 2007, you entered into a strategic partnership with a Chinese logistics giant, Sinoma cargo international to evacuate cargo from the port using barges to solve the Apapa gridlock. How have you been able to eradicate this challenge seeing that it seems to be one that has defied all solution?
The Apapa gridlock has become a chronic thorn in the flesh of private stakeholders, which has resulted to huge revenue loss to Shippers, shipping agents, freight forwards, trucks owners and terminal operators. The idea of evacuating cargo from the port using barges was to help alleviate the problem caused by traffic gridlock but not to solve the problem of gridlock, as there many factors responsible for Apapa gridlock, such as poor road network linking the hinterland, accidents, widespread infrastructure degradation and inadequate facilities.
It has been very challenging giving the ugly gridlock that has bedevilled Lagos ports. However, we have made significant progress in cargo evacuation through the use of barges in the last two years of this novel idea. We’ve so far evacuated 60,073 metric tons of cargo equating about 2400 numbers of trucks. With these numbers we’ve taken off the road over 2400 trucks from compounding the already bad traffic situation.
Because of the progress made in this regard, we have entered into partnership with two new companies using barges in cargo evacuation and bringing in empty and laden containers for export through ENL terminal.
2007 seemed to be quite a remarkable years for ENL Consortium, it was the Port and Container Terminal Development Award at the Seatrade International Award, as well as local award by the Independent Newspaper Association. What has added to this milestones that saw to these awards?
ENL as the leader of multipurpose terminal in Nigeria has made remarkable achievements in cargo handling operation. These awards are in recognition of the unprecedented milestones achievements in port operation. Our records speak for itself in term of cargo throughput, quality of terminal services and social stability as it relates to dockworkers.
To answer your question on what has added to our milestones achievements:
1 Differentiation of services – We now offer more services such as cargo evacuation through barges which has resulted to lowering port cost for ship agents and shippers.
There so many challenges in the maritime sector, one of which is adequate maritime security. We understand that the government has called on private participants in addressing these issues; we think the private investors are doing enough with the challenges to battle with. Is this not an overstretch on the part of the private investors?
Adequate maritime security is the joint responsibility of Nigeria Maritime and Safety Administration and Nigerian Navy. There is need to extensively review Nigeria ports security plan and system in view of the prevailing security challenges confronting the nation. These challenges have resulted to loss of vessel traffic to neighbouring countries and high freight cost to Nigeria ports, particularly the Eastern port because of the security challenges in Niger Delta region, Private participation should be informed of collaboration with government security agencies. Private stakeholders in the maritime sector can partner the government in providing fund needed to address these challenges. Maritime security trust fund should be considered to assist in the provision of security equipment and facilities needed to effectively police Nigeria territorial water.
Your firm has recieved several recodnitions for business excellence. What does this mean to you with respect to the challenges highlighted so far?
It’s recognition of ENL contributions to port operation in Nigeria and Africa at large with our eyes set for bigger achievements in spite of the challenges highlighted above. It is also recognition of ENL contribution to Nigeria economy giving the role ports play in the economy life of a nation.
This will spur us to do more as we are not unmindful of port role as an essential link in global logistic chain and interface between marine and land transport, and as such, should facilitate movement of cargo through it.
How can the maritime sector help mop up the population of young Africans faced with the unemployment crises?
Unemployment is a serious problem that has plagued the African continent, which has forced many young Africans to embark on dangerous journeys across the Sahara desert and Mediterranean Sea in an attempt to seek greener pastures in western world; of which many of them ended up getting killed in the desert or drown in the Mediterranean Sea. It’s also the bane of many crimes involving
The maritime sector can help address the problem of unemployment in Africa because of the huge employment opportunities locked in the sector. However, this depend on overcoming key challenges such as improving governance, consistent maritime policies tailored toward employment creation, investing in infrastructures and reducing barriers to trade as well as investment in human capital.
Media and Entertainment in Africa A peep into the Future
Africa’s entertainment and media industry has entered a dynamic new phase - a third wave of convergence.
The borders that once separated the entertainment and media (E&M), technology and telecommunications industries are blurring in the battle for the attention of the consumer in a world that is rapidly digitizing.
