Nepad Edition 3 by Contact Media

Post Office Logistics – from a letter to bulk frozen freight Whether you want to send a gift parcel overnight, ensure safe delivery of precious bulk cargo, or start an online shop, the Post Office Logistics group designs a perfect solution. “To courier an item overnight – to even a tiny town or village – you need us. Moving bulk items in secure containers? You need us,” says Nhlanhla Dube of SA Post Office Logistics. Dube explains the unique advantage of Post Office Logistics – designing special solutions. “One of our more unusual operations is delivering tiny citrus moths from the Lowveld, where they hatch, to citrus farmers in the Western Cape. The moths fertilise flowering citrus trees and without them there would be no fruit production. We transport the moths in special containers that protect them 100%.” SA Post Office Logistics acquired 26 new Mercedes-Benz and Fuso trucks at the end of 2012, making a huge improvement to the coverage and reliability of its fleet.

On a less fragile note … SA Logistics delivered the 2013 budget supplements for newspapers countrywide (and under strict security) from Cape Town. For the 2011 National Census, SA Logistics delivered 41 million items countrywide, and returned the completed material to Stats SA – all within deadline. Individual retail customers also deserve flexibility. Speed Services Couriers, available at all Post Office counters, offers the most affordable counter-to-counter courier service in South Africa. A courier item can be handed in at more than 2,000 Post Office counters for delivery the next day. And for account holders, Speed Services Couriers will collect items from the customer’s door for next-day delivery. Both sender and receiver can track items via the web, call centre or sms. Speed Services Couriers recently introduced a cash-ondelivery facility for business owners. XPS couriers – a subsidiary of SA Post Office Logistics – focuses on business-to-business delivery, reaching 3,200 destinations daily and offering peace of mind through electronically captured delivery confirmation documents. Clients receive proof of delivery via hard copy, CD or website. PX – another subsidiary – targets the niche freight market of retailers and related business sectors. PX moves consolidated loads of up to three tons in tailor-made containers right to the client’s doorstep, offering a threeday loose consignment service. Post Office Logistics offers a particularly cost-effective service through alliances with postal operators in neighbouring Swaziland, Botswana and Namibia.

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CONTENTS

CONTENTS View from the top

12 14 16 18

Perspective from NEPAD CEO, Ibrahim Mayaki Perspective from NEPAD Business Foundation CEO, Lynette Chen Perspective from chairman of the NEPAD Business Foundation, Stanley Subramoney Perspective from World Economic Forum head of Africa, Elsie Kanza

African interest 20

Dlamini-Zuma: towards a people-driven continent African Union chair Dr Nkosazana Dlamini-Zuma explains her goals for Africa and how to achieve them.

Growing African business giants As the continent’s economies advance, African business are fast developing home-grown competitors to multinational giants, writes Dianna Games.

If you snooze, you’ll lose… By diversifying its economy, Nigeria has soared ahead of South Africa as Africa’s biggest economy. What does this mean for South Africa and the continent?

Africa’s little oddities This continent has its good and bad qualities, but it also has some interesting quirks and astonishing facts.

Agriculture and food security 42

Growing job creation through agriculture There has been progress in creating jobs in agriculture, but there are issues that still need addressing.

Naidoo takes a leaf out of India’s book Agriculture may be the solution to poverty. Jay Naidoo looks to other countries for guidance.

www.nepadbusinessfoundation.org

62 53

Water – not a drop to spare Drinkable water is fast becoming a scarce resource in Africa. What is being done to improve the situation?

Who is benefiting from corporate social responsibility in Africa? While a question mark hangs over the overall success of CSR, some companies are making a sustained effort.

Regional integration and infrastructure 62

Stopping the runaway terrorism train Terrorism in Africa is on the increase, but what is being done to curb it?

Realising Africa’s real possibilities Sceptics aside, there is much to celebrate about Africa, and possibilities abound. So, what are they?

Healthy lessons learnt from Ebola Ebola shocked the world and shone a torch on a much bigger health problem on this continent.

Making resources count Mozambique is a country in flux after one of the world’s largest deposits of gas was discovered there.

Africa’s double-edged swords International futurist Graeme Codrington considers the global forces that are good and bad news for Africa, and the changes the continent needs to make.

OUR BUSINESS IS YOUR BUSINESS SUCCESS IN AFRICA The NBF provides critical public and private sector linkages for the acceleration of Africa’s development projects from inception to implementation.

PwC embarks on its own business across the African continent

Unlocking African Potential

More and more investors around the world are seeing the growth po – especially its substantial demographic edge. Africa has become one most popular investment destinations. Six of the world’s fastest-gro are in sub-Saharan Africa (SSA).

Our focus areas:

Foreign investors are planning new developments and expanding existing ones in Africa. Africans are leading the way with more investments, showing optimism about the growth and investment potential of the continent. According to the recent Regional Economic Outlook for SSA published by the International Monetary Fund (IMF), gross domestic product (GDP) growth is expected to go up from 5% in 2013-2014 to 5,75% in 2015. This is a positive view. However, some countries do face serious challenges. In West Africa, the Ebola virus has caused the tragic loss of human life and is also placing significant strain on several economies.

Infrastructure| Agriculture| Capacity Building| Governance | Natural Resources

Some countries have to contend with their own domestic and internal challenges: South Africa’s growth has been low due to difficult labour relations and not being able to supply enough electricity, amongst other things.

On a more positive note, the IMF projected a record investment into Africa of USD80 billion in 2014, from both advanced and emerging economies. Real estate, financial services, telecommunications, infrastructure, resources and consumer-facing businesses are some of the industries that will drive growth and attract international trade and investment.

Global megatrends are also influenc According to PwC research, African changes, urbanisation and demogra main trends that will transform thei five years. They know how these tre business and the way Africa is seen. of Africa will be affected by internal trends, especially the fast urbanisati the rise of middle-class consumers.

Most large Western corporations are one of the three largest cities in SSA and Lagos. By 2060, Africa’s middle 1,1 billion, which will by then be 42% according to the African Developme creating significant opportunities, p in the sectors in which richer consum money, such as recreation and servic

As to the findings of our own research on Africa and the numerous interviews that PwC has conducted with CEOs across the continent, we are more convinced than ever that despite many challenges in Africa, the African story is positive. At PwC we embarked on our own business journey into Africa several years ago and have continuously looked at ways in which to stay ahead of the game.

Daniel Silke, political analyst and au Future: Top trends that will shape So World’, presents a convincing case fo focusing on the growth of cities and rapid rise of the African consumer.

This means actively seeking to recruit and retain the best talent, as well as investing in our business to better serve our clients in Africa. Recently, we established an integrated PwC Africa business, made up of firms in

The ever-changing African landscap and opportunities for companies doi the continent. It is through our enga with clients that we are able to call o range of expertise and skills, as wel analysis that may be useful to those

Web: www.nepadbusinessfoundation.org | Tel: +27 (0) 10 596 1888 | Email: info@thenbf.co.za | Fax: +27 (0) 10 596 1889 | Twitter: @thenbf Supported by:

the predominantly English-speaking West and East Africa, which is led an single leadership team. In 2014, PwC alliance with PwC in the UK to meet for professional services as trade act regions grows. What this means for positioned to serve them better acro benefit of PwC’s global reach.

www.pwc.co.za

14-16098_Advertorial Nepad Africa.indd 1

CONTENTS

Human development and human capital management 92

Creating a future for war-affected children Children are vulnerable pawns in conflicts all over Africa. What happens to them once the fighting is over? Paying the price for progress As the economic structure of African countries changes, how does this impact on remunerating the workforce?

100

The road to empowering African women Women in Africa are responsible for so much and so many, but how empowered are they? What is happening for women in Africa?

104

Fighting the war for talent on two fronts Transfer of the right skills is the answer to the skills shortage and unemployment looming large on this continent.

110

Enabling the youth to become contributing members of society. Professor Mthuli Ncube looks at solutions to youth unemployment.

116

118

Top African tech start-ups Entrepreneurs abound in Africa, and tech is where much advancement is happening. Find out about some of the top tech start-ups. The mushrooming middle class The middle classes are growing fast on this continent, which is a positive sign. What is happening and how?

100

Climate change and environment 124

Why girls need sunshine Climate change is a reality, but small steps to lower harmful emissions can change people’s lives.

128

Stemming the bleeding of Tanzania’s forests Finding a way to curtail and legalise the chopping down of forests has a huge impact on the environment.

130 130 The simple innovations lighting Africa Sub-Saharan Africa has a serious energy problem, but there are uncomplicated, novel ways to solve it.

Governance and democracy 136 Shaping the continent’s growth Dianna Games identifies the top five challenges and opportunities facing Africa. 138 Brics Bank heralds a new power player in the international arena As Brics takes control of its future with the imminent launch of its bank, Laetitia Habchi considers what this means for the world. 142 Public-private partnerships – a partnership of peers What is the value of public-private partnerships in infrastructure, and how do they work best? 146 Is foreign investment just another form of colonisation? How much has Africa and its people gained from the continent’s popularity with foreign investors?

Cross-cutting issues 150 Voluntourism – altruism or opportunism? Africa is a favourite destination for ‘voluntourists’ – people who combine travel with service to the poor. But do they do any good? 152 Superstardom doesn’t spell super-charity An international star’s name on an African charity attracts the media, but is all the fuss worth it? 158 Africa’s cellular leap The notion that Africa is behind on technology has no validity. www.nepadbusinessfoundation.org

THE OFFICIAL NEPAD YEARBOOK 2015 NEPAD Business Foundation physical address: Tuscany Office Park, Building IX, Ground floor 6 Coombe Place, Rivonia, Johannesburg, 2128 South Africa

NEPAD Planning and Coordinating Agency physical address: International Business Gateway, New Road & 6th Road Midridge Office Park, Block B Midrand, 1685 South Africa

NEPAD BUSINESS FOUNDATION

NEPAD PLANNING AND COORDINATING AGENCY

CEO’s Office Lynette Chen (NBF CEO) Email: jackie.kanusu@thenbf.co.za Tel: +27 (0) 10 596 1892

CEO’s Office Dr Ibrahim Mayaki (NPCA CEO) Email: jacintan@nepad.org Tel: +27 (0) 11 256 3633

Education and Training Prof Mzobz Mboya Email: mzobanzim@nepad.org Tel: +27 (0) 11 256 3647/3624

Communications Abiola Ajayi Email: abiolaa@nepad.org Tel: +27 (0) 11 256 3626

ICT Towela Nyirenda-Jere Email: towelan@nepad.org Tel: +27 (0) 11 256 3588

Gender Development Rosalie Lo Email: rosaliel@nepad.org Tel: +27 (0) 11 256 3658

Energy Prof Mosad Elmissiry Email: mosade@nepad.org Tel: +27 (0) 11 256 3674

Capacity Development Florence Nazare Email: florencen@nepad.org Tel: +27 (0) 11 256 3632 Science and Technology Aggrey Ambali Email: aggrey@nepad.org Tel: +27 (0) 11 256 3688

TerrAfrica Mamadou Diakhite Email: mamadoud@nepad.org Tel: +27 (0) 11 256 3658

Finance and Accounts Monica Dowie (NBF CFO) Email: monica.dowie@thenbf.co.za Tel: +27 (0) 10 596 1904 NBF Mozambique Office Francisco Nhanale (Country Manager) Email: francisco.junior@thenbf.co.za Tel: +258 827 63 4931 NBF Zambia Representative Office Brenda Nang’amba (Country Manager) Email: brenda.nangamba@thenbf.co.za Tel: +260 211 26 2936

NBF Malawi Representative Office Dr Felix Benson Lombe (Country Manager) Email: ceo@aiccafrica.org Tel: +265 1775 691 Marketing & Communications Terrence Mutuswa Email: terrence.mutuswa@thenbf.co.za Tel: +27 (0) 10 596 1899 Stakeholder Relations Roger Scharneck Email: roger.scharneck@thenbf.co.za Tel: +27 (0) 10 596 1888

Rural Futures Programme Estherine Fotabong Email: estherinef@nepad.org Tel: +27 (0) 11 256 3644

NEPAD FOCUS AREAS & CONTACT DETAILS Agriculture and Food Security

Agriculture Desk Monica Dowie Email: monica.dowie@thenbf.co.za Tel: +27 (0) 10 596 1885

Comprehensive Africa Agriculture Development Framework (CAADP) Augustin Yamdjeu Email: augustinw@nepad.org Tel: +27 (0) 11 256 3605

Climate Change and Resource Management

Strategic Water Partners Network (SWPN) SWPN Secretariat Email: swpn.secretariat@thenbf.co.za Tel: +27 (0) 10 596 1892

Natural Resource Management based on the Environment Action Plan (EAP) Estherine Fotabong Email: estherinef@nepad.org Tel: +27 (0) 11 256 3644

Regional Integration and Infrastructure

Africa Infrastructure Desk (Afri-ID) Laetitia Habchi (Programme Manager) Email: laetitia.habchi@thenbf.co.za Tel: +27 (0) 10 596 1881

Programme for Infrastructure Development in Africa (PIDA) Adama Deen Email: adamad@nepad.org Tel: +27 (0) 11 256 3678

Economic and Corporate Governance

African Corporate Governance Network (ACGN) Monica Dowie (Programme Manager) Email: monica.dowie@thenbf.co.za Tel: +27 (0) 10 596 1885

African Peer Review Mechanism (APRM) Rachel Mukamunana Email: rachel.mukamunana@aprm-au.org Tel: +27 (0) 11 256 3413

Human Development and Capacity Building

NBF Cross-cutting Themes Lynette Chen (NBF CEO) Email: jackie.kanusu@thenbf.co.za Tel: +27 (0) 10 596 1892

Capacity Development Strategic Framework (CDSF) Florence Nazare Email: florencen@nepad.org Tel: +27 (0) 11 256 3632

Investment and Capital Markets

Africa Investment Integration Desk (AvID) Adam Gross (Programme Advisor) Email: adam.gross@thenbf.co.za Tel: +27 (0) 10 596 1894 www.nepadbusinessfoundation.org

CONTENTS

Advertorials 24

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Powering up for the future PDS Power helps business in Africa keep the lights on

ECIC Exporter port of call

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82 CSI Group Delivering a guaranteed customer service everytime 86 MICROMINE Intuitive mining solutions 94 AMSCO Sub-Saharan Africa’s biggest and most ambitious human capital development company 98 Sport For All Q&A with Kelli Givens 102 Heat and Control Bringing the heat 108 Summerfields Rose Retreat and Spa Ultimate indulgence 120 Xylem Water Solutions: The rising tide How are we taking care of South africa’s dwindling water supply? 122 Vokes Filtration A market leader in HVAC systems 126 Strategic Water Partners Network Building a sustainable future for South Africa’s water 134 Netafim Future agriculture or the future in agriculture? 144 Rand Merchant Bank Leading African corporate and investment bank with a deal footprint across 35 African countries

“My future?” Delivering sustainable

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infrastructure that improves our world. “DOING GOOD WHILE DOING BUSINESS”

Contact www.bigenafrica.com, or the office most convenient to you: Pretoria (012) 842 8700; Johannesburg (011) 802 0560; Bloemfontein (051) 430 1423; Cape Town (021) 919 6976; Durban (031) 717 2571; East London (043) 748 6230; Gabarone gaborone@bigenafrica.com; Kuruman (053) 712 2882; Mahikeng (018) 386 2111; Mthatha (047) 532 5234; Nelspruit (013) 755 1421; Polokwane (015) 297 4055; Richards Bay (035) 753 1235; Rustenburg (014) 597 3655; Windhoek +26 461 237 346.

The NEPAD Business Foundation would like to thank the NBF Board of Directors for their commitment and dedication to the African vision of development and their continued support of the organisation.

Mr Stanley Subramoney Deputy CEO, Southern Africa PricewaterhouseCoopers Chairman of NBF Board

Mr Geoff Rothschild Former Head of Government & International Affairs Johannesburg Stock Exchange Chairman of NBF OPSCO

Ms Futhi Mtoba Former Chairperson Deloitte Africa Vice-Chair of NBF Board

Mr Cas Coovadia Director The Banking Association of South Africa Mr Patrick Kabuya Senior Financial Management Specialist World Bank Chairman of NBF ARC Mr Mark Gregg-MacDonald Group Executive: Planning and Monitoring Transnet SOC

Mr Mark Williams Founder SureNet Group

Mr Sean Murphy Divisional Manager Sub-Saharan Africa Mott MacDonald

Ms Lynette Chen CEO NEPAD Business Foundation

Notes: OPSCO - Operations Committee

FOUNDING PARTNERS:

Dr Reuel Khoza Former Chairman Nedbank

ARC - Audit and Risk Committee

Prof Wiseman Nkuhlu Managing Director Eclecticcap

Ms Graca Machel Founder The Graca Machel Trust NBF Patron

NBF - NEPAD Business Foundation

PLATINUM MEMBERS:

Mr Reolof van Tonder Business Development Manager CSM

Dr Nkosana Moyo Founder Mandela Institute for Development Studies NBF Patron

CREDITS NEPAD Planning and Coordinating Agency International Business Gateway Block B Cnr Challenger and Columbia Avenues Midridge Office Park New Road & 6th Road Midrand, Johannesburg P O Box 1234 Halfway House Midrand, Johannesburg, South Africa, 1685

Tel: Fax: Email: Website:

+27 (0) 11 256 3600 +27 (0) 11 206 3762 info@nepad.org www.nepad.org

The NEPAD Business Foundation Tuscany Office Park, Ground Floor, Building Number IX, 6 Coombe Place, Rivonia, 2128, Johannesburg, South Africa

Tel: +27 (0) 10 596 1888 Fax: +27 (0) 10 596 1889 Twitter: http://twitter.com/thenbf Email: info@thenbf.co.za Website: www.nepadbusinessfoundation.org

Acknowledgements

We especially thank Lynette Chen and Terrence Mutuswa, who assisted in directing content development for the NEPAD Yearbook at the NEPAD Business Foundation. We also thank Dr Ibrahim Mayaki and Abiola Ajayi, who coordinated support from the NEPAD Planning and Coordinating Agency. & C O M M U N I C AT I O N S

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Contact Media & Communications (Pty) Ltd

& C O M M U N I C AT I O N S

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Editor: Peta Krost Maunder CEO & Development Director: Sean Press Managing Director & Publisher: Donna Verrydt Head of Finance & Operations: Lesley Fox Design & Layout: Janine Louw Copy Editor: Loren Barale Proofreader: Haley Abrahams Production Assistant: Gwen Sebogodi Account Executives: Paul Styles, Damian Murphy, Chioma Didi Okoro Contributors: Lynette Chen, Graeme Codrington, Bruce Cooper, Robert Ddamulira, Dr Nkosazana Dlamini-Zuma, Dianna Games, Stuart Graham, Helen Grange, Iza Grek, John Kabubu, Elsie Kanza, Dr Ibrahim Assane Mayaki, Professor Mthuli Ncube, Malcolm Pannell, Samantha Perry, Ajen Sita, Samantha Smith, David Storey, Stanley Subramoney, Rob Urquhart, Stacey Vee, Liesl Venter, Lesley Wentworth.

Repro & Printing Kadimah Print

Disclaimer All material is strictly copyright and rights reserved. No portion of this publication may be reproduced in any form without prior written consent of the publisher. Whilst every care has been taken in compiling this publication, neither the publisher nor the NPCA, NBF and its associates give any warranty as to the accuracy of the content. The views expressed in the publication are not necessarily those of the publisher, NPCA, NBF or its associates.

VIEW FROM THE TOP

Towards Agenda 2063 – and the Africa we want

Dr Ibrahim Assane Mayaki, chief executive of the NEPAD Planning and Co-ordinating Agency, speaks about how the leadership is working towards the Africa that Africans want.

n 1963, the newly ‘independent’ African countries came together to form the Organisation of African Unity, which would promote the unity and solidarity of member nations and act as a collective voice for the continent. However, they emphasised the importance of sovereignty and the inviolability of their borders. A new form of cooperation between neighbours had to be invented to increase the level of interaction between them with regard to economic, security and political issues. By the mid-1970s, regional economic blocs started to emerge. Therefore, towards the end of colonialism, African integration took two different paths. The first was a somewhat political path, which focused on the eradication of all forms of colonialism. This path defended the interests of independent countries and helped those territories that were still colonised to achieve independence. The second focused on regional economic integration, with the three most advanced sectors – the Economic Community of West African States, the Southern African Development Community and the East African Community – signing a number of protocols calling for the free movement of goods, services and people within the respective regions. African integration was viewed by its governments to be a possible alternative to many years of external advice. This was anchored on the realisation that, as a continent, Africa had the capability to realise its full potential, to develop flourishing, inclusive and prosperous societies.

www.nepad.org

Although there have been many attempts at an African economic integration agenda, the drive got off the ground around 2001, with former South African president Thabo Mbeki’s Millennium Partnership for the African Recovery Programme and former Senegalese president Abdoulaye Wade’s Omega plan. From our vantage point, the adoption of the New Partnership for Africa’s Development (NEPAD), in July 2001, as a socio-economic programme aiming to accelerate economic cooperation and integration, was the driving force behind the discussion for true African integration. The NEPAD agenda was immediately translated into a detailed programme of action, on which the NEPAD Planning and Co-ordinating Agency is still working and reporting to the heads of states committee. Following these milestones on the integration journey came the reform process, leading to the creation of the African Union in July 2002, with the aim of ensuring “an integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena”. After celebrating the 50th anniversary of the birth of African unity in 2013, we are aware of the multifaceted and multidimensional global challenges the continent must overcome to lay the foundations of its development. Sound planning and results-oriented policies and actions will be needed to transform our continent. The 24th African Union Assembly, held in January 2015, adopted a continental plan for the next 50 years. Just 14 years after the adoption of NEPAD, this plan is in line with the vision of the founding fathers of an independent Africa. The goal is to ensure transformation and sustainable development for future generations through Agenda 2063. As a vision and an action plan, this is the blueprint that will guide the transformation of Africa. It is a call for all segments of society to work together to build a prosperous and united continent, based on shared values and a common destiny. Agenda 2063 is not only a new, revolutionary plan for an integrated and developed Africa, it also builds on previous initiatives.

There is no doubt that the people of Africa, and the African diaspora, are committed to actualising the seven aspirations entrenched in Agenda 2063. The first two decades of the 21st century have ushered in a real transformation of the African continent. Its economic growth in the last decade has been receiving positive reviews. The continent is recovering the growth momentum of the 1970s, as reflected in the 5.4% gross domestic product growth from 2005 to 2013. Also, the Human Development Index shows a 1.5% annual growth. Nevertheless, the poverty gap remains high, at 48.5%, and the threat of the soon-to-be-contained Ebola virus has affected the average growth rates of West Africa. Notably, African countries whose growth is driven by agriculture and services have registered a reduction in poverty levels. Therefore, job creation – especially for the youth – trade and the expansion of small and medium-sized enterprises are among the prerequisites for maintaining the momentum of transformation. This time around, as guided by the aspirations of Agenda 2063, Africa will participate in the global economy as an equal partner, with clearly defined terms of engagement, through its continental programmes. To demonstrate that Africa has put its house in order and taken full responsibility for its destiny, its leaders are prioritising infrastructure development as a major contributing factor to integration, hence the importance of NEPAD’s Programme for Infrastructure Development in Africa. At the NEPAD Planning and Coordinating Agency, in our role as the African Union’s development agency and implementing arm of Agenda 2063, we are convinced that infrastructure development, underpinned by intraregional and global trade, is the continent’s best strategy to foster industrialisation. These are the major conduits to a prosperous and economically integrated Africa. Africa’s challenges are how to foster inclusive prosperity, reduce the potential for violent confrontation and create conditions for peaceful co-existence. And this is the Africa we want.

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VIEW FROM THE TOP

Africa beyond the millennium development goals Lynette Chen, chief executive officer of the NEPAD Business Foundation, shares her views on Africa’s Agenda 2063 and of Africa beyond the MDGs.

n 2000, The Economist, one of the world’s leading publications on economics and political thought leadership, published an edition with Africa on its cover and a coverline calling it ‘The hopeless continent’. In 2011, the same magazine had Africa on the cover again, but this time, it was headlined ‘Africa Rising’. In November 2012, Time magazine also had ‘Africa Rising’ on its cover. Since creating the millennium development goals (MDGs), Africa has been changing its narrative from a continent characterised by poverty and hunger to one of the fastest-growing regions in the world. This has shifted the global perception of our continent, and the NEPAD Business Foundation (NBF) strongly believes that this is the century for Africa.

www.nepadbusinessfoundation.org

The global supplier

Post the MDG deadline and with the roll-out of the African Union’s Agenda 2063 this year, we expect to see a change in the paradigm for development across the continent as factors for economic convergence continue to align in favour of Africa. While Africa’s growth in the past decade has been attributed to its abundance of high-value mineral resources, the current downturn in commodity prices creates doubt about future demand. However, foreign governments have worked hard to secure and ensure trade arrangements that will guarantee a continued supply of African resources. India has held two summits with African governments to solidify bilateral trade agreements that grew from US$3 billion in 2001 to US$93 billion by 2013, and has gone further to offer Africa up to US$5 billion in credit. Further talks between African governments and other nations have resulted in the following deals with cash inflows into Africa: the Forum China-African Co-operation Conference of 2012, which resulted in a US$20 billion loan towards infrastructure development; the Arab-Africa Summit offered an ‘easy terms’ deals of up to US$2 billion in 2013; Japan offered aid and investment to Africa to the amount of US$32 billion in 2013; the French president met with 40 African leaders and offered unspecified terms in 2013; the EU-Africa summit of 2014 resulted in a US$39 billion grant to fund development projects; and the US announced a US$33 billion commitment to Africa during the US-Africa Leaders Summit of 2014. These funds will target the improvement of Africa’s export capabilities through the development of critical infrastructure in the transport, energy and ICT sectors, as well as supporting the development of strategic production industries in agriculture and mining. It is important to note that money alone is not enough to influence accelerated development in Africa. The capability of African governments to manage and utilise the funds in line with set goals and targets is equally crucial, as is securing the buy-in

of private sector stakeholders in support of continental development. While investment and growth has occurred in Africa, there is a great need to see this translate into meaningful impact on the lives of ordinary citizens. These investments must incorporate industrialisation and the inclusion of local content in the supply chain – upstream and downstream – in order to generate jobs, create new enterprises and small to medium enterprises and build capacity for Africans. Only through this concerted approach will there be poverty alleviation and will the longterm sustainability of livelihoods of African citizens be secured.

Infrastructure still a priority for Africa

Infrastructure development continues to be a priority for Africa. Investment in infrastructure is a key driver for economic growth with vast potential for large profits and high investment returns, considering that Africa holds 10% of the world’s oil reserves, 22% of the world’s gold deposits and 90% of the global supply of phosphate, among other metals and commodities. Infrastructure development in Africa also has the capacity to unlock the potential of agriculture, which will not only enable the continent to feed itself, but to meet global demand for food in the future. As African governments are being pressured to accelerate the development of critical infrastructure in transport, ICT and energy, their national infrastructure strategies are being aligned to continental and regional master plans. These plans include enhancing and accelerating infrastructure development across the continent NEPAD Programme for Infrastructure Development in Africa, the SADC Regional Infrastructure Development Master Plan and the Comesa-EAC-SADC Tripartite Inter-regional Infrastructure Master Plan. There is an increasing call for private sector participation. The NBF plans to build on the successes of its Africa Infrastructure Desk (Afri-ID) in unblocking barriers in port, rail and pipeline

THE OFFICIAL NEPAD YEARBOOK 2015

infrastructure projects along the NorthSouth Corridor. Through the NBF’s Afri-ID multistakeholder platform, partnerships between the public and private sector have been created to find innovative solutions to accelerate the implementation of five key projects that will have a regional impact. The function of the Afri-ID is to expedite the identification, development and implementation of regional infrastructure projects and translate them into bankability. There certainly isn’t a lack of projects in Africa. The biggest challenge is finding the right information on the status of these projects. The core competency of the Afri-ID is its ability to analyse and gain a deeper understanding at the early stage of the project life cycle. Its interventions help create an enabling and consultative environment between the public and private sector to jointly discuss innovative models of partnership to take these projects to implementation. This involves research on projects and its current status of development; identifying and developing the business case; providing advisory services on project preparation and financing; as well as the facilitation of policy and regulatory alignment. This is done through a series of critical activities and discussions within the working groups for each project.

Africa’s markets

Global appetite for African markets has steadily been rising since 2000 and an increasing number of international investors are becoming acclimatised to operating in Africa. A recent survey by Fortune magazine showed that one in five of the world’s 500 largest corporations have established operations in Africa, either directly or through part-ownership of companies. Much of this appetite stems from the fact that Africa is the second-largest continent and is home to the world’s youngest and fastestgrowing population. Economists project that by 2060, Africa’s middle-class population of about 300 million people will triple to about 1 billion people. This will offer a lucrative market for products and services and become a profitable long-term investment for local and international businesses. Another avenue that is gaining ground in efforts to develop Africa’s markets is the international private equity investments funds

that are finding their way to African shores. Africa received private equity investments of up to US$4 billion in 2014, with investment capital going to telecommunications start-ups and other small to medium businesses across the continent. This year, the NBF will be launching the Africa Investment and Integration Desk (AvID), which will coordinate funders and financiers to work in a more integrated way to provide packaged financing for strategic African project opportunities.

The NBF plans to build on the successes of its Africa Infrastructure Desk (AfriID) in unblocking barriers in port, rail and pipeline infrastructure projects along the North-South Corridor. To maintain the continent’s growth trajectory, African governments need to efficiently mobilise and rapidly deploy large capital investments in transportation, energy and ICT infrastructure, develop the agricultural sector and resource industries, as well as focus on the development of a competitive manufacturing sector. Such large capital investments need to be raised both within the continent, as well as from foreign direct investment. The NBF’s AvID is poised to play a pivotal role in bringing together donors, development finance institutions, commercial banks, equity investors and impact investors to work together in a cohesive manner to finance projects in a sustainable manner.

Repositioning the NBF

The NBF believes in the emergence of a new calibre of private sector in Africa. Businesses that prioritise sustainable social development as much as they do returns on profit, and are willing to work jointly with governments to achieve growth in markets, will experience better success in Africa in the long term.

There is no simplistic way to look at entry into African markets and, contrary to popular belief, countries in African regions often have little in common and social, political and economic dynamics vary considerably from country to country. The importance of African-context comprehension and incorporation into expansion strategies can never be overstated. The NBF’s knowledge of Africa and government networks will allow companies to align their plans to national and continental frameworks, as well as the AU’s Africa Agenda 2063 targets, for increased intra-African trade and investment. With almost a decade of experience, the NBF has the ability to act as a neutral facilitator for public-private investments and social relationships that have a positive impact for the development of Africa and the alleviation of poverty. The NBF specialises in mobilising private sector resources to execute private sector-led programmes and initiatives for Africa’s development.

Strategic partnerships

The NBF signed a memorandum of understanding with the AU Commission in December 2014 and will be establishing an office in Addis Ababa, Ethiopia, in 2015. This will enable the foundation to develop closer relationships with the AU and the United Nations Economic Commission for Africa to provide a private-sector perspective on continental policies that impact trade and investment. In addition, Ethiopia has attracted many investors, with the government positioning a clear investment strategy to develop its infrastructure, agriculture and manufacturing sectors. The AU’s Africa Agenda 2063 is more than a framework to direct the efforts and activities of governments across the continent, it is a strategy for Africa’s economic prosperity that has determined its own development targets to be reached by 2063 – defined by Africans, for Africans. It is an action plan for cooperation that will unify Africa and move us closer to real economic integration. The NBF is in full support of this initiative and will work with the AU Commission to achieve the vision of Agenda 2063, which will see a prosperous, robust, thriving and sustainable Africa. The future of Africa is bright. www.nepad.org

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In a changing global landscape Stanley Subramoney, chairman of the NEPAD Business Foundation, discusses Africa’s position in the changing global landscape. Africa – post-Millennium Development Goals

As the world reaches the 2015 deadline for the Millennium Development Goals (MDGs), it is time to reflect on the targets that were set and see what has been achieved. The primary goal for the MDGs was to halve the number of people living in extreme poverty – those surviving on less than US$1.25 a day. The 2014 MDG Report revealed that this was achieved between the 1990 and 2010 period, due to progress made in Asia. China achieved a remarkable reduction of poverty – 20% in less than 20 years. This is good news for the world, although much emphasis needs to be placed on a more balanced global development, since progress varies greatly from country to country. However, African countries are lagging behind in reaching their targets. According to the results of the Centre for Global Development’s MDG Progress Index, five African countries are in the top 20 performers. This is outstanding, considering the starting point was not the same for all countries. A large portion of Africa started way behind the rest of the world. It is on the basis of this asymmetrical point of departure for the continent that the Africa Union decided it was time for the continent to develop and to set its own goals through a broad-based economic framework. The African Union’s Agenda 2063 was proposed and adopted as a means of taking ownership of the continent’s development targets and priorities, as well as creating a more equitable structure for economic wealth distribution within realistic time frames. Building on the progress made in Africa to achieve the MDGs, the African people are looking at 2063 as a target for achieving inclusive growth and accelerated development across the continent. This initiative holds the potential not only to maintain and ensure Africa’s steady growth trajectory, but also to enhance economic development through increased cooperation between African countries.

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The NBF’s Africa Infrastructure Desk is having great success in unlocking business opportunities in the North-South Corridor’s infrastructure projects. It has also managed to accelerate port and rail project implementation.

Looking ahead to Agenda 2063

As Africa is poised to become the point of global convergence in the next 20 to 30 years, investment in its capabilities, value chains and people are going to become critical for the region’s sustainable economic

growth. This will mean increasing sectorial development for key industries, with agriculture at the top of the list. Agriculture has more potential to improve African livelihoods than any other sector. Africa is at a point where the reconfiguration of economic mechanisms in terms of industries is no longer an option but a necessity. Productivity in African agriculture is still the lowest in the world, at only 1.5 tons per hectare, which is far below the global average. What this means is that Agenda 2063 priorities for agriculture must consider the following as optimal focus areas: rural farm mechanisation, development of agribusiness, empowering women in agriculture and increasing efforts to attract the youth to the sector. This will complement NEPAD’s focus on agriculture and food security through the Comprehensive Africa Agriculture Development Programme framework. It will also further support the activities of the NEPAD Business Foundation’s (NBF) Removing the Barriers in Agriculture Programme. This implements projects such as the Foundation for Community Development, Rural Women’s Programme and the Agriculture Supply Chain Entrepreneurship Development Programme, which targets youth in agriculture. Another priority area of Agenda 2063 is the continent’s natural resources, which is aligned to the NEPAD Climate Change and Natural Resources focus area. The primary goals here are to improve import and export capabilities and global competitiveness, as well as to increase local benefit by investing in productive industries that transform extracted resources. Vital to achieving the targets for Africa’s transport infrastructure development is the capacity of players to expedite project implementation. The NBF’s Africa Infrastructure Desk is having great success in unlocking business opportunities in the North-South Corridor’s infrastructure projects. It has also managed to accelerate port and rail project implementation.

THE OFFICIAL NEPAD YEARBOOK 2015

Agenda 2063 will offer these kinds of initiatives the platform to share best practices and lessons learnt, so successful development concepts can be adopted by similar organs across the continent. One of Africa’s main assets is the youthfulness of its population. According to UNICEF, Africa’s growing youth demography points to an increase in the continent’s labour force, which is good news when considering that Africa will have close to 30% of the global population by 2050. With such projections, its target is to hold at least 30% of global trade as a proportional fraction of the region’s population to the world and work to exponentially increase its intra-African trade, which currently is only 10%. This will entail job creation in labour-intensive industries and skills development to fill the enormous skills gap and grow industrial sectors in line with economic targets. In this regard, peer learning will play a huge role in policy and strategy adoption. African countries with high unemployment rates will be looking at countries such as Kenya, as it works to reduce its unemployment rate of 40% by creating 2 million jobs for the youth annually.

New realities in a complex and changing world

Our world is changing, and long-held assumptions about global politics and economics are constantly being modified. For the first time in centuries, we may be looking at a non-Western and non-English-speaking state as the world’s leading economy. China’s economic growth is changing both global economic and geopolitical dynamics, driving the need for Africa to reassess its political and economic agendas to keep in tune with the changing environment. The global system is under pressure to accelerate the economic recovery process to averages above 5.4% – the levels before the economic downturn of 2008 – while ensuring equitable wealth distribution and resolving income inequalities. This scenario has increased the focus on nationalism as a

topic of mainstream debate being driven by ”certain political parties” in Europe. Adding to that, growing unemployment is fuelling anxiety and unrest among the world’s youth. As Africa aims to accelerate continental transformation and development over the next 50 years, it has to be cognisant of the new global environment, which will affect its growth. The complex issues facing the world concerning territorial tensions, economic crises within countries and security concerns present new threats and opportunities for our continent. To ensure the future of Africa, business for sustainable economic growth and politics will matter more than at any other period in recent history. The world is entering a new era, where the success or failure of the global system is going to be determined by the level of leadership that will be managing the drivers of change, and the calibre of the private sector and its attitude towards sustainable growth and development.

The continent has a positive outlook for the future with the continuation of growing economies and improving livelihoods. Helping businesses to grow in Africa

Confident of Africa’s opportunities for economic growth, the NBF has strategically positioned itself to support local and foreign businesses looking to expand their operations across the content. In line with this strategy, and through our presence in strategic countries, which includes the upcoming launch of our Ethiopian office, the NBF’s continental coverage will include southern, Central and East Africa, with the possibility of North and West Africa being covered through special arrangements with partner organisations in the short term. The NBF’s full continental

coverage will translate into business growth for member companies and businesses seeking early entry into Africa’s developing markets. They will make use of one service to facilitate government-to-business and business-tobusiness relationships. Late last year, the NBF signed a memorandum of understanding with the African Union Commission to strengthen the coordination of complementary activities, interests and capacities. This means the NBF is more in sync with the African Union’s development efforts, including Agenda 2063, and NBF members can contribute directly to government-supported continental frameworks and initiatives. The NBF will continue to support business growth across the continent and strengthen the relationships between governments and the private sector. This year, the NBF will be launching the Africa Investment and Integration Desk, whose mission will be to coordinate the finance and investment communities to provide innovative financing solutions to implement strategic projects across sectors. There are great opportunities for growth in Africa’s emerging markets. This continent has tremendous potential for businesses willing to take a long-term view to invest strategically in the African growth story. A final point of consideration for continental development is the reassessment of education, which has to move away from educating and training African children in the old methods. We must educate our children to make them relevant to the African environment and to be globally competitive. This will mean equipping our youth with skills that are immediately applicable to the African context, with priorities in agriculture, technology and other productive sectors. Again, I say Africa is rising and is on the move. I have every confidence in Agenda 2063 and I believe in the level of ambition of the African people, which will make these programmes and frameworks a resounding success. www.nepad.org

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The way forward

for this continent

Elsie Kanza, director and head of Africa for the World Economic Forum, explains her views for Africa in this Q&A.

