Corporate Africa 58 by Corp Afric

Africa

Quarter III 2013 Issue 58 Vol 1 Number 888

CORPORATE

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AFRICAN MINISTER OF MINES Balancing private and public interests

Opening New Oil Frontiers

New countries enter oil production in Africa

Africa Extractive Industry Trends

CONTENTS

Energy

Technology 22

Features 4

Multilateral Aid for the 21st Century President of the African Development Bank Donald Kaberuka describes the paradigm shift in attitudes to African economics. EMPOWERMENT THROUGH BRICS Tony Elumelu explains why the BRICS nations need to change their attitude toward business with Africa. The ICC AND KENYA’S TRANSITIONAL JUSTICE AGENDA Christopher Gitari, Senior Associate at the International Center for Transitional Justice, investigates the consequences for African politics.

Connecting the Other 3 Billion Groundbreaking satellite technology is set to revolutionize broadband in developing Africa.

Why We Are All 4Afrika Fernando de Sousa, General Manager for Africa Initiatives at Microsoft, on Microsoft’s Africa project and solving youth unemployment with technology.

NATIONAL PAVILIONS sHOWCASE ICT Investment Opportunities in Africa ICT is a vital driver of economic growth in Africa.

GSMA mAgri: A brave new world for Africa’s farmers Fiona Smith, Senior Director at GSMA, describes how technology is revolutionizing Africa’s agriculture industry.

12 Governing the African Mining Sector After a year of turmoil in the African mining sector, Corporate Africa interviews South Africa’s Mining and Energy Minister, Susan Shabangu.

six trends OF AFRICA’S EXTRACTIVE IndustrIES Rolake Akinkugbe is a natural resources expert and Head of Energy, Oil and Gas Research at the Ecobank Group.

AFRICA GROWS BY FUNDING SMES Dr. Wiebe Boer is Chief Executive Officer of The Tony Elumelu Fundation.

18 Is the Mining Sector Benefiting Africans? Mwana’s Executive Director of Operations, James Arthur, ponders the future of the African mining industry.

Powering Africa’s Most Populous Nation Seven Energy on meeting the demand for oil and gas in Africa’s most populous country.

Opening NEW OIL Frontiers Diane Sutherland, Chief Editor, and Jennifer Nickle, Deputy Editor, at Petroleum Africa, describe the potential new markets in Africa’s oil and gas industry.

Africa’s Renewable Energy Ambitions SESSA’s Stephen Folder on Africa’s Green Potential.

Oil in Nigeria Heritage Oil on their projects in Nigeria.

GENERAL ELECTRIC Transnet partnership to modernize Africa’s rail industry.

Interview 62

Finance 30

16 Mining in Kenya: Balancing the Public and Private Interests The Kenyan Chamber of Mines discusses the proposed regulations to Kenya’s mining industry.

Calabar: General Electric’s New Frontier in Nigeria The company’s executives on their billion-dollar investment in Calabar.

Mining

14 REFORMING South Africa’s Mining Senzeni Zokwana, President of the National Union of Mine Workers, explains how the mining sector should be run in a democratic era.

Treading Carefully through Africa’s Development Rebecca Costa, sociobiologist, radio presenter and best-selling author, on Africa’s future in a dangerous global market.

Agriculture 66

MIgration And ITS EFFECT On african farmers EMRC on the consequences of urbanization of the agriculture sector. Malawi’s Warm Heart Mining Sector Mkango CEO William Dawes explains the huge potential in Malawi’s natural resources

RUNNING A TIGHT SHIP World Marine’s a leader in the field of bunker supply.

financing africa’s Infrastructure Zakhele Mayisa is the Principal Infrastructure Finance Officer for Reginal Integration and Trade at the African Development Bank.

FROM SUBSISTENCE farmers to successful entrepreneurs Farm Africa is a charity boosting harvests in Africa.

Events 73

EVENTS

Published By Times Publications Group Ltd Publisher James Norris Managing Editor Patrick Lee Advertising Manager Assena Tabélé Graphic Designer Ana Afonso Fernández Conference Coordinator Marina Dal Toé Special Project Director Jian Ping Sun Administration Assistant Adam Parker Project Managers Vivian King, Robert Samuel, Clementine Lacroix, Charles Chauvin, Larissa Doval Corporate Africa (ISSN 1358-5789) is published quarterly. Subscription details can be obtained from Times Media Group at principal commercial office: 30-32 Tabard Street, London SE1 4JU; Tel: +44 (0) 20 7089 8830 or Fax: +44 (0) 20 7089 8831. Email administration@times-publications.com or visit our website at www. corporate-africa.com. © Times Media Group Ltd. 2012 — all rights reserved. First Published in 1994. Distributors in Africa: Shama PLC Tel: +251 11 554 5290, MCS/Caxton International PressTel: +27 11 807 9599, Print Excellence Ltd.Tel: +233 243 213 881, Dominion Bookshop, +233 240 695 791, Publisher’s Distribution Services Tel: +254 20 3222 901, PDS Accountant Tel: +254 20 3222 903, Glendora Bookshop Tel: +234 803 304 7091.