As the mobile device cements itself as the pre-eminent source of the E&M experience, the most disruptive, forward-thinking companies are striving to create an integrated ecosystem suited to this consumer-driven
dynamic. This is according to PwC’s ‘Entertainment and media outlook: 2018 – 2022: An African perspective’.
By 2022, total E&M revenue in South Africa is expected to reach R177.2 billion, up from R129.2 billion in 2017. Internet (access and advertising) is expected to grow at a compound annual growth rate (CAGR) of 11.3% over the forecast period to reach R91.2 billion, up from R53.4 billion in 2017.
Overall E&M growth will be less reliant on Internet access revenue as organic growth opportunities in Internet
connections start fading towards the end of the forecast period. Internet advertising will greatly exceed TV advertising in terms of growth, leading the way with a 13% CAGR over the forecast period to reach R9.4 billion and overtake TV advertising spend in 2022.
The Outlook is a comprehensive source of analyses and fiveyear forecasts of consumer and advertising spending across five countries (South Africa, Nigeria, Kenya, Ghana and Tanzania) and 14 segments: Internet, data consumption, television, cinema, video games, e-sports, virtual reality, newspaper publishing, magazine publishing, book publishing, business-to-business (b2b), music, out-of-home (OOH) and radio.
Vicki Myburgh, Entertainment and Media Leader for PwC Southern Africa, says: “It’s clear we’re in a rapidly evolving media ecosystem that’s experiencing Convergence 3.0. In Convergence 3.0, the dynamics of competition are evolving while
a cohort of ever-expanding super competitors and more focused players strive to build relevance at the right scale. And business models are being reinvented so all players can tap into new revenue streams, by, for example, targeting fans and connecting more effectively with customers to develop a membership mindset.
“The pace of change isn’t going to let up anytime soon. New and emerging technologies such as artificial intelligence and augmented reality will continue to redefine the battleground. In an era when faith in many industries is at a historically low ebb and regulators are targeting media businesses’ use of data, the ability to build and sustain consumer trust is becoming a vital differentiator.”
South Africa’s E&M industry faced a challenging year in 2017 amidst economic and sociopolitical uncertainty. Total E&M revenue rose at a comparatively low rate of 6.8% year-on-year to R129.2 billion. A bounce-back in 2018 sees an anticipated 7.6% year-on-year growth, while the CAGR to 2022 is forecast at 6.5%.
South Africa will see a strong CAGR of 7.6% for consumer revenue to 2022, moving from R93.9 billion in 2017 to R135.7 billion in 2022. Beyond revenue from the Internet segment (buoyed by apps revenue) there are many success stories, most notably that of video games, which will surpass books, magazines and B2B to become the third-highest contributing consumer segment.
There is a striking difference in growth between digital and nondigital revenue, which have CAGRs of 11.4% and 1.8% respectively. Put another way, digital revenue will add R41.3 billion and nondigital revenue R6.7 billion in absolute terms to 2022. The nondigital elements of five different segments – books, magazines, newspapers, OOH and video games – will all decline to 2022.
Within this overall increase, the fastest revenue growth will be in the digitally driven segments. Virtual reality will lead the way, albeit from a low base, at a fiveyear CAGR of 55% to reach R671 billion in 2022, from R75 billion in 2017.
“The exceptional growth in VR reflects the excitement in this space. VR devices and experiences are in the early stages of being accepted by
the mainstream, as VR now emerges as a viable long-term platform for unique, immersive experiences, attracting major investment from media and technology companies eager to seize a share of this fast-growing market,” Myburgh adds.
After a breakthrough year, South Africa’s total e-sports revenue is forecast to rise from R29 million in 2017 to R104 million in 2022, a CAGR of 29%. A host of highprofile events in 2017 helped to propel e-sport further towards the mainstream, and a number of similar events have been and are being held this year.
A booming social/casual sector is driving strong growth in the video games segment. Total revenue is forecast to rise from R3.1 billion in 2017 to R6.2 billion in 2022, a CAGR of 15%. TV and video will continue to be a major driver of consumer spend. Following growth at 4.8% CAGR over the forecast period, the total TV market will be worth R40.8 billion by 2022.
The shift from physical to digital media has been one of the core drivers of the global and local E&M market for many years. But different media segments have experienced strongly contrasting patterns of digitization. In some cases, consumers have been quick to drop physical formats and embrace digital alternatives at the first opportunity.