What is your view on Africa’s position in the global economic order? I am cautiously optimistic about Africa’s current and future position in the global economic order. My optimism stems from the fact that Africa has continued to grow steadily, at 2–3% faster than global gross domestic product. The projected growth for 2015 is above 5% per annum. Various factors account for this growth, including a stable macroeconomic environment, reaping a democratic dividend, the rising flow of foreign direct investment, more public investment in infrastructure and higher agricultural production. Nonetheless, the new global context calls for a cautious march forward. Economically, the tumbling global oil prices have challenged Africa’s minority oil-producing countries, while providing relief to the majority oilimporting countries. That said, with the region accounting for one-third of all of the world’s new finds for oil and gas over the past five years, sub-Saharan Africa will surely expect a slowdown in investments into exploration. For this reason, keeping up the pace of investment in manufacturing and services will be crucial. Politically, also, Africa’s leaders need to position themselves in order to address new looming geopolitical risks. Looking 25 years ahead, Africa’s biggest opportunity – but also arguably its greatest threat – is its youth demographic. Africa’s working-age population is expected to double to 1 billion in the next 25 years, surpassing both China and India. The subsequent rising consumer base offers immense opportunities for investments in goods and services, and to provide the talent to allow the region to become a net exporter of food once again. At the same time, however, the levels of youth unemployment already have the potential to unleash significant social upheaval, and this will worsen if the tens of millions of African youths entering the workforce each year cannot find gainful employment. With Africa reaching its United Nations Millennium Development Goals target deadline in 2015, describe its political and socio-economic progression in the last 15 years. Africa’s scorecard with respect to attaining the Millennium Development Goals is mixed. According to the UN Human Development www.nepadbusinessfoundation.org

Looking 25 years ahead, Africa’s biggest opportunity – but also arguably its greatest threat – is its youth demographic. Index, 15 countries have attained medium to very high human development. Significant progress has been made in reducing infant and maternal mortality. Access to primary school has also increased, although this has not been accompanied by a substantial enough improvement in quality. This must surely present the next key challenge in the education transformation agenda. The dent on poverty has been lower than expected and inequality has risen. Macroeconomic reforms and better financial management have encouraged growth, but this has still not translated into structural transformation of Africa’s economies. To achieve this, the post-2015 development agenda needs to take into account bold microeconomic reforms powered by big data to reconstruct the foundation that will drive Africa’s roadmap to prosperity. Inclusive economic growth – with a priority focus on women and the youth – is a topic that is gaining momentum across the continent. How can the continent succeed in the equitable

distribution of wealth, with special focus on women and the youth? I previously highlighted the potential for a youth demographic dividend. With respect to women, Africa is making strides in closing its gender gap. According to the World Economic Forum’s Global Gender Gap Index 2014, Rwanda now ranks among the top 10 most gender-equal societies in the world in terms of economic and political participation. Burundi and South Africa rank 17th and 18th respectively. Nevertheless, much more needs to be done and can be done. Many African women, for example, while enjoying higher levels of inclusion in the workforce than in other parts of the world, remain stuck in low-quality, low-paid work. To achieve sustainable growth that is inclusive of all ages and both sexes, the World Economic Forum on Africa in June will challenge Africa’s leaders to share insights related to three perspectives. The first is how to better mobilise, efficiently use and safeguard its various resources to meet the enormous demands that it faces. In this respect, enabling women and youth to harness land and energy resources should be a priority. Second, we challenge Africa to accelerate the competitiveness, productivity and efficiency of its various markets. According to the African Development Bank, the informal sector accounts for about 55% of subSaharan Africa’s gross domestic product and 80% of its labour force. Capitalising on this dynamism can have a transformational effect on growth and living standards, especially for the women and youth who make up the majority of workers. Third, Africa is challenged to be more creative in developing solutions that are suited to its unique environment. Here, education is absolutely critical to unlocking Africa’s creativity. Design thinking and deepening investments in science, technology, innovation and art will help Africans solve more of their own problems, as well as participate effectively in the global economy. The success of mobile money services, such as m-pesa, has shown what Africans are capable of. It is now time to unleash the creative potential of a whole new generation of African innovators to help our economies really take off.

CMY

AFRICAN INTEREST

Dlamini-Zuma:

towards a people-driven continent African Union chair Dr Nkosazana Dlamini-Zuma speaks about the goals of Agenda 2063 and what Africa need to do to achieve them.

he African Union’s (AU) development plan for the continent – Agenda 2063 – stands out because it is people-driven. So says AU chairperson Dr Nkosazana Dlamini-Zuma, who addressed the African Leaders in Dialogue dinner hosted by the NEPAD Business Foundation in Johannesburg in November 2014. “We consulted all sectors of African society,” says Dlamini-Zuma. “They have told us what they want, and they told us also what they think they can do to get to the Africa that they want. By the time we went to government, we had a pretty good idea of what Africans all over the continent think.”

“We can’t have a plan and expect the first pennies to come from across the seas. We have to change that mindset in Africa.” The objective of Agenda 2063 is to develop Africa’s growth trajectory over the next 50 years, using an action plan centred on eight broad pillars. These are: accelerating the African Renaissance by integrating panAfricanism in all policies; continuing the struggle against colonialism; implementing the Continental Free Trade Area; developing Africa’s human capital by eradicating disease and developing its natural resources; eliminating recurrent conflicts; creating respect for the rule of law, human rights and democratic governance; taking ownership of African issues; and continuing the struggle against racism and discrimination. The AU will also be taking responsibility for the project’s funding, which is another reason Agenda 2063 is an action plan with a difference. “We can’t have a plan and expect the first pennies to come from across the seas. We have to change that mindset www.nepadbusinessfoundation.org

in Africa. When there is a crisis, the first person you think of is a donor somewhere. Why don’t we say that we’ll put something on the table first? The donors will then be encouraged to come and help us,” says Dlamini-Zuma. She explains that it’s important to change the mindset of the current generation so that they keep future generations in mind. “When our children and grandchildren celebrate another 50 years, how will they look at Africa and what has happened in that time?” Dlamini-Zuma asks. “I hear people saying: ‘Who cares? I won’t be there.’ But who really cares who will be there? Africans will be there,” she says. “When there was colonialism and slavery here, those who fought against it did so because they knew that freedom is good for every human being, whether they are there or not. We must have the same attitude.” The first step in insuring that Africa reaches these goals is to invest in its people, particularly in equipping the youth with skills in science, technology and maths. “If we don’t do that, we will always be a continent that will be behind everyone else,” says DlaminiZuma. “I’m a great believer in that if we skill our people and nothing else, they will figure out what to do.” This, she adds, should be a joint effort between governments, academia and business. Another priority is accelerating the modernisation of agriculture, says DlaminiZuma, because the average farmer on the continent is about 50 years old. “Which young people who have a cellphone and are tweeting are going to be holding a hoe and farming?” she asks. The women who were consulted while developing Agenda 2063 agreed that the “backbreaking handheld hoe needs to go to the museum”, says Dlamini-Zuma. “As long as African agriculture is symbolised by a woman carrying a handheld hoe, we are not going to get anywhere – so whatever you do, you have to modernise and then young

people will be attracted to it.” Africans need to add value to what they do in agriculture because the continent has always exported raw materials and, in doing so, has exported jobs and revenues. “We are the biggest donors of jobs and revenue, yet we have millions of youths without jobs,” says Dlamini-Zuma. In 2015, members of the AU need to be having a different conversation – one which includes business, political leadership and academia, she says. These three parties need to have the same understanding of where the continent is going and what it needs to do to get there. “Business should be able to tell us what are the things they most need from politicians. Politicians should be able to say what business should be doing

“I’m a great believer in that if we skill our people and nothing else, they will figure out what to do.” together. Academics should know what skills are needed in the next 10, 20, 30 years. We need that dialogue amongst ourselves,” says Dlamini-Zuma. And most importantly, she adds, to achieve the goals that Agenda 2063 has set out for the continent, women need to be integrally involved “in every area of human endeavour”, because without them “we are also not going to get far”. The theme for the year is women’s empowerment within Agenda 2063, which has nothing to do with the exclusion of men, explains Dlamini-Zuma. She says some ambassadors have asked her why she keeps placing an emphasis on women. “My answer is simple: we’ve always depended on men until now. They will continue as they’ve been doing over centuries, but we will add new skills and approaches as women.”

THE OFFICIAL NEPAD YEARBOOK 2015

Dr Nkosazana Dlamini-Zuma

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AFRICAN INTEREST

Growing African business giants As economic development on the continent grows, Africa â&#x20AC;&#x201C; and not just the southern tip â&#x20AC;&#x201C; is fast developing home-grown competitors to the international business giants, writes Dianna Games.

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THE OFFICIAL NEPAD YEARBOOK 2015

he legend of cement magnate Alike Dangote is growing. Africa’s richest man regularly makes headlines in the international media, partly because of his wealth but also because of the rapid expansion of his business empire across the continent. Dangote Cement has opened up in 14 African countries in just a few years and boasts that once it has consolidated its hold in Africa, it will look at opportunities in the Middle East and Latin America. The foothold in a swathe of high-growth African markets by an African-owned company from outside South Africa is

The top 20 or 30 companies that routinely appear on lists of top 500 companies pulled together by pan-African magazines, such as The Africa Report and African Business, are mostly South African. South African brewer SABMiller has operations around the world; fast-food chain Nando’s is a market leader in the United Kingdom (UK) and has expanded to the United States (US) and elsewhere; cellphone company MTN operates in some of the world’s toughest markets outside Africa; retailer Woolworths recently bought an Australian retail chain; the Imperial Group and Bidvest

But the new growth frontier is what some call ‘middle Africa’ – the countries between the north and south extremes. It is the area from which the new wave of African multinationals hail. worthy of comment. Dangote’s successful expansion has shaken the complacence of the other biggest player in Africa – France’s Lafarge, which is in merger talks with Holcim of Switzerland to form the world’s largest cement company. Lafarge has also merged its South African and Nigerian operations to compete head-on with Dangote. The fast-moving consumer goods sector has traditionally been dominated by foreign companies, such as Unilever, Nestlé, Heineken and Diageo. And while they remain dominant players, increasingly, much smaller African-owned and -managed companies are muscling their way into the continent’s fastgrowing consumer markets. It can require deep pockets to take on established multinationals in Africa, but local players have many advantages. They have canny business models, a high tolerance for risk and a deep understanding of the business environment. Local entrepreneurs are well-positioned to take advantage of local knowledge and brand-building on their home turf. A rising trend of local empowerment is not just about giving jobs and contracts to local companies, but also about creating pride in local brands. An advantage African companies often have is the flexibility of their corporate structure. This is less evident in South Africa because of its more structured economy and longer corporate history, but in other countries, companies tend to retain a distinctly entrepreneurial structure, which makes them nimble and able to respond quickly to challenges and opportunities. There is no doubt that South Africa is the leading source of the biggest companies in Africa, both in terms of their African footprint as well as international expansion to regions outside the continent.

both have operations in Europe; and Sasol has investments in the US and Middle East. There are many similar examples. The developed country corporate structures and ethos, combined with a distinctly African entrepreneurial spirit that exists in many of South Africa’s largest companies, has enabled this country to box above its weight in global terms. It is not alone – North Africa is also home to sizeable companies with strong international links and investments, served well by their geographical proximity to European and Middle Eastern markets. But the new growth frontier is what some call ‘middle Africa’ – the countries between the north and south extremes. It is the area from which the new wave of African multinationals hail. Nigerian companies are expanding rapidly in the West African region, building on experience and capacity developed in a challenging home market. West African regional bank, Ecobank, has a presence in 35 countries, while many Kenyan companies

developed country investors for a slice of Africa’s fast-growing frontier markets. The London Stock Exchange has become the destination of choice for raising capital. In 2013, there were 10 Africa-related initial public offerings on the exchange – double the number of the previous year. African companies are also benefiting from mergers and acquisitions, as multinational companies from elsewhere in the world snap up assets to expand their African footprint and gain market share. In the case of Nigeria, the reverse is happening in the oil and gas sector, with local companies buying the local operations of divesting international companies. For example, in 2014, Nigerian oil and gas giant Oando paid US$1.6 billion to buy the onshore oil assets of American oil major ConocoPhillips. Similarly, domestic oil company Seplat raised a massive US$500 million in London in 2014 to acquire Chevron’s onshore oil assets. Local companies are playing an increasingly assertive role in this critical sector. In 2014, Angola’s biggest bank, Banco BIC, which is part-owned by the president’s daughter Isobel dos Santos, acquired Portugal’s state bank, Banco Português de Negócios, in an interesting turnaround of fortunes between the European country and its former colony. Every year, the number of African billionaires and millionaires grows on the back of these expanding business empires. Many of the names on the lists of Africa’s wealthiest are entrepreneurs who started as small traders, but who have built these small enterprises into business empires stretching across multiple sectors, often over decades. They have occupied space in markets in which foreign investors are trying to find gaps as interest in the continent’s opportunities grows. A new confidence in their own continent, combined with greater connectivity through information and communications technology and improving infrastructure, has opened

Many of the names on the lists of Africa’s wealthiest are entrepreneurs who started as small traders, but who have built these small enterprises into multisector business empires. have expanded in East Africa, listing on exchanges in the region. The ‘internationalisation’ of the new corporate players is taking place beyond simply increasing their footprint. A number of African companies have sought debt and equity on international markets, tapping into the appetite of

up the continent for Africans. Growing incomes and a rising middle class are the manifestations of this change. A strong and successful private sector is a key underpinning for Africa’s future. The more Africans invest in their own continent, the more invested they will be in its future. www.nepad.org

ADVERTORIAL

EUROPEAN INVESTMENT BANK A PARTNER FOR GROWTH ACROSS BORDERS AND SECTORS

The European Investment Bank (EIB) supports sound projects in sub-Saharan Africa, and is doing so in increasing numbers, from large-scale and vital infrastructure down to intermediated loans and equity for micro, small and medium enterprises. The bank does this under the Cotonou Agreement, an international treaty between the so-called ACP countries (Africa, Caribbean and Pacific) and the European Union, using the ACP Investment Facility, a revolving fund with contributions from the European Development Fund, in addition to investing its own resources. The ultimate objective is to foster sustainable economic growth and to contribute to poverty alleviation, and Africa has huge potential and demand for investment. We can be a strong catalytic partner in developing the continent, and can pass on our experience from all geographic regions and economic sectors. Adam Samie, CEO of Lion of Africa Insurance

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ADVERTORIAL

aniel Kasimu and his wife have been operating a maize milling firm in Kenya for the past six years. His business targets individuals in the city of Machakos, 63km south-east of Nairobi – notably low-income earners from the Kariobangi slum – but also receives occasional orders from local schools and government institutions. Daniel’s milling firm has five permanent employees. He has been a client of the microfinance institution Family Bank in Kenya for over five years, and in that time has received several loans of varying amounts, from KSh100 000 Kenyan shillings to KSh650 000, all of which he has invested in his business – a business for which Daniel has big plans.

Stability for all

The loans he has received have enabled Daniel to grow and develop his company, meet the cost of electricity and source affordable raw materials: bulk buying reduces the cost of production, and he has been able to acquire a destoning machine to make the milling process easier. He plans to buy more milling machines and start branding his products, but this would most likely have been impossible without the funding Daniel received from Family Bank. This kind of funding is just one example of how the European Investment Bank (EIB) operates in Africa. We have a partnership with Family Bank, and this ensures its stability and security. It gives Family Bank more available funds and enables it to offer longer repayment terms to its own clients, such as Daniel. The EIB issued three such credit lines for microfinance in Africa in 2014. It is expected that almost 11 000 loans will be made to micro and small enterprises from these three credit lines, creating or sustaining employment for around 35 000 beneficiaries. In addition to these, and moving up a scale financially, a further 12 credit lines for banks in sub-Saharan Africa were financed, destined to support SMEs and mid-caps across the region, sustaining the same amount of jobs, while private equity investments should create a further 42 000 positions in investee companies.

Laying the foundations

Small businesses drive economies, but they need to have the correct infrastructure,

from a secure supply of clean water to workable transport networks to clean energy production and distribution. Staying in Kenya but moving to the north, there is an example of forward planning that, while it has taken some time to get off the ground, should benefit many. The sparsely populated and desolate Lake Turkana region is soon to be home to the largest wind farm in subSaharan Africa. The EIB has invested €200 million in the project and mobilised a further €25 million from the EU-Africa Infrastructure Trust Fund to fill an equity gap. The wind farm will produce 300MW of clean energy, representing almost one-fifth of the installed capacity for generation in Kenya, and it will be sold cheaper than thermally generated equivalents. The project is the largest public-private partnership in Kenyan history, will offset millions of tons of CO2 emissions over its lifetime, and will save Kenya around €120 million in fossil fuel imports per year. The EIB is committed to climate action, and renewable energy forms a cornerstone of this: without power there can be no growth, but the environment is equally important. In a different region, and with different requirements, the bank also invested in hydropower facilities in Burundi and Guinea, as well as a solar plant in Burkina Faso. Taken all together, it is estimated that over 850 000 households and businesses in subSaharan Africa could potentially be served by these clean energy facilities supported by the EIB in 2014. While it is treated under a different mandate from other countries in sub-Saharan Africa, South Africa has some of the world’s best conditions for solar power generation. In 2014, the bank invested in two separate facilities in the Northern Cape with the capacity to power around 275 000 homes in the country.

Always learning

The priorities for the EIB in sub-Saharan Africa, in line with the EU Agenda for Change, are private sector development, basic infrastructure and climate action. The EIB is a truly European institution, but its first operation in sub-Saharan Africa occurred as far back as 1963, when it invested ECU1 million in a banana packaging and export business in Côte d’Ivoire.

Nowadays, the bank has a wealth of experience across geographical regions and different sectors, and is eager to invest in Africa. It has the instruments to be a key player in the development of the continent’s economies. Blending grants and loans filled a funding gap and allowed the Lake Turkana wind power project to get over the line. These gaps remain in African markets, and to give the continent what it needs, financial institutions have to create innovative financial instruments to help plug them. The Impact Financing Envelope (IFE), a new special window under the ACP Investment Facility for potentially riskier private sector investments that generate superior developmental impacts, is one such tool, and marks a further step along the road in the EIB’s evolution in supporting Africa. In order to qualify for IFE funding, projects must address social, demographic or environmental challenges, such as rural, female and youth unemployment; food security; social and financial exclusion and post-disaster recovery; and waste management and water supply. Our overall aim is sustainable economic growth and alleviation of poverty, in line with the European Commission and the European External Action Service. Our projects must meet stringent criteria in terms of sustainability, bankability and ethics. The EIB is diversifying and evolving to support development in sub-Saharan Africa. It is our ambition to achieve more through our loans and help integrate African economies into the world market, thereby promoting sustainable prosperity for all.

Contact details 98-100, Boulevard Konrad Adenauer L-2950, Luxembourg Tel: +352 43 79 1 Fax: +352 43 77 04 Email: info@eib.org www.eib.org

www.nepadbusinessfoundation.org

AFRICAN INTEREST

If you snooze, you’ll lose… By diversifying its economy, Nigeria has soared ahead of South Africa as the continent’s biggest economy. Does this mean a loss of South Africa’s continental superiority as well? Dianna Games reports.

igeria is often dismissed by South Africans as a faraway country with poor governance, infrastructure deficits, weak institutions, widespread poverty and corrupt bureaucrats. And they would not be wrong. But Nigeria also has many advantages that have made it a force to be reckoned with. In March 2014, it was crowned the biggest economy in Africa. In 1990, when Nigeria’s economy was last measured officially, its gross domestic product (GDP) was US$35 billion (R362 billion). In 2012, the World Bank estimated it to be worth US$262.61 billion. Just how much of a ‘guesstimate’ this was emerged earlier this year when a rebasing of the economy put the country’s GDP at a massive US$510 billion – significantly higher than South Africa’s US$384 billion. The oil-producing country’s population of 170 million has made it an attractive destination for investors looking for highyield opportunities in emerging markets. Nigeria, although still highly dependent on its oil and gas industry, is also successfully diversifying its economy, with new sectors accounting for a substantial part of the new GDP figure. Primary among them is telecommunications, which has come from nowhere two decades ago to become the fourth-biggest sector after agriculture, trade and services and the oil industry, contributing 8.7% of GDP. Real estate has also risen rapidly off a very low base, contributing 8% to the revised GDP figure. Other sectors showing strong growth are the services sector and Nigeria’s famous Nollywood movie industry, estimated to employ more than 1 million people, while insurance, aviation, mining and education are also increasing their contribution to GDP. MTN’s huge success in Nigeria has been a catalyst for hardy South African companies, already moving their businesses across the continent, to take another look at the country. Many have done very www.nepadbusinessfoundation.org

well, making good profits in information and communications technology (ICT), retail, packaging, hospitality, construction, advertising and financial services, among other sectors. Nigeria has become one of South Africa’s biggest trading partners, supplying an ever-increasing portion of Pretoria’s crude oil and absorbing large amounts of its exports.

The oil-producing country’s population of 170 million has made it an attractive destination for investors looking for high-yield opportunities in emerging markets. But it was nevertheless a surprise – even for those familiar with the extent of the opportunities in Nigeria – to see that the economy was so much larger than that of South Africa. Myopic perceptions held by many South Africans that Nigeria was a basket case made this more difficult to swallow. Many comparisons were made between the two countries to point out South Africa’s superiority. Nigeria’s institutions are much weaker, as are its human development indicators. Nigeria’s stock exchange market capitalisation as a percentage of GDP is 15.5%, compared to South Africa’s 160%. This is not surprising, given that the nations are at different stages of development. Nigeria suffered under military rule for most of the period after independence in 1960, and has been dealing with this legacy since the end of military rule in 1998. The repercussions included high levels of corruption, weak institutions, massive

poverty, a small (but rapidly growing) private sector, political mismanagement and a major dependence on a single commodity – oil – for revenue and exports. South Africa, in 1994, benefited from an already sophisticated economic structure, the political goodwill generated by the end of apartheid and instant economic openness. Although both countries rely on commodity exports, oil comprises more than 95% of Nigeria’s foreign income, compared to South Africa’s more diversified basket of commodities, which makes up 65% of exports. South Africa generally is more diversified than Nigeria in its economic make-up, with higher levels of manufacturing and services, for example. Given its population, Nigeria has benefited from the sheer size of its market, so the extent of the GDP growth over 24 years should not be surprising. Its population is forecast to double by 2050, while South Africa’s will probably only grow by 25% over that time, so it is not likely to catch up to Nigeria any time soon. The news of Nigeria’s ascent was, surprisingly, soberly received in the country itself. Nigerians used the occasion to point out the opportunities lost during years of underinvestment by successive highly corrupt governments and the failure to tackle poverty, social deficits and poor governance. They reflected that the rebasing was an exercise in vanity that did not change the structure of the economy or better people’s lives in any direct way. The demographics might be mouthwatering, but incomes undermine the potential. The middle class, optimistically estimated by experts to be about 40 million people, is mostly on shaky ground, being nearer the bottom end of the definition than the top, Nigerian analysts say. With news of the rebasing, South Africans, too, took their government to task, criticising the country’s low growth rates, increased evidence of corruption, the ruling

THE OFFICIAL NEPAD YEARBOOK 2015

party’s growing arrogance, rising levels of state nationalism in policy and decreasing global competitiveness. Although Nigeria’s new GDP figure does not change the country’s current reality, it could have implications for the future by flagging its future potential at a time when South Africa’s star seems to be waning. The question is whether South Africa will lose its continental authority, along with its economic supremacy. Many argue that South Africa has limited authority in Africa because of its belief that it is unique on the continent due to its history and relatively sophisticated economy. This has led to resentments among other powerful African states towards the

Nigeria’s new status may not affect foreign direct investment in South Africa, but South Africa’s own policies might. country, a fact that has undermined Pretoria’s potential leadership in Africa. The country has failed to build strong relationships with its rapidly growing hinterland, preferring to court fellow Brics nations (Brazil, Russia, India and China) and developed economies. South Africa’s tendency to believe it is unique in Africa has made it complacent – an attitude encouraged by its membership of the G20, where it is the only African representative. This complacency means it has failed to register the potential threat posed

by the rapid growth of economies on the continent, which are setting themselves up to ‘eat its lunch’. Other big economies are positioning themselves as regional gateways and building infrastructure, sophisticated financial systems and world-class ICT capacity. Their companies are expanding and snapping up market share in many sectors, and international companies are starting to relocate their African headquarters outside South Africa. Nigeria’s new status may not affect foreign direct investment in South Africa, but South Africa’s own policies might. With low growth rates and a government that remains hostile to private sector initiatives, the country needs to try harder to interest investors who are not likely to desert South Africa but who have made clear their interest in high-growth economies, such as Nigeria. This should be a wake-up call to Pretoria to, for a change, listen to what business is saying. Dianna Games is CEO of advisory Africa @ Work and honorary CEO of the South Africa-Nigeria Chamber of Commerce in Johannesburg.

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AFRICAN INTEREST

Africa’s

little oddities From Nigeria having the highest number of twins to Cameroon having 280 languages, here are 40 quirky and astonishing facts about Africa and its people.

In a Nigerian town called Igbo-Ora, considered the world’s twin capital, there is an average of 150 sets of twins for every 1 000 births. Elsewhere, the average ranges from nine to 16 sets of twins per 1 000 births in Europe, to 18 to 33 sets per 1 000 births in the United States (US).

Mopane worms, eaten as a source of protein in some African countries, aren’t worms at all. They are caterpillars that transform into pretty moths.

The predominant language on the African continent is Arabic (spoken by 170 million people). This is followed by English (130 million); French (115 million); Swahili (100 million ); the North African Berber dialects (50 million); Hausa, spoken in West and Central Africa (50 million); Portuguese (20 million) and Spanish (10 million).

The Vredefort Dome near Parys in South Africa – the largest verified meteorite impact crater on earth – has its own magnetic field. It was more than 300 km across when it was formed.

When one thinks ‘pyramids’, one tends to picture Egypt. In fact, Sudan has twice as many – 220 to Egypt’s 110.

The largest frog in the world is found in the rainforests of Cameroon and Equatorial Guinea. It is aptly called the goliath frog and can weigh up to 3 kg.

The cheapest place in the world to get an open-water diving certification is Lake Malawi.

The African cicada (Brevisana brevis) holds the Guinness World Record for the loudest insect, with an average sound-pressure level of an ear-splitting 106.7 decibels.

Another Guinness World Record held by Africa is for the thinnest continental crust, at 15 km.

10. South Africa is the only producer in the world of the MercedesBenz C Class right-hand drive car. www.nepadbusinessfoundation.org

11. The Koeberg nuclear power station in Cape Town is the only commercial one on the continent – and it is built on a fault line. The Milnerton fault last saw an earthquake in 1809, measuring 6.5 in magnitude on the Richter scale. Scientists believe it is due for another quake soon. 12. Megafauna – or mammals of particularly large size – are unique to the continent, and animals such as giraffe, zebra, gorilla, hippopotamus, chimpanzee and wildebeest are only found in Africa.

13. Speaking of giraffes, did you know that they have blue tongues? And that their tongues are an average of 50 cm in length? 14. There are more than 280 languages in the Republic of Cameroon – 286, if you count the six that have become extinct. However, not all of them are spoken, and 54 of those languages are considered to be in danger and 26 are dying. 15. After World War II, the deadliest conflict in history was the Second Congo War, which claimed over 5.4 million lives between 1998 and 2008. 16. The Sahara, the largest desert in the world, is bigger than the US, if you take landmass into account i.e. don’t include lakes and rivers.

THE OFFICIAL NEPAD YEARBOOK 2015 17. In the Senegalese capital Dakar, there is a colossal bronze statue depicting a couple and their baby, pointing towards the future. At 49 m, The African Renaissance is the tallest statue in Africa – and taller than the Statue of Liberty (without its pedestal) in New York, US and the statue of Christ the Redeemer in Rio de Janeiro, Brazil. 18. Deforestation is a huge problem in Africa. In countries such as Kenya, Malawi and Zambia, only 1–5% of original forests remain. 19. Africa might be the cradle of mankind, but it is also the youngest continent, with 50% of the population under the age of 25 years. 20. Have you seen the animated movie Madagascar, where the king of the lemurs is voiced by Sacha Baron Cohen? There are over 100 species of lemur on the island.

23. Did you know that there are fewer people with internet connections across the entire continent of Africa than there are in New York City? 24. In Tunisia, it is believed that the symbol of the fish provides protection from evil. The foundations and walls of new buildings often contain fish bones, and brightly coloured cloths or plastic fish are attached to cars and taxis to protect the passengers. 25. All Star Wars fans will be interested to know that the sets for the planet Tatooine were created in the Tunisian desert, and still stand today. You can visit Luke Skywalker’s home. 26. Hippos kill more than 3 000 people a year, and the hippo’s closest living relative is the whale. 27. In Nigeria, the locals drink more Guinness beer than is consumed in Ireland. 28. The Soviet Union flag, with its golden hammer and sickle, inspired Angola’s flag. The star also comes from the Soviet flag. 29. South Africa is the only place in the world where two Nobel Prize winners lived on the same street. What are the chances? Nelson Mandela and Archbishop Emeritus Desmond Tutu both lived on Vilakazi Street in Soweto. 30. There are over 1 million Chinese citizens in Africa, and China is Africa’s biggest partner in trade. This is sparking economic fears that China is slowly but surely colonising the continent.

5.4 millio live he n re

31. Let’s hope that if aliens make contact, they don’t choose to land in South Africa first – legally, they would be considered property of the state. 32. Another from the Guinness World Records: the last Sharifian emperor of Morocco, Moulay Ismail, known as ‘The Bloodthirsty’, goes down in history as having the most descendants. He was reputed to have fathered 525 sons and 342 daughters. 33. Hyenas, those most perfect scavenger machines that are native to the African continent, are genetically closer to cats than dogs. 34. Somali’s pirates are infamous for taking tourists prisoner and ransoming them back to their home countries. In 2010, it is estimated Somalian pirates made US$238 million in ransom money. 35. In Angola, tipping is not standard practice. If you do tip, it should never be more than 10% of the bill and you don’t have to tip in money – you can even leave cigarettes. 36. Despite their name and habits, African dung beetles are fascinating creatures. Did you know that they use the starry Milky Way to navigate? 21. Madagascar broke away from the African continent 165 million years ago and away from India 100 million years ago. Because of this isolation, 90% of the flora and fauna on the island can be found nowhere else on earth.

22. Monkeygland steak is a South African favourite. But did you know that the famous sauce was created by visiting international chefs as an insult – according to one version of the story – to locals’ habit of mixing together tomato sauce and Worcestershire sauce?

37. Left-handers beware: it is rude to greet a Tanzanian with your left hand as it is considered unclean. 38. More films are made in Nigeria’s film industry, Nollywood, than are made in Hollywood every year. 39. The closest point from the US to Africa is between Quoddy Head State Park in the state of Maine and Safi Province in Morocco. Sources: list25.com; wikipedia.org, answersafrica.com, travelground.com, nationalgeographic.com, travel.wikinut.com

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Group Five is a diversified construction, infrastructure concessions and related services group engaged in resources, energy, real estate and infrastructure delivery with a growing international client base in South Africa, the rest of Africa and Eastern Europe.

We operate in over 25 countries in Africa and Eastern Europe I Construction Charter Level 2 BBBEE rating I 2012 Winner â&#x20AC;&#x201C; Excellence in Reporting: JSE Ltd/Chartered Secretaries Southern Africa (CSSA) I Constituent of top JSE SRI Index companies 2014 I Top Employer certified â&#x20AC;&#x201C; 2015 I Employing 14 000 people I Celebrating 41 years as a listed entity.

Group Five Limited 9 Country Estate Drive, Waterfall Business Estate, Jukskei View 1662, Postnet Suite 500, Private Bag X26, Sunninghill 2157, South Africa Tel +27 10 060 1555 | Vax +27 86 206 3885 | Email groupfiveho@groupfive.co.za | Website www.groupfive.co.za

Infrastructure development and industrialisation of the African continent are critical levers for economic growth and development. With a track record of over four decades, we take pride in continuing to be a partner of choice in the growth and development of South Africa and the rest of our African continent.

Mining I

We operate in the following seven sectors: Industrial I Power I Oil and Gas I Water and Environment I Real Estate I Transport

We have the skills and experience to deliver any aspect of an infrastructural project, including concept development, manufacturing, construction and operations as well as maintenance.

1974 â&#x20AC;&#x201C; 2015

years as a listed company

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LION OF AFRICA INSURANCE A TOP FIVE CORPORATE AND COMMERCIAL INSURER

Adam Samie, CEO of Lion of Africa Insurance

www.nepadbusinessfoundation.org

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A South African non-life insurance company, Lion of Africa Insurance is one of the top five large group insurers and the only short-term insurer to achieve a Level 1 B-BBEE status.

ion of Africa Insurance is recognised by the Financial Intermediaries Association as one of the top five corporate and commercial insurers providing services to many of the top 100 JSE-listed companies and local authorities in South Africa. Lion of Africa Insurance CEO, Adam Samie, gave insight into the company that is playing a leading role in empowerment and transformation within the financial services sector. How has a company that was only established 10 years ago managed to become one of South Africa’s leading short term insurers? We focused on two things. One was to concentrate on what we think we know best, which is to underwrite complex and technical risks. We aimed ourselves at the top 5% of South Africa’s industrial conglomerates, which is a niche market that is not easy to get into. The second thing was we tried to embed into our culture the values of the new democratic South Africa – our B-BBEE stamp is symbolic of our ideology in the democratic constitution and ensures that our employees have a fair opportunity to succeed without any restrictions other than what they place on themselves. How do you apply technical expertise, quality and innovation to such a fundamental and straightforward sector such as insurance? I would say very easily. Short-term insurance, in particular, is widely misunderstood and has, in the volumes market, largely become commoditised. But the reality is insurance in some shape or form has been around for almost as long as mankind has been around. It is fundamental to making things work in the broader economy, and also as a safeguard for the protection of financial well-being for private individuals. Any human endeavour – such as putting a man on the moon or sending an exploration vessel into space – would not have been achieved had there not been some form of insurance element to cover the risk. And if you think of that gap, you get innovation. Every new product in our economic history comes about in a continuum with insurance innovation.

Did your involvement in the 2010 FIFA World CupTM have a large impact on the success of your business and your influence in South Africa? Lion of Africa Insurance is a large insurer of infrastructure in South Africa and in Africa. From an insurance point of view, the World Cup was about infrastructure development, such as new roads and hotels. We had a big role to play as we insured five of the six new stadiums that were built. We also insured the vehicles and buses that transported the players around and were used during the event. What the World Cup did was it helped identify Lion of Africa Insurance as one of the players in Africa for that type of insurance. Please tell us more about Lion of Africa Insurance Music Expressions? Philosophically, we identify with the new South Africa and we want to play a role that is also socially relevant. We are also quite keen to contribute to the broader cultural development of South Africa. Musical Expressions gives us an opportunity to bring to life a cultural experience through a medium that is shared and enjoyed by the majority of our people. As a company that has experienced exponential growth in the last decade, where do you see Lion of Africa Insurance in another 10 years? We had a two-stage approach, which has sort of converged into one with time. First, we would like to establish ourselves as a South African insurer. The reason behind this is that South Africa has established itself as the leader in terms of market size, and if one wants to grow big in Africa one needs to grow first in South Africa. We are currently recognised as the fifth of the top five large group insurers in the corporate market sector, and this list includes big players such as Santam, AIG and Mutual & Federal. A fair proportion of our business is done outside Africa, but considering our 10-year plan, we would like to be present in at least three other African countries. We are currently associated with all the countries in the SADC region and, in 2015, we aim to consolidate our Africa business by establishing an African desk and having an individual running it. In terms of progression,

we have always supported the partnership approach, so whether it is a partnership or joint venture, we aim to work together with other companies in order to expand. What brought about Lion Life? It seems to be a separate entity from the initial goals of Lion of Africa Insurance? How do the two work together, and can you apply the same strategies to both entities? Lion Life comes out of African People’s Organisation (APO) Life, an organisation that had reached the end of its life per se. So we felt that as part of our heritage, we were the appropriate entity to take over its licence and not let it die, because it was actually established in 1912 in Umthatha so it bears strong ties to the economic history of this country. What we have been doing in the last seven years of taking over is just cleaning it up and adding new products to it, and to list it as a financial services organisation under Lion of Africa Insurance. What business ethics have you applied that have ensured the success of your business? We have corporate values that we hold dearly. In our interaction with our customers, we demonstrate that we are also people and that we make mistakes, but more importantly that we can apologise. Which is an important fundamental value that we are trying to support in the democratic build of our nation. We are in the service-providing industry, and one thing we like to show to our customers is that there is also another human being behind that desk or on the other side of the phone who understands their needs. It is about trying to humanise the business transaction, which is the opposite of commodification. Contact details 62 Wierda Road East Wierda Valley Sandton Tel: +27 11 780 2059 www.lionsure.com www.lionsure.com or find us on Facebook or Twitter

INSURANCE

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MultiChoice Africa is an African pioneer of pay TV services in sub-Sahara Africa, having launched the first digital satellite service in the 1980s. The company provides multi-channel multi-platform digital pay television services containing channels from Africa, America, China, India, Asia and Europe.

MultiChoice Africa has over twenty yearsâ&#x20AC;&#x2122; experience as a Pay TV operator in Africa, offering cutting- edge digital technology and a selection of DStv and GOtv bouquets containing premium television channels for subscribers in 50 African countries and its adjacent Indian Ocean islands. The GOtv offering is on a Digital Terrestrial Television (DTT) network which was established in 2011 and currently covers nine countries. This low cost market offering provides great family entertainment at a price everyone can afford.

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MULTICHOICE AFRICA

CREATING AUTHENTIC AFRICAN STORIES The MultiChoice story dates back to 1986 and it was one of the first subscription television services outside of the United States. Over time, the company has grown exponentially across the continent, positively impacting the industry and creating thousands of jobs. CEO Nico Meyer shared some of MultiChoiceâ&#x20AC;&#x2122;s successes and plans for the future.

ith our roots firmly entrenched in Africa, MultiChoice has continued to prioritise its investment in promoting local film and television entertainment, people development and technology. In Nigeria alone, the company has, together with its partners, made an investment of over N55 billion (nearly US$350 million). In Kenya, the investment made amounts to Ksh1.5 billion in local content production, state-of-the-art M-Net and SuperSport studios in Nairobi and various skills sharing initiatives. MultiChoice Africa together with M-Net have therefore changed the face of African entertainment by promoting and harnessing quality productions. Our continued commitment to invest in local skills development has not only resulted in ongoing

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MultiChoice CEO Nico Meyer

training of African film crews and production staff in the creative, sport, technology and related industries but also contributed to the empowerment of locals, as many of our offices are now 100% run by locals throughout the continent. With corporate responsibility becoming more of a focus in recent years, how does MultiChoice understand its role as a corporate citizen?

Our approach to CSI is one of leveraging and making the best use of our assets for the benefit of communities. For us, that means using our platform of top-class technology and a wide range of channels to empower others, nurture talent, harness skills and expand opportunities. In line with this philosophy, we have prioritised education as focus of our CSI programme. This is primarily achieved through our flagship project, the MultiChoice Resource Centre Programme,

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which was launched in 2004. The initiative uses MultiChoice’s digital satellite technology platform to support and enhance the learning and teaching experience in over 1 900 schools in 28 countries. In addition to the MRC Programme, we have various initiatives such as the CNN MultiChoice African Journalist of the Year Awards, which is the most prestigious and respected award for journalists across the African continent and aims to reward, recognise and encourage journalistic talent across all media disciplines whilst reinforcing the important role that journalists play in Africa’s development. The DStv Eutelsat Star Awards instigate innovative thinking amongst secondary school students in order to create awareness of how science and technology can be applied to everyday life. This pan-African competition aims to address a huge shortage of relevant skills in science and technology that our continent faces. Television as a medium is an extremely powerful tool that can educate, entertain and inform. How does MultiChoice manage this responsibility on the continent? A good example of how television can educate and inform is an educational video that we produced, which highlights the threat Ebola poses and the preventive measures that need to be taken. Through our platforms, we are disseminating information about Ebola and aiding the fight to stop its spread and save millions of lives. How does MultiChoice further contribute to the growth of social cohesion in Africa? Social cohesion is a key priority for MultiChoice, and local content furthers this aim by fostering a vibrant cultural identity and unity on the continent. A good example of a show that portrays social cohesion is the reality show Big Brother Africa, which is the only show on the continent that connects all African nations 24/7. Housemates have danced together, cooked together, shared traditional African folklore together, just the way we love it African-style! Africa Magic channels are accessible to over 50 countries on the continent through our DStv and GOtv services. We remain committed to delivering great family entertainment which caters for a wide range of cultures and tastes. Additionally, specialist bouquets for Indian and Portuguese subscribers offer a range of exciting channels that cater specifically to these cultural and language markets.

Chimamanda Ngozi Adichie said: “The single story creates stereotypes, and the problem with stereotypes is not that they are untrue, but that they are incomplete. They make one story become the only story.” How is MultiChoice giving a voice to local filmmakers and promoting the multiple stories of Africa? As a pan-African company, one of our key rules is to respect local cultures and traditions and to create business models in each country of operation with local partners that are sustainable in the long term. We have been able to build partnerships with local entrepreneurs and national broadcasters who were able to bring to the table the muchneeded local knowledge and understanding of markets, resulting in highly localised businesses. The success of the Africa Magic channels has in large part been due to our recognition of the importance of enabling Africa to tell its own stories. Your Africa Rising campaign seeks to tackle Afro-pessimism. Tell us more about this initiative? We launched the Africa Rising campaign with the aim of unearthing Africa’s potential, and so we collaborated on a song with six award-winning African artists namely Diamond Platnumz from Tanzania; Davido, a Nigerian American artist; Sarkodie (also referred to as Obidi Pon Bidi), a Ghanaian artist; Lola Rae, a British singer of Nigerian/ Ghanaian descent; Mi Casa, a South African band consisting of three members; and Tiwa Savage, a Nigerian singer-songwriter. Through the song we hope to inspire and create a paradigm shift amongst Africans. As a follow-up to Africa Rising, we have launched This is Africa (TIA), which is a movement targeted at millennials. TIA looks at the many preconceived notions about who we are and what Africa really is and flips them on their heads. These stereotypes are punctuated by the popular hashtag #TIA (This is Africa). The Africa we know is not the one portrayed so negatively on TV and on social media. Ours is a positive Africa, a new Africa. The CNN MultiChoice Journalist Awards have become a coveted accolade across the continent. What is the purpose of awarding journalists in Africa? We believe that the awards are a good platform to reward and acknowledge African journalists, particularly on a continent where journalists must contend with difficult operating environments and under-resourced newsrooms, and where they often risk their lives to cover Africa’s stories.