Features

Multilateral aid for st the 21 century

Donald Kaberuka, President of the African Development Bank, describes the changing nature of philanthropy in Africa, and explains why this change is essential.

ive years ago, it was the multilateral development banks which played a critical role in tempering the worst effects of the global financial crisis, with counter-cyclical funding, liquidity support, trade finance, and other instruments. The African Development Bank doubled its loans and grants between 2008 and 2009. Reflecting the key role that these banks played, the shareholders agreed to increase their capital base, and tripled it for the Asian and African Development Banks. Some of these institutions – the African Development Fund, the International Development Association (IDA), and the Global Fund to fight AIDS, Tuberculosis and Malaria – are now concluding the cycle of their ‘soft’ concessional lending windows which support the poorer countries. Last time round, those funds were generously replenished. What will happen this time? In the developed world, the commitment

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and the funding to end poverty is being sorely tested by persistently difficult economic times. As the global economy struggles to recover, it is in fact strong

In the developed world, the commitment and the funding to end poverty is being sorely tested by persistently difficult economic times.

growth in the lower income countries which can provide it with a new economic pulse. Meanwhile, for the first time in 20 years, Overseas Development Assistance (ODA) decreased last year. The pressure on the global economy now means that we need to rethink the aid instruments

of the future. The way forward is firstly by leveraging private capital and secondly by helping countries better manage their natural resources. In a difficult economic climate, ODA is emotive. Some would cut it all immediately, citing domestic concerns in the donor countries, or corruption, waste, and dependence in the countries to which it is destined. Others see ODA as an important if temporary instrument to help countries progress. It is not a controversial proposition that truly effective aid will progressively put itself out of business. We count it a success when recipient countries no longer need our help, and when they become donors themselves. In the case of the African Development Bank, Egypt and South Africa actually contribute to the Fund and Angola and Libya plan to do so.

Smart aid

Many countries in Africa have made tremendous progress over the last decade. Six per cent growth will be achieved this year, and the continent’s GDP has doubled since the millennium. Yet we must not over-simplify: there are still the real challenges of structural transformation and sustainability, in the lack of jobs, and the low skills base. There also remain pockets of serious and sometimes contagious fragility. And Africa is still hampered by a fundamental lack of transport, energy and water infrastructure. This costs it an estimated 2 per cent in GDP growth every year – nearly a third of the annual growth which it is already achieving. We cannot maintain progress with such an infrastructure deficit.

For each dollar we loan, we are able to leverage up to six more. I was in Dakar recently to see a cluster of infrastructure projects – a new toll road, a new airport, a power plant, and the expansion of the port – which, with US$ 245 million of Bank funding and US$ 132 million from the Senegalese government, drew in a further US$ 1.3 billion from commercial banks and international private investors.

Feautures

Infrastructure

History tells us that it is through trade and investment that nations have overcome poverty.

But we know that the financing gap for African infrastructure, put at around US$ 50 billion a year, cannot be funded purely through public resources. The African Development Fund commits nearly two-thirds of its resources to infrastructure. In the last two years, 100 million Africans have benefited from new electricity connections, water and sanitation works, better health services, and improved access to transport. The plans going forward – with a big focus on fragile states – target tens of thousands of megawatts of new power capacity, new and rehabilitated roads, power transmission and distribution lines, boreholes and wells, as well as hundreds of thousands of new enrolments in higher education and technical or vocational training. But we know that the financing gap for African infrastructure, put at around US$ 50 billion a year, cannot be funded purely through public resources. The first task is to take advantage of the current strong cycle of commodity prices and to manage natural resources wisely for funding infrastructure. That is why the G8’s “Trade, Tax and Transparency” agenda is so important. Second, we must bring in the private sector. The African telecomms revolution of the 1990s was largely driven by private funding, after sector deregulation showed what was possible. In the energy sector, the reforms are now in place and it awaits private capital. Our challenge is to make that possible.

This is “smart aid” in action – leveraging private capital; crowding in investment; and fighting poverty through trade, investment, and the private sector. This is also why the African Development Fund will introduce new, innovative financial products, including various guarantees, to help to unlock private sector investment in African countries and ease access to capital markets.

There are still the real challenges of structural transformation and sustainability, in the lack of jobs, and the low skills base.

History tells us that it is through trade and investment that nations have overcome poverty. ODA has helped along the way, but ultimately it is these which will carry the continent of Africa over the threshold toward sustainability. And just as they did in 2008 when they responded to the financial crisis, in 2013 the Development Banks must revisit the tools at their disposal to make this possible. Corporate Africa 2013

Features

Empowerment through BRICS

Tony Elumelu writes for Corporate Africa on why the BRICS market needs to change its attitude toward Africa.

n August I gave a speech at the first BRICS Business Council Meeting, and while there had an opportunity to speak to Mo Ibrahim and Donald Kaberuka, President at the African Development Bank (AfDB) (Mr. Kaberuka contributes on pg 4). We were there to speak at a panel session on “specific measures and initiatives to increase business, trade, manufacturing, and investment ties between the BRICS countries and Africa.” The three of us agreed, as is the general consensus, that the BRICS market offers an invaluable opportunity for Africa as a path for infrastructural, social and economic development. The economic bloc is, however, being utilized in the incorrect way. Stephen Chan recently wrote excellently for Corporate Africa on how China is investing in Africa’s natural resources, while in exchange paving the way for infrastructure by building roads and universities, etc. This relationship is being made difficult as the West, in particular America, continues its “race for natural resources” with China. Africa, inevitably, loses out as these two superpowers compete to extract resources from Africa at the cheapest possible price.

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It is essential that Africa is now able to do business in the BRICS market to the same extent that BRICS nations do business in Africa. Donald Kaberuka alluded to this situation earlier this year when he claimed in an interview that Africa is being “ripped off big time” by multinational corporations who do not compensate African communities fairly in exchange for the industrial development which ultimately takes profit from Africa. The nature of the problem is fairly easy to summarize: Africa is not being treated as a fair partner in the BRICS market and is not benefiting adequately. Mo Ibrahim has spoken excellently on how business in Africa is still seen from the point of view of philanthropy, and this will never help in giving Africa the global status it deserves. “Don’t come to Africa and help. Come and make money because the highest return on investment is in Africa,” Mr Ibrahim said, and he is right; business is what Africa needs more than philanthropy.