Although the growth rate for physical books is moderate, it is notable that books are performing far better than any other non-digital sector. “Permanency and collectability may be the reason for this. Books are seen as collectibles often owned and displayed for many years, making the loss of their physical presence more significant,” explains Myburgh. Although books currently seem to have the best prospects of any physical media format, they are, like every other media segment, just one disruptive digital competitor away from major upheaval.
Newspapers and magazines will see revenues decline over the next five years. In 2017, total newspaper revenue fell by – 2.9% to R8.6 billion. The forecast for the years ahead is for decline at -4% CAGR. By 2022, South African total newspaper revenue is expected to drop to R7 billion. Despite 24/7 access to media and entertainment, the appeal of shared, live experiences still attracts audiences. Music events still draw large crowds, with ticket sales set to see an 8.0% CAGR to 2022, helped by major tours from popular crowd-pulling acts in 2018.
Recovering admissions and rising ticket prices together with improved offerings will see box office revenue deliver modest growth at a 3.5% CAGR through 2022.
South African audiences are prepared to pay a premium to watch big-budget films with surround sound, vibrating seats, temperature change, strobe lights and so on. Radio continues to have a solid listener base
in South Africa, and a weekly reach of 91%. Radio revenue is projected to rise 3.9% CAGR over the forecast period to surpass the R5 billion mark in 2022. Chat apps and social platforms have become an increasingly important part of day-to-day life for consumers, both in South Africa and worldwide. As usage and entertainment rise, key players from across the E&M industry have teamed up with these platforms, growing them into ‘one-stop shops’ for consumer needs.
The report shows that advertising in the E&M industry was mostly affected by South Africa’s economic environment, with cautious growth of just 1.9% year on year. An improvement is expected to 2022, with a 3.3% CAGR bringing total advertising revenue to R41.5 billion, from R35.3 billion in 2017.
New technologies and devices like artificial intelligence (AI), virtual and augmented reality, voice-based smart home devices and virtual assistants look set
to drive innovation in online advertising on a global scale in the coming years.
Nigeria
Nigeria saw a huge 25.5% rise in E&M revenue in 2017 to US$3.8 billion, although US$605 million of this US$764 million rise was attributable to Internet access. A 21.5% CAGR rate is anticipated to 2022, with revenue reaching US$9.9 billion in that year. Again, Internet access revenue will account for 89.6% of this absolute growth.
Kenya’s E&M industry saw 17% year-on-year growth in 2017, again propelled by growth in the Internet sector. An 11.6% CAGR will take the country to US$2.9 billion in 2022, from US$1.7 billion in 2017. Outside of the Internet space, TV and video revenue dwarfs the other segments.
Ghana
Ghana’s E&M industry has more than tripled in value since 2013. Total revenue reached US$752 million in 2017. It is forecast to surpass US$1 billion in 2019 and to total US$1.5 billion in 2022, increasing at a 14.2% CAGR. As with Nigeria and Kenya, Internet access spend accounts for much of this revenue and growth. Ghana is in a strong position for further E&M growth as revenue gains critical mass over the next five years.
Tanzania
Total E&M revenue in Tanzania stood at US$496 million in 2017, having risen 28.2% year on year. Continued momentum at an 18.3% CAGR will see revenue reach US$1.2 billion in 2022, 2.3 times the size of the market in 2017. Tanzania’s E&M revenue make-up is ostensibly similar to that of Ghana, although here Internet revenue takes a slightly less dominant position.
Between them, the five countries considered in the Outlook will, driven by Nigeria, add US$12.4 billion in revenue from 2017 to 2022, at a combined CAGR of 11.9%. Although much of this will fall into the hands of telcos, there are significant opportunities for content providers too.
The engine of growth here will be organic, with increased populations and gradually increasing disposable income swelling the ranks of potential E&M consumers – and everincreasing Internet access greatly expanding the range of E&M opportunities available. “To succeed in the future that’s taking shape, companies must re-envision every aspect of what they do and how they do it. It’s about having, or having access to, the right technology and excellent content, which is delivered in a cost-effective manner to an engaged audience that trusts the brand. For those able to execute successfully, the opportunities are legion,” Myburgh concludes.
New technologies and devices like artificial intelligence (AI), virtual and augmented reality, voice-based smart home devices and virtual assistants look set to drive innovation. ‘‘