Looking ahead, what are MultiChoice’s ambitions for the future? We pride ourselves as pioneers of pay TV, as we continuously develop new technology that makes information and entertainment as readily accessible as possible, as the role of our subscribers has also evolved over the years. Our mission is to constantly be at the cutting edge of new technology that enables DStv and GOtv subscribers to enjoy the very best home television experience. Recently, we launched a product called the DStv Explora, a much more advanced decoder. This particular product has significant future possibilities and we will continue to expand its usage. One of the recent launches we had in relation to this product is the DStv BoxOffice, which brings a video store into your home. It also lends itself to a lot more that will unfold in future. The DStv Explora sets the platform for a lot of interesting features still to come in the next 12 months. We also recently launched DStv Now, a new App across Africa that allows subscribers to watch Live TV, enjoy DStv Catch Up and view the TV Guide from their mobile phones and tablets. The mobile app is currently on offer to DStv Premium subscribers with a PVR or Explora decoder, on both iOS and Android tablets and mobile phones through 3G, 4G or Wi-Fi internet connections. We will continue to innovate to ensure Africa remains at the cutting edge of technology.

Contact details 141 Bram Fischer Drive Randburg Johannesburg Tel: +27 11 289 4366 www.dstv.com www.gotvafrica.com

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AGRICULTURE AND FOOD SECURITY

Growing job creation

through

agriculture Although sound progress is being made to tap the enormous jobcreating potential of African agriculture, some issues, if addressed, would significantly boost the sector, writes Bruce Cooper.

Image courtesy of atm2003/Shutterstock.com

ver the past 30 years, agricultural production in Africa has grown by more than 160%. This enormous increase is close to that of South America and comparable to that in Asia. But the population in rural areas continues to rise exponentially and it is estimated that by 2025, 330 million young Africans will be in a labour market with limited opportunity for finding jobs in cities. African agriculture will have to play a key role in job creation to contribute significantly to the continent’s economic growth. With 50% of Africans depending on agriculture for their livelihood, there is great job-creation potential in the sector. But industrial agriculture, despite the significant contribution it makes to efficiency and the use of resources, creates fewer jobs than modern family farming. The integration and balancing of both models is needed to increase production and create more jobs. A report issued by the McKinsey Global Institute, titled Africa at work: job creation and inclusive growth, states that agriculture

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“Over 50% of the continent’s manufacturing workforce is in agriculturerelated industry.” can play a key role in African job creation: “We estimate that the continent will create 8 million wage-paying jobs in agriculture by 2020. However, that could be increased by a further 6 million if Africa were to accelerate development of the sector; this would be equivalent to an additional 3.1% growth per annum.” McKinsey suggests three ways in which agriculture can create more jobs on the continent: 1. Utilising uncultivated land The institute recommends that commercial farming be introduced onto unused arable land. Estimates show that Africa has around 60% of the world’s

uncultivated land, which amounts to 600 million hectares. There is a caveat to reaching such production levels, says McKinsey: “Governments would need to formulate new policies on land rights; integrated water management; access to inputs and finance; distribution infrastructure and trade policies.” 2. Establishing and developing agro-processing industries Stimulating Africa’s manufacturing sector can create millions of jobs. Countries that have large agricultural sectors cannot ignore the development of their agro-processing industries, says McKinsey. Over 50% of the continent’s manufacturing workforce is in agriculture-related industry. “Although wages in agriculture-related manufacturing are only 60-80% of those found in other manufacturing sub-sectors, they would still be considerably higher than the subsistence-level incomes earned today by many African farmers.”

THE OFFICIAL NEPAD YEARBOOK 2015

3. Labour-intensive crops Expanding production of labour-intensive crops can provide another opportunity for significant job creation. Between 10 and 50 people are required to farm staple products such as sorghum, grains and soya beans, while as many as 300 would be needed to grow 1 000 hectares of olives and 800 for oranges on an equivalent area. “Shifting to such crops can increase wagepaying employment in rural areas and create sources of export earnings for countries. But in this shift, countries must ensure their continued domestic food security,” says McKinsey.

Potential and hindrances

Seasoned agriculturist Theunis Duvenhage, who has worked in many African countries offering advice on agricultural projects, says the largest pool of underutilised natural resources, which can be mobilised for agricultural production, is located in Africa. Duvenhage adds that although African soil is of poor quality, a high level of efficient management in the commercial farming sector can overcome this deficiency. He cites South Africa as an example: “South Africa was, until recently, one of only eight countries globally that had been net exporters of agricultural products for the past eight decades.” But Duvenhage adds that irrigation is a more significant factor than inferior soil, and that its effective implementation and use can result in production four to five times higher than on good soils managed less efficiently. Job creation would be stimulated as a result of the increased yield. Duvenhage agrees foreign investment is sorely needed and can result in massive production increases. But African nations need help to prepare proper business plans to facilitate the establishment of commercial projects. ”If this can be done, rapid

development will follow,” he adds. He sees local people benefiting from this initiative in the following ways: • rental payments received for use of the land; • shares in the project company; • skills training in advanced management and technology; and • the opportunity to start an independent enterprise with support from the commercial project.

Shifting to labour-intensive crops can increase wagepaying employment in rural areas and create sources of export earnings for countries. Such motivation and opportunity would potentially make farmers bigger employers.

The CAADP

Africa has been proactive in implementing measures to address the need to expand its agricultural sector and boost national economies. The Comprehensive Africa Agriculture Development Programme (CAADP) was sanctioned at the African Union Heads of State Summit as a NEPAD programme in July 2003. Its goal is to “help African countries reach a higher path of economic growth through agriculture-led development which eliminates hunger; reduces poverty and food insecurity and enables expansion of exports”. Job creation is an automatic by-product. Annual agricultural gross domestic

product (GDP) growth has averaged nearly 4% since 2003 – well above the agricultural share of GDP growth rates for the past several decades. And the CAADP has noted the following encouraging successes: • Improved agricultural planning – 28 out of 54 countries have developed national agricultural investment plans. Twelve more are developing their own strategies. • Increase in public expenditure – the average public agricultural expenditure has risen by 7% per annum across Africa since 2003, almost double since CAADP launched. • Elevated profile for African agriculture– the programme has increased the awareness of African agriculture and put African leaders in a stronger position to lead African approaches to agriculture at all levels. Although there has been significant improvement in the agricultural sector, some CAADP targets for the first decade weren’t reached. But Dr Ibrahim Mayaki, CEO of NEPAD, is confident about the programme and the future: “The strength of CAADP is that Africans have embraced it, and it has become the framework guiding development cooperation for agricultural development in Africa. We invite our partners to continue their efforts in this direction.” The NBF runs private sector led agriculture initiatives which include the Removing the Barriers in Agriculture (RtB) and the Southern African Agriculture Development Partnership Platform (SAADPP). The NBF’s RtB and SAADPP programmes have goals which are aligned to those of the NEPAD CAADP initiative and are designed to target sectoral development of Africa’s agriculture in order to improve agriculture based livelihoods across the continent.

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BIGEN AFRICA DOING BUSINESS IN AFRICA

Doing business in Africa provides unique challenges and endless opportunities. With fewer conflicts and economic growth rates that are now competitive with those of other developing regions, Africa has experienced positive change and has a substantial amount to offer.

owever, the business environment, including social, economic, legal and political factors, is complex and doing business in this rapidly expanding region requires a different set of skills.

Bigen Africa’s core business rests on infrastructure and development. In light of the very unique African context Bigen works in, what have been the primary operational obstacles that you’ve faced in the past year? Almost all the African countries we are active in have adopted or are in the process of adopting citizen empowerment laws and practices that typically require a minimum percentage of local shareholder ownership. Progressing us to an operational position in these countries, especially for the government-funded market sectors, necessitates finding the right local partner and structuring a transaction that ensures not only shareholding and equitable economics but also meaningful participation of the local partners over time. Choosing the right partner is especially critical, as the local partner will be relied upon to introduce and maintain local relationships. The knowledge of the local partner is also invaluable to understand local culture, politics and the business environment. Including the islands off the coast, Africa consists of 53 countries, and therefore just as many combinations of language, culture, economy, politics, legislation and infrastructure. Although there are some subregional commonalities, each country is unique and, similarly, our approach to do business is crafted per country. And following on from that, how has Bigen Africa overcome them (with a view to helping other companies overcome them too)? It is a very expensive exercise to establish operations in any foreign country, even if the country is another neighbouring African state. To mitigate risk, we believe that a standard agreed process is the best strategy when entering new African frontiers, and we have adopted a seven-stage process to guide our actions:

Research & Explore

Relationships & Partnerships

1st Assignment

Establish Presence

In addition, it is strongly recommended using local consultants and experts. They will have knowledge of local customs, culture and relationships. Although the cost may in some cases seem exorbitant, it will definitely minimise ‘school fees’, and maximise your investment. What is Bigen Africa’s competitive advantage to accommodate doing business in Africa? Being Africans ourselves, we relate to and understand the challenges facing our continent with the ever-widening infrastructure gap. This understanding is translated in our value proposition and provides us with a competitive advantage over many of the international companies entering the African infrastructure development space: “Bigen Africa Group is skilled in integrating the entire value chain of

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Deon Fabel, Bigen Africa executive director SADC

Capacitate

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the infrastructure development process through in-house capabilities and strategic partnerships – from feasibility studies, through project preparation, management and implementation to ongoing asset management. The Group believes that the success of any cost-effective and sustainable project starts with the effective integration of the four cornerstones of civil society and sustainable communities, namely the social, institutional, financial and physical elements of the project. The Group provides its clients with a complete solution to all facets of a project, based on, amongst others, its intimate understanding of the requirements of the public sector (government), the private sector and other stakeholders (such as communities). Bigen Africa’s approach as infrastructure development activists adds validity and creative value to the products and services it provides.”

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Bigen Africa has a keen focus on community development, with the aim of improving life for all across the African continent (Doing Good while Doing Business). Tell us how you are achieving this in Africa? The pay-off line of the Group, “Doing good while doing business”, reflects our ultimate goal – to develop economically sustainable infrastructure in a way that results in socially desirable developmental outcomes. The Group delivers its products and services in a way that reinforces key emerging public policy priorities within sub-Saharan Africa. The capabilities and products of the Bigen Africa Group have been selected and developed to promote inclusive economic growth and human development. The Bigen Way has been developed, inter alia, to reflect the Group’s conviction that infrastructure development is, primarily, about the sustainable benefits stakeholders derive from its use. Bigen Africa Group has transformed itself into one of Africa’s leading infrastructure development activists, committed to improving the quality of life of all people through appropriate, sustainable infrastructure development solutions. This commitment is complemented by the Group’s focus on international best practice, leadership development, sound financial practices, and a sustainable triple bottom line. Working in collaboration with local industries and suitable partners is an essential part of your projects and developments. Can you tell us how you analyse and seek out potential partners on a local scale? As indicated above, finding the right local partner is a critical element of our ‘business readiness’ approach. Our objective is to find partners with complementary capabilities, but most importantly a shared value set. In many instances, this element can take a long time and will inadvertently include many hours spent on research and trial and error situations before the right partner is found. Tell us about the Bigen Africa strategic plan for beyond 2014, and what its primary objectives are? The Bigen Africa Group applies a five-year strategic cycle, and we are moving towards the end of our ‘S-Vision 2016’ that was crafted in 2011. S-Vision 2016 formalised the evolution of the Group into an infrastructure development organisation that remains in place and acts as an overarching guide for annual business planning processes and day-to-day operations. Objectives of S-Vision 2016 include to: • increase our access to infrastructure mega-projects; • build renewable energy, rail, mining and industrial, and project delivery capabilities through either partnerships or mergers and acquisitions; • open offices in West Africa (via Ghana as a port of entry) and increase the Group’s SADC presence in, inter alia, Zambia and Namibia through strategic partnerships and on the back of identified projects; • solidify key strategic partnerships to deliver returns; • embed development finance capabilities (including international finance) throughout the organisation; • redefine the corporate structure to improve understanding of stakeholder needs and to promote the speed and efficiency of project delivery; • maintain a high-performing culture internally, as well as zerotolerance to theft, fraud and corruption, while building trust, positivity and recognizing performance excellence throughout the organisation; • enhance corporate governance protocols in line with the 2008 RSA Companies Act and King III, as well as all other relevant legislation in countries the Bigen Africa Group operates in.

Within the 2015 calendar year, we will commence with the crafting of S-Vision 2021 to guide us beyond 2016. With 14 offices across South Africa and a number of representatives located in other African countries, what plans are there for expanding your operations and representation in 2015 and beyond? In accordance with S-Vision 2016, manned offices in Namibia (Windhoek) and Ghana (Accra) were established in 2014. Our expansion into Zambia will take form in 2015, and the end of 2016 will see us establishing a physical presence in East Africa. Although North Africa was not included in S-Vision 2016 as a strategic objective, large project opportunities in two North African countries developed late in 2014 that may necessitate physical presence in 2015/2016. With the exception of possibly establishing an office in the Northern Cape, our strategy for RSA will remain throughout S-Vision 2016 one of consolidation, reinforcement and continuous improvement of existing operations. Obviously, each of your developments and projects cater for a variety of audiences and clients. How does Bigen Africa work to ensure that all client needs are fulfilled as best as possible? For any company to advocate that they can do everything for everyone will be irresponsible, but with our well-developed partnership strategy and network we can get as close as possible. We serve the communities whose lives are improved by our projects with humility, and combined with our value proposition, integrate the entire value chain of infrastructure development, which makes us the service provider of choice throughout the continent.

Contact details The Innovation Hub Allan Cormack Street (off Hotel Street cnr Meiring Naude Road) Pretoria Tel: +27 12 842 8700 Email: pretoria@bigenafrica.com

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AGRICULTURE AND FOOD SECURITY

Naidoo takes a leaf

out of India’s book

Many say that agriculture is the answer to poverty, but former South African union leader and minister Jay Naidoo looks to other countries to see how Africa should do it, writes Peta Krost Maunder.

overty and joblessness are the two biggest challenges facing South Africa, in particular, and Africa in general. Former African National Congress stalwart, Jay Naidoo, believes that by getting the youth involved in agriculture, these are surmountable. “We have to understand our assets and utilise them properly,” says Naidoo, chair of the board of directors of the Global Alliance for Improved Nutrition (Gain). “Our most important asset is our people. Half the African population of close to a billion people are under 19. This is our demographic dividend. But we need to create concrete pathways out of poverty and the marginalisation they face today.” Naidoo was the founding general secretary of the Congress of South African Trade Unions from 1985 to 1993. He subsequently became minister responsible for the Reconstruction and Development Programme in President Nelson Mandela’s office, after which he was appointed Post, Telecommunications and Broadcasting minister. He left politics as such in 1999 to set up a management and investment company, while simultaneously chairing the Development Bank of Southern Africa. In 2010, Naidoo, able to pay his own salary, returned full time to his roots in social activism, focusing on building a global campaign against hunger and malnutrition and their connection to climate, justice, women’s empowerment and human rights. His focus now, Gain was set up at the United Nations Summit on Children in 2002, as a public-private partnership tackling the malnutrition facing 2 billion people in the world. Gain works in 35 countries and its business model of making markets work for the poor sees its innovative programmes reach close to 800 million people. He explains that the number of youths is growing exponentially: “By 2025, there will be more young people in Africa than in China. By 2050, there will be 2 billion people on this continent, and a quarter of the world will be www.nepadbusinessfoundation.org

African. By the end of the century, half the world’s young people will be in Africa. “Harnessing this tremendous resource and leveraging our natural and mineral resources could place Africa at the centre of the global economy along a new green growth trajectory that makes the 21st century an African one.” Naidoo believes Africans need to consider the continent’s natural assets and work with what is available: nearly one-third of the world’s mineral wealth, a fifth of the global land mass, 60% of the remaining arable land in the world and 15% of its forests are in Africa, while there are abundant fishing resources in our oceans.

“We need to prioritise food production in a way that improves human productivity while improving agricultural yields.” “We need to look at how we use these to position the continent for inclusive growth that creates a shared prosperity,” he says. “It does mean we have to rethink our education and training systems so that young people have skills, are productive and supported in entrepreneurship. “We know that close to 80% of food in Africa is produced by subsistence farmers, who are predominantly women. This is slightly different in South Africa because of apartheid, which broke the link between the people and the land.” These women farmers own less than 1% of the land, have little access to seed, water, power and, most importantly, markets where they can sell their surplus produce, Naidoo says. “No one wants to remain on subsistence living, but there are too many barriers stopping them making money.

“This needs to rectified. Government and industry must come to the party and address the blockages in the agriculture value chain. The empirical evidence proves that with women farmers, when there is a dramatic improvement in disposable income, most of this money goes to the education, health and nutrition of their children. This is where agriculture and nutrition blend together in symbiosis. It is not rocket science. Agricultural development has to be based primarily on graduating subsistence farmers into successful smallholder farmers.” Naidoo is inspired by an agricultural model he witnessed in India and other places, which focuses on building sustainable livelihoods through social businesses. He believes this model should be emulated in Africa. “We need a smallholder-focused model in Africa. The millions of peasant farmers can be aggregated into cooperatives of individual entrepreneurs who own their own land but come together to improve their bargaining power and create a shared service model that provides support to these farmers.” When Naidoo visited India in 2012, he explored the work done by the Naandi Foundation in Araku, a remote location where the people had been desperately poor and had high infant mortality and low school enrolment. Manoj Kumar, Naandi’s CEO, told Naidoo: “We thought we would bring development to Araku, until we realised that the farmers knew the land better than us. So, together we built an army of ‘barefoot development change agents’ by training adivasi [indigenous] farmers as our team of trainers in their own fields. Now they can teach our staff about development.” These ‘farmers’ were “landless peasants who had an acre of leased land from the government to grow coffee, but whose lands were unproductive because they lacked the necessary skills and tools”, Kumar told Naidoo. The Naandi Foundation created a cooperative for these coffee farmers and trained them in organic farming, how to make cow-dung fertiliser, how to process the

THE OFFICIAL NEPAD YEARBOOK 2015

coffee beans according to their quality and when to harvest. In this way, an organisation was built from the village upwards. The foundation also helped the farmers obtain legal title deeds to their land. Naidoo says that its organisers reminded him of the dedicated Cosatu unionists with whom he had worked. “They put the farmers through a rigorous process of organic certification and negotiated access to global markets. Farmers have now increased their incomes (from US$1/kg or just more than R10/kg) to an average of US$5/kg, cut out the middlemen, and are working towards connecting directly to the consumer. “The coffee, combined with other commodities in Araku, helps to create a small sustainable source of income and, at the same time, creates opportunities for education, medical care, better food sources, nutrition and fresh water.” Naidoo says that this is true sustainable development. “It comes from painstakingly organising communities around livelihoods. Cosatu succeeded in organising workers, not because we ‘sold’ politics, but because we organised workers around wages and working conditions.”

“Agricultural development has to be based primarily on graduating subsistence farmers into successful smallholder farmers.”

He says that much like the unionists, the people of Araku are no longer powerless. “Already they have demanded that teachers are in school on time and teaching. And those who don’t comply are chased away. Power here is slowly but surely returning to the people.” In Africa, we need to learn from successful models and adapt these to our needs. We see a huge migration towards our cities. The majority end up in urban slums where household food insecurity is high. Young people do not want to be subsistence farmers. We need to make agriculture a career path to a proper, well-paid livelihood, he says. “Even in South Africa, if the government and industry can remove the barriers, we could harness our huge land resources,” says Naidoo. In the 2014 budget, the South African government allocated over R7 billion for conditional grants to provinces to support subsistence and smallholder farmers as a part of the National Development Plan’s target of creating 1 million jobs in agriculture and land reform by 2030. “Land reform will succeed only when the smallholder farmers own the strategy of development. Large-scale commercial farmers have to support this endeavour and promote the capacity of families and workers on their farms to produce food for their own use, as well as for the market. It is short-sighted just to hire labour at the time of planting and harvesting. We have a shared responsibility in South Africa to build entrepreneurship and livelihoods for all our people.” The alternative in Africa and, indeed the

world, is that our demographic dividend will become the nightmare of an ever-increasing minority of people in whose hands wealth is concentrated. As a board member of the Mo Ibrahim Foundation, which focuses on promoting governance and leadership in Africa, Naidoo says: “In exporting our raw materials, we are exporting jobs. The time has come for us to stop acting as individual countries and use our resources together to improve our bargaining position in the global economy. We cannot talk of an ‘Africa Rising’ when we are the richest continent, yet the majority of our people live in poverty. “We have to trust our people. We need our leaders in the public, private and civil society sectors to work together. We need to prioritise food production in a way that improves human productivity while improving agricultural yields. And at the core has to be building sustainable livelihoods that allow us, in Africa, to feed ourselves and then feed the world. “That is the only pathway to lasting peace and prosperity in Africa. We have to put more money into supporting these initiatives. A large percentage of those billions need to go directly to the smallholder farmers to enable them to have the support network they need to be successful. “I have seen it work in India and parts of Africa,” says Naidoo. “This will be a key challenge for rural development in South Africa and can uplift so many who are jobless and living in poverty.”

Jay Naidoo and children from Lake Turkana in Kenya

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ADVERTORIAL

ICCO COOPERATION CELEBRATES 50 YEARS Founded in December 1964, ICCO Cooperation works towards the eradication of poverty and injustice across the globe. With its head office in the Netherlands, ICCO Cooperation works in 44 countries, providing financial support, and lobby and brokerage services to non-governmental organisations, businesses, faithbased and community organisations that focus on securing sustainable livelihoods, justice and dignity for poor and marginalised people.

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ith the ICCO Cooperation South African regional office located in Pretoria, the organisation works with innovative and entrepreneurial partnerships in southern Africa, partnering with local initiatives and programmes in Angola, Malawi, Madagascar, South Africa and Zimbabwe. Using a multi-stakeholder approach, ICCO Cooperation works towards transforming rural agriculture for the benefit of smallholder farmers and marginalised farm labourers. By closely collaborating with local organisations and companies who share the primary ICCO Cooperation values of compassion, justice and stewardship, based on principles of equality, co-responsibility and respect for diversity, the South African regional office works to: • connect smallholder farmers to value chains; • help rural families to secure their food and nutrition needs; • make carbon markets work for rural households; • empower people to assert their rights; and • help people to access good healthcare. ICCO Cooperation’s flagship programme, the Fair Economic Development (FED) Program, seeks to promote and strengthen rural entrepreneurship and connects smallscale producers to value chains in a bid to promote inclusive and sustainable economic development in southern Africa, in order to increase the income of organised rural producers. The programme supports the skills development of small producers in Malawi, Angola, Madagascar and South Africa, and links them to high-profit and value-added markets. The FED Program complements other ICCO programmes that ensure food security and access to natural resources by local populations through the promotion of inclusive, pro-poor, entrepreneurial and collaborative approaches. Pursuant to the rights-based approach, it includes issues of access to land, and suitable and affordable financial services to smallholder farmers.

The Human Rights and Business Campaign

ICCO Cooperation has been increasingly working with the private sector since the early nineties. Throughout the years, ICCO has come to believe that real change requires joint efforts, involving not only governments and civil society but also the private sector. ICCO Cooperation also believes that economic growth and acting in a responsible way go well together. Thus in 2015, the year of its 50th anniversary, ICCO Cooperation launches the worldwide campaign: ‘Human Rights and Business, Let’s Get Used to It’. Tied to ICCO Cooperation’s 50th anniversary, this awareness-raising campaign engages companies and other stakeholders to ensure that they actively comply with internationally recognised human rights standards within their business operations. With this campaign spearheaded by the seven regional offices of ICCO Cooperation in Africa, Latin America, Europe and Asia, ICCO Cooperation ensures that companies are made aware that doing good business also means paying attention to human rights, as part of their core business practices. ICCO acts as the linking pin, connecting local communities with companies. Over the next five years, ICCO Cooperation will continue to focus on enabling the inclusion of disadvantaged, vulnerable and marginalised groups within South Africa

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and further expand its network of partner organisations. By working closely with citizens and civil society organisations, ICCO intends to assist with: • the development of policies that ensure the realisation of marginalised people’s human rights, especially basic health and education rights; • the realisation of inclusive markets and the right to adequate food; • ensuring market-based solutions and inclusive pro-poor business models are found for entrepreneurs; • engaging in lobby and advocacy strategies on increasing civil society’s political space; • engaging private sector entities on human rights and business issues as well as cooperation with the private sector to advance positive social change within vulnerable groups, nurturing relations with the private sector to ensure that corporate social responsibility initiatives adequately respond to human rights questions; and • growing ecumenical partnerships.

The gap widens

Marinus Verweij, chairman of ICCO Cooperation, states: “Economic growth is important for the development of a country. But it is equally important that all people benefit from it. In countries with fast economic growth… a large group of people… don’t benefit from it. It worries me, because the gap between rich and poor widens in many countries. This is where INGOs like ICCO Cooperation come in. We stand up for the equal rights of all people and we dialogue with countries and businesses about how they can work on fair economic growth. We seek partnership with companies to make human rights and social responsibility relevant to economic growth.”

ICCOnomics

ICCO Cooperation seeks to promote the principles embodied in the UN Framework and Guiding Principles on Business and

Andre Olivier, regional manager, ICCO Cooperation Southern Africa Office, Pretoria.

Human Rights as a step in accelerating the realisation of the universal achievement of dignity and justice in the southern Africa region. ICCO organises conferences on human rights and business, and together with Social Accountability International (SAI), training has been developed for interested CSR managers and other business managers on how to take responsibility for the human rights impact of a company. This involves respecting the rights of employees worldwide, such as paying a fair wage and providing a safe and healthy work environment. Additionally, making sure no land grabbing is involved when starting a new firm and respecting the rights of indigenous people form part of the curricula. Freely accessible for all managers is ICCO’s e-book, ICCOnomics, which gives practical information about doing business right.

ICCO Cooperation in a nutshell

ICCO Cooperation is an international non-governmental organisation for development cooperation based in Utrecht, The Netherlands, and has seven regional offices worldwide. ICCO Cooperation has 300 employees, is a member of the ACT Alliance and is supported by, amongst others, the Dutch Government, the European Union and several philanthropic foundations.

Wozani Moyo, regional policy and advocacy advisor, ICCO Cooperation Southern Africa Office, Pretoria.

Contact details ICCO Cooperation Regional Office Southern Africa Green Hill Village Office Park, Candlewood House Cnr Nentabos and Botterklapper Street Die Wilgers, Pretoria, 0184, South Africa Tel: + 27 12 8071213 Fax: +27 12 807 1572 southernafrica@icco-cooperation.org Postal address ICCO Cooperation Southern Africa NPC P O Box 75649, Lynnwood Ridge Pretoria, 0040, South Africa South African Regional Office website www.iccokia.org/southernafrica/ On Facebook www.facebook.com/iccokerkinactieSouthernAfrica ?ref=hl

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t your career in accounting and finance with ACCA. d out how in demand you will be with the ACCA alification. We support over 82,000 students and ut 11,000 members across Africa. Join a network will open doors to a global career.

ACCA: PRODUCING WORLD-CLASS PROFESSIONAL ACCOUNTANTS SINCE 1904

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Established in 1904 as an alternative to the restrictive and elitist routes to professional accountancy qualifications at the time, ACCA is a leading global professional accountancy body, which supports nearly 170 000 members and 436 000 students across 180 countries through an unrivalled network of 92 offices and active centres across the world. ACCA’s director, sub-Saharan Africa, Jamil Ampomah, shares more about ACCA’s role in Africa’s development.

Director: sub-Saharan Africa, Jamil Ampomah

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What are your views about Africa’s challenges and opportunities? According to the IMF, 10 of the top 20 fastest-growing economies are in subSaharan Africa, and it’s estimated that 62% of the 1 billion people in Africa are younger than 25 years old, 75% being below the age of 35 years. I would like to see these citizens develop skills that will be required to support this growth. There is a huge gap between the projected demand and the existing capacity of skills across all sectors. We have a young and growing population, yet youth unemployment is very high. We also need to address the broader issues of improved levels of governance and transparency to protect the public interest and achieve equity. As an organisation, our mission and vision supports the AU’s Agenda 2063. As ACCA, we want to play a leading role in producing world-class professional accountants that Africa needs, as there is a huge shortage of professional accountants, and we hope that our efforts will complement that of other organisations with similar objectives across the region. Share with us some of the work ACCA has been doing in supporting the enhancement of good governance in Africa? ACCA’s interest and involvement in corporate governance is long-standing. Our commitment to supporting the enhancement of public financial management in Africa cannot be overemphasized. • ACCA has held several corporate governance conferences and dialogue sessions in a number of African countries over the years, and in 2011 conducted pan-African research on corporate governance in Africa. • ACCA has MoUs with leading organisations, including some stock exchanges and capital markets authorities in Ethiopia, Ghana, Kenya, Mauritius, South Africa, Tanzania, Zambia and Zimbabwe, which seek to promote corporate governance, amongst other objectives. • ACCA is a founding member of the Global Reporting Initiative (GRI) and we signed a MoU with GRI to jointly support the sustainability agenda in sub-Saharan Africa. • ACCA sponsored the inaugural Africa Corporate Governance Network (ACGN) forum held in Zimbabwe, and has an MoU with the ACGN to support the development of corporate governance across Africa. • In February 2015, we held a joint corporate governance conference with the International Finance Corporation in Ghana.

The profession is often criticised for not addressing the issues affecting the public sector. What are you doing to close this gap? The public sector is a significant part of economies in sub-Saharan Africa. Its size as a proportion of formal employment can be as high as 50 to 60%. And its proportion of GDP is significant. The efficiency and effectiveness of resource utilisation in this sector has a direct bearing on economic growth. ACCA is actively involved in capacity building and professionalising this sector by working with the main stakeholders at international, regional and national level. The ACCA professional programme was endorsed by the United Nations Conference on Trade and Development (UNCTAD) as a model for the development of the profession. Since achieving that accolade, we have continued to innovate and ensure that our qualifications are appropriate and relevant to all sectors across the region. As sign of our commitment, we have developed two certifications for this sector: • the Certificate in International Public Sector Accounting Standards (IPSAS) – for professional accountants working in this sector to gain specialised knowledge; and • the Advanced Diploma in Public Financial Management (Adv Dip PFM) – which leads to the development of skills required in order to be effective in senior finance roles in the public sector. This is a dedicated pathway for ACCA students in the public sector to progress and attain membership of ACCA. Since ACCA is so committed to Africa, do you have any physical presence on the continent? Yes, ACCA has fully staffed offices in Botswana, Ethiopia, Ghana, Kenya, Malawi, Mauritius, Nigeria, South Africa, Tanzania, Uganda, Zambia and Zimbabwe.

Contact Details Jamil Ampomah Director: sub-Saharan Africa ACCA Hse. No. C568/14, Nii Kwabena Bonnie Cresent, North Dzorwulu - Accra, Ghana Tel.: +233 (0) 204 734134 Email: jamil.ampomah@accaglobal.com Twitter @ACCANews www.accaglobal.com ACCA finance professionals see the complete picture www.accaglobal.com/complete

Be in demand. Be ACCA.

Start your career in accounting and finance with ACCA. Find out how in demand you will be with the ACCA Qualification. We support over 82,000 students and about 11,000 members across Africa. Join a network that will open doors to a global career. Visit www.accaglobal.com

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e sustainable food production across the key to unlocking Africa’s agricultural productivity. With these nd training programmes for farmers at all anonly strengthening its position in the region, but also delivering ot ation, use of technology and maintenance. a, ovide high-tech solutions to farmers feeding the world.’ he ica’s agricultural productivity. With these artnered with the Zambia 4-H project to help prepare Africa’s sl position in the region, but also delivering www.agcocorp.com ent global needs, including hunger, sustainable livelihoods and e. ons to farmers feeding the world.’ 15, 4-H will equip 250,000 young people in Sub-Saharan Africa embia and skills forhelp improved, sustainable 4-H needed project to prepare Africa’s livelihoods. www.agcocorp.com guding hunger, sustainable livelihoods and

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THE OFFICIAL NEPAD YEARBOOK 2015

Water – not a

drop to spare

Drinkable water is fast becoming a scarce resource in Africa. Stuart Graham looks at the situation and what is being done to improve it.

n an abandoned stretch of highway outside the Majakaneng township in South Africa’s North West province, not far from the luxurious Sun City resort, a lonely white Porsche speeds away from a mob that has left a wake of rocks and burning rubbish. The Porsche happened to be driving by when the mob rampaged, after water in the local reservoir ran dry. It was able to accelerate away – but a truck, too slow to turn around, was not so lucky. Its burned-out shell was torn apart by scrap metal collectors who tailed the crowd. Violent uprisings such as this one, which was documented by journalists from the Pretoria News newspaper on 5 February this year, have become frequent occurrences in South Africa as its municipalities struggle to provide steady water and electricity to residents. Dr Anthony Turton, an independent water resource management scientist, says the problem of collapsing infrastructure can be traced back to inexperienced and underskilled people being placed in “highly complex positions”. “South Africa is a unique case study, because of its political imperative of transformation,” he says. “One of the unintended consequences of transformation is that it is not conducive for technically competent people to stay in highly complex jobs. “The country’s current policies are not attracting skilled people to these very important jobs. We urgently need people with the right qualifications in these positions.” The problem of inadequate water infrastructure is not unique to South Africa. In its Future of water in African cities report, The World Bank predicts that African cities will come under increasing pressure as the urban population doubles to about 654 million by 2030. Population growth in cities will drive the demand for water, with economic growth and rising prosperity in the continent adding to the pressure, the report says.

More industries will develop and farmers will need to grow more food. The prosperity that comes with economic growth will raise expectations among people for quality water services. In South Africa, the Strategic Water Partners Network (SWPN) – led by the government and corporates such as power parastatal Eskom and private enterprises such as SABMiller, Nestlé, Coca-Cola, Anglo American, Sasol and BHP Billiton – aims to reduce the country’s water demand-supply gap, which is expected to be about 17% by 2030.

The World Bank says population growth in cities will drive the demand for water, with economic growth and rising prosperity in the continent adding to the pressure. The network has identified its priority areas as effluent and the treatment of waste water, water efficiency and leakage reduction, and agriculture and irrigation water use. Mining companies Anglo American and BHP Billiton have built a reverse osmosis waste-water treatment facility to manage acid drainage in the Emalahleni coal region east of Johannesburg. This has set the tone for those looking at water recycling. This plant converts waste water from underground mines into drinking water, providing 510 000 people in the Emalahleni municipality with about 12% of their water supply. Anglo American’s enterprise development project, Zimele, supports a water-bottling business at the site, creating jobs for a further nine people.

Apart from the water recycling, the plant produces a by-product – gypsum-based solids – used to build homes for Anglo American employees. So far, 66 affordable homes have been built with gypsum bricks. The project has been so successful that the company is investigating replicating it at more of its coal operations. Acid from mines that seeps into underground water has had a severe effect on South African farmers, particularly those using the Vaal River. It just so happens that the Vaal is the main supplier to the economic power province of Gauteng. Last year, the country’s public protector, Thuli Madonsela, said she was investigating the “alleged pollution of water as a result of mining operations in a number of provinces”. In reality, the biggest water losses are through agriculture, with millions of litres leaking out though canal systems and inefficient irrigation. In South Africa, the Water Research Commission estimates that 50% of dam water is lost while on its way to taps. The Vaalharts Irrigation Scheme in South Africa’s Northern Cape, which sees water from a diversion weir in the Vaal River flow through an 812 km-long network of canals to water approximately 1 250 farming units, is one of the schemes under the SWPN spotlight. The condition of the north canal, which supplies 30 000 hectares of crops in the northern part of the scheme, has deteriorated, with supporting soil behind concrete panels eroding and leaving gaping holes. This has allowed water to flow behind panels and aggravate the process, resulting in the collapse of the structure and a decrease in capacity. The SWPN Agriculture Supply Chain Working Group, chaired by Coca-Cola, is in the process of developing a business case to ‘unlock’ R4 billion in funding that is needed for the urgent upgrading. Then those behind the No Drop Project, a programme under the SWPN’s water efficiency www.nepad.org

AGRICULTURE AND FOOD SECURITY

and leakage reduction group, chaired by Nestlé, hope to radically improve water efficiency by incentivising municipalities across South Africa to save 600 billion litres of water a year by 2025. In a report based on data from 132 municipalities, the Water Research Commission found that levels of payment for water are “very low” in some parts of the country. There is little incentive to save water when the user has no intention of paying for it, it says. Energy company Sasol has implemented the No Drop concept in partnership with the Emfuleni municipality by training ‘Water Warriors’ to travel from house to house, repairing leaking pipes while educating residents and schools to be water-wise. Before the project started in Emfuleni, it had annual water losses equivalent to 14 000 Olympic-sized swimming pools. The project hopes to reduce the municipality’s annual water expenses by approximately R62 million. Turton, who recently completed a report for the British government on the Southern African Development Community’s water supply in 25 years, believes radical changes lie ahead in southern Africa as governments are faced with tough decisions over the way they use their water. He says the better-watered north will increasingly become the regional breadbasket, with the Democratic Republic of the Congo, Angola, Zambia and northern Mozambique emerging as major players. Countries located in the more economically diverse south of the region will be increasingly unable to create national selfsufficiency in water, energy and food. “If one overlays the energy crisis onto the food challenge, then we start to see the need for three major infrastructure corridors – the eastern, central and western – capable of servicing the water, energy and food needs of the south from the north,” he says. South Africa is an example of a country that is likely to move away from agriculture in favour of industry, which is far lighter on water. Some 63% of South Africa’s total water budget is used by agriculture, which contributes 3% to the gross domestic product (GDP). Industry, which uses about 8% of water, contributes 60% to the GDP. “Does it make sense if you are a waterconstrained country to sell oranges to the water-rich European Union?” asks Turton. “You could use that same water for mining and make a far larger contribution to the GDP. You will have more jobs and higher-value jobs.” For the residents of Majakaneng, the protest had a satisfying end, after the provincial government promised R9 million to develop water infrastructure in the area. Water supply disruptions, like those in Majakaneng, are often not anticipated, says Turton. But when they happen, “they bite big time.” www.nepadbusinessfoundation.org

‘Water Warriors’ travel from house to house, repairing leaking pipes while educating residents and schools to be water-wise.

Water Warriors Tom and Katherine Kirk watched as water pumps are installed and water washing stations set up in Zambia.

Children carrying drinking water.

Image courtesy of Dida Arreas

AFRICA, THE HEARTBEAT OF OUR FUTURE

By the year 2050 the worldâ&#x20AC;&#x2122;s population is expected to reach 9 billion people and Africa is in a unique position to address world food security. It is a continent with rich agricultural land and abundant opportunities to focus investments into agriculture capacity in order to assist in meeting future world food needs. www.afgri.co.za

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AFGRI

90 YEARS OF SUSTAINABLE AND FINANCIAL GROWTH With 90 years of sustainable and financial growth, AFGRI is changing lives for commercial and emerging farmers through its leading agricultural products and unlocking the huge agricultural potential the continent has. We find out more about South Africa’s leading agricultural services and diversified food group. As the leader in all facets of grain management, how does AFGRI set the standard for improved food security on our continent? Our grain management technologies and experience, moulded over nine decades, ensures that AFGRI is able to provide the correct order of services and support in each African country we operate in. We can assist farmers from the planting stages, through to harvesting, storage and then, most importantly, getting the product to a market when the price is satisfactory. The ability to store grain simply and safely adds tremendous value to food security. With decades of experience, what have been some of the fundamental lessons learnt in the agricultural sector? That agriculture is a test of patience, dedication and knowledge on a range of topics from your product, local and international market dynamics and rainfall patterns, to name just a few. With operations in 14 countries across Africa, how does AFGRI balance interests across the continent? Our business model has been honed by our experience in South Africa to be a holistic provider of agricultural services to clients. www.nepadbusinessfoundation.org

AFGRI CEO Chris Venter

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Armed with this knowledge, we are able to support farmers in Africa with inputs and services which will best help them improve their yields. As an example, we know that mechanisation, even on the smallest scale, can result in substantial yield improvements and thus income. However, many farmers cannot afford mechanisation solutions, so in Zambia, AFGRI has assisted with a Tractor Programme, assisting in supporting the farmers with access to finance and the ability to use the tractors as a collective. In Uganda, we have also piloted a Farmer Mechanisation Programme, and followed this up with a Horticultural Mechanisation Agricultural Services Programme called ABBA in Western Zambia, showcasing our passion for the upliftment of African Farmers in a diversified but sustainable manner.

where we believe that an education can never be taken away from a person, and being armed with a good knowledge base will enable the students to make a success of their enterprise. Our programme is in its first year and we are pleased with the results thus far.

How did AFGRI’s sponsorship of Blue Bulls rugby come about? The dedication to success and winning culture of the Blue Bulls brand appealed to AFGRI, coupled with our love for the sport. In addition to this, the involvement with the Vodacom Blue Bulls brand provided AFGRI with an opportunity to promote our brand.