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Balanced business relations Therefore it is essential that Africa is now able to do business in the BRICS market to the same extent that BRICS nations do business in Africa. A new crop of African entrepreneurs are emerging who have ambitions beyond the continent. They should be investing in the BRICS countries in the same way that BRICS are investing in Africa - this relationship needs to go both ways. As the former CEO of the United Bank Africa, I am in a position to see specifically how this relationship can be made mutually beneficial for world trade. It is up to Africans to ask questions of the BRICS market. For instance, if China is doing so much trade and

Africa is not being treated as a fair partner in the BRICS market and is not benefiting adequately.

investing in Africa, why shouldn’t African banks operate in China? Economic growth is the responsibility of governments and the private sector, and in this instance it is essential that the government formulates proactive policy in order to make it easier for Africans to do business in China. When I was the CEO of the United Bank for Africa, we sought a banking license for India, but it didn’t go through. We also tried for years to set up a representative office in China, but we were also not successful. The relationship needs to go both ways. Otherwise we see a trade relationship that becomes exploitative and centers on philanthropy, and the paradigm of Africa as a poor nation rich in resources will never change this way. The nature of African trade with the BRICS is now about commodities – non value adding trade. Let’s engage to partner and invest in companies that can process the materials, create employment in Africa, and create an attractive African consumer market for BRICS countries. The world knows that Africa is in a position to engage in trade – now is the time for action in order to act on the world stage. For a solid and mutually beneficial cooperation between Africa and the BRICS nations, the BRICS need to allow these new African entrepreneurs to invest in their countries just as they are investing in ours.

If China is doing so much trade and investing in Africa, why shouldn’t African banks operate in China?

How this can be done? This means that there needs to be a focus on identifying initiatives to increase trade, business, manufacturing and investment ties between the BRICS nations and Africa. This is the responsibility of government, and to some extent this process has begun in South Africa. However, two things need to happen: Governments should create enabling environments for business and the private sector must take advantage of these opportunities. South Africa has be-

gun to create this environment but they need to be more welcoming of foreign investors, particularly from within Africa, not just in resource sharing but also in terms of direct trade and investments. A more integrated business environment in Africa will ultimately be beneficial to South Africa. It is the responsibility of governments, therefore, to trust in the health of the private sector and to put faith in the sector’s ability to shape the pace of economic development and growth. This is not to undermine the huge role of a public sector in defining a nation, in key sectors such as health, police, etc., but the economic model needs to put its faith in the private sector. A key part of this will be governments being strong in their policy. African leaders must desist from changing policy midstream, as was done in Zambia recently with bank ownership. This is not helpful to business and is detrimental to economic development.

Africapitalism For all Africa’s well-publicized growth over the last decade, much of it has been extractive and export-led, and it has had relatively little impact in terms of jobs and domestic wealth. Given current demographic trends (tens of millions of people will enter the workforce over the next decade) we are not creating private sector jobs nearly fast enough. We need a robust platform of private sector job growth and wealth creation within Africa, or we risk undermining Africa’s current growth trajectory. The BRICS market must provide an enabling platform for African businesses to make long-term investments and create long-term social wealth. This will allow the continent to become profitable and sustainable and will ensure that Africans are able to take responsibility for their own developments. No longer will Africans have to rely on external philanthropy or the extraction of their natural resources. The BRICS market must provide a forum for both Africans and non-Africans to evolve their thinking about how best to channel their efforts and investments on the continent. As African business leaders, and as Africapitalists, we agree that we have among us enough resources to make things happen in Africa. We must share the opportunities on the continent. There are enough of us to make a difference. We need to work together to find ways of increasing trade and investment ties between the BRICS nations and Africa.

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Features

The ICC and Kenya’s transitional justice agenda: Just what the doctor ordered? Kenya’s president and vice president are on trial for crimes against humanity - the first time that heads of a sovereign nation have been charged in The Hague. Christopher Gitari, Senior Associate at the International Center for Transitional Justice, discusses the consequences of these trials.

he International Criminal Court (ICC) process has had an immense impact on Kenya to date. Although at first it may appear that the trial’s politicization by local forces has undermined Kenya’s own transitional justice agenda, the international process has the potential to end the culture of violence within Kenya’s landscape. This would inevitably contribute to the country’s long-term stability and, consequently, its development.

Serious introspection has taken place about the capacity of the judicial system to deliver on the criminal justice agenda. The ICC process was triggered by Kenya’s inability to establish a national mechanism to investigate and prosecute individuals responsible for committing crimes during the post-election violence of 2007 and before. Today these individuals are those who are alleged to have used violence as a tool to becoming elected: President of Kenya, Uhuru Kenyatta, and his deputy, William Ruto. Transitional justice efforts, such as police reform, establishment of an 8

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International Crimes Division of the High Court, and implementation of Kenya’s Truth, Justice and Reconciliation Report have now stalled. State actors driving various transitional justice processes appear to have developed cold feet, fearing that enthusiasm would be viewed as supporting the ICC process and therefore undermining the two leaders or fearing that pursuing the transitional justice agenda may undermine the ICC trials. What is also significant is that many of those who have pursued justice against those responsible for the atrocities in 2007 have been intimidated, or have disappeared. Ruto and President Kenyatta are on trial for the part they played in the post-election violence in 2007, which left over 1300 people dead and hundreds of thousands displaced.

Following its current course, Kenya will remain the geopolitical and economic leader in East Africa.

Political impacts The ICC had a powerful presence in the runup to the 2013 general elections, uniting friends and foes across political divides. The National Party (TNA) and United Republican Party (URP) formed the “Jubilee Coalition,” which campaigned on an anti-ICC platform. Their slogan “Accept and Move On” countered proponents in the Orange Democratic Movement and civil society who demanded redress for historical injustices. The country was divided into two clear camps: one arguing that Kenyatta and Ruto were unsuitable to hold office and the other arguing it was time for the country to move on. The election was, therefore, cast as a referendum on the ICC. But during the campaign, politicians toned down their rhetoric out of fear that they might worsen the situation for Kenyatta and Ruto at The Hague, or that they themselves might become fresh targets for the ICC. Former ICC Prosecutor Moreno Ocampo has argued that the ICC may have played a stabilizing role during the elections. In the end, with a Jubilee Coalition victory, it was argued that the ICC process and, by extension, all other transitional justice processes were irrelevant and that the nation was ready to move on.