What is your hope for the future of agriculture in Africa? Agriculture is the DNA of AFGRI and we are passionate about being an enabler to food security across the continent. In this way, we will strive to continue to assist farmers through our products and services, to be more efficient and to be able to get their products to a market for sale. This fundamental service will also be supported by education and technology.

What have been the benefits of this sponsorship? Greater brand awareness has resulted, as well as the ability to spread the word with regard to the service support AFGRI is able to afford to commercial and emerging farmers alike. AFGRI supports emerging farmers not only providing by funding via the Emerging Farmer Programme, but also essential technical training and support. Why is funding alone not sufficient, and what have been some of the outcomes of the training so far? One of the four strategic social investment areas for AFGRI is education,

One of the training courses offered is Business Ethics. What is the underlying ethic that drives AFGRI’s operations across the continent? Being a good and ethical corporate citizen is the backbone of AFGRI, but we are also guided by our seven values – Integrity, Passion, Accountability, Innovation, Respect, Team Work and Service. We apply these values in everything we do, with ethics being the underlying behaviour.

What government initiative would you like to see towards greater food security in South Africa? We believe the government has a number of programmes it champions in order to promote greater food security. What we believe is that there should be more involvement from the private sector and a concerted effort across the entire industry to look after and assist tomorrow’s farmers, which will go a long way towards having a positive effect on the food security in our country.

With nearly a century in business, how has AFGRI maintained its top-ranking position in the agricultural sector? Through continuous innovation and our hands-on involvement with our clients, we are able to remain relevant to our clients and to the sector. As an example, our animal feeds division teamed up with Kansas State University in the USA to develop AminoMax, an animal feed supplement which improves the productivity of a dairy herd. You have a large portfolio of CSI projects – which one would you say is the most rewarding to you personally? Education, to both adults and children alike. What are AFGRI’s ambitions for the next 10 years? To expand further across the African continent and to be an enabler to food security across the continent, supported by technology developments. And making African farmers our primary concern, as they are the key to unlocking the huge agricultural potential our continent hosts.

Contact details AFGRI Limited Head Office 12 Byls Bridge Boulevard Highveld Ext 73 Centurion Tel: +27 11 063 2347 Email: afgri@afgri.co.za www.afgri.co.za

www.nepadbusinessfoundation.org

YOU SEE A PIECE OF LAND WE SEE POTENTIAL

At AFGRI, we strive towards constant progression, growth, innovation and, more importantly, forging the vision we have on food security for South Africa and the rest of the African continent. As a 90-year old agricultural services and foods company, we have comprehensive, intimate knowledge of agriculture in South Africa and the region. To us, it is more than a job, itâ&#x20AC;&#x2122;s our passion. Producing animal feed, poultry, proteins, oil and yellow maize along with providing agricultural retail services, financial services, solutions and products, we invite you to contact us for tailor-made, personalised solutions. www.afgri.co.za

THE OFFICIAL NEPAD YEARBOOK 2015

Who is benefiting from corporate social responsibility in Africa? While a question mark still hangs over the overall success of corporate social responsibility in Africa, some companies are seen to be making a sustained effort, writes Bruce Cooper.

key function of corporate social responsibility (CSR) is building productive relationships with communities and stimulating economic growth, particularly in disadvantaged areas. But the visionary goals outlined by companies are not always achieved. In October 2013, the Bench Marks Foundation, a non-profit organisation owned by churches in South Africa, issued a 67-page report titled Coping with unsustainability: Policy Gap 7, in which it took South African mining giant Lonmin to task for failing to live up to its social and environmental commitments over a 10-year period. In 2006, the company promised to convert “all hostel accommodation into family accommodation within five years” – but, by 2012, only 79 hostels of the reported 128 had been changed, according to the foundation. Lonmin declared in 2004 that it would meet new air-quality permit requirements of sulphur dioxide emissions of less than 4.8 tons a day. The targets were achieved in 2004/5, but had gradually increased to 14.1 tons by 2010. Although the levels decreased to 8.5 tons in 2012, it was at the expense of poisonous sludge ground pollution, the report states. The foundation recommended that South Africa’s Department of Mineral Resources suspend the platinum producer’s licence. In response, Lonmin offered to engage with the foundation to produce sustainable outcomes. But CEO of the foundation, John Capel, says although progress speeded up since 2012, it remains unsatisfactory and “…trying to work out what has been achieved requires forensic detective work”. He added that the problems cited in the Lonmin report are representative of the mining industry in Africa as a whole, a statement with which Lonmin had publicly agreed.

Bessie Mogale is part of Coca-Cola’s 5by20 project.

This seems to echo Oxfam’s Behind the brands report, in which it accuses businesses of being too secretive and making claims of sustainability and social responsibility that are difficult to verify. It stressed that private investment must bring real benefits and

“Increasing dialogue and better relationships between business, government and the various stakeholders are imperative.”

expressed concern over failed CSR schemes, smallholders being left worse off and decreasing food security. According to Terence Corrigan, a political and governance consultant and South African Institute of International Affairs research fellow: “Increasing dialogue and better relationships between business, government and the various stakeholders are imperative. To this end, strong, independent business chambers and institutes of directors are necessary.” While there is much to be done by corporates in Africa to improve their CSR alignment with development, some appear to be making a sustained effort, and these could serve as models for the future. www.nepad.org

AGRICULTURE AND FOOD SECURITY

Illovo Sugar Limited

In a May 2014 socio-economic assessment report of Illovo’s impact in Africa, it was noted that: • the sugar company contributed an estimated £1.4 billion in 2012/13 to African economies, including direct, indirect and induced economic impacts; • for every worker directly employed by Illovo, between 1.9 and 3.6 additional workers are supported in the wider economy by creating jobs and economic opportunities in the rural communities nearby, or relevant to, the company; • through direct employment of workers on farms and in factories, the sugar company supported the livelihoods of between 400 000 and 625 000 people across southern Africa; • the sugar company spent 30% of its revenues (R3.4 billion/ £252 million) with independent, outgrower farmers in 2012/13; it procured cane from nearly 17 000 smallholder farmers, with smallholders supplying over 90% of outgrower cane in Malawi and 70% in Tanzania; and • the sugar company generated 90% of total energy consumption from renewable sources. In terms of Illovo’s direct impact on national economies, the group’s gross value add in 2012/13 was R4.2 billion (38% of revenues).

SABMiller

The company supports the responsible, sustainable use of land for crops used in brewing and creates secure, sustainable supply chains both for malting barley (its biggest brewing crop) and local crops such as sorghum and cassava. In this way, farmers are helped to increase profitability, productivity and social development, while reducing environmental impact.

While there is much to be done by corporates in Africa to improve their CSR alignment with development, some appear to be making a sustained effort.

Illovo giving back to the community in which it works.

The company’s Replenish Africa Initiative aims to: • provide clean water and sanitation for 6 million by 2020; • provide 2 million people with sustainable, safe water by the end of 2015; and • empower 250 000 women and youths to return up to 18.5 billion litres of water to nature and communities. Considerable power and economic strength have made large corporations a dominant force in African society, but they will have to broaden the sincerity, scope and depth of their CSR activity to boost economies where some public institutions might have failed.

SABMiller has begun construction of a new malting plant in South Africa at Alrode in Alberton, South Africa, which will allow the company to reduce the amount of malted barley it imports and to further its programme of developing the local agricultural sector by helping black farmers to improve the profitability and the environmental and social impact of their farms. The company sources about 65% of its barley locally – a figure that should increase to between 90% and 95% when the plant becomes operational. In Zambia, farmers have made a significant contribution to the economy by developing a malting barley sector from scratch. This ensures SABMiller is locally self-sufficient for the crop. About 90% of land in sub-Saharan Africa is untitled, and the company has added its voice to those campaigning to improve land rights. It cites as examples Botswana and Ghana, where a change in law allows land held in long custom to be given the same legal status as documented private property.

Coca-Cola

The company consults widely with key government and civil society stakeholders to ensure the sustainability of its programmes, which the community eventually comes to own and maintain. Through its CocaCola Africa Foundation, it has invested over US$150 million in 190 community projects in 48 African countries. A significant part of the company’s success on the continent is attributed to women across Africa, who run small businesses and sell Coca-Cola products. The 5by20 programme aims to empower them within the Coca-Cola system by 2020, providing business skills, financial services and training. www.nepadbusinessfoundation.org

A proud 5by20 programme entrepreneur.

www.pwc.com

Unlocking Africa’s potential

With close to 450 partners and 8 500 people in 32 countries, we’re the largest provider of professional services in Africa. This enables us to provide our clients with seamless and consistent service, wherever they’re located on the continent. This, together with our in-depth knowledge and understanding of African operating environments, means we can put ourselves in our clients’ shoes and offer truly tailored Tax, Assurance and Advisory solutions to their unique business challenges. Realising the attractiveness of the continent as an investment destination, our dedicated Africa Desk provides assistance to organisations looking to expand their presence here. To see how we can help your business, visit www.pwc.com/africa.

REGIONAL INTEGRATION AND INFRASTRUCTURE

Stopping the runaway

terrorism train

Terrorism in Africa is on the increase. Liesl Venter finds out what is being done to curb it.

here are few words to describe the horror and brutality much of the world has been experiencing at the hands of extremists and terrorist groups in recent times. From Islamic State beheading and burning people alive in Syria to Boko Haram using little girls as human bombs in Nigeria, the atrocities are increasing. One is hard-pressed to imagine how much worse it can get, but new horrific lows are reached every day. Statisticians, however, say that despite the increase in terrorist activities – and yes, terrorism is on the rise – one is far more likely to die at the hands of a common criminal than a terrorist. According to the Global Terrorism Index 2014, homicide claims 40 times more people globally than terrorism. There were 437 000 lives lost due to homicide in 2012, compared to 11 000 terrorist deaths in the same year. Since then, there has been a 61% increase in terrorism-related deaths, with all indications pointing towards not only the intensity of terrorism increasing but its breadth as well. “The odds of being directly impacted by a terrorist attack in Africa still remain quite low,” says Adunola Abiola, director and senior analyst at Think Security Africa. “However, it is becoming an increasingly more serious problem for three main reasons. Firstly, there are a rising number of countries impacted by the problem. Secondly, the problem has escalated from being a tactical to a strategic problem for African governments, as groups with extreme beliefs are increasingly vying for political authority.” And finally, she says, growing interconnectedness between extremist groups in Africa and the Middle East is homogenising the threat and making it intercontinental. Flushing out the threat in concrete metrics means there has been a 20% increase in the number of African countries impacted by terrorist-related violence between 2013 and 2014 alone. The number of countries rose from 14 to 17. In 2013, there was only one African capital city facing a credible strategic threat from terrorist groups – Mogadishu in Somalia. By 2014, the number of capitals under threat from extreme groups had tripled, with Tripoli in Libya and N’djamena in Chad on the list.

www.nepadbusinessfoundation.org

Anneli Botha, a senior researcher on terrorism at the Institute for Security Studies in Pretoria, says the attacks have become increasingly lethal. “Terrorism in itself is nothing new. Africa was the first target of al-Qaeda, with the Kenyan embassy bombings, and came up with a convention to deal with the threat of terrorism long before the world was taking notice of the continent,” she says. “There are various regional and subregional frameworks in place, while most countries on the continent have national plans to deal with the threat of terrorism.” According to Abiola, the African Union has also significantly increased its activity to deal with terrorism. It has a dedicated research centre in Algiers and regional and national legislation has been implemented in several countries.

“But resources remain a challenge. When it comes to these radical threats, there is not just one thing to be done on its own to resolve the problem – a package of measures is required, and it requires budget.” “In practical terms, this has resulted in augmented bilateral and multilateral cooperation. In addition to this, there are broader initiatives, such as multinational military training exercises, bilateral and multinational cooperation from nonAfrican states designed to enhance security capabilities and aid African governments with strategic planning.” But is this enough? “No government wants the stigma of being impacted by terrorism. It drives away investment, shrinks trade and can make re-election through free and fair means difficult to secure. For these reasons, African governments are generally doing what they consider most appropriate,” says Abiola.

According to Jean Devlin, associate director for Africa at Control Risks, there is a commitment to address terrorism in countries such as Nigeria and Kenya. “But resources remain a challenge. When it comes to these radical threats, there is not just one thing to be done on its own to resolve the problem – a package of measures is required, and it requires budget,” she says. “Data and intelligence are two important aspects of dealing with terrorism. Building intelligence networks that can be shared across regions, so that there is an integrated approach that allows for policy development, is essential for a programme that effectively deals with the threat of terrorism.” In Africa, finding the funding required is often difficult. Says Abiola: “African governments are often overburdened by the demands of maintaining fragile political alliances, and all that entails, trying to restructure disadvantaged economies, so much so that they very often don’t get round to confronting terrorism challenges until it has become far too entrenched and therefore difficult to contain. African governments have generally not been as prepared as they should be in the face of credible threats.” Devlin agrees, saying not enough is being done, despite the continent taking great strides in dealing with terrorism threats. “While there is a sense of urgency, and definitely a sense of engagement, around the topic, and it has become a discussion point and is on the agenda, there needs to be more of an urgency in coming up with real solutions. Of course, one must be cognisant that one cannot have a one-size-fits-all approach on the continent, as the threats are contained within geographic regions and very particular to certain areas.” According to Botha, there is a definite move towards improving the way Africa approaches terrorism. “There is a recognition of the need for a coordinated approach, where there is a real understanding of the threats and better sharing of information. But gathering intelligence is an expensive exercise and so finding the funds is a priority and then, of course, channelling those funds to where the need is the greatest and the most immediate.”

Image courtesy of Erica Simone/Shutterstock.com

THE OFFICIAL NEPAD YEARBOOK 2015

Dr Martyn Davies, CEO of Frontier Advisory, says a rapid response is needed in Africa. “We cannot wait and see what happens. If we want to continue to attract investment, and see the projected economic growth realised on the continent, then we need to have very clear policies and strategies in place on how we are going to deal with terrorism.” In light of the fact that Africa faces many other challenges, dealing with terrorism and extremism will not be easy, but it is critical to the success of the continent. “At the strategic or political level, the most serious concern relates to the events-driven nature of strategic objectives. As shocking as some of the terrorist-related activity in Africa has been recently, the overall strategic objective of a campaign against terrorism should be its dismantlement and reintegration of members of organisations,” says Abiola. “What we have seen in Africa is that strategic objectives are being driven or altered

by public and international outrage. By and large, African governments are at war with segments of their own societies, and only an extremely disciplined approach to countering terrorism will prevent violence and instability from becoming more widespread.” There are also serious questions around the success of operations against terrorism. There are questions about the extent to which tactical successes are translating into strategic ones, and even more worrisome is the extent to which tactical successes may be setting the stage for more serious instability. “There are valid concerns around how

much African countries are doing and whether it is enough,” says Devlin. Increased funding and a better understanding of the threat are imperative to ensure any level of success. “To really deal with terrorist threats, you need intelligent structures,” says Botha. “You need solid legislation, the ability to investigate and, more so, prosecute terrorists. There needs to be regional integration, policies that facilitate cooperation between countries. And of all of this has to be implemented. It cannot just be talked about at conferences and meetings.”

Image courtesy of Westport 1946

“There is a recognition of the need for a coordinated approach, where there is a real understanding of the threats and better sharing of information.”

People protest against Boko Haram abducting nearly 300 schoolgirls.

www.nepad.org

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A RE YENG

OPERATING SMOOTHLY!

A Re Yeng buses in full operation for the inception phase service.

Bus operations continue to run smoothly almost three months after the successful launch of the City of Tshwane’s lifestyle-changing transport system, A Re Yeng.

he development of A Re Yeng is intended to transform the public transport system in the City of Tshwane through the provision of a highquality and affordable public transport system, in line with the National Policy Transport Strategy of 2007. The entire A Re Yeng route will extend from Kopanong in Soshanguve, via Rainbow Junction through the CBD and continue to Menlyn, with a branch line to Hatfield and lastly to Mamelodi. A Re Yeng was launched on 14 November 2014 at an event attended by the Premier of Gauteng, David Makhura; Gauteng MEC for Roads and Transport, Ismail Vadi; and Executive Mayor of Tshwane, Councillor Kgosientso Ramokgopa, together with members of the Mayoral Committee and other stakeholders.

www.nepadbusinessfoundation.org

(L-R) MEC for Sports, Recreation, Arts and Culture, Cllr Nozipho Makeke. Executive Mayor of Tshwane, Cllr Kgosientso Ramokgopa; Gauteng Premier, David Makhura; and Gauteng MEC for Roads and Transport, Ismail Vadi, using the Connector card at Central Station.

The launch signalled the commencement of the first phase of bus operations from the corner of Nana Sita and Paul Kruger streets in the Pretoria CBD to Hatfield via Sunnyside. This line connects to the Gautrain station in Hatfield and has seven stations (two in the CBD, three in Sunnyside, one at Loftus Versfeld Stadium and one in Hatfield) that are situated in the dedicated roadways, with safe access from the adjacent sidewalks. In addition, there are four feeder routes linking up the trunk route to Unisa, Steve Biko Academic Hospital and the CBD.

A Re Yeng has two services:

• Trunk service: Buses run on dedicated lanes, with stations located in the central median of the road from the CBD to Hatfield. • Feeder service: Buses run on mixedtraffic lanes, bringing passengers to the trunk route.

A Re Yeng trunk and feeder services integrate with other modes of public transport services as follows: • Gautrain at Hatfield Station; • Metrorail at Mears and Devenish Station, Muckleneuk, as well as Loftus Versfeld, Rissik and Hartbeesspruit, Hatfield; and • Tshwane Bus Services and other bus services, minibus taxi and other roadbased public transport modes at various stops and stations in the Pretoria CBD.

A fleet of 30 A Re Yeng rigid buses is transporting commuters along the trunk and feeder routes for the inception phase. Prospective A Re Yeng commuters can use the bus by purchasing the Connector card for as little as R25. The cashless smart card is sold at the kiosks inside all seven A Re Yeng bus stations situated along the trunk route and at the Sammy Marks Customer Care Centre CBD (corner Madiba and Sisulu streets).

Benefits of using the Connector card include the following:

• Commuters will get R25 worth of free travel points when they present proof of identification when registering for the Connector card. • Lost cards can be traced to registered owners. • Balances on lost or stolen cards can be transferred to your new card. • Learners aged five to 18 travel on a flat rate of seven points, as long as they can prove that they are students. • Children under the age of five who travel with a paying adult travel for free. However, they must sit on the adult’s lap and are not allowed to take up a seat. • Pensioners over the age of 65 travel for free on off-peak hours between 08:00 and 15:30 from Monday to Friday, weekends and public holidays. Commuters can look forward to travelling in comfort. For their ease and convenience,

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Dawn of a new era: (L-R) Premier of Gauteng, David Makhura; City of Tshwane member of the Mayoral Committee for Transport and Roads, George Matjila; Gauteng MEC for Roads and Transport, Ismail Vadi; and the Executive Mayor of Tshwane, Cllr Kgosientso Ramokgopa, during the unveiling of the plaque that signalled the start of A Re Yeng inception phase operations.

all A Re Yeng buses are equipped with free Wi-Fi that is available to the public at all stations and in all trunk route buses. Any Wi-Fi enabled device, such as cellphones, tablets and laptops, can connect to the internet by selecting the Tshwane Free Wi-Fi network hotspot at a station or in the bus. Each device can download up to 250 MB of data per day. The Wi-Fi range is limited, due to the power capacity of the antenna involved. As a result, it will not be possible to access the Wi-Fi 1km from the station or bus. Users do not need to register for the free Wi-Fi. The username is “Tshwane Free WiFi” and no password is required. A Re Yeng buses are also equipped with full air-conditioning, low-floor technology which supports Euro V emission, hi-tech full air suspension and automatic transmission, complete with integrated hydrodynamic retarders – ensuring maximum passenger comfort, vehicle stability and a cashless automated electronic system that is fully monitored by camera and sensors. Close to 50 000 trips have been boarded on A Re Yeng from November 2014 to date by professional adults, students and scholars, as well as pensioners and learners.

• Line 2B: Hatfield to Menlyn This line of the A Re Yeng project is about 7 km long. It runs along Lynnwood Road from its intersection with University Road, proceeding east through Hillcrest to the right turn into Atterbury Road towards the Menlyn node. It then proceeds up to the intersection of Atterbury Road and Lois Street. Construction is expected to commence in the coming months. • Nana Sita to Pretoria Station The A Re Yeng team is currently busy with the public participation for this section. This section was previously earmarked for pedestrian traffic only, but has been proven to be a crucial section to the system. Connecting the A Re Yeng Station at Nana Sita Street with Pretoria Station creates an opportunity for bus and taxi commuters at Pretoria Station to switch onto the A Re Yeng system without having to travel on foot to Nana Sita Street. The affected business owners have been informed about this decision and public participation is ongoing. The A Re Yeng team aims to start with construction in this area by May 2015.

More road works are expected to commence this year at the following sections:

Future A Re Yeng routes: • Hatfield to Menlyn The route is about 7 km long and operates from Loftus Versfeld Station in Hatfield

along Lynnwood Road east through Hillcrest until turning right at Atterbury Road to proceeding to Menlyn. • Menlyn to Mamelodi The route will be 11 km long and will extend from Menlyn to Mamelodi’s Denneboom Station, via January Masilela Drive, Lynnwood Road and Simon Vermooten Road. • Mamelodi to Mahube Valley The route will be 9 km long and extend eastward via Tsamaya Road, terminating at Mahube Valley in the east of Mamelodi. • Wonderboom to Akasia The route will be 10 km long and will extend from Wonderboom Station in a westerly direction via Rachel de Beer Street and the R513 to Wonderpark Shopping Centre in Akasia. • Akasia to Soshanguve The route will be 13 km long and will extend from Akasia via Doreen Road to Rosslyn. It will terminate at Kopanong Metrorail Station in Soshanguve. Contact details Intergrated Rapid Public Transport Network Suite 201, InfoTech Building 1090 Arcadia Street, Hatfield Tel:+27 12 358 6269 Facebook: A Re Yeng Twitter: A_Re_ YENG Instagram: areyengsm

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ADVERTORIAL

POWERING UP FOR THE FUTURE

PDS POWER HELPS BUSINESS IN AFRICA KEEP THE LIGHTS ON As specialist providers of stand-by electricity and power-generating equipment, PDS Power is well equipped to help African businesses respond to an energy crisis. Director Jennifer Bezdek tells us more about how PDS Power creates effective energy solutions for its clients. the implementation of loadshedding and its long duration, demand for our UPS and generator solutions has definitely increased. The African business environment often requires customised, turnkey solutions that respond to rather unique operational scenarios. Can you tell us about interesting case studies or installations that PDS Power has undertaken in the last year? We pride ourselves in offering a full turnkey solution for supply, electrical reticulation, installation and civil work installations that include the UPS and generators we provide. We also have a full team of field technicians who maintain, service and repair the equipment.

PDS Power director Jennifer Bezdek

With South Africa experiencing loadshedding schedules and a worrying outlook on when it will end, more and more demand is being placed on companies to provide and implement backup power sources. How is PDS Power responding to the increased demand? Having been in business for the last 21 years, we have built up a large database of loyal clients that we support during times of loadshedding. Our relatively large team is able to deal with the demand, but there are times when the demand exceeds our capabilities. This is when we have to prioritise and deal with the demand as and when we can. With that in mind, have any new or unexpected challenges sprung up in recent months? Lack of stock and long lead times have impacted our business due to the sudden demand, similar to that of 2008. We normally forecast for the year ahead and manufacture products accordingly, but with www.nepadbusinessfoundation.org

availability of sunshine, it makes perfect sense for us to take advantage of solar power facilities. The implementation of solar plants will reduce the demand on Eskom, and give customers the future opportunity of selling power back to the grid. And lastly, you’ve been committed to PDS Power for more than 17 years. What’s been your career highlight so far? The highlight of my career has to be watching PDS Group grow from a small business into a multimillion rand company and multi national organisation.

Tell us more about your solar-powered range of energy solutions. In 2014, we introduced our solar inverter range of products, which can be installed in a stand-alone configuration. These units are solar compatible and, should the client want to at a later stage, solar panels can be connected to allow the client to get off the grid. The client is able to purchase and add panels as and when they wish. PDS Power puts a lot of emphasis on providing after-sales service, including operating a 24/7 support service. Can you tell us more about this level of service and how your clients have responded to it? Because our clients’ businesses are usually quite critical in nature, we’ve always paid special attention to our 24/7 aftersales service. We operate using service level agreements that cater to our clients’ specific needs and provide energy solutions to a large mission-critical market sector, including banking, mining, telecommunications and medical companies to mention a few. Media reports tell us that two new solar power plants are being planned for construction in the Northern Cape, and there are also talks of extending the country’s nuclear power programme. Do you feel that alternative energy sources are a good way to go for South Africa? Absolutely. With the increase in demand for power in South Africa and the abundant

Contact Details 275 Granville Avenue North Robertville Ext. 10, Roodepoort Tel.: +27 11 472 0669 F: +27 11 472 6008 Email: Jenny@pdspower.co.za sales@pdspower.co.za www.pdspower.co.za Find us on Facebook

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EXPORT CREDIT INSURANCE CORPORATION EXPORTER PORT OF CALL ES

How does ECIC weigh up short-term gains and long-term benefits when granting cover to South African exporters? We set criteria, the first being to check if the exporter uses 50% or more South African-manufactured goods. This ensures that the increase in SA’s manufacturing base translates to economic growth. We work closely with major banks in South Africa and foreign banks registered to operate in SA. We’ll cover a loan provided to an exporter for political and commercial risk for eventualities that could lead to non-payment. The bulk of projects we provide insurance cover for are presently in the US$20m to US$500 million range, and we can go beyond that threshold on a case-to-case basis in the interest of the SA exporter and our economy. As South Africa has a large SME base we wish to support, we will also provide cover for exports in the US$5m to US$20m range in support of small and medium-scale transactions, and play a significant role in propelling the SME sector. These ranges are not fixed, but could be adjusted to suit changing circumstances.

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ECIC

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rguably, few organisations are better placed to give insights into the African economy than the Export Credit Insurance Corporation of South Africa SOC Ltd (ECIC), which backs loan funding of capital projects on the continent and beyond. ECIC provides political and commercial risk insurance against risks associated with investments and loan finance for capital goods and services projects in foreign countries in sectors related to infrastructure, mining and energy, to mention a few. We spoke to the chief executive officer of ECIC, Kutoane Kutoane.

Tell us more about your risk cover. Broadly speaking, we cover political risks (up to 100%) such as confiscation of plants and equipment, nationalisation of assets, currency non-transferability or political issues such as gripping violence or civil war, including acts of terrorism cover on a facultative basis. Commercial risk cover (between 85% and 100%, depending on our assessment of unique project requirements) protects exporters for risks such as breach of contract and protracted default by the buyer due to changing commercial conditions in the country of destination.

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The Export Credit Insurance Corporation is taking a more proactive role by helping local exporters source cheaper finance opportunities.

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to facilitate capital projects in key economic sectors in the following sectors: Mining pro Road and rail projects, Construction and civil engineering projects, Telecommunica Water supply and sanitation projects.

SIUNSU TH T R AR AN O UOU FS S NCC E C O E C ORR P O RATTI OIONNO O F PO RA

YOUR EXPORT RISK PARTNER Contact details

Have you found that the South African export industry requires more customised solutions or requests more flexible arrangements? We align ourselves with international ECAs (export credit agencies) and conduct stakeholder sessions with our exporters to find out what it is that we can do to make it easier for them to meet conditions, or if those conditions are even necessary. One of the changes we’ve made is to streamline our documentation to make it more comprehensible and user-friendly.

Block C7 & C8, Eco Origins Office Park 349 Witch Hazel Avenue, Highveld Ext 79 Centurion 0157 Tel: +27 12 471 3800 Fax: +27 12 471 3850 Email: info@ecic.co.za www.ecic.co.za

www.ecic.co.za

What is ECIC most hoping to contribute towards in 2015, especially in terms of economic growth for SA companies? Before, we depended on our wellestablished relationships with banks to bring customers to us. Now we are taking a more proactive role in mobilising exporters; we’re building a strong business development programme which will involve relationshipbuilding in the buyer countries to promote our offerings forming part of the entire South African export value proposition. To this end, we have adopted a strategy of actively identifying opportunities on the African continent i.e. large infrastructure contracts, and providing insurance on bonds, which will help exporters secure these types of contracts. Our role is to facilitate and to enable ease of entry and competiveness. To this end, we would be contributing positively to our National Development Plan (NDP), Industrial Policy Action Plan (IPAP) and National Export Strategy (NES). Kutoane Kutoane, CEO of ECIC.

www.nepadbusinessfoundation.org

ENABLING SOUTH AFRICAN EXPORTERS OF CAPITAL GOODS AND INVESTMENTS TO RISKY MARKETS IN AFRICA AND BEYOND.

for capital goods and services projects. Our expertise in the African continent and our appetite in risky markets will support funding through risk insurance to facilitate capital projects in key economic sectors in the following sectors: Mining projects, Energy related projects, Road and rail projects, Construction and civil engineering projects, Telecommunications infrastructure projects, Water supply and sanitation projects.

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ECIC

SIUNSU TH T R AR AN O UOU FS S NCC E C O E C ORR P O RATTI OIONNO O F PO RA

YOUR EXPORT RISK PARTNER www.ecic.co.za

REGIONAL INTEGRATION AND INFRASTRUCTURE

Realising Africa’s

real possibilities

Image courtesy of Shutterstock.com

Sceptics aside, there is much to celebrate about Africa right now, and its possibilities abound, writes Ajen Sita, chief executive of EY Africa.

frica’s rise over the past decade has been substantial. While sceptics still abound, and there are people who seek to debate the point, the evidence of Africa’s progress is irrefutable. Over this period, a critical mass of economies have grown at high and sustained rates – so much so that, despite the impact of the ongoing global economic situation, the size of the African economy has almost quadrupled since 2000. Forecasts indicate that many parts of the region will continue to experience relatively high growth rates, with a number of African economies predicted to remain among the fastest growing in the world for the foreseeable future. The sceptics will often point to the widespread perception that most of Africa’s growth has been driven by resources. Due to the volatile nature of commodity prices, an overdependency on a few key resources clearly raises questions about the sustainability of growth. The subtext of such scepticism is also often one tainted by negative historical beliefs about Africa as a conflict-ridden, politically unstable, www.nepadbusinessfoundation.org

hopelessly corrupt basket case. However, a far more positive story has emerged in the post-cold war and postapartheid era, one of significant economic, political and social reform; of a process of democratisation that has taken root across much of the continent; of ongoing improvement to the business environment; of exponential growth in trade and investment and of substantial improvement in quality of life. These fundamental improvements have provided a platform for robust economic growth in a large number of African economies. And despite perceptions to the contrary, we estimate that less than one-third of Africa’s growth has come from resources. The rest has come from a range of other sectors, including agriculture, manufacturing, construction and, in particular, services. For companies seeking to expand and

investors seeking higher returns, the African growth story is a compelling one. While most developed economies continue to struggle, Africa offers an exciting opportunity for investment and an alternative to the ultracompetitive Asian and other emerging markets. It is little surprise, therefore, that investor interest in Africa has been on the increase. Our 2014 Africa attractiveness report shows that perceptions of the continent’s relative attractiveness as an investment destination have improved dramatically over the past four years, while foreign direct investment projects to subSaharan Africa grew at a compound rate of 19.5% between 2007 and 2013. Looking forward: towards inclusive, sustainable growth There is, therefore, good reason to pause and celebrate the progress of a region that was

While most developed economies continue to struggle, Africa offers an exciting opportunity for investment and an alternative to the ultracompetitive Asian and other emerging markets.

THE OFFICIAL NEPAD YEARBOOK 2015

dismissed by The Economist at the beginning of the 2000s as “the hopeless continent”. That said, it is important, too, that we do not get caught up in a latter-day ‘gold rush’ mentality. Most African countries still have a long way to go to emulate Asia’s sustained growth path. In many respects, Africa is today at a point where many of the east Asian economies were in the 1970s, and the likes of India, Mexico and Turkey were in the 1980s. Looking forward over the next decade and beyond, EY’s scenario analysis suggests that a success story for Africa will be one that leads us on an inclusive, sustainable growth path; one in which economic growth remains robust but with a far greater emphasis on enterprise development, job creation and human welfare.

A success story for Africa will be one that leads us on an inclusive, sustainable growth path; one in which economic growth remains robust but with a far greater emphasis on enterprise development, job creation and human welfare. It is clear that the potential exists for us to be part of an African future that would have been virtually unimaginable a generation ago. The reality, though, is that this future is neither inevitable nor will it happen without active participation and commitment from multiple stakeholders. As a large, global multinational, strongly committed to Africa, we are particularly focused on the role and responsibility of business in helping to realise the possibilities for inclusive, sustainable growth on the continent.

Besides investing in our own growth in Africa, part of our commitment has been to leverage our brand and global reach to promote the African investment agenda. With our flagship Africa attractiveness survey, we have been among those at the forefront of highlighting the African growth narrative. Realising the possibilities: five priorities for action Underpinning this year’s EY Strategic Growth Forum Africa are the five priorities that we believe are going to be the most critical drivers of a successful African future: 1. Embracing shared value: The central premise behind creating shared value is that the competitiveness of a company and the health of the communities and economy around it are mutually dependent. It is a fundamental business philosophy that recognises that profit and purpose can coexist and be mutually reinforcing. A philosophy of shared value should underpin the core purpose as an organisation – building a better working world – a working world with increased trust and confidence in business and capital markets; the development of talent in all its forms; greater collaboration across private, public and social sectors; and inclusive, sustainable growth at its heart – a purpose that is more relevant in the African context than ever before. 2. Promoting partnerships: The relationship between government and business across many parts of the continent is not always as engaging and productive as it could and should be. Too often business is viewed as part of the problem. In contrast, government and business, both local and international, need to become partners in embracing a philosophy of shared value and driving a common agenda of inclusive, sustainable growth. Partnership, cooperation and collaboration across the private, public and social sectors could be a powerful force for transformative change and growth. 3. Fostering entrepreneurship: Entrepreneurs provide one of the main engines of growth in any healthy

economy. They act as vital agents of change by developing new products and services, implementing more efficient production methods and creating new business models and industries. Perhaps most importantly, small and mediumsized enterprises will be the main drivers of the job creation required to realise inclusive, sustainable growth. For organisations genuinely committed to shared value and collaborative partnerships, the promotion of local content and enterprise development should be a key business priority. 4. Accelerating regional integration: With the shifting dynamics in the global economy, Africans have a unique opportunity to break the structural constraints that have long marginalised the continent. This will, however, only be achieved by driving greater regional coherence from the current patchwork quilt of 55 sovereign states. Regional integration and stronger regional institutions (such as the African Union and regional economic communities) are key to promoting greater levels of regional investment and trade, because this would make it much easier and more efficient to conduct cross-border business, and would create markets with greater critical mass, coherence and density of economic activity. 5. Bridging the infrastructure gap: Ultimately, though, regional integration will be enabled by sufficient investment in infrastructure – road networks, electricity access, telecommunications and trade infrastructure (such as ports, highway corridors and railroads) – to physically connect markets, reduce the cost of delivered goods, facilitate the mobility of people and products, remove productivity constraints and enhance the overall competitiveness of the region. www.nepad.org

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CREDIT GUARANTEE INSURANCE CORPORATION OF AFRICA LIMITED Credit Guarantee Insurance Corporation (CGIC) is a South African underwriting company that has been in operation for 58 years, and in that time fully established itself as a major player in the trade credit insurance industry in Africa. Senior manager (Africa Trade Credit), Justin Jacobs, gives insight into the largest, most experienced and professional credit insurer on the African continent. Products

CGIC boasts two of the most prestigious insurance companies in South Africa as shareholders; Mutual and Federal, which

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holds a majority around 52%, and Santam with just over 33%. Catering for both large corporates and SMMEs (small to medium businesses), CGIC provides export trade credit insurance, domestic trade credit insurance, bonds and surety and a variety of other services to its clients. For businesses that sell services/products on credit, cash flow and continued income are vitally important as they ensure effective operations and the sustainability of the business. When that is threatened by lack of payment and when bad debts accumulate, it could mean the end of a business. That’s where CGIC comes in with its range of products that insure transactions against potential payment defaults or the insolvency of customers. To the SMME sector that forms a very large part of its business, CGIC provides much-needed assistance for small businesses when it comes to getting benefits such as overdraft facilities from financial institutions. The bonds and surety division offers various surety products. Amongst them are construction guarantees. The purpose of these is to protect the employer against nonperformance by the contractor. They provide protection against an increased cost of completion of the contract as a result of the contractor’s default. The underlying risk covered is nonperformance by the contractor of quality of works, completion of the works and time for completion, resulting in a financial loss to the employer in engaging a new contractor to complete the project. Bonding is also known as ‘surety’.

Future plans

Over and above the aforementioned major shareholders, CGIC has a large international partner in Atradius, the second-largest trade credit insurer in the world, based in Amsterdam. This partnership has resulted in CGIC gaining valued information concerning international markets that is beneficial to its local clients, and Atradius’s interest in Africa could potentially mean more business for CGIC. In South Africa, CGIC owns more than 70% market share and is making headway with its plans to expand into the rest of Africa. Looking primarily at the SADC region, CGIC will be looking to assist companies in those countries, which will in turn help to expand trade in the region. Currently, CGIC has launched in Namibia in partnership with Old Mutual and Santam. Research into Botswana has started, and the same strategies adopted in Namibia will be implemented there.

REGIONAL INTEGRATION AND INFRASTRUCTURE

Healthy lessons

learnt

Image courtesy of Shutterstock.com

from Ebola

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THE OFFICIAL NEPAD YEARBOOK 2015

The world stopped and stared at Africa when the Ebola virus began its killing spree, but it also shone a bright light on a much bigger problem, writes Liesl Venter.

ealthcare systems in Africa are fragile. And never has this been clearer than with the outbreak of Ebola in West Africa in 2014. As the epidemic wreaked havoc in countries such as Sierra Leone, Liberia and Guinea, it became very clear very quickly that there was little capacity to deal with the crisis. “And that in itself was a very valuable lesson,” says Jens Pedersen, Medecins Sans Frontieres (MSF) South Africa’s humanitarian affairs advisor. “What we learnt from Ebola is that healthcare systems are weak and vulnerable.” It is a message reiterated by former United Kingdom prime minister Tony Blair during a recent visit to Africa. “Ebola hit Africa hard, and there is no denying that the response to it was too slow. What has come from that is the very real realisation by governments that they have to deal with health, and that it has to move to the top of the priority list. The lessons from Ebola – the need for strong health systems, well-trained and skilled staff on the ground – must and will be applied to healthcare systems across the continent.” While Ebola alone could easily be enough reason to panic, it is only the tip of the iceberg. Health in Africa faces far greater problems. “Africa bears the world’s heaviest disease burden,” says Anuschka Coovadia, head of healthcare markets at medical technology firm KPG Africa, “driven by the pervasively high prevalence of diseases such as HIV/Aids, tuberculosis and malaria.” Only around 11% of the world’s population live in Africa, yet about 49% of maternal deaths occur in Africa. At least 50% of the deaths of children under the age of five years are in Africa. “This is but a small reflection of the amount of work we have to do,” says Dr Themba Lebogang Moeti, CEO of the Health Systems Trust. “There is a disproportionate burden of mortality that we have to deal with, and health sectors across the continent face some significant challenges in times when domestic resources are low and the priority list long.”

“Health does not stand in isolation. We have to also address the root causes of the social challenges that we face.” According to Coovadia, while there have been significant strides forward in the healthcare sector, the continent is still searching for robust, reliable and relevant systems, which provide affordable, highquality healthcare for all. “And while we are finding our way, our solutions are being slowly and deliberately fashioned out of our unique, distinct and complex sets of needs and challenges.” Out-of-pocket spending remains a problem, often leading to financial devastation for those entering the system, while there are still large areas of the continent where people are not part of a health system, meaning no treatment or care. Changing the environment and dealing with the challenges is a mammoth task on its own but the picture is more complex. “There is a very definite increase in non-communicable diseases on the continent,” says Dr Sarah Louise Barber of the World Health Organization. “Diabetes and cardiovascular conditions are increasing in prevalence and bring new challenges to an already burdened system.” The need for more investment in healthcare is a given, says Mohga Kamal-Yanni, senior health and HIV policy advisor for Oxfam. “At the current rate, it will take decades to achieve universal health coverage. Governments are simply not spending enough, and there has to be concrete plans drawn up to ensure that at least 15% of government spending is on health.” A total of 33 countries in Africa are spending less than US$60 capita per person per year on health. There is an estimated US$31 billion per year gap in spending on the continent. “The funds are simply not there in many cases,” says Barber. There are no simple solutions, says Peter Mehlape, director of www.nepad.org

REGIONAL INTEGRATION AND INFRASTRUCTURE

future healthcare professionals. According to Barber, there needs to be a fundamental change in the approach to healthcare. “There has to be a move towards better systems where there is universal healthcare coverage for Africa’s people.” This is, however, not an easy or simple change to bring about, and it does not come cheap.

“The kind of healthcare system we need is unlike any other in the world, and it is achievable.” Coovadia says the first step is moving away from expensive policies that are not implementable. The next step is the creation of consistent governance and regulatory frameworks where a patient-intrinsic approach is championed. “Africa is in the great position that it can tap into solutions implemented across the world and we can leapfrog, bringing best practice to the continent. The kind of healthcare system we need is unlike any other in the world, and it is achievable.” Mehlape says it is essential that

Image courtesy of Sergey Uryadnikov/Shutterstock.com

global health for the Europe, Middle East and Africa region for medical technology company Becton Dickinson & Comp. “The healthcare challenges are complex and exist in a resource-constrained setting. Functioning health systems don’t always exist, as there are fundamental limitations in funding, staffing, training and other manifestations.” Mehlape says African countries need to implement the ‘three P’ approach – people, partnerships and products. “Africa needs the partnerships between the role players, including the public and private sectors, NGOs and civil society. No one organisation is going to drive the change required. Then you need the people to implement the plans developed by partnerships and you need the necessary products – the state-of-the-art medical technologies and services – to treat disease.” Coovadia says lack of healthcare policy is not the problem. “There is an abundance of policies at various levels and across countries and regions – the actual delivery and implementation is problematic.” This is because there is a lack of adequate healthcare infrastructure, and inconsistent and incomplete regulatory and governance frameworks compound the problem. Another major concern is resources. There is a dire shortage of doctors and nurses, as well as a woefully insufficient pipeline of

Signage in Congo informing visitors that it is an Ebola-infected area.

www.nepadbusinessfoundation.org

healthcare capacity is created that will allow improved quality care. And, says Moeti, Africa needs to look at the sources of the problems. “Health does not stand in isolation. We have to also address the root causes of the social challenges that we face.” He says it is just as important that health systems incorporate governance and accountability. “There are many efficiencies required to make the system work, but to speed up delivery we have to ensure that we are working towards the same goals; that there are strong frameworks and policies in place to guide us; that we reduce the leakage of funds and put accountability processes in place.” There is agreement that the next decade will be critical for healthcare on the continent. “It is essential to tackle health from an individual country perspective first and foremost. The aim is to implement systems where an entire population has access to a package of services and no one goes into poverty to pay for the spending on it. There have been improvements in some countries, while others are definitely struggling more and have even lost ground – Sierra Leone is one such case.” Failure is not an option, says Kamal-Yanni. “Health is a priority. After all, without healthy people, you have nothing.”

ATNS – ensuring safer African skies through expert air traffic navigation services Who we are

Our achievements

Air Traffic and Navigation Services SOC Limited (ATNS) provides air traffic, navigation, training and associated services within South Africa. ATNS is responsible for Air Traffic Control throughout South Africa and a large part of the Southern Indian and Atlantic Ocean, comprising approximately 10% of the world’s airspace. ATNS operates from nine ACSA and 12 other aerodromes. As a globally competitive employer of choice, ATNS is committed to diversity and has achieved ranking within the top 10 companies in South Africa with regards to female representation at executive levels.

From our founding in 1993 ATNS has improved staff training, delivered on numerous capital investment projects aimed at enhancing service delivery, instituted well-researched quality management systems, participated in international operational benchmarking, successfully managed costs, initiated activity-based costing and increased revenue streams from non-core business to name a few.

What we offer

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A significant milestone was ATNS’s award, alongside its ASIOACG partners, as the Best Service Provider at Jane’s annual ATC Awards Ceremony, held in Spain in 2014. Not only that but our Aviation Training Academy has been awarded the IATA World Regional Training Partner Award in 2011, 2012 and 2013.

Airspace Design Billing and Collections Management Training Engineering and Technical Services Flight Procedure Design and Cartography WGS-84 Surveying and Obstacle Evaluation Automated Safety Managements System (XTRAX) Communication Navigation and Surveillance System Central Aeronautical Database (AIS to AIM Solution)

Get in touch Contact ATNS as the leading provider of air navigation services for all your requirements – call us on +27 11 607 1000 or email us at marketing@atns.co.za. You can also browse our website at atns.com.

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CSI GROUP

DELIVERING A GUARANTEED CUSTOMER SERVICE EVERYTIME CSI Group was formed in 1993 to represent CTI International Technology throughout Sub-Sahara Africa. Since then CSI Group has diversified into four main businesses, in which various industries and sectors of the business and commercial world are explored and developed. These four main branches are: CSI Mining started 23 years ago as a product supplier (UNICELLS) and has diversified and evolved and grown into a full solution provider. While the business’ core offering is designing and manufacturing equipment for the mining sector, it also provides full service maintenance contracts and long-term onsite contracts that are utility oriented services for both the Government and Private sector. It has partnered with strategic likeminded companies involved in similar areas or with complementary products to provide a holistic/ comprehensive offering for the mining sector. CSI Mining has engaged cutting edge technologies that not only provide and save energy but are also environmentally friendly with regards to treatment of toxic waste for the communities they service. CSI Energy was incorporated into the CSI Group eight years ago to represent the Energy sector. It manufactures Flat Plate Solar Collectors; Flat Plate Tube Collectors; Heat Transfer Tubes and various other components around the Solar Thermal side of the business. It is proudly South African in the sourcing and installation of all its products and through its Solar Thermal collector-manufacturing company PowerzOn Solar Systems is one of the market leaders in Flat Plate Collectors with about 20% market share. Ukukhula Enterprise Development was formed to bring all the groups’ Enterprise Development activities under one umbrella. The CSI Group is passionate about Enterprise Development as it is inherent to its values, which are Excellence, Integrity, Passion and People. The first Enterprise Development project was within CSI Energy four years ago; it outsourced the assembly of solar panels to its previous employees. The Group provided them with extensive business coaching and cash flow management Enterprise Adam Samie, CEO of Liontraining. of Africa Insurance www.nepadbusinessfoundation.org

Development is extended to all operations, including those outside South Africa. Going forward, Ukukhula Enterprise Development will be used as a vehicle to get funding from Government to assist small business. CSI Infrastructure Started as a Project Management company within the construction sector and with the assistance of CSI Enterprise Development, Oikos has evolved into the facility management space, which is the cleaning and maintenance of buildings. Oikos is currently in all nine provinces and, through its ground breaking management systems, managed from its head office in Johannesburg Oikos is one of the success stories of CSI Enterprise Development. Its objective is to move into the rest of Africa The CSI Group has been in operation since the early nineties. With such a wealth of experience behind you, what do you feel is the primary challenge being faced by African businesses in this decade? CSI Mining typically plays in the Capital project phase of a mining establishment, so regional stability, government legislation around mining and mining rights, are key in decision making for funding. These elements tend to be a minefield in a lot of African countries, so we have to learn to manage these. For CSI Energy, the uptake of energy related business is slower as the African development position is not yet focused on energy efficiencies as it is on provision. Currently we are also finding that South Africa is valued for its innovative technology, quality and high standards however it is also viewed as being not as cost effective on logistics and price as its competitors from the East. Having said all that adapting to the way business is done in the rest of Africa without compromising the integrity of the CSI Group, has resulted in the Group being highly regarded by its clients and suppliers.

Being able to innovate in times of crisis or steep change is important for any business. But, as CSI Mining designs and manufactures top notch equipment for the mining sector and provides a wide range of corrosion-resistant solutions, in light of climate change and environmental shifts, how does CSI Mining respond to these ever-changing and sometimes unpredictable variables? CSI Mining has aligned its innovation to the evolving technological requirements of its clients and suppliers. The product lines encountered 18 years ago within CSI Mining are significantly more enhanced and diverse today as the company has evolved to shape the industry. Its technological objective is to become trendsetters focused on the longterm sustainability of its customer base. As a group we have developed revolutionary technology– for environmental waste, providing further access to beneficiation and keeping the water clean for the community. It’s an industry shaping technology! The consumption, saving and procurement of energy features is high on the agenda for every African business. Has CSI Energy found there to be an increased interest in the company’s green and renewable energy solutions during the past business year? There has been increased interest in our energy solutions due to the following threefold strategy from the Department of Energy: • The implementation of the legislation that makes it compulsory for every new build to have at least 15% of its solar water heating from renewable energy source. • Failing electric geyser in the market will be replaced with solar ready geysers • Rebate scheme will be upscaled and a local content sliding scale on the rebate will be applicable. The higher the local content the higher the rebate.

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It is said that the spirit of entrepreneurship is thriving in Africa. How does CSI Enterprise aim to assist small businesses throughout the next year and decade? Can you tell us more about the Ukukhula model? Ukukhula was formed to assist in accessing funding from Government. It will guarantee part of the funding or the full 50% for the smaller businesses. Ukukhula does not only access funding for small business but will also protect the rights of smaller businesses by being a part of the contract negotiations, thus ensuring the small businesses make sustainable profits. Ukukhula provides a nine-month comprehensive training programme and continual coaching after that period monthly and then quarterly. CSI Enterprise currently has a permanent office in the DRC and has started working with the communities. Through Oikos, CSI Infrastructure undertakes large facilities management programmes and implements some incredible office design ideas. Can you tell us about your top three projects from the past year, and anything you’re looking forward to project-wise? Oikos’s biggest customer currently is MTN. The contract has grown from managing two provinces to managing all nine provinces (660 buildings) in three years. Oikos is looking to extend to the MTN offices in the rest of Africa. Its other projects have

included the Department of Home Affairs and Southern Sun Hotels. Looking forward Oikos shall be focused on the small/medium businesses in South Africa and will be offering them tailor-made cost effective packages. Whilst facility management is still a relatively new concept locally, Oikos is growing and has entered the market at the right time. In the rest of Africa, Oikos has the CSI Group footprint as an added advantage; adding to that its management systems are all available online and provide real-time information, this system is unmatched so far. Embassies across Africa will be part of its target market in the coming years.

Contact details CSI Business Park, Cnr. Botha & Pretoria Road, Petit, Benoni, Gauteng Tel: +27 10 003 0127 Fax: +27 11 965 0187 Email: info@csiza.co.za

Lastly, as the CSI Group has a wide and varied group approach but specialises in service provision through its four primary departments, what do you feel are the most important aspects of creating a consolidated and service-focused product offering for African businesses? The most important aspects relate back to the Group’s values of Excellence, Integrity, Passion and People. These values will ensure the provision of high quality, innovative and competitive products and service. Integrity and accountability also play a huge part in the long-term sustainability of the CSI Group businesses within Africa. The Group shares in the drive and compassion for Africa and aims to see empowerment and sustainable projects beyond themselves for the communities they operate in. www.nepadbusinessfoundation.org

REGIONAL INTEGRATION AND INFRASTRUCTURE

Making resources count Dianna Games takes an in-depth look at Mozambique, a country in flux.

ozambique is at a crossroads. When one of the world’s largest discoveries of gas was found by international oil companies in the seas off the country’s palm-fringed coastline in 2010, it sparked an expectation that anything was possible for one of Africa’s poorest nations. And it should be. With an estimated US$50 billion of new investment in the country’s gas sector alone over the next decade, a new era awaits a country that has been better known for being a model recipient of donor aid. Although the size of the deposits off Mozambique mark the country for special attention, the situation in which it finds itself with regard to the management of resources is not unique. It is among many new African oil and gas producers lining up to challenge countries that are established in the game. Others include Tanzania, Uganda, Kenya, Madagascar, Liberia, Sierra Leone, Namibia and Malawi. This is also not the first time Mozambique will be dealing with significant investments. One of the first large projects in the country was the US$2 billion Mozal aluminium smelter in 2000. There have been many more megaprojects since then in mining, infrastructure and other sectors. It is also not the first gas to be discovered in the country. In the late 1990s, South Africa’s Sasol exploited onshore gas in southern Mozambique, transporting it to South Africa’s industrial heartland through a US$1.2 billion, 800 km gas pipeline. More recently, huge coal deposits www.nepadbusinessfoundation.org

were found in the Tete area, attracting international companies such as Vale and Rio Tinto to exploit them. Despite the strong socialist ideology that remains at the heart of the ruling Frelimo party, the government has become reasonably adept at managing large projects, using them to give investors confidence and show that the country is able to handle large projects.

The government hopes the gas boom will end its donor dependence and enable it to tackle pervasive poverty. It has not all gone smoothly. For example, projections of coal exports amounting to 50 million tons per year from the Tete area have not been realised because of a lack of efficient infrastructure to export large volumes of coal. Rio Tinto exited its US$4 billion Mozambican investment in 2014, selling for just US$50 million, while Vale has sold 15% of its coal operation. But the gas, and huge linked projects to produce liquefied natural gas, are in a different league – and community expectations of benefits from this are high. A major challenge is how the government and multinational investors in this high-stakes sector will tread the fine line between profit and development.

The government has often been criticised by Mozambicans for its focus on megaprojects and linked incentives on the basis that there are too few links to the broader economy. This discounts the fact that thousands of jobs have been created through these projects – both temporary and permanent – and the companies have injected millions into the state coffers through the trickle-down of taxes and increased economic activity. But Mozambicans are right to be concerned. Despite high growth rates averaging 7% for a decade, the country remains one of Africa’s poorest, lying in the bottom 10 of 187 countries ranked by the United Nations Human Development Index in 2013. Gross domestic product (GDP) per capita in 2013 was just over US$600 – it has only doubled in a decade, despite the high growth rates. Most development and modernisation is in the cities, tourist centres and some of the towns near resources. The majority of people in this country of 25 million still survive on subsistence agriculture, fishing and informal businesses. Education levels are low and skills are in short supply across the board. The government hopes the gas boom will end its donor dependence and enable it to tackle pervasive poverty. In this regard, it has become more assertive about the benefits for locals from the commercial exploitation of natural resources. In addition to local content obligations for foreign investors, it has recently updated legislation regarding the oil and gas industry to maximise benefits from new gas finds and from minerals.

THE OFFICIAL NEPAD YEARBOOK 2015

It is doubtful that politicians can fulfil the Norwegian model’s commitment to revenue transparency, diversified long-term investment and public accountability. economy with a GDP of US$16 billion. The first gas is only expected to be exported after 2018, so there is time to work out the modalities for the companies involved. But the government is out of time. Mozambicans are impatient for their resource dividend and believe the state has been tardy in delivering it. The domestic private sector, too, is eager for some of the spoils that will devolve to them through empowerment directives and pressure to award contracts to local companies. Despite the dazzling amounts of investment coming Mozambique’s way, the country will need to work hard to avoid the ‘resource curse’ – or what is more accurately a

governance curse – which has afflicted other resource-rich nations in Africa and elsewhere. Africa’s new oil and gas producers are looking at models to help them avoid this. Nigeria has become the example of how not to do it, with Norway, one of the world’s biggest oil and gas producers, a popular model for successful state control of natural resources. Norway is advising Mozambican ministries on strategy and other issues. But factors that are critical to Norway’s success are missing in Mozambique and in other aspirant oil and gas producers in Africa – most importantly, the existence of strong democratic institutions. Despite political will to build successful oil states, it is doubtful that politicians can fulfil the model’s commitment to revenue transparency, diversified long-term investment and public accountability. There is no doubt that Mozambique is at an historic turning point. But at this critical juncture, its future depends on its ability to implement and manage its resource prospects and megaprojects more effectively. These need to contribute to the development of the country and create broad-based opportunities across the economy without making the terms of engagement too onerous for investors.

Image courtesy of Fortbridge

A new mining law requires between 5% and 25% local ownership. Similarly, in the gas sector, operators will also have to commit 25% of production to providing power for the domestic market. Companies exploring in Mozambique have to list on the tiny, illiquid Mozambique stock exchange, and foreign licence holders must explore for oil and gas in partnership with state energy utility Empresa Nacional de Hidrocarbonetos (ENH). The new fiscal regime will effectively undermine the profitability of multinational companies and may deter new investment as companies see their ownership progressively reduced, while the financial benefits are also diminished. The development of liquid natural gas facilities, necessary to develop an export market, is a point of contention. Companies believe they need to keep production costs down, particularly with oil prices low, by developing liquid natural gas facilities offshore, while the government wants them built onshore to create jobs, build technical skills and draw investment into supplementary services. It is understandable. A liquid natural gas facilities project can employ up to 15 000 people and draw investment of more than US$20 billion – a staggering figure for an

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The African continent is home to many international and local mining companies, all of which come with a vast array of individual needs that need to be fulfilled. From rock kicking to the production of beautiful gems that adorn the bodies of the rich and famous, there is a lot of technical work that goes on behind the scenes.

stablished in 1986 in Western Australia, MICROMINE is a leading provider of intuitive software solutions and services to the international mining sector. From capturing, managing, visualising and understanding data to controlling and reporting on mine production, MICROMINE has a solution perfectly suited to your operation’s needs. With more than 27 years’ experience in converting ideas into working solutions,

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this global giant has more than 20 offices worldwide. The South African office, which is ranked number three out of 20 in terms of sales, is part of a fully functioning global distribution and support network with local expertise. The company was founded by quantity surveyor, Graeme Tuder, whose goal was to produce intuitive solutions that were so userfriendly that they would enable semi-skilled individuals to produce accurate results. This goal turned the company into a valuable partner on a continent where skills are scarce. Additionally, all MICROMINE software is Windows 8-based and is available in multiple languages, including English, Russian, Turkish, Mandarin, Mongolian, Bahasa, Spanish and Portuguese. There are also plans to make the software available in French. MICROMINE is the only provider of software solutions that span the entire exploration and mining process, as shown by the range of solutions available:

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Mining Solutions • Pitram – the global leader in underground mine production and control systems Companies fortunate enough to utilise MICROMINE’s software solutions have access to real-time support, regardless of location, language and time zone. This is all made possible by the company’s extensive support network and ‘follow-the-sun’ support policy. No matter where you are in the world, a MICROMINE representative will always be available to manage your request or query, eliminating any potential for software downtime or reduced productivity. From local technical and functional support, product development and task tracing, you are covered! But MICROMINE is more than just a software solutions provider for established companies. The company is also involved in educating future generations

of engineers and geologists. MICROMINE runs University Licensing Programs. Through this initiative, MICROMINE supplies its software to leading academic institutions, providing students practical experience utilising solutions which are prevalent within real-world professional environments. To date, MICROMINE has provided the University of Stellenbosch with at least R4 million worth of software. Not only does this incredible initiative create a wealth of experienced and skilled local talent, it also reduces the need for international mining companies to send employees to Africa – thereby creating more employment opportunities for locals. With a strong understanding of the importance of R&D, MICROMINE realises that designing a general product is not good enough. The company has a robust Beta Testing Program which allows clients to experience new versions before their release. Members of the Beta Program are encouraged to provide their feedback so that MICROMINE’s solutions can continue to be developed according to clients’ needs and expectations.

As a result, the product growth strategies going forward will include: • continuing to invest a significant portion of annual revenue in research and Development programmes; • a roadmap for the development of each product; • a roadmap based on feedback from the market and customers; • developing versions of products for local markets – language, functionality, etc; • maintaining MICROMINE and Pitram market leadership in specific regions; and • continuing expansion into new rapidly growing mining centres.

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REGIONAL INTEGRATION AND INFRASTRUCTURE

Africaâ&#x20AC;&#x2122;s

double-edged swords Futurist Graeme Codrington considers the global forces that are both good and bad news for Africa, and the changes the continent needs to make.

istory will remember the era we live in as a transitional period. The digital age is dawning, as the industrial era shifts into the background alongside the agricultural era that went before it. As with previous historical transitions, we live in a time when the very structures of our societies are shifting, and the rules for success and failure in every part of our lives are being rewritten. This is both a scary and exciting time to live through. And it brings a unique set of challenges. These disruptive forces are nowhere more evident than in Africa. We see the potential for leapfrog improvements, but also the potential for people to be left behind. The challenge that faces Africa in the next few years is to grasp the opportunities that living in a transitional period of history affords, while mitigating the risks and threats that come with them.

Image courtesy of Shutterstock.com

Immense change is upon us. Deep, structural change is now the norm. And our near future is going to be very different from the world we grew up in.

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THE OFFICIAL NEPAD YEARBOOK 2015

Bill Gates’s ‘big bet’

In his annual letter in January 2015, Bill Gates laid out a vision for the next 15 years for the Bill & Melinda Gates Foundation and for the planet. He talked about a “big bet” for the world, stating that he believed it was clear that “the lives of people in poor countries will improve faster in the next 15 years than at any other time in history”. “And their lives will improve more than anyone else’s,” he said. He pledged the resources of his foundation to help make this hope a reality for the developing world. Gates is right. There is clear evidence in the macro-disruptive forces that are shaping the world that this current transitional moment in history has reached a tipping point. Immense change is upon us. Deep, structural change is now the norm. And our near future is going to be very different from the world we grew up in. The danger for Africa is that each of the disruptive forces at play in the world right now has the potential for both good and harm for our great continent. The choices we make in the next five to 10 years will lead us into very different futures – some gloriously bright and some depressingly dark. Now is the time for understanding, insight, bold leadership and clear decision-making. We want to choose the bright path. But we face dangerous doubleedged swords at every turn. Consider just three important examples of disruption, and examples of the double-edged swords they hold for Africa: 1. Technology: A supercomputer in every pocket and… at every job interview The single most disruptive force in the world at the moment is technology – especially digital technologies that put the power of a supercomputer into a smart device which fits into the palm of our hands. The unprecedented power and connection this provides is no longer available just to those who can afford the latest iPhone. Chinese and Korean cellphone manufacturers are now making fully functioning smartphones available for less than US$50. Add to that increasing supplies of free data, Wi-Fi

hotspots and connectivity and we’re about to change Africa forever. In his letter, Gates talked about the power of the education that can be delivered via these connected smart devices, as well as the access to mobile banking they will enable, as revolutionary forces for good. The rise of the virtual workforce is also in Africa’s favour, as companies around the world move towards micro-outsourcing tasks to an online tribe of workers through websites such as eLance and Freelancer. Geography is no longer a limitation to access to the global job market. That’s some of the good news. The bad news – the other edge to this powerful blade that’s cutting through history’s rules and the world’s established systems – is that those same computers have the potential to take over many jobs around the world. We’re entering an era of structural change in employment, similar to what happened on farms and in factories when we automated machines. Now we’re automating

The very structures of our societies are shifting, and the rules for success and failure in every part of our lives are being rewritten. routine administrative work, thinking and transactional jobs. The undereducated are going to find that there isn’t a lot of work available for them in the global workforce. Education and upskilling are therefore key, as is access to the global job market. Technology will both help and hurt us. We need to choose the path that leads to a brighter future. 2. Demographics: Healthier, longer lives with more consumers. And more mouths to feed Africa’s population is growing apace. It will slow down in the next few decades but we will still have the world’s youngest countries on average, together with far more older people, for a full century at least. There is good news in this demographic dividend – Africa will also remain the world’s largest potential consumer growth market and may be the only place in the world where investors can find doubledigit growth in the future. But the double-edged sword is that we need to feed, house and educate these young people – and keep them healthy and help them find jobs. The current economic systems and public policies in most African countries are not fit for this task.

3. A new green revolution – feeding a continent. But at what price? Back in the 1960s, an agricultural revolution increased production worldwide, but particularly in the developing world. The ‘green revolution’ has been credited with saving over a billion people from starvation. A new green revolution will be able to do this again in the coming decades, combined with improved medicine and cleaner manufacturing, dramatically improving health and living conditions for everyone. Africa will be able to feed itself, and change its US$50 billion annual food imports to exports. But we need to learn from India and some of their concerns after 50 years of the previous green revolution. These include the dangers of relying on genetically modified organism (GMO) seeds that are sterile, locking farmers into annual contracts with seed suppliers, massive requirements for water and fertilisers, long-term soil damage and the overuse of pesticides. India has also seen widespread unemployment among agricultural labourers in the rural areas, as farms are mechanised.

Making bold and future-focused choices

The future is in our hands, and the decisions we make in the next few years will shape the remainder of this century in powerful ways. It is, therefore, incumbent on those who are in a position to make choices right now to do so with due care and regard for the future and for the implications of the double-edged swords we face. We need more nuanced public debate about the pros and cons of public policies. We need leaders who are prepared to work to create new systems and not merely to enrich themselves and protect the systems that brought them to power. We need partnerships with companies and governments around the world that ensure we enjoy the benefits of the disruptive forces and are not just hit by their negative consequences. All of this requires stronger leadership than is generally evidenced in Africa right now. We need leaders who look outwards and not just in. We need leaders who have a grasp of the changes taking place and who are not merely rooted in their local traditions and systems. And we need leaders who can take the people with them onto these new paths, inspiring and challenging us all with visions for a bright future. It is Africa’s time – but only if we choose the right paths. Graeme Codrington is a Johannesburg-based futurist and international board advisor. He is cofounder of the leadership development consultancy TomorrowToday Global.

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HUMAN DEVELOPMENT AND HUMAN CAPITAL MANAGEMENT

Creating a future

for war-affected children Children are the vulnerable pawns in conflicts all over Africa. But what happens to them once the fighting is over? By Helen Grange

n war-torn South Sudan, more than 1 million children have either been displaced, losing touch with their families, or have fled to neighbouring countries since fighting broke out in December 2013. Meanwhile, in the last year, more than 12 000 children were recruited as soldiers by armed forces on both sides of the conflict, according to the UN Children’s Fund (UNICEF). In Central African Republic, boys and girls as young as eight years have been recruited and used by all parties to take direct part in inter-ethnic and religious violence. And in the Democratic Republic of the Congo (DRC), the United Nations (UN) has discovered that children as young as 10 years old are being recruited and used as combatants in multiple armed groups in the eastern part of the country, with girls reportedly used as sex slaves or subjected to sexual violence.

Image courtesy of UNICEF

“The aim is to bring back normality and give them a safe place to be children again.” This is a glimpse of the reality for countless children in troubled regions of Africa – a reality that should they survive childhood, they are likely to face a future of poverty, joblessness, alienation from family, cyclical violence, addiction and hopelessness. The challenges for organisations intervening on behalf of these children are monumental. Liberating child soldiers in South Sudan is a priority, and this is where UNICEF’s work is focused. By February 2015, in one of the largest child demobilisations in history, over 3 000 children between the ages of seven and 11 years were released from the South Sudan www.nepadbusinessfoundation.org

Democratic Army Cobra Faction by UNICEF and partners. Some of these children had been fighting for up to four years and many had never attended school. “These children have been forced to do and see things that no child should ever experience,” says UNICEF South Sudan representative, Jonathan Veitch. The organisation is trying to reunite these children with their families and reintegrate them into their communities. “It’s a tremendous uphill battle. We register them first, then use smartphones to take pictures to distribute. But it’s difficult for parents to recognise a child they haven’t seen for years, a child who is now a teenager,” says Sarah Crowe, UNICEF’s crisis communications chief. Following reintegration, education and economic support is critical to secure the future of these children, and this is where organisations such as War Child and Save the Children – both based in the United Kingdom (UK) – pitch in. “Children who are separated from their parents or aren’t in a family environment are at a high risk of abuse, dropping out of school or never enrolling, exploitation, early marriage, teen pregnancy and serious health problems. Many of these children end up on the streets, or in markets, using these as a base where little groups of them live,” explains Priscillia Tisserand, child protection advisor in South Sudan for Save the Children, which is active in Sudan, Ethiopia, Kenya and Uganda. Save the Children finds foster families who can provide care for these children, and visits regularly to ensure their needs are being met. It also encourages psychosocial activities “to bring back a routine into the lives and release profound stress”, says Tisserand. “The aim is to bring back normality and give them a safe place to be children again,” she says. War Child is particularly active in

northern Uganda, where it is thought that more than 60 000 children became soldiers during the 20-year insurgency by the rebel group Lord’s Resistance Army. Since the fighting stopped in 2006, relative security has returned, but the dropout rate at schools is very high, due to poverty and early marriage, or because children are needed at home. Only 43% of boys and 27% of girls complete primary school, according to War Child, while four consecutive years of drought has also left thousands of children suffering from malnutrition. “War Child has identified 2 000 of the poorest and most marginalised children, including orphans and those living with HIV, and we are providing training and grants to parents, siblings and, in some cases, the children themselves, to set up their own income-generating enterprises, like market stalls, beekeeping, tailoring, livestock and agriculture production,” says War Child’s Gemma Cropper. War Child also trains teachers, and organises “child rights clubs” to empower students to share their troubles and fears. “We also have a bi weekly radio show broadcast by local children to raise awareness in the region about children’s rights, like the right to go to school and the right to live free of violence or early marriage,” says Cropper. In Kinshasa in the DRC, War Child provides medical and emotional care to street children, running a night ambulance that looks for vulnerable youngsters in need of care. “The social workers on the ambulance can refer young women to our drop-in centre, a sanctuary from the dangers of the streets, where girls can begin to build a safer, independent life,” says Cropper. After their basic needs are met, Africa’s children of war need education or skills training if they are to have any hope of a better future. Thus, most organisations

THE OFFICIAL NEPAD YEARBOOK 2015

Following reintegration, education and economic support are critical to secure the future of these children. dealing with these children provide education and skills training in some form. These have to run simultaneously with awareness campaigns within the community, to guard against children lapsing back into danger once they are reintegrated. As Unicef explains: â&#x20AC;&#x153;Support [in Sudan] will extend to local communities to prevent and reduce discrimination against the returning children and also to prevent possible re-recruitment.â&#x20AC;? The cost of these interventions are significant. UNICEF estimates that the release and reintegration of each Sudanese child is approximately US$2 330 for 24 months. Donors include the IKEA Foundation, the European Union and the German and UK national committees for UNICEF, but the organisation needs an additional US$10 million in support. Some might balk at this, but the worthiness of the work that these organisations do is best expressed through the successes of the children themselves. In Kinshasa, for instance, child soldiers William, Betty and Samson had never used a computer. Today they are teaching information technology skills to other people in their community, empowering not only themselves but others too.

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The African Management Services Company (AMSCO) is a pan-African organisation that provides integrated human capital development solutions to private and state-run businesses across subSaharan Africa.

MSCO has evolved to become the leading advisory solutions provider, working to address the issue of market systems and capacity failures through management and skills development. CEO Paul Malherbe gives us more insight into subSaharan Africa’s biggest and most ambitious human capital development company. The spirit of entrepreneurship is said to be alive and thriving in Africa. Have you noticed an increased interest in pursuing entrepreneurship and setting up small businesses in the past year? Entrepreneurs are crucial because they kick start the economy, but because of the 2008 financial crisis, people are still exercising caution when entering the market; fear still exists about business prosperity due to the post-crisis financial environment. This is also due to infrastructure failures such as power supply. But that being said, if you look at the economic growth of subSaharan Africa and realising the SMEs are catalysts for economic activity, one is encouraged by the level of activity initiated by entrepreneurs. AMSCO CEO Paul Malherbe

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Following on from that, which of your services have been the most in demand in the past year? There is a huge demand for training and development; African enterprises are hungry for skills development. Our newest service, known as Development and Advisory Solutions, aims to bring together key role players. This service brings together development organisations (DFIs), private sector, government and others so that we structure and implement sectorial or thematic programmes that close skills gaps on a much broader scale. Because you provide assistance to African businesses, you must be familiar with the challenges faced by small companies on the continent. In your opinion, what’s the most common challenge faced by the majority of African businesses? I think that there are four issues that will unlock business opportunities for entrepreneurs. Two of them are within their control: financial capital and human capital – better skilled entrepreneurs will be able to grow their businesses and have a better chance at attracting growth capital. The second two, which are not in their control, are infrastructure and governance, which have a huge external impact on the business environment and its success. Could you tell us a little more about your Growth Oriented Women Enterprise Programme (GOWE)? GOWE aims to enhance women entrepreneurs’ management and business skills and increase their participation in business by providing basic business training – the training focuses on elementary training in some instances (Improve your business) and broader business training (Expand your business) that equip the female entrepreneurs with all the skills needed to effectively run their businesses. The saying is: “you don’t know what you don’t know, until you know what you don’t know”, so the moment the female entrepreneurs engage with the training, the whole trajectory of their businesses improves. This programme is currently being run in Kenya with huge success and has had a significant impact in many female-owned businesses. The AMSCO Capacity Development programmes focus on providing tailormade training and development courses that respond to both client and market

needs. Speaking in general terms, what kind of training is most highly demanded? We have seen a huge demand for training in financial management, front-of-house skills, technical skills and customer service. Monitoring and evaluation (M&E) is a critical component for enabling and securing business and project success. Does AMSCO’s M&E Programme look towards not only providing M&E services to supported projects but also towards empowering organisations to carry out this important function internally too? Entrepreneurs now better understand the philosophy of ‘profit, people, planet’ and that business goes beyond just being profitable. This has led to a bigger demand to understand and measure – at many levels - the environmental impact of the business. The shift is occurring that it is no longer large corporates and development institutions, but normal SMEs that are increasingly looking at their impact on their community and the environment. Does AMSCO intend on adding to its service portfolio in the next year? If not, what will your organisational focus rest on for 2015? There have been a lot of changes in AMSCO as we have realigned our service offering over the past two years to address the needs in the market, using our 26 years’ experience in developing African human capital – our restructured operational teams are better suited to quickly and efficiently work with enterprises and broader role players. Equally important to our strategy is the development of our new programme offerings, such as the Zambia Business in Development Facility (ZBIDF), to catalyse and scale cross-sector partnerships in businesses. We anticipate to focus on closing the gap between human capital and financial capital needs for enterprises.

Contact details 33 Fricker Road, Illovo Boulevard, Illovo Tel: +27 11 219 5000 Fax: +27 11 268 0088 Email: info@amscobv.com

Building Human Capital for a Sustainable Africa

Africa is the second fastest growing continent in the world after Asia. However, businesses, particularly Small and Medium Enterprises (SMEs) need to develop and optimise their skills to sustain this growth. The African Management Services Company (AMSCO) knows Africa like the back of its hand. For over a quarter of a century, we helped develop over 1000 private and public enterprises in 25 sub-Saharan African countries to become competitive, profitable and sustainable. We achieve this by providing integrated human capital development

solutions that include: • • •

Talent Management – Recruitment and temporary placement of international professionals in local companies Training & development services Implementation of Development & Advisory Solutions in partnership with various partners

AMSCO is a trusted advisory solutions driven company that works with private sector, industry associations and governments in many initiatives across various sectors. Contact us to establish how we can collaborate for a better Africa.

AMSCO was established in 1989 by the International Finance Corporation (IFC), the United Nations Development Program (UNDP) and the African Development Bank.

Visit www amsco.org. Tel: +2711 219 5000 (South Africa); Tel: +260 211 295 943 (Zambia); Tel: +254 020 244 1500 (Kenya); Tel: +233 302 702 1240 (Ghana); Tel: +234 1 632 0820 (Nigeria); Tel: +237 33 42 33 11 (Cameroon)

HUMAN DEVELOPMENT AND HUMAN CAPITAL MANAGEMENT

Paying the price

for progress

As the economic structure of African countries changes, it has to impact on remunerating the workforce. Malcolm Pannell considers this phenomenon.

he harsh reality is that most organisations in Africa are faced with a need to grow their businesses, sometimes rapidly, but most essentially to ensure they are succeeding. Meanwhile, they are under pressure to reduce costs. This means they need to increase capacity and productivity at the same time. However, many existing remuneration structures are preventing this from happening. Africa is going through a period of significant and fast-paced change, specifically with respect to the structure of its economies. The tendency to be reliant on extractive industries is becoming more balanced by the commercial and service sectors. This, in turn, is driving the creation of a significant middle

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class. Greater proportions of the population are becoming cash-based and urbanisation continues at a rapid pace, while solid and sustained growth rates are opening up new opportunities. The prospects for producers of consumer goods, retailers, bankers and cellular companies, among others, have enticed many well-known brands to invest in these markets. It has also meant the development and professionalisation of local organisations seeking to compete and enjoy a share of these expanding markets. Africa has suffered from a lack of skills for many years. Even where good education has been available, the opportunities were apparently absent, and many well-educated

and skilled Africans have sought a future outside the continent. The use of expatriates has been a common approach to bridging the gap, but this is proving to be a difficult solution to sustain and expand. The changing structure of many of Africaâ&#x20AC;&#x2122;s economies is demanding large numbers of skilled employees in technical, specialist and professional ranks, not to mention leadership positions. In an ocean of unemployment, severe skills shortages are

Payrolls with any discontinuity are difficult to manage.

THE OFFICIAL NEPAD YEARBOOK 2015

effectiveness that is of greater concern. As many of these organisations are discovering, payrolls with any discontinuity are difficult to manage. The requirement to progress talent through the organisation is a pressing concern; however, the threesegment nature of remuneration structures is a barrier to this happening easily. The gap in positions or opportunities in the mid-level segment makes it difficult for organisations to implement change – one of the key requirements of the current scenario. For those fortunate enough to have broken through the gap and entered the top tier of the payroll, the rewards are significant. But the pressure to accommodate these people has been severe and, by and large, the senior management ranks are overlayered, which leads to complications around accountability and effectiveness. For many organisations caught in this

which provides little incentive to increase productivity. There is a ‘gap’ at middle management and specialist levels, which are typically understaffed, and this makes the implementation of change very difficult for organisations. Finally, there is a large step up to the senior management and professional ranks, which enjoy a steep or highly differentiated pay curve, as organisations scrap over rare talent. The lack of performance management and a reliance on a plethora of fringe benefits makes it more difficult than usual to align costs with value creation. Inequality indexes give an indication of the impact of these structures on the national distribution of wealth, but it is their effect on organisational

dynamic, the challenge is to restructure around the imperatives of the operating model, while at the same time reordering their remuneration to a more continuous characteristic – one that facilitates the attraction and development of talent and increases productivity and capacity. Hay Group studies and client engagements have addressed specific remuneration issues that need resolution to enable these changes to take place. The results of these are, among others, a rationalisation of benefits, continuous pay structures modelled around job families, and implementation of performance management systems that drive sustained value creation over time. It is a demanding process and one which, if not done correctly,

becomes painful and unaffordable. If the challenge contained in this scenario were not so complex and steeped in status issues, things might have changed already, as these issues are well known. Complicating the matter is the fact that in dealing with people in situ in a going concern, one needs to proceed with caution. There is no easy ‘switchover’, but the need for the significant realignment of remuneration systems, as

There is no easy ‘switchover’, but the need for the significant realignment of remuneration systems is acute.

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clearly visible and organisations are forced to adapt to be able to compete for talent. Many regions of the world face similar challenges, but the impact on remuneration has some uniquely African characteristics. This is due, in the main, to historical factors. In a number of countries it is not uncommon to still find remuneration structures – and indeed organisational structures – that are driven by status rather than functional requirements. These are sometimes referred to as ‘colonial’ structures. In the main, the payrolls that accompany these structures have different segments or discontinuities. First, there is a ‘flat’ pay rate characteristic at the bottom of the structure, where the levels of pay from unskilled through to semi-skilled right up to supervisory level are hardly differentiated. Then, there is the tenure rather than competence-driven advancement,

characterised above, is acute. If African organisations are going to thrive on the basis of the solid growth in their economies, they will have to increase capacity and productivity – and this is not simply a function of direct investment. The use of strategic workforce planning tools to model the economics of the total payroll, and not just determine the talent management process, is the sort of solution required to help the journey succeed. Malcolm Pannell is the managing director of Hay Group South Africa, part of the global management consulting firm that works with leaders to transform strategy into reality.