Feautures

The National Assembly’s treatment of the final report from Kenya’s official truth-seeking body, the Truth, Justice and Reconciliation Commission, is telling. The Majority Leader threatened to use a proposed amendment by the Attorney General to expunge the name of alleged perpetrators from the report. The slashing of funding for independent commissions of inquiry, and the refusal to nominate persons to fill vacancies within those commissions, is confirmation of a campaign to weaken the justice and accountability sector, which is viewed not only as supporting the ICC process, but as its catalyst. The Kenya National Commission for Human Rights (KNCHR), a successor of the statutory body that authored a damning report which became the basis for ICC investigations, currently has one commissioner, instead of the expected five. This has been the commission’s state of affairs for close to one year. The net effect is an erosion of key institutions within the justice sector.

Justice and Legal reforms and the ICC Process On a positive note, the ICC process has played a positive role in catalyzing judicial reforms and, by extension, supporting this transitional justice agenda. Serious introspection has taken place about the capacity of the judicial system to deliver on the criminal justice agenda. Although the judiciary has made the most headway, it is clear that prosecutions and investigations (handled mostly by the police) remain ineffective. Reportedly, reform of the Kenyan judiciary was inspired by low public confidence in its role as a fair and objective arbiter of disputes, which was a cause of the 2007/2008 post-election violence and a trigger for the ICC process. Establishing an International Crimes Division (ICD) is one of the key proposals under discussion to ensure domestic criminal accountability for Post Election

Violence crimes. An ICD has been greeted with cautious optimism by members of civil society in the justice sector, many of whom fear that the Executive could use the unit to drum up support for referring ICC cases back to Kenya with no real intention of pursuing prosecutions.

International relations and development On the economic front, Kenya is viewed positively by investors, especially with the discovery of oil and underground water aquifers in the country. While western nations remain Kenya’s biggest trading partners, Kenya has scaled up its relations with countries in Asia, such as China and Japan, and other African countries, including Nigeria, to counter any fallout with the West over the ICC. The Chinese government, seeking to gain a foothold in the country, has pledged loans and grants of up to $US 5 billion for infrastructure Corporate Africa 2013

Features If the Kenyan government pulls out of its Rome Statute commitments, it may be unwittingly indicating to partner states that Kenya does not honor its agreements.

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development since the 2013 elections. This has made China Kenya’s biggest development partner, overtaking Japan. Following its current course, Kenya will remain the geopolitical and economic leader in East Africa. But Kenya’s positive outlook is based on Kenyatta and Ruto’s cooperation with the ICC and continuation as a state party to the Rome Statute. If the Kenyan government pulls out of its Rome Statute

commitments, it may be unwittingly indicating to partner states that Kenya does not honor its agreements. This would send the wrong message to foreign investors who rely on bilateral investment treaties and international investment agreements to protect their investments. The ICC’s impact on Kenya will be more acute if the ICC adopts a hardnosed approach and insists that the duo physically attend the trials. The terrorist attacks on Westgate Mall in Nairobi, which left at least 67 people dead, 61 missing, and 175 injured, has given more impetus to the argument that the ICC has to adopt a more flexible approach. The President is now leading a country under siege from terrorist attacks and his absence could undermine the national security of the country. But since the first ICC trial began, the tide appears to be shifting. The horrifying accounts of victims have been aired through various media outlets across the country, triggering more introspection and discussion as to the real objective of the ICC cases. The shift of focus back to victims may spur stalled transitional justice processes back to life, as the country begins to deal with the real issues arising from its legacy of violence and less about the politics of the ICC. The ICC trial process may just be what the doctor ordered.

Mining

Governing the African mining sector Minister for Mining, Susan Shabangu, is widely respected throughout South Africa and is tipped in some circles to become South Africa’s first female president. However, over the last year there has been huge civil unrest in the mining sector, including the murder of 34 striking miners by police at the Marikana mine in August 2012. She talks to Corporate Africa. Q. Starting generally, what does it mean for South Africa to be a member of BRICS? To be part of BRICS creates an opportunity for South Africa to be part of several economies and various regions, and that’s very important. It’s not just about being a member of BRICS, but when it comes to economies, there is also the practicality of contributing with strategic partners and dealing with issues from the UN and multilateral institutions and this enhances and builds a process of trying to reach a consensus on various issues which impact on the world. For us this is very important. In terms of economics, the BRICS markets have huge, growing economies, which means potential, not just for South Africa, but for the African continent.

We must also compete on this basis of social responsibility. Q. Now moving on to questions specifically about mining and minerals: Statistics SA shows that, in 2011, mining and quarrying contributed nearly 10 per cent of South Africa’s total GDP, and these industries employ thousands of people. However, mining is not included in the Department of Science and Technology’s ten year innovation plan. Does the South African government intend to continue investing in mining and technology research? One needs to look back to 1994 when there was an oversight from the new government in making sure we continued to invest in mining. Recently, we have realized this oversight by government. Today government is investing in titanium with 12

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the intention of looking at new products and realizing the importance of solid minerals in South Africa. It’s a reflection of realizing the critical role played by our commodities as a country. Q. Is South Africa looking to export its mining innovation and technology to other African countries and abroad, like Brazilian company Vale have done to such success?

You can’t talk about innovation as such without moving toward industrialization of our economies, so that is part of the process.

One of the issues that BRICS recognizes is in partner sharing in research and innovation; but also being able to enhance a nation’s individual commodities is very important. If you look closely at us, we are countries who share common commodities.

Q. Many Africans are wary of their natural resources being exploited at an unfair price. For example, Zambia exports US$ 3bn of copper, yet tax revenues are merely US$ 100m. Is there a problem with tax revenues and transparency in South African mineral exports? We don’t have the challenge of being ripped off because we have created a tax dispensation and regulatory environment when it comes to our tax dispensation, in a fair way, including in the mining industry. But I must also say we are not a country which is stagnant about how we move forward. As we speak today the Minister of Finance has set up a commission led by a judge in our review of corporate tax, including the royalties paid by mining companies, to come up with a dispensation that could be equitable, fair, but also contributing fairly to the economy. I’ve seen, as a country, we’ve done that well, but it’s important to ask whether our current corporate tax laws are still relevant in making all participants satisfied. And on this basis we are reviewing our corporate tax, including royalty tax which is paid by the mining industry. Q. Late last year AngloGold Ashanti declared 35,000 of its workers were striking. Anglo American Platinum did the same, with 20 per cent of workers refusing to work. Also there was a violent riot and strike in Marikana, where 34 people died before rock drillers won a wage rise [this interview took place before the Marikana mine massacre case went to court]. How has the government worked to improve conditions for mining workers, and to eliminate the threat of strikes in future?

While dealing with the issue of how South Africa positions itself globally in a way that enhances our interests as we deal with nonproducing countries, it becomes important to reposition ourselves within the global space as commodity countries within a BRICS environment. This will then allow us to have competitive advantage, ensuring value addition plays a part. You can’t talk about innovation as such without moving

On this issue of improving conditions for workers it is vital I stress that this is a priority of government and the mining industry itself. What we have inherited is this democratic government. There’s a history of illiteracy and cheap labor… and we cannot continue to operate in this space. If we need to compete with the rest of the world, this cannot be just on the basis of profitability and productivity; we must also compete on this basis of social responsibility. A key factor, and we need to address this, is erasing what was there in the past, and correcting this. We are dealing with issues of skills development, literacy for mine workers, and also the right

Mining

What we’ve seen happening is an indication of a sector which exploded over a period of time in an environment that was not conducive to any worker.

toward industrialization of our economies, so that is part of the process.

skills for the future in making sure we have a work force that understands the space. These are the key issues for us in South Africa. And what we’ve seen happening is an indication of a sector which exploded over a period of time in an environment which was not conducive to any worker. But we are addressing strike issues, and have set up various processes. We have signed with various mining companies and unions, agreeing on a Peace and Stability framework aimed at restoring peace in the area and re-dividing rule of law and the procedural aspect of mining companies. This has been taken forward by our deputy

There’s a history of illiteracy and cheap labor…and we cannot continue to operate in this space. President, in creating various structures in building stability in the mining areas. This is all due to an explosion of what has been a time bomb for us as a country in the mining space, but the future indeed presents an opportunity for stabilization and not only that but an opportunity of stabilizing a sustainable environment if we go to the core problems in the mining community and create decent employment conditions for those in the mining sector. Q. How realistic is it that we will see the inception of the BRICS bank soon? Well, the BRICS countries have committed themselves tocontribute to seed funding and, as we speak, at the summit that was held in South Africa, they have agreed that there is no doubt that the bank will be set up, but as with any institution there are particular rules that need to be set up. Currently the treasuries of the countries are meeting to deal with regulations which will ultimately ensure that the bank will be properly regulated, and its aims and objectives will be properly defined. I am very optimistic as we are all committed to this bank. It is about asking how do we bring our resources together and maximize output. Already the countries we invest in are working together in terms of investment as individual countries. It’s about taking that investment, putting it together to maximize growth and making sure it contributes beyond the BRICS countries.

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Mining

Reforming South Africaâ&#x20AC;&#x2122;s mining The mining sector in South Africa has been embroiled in strikes, murder, and corruption charges and has become an increasingly political issue, separating communities throughout the nation. Senzeni Zokwana, President of the National Union of Mine Workers, explains how the sector should be run in a democratic era.

he road ahead for the South African mining industry is likely to be a bumpy one if attitudes do not change and the industry continues to uphold the unsustainable attitude of the status quo. The majority continue to be sidelined 20 years into democracy, and this majority are beginning to rise and revolt. This is because they do not benefit from mining which takes place in their own communities: No development takes place in the form of infrastructure, human development, or in the form of training to upskill local communities. The events that led to the deaths of mineworkers in Marikana on South Africaâ&#x20AC;&#x2122;s platinum belt last year may be an example of the consequences to resisting positive change in the mining sector.

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This is why the National Union of Mineworkers (NUM) has reprioritized the issue of transformation. The NUM has put transformation on top of its agenda for the past 19 years but the mining sector has always been an unwilling partner. There has always been workplace skills plans, the mining charter with its transformation targets, the social labor plans, and many others which the sector has agreed upon with its various stakeholders including labor and government. None of these targets have been met. The mining sector continues to lament lack of skills as a problem whilst they are themselves failing to meet their own workplace skills targets. When it comes to affirming the previously disadvantaged in terms of appointments, no progress has been made.

Failed progress Gwede Mantashe, the ANC Secretary-General, characterized the situation as turning South Africa into a society with a deep racial dichotomy, where there is a concentration of black people at the bottom fringes of society, in particular working in the mines in poor conditions with very low pay, while the white community is on top. The sector has coopted politically connected individuals at the expense of the majority of the people. Black Economic Empowerment (BEE) was replaced with Broad Based Black Economic Empowerment (BBBEE) but the results remain the same. Three years ago, the NUM agreed to an Employee Share Ownership Program (ESOP) with Kumba Iron Ore where over 2000 workers qualified for free shares with a vesting period of two five year terms. At the end of the first five years, each worker qualified to get about R 500,000 (US$ 50,000) each. Production improved at Kumba even at a time when all mining houses were crying foul in relation to productivity. This is a model that the NUM had wished to extend to other mining companies but was rejected by many. Day in and day out there are reports that a politician has been bribed by a mining company in a bid to obtain a mining license. Blame cannot only be apportioned to the corrupt politician but the mining companies as well. It takes two to tango.