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ADVERTORIAL

Q&A WITH SPORT FOR ALL’S

KELLI GIVENS A

s South Africa’s first ever FASAapproved social franchise, Sport For All is committed to achieving social goals through its franchises, specifically child development, youth employment and healthy lifestyles for all family members. Chief executive officer Kelli Givens shares its progress, challenges and successes in 2014. As the first social franchise in the country, have you found that this concept is gaining ground in South Africa since you opened your first SFA site in 2005? Until this year, Sport For All was the only FASA-approved member defined as a social franchise.The concept continues to grow in three distinctly different ways: businesses which operate with a defined social intention (i.e. providing franchise ownership opportunities to previously disadvantaged individuals who would otherwise not qualify); businesses whose ‘product’ addresses social needs; and NGOs that utilise replication as a means for growth. In your experience, what are some of the biggest challenges that new franchisees experience, and how can they tackle them? In addition to the inherent challenges facing a first-time business owner, an SFA social franchise operator must align with our clearly defined values and principles – to make a difference in the community. Income generation (payment for services at grassroots level), hiring practices (youth job creation) and the product offering (healthy living) are purpose-driven towards the end goal of ‘profit making, not profit taking’. To succeed, the business owner cannot be solely motivated by personal financial benefit.

throughout the country. To this end, we have forged partnerships in three core areas: business development, youth development through sport, and facilities development. In addition to the more than 1 500 companies who have contributed financially to Sport For All to fulfil B-BBEE requirements, African Resonance, market leader in South Africa’s national payment system, developed and maintains the smart-card-based player management system to track membership and cash flows. Laureus Sport For Good Foundation, in partnership with Sport For All since 2005, provides financial and practical support to franchises to ensure members can pay the required fees. And many of our franchise sites operate from municipal sites at little or no cost, lowering monthly overheads. The SFA model is an ideal investment for companies seeking to bolster their BEE points and support economic and social development at a community level. Tell us about some of your ‘gold’ sponsors in 2014. Sport For All has proven to be an attractive B-BBEE partner for companies seeking to fulfil SED and ED requirements, as we have consistently proven that contributions are effectively and efficiently utilised as seed funding to open new sites and/or to provide funding to incubate and grow existing franchises. To date, more than 21 sites have been developed and supported

through BEE funds. SFA has distinguished itself from most BEE beneficiaries by accepting what are considered small contributions (under R1 000). By pooling these funds, we have been able to achieve the same lofty goals. In 2014, some companies, like Flexible Packaging Converters, provided the full funding required for an entrepreneur to purchase a Sport For All franchise. Are you planning to expand the SFA concept further into Africa, or remain local? Sport For All has received enquiries from individuals from throughout the African continent (most notably SADC countries), South America (Brazil) and Asia (India). We have undertaken the necessary processes and procedures to determine the viability of expansion. The projected way forward is to identify competent prospective licensee candidates to partner with in suitable markets. Contact details National Bank House Seventh Floor 84 Albertina Sisulu Street Johannesburg, 2001 Tel: + 27 87 820 4030 Fax: +27 11 492 3583 Email: info@sportforall.co.za www.sportforall.co.za

Since we last interviewed you for NEPAD 2014, have you made any changes to the SFA franchise model? Sport For All will be undertaking an exciting brand relaunch in the coming year. Members and their parents have indicated a preference for a more structured short-term clinic environment, high-profile sports events, holiday programmes and individualised coaching opportunities. The expanded SFA menu will ensure that franchises achieve and maintain sustainability and relevance. What are some of the organisations that you have partnered with, and how does this benefit Sport For All? Sport For All chooses partners who share the common goal of socio-economic and enterprise development in communities

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Sport For All CEO, Kelli Givens

at South Africaâ&#x20AC;&#x2122;s first FASA registered social franchise where dreams become reality for entrepreneurs who want to make a difference

OWN YOUR FUTURE at the ideal Sports Training Club for kids of all ages Kabelo Tshwane, Palesa Pitlele and Khotso Thoabalo Franchisees - Sport For All Botshabelo (Free State)

FRANCHISE OPPORTUNITIES AVAILABLE NATIONWIDE 087 820 4030 | info@sportforall.co.za | www.sportforall.co.za

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The road to empowering

African women

It is said that gender equality is not a woman’s issue but a human issue, as it affects us all. Iza Grek finds out what is happening for African women.

Image courtesy of Chris Kirchhoff, MediaClubSouthAfrica.com

“One of the biggest challenges is demonstrating that there is a solid business case for investing in women, without regarding them as victims or objects of charity.”

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THE OFFICIAL NEPAD YEARBOOK 2015

rom the days when women around the world couldn’t vote, huge strides have been taken for women’s emancipation, but gender equality is still far from a reality in Africa. Sub-Saharan Africa has made some notable improvements in recent years in health, education, economics and politics, according to the World Economic Forum’s Global gender gap report. Countries that stand out as the most genderequal in this region are Rwanda, Burundi, South Africa, Mozambique, Malawi, Kenya, Lesotho, Namibia, Madagascar and Tanzania. Rwanda, Burundi and South Africa rank in the top 20 out of the 142 countries scored. Rwanda ranks particularly high, due to its empowerment of women in politics – 64 out of 100 seats in its lower house are held by women, making it the only country in the world with more women than men in parliament. “Burundi’s stellar performance rests mainly on upping recruitment of women into its labour force and narrowing the pay gap,” says Hannah Edinger, a director at Frontier Advisory, a research, strategy and investment firm that offers its services to emerging market economies. Other indicators for countries would be reducing the education and health gaps. Some of the worst-performing countries in the report are Mali and Chad, ranking 138th and 140th respectively, coming short on aspects such as wage equality and women rising to leadership positions in organisations, among other criteria. At its International Women’s Day commemoration early in 2013, the South African Human Rights Commission maintained that there were “still high levels of poverty, inequality, unemployment and violence directed at women and girls”. Education and health (particularly sexual health) are also among the areas that require attention to narrow the gap between men and women. And agriculture is perhaps one of the most neglected areas in Africa, with access to land and agricultural equipment among the challenges, says Edinger. She says that in the political sphere, countries in Africa have made great strides to empower women, but gaps such as access to education and health hamper progress towards economic empowerment. While much has been done by global organisations, the private sector and lobby groups, Africa’s political and economic landscape is not always appropriate for intervention efforts. Many challenges remain for projects to launch, in the first instance, and then to be successful and sustainable. “One of the biggest challenges is demonstrating that there is a solid business case for investing in women, without regarding them as victims or objects of charity,” says Nomsa Daniels, executive director at Women in Finance, a non-profit

organisation that provides a forum for professional women in financial services and related industries. Another challenge is changing mindsets that seek to limit women’s horizons to small-scale activities that are mostly in the informal sector. New Faces New Voices, an initiative of Women in Finance, focuses on bringing more women into the formal financial system by increasing their access to finance and financial services, says Daniels. It also builds their capacity and skills as consumers, entrepreneurs and investors to access finance, and serves to fast-track the number of women who occupy influential leadership positions in the financial sector.

“We want to see women graduate from micro to small, from small to medium and from medium to big in the kinds of enterprises they can own, operate and manage.” Two examples of Women in Finance’s most successful projects are in Uganda and Kenya. “Our Uganda chapter has developed a model for financial inclusion for women, known as Financial Inclusion through Savings and Village Enterprises, or FINISAVE.” This is based on the premise that people in underserved markets have the ability to save, regardless of their income level. Through this intervention, more than 250 000 people have accessed knowledge on how to become bankable – 60% of them women – and they have established village savings and investment clubs to leverage these savings, Daniels says. “In Kenya, our chapter has partnered with the Nairobi Stock Exchange to launch a Leadership and Diversity Dialogue for the boards of listed companies. This is in an effort to promote discussion about the importance of diversity and how diverse teams deliver better returns than homogenous teams. It also opens the way for debate on why improving the gender balance of boards and women in senior management positions is necessary for companies to fully utilise their human capital,” Daniels says. “We want to see women graduate from micro to small, from small to medium and from medium to big in the kinds of enterprises they can own, operate and manage,” Daniels says. Addressing access to agriculture, Lynette Chen, CEO of the NEPAD Business Foundation (NBF), says the NBF has set up a major farming initiative in Mozambique to assist women in rural areas. One of its major initiatives is the DUATs (land usage

rights, from the Portuguese Direito de Uso e Aproveitamento dos Terras) Programme. Developed for rural women by the Foundation for Community Development (FDC), this intervention aims to help rural women acquire the right to use land to access project funding and technical support services. It also enables them to provide mentorship and networking with established private sector organisations for integration into the value chain, Chen explains. “In the first phase, the NBF, FDC and African Women in Agriculture worked with the provincial government of Manica (in Mozambique) and the Ministry of Agriculture to implement a process for transferring these rights to rural women expeditiously,” she says. In June 2013, the rights were transferred. “This project has and will continue to realise rural women farmers’ access to funding and technical services,” she says. The Angonia Scale-up Soya Bean Programme is another agricultural initiative of the NBF. Having secured private sector and development funding from the United Nations Development Programme, the NBF procured equipment for rural farmers, Chen says. In addition, it coordinated technical support organisations to train farmers in progressive techniques and how to use equipment. “Our agriculture initiatives, Removing the Barriers to Agriculture and the Southern African Agriculture Development Partnership Platform, have been successfully running interventions to support women in agriculture. Both NBF representative offices in Zambia and Malawi are run by women.” She adds, “Mozambique, however, remains our most successful execution of involvement regarding gender.” Chen says the NBF has identified the Beira Corridor as a priority focus area on the basis of investments in infrastructure, agriculture and mineral extraction planned for the belt. As such, the NBF has been working in Mozambique, Zambia and Malawi. Edinger highlights a technology initiative that includes Intel in partnership with The Rockefeller Foundation, Safari Connect, The Youth Banner and USAid. “Focusing on connectivity and access to information, it looks to halve the gender gap in technology by 2016 by connecting 5 million African women to the internet. “ “Economically, it includes improving their employment opportunities through better access to education and skills and, in turn, they are better equipped to pursue entrepreneurial ventures.” The project was started in Kenya in 2014 and is expected to be rolled out in other countries, she adds. While projects abound to help women improve their lives and work towards gender equality – thereby improving the lot of their families too – there is still a long road ahead. www.nepad.org

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ADVERTORIAL

HEAT AND CONTROL BRINGING THE HEAT Heat and Control believes in the power of innovation, and is pushing the envelope when it comes to processing, product distribution, packaging and control systems.

ith vastly diverse client needs and a necessary keen focus on inspiring and enabling innovation, Heat and Control has claimed and lived up to its reputation as a world leader in its sector. We caught up with Heat and Control’s general manager in Africa, Jeff Rossouw, who let us in on the company’s approach to innovation, as it leans on its incredible pool of global resources and wealth of experience built up internally over the last 65 years in operation. A company’s existence lies in innovation Heat and Control is one of the world’s oldest and most foremost specialists for single source design, engineering and manufacture of complete food and snack processing, seasoning, packaging and inspection systems. As a company, Heat and Control believes that its existence lies in innovations. While measurable goals for innovation can seem a little difficult to set in the food packaging and processing industry, Heat and Control is incredibly fortunate, as its global footprint enables it to engineer solutions that very often find similar application in other regions of the world, where eating habits are distinctly different. As an example, Nigerian Chin Chin requires very similar processing parameters to that of croutons. The diversity of Heat and Control’s customer base unlocks incredible opportunities. A crowning moment in 2014 During 2014, Heat and Control supplied quite specialised technology that is only found in a select few of the global operations of a multinational company. A first in subSaharan Africa, this technology enabled processors to reduce stock holding and storage space, by running a range of SKUs on an almost just-in-time basis. From an operational perspective, Heat and Control’s own operational success was found in generating a steady stream of business across a number of industries. While this remains the single biggest challenge to be found in this company’s industry, the knock-on effect is that Heat and Control’s forecasted results for 2015 are looking very positive.

Jeff Rossouw, Heat and Control General Manager in Africa.

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But what happens if the lights go off? While most of Heat and Control’s manufacturing is completed offshore, the very real interruption of loadshedding that South African businesses face still affects the company. For Heat and Control’s customers, especially small to medium processors, the effects of necessary loadshedding are felt quite harshly. These are typically ownermanaged businesses that do not always have access to long-term funding through financial institutions that would enable them to purchase massive generators. Product quality and the use of raw materials, such as cooking oil, are adversely affected by interrupted production cycles. A global approach with local focus While Heat and Control’s global head office is located overseas, the company finds there’s little to no difference between quality control standards abroad and in emerging markets like Africa. Even in small to medium homegrown companies, product quality is comparable to their international counterparts, because food processing requires certain procedures and management systems to maintain quality. Looking forward to innovative solutions As part of Heat and Control’s commitment to enabling innovation, the company works to provide its clientele with well-researched, economically viable solutions to their process problems. That’s why Heat and Control constantly revises and reviews its product range, as it did in 2014, when extending the Flavorite division’s products on offer to the sub-Saharan market. Heat and Control is looking forward to tackling a new growth phase in Africa, which is geared towards plantain processing lines and Chin Chin production lines for Nigeria.

Contact details La Belle Industrial Park, Unit 9 La Belle/Willow Road Stikland, 7530 Bellville Cape Town Tel: +27 21 948 5934 Email: info@heatandcontrol.com

innovations in food processing + packaging systems

Design & Engineering | Manufacturing | Installation & Commissioning Service & Spare Parts | Operator Training

snack | meat, poultry, seafood french fry | vegetables | confectionery processing systems product handling + distribution inspection systems coating, flavouring + seasoning controls + IT

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Food Processing & Packaging Systems

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Fighting the war for talent on two fronts EY’s David Storey and Rob Urquhart tackle the problem of skills shortage and unemployment in South Africa and the rest of the continent.

ith the spectre of skills shortages and unemployment looming across the continent, questions as to how to bridge the divide and transfer skills effectively are coming to the fore. The median age on the African continent is 20 years, putting projections of its potential labour force at 1.1 billion people by 2040, according to EY’s Africa on the move: the quest for sustainable growth 2013 report. However, there is only a small pool of potential talent to take up management and skills-intensive professional and technical roles. This is a result of low secondary and tertiary enrolment rates, poor educational infrastructure, little investment in the education sector and the continued importance of agriculture as an employer. Matching this small supply with a growing demand should yield intense competition for local, African skills in particular. And as the survey Talent trends and practices by EY indicates, the demand for technical and professional skills, in particular, is increasing. South Africa’s National Development Plan correctly points out that substandard educational outcomes, “especially for poor black people,” are a key contributor to unemployment and economic marginalisation. Many employers are resistant to taking on new matriculants because they are concerned they either do not have the foundational skills required to learn on the job or have a poor attitude to work. This has resulted in increased poaching and rising wage costs for functionally competent incumbents in entry-level jobs. This is a situation that might well play out in Africa’s growth story more generally. As investment on the broader African continent increases, the default response has been to plug skills shortages with expatriate staff. But, increasingly, this solution is

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recognised as untenable. Employers have to pay a premium for expatriate skills – almost 50% of executives in EY’s survey attracted a premium that is at least twice that of a local employee in the same category. Also, cultural conflict and understanding, differing norms and behaviours and the lack of permanence associated with expatriate deployments are challenges. An alternative that employers are beginning to explore to address skills gaps is to tap into the returning diaspora. However, the transfer of skills from expatriates to indigenous staff remains the single biggest concern of multinationals operating on the continent, according to EY’s Realising potential: sub-Saharan Africa talent trends and practices survey. A unique solution that originated in the short-term insurance industry in South Africa is being adopted by other sectors. In response to rising wage-cost pressures for a small pool of talent for entry-level jobs, and the lack of foundational skills among school leavers, a ‘youth talent accelerator’ was established. Bringing together employers in the sector and led by chief executives, the accelerator attempts to recruit and select candidates with the right profile for key entry-level roles. It also bridges English language and maths skills to enable candidates to operate in sales and service environments. It grooms these individuals to succeed in the workplace by developing fundamental competencies in personal mastery, life skills, work readiness and industry knowledge. The commitment of employers to guarantee employment for those candidates who successfully complete the bridging programme is critical to the success of this initiative, as is their hands-on involvement in designing the programme. Human resources and learning and development

THE OFFICIAL NEPAD YEARBOOK 2015

There is only a small pool of potential talent to take up management and skills-intensive professional and technical roles, as a result of… little investment in the education sector [among other reasons].

between unemployment and skills scarcity? The youth talent accelerator example has a number of useful lessons for organisations looking for skills transfer solutions: • There must be a sound and sustainable business case. Investment in programmes of such a nature must have a direct impact for the participants. In the case of the youth talent accelerator, this was about managing labour costs, improving the skills pipeline and, ultimately, the supply of labour. • Organisations must understand what the areas of highest strategic importance are that they want to impact through a skills-

Image courtesy of Shutterstock.com

personnel from the industry participants were integrally involved in creating and approving the purpose, curricula, quality, costing and funding. They also set the roles and responsibilities of their staff in supporting the programme. The government recognised the importance of overcoming employers’ concerns with the recruitment of new labour market entrants, and it allowed employers to define a solution relevant to their context. Once happy with the cost-sharing arrangement, it allocated about R200 million to this initiative from the Jobs Fund. What are the requirements for skillstransfer programmes to bridge the gap

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HUMAN DEVELOPMENT AND HUMAN CAPITAL MANAGEMENT

transfer programme. Blanket approaches will not work. This presupposes understanding what key and scarce skills are; the anticipated demand and supply and engaging in the associated workforce planning activities. • There must be a critical mass of employers who share an understanding of the business imperative for skills transfer and development initiatives – a ‘win-win’ scenario for all concerned. • The role of the government as a social partner cannot be underestimated – as a gatekeeper or enabler for such initiatives to succeed and in respect of the potential for financial support. • There must be hands-on engagement by employers in skills-transfer initiatives. It cannot simply be outsourced. Employers must bring to bear their institutional knowledge and capacity in the design, delivery and support of skills-transfer programmes. There are other less apparent factors that are critical to the success of such programmes. It must be ensured that those tasked with transferring the skills are willing and able to do so. This might require thinking about how one harmonises an individual manager

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or specialist’s reason for participating in a skills-transfer programme with the business imperative for the programme. The belief that transferring skills threatens the job security of current incumbents must be addressed by way of example. In the broader African context, expatriates are highly unlikely to undertake skills transfer of their own volition. Incentives or disincentives, such as pay penalties or explicitly foregrounding the managerial responsibilities for human resources development in performance contracting, are ways to do this.

The National Development Plan correctly points out that substandard educational outcomes, “especially for poor black people,” are a key contributor to unemployment and economic marginalisation.

The ability of those tasked with transferring the skills to do so should not be ignored. Structured mentoring and coaching processes are required to support managers and specialists in the skills-transfer process. There might need to be a shift in their behaviour and practices to focus on talent development. Consideration should also be given to whether the recipient of the skills has the right attributes. Neither a blanket approach, which doesn’t differentiate in terms of eligibility for skills-transfer programmes, nor an approach that considers eligibility in terms of educational achievement, are advocated. Approaches that identify and differentiate ‘rough diamonds’ are preferable. Skills-transfer approaches cannot be founded on pure, formal, classroom-style learning. Rather, a ‘tell me, show me, let me’ blended learning approach that focuses on onthe-job learning and is supported by structured coaching and mentoring is required. David Storey is the EY Europe, Middle East, India and Africa (EMEIA) lead for People and Organisational Change and Rob Urquhart is an associate director in People and Organisational Change: EY Africa. EY is a global leader in assurance, tax, transaction and advisory services.

Connecting African business to new worlds of opportunity for 100 years and counting

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Summerfields

ADVERTORIAL

Ultimate indulgence at

Rose Retreat and Spa

Summerfields Rose Retreat and Spa is a five-star estate that houses guests in luxury tented lodgings along the tranquil Sabie River in Hazyview, Mpumalanga. With a keen focus on creating comfortable and calm stays for guests, Ilse and Andre van Heerden established Summerfields in December 2006. Barefoot luxury

As Andre tells us, the ‘barefoot luxury’ at Summerfields enables visitors to cool off in comfort, far from the madness of a cosmopolitan city and switched-on lifestyle. Andre says: “Guests are encouraged to switch off their mobile phones and laptops, and there are no televisions installed in the rooms. With idyllic nature all around us, guests relax by reading or taking a walk through the surrounding forests, engaging in a farm tour or savouring a lazy lunch by the riverside.”

Making guests’ experiences memorable

Perhaps that’s why Summerfields has won acclaim for its focus on escapism, as the team focuses on making guests’ stays more than just a holiday, but a luxury retreat. Summerfields Rose Retreat and Spa has been nominated for a 2015 World Luxury Hotel Award and it’s not hard to see why, as Andre explains that “Summerfields strives to be a world-class company that offers world-class experiences to guests. We use the renowned Lobster Ink training programme to empower our staff and set stringent operating procedures while

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Ilse (training and rose manager), Natia (executive chef) and Andre

implementing effective guest interaction programmes, in an effort to make every guest’s experience with us memorable.”

A working farm

But beyond the luxury accommodation and delightful treats on the lunch menu, Summerfields is also an operational farm that produces macadamia nuts, granadillas and litchis for both foreign and local marketplaces. Andre explains: “Summerfields aims to be fully organic by 2016, while all eggs, vegetables and poultry used in our restaurants are grown on our farmlands.”

Serenity found at the spa

Of course, Summerfield’s signature bloom, the rose, can be found in every tented suite, public area and sometimes even next to a meal, serving as a garnish to a delightful dinner. Before guests head to the dinner table, however, it’s time to remember the primary reason why people visit Summerfields Rose Retreat and Spa – it’s the signature treatments and indulgent spa packages. Inspired by the spa’s serene surroundings and drawing on the magic contained within ingredients found in nature, Summerfields Rose Retreat and Spa takes relaxation one step further, by creating spa packages that work to reinvigorate and

revitalise even the most stressed guests. Andre told us that the spa’s “signature facial is all natural, made up of papaya extract, honey and eggshells. Coupled with a day package, guests are pampered with soothing treatments, revitalising massages and restorative skin wraps.”

Parkrun fun!

Summerfields also provides a wide range of activities for guests and visitors to enjoy across the 100 hectare farm. Andre tells us that Summerfields has become a parkrun venue, with a weekly 5km run attracting a crowd of keen enthusiasts. Andre says: “Parkrun is a worldwide phenomenon, started in the UK by a South African, and brought back to South Africa by legendary long-distance runner Bruce Fordyce. It is now in its tenth year, with more than one million members worldwide and 200 000 in South Africa. Runners meet every Saturday morning at 8am and the run is recorded and compared worldwide, setting individual targets for people to become more active and improve their fitness levels against their own age group and demographics. We’re proud to be supporting such a great community fitness initiative.” Far more than just a spa or a luxury lodge, Summerfields Rose Retreat and Spa is the ideal escape from the bustle and buzz of city life.

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Enabling the youth to become

contributing members of society

Professor Mthuli Ncube looks at solutions to youth unemployment.

ith half of Africa’s population under the age of 20 years and with a median age of 18, the continent is facing a youth bulge. Of the 2.4 billion people projected to be added to the world by 2050, 46% will be born in sub-Saharan Africa. The region will contribute 77% of the total increase in global population by 2100. Thirty-one countries out of the region’s 51 are projected to at least double their population by 2050, according to Population Action International and the African Institute for Development Policy.

Source: Population Action International (2003) The Security Demographic.

Figure 1: Young adults (15-29 years) as a proportion of all adults (15+), 2005

Although the young constitute around two-fifths of the continent’s working-age population, they make up three-fifths of the total unemployed. Youth unemployment rates exceed those of adults, often by a ratio of two to one. In some countries – such as South Africa – one in two young people are unemployed. However, this youth bulge is a potential gold mine to be exploited. Some analysts have argued that the ‘economic miracle’ of the East Asian Tigers can, to a large extent, be attributed to a ‘demographic dividend’ that these countries were able to reap, thanks to effective policies which led to the expansion of employment and labour force participation.

Active labour market policies – lessons for Africa

Active labour market policies (ALMPs) are government programmes that help the unemployed find work. There are a wide range of these: job-search assistance programmes, skills training, schemes to promote self-employment, wage subsidies and direct job creation. Until recently, these programmes were rare in Africa, and rigorous evaluations of them even more so. In a global review of ALMPs targeting youth, the World Bank in 2007 found that sub-Saharan Africa, the Middle East and North Africa had the lowest coverage. It concluded that “there are no major differences across categories of interventions in terms of impact or cost effectiveness” and that “particular types of

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programmes should not be favoured but, rather, that interventions should be chosen based on the specific obstacles to employment”. a. Job-search assistance In more developed countries, job-search assistance programmes are a common form of ALMPs and are among the most cost-effective. They require the recipients of unemployment benefits to get personalised help on a regular basis and provide resources jobseekers can access. One interesting form is re-employment bonuses – cash payments to unemployment benefit recipients who find a job quickly and keep it for a specified length of time. These programmes are effective because they are closely integrated with unemployment insurance systems. In Africa, this is isn’t happening. The numerous studies of discouraged work-seekers show a strong argument for developing job-search assistance programmes in Africa, adapted to local circumstances. For instance, job-search monitoring might be difficult, but incentives could easily be provided for the use of job-search assistance programmes. b. Skills training Skills training initiatives are the most frequent ALMPs encountered in Africa, according to the African Economic Outlook journal (2012). A lack of skills is one of the key reasons for youth unemployment. In many developing countries, education systems fail to equip young people with the skills needed to get a job, especially in the formal sector. Mauritius, for example, is aiming to address its skills mismatch by a mixture of retraining and managed migration. (Box 1)

Box 1: Tackling youth unemployment through training and managed migration – the case of Mauritius The unemployment rate in Mauritius is estimated to rise to 8%, but the government has taken bold steps to address this problem. In its last budget, it set up a National Youth Employment Programme targeted at people aged 16 to 25 years (especially women), who comprise 57% of the total unemployed. The programme provides apprenticeship training and placement with the active participation of the private sector. Mauritius also relies on foreign labour to fill in the skills. The government is keen to encourage labour mobility through a circular migration programme that targets employable low- and middle-level skilled people.

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Three features appear to increase the effectiveness of public training programmes: effective targeting, small-scale operations and programmes with a strong job component. Little robust evidence has been produced on the effectiveness of skills training in Africa, but this is changing and the little evidence that exists suggests they have a positive impact. An example is Jeannie Annan and Chris Blattman, who researched reintegrating and employing young ex-combatants in Liberia through an agricultural training programme. They found that more than a year after completing the programme, participants were at least a quarter more likely than the control group to be engaged in agriculture, and 37% more likely to have sold crops. c. Schemes to promote self-employment Schemes to promote self-employment are probably the second most popular ALMP in Africa. Sometimes they consist simply

Box 2: Tackling youth unemployment through entrepreneurship promotion – the case of Nigeria

of entrepreneurial training, but frequently also provide loans, business development services and expert advice to young entrepreneurs. Despite their popularity, self-employment programmes have frequently failed to achieve results. Since the late 1990s, for example, the South African government has invested significant resources in promoting entrepreneurship. However, the number of young people accessing these services is tiny, according to the Development Bank of South Africa (2011). Similarly disappointing results have been observed in the Maghreb region of north-west Africa. Yet, evidence on some recent innovative schemes suggests they can be effective. An unconditional cash transfer scheme to pay for vocational training, tools and business start-up costs has proven to be very effective in Uganda.

The Youth Enterprise with Innovation in Nigeria Programme was launched in 2010, to support youth business ideas. Since then, 1 200 young people have been selected to receive financing, help with

In Nigeria, robust economic growth over the past decade has not

business registration, mentoring and other assistance.

created the jobs the country needs. The unemployment rate for the 15-24 year age group stands at 38%, compared to 22% for 25- to

The Ministry of Youth Development has also set up the Nigerian

44-year-olds, 18% for 45- to 59-year-olds, and 21% for 60- to

Youth Entrepreneurship Development Programme.

64-year-olds. Oil companies have also helped employment efforts. Launched in The National Employment Policy, approved in 2002, has made

2004, Shell Petroleum Development Company’s Youth Development

entrepreneurship training compulsory at all Nigerian universities.

Programme has trained more than 1 900 people. Nigerian Liquefied

The Central Bank has set up Entrepreneurship Development Centres

Natural Gas started the Youth Empowerment Scheme in 2004, aimed

in the country’s six main geographical regions for youths. By January

at youths from over 100 rural communities. By 2011, more than 660

2011, these centres had trained and counselled over 34 000 graduates, created about 2 800 jobs and given about 1 000

Source: AEO (2012)

Courtesy of Chris Kirchhoff, MediaClubSouthAfrica.com

graduates access to funds.

people had been trained.

Testing the water quality at SABMiller.

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HUMAN DEVELOPMENT AND HUMAN CAPITAL MANAGEMENT

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d. Employment subsidies The objective of employment subsidies, which usually take the form of direct wage subsidies or social security waivers, is to reduce the cost of hiring new employees and help firms keep on existing employees. They are most effective are if they target the long-term unemployed; are offered for a limited period of time; are aimed at small businesses; and combine on-the-job training, counselling and job-search assistance.

Direct employment creation

One common policy implemented by governments to tackle unemployment is direct job creation. These schemes provide unemployed workers with temporary jobs and an income while, at the same time, contributing to infrastructure development, environmental protection and/or community amenities that may attract future investment and additional jobs, according to the American Economic Review journal (2004). Their effectiveness depends to a large extent on a coherent analysis of the country’s situation and the development of the right mix of policies. This task is hampered in many African countries by the absence of a decent labour market information system. In addition, responsibilities for youth employment policies are often split between too many government actors, with insufficient coordination among them. ALMPs are unlikely to be able to make a significant impact on youth employment when they are caused primarily by structural deficiencies. No matter how many wage subsidies, training programmes and entrepreneurship schemes are delivered, the overall result will depend on the economy’s capacity to generate new jobs.

Despite a positive growth record in recent years, some analysts have argued that Africa has ‘de-industrialised’, with labour moving in the wrong direction – from more productive to less productive activities – including, notably, informality. Africa, therefore, needs more high value-added activities, ranging from agro-processing to manufacturing to tradable services, to create good jobs and sustain growth. As an investment in the quality of the labour force, Africa will need to continue to expand and improve education and skills, as young people in Africa have a very low education profile compared to those in other regions of the world.

Box 3: Youth unemployment in South Africa: Tackling a lack of skills In 2011, the South African government released a discussion paper, ‘Confronting youth unemployment: Policy options for South Africa’, which identified a number of factors responsible for the high unemployment among young people, including low levels of education and skills. The paper notes that unemployed young people tend to be less skilled and inexperienced – almost 86% do not have formal further or tertiary education, while twothirds have never worked. It argues for an improved education system that reduces drop-out rates and channels more students into tertiary education. Policies to address quality issues include a focus on improving literacy and numeracy and increasing the number of quality passes in maths and science. In addition, there is a significant role for second-chance programmes, which aim to strengthen employment prospects for low-educated youth, especially those who dropped out of school, and to motivate them to study further. Sources: AEO (2012) and South Africa National Treasury (2011)

Mthuli Ncube is professor of public policy at Oxford University, Blavatnik School

Figure 2: Secondary and tertiary enrolment ratios by region

Images courtesy of Chris Kirchhoff, MediaClubSouthAfrica.com

Source: Author’s calculations based on World Development Indicators (2011)

Construction in progress on a new hospital in Vosloorus, South Africa.

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of Government, and is the former chief economist and vice-president of the Africa Development Bank Group.

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Top African tech start-ups Entrepreneurs abound in Africa. Stacey Vee looks at some of the most successful tech start-up companies on the continent. 1. [Kenya] Kytabu

The aim of the Kytabu project is to help children access textbooks. This service leases digital textbooks at discount rates. The books are pre-installed on a low-cost tablet, so that they can be leased directly from the tablet without a mobile network gateway. They can be accessed on an hourly, weekly, monthly, school term or annual plan, so you can get the textbook when you need it, for as long as you need it.

2. [Kenya] Waabeh

Waabeh is an African audio marketplace – in other words, Kenya’s version of iTunes. It was created to help combat piracy and empower artists with easy upload and distribution tools, offering them higher royalties. This application allows users to stream the music, embed codes in their websites and share with friends. Waabeh has exceeded 10 000 downloads and serves over 330 000 streams of its content. It is available on the web and as an Android application.

3. [Nigeria] Save & Buy

Save & Buy is a web and mobile platform offering a savings product, which enables buyers to pre-plan online purchases and save money towards these items securely through e-commerce channels. Users are able to pay for their goods in instalments, with clear payment schedules. The platform incorporates a loyalty programme, so savers can earn points and benefit from discounts and loans. The company works with established e-commerce stores, offering customers these payment and savings options.

4. [Ghana] Dropifi

Dropifi offers an intelligent online contact form for customers to fill out to enable small and medium-sized businesses to analyse, visualise and respond to incoming messages. The Dropifi contact widget allows companies to see incoming messages, information in relation to industry metrics, as well as the demographic and social media profiles of the senders. Dropifi can be customised to a company’s needs and brand and is easy to use and install. It includes a number of features, such as anti-spam filters, sentiment analysis, analytics, rerouting to the correct person and sending automatic responses.

5. [Kenya] Able Wireless

Able Wireless is an on-demand streaming service and wireless service provider. It has been referred to as ‘Netflix for Africa’, streaming documentaries, movies, music, YouTube videos and other content. It also provides unlimited access to broadband internet. This service aims to create a legitimate distribution system and help eliminate piracy and torrent downloads. This high-quality, affordable service costs as little as US$6 per month, with the devices also costing US$6 per month.

6. [Kenya] SleepOut

SleepOut is an online accommodation marketplace, listing unique accommodation options in Kenya. The portal includes reviews, booking and contact information for all the hotels. This allows tourists to make reservations and base their choice on reviews from previous guests. CEO Johann Jenson says the aim of SleepOut is to “match guests looking for a place to sleep with hosts and their empty beds”. www.nepadbusinessfoundation.org

THE OFFICIAL NEPAD YEARBOOK 2015

7. [South Africa] Mellowcabs

Mellowcabs is a transport and advertising company that manufactures, implements and operates electric pedicabs nationwide. Its main source of income is from selling advertising space in and on the vehicles. Each Mellowcab has a tablet computer that runs geolocation software – as the vehicles approach a certain store or restaurant, the software triggers adverts for the business. Mellowcabs complement existing transport systems by operating in a limited urban radius of 3-4 km.

8. [Kenya] Angani

Angani is a public cloud computing provider in Kenya that offers pay-as-you-go services to East Africa. The company buys infrastructure in bulk, virtualises it and leases it at a reduced rate, taking away the expense of a company maintaining its own IT infrastructure. With the help of Angani, companies don’t have to worry about buying hardware, software, servers, cooling systems, upgrading and maintenance. The company provides a number of pricing plans with hourly rates, so you only pay for what you use.

9. [Nigeria] Jumia

Jumia is an e-commerce start-up in Lagos, inspired by Amazon. Since its inception in June 2012, the site has become the number one online retail shopping business in Nigeria, with over 500 members on its payroll. The online store offers everything from fashion and consumer electronics to home appliances and beauty products. It delivers to Morocco, Kenya, Ivory Coast and Uganda. Jumia was named e-commerce website of the year in Nigeria at the Beacon of ICT Awards 2014.

10. [South Africa] Obami

Obami is a social learning platform that lets communities connect, create, share and learn, bringing people in the education system together. Students can create a profile and connect with teachers, parents and each other, encouraging social engagement between educators and learners. Obami has launched a mobile app, Obami Tutor, linking learners with tutors via their smartphones. Teachers who connect with the students guide them through worksheets and assignments, using a curriculum aligned with the school system.

11. [South Africa] 22Seven

22Seven is a personal money management system that tracks your transactions and income, helping you monitor what you are spending. The app links all your accounts, such as cheque and savings accounts, credit and store cards, investments and loans, in one place, which is updated whenever you log in. All your transactions are automatically categorised so you can keep tabs on exactly what you are spending. If you’re not convinced, you can sign up for a free 30-day trial and experience the app for yourself.

12. [Nigeria] Tranzit

Tranzit is a free web and mobile taxi booking service that not only gets you from one place to another, but also offers parcel deliveries and a discovery network. This network allows you to search for things to do and places to go to in your neighbourhood. The pricing for the service is based on an algorithm that helps users get the best rates based on distance, time of day and traffic conditions.

13. [Uganda] ClinicMaster

ClinicMaster aims to transform the healthcare system in Uganda. It’s a start-up company that is working at getting medical information online and getting doctors connected. It has been described as “an integrated new generation healthcare information management and medical billing” system. It allows healthcare providers, such as hospitals and clinics, to keep track of their patients, monitor medical stock, and automate transactions. ClinicMaster lets doctors store patients’ information in one electronic file, so it is easily accessible.

14. [Nigeria] Naija Workman

Naija Workman aims to create an online marketplace matching local service providers with customers. It is safe and secure to use as all service providers are verified, so users know who is professionally licensed, qualified and has been background checked. Requesting a service comes at no cost, and users are presented with three quotes so they can review them and pick the best. The platform supports the entire process, allowing users to search, contact, schedule and pay in one place.

15. [South Africa] Project Isizwe

Project Isizwe is a non-profit organisation that provides free Wi-Fi hotspots to low-income communities, focusing on education and economic growth throughout Africa. The organisation believes that an internet connection is essential and should be readily available to everyone, regardless of their circumstances. The Wi-Fi is available in public spaces, known as Free Internet Zones, where users can access the internet without paying and without passwords or login details. www.nepad.org

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The mushrooming middle class The middle classes are growing fast in Africa, according at a report by political economist Simon Freemantle. This article is based on his report.

conomic growth in sub-Saharan Africa over the past 14 years is translating into social change, with populations becoming increasingly urbanised and enjoying a higher standard of living. Sub-Saharan Africa’s middle class is growing fast, according to the Understanding Africa report by Simon Freemantle, senior political economist and senior analyst at Standard Bank’s Africa political economy unit. The report, released in July 2014, found that there were 15 million middle-class households in 11 of sub-Saharan Africa’s top economies this year, up from 4.6 million in 2000 and 2.4 million in 1990 – an increase of 230% over 14 years. The rise in wealth has followed a tenfold rise since 2000 in the combined gross domestic product (GDP) of the 11 nations studied – Angola, Uganda, Nigeria, Ghana, Kenya, Tanzania, Ethiopia, Sudan, South Sudan, Mozambique and Zambia – from US$120 billion in 2000 to US$1 trillion today. The rise of the middle class, along with the rise

in GDP, indicates that Africa’s income accumulation has a broader base than previously thought. Though the growth is optimistic, Freemantle cautions that the estimation of the number of middle-class individuals may have been exaggerated as a result of the “breathless Africa rising narrative” doing the rounds. He cites the African Development Bank’s 2011 study, The middle of the pyramid: dynamics of the middle class in Africa, as an example. This study attached middle-income status to individuals with a daily per-capita consumption of US$4 to US$20 a day, as well as those in a ‘floating class’ with consumption of US$2 to US$4 a day, resulting in an assessment that about one-third of the continent’s population – or 300 million people – were middle class. Freemantle argues that because the bulk of these consumers in fact reside in the lower brackets of the US$2 to US$20 band – by the development bank’s own admission, half are in the floating class of

Image courtesy of Shutterstock.com

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THE OFFICIAL NEPAD YEARBOOK 2015

US$2 to US$4 a day – their status as middle class is highly vulnerable to economic shock. Using South Africa’s living standards measure (LSM), which is based on comprehensive household data, to reach more detailed social analysis, Freemantle breaks down households in the 11 economies into to four income/consumption bands: low income; lower middle class; middle class; and upper middle class. This leads him to conclude that, in total, of the almost 110 million households in the 11 countries, 94 million (86%) fall within the low-income band.

The rise of the middle class, along with the rise in GDP, indicates that Africa’s income accumulation has a broader base than previously thought. Based on the South African context, from which the LSM measures are drawn, Freemantle describes a typically middle-class African person thus: “Older than 35 years (or at least significantly older than the national median age); predominantly urban-based and focused on the country’s core commercial hubs; employed on either a full-time or at least part-time basis and twice as likely as the national average to hold a post-matric tertiary qualification. “Over 95% of middle-class households are likely to have a television and double the national average will make regular use of the internet. The children of these households are likely to attend well-regarded public schools and they make frequent use of formal supermarket/grocery stores, as opposed to shopping for produce at informal markets.” Ethiopia sits at the bottom end of the LSM scale, with 99% of households defined as low income and over 95% of the population living on or below the poverty line. At the top end is Nigeria, whose growth dwarfs the other countries in the study. Between 2000 and 2014, Nigeria’s middle class swelled 600%, resulting in the present figure of 4.1 million middle-class households, or 11% of the total population. Although more than half of the total 7.6 million middle-class households across the 11 countries in 2014 are in Nigeria, an impressive 21% of middle-class households are in Angola, and 14% in Sudan and 10% in Zambia are middle class, Freemantle says. The middleclass is clearly rising

Source: Standard Bank Research

In the next 15 years, those figures are expected to grow. The report states that between 2014 and 2030, analysts expect an additional 14 million middle-class households to be added across the 11 focal countries. And, if we include the lower middle-class band, the overall number is expected to swell to more than 40 million households by 2030, from about 15 million today.

Household consumption expenditure has swelled notably

Source: Standard Bank Research

And, the growth of the middle class is expected to accelerate compared with growth in other classes. Whereas today there are roughly as many lower middle-class households across the 11 economies as there are middle-class households, by 2030 it is expected that the number of middle-class households will outstrip those in the lower middle-class bracket. Ghana stands out in this regard. Between 2014 and 2030, Ghana’s low-income band is expected to contract from 5.5 million to 5.3 million households, whereas its middle class is expected to lift fourfold, Freemantle says. The growth of the middle class is matched by fast population growth and increasing urbanisation across the board. By 2030, the population of the 11 countries is expected to reach more than 800 million people, from 525 million today. Since 2000, between 60 million and 80 million people have been born in, or have migrated to, cities across the 11 countries. Within the next 15 years, it is estimated that a further 160 million will move to urban centres.