Mining

The NUM has put transformation on top of its agenda for the past 19 years but the mining sector has always been an unwilling partner.

Communities where mining takes place have to benefit as do workers who create the wealth. The NUM is determined to ensure that this happens. Beneficiation has to take place if South Africa is to address the high unemployment levels in the country. In addition to taking the lead and embracing transformation, the NUM is determined to ensure that collective bargaining is respected both by its members and companies alike. Part of what led to Marikana is the mining companies’ double-speak. The NUM, Solidarity, and UASA had just completed a round of negotiations at Impala Platinum in June last year when the company went out of its way to unilaterally increase the wages of rock drill operators. The problem is not that these wage increases were allowed, but the manner they were given became problematic. The NUM had just emerged from a bargaining season where the company had pleaded poverty with no more money to give the workers. Then out of the blue, money was available for the certain categories of workers. This gesture undermined the collective bargaining process in two ways: Firstly it sent a message that collective bargaining was less important as companies can award increases to whomever they want whenever they want. Secondly, it suggested that trade unions have no capacity to negotiate proper increases. This had a negative impact on the trust workers put into trade unions. It led to the formation of workers’ committees on the platinum belt and the emergence of community and political parties pretending to be champions of the poor miners. It opened the doors for chaos and lawlessness in a sector that is the backbone of South Africa‘s economy. It is for this reason that the NUM believes that collective bargaining has to be promoted and respected by all parties, mining companies included. Mining companies would be expected to be cooperative and take the lead in restoring law and order. Their actions would have to speak louder than their words. Their commitment to transformation and collective bargaining should not leave a bitter taste in the mouths of other stakeholders. This is very important for stability to be the order of the day in the sector.

The mining sector continues to lament lack of skills as a problem whilst they are themselves failing to meet their own workplace skills targets. For stability in the mining sector, there cannot be an old apartheid order mining sector in a democratic dispensation. The mining sector requires bold leadership that is prepared to take the sector into new unchartered waters.

Collective bargaining Moving forward, the NUM has not only reprioritized transformation but has put the notion of evaluation of progress at the center to ensure that companies comply. In terms of the new mining charter, government, as the regulator, has to receive reports on a continuous basis and to conduct followup inspections to ensure that compliance takes place.

The adage that says if you wish for peace, prepare for war is very relevant to what the NUM‘s intentions are. To achieve what we aim to achieve, the union is prepared for a fight with the country’s mining sector. Of course the fight will not be through violent protest or chaotic behavior. It will be through established processes and protected strike action which we always argue is the last resort unions have at their disposal. The pen has always prevailed and proved to be mightier than the sword as opposed to Otto van Bismarck‘s assertion that “the problems of the day would not be solved by the majority of speeches and votes but through blood and steel.’’

Corporate Africa 2013

Mining

Mining in Kenya: Balancing the public and private interests Kenya Chamber of Mines writes for Corporate Africa on proposed regulation of the mining industry in Kenya’s growing mining sector.

frica is the global frontier in mining. The continent is known to be richly endowed with resources and with each new day new deposits are discovered, mines are opened and towns develop due of the exploitation of mineral resources.

In the past Kenya has not been regarded as a mining giant but if recent events are anything to go by the tide could be changing. Situated north of the Eastern Africa mining giant Tanzania and the Democratic Republic of Congo, Kenya has for a long time played a very minimal role in the robust mining industry existent in the region. Kenya has very few mining operations aside from limestone mining undertaken by cement companies. Two main mining operations stand out: Trona mining that is utilized for the production of Soda Ash along Lake Magadi and Fluorspar mining undertaken along the Kerio Valley. It is anticipated that, as from early 2014, the mining of titanium in Kenya’s Kwale County is set to become the third full scale mining operation. So, why is there so much interest in Kenya’s mining industry?

Unexplored Mines The answer lies in exploration. Much of Kenya’s potential remains undiscovered owing to very low levels of exploration undertaken in the country. Due to significant investment in oil, gas and coal exploration, deposits have been identified and presently there is a high level of gold exploration, copper, manganese, and iron ore. This is bound to grow even further following the Jubilee government’s decision to establish a dedicated Ministry of Mining, and therefore depart from the age-old trend of having mining as a small department under the Ministry of Environment and Natural Resources. In addition, the Kenyan government’s economic development blueprint, Kenya Vision 2030, has recognized the mining, oil and gas sector as key in the economic pillar of the vision. There is, however, a critical gap that has, in a sense, hampered the growth of the industry despite the existence of a mining ministry and robust private sector representation. This gap is inadequate regulation. As in most African countries endowed with mineral resources, creating the legal framework that will attract and retain investors while balancing the revenue demands of the country, community, and ecological interests is a juggle in itself. Kenya for instance is regulated by a law enacted in 1940: the colonial era. This relic of a statute has undergone various remedial patchworks through amendments and a two decade long effort to overhaul the law , with little being done. However, the new Ministry has promised to ensure that the legal and policy frameworks are put in place as a matter of priority. This indeed has been a keen call by the Kenya Chamber of Mines and it’s no surprise that some of its more critical lobbying efforts are on legal and regulatory reform.