Between 2014 and 2030, analysts expect an additional 14 million middleclass households to be added across the 11 focal countries. Along with a rise in income, there has been a significant rise in household consumption expenditure. This year, total household consumption expenditure across the 11 countries is estimated at US$360 billion, 45% of which is contributed by Nigeria alone. It shows growth of about 65% from household spending in 2000 of about US$130 billion. By 2020, consumption expenditure across the 11 nations is expected to rise to US$520 billion, and by 2030, to reach US$820 billion. Nevertheless, the report highlights the vast income disparities among the 11 nations, cautioning: “Though there has been a meaningful individual lift in income, it is clear that a substantial majority of individuals in most countries we looked at still live on or below the poverty line [measured as those with a daily income of US$2 or less].” Though the outlook is patchy, with Nigeria leading the way in terms of the rise in household income and the opportunities it presents and Ethiopia lagging on all fronts, while Angola, Ghana, Zambia and Kenya occupy the middle ground, it is clear that the economies of most sub-Saharan nations are in a much better place than they were in 2000, Freemantle says. The rise of a substantial middle class doesn’t just provide potent economic opportunities, it supports the maturing of political and economic institutions, creating a virtuous cycle of social, political and commercial gain. www.nepad.org

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ADVERTORIAL

XYLEM: THE RISING TIDE HOW ARE WE TAKING CARE OF SOUTH AFRICA’S DWINDLING WATER SUPPLY? Someone with the answer to Africa’s pressing water issues is Bennie Thiart, sales director for sub-Saharan Africa, Xylem Water Solutions SA.

ylem is partnering with municipalities and water boards to promote responsible and sustainable water usage. Some of the ways that this is done is by relooking the full water cycle, from ‘raw’ water that comes in from our rivers and dams, right through to wastewater, which can be recycled. Thiart shares more on what Xylem Water Solutions is doing to change the way we think about water as a vital resource. 2014 was proclaimed as the hottest year on record by various agencies – do you think this trend will continue in 2015 and beyond? Global warming, combined with population growth, is a reason for concern and therefore water industry players should focus on water resilience, ensuring we have enough for future generations. How do you feel Xylem Inc should keep up with this level of climate change and what plans is the company making to adapt? Again, water resilience is the key here and Xylem, through its products and expertise, can assist in solving various types of water issues related to climate change. For example, we have many projects assisting customers, such as water supply in areas prone to drought, dewatering of flooded areas, water re-use and treatment of water for multiple uses. What are the toughest challenges Xylem faced in 2014 within its African operations? Africa is still a developing continent with major opportunities across all industries. Xylem’s biggest challenge is to convert these opportunities into business ventures.

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Bennie Thiart

Have you found that lessons learnt within the African and southern African operations of Xylem help other regions to respond to new or changing demands? Yes, Xylem promotes intercompany cooperation, through which our team shares our stories and learnings from other regions. In your career, you’ve had previous experience in dealing with wastewater. What potential exists for turning wastewater into potable water, and what could be done in South Africa to support and implement systems that do this, especially at community level? I have been involved in the wastewater industry for quite some time, and I can confirm that there is a definite need for the re-use of water. Xylem has been involved with similar projects and we have the experience and products to contribute to such projects. There is continuous focus on the supply of basic needs such as water, electricity and sanitation to communities in South Africa. Water re-use can and will be part of the solution. What was Xylem’s biggest success within its southern African operations? With having such a large product portfolio that applies across multiple market segments, I believe our biggest success was that we were able to continue offering solutions to our customers during challenging economic times, delivering growth at the end of the year – not only for us, but for our customers as well.

Your business, along with all other South African companies, is obviously heavily dependent on electricity to operate. How does Xylem intend to handle the current electricity issues, and work around the loadshedding schedules? At our own operation sites, we have implemented alternative energy options to ensure that we will continue our service levels without interruption. Furthermore, we are investigating possible solutions that we can offer to our customers that will enable them to use our products even if the power supply is interrupted. You exhibited at the 2014 WEFTEC in New Orleans, the Water Environment Federation’s Annual Technical Exhibition and Conference. What was the biggest lesson the team brought home from attending? WEFTEC plays a major role in the industry as a platform for exhibiting products, networking and training opportunities. The feedback that we received from events like this helps us to shape and develop our company towards the industry and customer needs.

Contact details Tel: +27 11 966 9300 Fax: +27 11 552 8742 www.xyleminc.com www.twitter.com/xylemsa

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VOKES FILTRATION

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e are a proudly South African female-owned company with market-leading expertise in all aspects of HVAC systems, dust extraction systems and liquid filtration systems. With our extensive range of industrial, dust and air products, we can select and provide the best-performing filters, filtration systems and replacement parts for your needs.

Industrial filtration We have a complete range of strainers that are available in a variety of materials and in single or dual basket configurations as well as fully automatic back flush filters. Our units are available from pipe sizes 2” and above to suit any pressure class.

We also supply: • Oil mist eliminators such as the StreamLine – used for cleaning insulating oil by removing water, mist, and particulates from the oil stream; • Oil coalescers – used for the efficient removal of water from oil; and • Fuel lubricating oil filters – used for removing a variety of particulates and is suitable for diesel engines and gas turbines.

Dust Filtration Industrial and commercial processes generate dust, fumes and mist. These particles need to be captured and filtered to provide clean air for the operator and environment. We use different filtration www.nepadbusinessfoundation.org

Dry filtration is realised through the collection of particles through a cyclone, bag filter or cartridge filter. It is used to capture dry particles such as coal dust, wood shavings and powders. Filtration occurs when the particles are dragged through the system into the extraction unit through a prechamber or cyclone, which enables separation of coarser particles. The flow then passes through the bag filter, depositing particles into a hopper at the bottom, while clean air is discharged through the filter into the atmosphere. The type of system used depends on the material, size and application.

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Wet filtration technology is used for the removal of solvents, V.O.C.s, mist and fumes. The removal of pollutants mainly occurs by a process of impingement of wetted particles on collecting surfaces. Water is dragged when the fan creates a depression, trapping particles when polluted air is centrifuged. Once purified, the air passes through a highperformance drop separator to eliminate any possible ‘carryover effects’ and is then emitted into the atmosphere. These units may include scrubbers and hydrodynamic filters.

Air filtration From coarse dust filters through to the latest laminar flow operating theatre filters, our range of air filtration solutions has been designed specifically to meet the requirements of our customers, no matter what field of application or operating environment. We supply a vast range of air filtration products, from complete HVAC systems to replacement filters. We are also distributors of Andreae Team, North American Filter Corporation, Hascon Filtration, Vokes Air Group and Volz products. We care about the environment and

Contact details: Saligna Rooms, Main Building, Bluegum Creek Estate 49 Golden Drive, Morehill Ext 8, Benoni, 1501 Tel: +27 11 425 0470 Fax: 086 732 1247 www.vokes.co.za

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Why girls need sunshine Climate change is a reality, but Samantha Smith tells the story of how taking a small step to lower harmful emissions can change people’s lives.

“O

ur eyes are burning, and we get tired easily,” was a common refrain in the home of Uenice, Scovia and Jofit – girls who live in the Kasese district in Uganda. Or so it was in January 2014. They were breathing toxic fumes from the paraffin lamps that they lit every night once darkness fell. These lamps produce smoke and soot, which lead to chronic respiratory infections. The fact is that 4.3 million people globally lose their lives to indoor pollution-related illness each year, caused by things such as paraffin lamps and open fires for cooking. That is higher than the number of people who lose their lives to Aids and malaria combined. Most of these people are women and children under the age of five years.

Masika Gorret, a mother of eight, earns extra income by charging cellphones via solar power.

Image courtesy of WWF

Cleaner energy can be a part of changing this story

A single solar panel on a home’s roof can power up to six light bulbs. This brings illumination. This brings improved indoor air quality – instantly. This also brings savings – money no longer spent on paraffin. That money enables people – mostly women – to spend instead on food, start small-scale businesses at home or pay school fees. When families have an increased ability to pay fees, more children go to school. And more girls go to school. It enables greater access to education. Studies have shown that children with lighting in their homes spend more time studying, and attend more years of school overall, than those who don’t. These changes are evident in the Kasese district because of a project called The

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Champion District. The goal? More roofs with solar power. More than 2 000 homes have solar power on their roofs since the project started in 2012. One of these homes belongs to the family of 17-year-old Naomi Nyalwa from the village of Kabukero. She no longer gets sick from doing her homework in the evenings, and her younger sisters are no longer coughing. Febi Bitareko lives in the neighbouring village of Kabaka. She is a mother of seven. She and her husband kept the money they saved from no longer having to buy paraffin in a homemade savings box. Now Bitareko has opened a small shop in front of their house. She continues to build her earnings, enabling her to expand her shop. Then there is Masika Gorret, who lives in the nearby fishing village of Kayanja. She is a mother of eight. She earns extra income by charging cellphones via solar power for those who have yet to get renewable power for their own homes.

The co-benefits of solar power are immediate and explicit

Without solar power, the lack of electricity affects public services – some of which are particularly important to women. The Kanyatsi health centre is on the border of Uganda and the Democratic Republic of the Congo. Morris Baluku works here as a midwife, and regularly delivers babies in the middle of the night with the help of the dim light from a cellphone held in his mouth. After a solar panel was donated to the health centre, it prioritised the electricity for a fridge for its medicines and vaccines. While this improved conditions substantially and helped save lives, women continue to this day to give birth in unsafe conditions. The risk of complications during and after birth increases for both mother and child in cases when there is not enough light to conduct a safe delivery or for follow-up exams.

THE OFFICIAL NEPAD YEARBOOK 2015

Now take climate change on top of all this

The emissions from paraffin lamps around the world are equal to five times the emissions of the entire country of Norway. The use of firewood and charcoal, for heating and cooking, also has broader impacts – for example, deforestation. Some 1.3 billion people in the world still do not have access to electricity. It is only logical that clean, renewable power is what fills that gap. Fossil fuels – coal, oil and gas – are unable to power remote locations as quickly and efficiently as renewable energy. It is not sustainable to alleviate poverty with power plants fuelled with coal, oil or gas – on this path, it will not be possible to get the economics to justify themselves, nor will it be possible to stay within world’s emissions limit in the face of climate change.

The world needs to build sustainable, renewable electricity urgently where people are living, however remote those areas may be. To make that happen, there is a need for solar panels on home roofs, micro-grids in rural areas and small off-grid power plants that use solar or hydropower to supply entire villages with electricity. As Robert Ddamulira of the Worldwide Fund for Nature – Uganda (WWF-Uganda) explains: “We see Kasese as a reflection of the unacceptable status of a world addicted to fossil fuels. We are in a situation where less than 10% of this population has access to electricity. A single, simple solar-powered light costs just US$26. We simply can’t afford not to make this transition to clean, accessible power a reality.”

The good news is that solutions are out there – and in a big way

Renewable energy makes up 22% of power generation around the world. The world built more renewable power facilities last year than for coal, oil, gas and nuclear combined – for the first time in history. The world is changing fast. The WWF has called on governments and multilateral development banks to increase investment in renewable power and phase

out those in fossil fuels, particularly coal. The energy infrastructure in place by the year 2017 has a major role to play in defining our global path on climate change, according to the WWF.

Multilateral development banks play a key role in the world’s climate change path The WWF expects global financial institutions – whose role is enabling global development – to expand their efforts in

The emissions from paraffin lamps around the world are equal to five times the emissions of the entire country of Norway. accelerating a shift to a low-carbon world through investing in renewable power and ending investment not only in coal but also in oil and gas. It is also up to the governments that fund these multilateral institutions. Governments could make a difference by supporting the ambitious announcement by multilateral development banks at last year’s UN Climate Summit that would enable greater action to move energy investments to act on climate change. UN secretary-general Ban Ki-moon called on governments and institutions to decide and and be proactive on tangible climate change actions. Governments must be aligning their policies and financing with the actions needed on climate change.

At the end of the day, climate change reminds us of what matters Climate change threatens everything. It threatens ecosystems. It puts a third of species at risk of extinction. It threatens people – all of us. Yet people are also the solution. How we choose to build energy moving forward will change all of us, wherever we are. And in the Kasese district of Uganda, the family of Uenice, Scovia and Jofit purchased a solar panel for their home last month. Our colleagues in Uganda sent us an email sharing the good news. In the email were two photos. The first was a picture of a new light-emitting diode (LED) light bulb, powered by the solar panel, in their living room. The second was one of Uenice, Scovia and Jofit – smiling. Samantha Smith is leader of the WWF Global Climate & Energy Initiative. The WWF is a partner in the initiative in Uganda that puts solar panels on roofs.

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BUILDING A SUSTAINABLE FUTURE FOR SOUTH AFRICA’S WATER Even though South Africa’s Strategic Water Partners Network is a relatively new public-private programme, it’s already on track to achieve its objectives by 2030.

n offshoot of the 2030 Water Resources Group, South Africa’s Strategic Water Partners Network (SWPN) seems likely to achieve its intended goals by 2030. But, if the goals are to be met, key partnerships need to flourish and active participation from all sectors is required. We spoke to Andre Fourie, SWPN South Africa co-chair, about the programme’s goals and progress. How does the SWPN help public, private and non-governmental sectors in South Africa to create a secure, sustainable future for global water? By focusing first on building and facilitating solid relationships between the public, private and non-governmental sectors, we’re better equipped to tackle the tough issues in the water sector. Because trust has been built over time, healthy and honest debates have taken place, enabling government, business and the NGO sector to identify important priorities to secure the country’s water future together. As a result, the SWPN is on track to achieve its intended impact. It remains important for partners and observers of the SWPN to keep a long-term perspective. What has the response been like from the private sector? The SWPN is co-chaired by South African Breweries (SAB) and the Department of Water and Sanitation (previously Water Affairs), with the SAB having funded the bulk of SWPN’s work during the first two years. Other leading companies have since joined in and made substantial financial

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contributions. The 2030 WRG is also making a very welcome annual financial contribution, which has assisted in leveraging substantial financial support from the Department of Water and Sanitation and GIZ. Can you elaborate on the differing focus areas of SWPN? The Effluent and Wastewater Treatment Working Group has already begun Phase 2 of implementing a sustainable water management programme in the Witbank coal mining area. The programme is currently working to define the policy, financing and institutional options needed to reduce water pollution from mines while turning mine wastewater into a resource. The Agricultural Supply Chain Working Group has developed a business case to unlock funding of R4 billion to upgrade the Vaalharts irrigation scheme. The SWPN has also begun facilitating the implementation of

“Water projects do not happen overnight, and especially not projects that could shape the country’s future water balance.” Andre Fourie, SAB Miller and Co-chair of the Strategic Water Partners Network (SWPN) in South Africa.

a proven irrigation management system that reduces water loss. The Water Efficiency and Leakage Reduction Working Group’s No Drop project has been SWPN’s biggest success thus far. An incentive programme was introduced that aims to reduce municipal water loss to 18% by the year 2025, saving over 600 billion litres every year, with a financial value of R2.5 billion. With municipal water loss rates currently recorded at 32%, a model contract that’s compliant with the Municipal Finance Management Act has been drawn up, to help municipalities better contract or partner with the private sector around water conservation and demand management. This approach

Andre Fourie, SAB Miller and SWPN South Africa co-chair

has been endorsed by the Department and is formally included in the government assessment of municipal water supply systems. What do you feel is the biggest challenge within the African context, and in particular, for South Africa? Aside from issues around water pollution, municipal water loss rates are still very high and the country must improve proper operation and maintenance of infrastructure throughout the water sector, and specifically for wastewater treatment facilities. Using water better through more efficient irrigation in the agricultural sector can also have a very positive impact on the national water situation, given that about 70% of water in the country is used in this sector. Contact details Strategic Water Partners Network (SWPN) Secretariat NEPAD Business Foundation Tuscany Office Park, Ground Floor, Building No. 9, 6 Coombe Place, Rivonia, 2128 Johannesburg Tel: +27 10 596 1888 /1893 Email: SWPN.Secretariat@thenbf.co.za Website: www.thenbf.co.za Twitter: www.twitter.com/thenbf

Strategic Water Partners Network South Africa

The 2030 Water Resources Group (2030 WRG) is a unique public-private-civil society collaboration. We facilitate open multi-stakeholder dialogue and support the creation of partnerships which drive action on water resources reform in water stressed countries. The ultimate aim of such reforms and actions is to close the gap between water demand and supply by the year 2030. In South Africa, the 2030 WRG helped to establish the Strategic Water Partners Network (SWPN) in late 2011. The SWPN has rapidly become an established forum for collaboration between stakeholders on the countryâ&#x20AC;&#x2122;s most pressing water resources issues. It has also become a leading example for other countries on how to establish effective national water partnerships between the public and private sectors. The 2030 WRG is assisting other countries in their efforts to replicate this effort, including, in Africa, both Tanzania and Kenya. For more information, please visit www.2030wrg.org.

Direct financial support for the SWPN is provided by SAB Miller, Anglo American, BHP Billiton, Eskom, Sasol, NestlĂŠ, Exxaro, GIZ, the Republic of South Africa Department of Water and Sanitation and the 2030 WRG.

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Stemming the bleeding of Tanzania’s forests Finding a way to curtail and legalise the chopping down of forest trees has had a huge impact on environment and climate change, writes John Kabubu of the WWF.

he sound of a saw cutting deep into the kiaat tree (Pterocarpus angolensis, also called the bloodwood) in a forest in Kisangi village in southern Tanzania fills the air. Sweat drips from the body of 56-year-old Rafii Hashim as he pushes the saw rhythmically back and forth to ensure a smooth cut. The birds are chirping, the forest air is clean and the lungs present are only too happy not to be breathing polluted city air. As the saw cuts through the tree, it bleeds a deep red colour. It’s not unusual for the kiaat tree to release red sap from its trunk when cut. The harvesting of trees in Kisangi village goes on in an orderly manner and without fear. This is because all activities being undertaken are legal and sanctioned by both the government and the community. Forest Stewardship Council certification is slowly taking root in some villages around the Kilwa and Lindi districts in southern Tanzania. Forest management, according to the internationally recognised standards of the Forest Stewardship Council (FSC), delivers environmental services to local and global communities. These include clean air and water and contributing to mitigating the effects of climate change. The FSC addresses issues such as illegal logging,

deforestation and global warming. Its activities have a positive effect on economic development, environmental conservation, poverty alleviation and social and political empowerment. Communities are beginning to realise the benefit of conserving their forests and putting a leash on the illegal timber trade. Despite this step in the right direction, it is worth noting that it hasn’t always been this way in rural Tanzania.

A change for the better

Hashim is optimistic when he speaks about FSC certification and the challenges they experienced before deciding to harvest their timber in a sustainable manner. Hashim and other men in his village harvested trees illegally for meagre earnings before the introduction of standards and certification in their village and the training they received. “Before FSC, we used to get 100 Tanzanian shillings per tree and this wasn’t always guaranteed, since most of this timber was being harvested illegally. This money was not enough for us to do anything,” says Hashim, a father of 13 children. Today, the story is different for Hashim and the people of Kisangi.

“All this knowledge will help us harvest our trees in a way that doesn’t harm the forest and ensures that even our children will have a forest to enjoy.”

Images courtesy of WWF

After receiving training on how to manage forests and take care of them through combined support from the Fællesforeningen for Danmarks Brugsforeninger (FDB, a Danish cooperative retail and wholesale society), the Sound & Fair campaign, Mpingo Conservation and Development Initiative and the Worldwide Fund for Nature (WWF), Hashim and his fellow villagers are beginning to reap the fruits of their hard labour. “This thing called FSC has helped us conserve our forests better. It has helped us know when it is right to harvest and when it is not. We are now making over 100 000 Tanzanian shillings for every cubic metre we harvest. All this knowledge will help us harvest our trees in a way that doesn’t harm the forest and ensures that even our children will have a forest to enjoy,” Hashim says. The forest in and around Kisangi village is a lifeline for the communities that reside in the area. The money generated from the sustainable harvesting of trees has the support of the government. According to National Participatory Forest Management coordinator Joseph Kigula, the government gains when communities advance. “This is their money and their forest. They decide when and how to use the revenue collected from sustainably sourced trees. We are not losing as a government because the villagers here are part of the government. In fact, they are the government,” says Kigula, explaining the benefits of the project. www.nepadbusinessfoundation.org

THE OFFICIAL NEPAD YEARBOOK 2015

Living in harmony with nature

The residents of Kisangi are mainly farmers who grow maize, rice and the cashcrop sesame seed. The forest around the village has many benefits to the community besides timber, including contributing to bringing about rainfall, which is beneficial for crop cultivation. According to Hashim, the benefits of having a healthy forest cannot be underscored enough. “We use the forest for many things. Many stomach ailments in my household are treated using medicine from the forest, from roots and leaves that make our children stronger. Today, our forests are even more beneficial to us after the education we have received so far to open our eyes and minds. We are able to build our schools and hospitals now with money from the forest. We did not know how valuable our forests were until we received education from Mpingo Conservation and Development Initiative,” notes Hashim. It is this education that has kept illegal activities in the forest at bay and given Hashim and the people in his village the will to protect the forest from it. “Before, both outsiders and village insiders harvested trees illegally. Today, every villager watches the forest and takes care of it. We even want to increase the FSC-certified acreage, so that our villages can continue to benefit even more from our forests,” explains Hashim. The plan increase in acreage so that other villages can also benefit has not escaped the radar of conservationists. WWF Coastal East Africa Initiative leader Peter Scheren notes that the conservation organisation has set its standards high in spreading the gospel of sustainable forest management. “We are aiming for at least an additional 1 million hectares of forests to be under various sustainability standards in the near future. As more communities and villages continue to join, we hope that the economies of scale can be reached which, in the end, will help secure the livelihoods of our people.

Worrying challenges remain

“This is only our second harvest, and finding markets to sell our timber continues to be a big obstacle toward the development of the village,” he explains with concern on his face. This challenge could easily see the communities in Kilwa and Lindi districts revert to illegal activities and trade in timber. A great tree has come crashing down, but the benefits of this project are evident. Hospitals, schools and other development projects will be carried out with funds from the sale of sustainably harvested timber. Communities will develop and forests will thrive – provided that markets are found for this community to keep FSC certification running on its own, sustainably. John Kabubu is communications manager for the WWF Coastal East Africa Initiative.

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The simple innovations lighting Africa Sub-Saharan Africa has a serious problem with energy poverty, but there are ways to counter this, writes WWF Africa energy coordinator Robert Ddamulira. www.nepadbusinessfoundation.org

THE OFFICIAL NEPAD YEARBOOK 2015

Energy poverty – lack of access to modern energy services, which the UN is seeking to address – is widespread in sub-Saharan Africa. According to the International Energy Agency, six out of the 10 energy-poorest countries globally are found in sub-Saharan Africa. These are, in ascending order: Nigeria, Ethiopia, Democratic Republic of the Congo, Tanzania, Kenya and Uganda. More than 74% of the world’s people who are without modern energy services live in 10 countries – these six and four Asian countries: India, Bangladesh, Indonesia and Pakistan. Energy poverty in Asia is expected to fall by more than 250 million people, while in sub-Saharan Africa this challenge is expected to grow by more than 100 million people, from about 580 million people to nearly

700 million people by 2030, according to the International Energy Agency. The energy poverty challenge in subSaharan Africa is daunting, and to overcome it we need to deploy unusual solutions. Today, more than ever, we have an opportunity to make a big difference in this area. Energy-poor people in sub-Saharan Africa spend more than US$11 billion on paraffin each year to light their homes, the International Finance Corporation said in 2011. In addition to this, an estimated 600 000 people die prematurely each year from indoor air pollution associated with paraffin lamps and cooking with traditional firewood and charcoal. So, there is a strong economic and health imperative for sustainable energy solutions across sub-Saharan Africa.

The WWF recognises that energy poverty has important implications for the long-term harmony between human development and nature conservation.

Image courtesy of WWF

bout 200 km from Kampala in Uganda, lies an important milestone in the history of humanity – the Nyero Rock Paintings. They depict a series of concentric circles representing energy rays from the sun. Archaeologists have estimated that these paintings were made by our Stone Age ancestors more than 50 000 years ago. Today, humanity has moved on from the Stone Age – not because the world ran out of stones, but because we found a better way to accomplish everyday tasks using more effective tools. The transition from the Stone Age to today’s digital age has been gradual, but is now considered complete. If our ancestors from 50 000 years ago could come back to life today, they would be living in a world beyond their wildest imaginings. The United Nations (UN) is challenging us to imagine a new age – one where everyone has access to modern energy services. It is challenging us to make this happen – not in 50 000 years, but within 15 years, by 2030. The UN Agenda to End Global Energy Poverty 2030 is premised on three mutually reinforcing global aspirations: • ensuring access to modern energy services for all; • doubling the share of renewable energy; and • doubling the rate of growth in energy efficiency.

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CLIMATE CHANGE AND ENVIRONMENT

To give momentum to the UN’s global aim of sustainable energy for all, the decade between 2014 and 2024 has been made the decade of Sustainable Energy for All (SE4ALL), and 2015 has been declared the International Year of Light. The Worldwide Fund for Nature (WWF) Regional Office for Africa is committed to being an important player in SE4ALL in Africa. We recognise that energy poverty has important implications for the long-term harmony between human development and nature conservation.

A 13-year-old Maasai boy called Richard Turere came up with an ingenious, yet simple, solar lighting solution to make peace with lions.

Images courtesy of WWF

The dependence on traditional biomass energy is contributing to more than 70% of forest loss in six countries in East and southern Africa where the bulk of our sustainable energy interventions are focused: Mozambique, Zambia, Zimbabwe, Uganda, Kenya and Tanzania. Overall, an estimated 1.2 million hectares of primary natural forest are lost each year in only these six countries, and dependence on traditional forms of biomass is an important driving force behind this loss. In some countries, such as Uganda, if energy poverty persists, nearly 100% of all forests will be lost by 2050. Renewable and sustainable solutions to address energy poverty are not only available but are getting cheaper every day. The cost of solar photovoltaic technologies has fallen at a faster rate than predicted, in part due to technological innovation and lower raw material prices, hence lower manufacturing costs. In 2011 alone, the price of solar dropped by more than 40%, according to the International Finance Corporation. However, due to various barriers, the growth in adoption of sustainable energy solutions across subSaharan Africa remains a huge challenge. With its global network of expertise, WWF believes it can be an important contributor, convener and catalyst in enabling the accelerated widespread adoption of renewable, sustainable energy solutions in sub-Saharan Africa. As part of its contribution to the UN International Year of Light, WWF’s Africa Energy Hub is supporting two special initiatives. These are briefly described below.

National Park. For many years, hungry lions have been finding easy prey in their kraals. In revenge, the Maasai would routinely poison animal carcasses, which the lions would eat and die, pushing the alreadythreatened lion populations to the brink of extinction in that area. A 13-year-old Maasai boy called Richard Turere came up with an ingenious, yet simple, solar lighting solution to make peace with lions. It involved placing flickering solar lights around his kraal at night. In the lions’ minds, these represented people with spears waiting at the edge of the kraal to kill them, so they returned to the wild and their ageold diet of antelope and zebras. WWF-Kenya is working with several Maasai communities to install Richard’s peaceful solution to the long-standing human-wildlife conflict. WWF-Kenya is also providing extra lights to enable young people like Richard to do their homework at night in these mostly off-grid, energy-poor Maasai communities.

Solar for education (S4E)

The WWF is working with WWFTanzania to target schools as centres of community transformation. We believe that great young people like Richard exist in Tanzania, too – and elsewhere in Africa – but they don’t know much about modern renewable energy solutions. The people facing energy poverty challenges are best placed to imagine solutions that could solve endemic energy problems. We are sourcing ideas from pupils in off-grid primary and secondary schools by challenging them to write essays about how solar lighting and phonecharging solutions can improve their lives and their communities. A competition, to be held as part of the Earth Hour 2015 activities, will recognise

Solar lights making peace with lions Working with WWF-Kenya, we are promoting the rollout of a solar lighting initiative to help resolve the human-wildlife conflict in the Maasai Mara. The Maasai are a pastoral tribe, who live close to Nairobi www.nepadbusinessfoundation.org

outstanding ideas from one primary school and one secondary school. These institutions will be rewarded with a solar system to provide light and improve education outcomes. All ideas generated from this process will be integrated into WWFTanzania’s energy programme. The WWF calls on all stakeholders across Africa – government authorities, development partners, civil society, religious and cultural leaders – to add their voices to ours in promoting and adopting renewable and sustainable energy solutions in Tanzania and the rest of Africa. By working together, we can end energy poverty within our generation.

Parabolic reflector stove

Margaret Wamjiru Mundia with solar powered torch in Kenya.

PwC embarks on its own business journey across the African continent More and more investors around the world are seeing the growth potential of Africa – especially its substantial demographic edge. Africa has become one of the world’s most popular investment destinations. Six of the world’s fastest-growing economies are in sub-Saharan Africa (SSA). Foreign investors are planning new developments and expanding existing ones in Africa. Africans are leading the way with more investments, showing optimism about the growth and investment potential of the continent. According to the recent Regional Economic Outlook for SSA published by the International Monetary Fund (IMF), gross domestic product (GDP) growth is expected to go up from 5% in 2013-2014 to 5,75% in 2015. This is a positive view. However, some countries do face serious challenges. In West Africa, the Ebola virus has caused the tragic loss of human life and is also placing significant strain on several economies. Some countries have to contend with their own domestic and internal challenges: South Africa’s growth has been low due to difficult labour relations and not being able to supply enough electricity, amongst other things. On a more positive note, the IMF projected a record investment into Africa of USD80 billion in 2014, from both advanced and emerging economies. Real estate, financial services, telecommunications, infrastructure, resources and consumer-facing businesses are some of the industries that will drive growth and attract international trade and investment.

the predominantly English-speaking regions of Southern, West and East Africa, which is led and managed by a single leadership team. In 2014, PwC Africa announced an alliance with PwC in the UK to meet an increased demand for professional services as trade activity between the two regions grows. What this means for clients is that PwC is well positioned to serve them better across Africa, with the full benefit of PwC’s global reach. Global megatrends are also influencing business and society. According to PwC research, African CEOs see technological changes, urbanisation and demographic changes as the three main trends that will transform their business over the next five years. They know how these trends will affect both their business and the way Africa is seen. The long-term growth of Africa will be affected by internal social and demographic trends, especially the fast urbanisation of Africa’s people and the rise of middle-class consumers. Most large Western corporations are already active in at least one of the three largest cities in SSA: Kinshasa, Johannesburg and Lagos. By 2060, Africa’s middle class is expected to reach 1,1 billion, which will by then be 42% of the population, according to the African Development Bank. This growth is creating significant opportunities, particularly for companies in the sectors in which richer consumers typically spend their money, such as recreation and services.

Daniel Silke, political analyst and author of ‘Tracking the Future: Top trends that will shape South Africa and the World’, presents a convincing case for the future of Africa, focusing on the growth of cities and their influence, and the rapid rise of the African consumer.

The ever-changing African landscape will pose challenges and opportunities for companies doing business across the continent. It is through our engagement and dialogue with clients that we are able to call on our unique and wide range of expertise and skills, as well as provide insights and analysis that may be useful to those doing business in Africa.

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ADVERTORIAL

NETAFIM: FUTURE AGRICULTURE OR

THE FUTURE IN AGRICULTURE? The world’s population will reach 8 billion by 2025 and 9 billion by 2050, according to various forecasts. That may seem quite far off from now, but these numbers have many implications.

he gravest warnings indicate that if the current trend of rising food demand continues, the world population’s massive growth will lead to a global food crisis. The food crisis is an issue for many, and several companies are taking significant steps to address the challenge of producing enough food for the world’s growing population. By nature, future agriculture will be responsible for most of the food supply, but it’s important to remember that agriculture is undergoing many changes, and will appear quite different than today. Will future agriculture be able to supply enough food for the world’s population? Is there a place for manual labour in a world that worships high-tech? How will agriculture look in another decade and beyond? And no less important, how will we reduce the environmental damage caused by unsustainable agriculture, which leads to wasted water, a greater greenhouse gas effect, and nitrate removal from groundwater? In looking forward, it’s clear that agriculture faces significant cultural changes. The next generation of growers will not be founded on mud and boots. Photographs of hundreds of growers bending down in rice fields that have been irrigated by flooding for eternity will disappear. And the cultivation of all crops will be fully mechanised – from planting to harvesting. Tractors will be equipped with GPS navigation systems, and will be able to generate precise performance reports. Sprayers and fertiliser systems will be able to distribute a selective amount of water and nutrients based on a camera scan of the surface area approached by tractors. In short, we’re undergoing a total revolution. In preparation for the future, Netafim is

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promoting partnerships with mechanisation companies to create a situation whereby planting machines will take in drip-irrigated water and harvesting machines will dispose of the same water – all in one step. But that’s not all. With the help of technology, the future grower will rarely go to the field, but rather will manage things from home. On a recent visit to India, I heard an expression accurately describing the changes taking place. Future agriculture will be ‘white-collar’ agriculture (where I’m from, the concept ‘weekend agriculture’ was developed). The grower will receive data from the field, including photographs and SMS alerts, and will visit it only on weekends. This remains a long-term vision, even though today some tasks can already be carried out not only from home, but also by smartphone. Netafim recently developed uManage™, a system that remotely controls and monitors agricultural activity. uManage enables growers to collect, manage and analyse crop information, and to manage irrigation and fertiliser performance, as well as yield and vegetation status. The system even enables users to analyse other factors impacting crops (e.g. wind direction, weather forecast, temperature, radiation, ground dampness, fertiliser). This is the direction toward which the agricultural world is heading, and growers with ploughs will, in all likelihood, become a distant memory of the past. Agricultural progress is one way to confront the current global trend of rising food demand, but obviously it’s not the only way. What other methods exist? Yield increase per unit area while saving water: The rise in food demand forces us to grow more produce within our existing land area, thereby presenting a serious challenge. How do we address it? We believe in the concept of ‘growing more with less’ (less land, less water, less energy). It’s possible to double many crops’ yields with half the amount of water. Rice is the clearest example. For years, rice was flooded with water based on traditional agricultural practices, which wasted much water on the one hand, and caused environmental damage on the other (flood irrigation increases greenhouse gas emissions). But more significantly, flooding didn’t maximise yields. Based on research and experimentation across the globe, drip-irrigated rice generates larger yields and causes less environmental damage than flooding.

Dubi Raz, Agronomy director, Netafim Genetic cultivation of new high-yield varieties: According to estimates, over onethird of the world’s population lives in areas suffering from a water shortage. Glaciers are melting, droughts are becoming more frequent, and aquifers are emptying out – all pointing to a growing global problem that will impact many areas, including, of course, agriculture. The main message within this context is that new and more durable varieties that generate 10-30% more yield with the same amount of water will be developed. Optimised fertilisation adapted to the plant’s pace of growth: This is carried out with precise quantities of water so that nitrates are not removed from the groundwater, as is the case with flooding. While on the subject of flooding, it appears that due to the creation of anaerobic conditions, far larger quantities of methane gas and CO2 are released into the air compared to drip, thereby leading to a greater greenhouse gas effect. Drip as a delivery system: Rather than spraying harmful chemicals from airplanes, which creates air pollution, we can deliver many pesticides at lower volumes directly to the root system to achieve effective pest control. Beyond that, we’ve identified many ‘green’ materials such as mycorrhizas – symbiotic relationships between fungi and plant roots – and diverse bacteria, which can not only deliver drip-irrigated water, but also enlarge the root system, leading to significantly greater yields. In conclusion, the agricultural world is undergoing radical changes that are affecting us today, and will have an even greater impact in the future. At Netafim, we hope that the current challenges will spur on the development of effective solutions that will improve agriculture and the quality of food we eat.

Contact details Netafim South Africa Head office +27 21 987 0477 Email: sales@netafim.net www.netafim.co.za

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Shaping the continent’s growth Dianna Games identifies the five top challenges and opportunities facing Africa.

ore than a decade of solid economic growth, coupled with improving governance, economic reform and a new focus on tackling long-standing challenges have positioned Africa as an attractive destination for investment and global attention. But the continent is experiencing a range of challenges that have led to lower growth estimates. The International Monetary Fund has cut its forecast for economic growth in sub-Saharan Africa to 4.9% from an earlier projection of 5.8%. The World Bank suggests 2015 growth will be 4.6%. The challenges are the result of pervasive internal and external factors that highlight countries’ vulnerability to exogenous shocks and the need for structural change. While being mindful that Africa comprises 55 diverse and complex countries, selected challenges and opportunities that will continue to affect the continent in the short term are listed below.

Top five challenges 2015/16 1. Resource dependence Africa remains a resource-dependent continent as countries producing commodities from oil to copper tend to rely on the vagaries of world markets and price cycles for the bulk of their revenue and foreign exchange requirements. The failure to restructure economies during times of high commodity prices continues to cause financial pain during down cycles. A plummeting oil price – down more than 50% between June 2014 and February 2015 – has again highlighted the need for resource-rich countries to diversify their economies and create financial cushions to allow them to deal with price shocks. Although non-oil producers are enjoying a fiscal breather from high import bills in this era of low oil prices, some of the continent’s www.nepadbusinessfoundation.org

The failure to restructure economies during times of high commodity prices continues to cause financial pain during down cycles. biggest economies are struggling. Nigeria has cut its growth outlook, while Angola faces serious austerity measures after slashing US$14 billion from its 2015 budget. Other oil producers are similarly affected, as are producers of base metals – coal, copper, iron ore and steel – as prices soften on the back of weakening global demand. 2. Infrastructure deficits Although the African Union (AU), African Development Bank and other institutions have prioritised infrastructure delivery in Africa, progress is slow. Energy shortages persist, despite billions of dollars of investment in the sector, while transport infrastructure is failing to keep up with increasing trade and economic activity, adding significantly to the cost and difficulty of doing business in Africa. While capital is being mobilised effectively for investment in infrastructure, many factors preclude progress in project delivery. These include a lack of effective regulatory frameworks and attractive tariff and offtake arrangements, little capacity within state organisations to manage large capital infrastructure projects, political interference in projects and a skills deficit. 3. Growing conflict The rise of extremist groups in Africa is fuelling concerns about security. Boko

Haram in Nigeria and al-Shabaab in the Horn of Africa have stepped up their activities, and states seem unable to contain their violent activities. This has raised fears that the trend will spread to other areas of the continent as they become emboldened and take advantage of growing links with their international counterparts. Local conflicts are spilling over borders in east and central Africa as rebel groups become embroiled in regional tension and act as proxies for interstate hostilities. This is particularly the case in East Africa and the Horn and, increasingly, in parts of West Africa. Sea piracy is also on the rise in West Africa. 4. Ebola Even as signs emerge in 2015 that the Ebola epidemic may be slowing down, the full impact of the contagion has not yet been measured in terms of social dislocation, disruption of economic activity and regional trade, and diversion of scarce funds into emergency services in the three worst-affected countries – Liberia, Sierra Leone and Guinea. The broader effect of the contagion on the rest of the continent in terms of lost business opportunities and investment, declining tourist numbers and the overall branding of the continent has also not been quantified. However, anecdotally, it has been significant, making a large dent in the international perception of Africa as an exciting, highgrowth frontier region for investment. 5. Education and skills development Quality education for the mass of Africans remains elusive, despite high levels of spending on schools in many countries. The United Nations Educational, Scientific and Cultural Organisation (UNESCO) says nearly 40% of African adults are illiterate – two-thirds of them women. Despite the fact that AU member states have undertaken to commit at least 6% of gross domestic product

THE OFFICIAL NEPAD YEARBOOK 2015

(GDP) to education, schooling outcomes are not optimal and tertiary education remains elusive to many. Skills shortages are also a brake on economic development, and on governance and institution-building. Education and training is a key underpinning for the African growth story, but it is not being developed at the pace required to take advantage of investment opportunities and to maximise policies prioritising local empowerment.

Top five opportunities 1. Sustained economic growth Although there are headwinds that are affecting growth prospects, the trajectory remains positive and many countries continue to pursue the economic, political

2. Political stability In spite of pockets of internal conflict and contested political power across the continent, political stability and peaceful transfers of power are becoming the norm in Africa, lowering the political risk for investors and allowing space for building institutions and better governance. However, political stability is just one element in creating an environment for inclusive and sustainable growth. Robust and predictable policy, inclusive economic growth and effective governance are also required to build the economies of the future, and these are still lacking in most countries. 3. Economic diversification Although many countries remain dependent on resources for revenue, there is a trend towards greater economic diversification as investors seek opportunities emanating from growing populations, rapid urbanisation and increasing disposable income. Significant drivers of diversification are information and communications technology (ICT), consumer goods industries, hospitality and aviation, and agriculture and construction.

4. Capital and revenue diversification As Africa moves away from international aid, revenue streams are becoming more diversified. Remittances, for example, are higher than official direct assistance to Africa. The rebasing of economies has moved many countries to middle-income status, enabling them to borrow money for development on international capital markets, while policymakers are looking at how to use trapped capital in pension funds to leverage growth. The continent is also benefiting from high levels of foreign direct investment. 5. Innovation and connectedness Innovation is key to the transformation of African economies. The continent, with a large young population and the proven ability to take up new technologies, is wellplaced to address many of its challenges through innovative thinking and product development. As a result of improving internet connectivity and access to mobile devices, Africans are more connected to the global community, and each other, than ever before â&#x20AC;&#x201C; an environment that is conducive to innovative thinking, sharing ideas and successful models.

Dianna Games is a leading commentator, author and columnist on business issues, trends and developments in Africa. She is also the CEO of business consultancy Africa @ Work.

Image courtesy of Juliya Shangarey/Shutterstock.com

The continent, with a large young population and the proven ability to take up new technologies, is well-placed to address many of its challenges through innovative thinking and product development.

and social reforms that help to support this performance. Despite the facts that some of the fastest-growing economies in Africa are coming off a low base and many are resource-dependent, there is no doubt this growth is helping to create employment and opportunities for many more Africans than in the past.

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Brics Bank heralds a new power player in the international arena As Brics takes control of its future with the imminent launch of its bank, Laetitia Habchi considers what this means for the world.

he Brics Bank is soon going to be a reality. It will be a development bank, whose purpose is to mobilise resources for infrastructure and sustainable development projects in the Brics (Brazil, Russia, India, China and South Africa) countries and other emerging economies, particularly in Africa. The creation of the New Development Bank (NDB) and a Contingent Reserve Arrangement (CRA) – which will act as an extra safety net in the event of financial crisis – was endorsed at the Brics summit in July 2014. At the end of February 2015, India’s Union Cabinet cleared its creation. Around the same time, the Russian State Duma ratified the US$100 billion Brics Bank, and the Russian Finance Ministry said the bank would start operating at the end of 2015. Russia agreed to provide US$2 billion from the federal budget for the bank over the next seven years. While the headquarters will be in Shanghai, China, the first president of the bank will come from India and the first chairman of the board of directors will come from Brazil. South Africa will be the first regional centre. Laetitia Habchi, head of the NEPAD Business Foundation’s infrastructure desk in South Africa, says the set-up of the two new institutions (NDB and CRA) was originally announced at the New Delhi Brics summit in 2012. Two years later, the Brics members agreed on the amounts of US$100 million for each institution, with an initial subscription of US$50 million for the NDB and the distribution of capital between the countries. Habchi was previously senior investment officer at Agence Française de Développement from 1995. From 2010 to 2012, she was seconded to the Development Bank of Southern Africa.

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THE OFFICIAL NEPAD YEARBOOK 2015

She says it is important to note that establishing such a banking institution is not simple. “The fact that member countries have managed to do this is an achievement in itself,” she says. “The formation of the new bank will increase the availability of liquidity for infrastructure projects. It will also contribute to increasing competition when projects are submitted. This will also have a stimulating effect and should accelerate the duration of

the due diligence for loan approvals. “Currently, there is not much information on the financial products that the bank will offer, since the finance ministers of the Brics countries still have to work out the modalities for its operationalisation.” It remains to be seen what value the Brics bank can bring in a world of international finance, where there are already a large number of tried and tested models, says Habchi. “This new bank may not be able to finance core infrastructure projects for which the returns on investment are weak and on a very long term; as an example, in the water sector. “The bank also does not appear to have been established to improve access to financing for those excluded from the structured economy,” Habchi says. “This is above all because any new, less-restrictive rules in the decision process on loans would necessarily lead to a higher risk-taking level. This would jeopardise the sustainability of the NDB in the long term.” Habchi suggests the financial tools of a

multi-sovereign ‘risk equity’ Brics fund or a guarantee fund for the construction phases for public-private partnership infrastructure projects should be explored. She says these types of financial products are being considered by NEPAD. Habchi believes that if the ambitions of the Brics countries are not stemmed, the power will shift, with a reduction in the hegemony of the dollar and a reduction in the strength of the World Bank and International Monetary Fund (IMF). “Emerging countries accuse the latter [World Bank and IMF] of being too slow in their own reforms, and too rigid and stringent in the loans conditions precedent,” says Habchi. “The creation of the NDB/CRA can partly be explained by the fact that the IMF is slow to modernise its governance to reflect the increase of the emerging country weight in the world economy.” She maintains that the foreseeable upheaval in the distribution of global energy resources also has an impact on the relations

Image courtesy of GCIS

“Emerging countries are aware of their increasing power. At the moment, they are showing a determination to differentiate themselves from the West.”

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between Brics and the West. “The gas supply agreement between Russia and China provided a glimpse of what can be expected,” she says. In November 2014, the two Brics countries signed a US$400 billion gas-supply deal – the second between them in a few months – in which Russia is to supply China with gas.

“A new political focus has appeared and will be a force to reckon with. There is an increasing alignment of the Brics, which would have been inconceivable just a few years ago.” Putin has ordered this eastward shift for the country’s economy to avoid isolation following the imposition of Western sanctions over the Ukraine crisis, according to Reuters in November 2014. “More recently, the Brics countries have refrained from criticising Russia’s position in the conflict in Ukraine,” says Habchi. “Any issue between the West and Russia leads to new trade opportunities for the Brics. “This is why South Africa views positively Russia’s embargo on certain European food products, such as fruit and vegetables. It is still not clear what will be the consequences

Brics leaders

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of Russia’s recent embargo on Europe in retaliation to Western sanctions. “A new political focus has appeared and will be a force to reckon with. There is an increasing alignment of the Brics, which would have been inconceivable just a few years ago.” Habchi maintains that the West doesn’t take “sufficient account” of Brics’s power. “The West also has its strengths, starting, until now, with its financial capacity. For example, the subscribed share capital of the European Investment Bank alone stands at €243 billion; this amount is well above that of NDB. The know-how and the experience of the West remains at an unparalleled level.” The Brics countries’ expertise and technical and scientific research must continue developing, she says. Also, she adds, if Mexico, Indonesia, Nigeria and Turkey (sometimes referred to as the ‘Mint’ economies) are added to Brics, the gross domestic product (GDP) of this group would be close to that of the G7 and it is expected to be double by 2050. “Emerging countries are aware of their increasing power,” says Habchi. “At the moment, they are showing a determination to differentiate themselves from the West. Cooperation with the multilateral and bilateral development banks is not their priority. The West must nevertheless seek to continue to strengthen the dialogue, because long-term sustainable economic development depends on it.” Habchi believes it is too early to predict the outcome of this new power relationship. Although the Brics countries represents 50% of the world’s poor, they promise a different and, therefore, innovative development

policy. However, they are lagging behind in the fight against poverty, and the European economies have a far more inclusive social model, she says. And while the Brics countries’ main strength lies in their flexibility and responsiveness, they are still struggling to develop innovative models to promote employment. However, they aren’t alone in this – it is a challenge the whole world is facing. In southern countries, there is, however, “frugal innovation” that could be further explored by Brics as a solution to the fight against poverty, Habchi says. South Africa, as a bridgehead, is an important access point to the wider African market, as it is the leading economy in terms of governance, average GDP per capita, and the development of its infrastructure. Brics gives it the opportunity to play a major role in the sustainable development of the continent, according to Habchi. “Africa’s development will not come from the outside but from its capacity for inclusion, regional integration, continuous improvement in the business environment, infrastructure development and its industrialisation,” says Habchi. “To achieve this, Africa needs good governance, new management methods within an open and informed partnership, whether this is with the Brics or with the West. “Will sub-Saharan African countries manage to develop balanced, long-term relations with the Brics, without rejecting their Western allies? All this is an encouragement for Africa to take ownership of its destiny.” http://ideas4development.org/en/the-brics-banknew-actor-for-the-development/

Image courtesy of GCIS

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Public-private partnerships –

a partnership of peers Lesley Wentworth considers the real value of public-private partnerships in infrastructure, and how they work best.

ith an estimated infrastructure financing requirement of US$1 trillion per year to 2020, developing economies face substantial investment challenges. This amount addresses backlogs and the maintenance of assets, while an additional US$300 billion per year is needed to reduce carbon emissions and increase the climate resilience of these infrastructure developments. Recently, African governments have had some success raising funds on international markets, reducing their reliance on aid, but significant funding gaps remain. Without private sector financing, the infrastructure gap will continue to widen – notwithstanding commitments, such as United States (US) President Obama’s pledge of US$7 billion through the Power Africa initiative and Japan’s pledge of US$14 billion between 2013 and 2017, as well as the engagement of regional and multilateral development finance institutions. Development finance institutions play an important role in establishing project credibility and leveraging private participation – for instance, through joint financing (or blending) with government. In addition, long-term financing instruments, such as infrastructure bonds and pension funds, have begun to make a difference in the financing of infrastructure. Despite the African Development Bank’s US$40 billion contribution to the African Domestic Bond Fund, the African bond market is at an incipient level. This alternate source of financing may eventually lead to a significant deepening of financial markets in African regions.

Private participation in infrastructure (PPI) in Africa

In sub-Saharan Africa, between 1990 and 2013, 499 infrastructure projects with private participation reached financial close in 47 countries. Telecommunications comprised about 205 of these projects, but made up 76% of the total infrastructure investment portfolio (US$108.7 billion), followed by energy (US$22.4 billion), transport (US$18.2 billion) and water and sanitation (US$392 million). Since the global financial crisis, the number of energy projects showed significant growth (46 projects), although investments in energy totalled approximately US$11.3 billion and in telecommunications US$22.5 billion (14 projects), according to the World Bank and Public-Private Infrastructure Advisory Facility’s Private Participation in Infrastructure database. During the period, 57 projects were cancelled or classified “under distress (facing international arbitration or there has been a formal request for cancellation)”.

Many African infrastructure projects are transnational in nature, adding complexity and risk – with multiple jurisdictions, lack of regulatory and legislative harmonisation and multiple procurement systems. www.nepadbusinessfoundation.org

THE OFFICIAL NEPAD YEARBOOK 2015

(minimal involvement through short-term procurement of the private sector). Nonetheless, the difference is that under a PPP, the government is responsible for the provision of a public service, albeit through a service provider or partner. PPPs involve the private sector ‘bundling’ various operations, such as: • designing, building, maintaining and/or upgrading the public sector infrastructure; • assuming substantial financial, technical and operational risks; • receiving financial return through payments over the contract period from user fees or tariffs, repayment revenues from the public sector, or a combination of these; and • typically, returning the infrastructure ownership to government at the end of the contract. In Africa, the two most common forms of PPPs are concession and availability-based PPPs: • The concession is a long-term contract (20–30 years), after which the operation reverts to the government. The private operator recoups its investment, operating and financing costs with profits through user-pays models, which need to be appropriate for citizens. • Availability-based PPPs are epitomised by power purchase agreements used, for example, in energy-generation projects, where private investors build a power plant and contract to sell the electricity they generate to a government utility.

PPP innovations in Africa

Source: World Bank and PPIAF, PPI Project Database. (http://ppi.worldbank.org)

Worldwide, since the 1980s, private sector participation in facilities historically considered the domain of the public sector has grown and matured. Public-private partnerships (PPPs) have been the most popular modality for involving private sector firms in governmentowned assets or service responsibilities. Various models have evolved, considering different risks being carried by the most appropriate partners, as well as the extension of the model to additional partners – such as academic institutions and civil society organisations. Infrastructure development ranks high on the continent’s priority list, and there are several continental infrastructure initiatives under development by African intergovernmental bodies, such as like the African Union and NEPAD, as well as regional economic communities. Many African infrastructure projects are transnational in nature, adding complexity and risk – with multiple jurisdictions, lack of regulatory and legislative harmonisation and multiple procurement systems. With proper project planning and clear ownership at the national level, along with a willingness to commit to reforming procurement and public service delivery – especially with a view to building a stronger regional economy – these risks can largely be mitigated. Intrinsically, this emphasises the strong catalytic role infrastructure development has in regional economic integration. Foreign direct investment in infrastructure – where the infrastructure asset is determined to be within the public interest, sustainable and affordable for the end-user – can bring economic spillovers that leave the host economy better off. This remains an area of contention, especially among civil society organisations that seek to reduce negative impact on affected communities, their environment and livelihood. Civil society organisations are an important partner in the modern concept of PPPs.

Decoding PPPs

Economic studies on PPPs often show these on a scale of private sector involvement ranging from privatisation (full equity, ownership and management of the private sector) to short-term service contracts

Despite Africa’s many challenges, including pockets of political instability, a lack of home-grown and innovative financing models and a dearth of local capacity for project preparation, there have been a number of innovations that have ensured that PPP projects are moving towards best practice. Among them, Kivu Watt has been lauded worldwide for its innovation. It involves the construction of an integrated methane gas extraction and a 25 megawatt power plant in Rwanda. International partners include global energy developer and operator, ContourGlobal, and the Rwandan utility company Energy, Water and Sanitation Authority. Among the financiers are the Emerging Africa Infrastructure Fund, the Netherlands Development Finance Company and African Development Bank. Political risk insurance is provided by the World Bank’s Multilateral Investment Guarantee Agency (MIGA). The Kivu Watt project entails the extraction of toxic methane gas from the depths of Lake Kivu to be used as fuel and electricity, and is poised to change the power sector in Rwanda. Other interesting projects include: • The Lesotho National Referral Hospital, the first full-service health PPP in Africa outside of South Africa, which is run by the Tsepong Consortium (a consortium of several Lesotho based companies) and guided by the South African company Netcare. The project is intended to bring together basic healthcare with specialised medical facilities and training for staff. • In terms of transport hubs, the Port of Cotonou in Benin leads in the quest for investment in African ports for greater trade. The project involves Bolloré of France and the Société de Manutention du Terminal à Conteneurs de Cotonou, in the bid for a 25-year concession to build and operate the South Wharf Container Terminal. Namibia’s Walvis Bay Gateway Terminal is another such development to watch. Essentially, infrastructure assets are illiquid, requiring large upfront capital outlays and a continuous revenue stream. This is a tall order for governments and the role of the private sector, as competent and scrupulous partner in finance, operation and commercial and political insurance is essential. This is especially so with shallow African financial markets and strained government budgets. PPPs offer a solution to the infrastructure deficit as long as this is a partnership of peers, with transparent motivations. The aim is affordable infrastructure assets and services, which leave the economy – and, importantly, the end-user – better off. www.nepad.org

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WITH A DEAL FOOTPRINT ACROSS 35 AFRICAN COUNTRIES With an office in Nigeria, and one in Ghana due to be opened this year, Rand Merchant Bank (RMB) has positioned itself to facilitate and fund many of West Africa’s infrastructural projects.

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ur deep sector understanding and expert knowledge of local financing requirements, legal and jurisdictional frameworks, together with the ability to leverage the balance sheet of FirstRand Bank, enables us to service the needs of the rapidly expanding West African economy,” says Ato Gyasi, Investment Banking co-head at RMB Nigeria. FirstRand Bank is a wholly-owned subsidiary of FirstRand Limited, one of Africa’s largest financial services groups listed on the Johannesburg and Namibian stock exchanges. “We offer clients advisory, capital markets, financing and principal investing solutions,” says Ayo Olajiga, Client Coverage head at RMB Nigeria. “We have had a

Ayo Olajiga, Client Coverage head at RMB Nigeria

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merchant banking licence in Nigeria since 2012, while our soon-to-be opened office in Ghana will give us further impetus to provide investment banking products and services across West Africa.” Two of the many West African deals RMB has recently lead-arranged include Cenpower, a greenfields independent power plant (IPP) in Tema, Ghana, and a facility to fund various capital projects for African Steel Mills in Nigeria. Cenpower’s power plant, the construction of which began earlier this year, will be a combined cycle gas turbine plant with a capacity of 350MW and a total project cost, including associated substation, fuel treatment infrastructure and working capital, of around US$900 million (US$650 million debt and US$250 million equity). It will improve Ghana’s electricity supply security by increasing the country’s generation capacity by around 13%. RMB acted as global coordinator, initial mandated lead arranger, bookrunner and hedging coordinator for the US$650 million debt facilities to fund the plant’s construction. “Cenpower is an important deal in the African context, as it has largely been done by African banks and institutions with a small number of international partners,” Gyasi says. “The founding shareholders are Ghanaian, while 67% of the equity will be held by African entities. The construction company is African and 83% of the senior debt is issued by African lenders. We believe Cenpower provides an important template for future project financed IPPs in Africa.” In Nigeria, RMB arranged and financed a three-year term facility for African Steel Mills for use in various capital projects. African Steel Mills, the largest importer of end products in the steel production process in Nigeria, is part of the African Industries Group, an international group which manufactures and trades a wide range of industrial and chemical products such as steel, glass and sodium silicate. As well as importing steel products, African Steel Mills also manufactures them, 60% to 70% of which are derived from scrap metal. “Scrap metal usually transforms into an environmental problem and African Steel Mills is using its skills to clean up the streets,” says Olajiga. “By encouraging unemployed people to collect scrap metal, African Steel Mills is creating employment while also

contributing to the local beneficiation of metals in Nigeria. This waste to wealth approach is reducing poverty and protecting the environment.” However, West Africa is not the only region which is contributing to Africa’s growth story. The ongoing need for sustainable infrastructure and technology, coupled with the need for reliable financial services, means Africa probably holds the greatest overall investment potential of all frontier markets globally. RMB offers clients on-the-ground financial services which have been accumulated over many years of doing deals on the African continent.

Ato Gyasi, Investment Banking co-head at RMB Nigeria

Contact details RMB Nigeria 12th Floor Churchgate Towers 2 Plot PC 31 Churchgate Street, Victoria Island Lagos, Nigeria Switchboard: +234 (0)1 463 7900 Email: info@rmb.com.ng

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Is foreign investment just another form of colonisation? Africa has become a popular with foreign investors, but how much does this continent and its people gain from this, asks Stuart Graham.

n the days when the British administered what was then the Nyasaland Protectorate (now Malawi), the rolling cane fields of Nchalo Sugar Estate south of Blantyre would have been a proud symbol of colonial rule. Today, the estate is run by South African company Illovo Sugar, but unlike the colonial days when infrastructure development was focused around the needs of British farmers, the company has undertaken responsible investment by developing the communities in which it operates. One of the main aspects of its policy is to develop local economies by supporting and mentoring local farmers through apprenticeships and management development programmes. “We set ourselves up so that we are in a position to buy from local cane farmers as much as possible,” says Illovo spokesman Chris Fitzgerald. “We make a point of doing this in all the countries we operate in, including Malawi, Mozambique, Zambia, Tanzania and Swaziland.” About 416 000 tons of the 2.4 million tons of Malawi's sugar cane production in the past financial year came from Malawian outgrowers (small contract farmers). Since then, two new outgrower projects, the Phata and Kasinthula phase four schemes, have been launched. One of the bonuses for small farmers, says Fitzgerald, is that growers can deliver to the factory door. Illovo takes care of the processing, refining and distribution. At the end of last year, the company launched its Managers in Training Programme to develop the skills of locals. It now has 158 senior managers in Malawi, after starting with 47. The number of expatriate managers has dropped by 10%.

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The stormy relationship between some African countries and Chinese investors has done little to affect Africa’s appetite for doing business with the Asian country. Apart from cane, Illovo estimates it that it buys “non-cane supplies” from about 270 small businesses in Malawi. Multinationals like Illovo have poured into Africa as peace and stability has spread over most of the continent in the past decade. Governments, desperate for income to develop infrastructure, have been wooing investors and putting their natural resources to tender. In its 2014 attractiveness survey, EY states the capital investment into Africa grew by 12.9% to 52.6 billion dollars in 2013. Africa has moved from the third-from-last position in 2011 to the second-most attractive investment destination in the world, according to the survey. NEPAD has pushed foreign companies to invest responsibly by training locals and sourcing supplies from local businesses as far as possible. Many have answered the call. Brewer SABMiller is supporting small-scale farmers by buying their cassava roots to produce a beer that is sold in Ghana and Mozambique. The company has partnered with the Dutch Agricultural Development and Trading Company, which has developed a mobile processing unit that travels to cassava-growing regions to process the highly sensitive root on site. Africa's agricultural potential is enormous but underexploited, says

THE OFFICIAL NEPAD YEARBOOK 2015

SABMiller Africa's managing director Mark Bowman. The company estimates that the volume of the informal, unregulated alcohol market across Africa could be up to four times that of the formal market. By using locally sourced raw materials such as cassava, the company is able to create “high-quality, affordable products” for consumers who would otherwise be drinking informal or illicit alcohol. Mark Bristow, the chief executive of Randgold Resources, which has invested heavily in Ivory Coast, Democratic Republic of the Congo (DRC), Mali and Senegal, says mining can have an enormous impact on an undeveloped region. He says the Kibali region, where Randgold invested in the DRC, was “very challenging” due largely to the lack of infrastructure. However, even before the company started pouring its first gold from the region in 2013, a number of satellite industries, including agriculture, had developed. But while mining can play a major part in Africa’s development, its potential to contribute is “handicapped by an irresponsible short-term culture”. “The harsh truth of the matter is that the mining sector has inflicted debt, impairments and write-downs on itself without making provision for its own long-term future, and is in a sorry state,” he said at a mining conference in Cape Town in February. “Yet, even now, almost all Africa’s mining countries are revising their mining codes and regulations to increase their share of the miners’ revenues. To put it bluntly, they are demanding more money from an industry that is basically insolvent.” There is only one way to secure mining’s future as a creator of real and lasting value for Africa and its people, says Bristow. “That is for the industry and its host governments to renew and strengthen their commitment to a mutually profitable partnership.” The rush to develop Africa has raised concern about a new era of colonisation, as foreign superpowers race to get their hands on the continent's resources. Zambia's late president Michael Sata pointed his finger at China, and even used anti-Chinese sentiment in the country as part of his election campaign. “We want to work with the Chinese, but they must change,” he said before his election to office in 2006. “Their labour relations are very bad. They are not adding any value to what they claim is investment. Instead of creating jobs for the local workforce, they bring in Chinese workers to cut wood and carry water.” The anti-Chinese remarks by Sata, who visited China shortly after his election, were regurgitated by the international media in October 2010 after Chinese mine managers shot and wounded 11 Zambian workers who were protesting against conditions at Collum coal mine in the southern Sinazongwe province.

Hillary Clinton took a swipe at unscrupulous foreign investors during a speech in Zambia when she was United States (US) Secretary of State in June 2011. “We saw that during colonial times, it is easy to come in, take out natural resources, pay off leaders and leave,” she said in comments quoted by The New York Times. Botswana’s President Ian Khama blamed Chinese companies for his country’s power problems. Khama told Business Day newspaper in Gaborone that the country would look very carefully at any company that originated from China in providing “construction services of any nature”. Yusan Wu, a researcher at the South African Institute of International Relations, says suspicion of the Chinese could be caused by the difficulty differentiating between “government and private Chinese investment”. China is a fairly new, but fast-learning, player that comes into direct competition with longer-standing African partners from regions such as the European Union. “China can also be perceived as competition to local sectors, like manufacturing, who may find it difficult to compete,” she says. The stormy relationship between some African countries and Chinese investors has done little to affect Africa's appetite for doing business with the Asian country.

NEPAD has pushed foreign companies to invest responsibly by training locals and sourcing supplies from local businesses as far as possible. In February, African Union (AU) chief Dr Nkosazana DlaminiZuma praised a proposed plan for China to develop road, rail and air transport routes to link capitals across the continent as “the most substantive project the AU has ever signed with a partner”. “In some cases, China does need to learn more about the needs and context; for example, in culture and language, of the local environment,” she says. It is a matter of learning by doing, she says. In the long term, Africa needs engineers, doctors, scientists and innovators so that it can manage its own affairs and exploit its own resources. The end goal of foreign direct investment should be the productive expansion of the economy and employment growth, writes Cezanne Samuel, an economist specialising in international trade and investment, in a research paper for the South African Institute of International Affairs. Foreign direct investment should target employment creation, build backward and forward links with domestic enterprises, support entrepreneurial or equity development through joint ventures, promote the spillover of technological and business expertise, and upgrade skills. Africa should concentrate on attracting foreign direct investment that contributes to the expansion of productive manufacturing sectors, such as agri-processing, light manufacturing, transport and logistics services and professional services industries that are at the higher end of the value chain. This would shift the concentration of capital inflows from the minerals, energy and financial sectors that have traditionally attracted the bulk of foreign direct investment. Only once it can manage its own destiny will Africa be free of the last shackles of colonisation.

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Voluntourism –

altruism or opportunism?

Image courtesy of Hermann Vivier

Africa is the favourite destination among ‘voluntourists’ – people combining travel with service to the poor. But do they do any good, asks Helen Grange.

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n avowed lover of Africa, Britain’s Prince Harry tends to mix his holidays with charity work on the continent, grabbing headlines last December in Lesotho where he toured the new education and healthcare facility built by Sentabale, the charity he co-founded. While not quite the same thing as active service, as in laying bricks or manning a soup kitchen, Harry could be loosely labelled a ‘voluntourist’.

“Ultimately, the smallest difference you can make still matters.” Voluntourism in Africa is a fastgrowing trend, in which students or young professionals combine their travels with an element of work in a developing country. Helping out at an Aids orphanage or pitching in to build a much-needed school are the sorts of projects that voluntourists get involved in. All very noble, but do these oftenfleeting visits benefit the targeted communities or individuals in a sustainable way? Or is volunteerism more about misplaced Western ‘saviourdom’ – a need to feed an altruistic yearning – than about those it is meant to help? Voluntourism accounts for more than 1.6 million volunteer tourists spending about US$2 billion each year, according to the United Kingdom (UK)-based Tourism Research and Marketing report Volunteer tourism: a global analysis. But as quickly as this industry has mushroomed, so too have concerns about the impact that it makes in relation to what voluntourism companies offer on their websites. As Ossob Muhamud of The Guardian’s Africa on the Blog points out: “Voluntourism almost always involves a group of idealistic and privileged travellers who have vastly different socio-economic statuses vis-à-vis those they serve. They often enter these communities with little or no understanding of the locals’ history, culture and ways of life.” Environmental activists argue that while there are many good voluntourism programmes that make a difference to communities in the short term, these don’t address the root institutional and structural causes of poverty. Instead of focusing on the symptoms, volunteers and the organisations

that recruit them should focus on the causes of inequity in the world’s poorer regions, notably corruption and an unjust global economic order. Of course, there are as many greys in this debate as there are voluntourism agencies and charities they serve, and it would be unfair and inaccurate to generalise. Most volunteers feel they contributed to uplifting their host community, even if they didn’t find what they expected or get the gratification they felt they paid for. “Ultimately, the smallest difference you can make still matters,” writes voluntourist Matt Fortune, who spent five days last year in South Africa’s Western Cape township of Kayamandi, where he and his group created a new play area at Kuyasa, a local schoolcum-activity project. Still, he found that most of the activities were “odd jobs” – in other words, nothing that changed lives in the long run. “What set my time at Kuyasa apart, though, is the things that cannot be staged, the things that, for all my criticisms, made this an experience I’ll never forget,” he wrote in London’s Daily Mail. Africa is the most popular destination among voluntourists, according to a recent study, and there are dozens of similar projects receiving them every year. One is The Surfer Kids Community Volunteer Programme in the impoverished Friemersheim area, also in the Western Cape, run by Hermann Vivier. Volunteers on this programme provide free extracurricular activities for the children of Friemersheim, ranging from sport to arts and crafts, drama and yoga. They also teach computer skills at the Friemersheim Primary School and, at weekends, head for the beach to teach these children swimming and surfing skills as part of The Surfer Kids Core Surfing Programme, which is seen as life skills training. “Everyone in Friemersheim will confirm that we’ve made an incredible and consistent impact over the past four to five years. Added to that, our volunteer programme adds considerable value to the extramural curriculum at Friemersheim Primary. And last but not least, our volunteer programme generates an income for our local programme facilitators, who would otherwise have very few prospects in the rural isolation of Friemersheim,” says Vivier. Vivier admits he is sceptical, however, of “so-called wildlife volunteer projects”, particularly on private game reserves. “First of all, these projects are incredibly expensive,

asking three or four times the fee we ask. And volunteers on these work with animals that aren’t even necessarily indigenous to the area. I don’t see how these programmes benefit anyone except the game farm owners,” he says. Indeed, the fees for voluntourism adventures can be eye-opening. Kenya Big Ten Safaris, which offers a range of voluntourism options from helping in an orphanage to tree-planting, charges US$475 for one week and US$770 for four weeks. Still, that people from abroad are willing to spend money to pitch in should not be sneered at, comments Oliver Hagen, who runs VACorps (www.vacorps.com) in South Africa– internship programmes for foreign students looking to combine travel with a grassroots learning experience in their field. “What is not considered (by critics) is how much these participants contribute to the local economy. I would conservatively estimate that the average intern in our programme spends US$8 000 during a twoto three-month internship with us,” he says. Hagen adds that a professional matched to an organisation requiring much-needed skills can make a very worthy contribution. “Our oldest participant was a 62-year-old retired lawyer from California who did a VACorps internship in Cape Town. His input was invaluable,” he says.

“Voluntourism almost always involves a group of idealistic and privileged travellers who have vastly different socio-economic statuses vis-à-vis those they serve.” The credibility of the voluntourism organisation, as well as the nature of the work that volunteers do, are key in deciding its usefulness. At best, the voluntourist imparts a skill or structure that will empower an individual or community long after they’ve left. At worst, affluent or naive visitors are sold a glimpse of Africa’s poverty and do some menial work to appease their consciences. Either way, the intention, if not the ultimate outcome, can’t be bad. www.nepad.org

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Superstardom

doesn’t spell super-charity An A-lister’s name on an African charity certainly attracts the media, but how effective are they? By Helen Grange

amous people driving charities in Africa – Madonna, Bob Geldof, Bono – don’t always get it right because they’re well known. In fact, sometimes they get it spectacularly wrong. Not because they don’t mean well, but because of factors and dynamics beyond their control. Take the latest brouhaha over Geldof’s Band Aid 30 – the reincarnation in November 2014 of the supergroup Band Aid in response to the Ebola crisis in West Africa. Geldof teamed with musicians such as Tiken Jah Fakoly from Ivory Coast and Malian artists, including Salif Keita, to produce a song with different lyrics to the original Do They Know it’s Christmas?. However, the song has been criticised for presenting Africa as a desperate place, without hope. Ghanaian afrobeat star Fuse ODG pulled out, saying he felt it was a quick fix to a bigger problem.

“People can feel good donating £2. But in the long term, I don’t see people going over to Africa and spending even more money. So I feel like, in the long term, it’s quite detrimental to the continent.” “People can feel good donating £2. But in the long term, I don’t see people going over to Africa and spending even more money. So I feel like, in the long term, it’s quite detrimental to the continent,” he said. Then there’s an inglorious pile of famous-name branded charities that have gone pear-shaped due to corruption or incompetence on the ground. Madonna, who funds orphanages in Malawi, where she adopted two of her children, had to pull back on funding for a £10 million (British) girls academy in 2011 amid claims of www.nepadbusinessfoundation.org

corruption. After that, Trevor Neilson, from the Global Philanthropy Group, which runs the Raising Malawi Trust in the United States (US), gave his assurance that the singer would only consider funding organisations if they had “a clear track record of transparency, accountability and good governance”. Oprah Winfrey became mired in controversy soon after she opened her South African Leadership Academy for Girls, when allegations of the dormitory parent molesting the girls came to light. As the scandal grew, Winfrey had to fire every other residential staffer and the school’s head, and start afresh. This shows that while you might be famous, this is no guarantee of success in your philanthropic ventures. In fact, the majority of philanthropic initiatives don’t work, with 75% closing shop in their first year, according to a report in Forbes magazine. That said, there are celebrity-endorsed charities in Africa that do excellent work. Through his charity, Ivorian football sensation Didier Drogba is helping to fund the construction of five children’s and women’s health clinics in his country. “Didier is doing an amazing job. The way he is affected by the sick children, you can tell that he really cares and that he really wants to help. He loves his country and his country loves him,” says English footballer John Terry. The Salif Keita Global Foundation, meanwhile, is quietly supporting numerous awareness campaigns focused on albinism throughout the continent, and in Mali alone, has registered 4 000 people with albinism. Donations go towards sunscreen, hats and sunglasses. His foundation also provides free healthcare to prevent and treat skin cancers. Keita, who is an albino, when asked what drives his philanthropy, said: “Humanity! I believe in human beings. I believe in a better world.” Still, like most charities, his foundation needs more. “We are seeking more government, NGO and private sector support

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Image courtesy UNICEF

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Celebrities such as UNICEF Goodwill Ambassador David Beckham attract attention to charity work in Africa, but donors still need to appraise the charityâ&#x20AC;&#x2122;s work with sensible scepticism.

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Image courtesy of Mencap Photos

in Mali,” said a spokesperson for the foundation. Then there’s Yvonne Chaka Chaka, tirelessly campaigning for medication and bed nets to prevent malaria through her Princess of Africa charity. Zimbabwean superstar Oliver Mtukudzi is a UNICEF goodwill ambassador who gives free concerts for causes in his country. While any philanthropic effort by superstars is laudable, from a donor’s perspective, it’s important to apply the same checks and balances that apply to any charity, according to Sandra Miniutti of Charity Navigator, a global service evaluating non-profit organisations. “We typically warn donors that a celebrity connection is a good way to learn about organisations, but it isn’t a seal of approval,” she says.

“Didier Drogba is doing an amazing job. The way he is affected by the sick children, you can tell that he really cares and that he really wants to help.” interventions in Africa are never questioned. However, when they establish their own charity organisation, you have to vet it with extra care – “as you would any new charity that doesn’t already have a track record,” Miniutti says. Famous people can be notoriously insensitive to the dynamics that play out in an African situation, not to mention the societal and political forces that apply to it. Twitter users the world over seemed unimpressed with Geldof’s take on Ebola, for instance, and Madonna was accused by Malawian ex-president Joyce Banda of being “arrogant” (although she’s in favour with current president Peter Muharika). Even so, there’s merit in any charitable effort. As in business, failures lead to insights and breakthroughs and celebrities, like anyone else, learn from their mistakes. Oprah, rather than giving up when the going got tough and criticisms of her school were coming thick and fast, quietly redoubled her efforts and made it work. And last year, her school’s matriculants again achieved a 100% pass rate.

Image courtesy of G8 UK Presidency

Bono and The Edge in concert.

UNHCR special envoy Angelina Jolie and UK foreign secretary William Hague visiting Nzolo camp in DRC.

A key consideration is how much money goes to the actual cause, as opposed to administration costs. “At least 75% of the charity’s funding should be spent on the programmes themselves,” says Miniutti. And ask questions, she suggests. It’s important to know the exact focus of the charity, who it’s targeted at and what sort of track record the charity has, Miniutti says. Also, celebrities may not know how to choose the right people for the job – Oprah’s initial crew at her academy being a case in point – so it’s important to look at the executives and their expertise, says Miniutti. She explains that having a famous person’s name attached to a well-run charity is one thing – as a special envoy for the United Nations High Commissioner for Refugees (UNHCR), Angelina Jolie’s www.nepadbusinessfoundation.org

Yvonne Chaka Chaka does much to help those less privileged in Africa.

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Africa’s cellular leap There is a belief that Africa is behind on technology, but that is not the case, writes Samantha Perry.

roadband internet connectivity has taken off around the world. There are more than 1.5 billion personal computers (PCs), 1.2 billion smartphones and about 200 million tablet devices in use today. About 3 billion people had access to the internet by the end of 2014, and there are 2.3 billion mobile broadband subscriptions.

Private Infrastructure Development Group, international and retail bandwidth costs in East Africa had dropped by 83% and 67% respectively by March 2011, within two years of Seacom – the cable that connects South Africa, Mozambique, Kenya, Tanzania, Djibouti, India and France – going live. Less than two years after that, the group says, the

The installing of 18 submarine cables around Africa has opened up the continent to the world. The average professional in the developed world has a PC (desktop, laptop or both), smartphone and tablet, as well as a number of other connected devices, such as TVs and gaming consoles. Mobile broadband subscriptions outnumber people in Finland, Australia, Japan, Sweden, Denmark, South Korea and the United States (US), according to the Organisation for Economic Cooperation and Development (OECD). In Africa, we’re doing things a little differently, however. The availability of internet access and the PC revolution started later in Africa than in more developed economies. While today the desktop PC is starting to become a relic, even in South Africa, it’s an innovation that hasn’t yet arrived in many homes in the rest of Africa. Landline phones, again something of an archaic technology when viewed against the mobile or internet-based telecommunications systems that dominate the developed world, haven’t made an appearance in many places on this continent. Africa – unencumbered by legacy information technology and telecommunications systems – has leapfrogged over multiple generations of both and landed in the middle of the internet revolution. The installing of 18 submarine cables around Africa has opened up the continent to the world. Seventeen of those cables have been activated since 2009. And at least three new ones are planned to come online next year, according to the consortiums involved in laying them. The underwater cables will provide more affordable internet access. According to the www.nepadbusinessfoundation.org

number of Kenyan internet users increased from 3.6 million to 8.6 million. From high-tech landing stations on the coast, where the cables are installed, these submarine fibre cables link the continent to the world. Satellite connections, which are slow and expensive, are used only when nothing else is available. The first cellular networks that were licensed in Africa in 1994 were in South Africa (MTN and Vodacom). Today, most countries have at least one licensed mobile cellular network operator and most have two or three. Mobile operators on the continent offer the latest in mobile technologies to customers, such as 3G and Long-term Evolution (LTE), meaning that data connections are fast and able to carry increasing amounts of data. According to the International

The average for the developing world is 21 per 100 inhabitants, versus 84 in the developed world. Mobile broadband is the connection option of choice in South Africa, where far more users have access to mobile broadband than wired broadband. Mobile subscribers outnumber people in the country. A number of things are behind this. First, there are machine-to-machine communications, such as point-of-sale systems and trackers in cars. Then there is the African habit of using multiple subscriber identification module (SIM) cards, to enable people to make calls from one network to a subscriber on the same network and take advantage of cheaper same-net rates or price specials offered by operators at different times. There are about 20 million smartphone users in South Africa, according to a Kleiner Perkins Caufield & Byers report. You need a smartphone to take advantage of mobile broadband as non-smartphones, known as feature phones, generally offer basic functionality and don’t have the applications that would enable them to use high-speed networks such as LTE. That’s not to say that feature phones do not have internet access, however – it’s just not broadband, which is accepted as a highspeed, always-on connection. Less than 1 million South Africans have access to wired digital subscriber line (DSL)

Mobile commerce has enabled online shopping and prepaid services, from airtime to electricity. Telecommunications Union (ITU), African mobile broadband penetration will increase to 20% this year – up from 2% in 2010 – making it the fastest-growing region globally (43% year-on-year 2013/2014). Globally, the organisation expects there to be 1 billion mobile broadband subscribers in 2015. There are about 19 active mobile broadband subscriptions per 100 habitants in Africa, versus 64 per 100 in Europe and 59 per 100 in the US, according to ITU statistics.

broadband at home, while high-speed connection options used by corporates grant many people access at work. The rest of the continent is also reliant on mobile broadband, because wired broadband frequently doesn’t exist. This is because copper network rollouts were limited and the networks are small and frequently incapable of carrying data traffic. Penetration is low – 20% on the continent as a whole – but growing fast: 43% year-on-year, as noted above.

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Broadband benefits

Image courtesy of Shutterstock

The social and economic benefits of mobile broadband have been huge. A statistic from the World Bank says that a 10% increase in (fixed) broadband penetration results in a 1.21 percentage point increase in per capita gross domestic product (GDP) growth in developing economies. However, the correlation in developed economies is weak, according to OECD data. That said, those economies have fixed broadband and much higher rates of PC penetration, so mobile broadband would have an exponentially lower impact. For people using cellphones and broadband connections, however, the impact has been huge. The internet provides access to information and links people across

distances. It provides a means for people to educate themselves, to search for jobs, to link to mobile apps that will tell them that they will get too little for their crops at the nearest market and they should go a little further out of town to make a decent rate on their daily catch. Mobile commerce has enabled online shopping and prepaid services – from airtime to electricity. Mobile health applications, such as the Mobile Alliance for Maternal Action, improve maternal and infant health by providing information that “promotes earlier antenatal care, supports HIV-positive mothers and helps women and caregivers understand

how to prevent transmission of HIV to their babies”. It uses Mxit, short message service (SMS), unstructured supplementary service data (USSD) and a .mobi site to reach about 350 000 women in South Africa, and works in India and Bangladesh too. The impact of broader internet access on governments has been marked, allowing citizens to interact with their leaders and assert their will in new ways. The Egyptian revolution is often cited as an example of how social media can enable citizens to communicate with each other, share information and coordinate activity to oppose a government. Systems such as m-pesa have provided financial services where none existed, banking the unbanked and underbanked. m-pesa is a cellphonebased service that enables users to transfer money; deposit and withdraw cash; buy airtime and pay bills – all without a bank. Services such as Mama and m-pesa wouldn’t be half as useful in developed economies, where radio, television and internet access are a given. As mobile broadband proliferates and more Africans get involved in developing services that meet the needs they see in their communities, so the economic and social benefit will deepen. www.nepad.org

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SCOPE AND PURPOSE The scope of work of the Learning Academy covers the full spectrum knowledge acquisition including outreach and public understanding of the water sector, supporting academic and vocational training programmes in South Africa, and incubating specifically professionally qualified blacks and female trainees within DWS.

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