Corporate Africa 2013

The stability of laws and regulations in mining jurisdictions provides a key basis for investment. Without this, investors find it difficult to operate, considering that exploration and mining ventures are capital intensive, risky and heavily dependent on global market forces of demand and supply. In Africa this has remained a great challenge whereby governments, through unilateral declarations that are often politically motivated, prescribe new terms on royalties and license fees with the aim of collecting larger rents from mining companies. This unpredictability makes capital expensive and usually beyond the reach of would be African investors. Coupled with fickle global market dynamics, the story of

African mining could be one that ends before it ever really begins unless there is a better regulation framework. The quest for regulatory reform cannot, however, subsist where industry is incapable of undertaking self-regulation on its practices as well as how it maintains efforts to engage and win goodwill in the communities it operates in. No amount of regulation can win a company the much coveted social license to extract minerals. It is only gained through working to ensure that communities around operations take

the time to invoke the participation of the locals in employment, procurement of services and complementing in social amenities. Business member organizations play a vital role through enhancing dialogue and sharing best practices on how to encourage transparency and socially and ecologically responsible mining as knowledge on

The story of African mining could be one that ends before it ever really begins unless there is a better regulation framework.

changing scopes on regulatory and fiscal dynamics. The Kenya Chamber of Mines was established in the year 2000 as a government initiative to foster dialogue with the private sector players. The Chamber has, as its key mandate, to act as a representative entity for the private sector companies operating in Kenya’s mining sector. At first the Chamber existed mainly as a lobbying body, pushing for more favorable working conditions for miners and private stakeholders. However, in line with the growth in prominence of the sector, the Chamber’s role has continued to evolve to take on a number of core roles including the marketing of the industry locally and internationally to promote

Mining

New regulations

investment opportunities, drive awareness of the industry among local communities and be a source of information for its members. In time the Kenya Chamber of Mines has opened up its membership to a variety of service providers interested in mining. Today, the Chamber’s membership portfolio that was once home to only exploration companies and mine operators has evolved to one that caters for legal, financial, consultation and equipment supply fields among many more. This is indeed value adding for the membership consisting of explorers and operators, as well as new foreign owned entities looking to enter the marketplace, as they gain a platform to have direct access to miners and a whole list of service providers that can cater for their needs.

The Kenyan government’s economic development blueprint, Kenya Vision 2030, has recognized the mining, oil and gas sector as key in the economic pillar of the vision.

Corporate Africa 2013

Mining

Is the mining sector benefiting Africans?

Mwana’s Executive Director of Operations, James Arthur, discusses how mining is essential to social and economic development in Africa, and ponders the future of the mining industry in Africa.

wana Africa is a mining company with projects based in South Africa, Democratic Republic of Congo, Angola, Botswana, and Zimbabwe. Through these projects Mwana extracts base metals, gold, and diamonds. The company’s reputation for responsible and sustainable development has been established by ensuring a safe working environment for its staff, by positively engaging with the communities in which it operates, and by minimizing the environmental impact of its activities. Mwana’s primary contribution to the areas in which it operates is the stimulation of economic activity through the creation of jobs; development and support of local businesses; the use of local contractors; and the purchase of goods and services from nearby suppliers. The focus of Mwana Africa’s social initiatives continues to be in education, health, and enterprise development, in particular in support of small and medium enterprises (SMEs) to diversify local economies and reduce dependence on Mwana’s operations as the sole significant employer in the areas in which we operate. Mwana actively engages with stakeholders through a variety of formal and informal meetings, briefings, surveys, and feedback sessions on issues raised. Mwana’s respective involvement in supporting community trust initiatives in Zimbabwe further testifies to the company’s commitment to social development in the communities in which they operate.

Corporate Africa 2013

Promoting Economic Development In Zimbabwe, in particular, both of Mwana’s mines are members of the Chamber of Mines of Zimbabwe (COMZ). COMZ is a private sector voluntary organization established in 1939 by an Act of Parliament. The members include mining companies, suppliers of machinery, spare parts, and chemicals, service providers including banks, insurance companies, consulting engineers, and various mining related professional bodies and individuals. The mining company members of the COMZ produce about 90 per cent of Zimbabwe’s total mineral output. The Chamber of Mines’ mission statement is to promote development and growth with strategies consistent with high international standards of health, safety and environmental consciousness, and to positively influence the local business environment in order to attain the objectives of the mining industry.

Promoting Social Development At the year end, Mwana Africa employed 1560 people (compared with 2615 the previous year). The significant staff reduction this year reflects the restructuring at BNC. However, the group’s impact extends well beyond its direct employees and into the communities where it operates. In Zimbabwe it has been estimated that, for every employee, as many as ten others derive benefit from Mwana’s operations: a total of more than 14,000 people.

Preference during recruitment is given to the local community, especially for unskilled and semi-skilled positions. With the exception of senior expatriate management, all staff in our exploration operations is drawn from the immediate communities. At Freda Rebecca Mine in Zimbabwe 94 per cent of the workforce is from the local town of Bindura.

The focus of Mwana Africa’s social initiatives continues to be in education, health, and enterprise development.

During the year Freda Rebecca Gold Mine has increased the proportion of supplies and services that it sources from local suppliers, with 69 per cent of total procurement expenditure sourced locally. Several small business enterprises are assisted by Freda Rebecca to provide services to the mine and the mine villages, and to encourage entrepreneurial ventures. Similarly, BNC sourced 76 per cent of its total procurement locally. The exploration operations in Katanga source 15 per cent of goods and services from local villages, with the remaining 85 per cent split between the towns of Likasi and Lubumbashi. The sheer remoteness of Mwana’s operations in Zani necessitate that virtually all supplies are imported from Uganda.

Mining

Exploration projects routinely assist with infrastructure support such as the upgrading of roads and the construction of access bridges. In cases of extreme emergency, exploration staff assist community members by providing transport to hospitals. Where operations interact with artisanal gold miners, the company has undertaken studies to better understand the issues and challenges faced by these populations. This is a prelude to formulating a strategy to manage future interactions with the aim of improving these miners’ working conditions. At Zani, PACT (an America NGO) is assisting Mwana with this process. Bindura Estates (a wholly owned subsidiary of Freda Rebecca) embarked on establishing a commercial farm on the arable portions of the mine lease. In addition to bolstering the local economy of Bindura and improving food security, this venture is providing stable employment for the local community as permanent employees and seasonal labor.

The company’s primary contribution to the areas in which it operates is the stimulation of economic activity through the creation of jobs.

Education Freda Rebecca Gold Mine (FRGM) continued to expand its partnership with the Italian NGO Terre des Hommes (TdH), adding to its support network, a local primary school, Mapunga. TdH maintained its commitment to provide school fees for over 150 children, as well as paying the salaries of some teachers. The mine organized refurbishment of the buildings and surrounds of Mapunga School, constructing six new classrooms, ablution facilities, and sinking a borehole for reticulation and sanitation purposes. FRGM also provided assistance with furniture, educational books, and stationery, helped Batani crèche with the construction of a market garden and, this year, the crèche is also embarking on a small scale chickenrearing enterprise with FRGM and TdH’s support. The vegetables from the garden will supplement the children’s nutritional needs, and the income generated will subsidize the crèche thereby reducing school fees. In the coming year, a further six schools in the immediate vicinity of the mine will be refurbished. FRGM is also sponsoring five students through their degrees at the School of Mines, and offers scholarships on a case-by-case basis to academically gifted students from the local community. BNC provides on-site primary school education, funds secondary schooling and grants a number of scholarships to higher education institutions for employees’ children. The exploration project at Zani in the DRC has constructed several classrooms

for schools in the vicinity, and has finished refurbishing the dormitory at the secondary school adjacent to the camp. In addition, the project has also commissioned a local carpenter to make desks for local primary and secondary schools.

Health and Safety

At Freda Rebecca Mine the implementation of proactive safety management programs resulted in the lost time injury frequency rate (LTIFR) remaining at 0.91. All our mines and exploration operations routinely achieved extended periods in which no lost time injuries were reported. The principal health issues faced in the regions in which we operate are malaria, HIV/AIDS, and waterborne diseases such as typhoid and cholera. The company provides medicines, education, and training for the prevention and treatment of these diseases, as well as associated infections such as tuberculosis. FRGM helped the local municipal council with its refurbishment of the local water supply, upgrading pumping capabilities, as well as 24-hour maintenance assistance. In addition, FRGM embarked on a comprehensive borehole reticulation program for outlying communities to ensure access to safe water supply; to date, 10 holes with manual pumps have been completed. BNC and Freda Rebecca Mine also staff and fund the running of occupational health as well as primary health care clinics for employees and their families. Both the Trojan Mine clinic (part of BNC) and the Corporate Africa 2013

Freda Rebecca clinic have been certified by the government as Opportunistic Infections Clinics. Freda Rebecca continued with its Employee Assistance Program for its employees and dependents, which focused on counseling for work and lifestyle problems. Mwana’s mine operations have all implemented community-wide HIV/ AIDS management strategies linked to the concept of overall Wellness. This includes awareness and education campaigns, voluntary counseling and testing (VCT), and health care training. Freda Rebecca was certified as an ART clinic to dispense anti-retroviral (ARVs) medication supplied by the government to affected employees and their dependants, as well as the local community. Both Freda Rebecca and BNC also receive assistance from the Zimbabwean Business Council on AIDS (ZBCA). BNC has initiated a similar association as FRGM with the HIV/AIDS assistance project coordinated by the Swedish Workplace HIV & AIDS Program (SWHAP). The first phase of cooperation involves the review and implementation of HIV/AIDS and Wellness policies and practices. UNICEF donates primary health care drugs to Freda Rebecca, which passes on any unused.

We take proactive measures to conserve local biodiversity, and to re-establish habitats disrupted by vehicle movement, waste rock dumps,and tailings dams.

The future of resource extraction

Working with Governments

In February 2013, Mwana announced that the gold mineral resource at its Zani-Kodo project in the DRC had increased to 2.6 Moz. In February 2013, Mwana announced it had signed a Joint Venture Agreement with Zhejiang Hailiang Company Limited to jointly explore some of its copper license areas in the Katanga Province of the DRC.

Mwana Africa maintains a proactive relationship with the governments, partner companies and communities in all the countries it operates in. This is a critical success factor. It also helps identify any issues early so that these can be addressed in a timely manner. This is achieved by understanding the political landscape and key influencers, government priorities and the decision making process and actively engaging with the relevant departments with a view to implement or advocate where necessary.

Mwana Africa is now entering a new phase of its development, focusing on operational delivery from its two mines in Zimbabwe and the development of the Zani-Kodo gold deposit in the DRC. In addition to this, given the focus on cost cutting in light of lower commodity prices, exploration drilling and the pre-feasibility study at Zani Kodo are under review.

Advancing technology

Mwana has developed close working relationships with service providers throughout the industry. Through leveraging these relationships Mwana believes that it is well positioned to take advantage of technology developments and assess their potential application and benefit. Some of the projects where advances in technology are being investigated and applied include: the recovery of fine diamonds at the Klipspringer tailings retreatment project; advanced gravity recovery systems for improved recoveries at FRGM; application of developments in reagents technology for improved metallurgical performance at a Trojan concentrator; application and rollout of drop raising as a mining method to improve safety and efficiencies of mining at Trojan Nickel mine.

Mwana Africa limits the impact of its operations on the environment through responsible waste disposal and prevention of pollution, and through optimizing the use of resources such as water, fuel and electricity. We take proactive measures to conserve local biodiversity, and to reestablish habitats disrupted by vehicle movement, waste rock dumps, and tailings dams. In all but one of our operations, internal and external environmental audits were completed and no significant noncompliances were found. Following the leach tank incident at Freda Rebecca Mine in February, the mine has successfully cleaned up the pulp spillage to the satisfaction of Zimbabwe’s Environmental Management Authority. FRGM, in conjunction with EMA, has since continued to monitor the discharge levels in the drainage canal and these have now returned to acceptable levels. FRGM maintained ISO14001 certification for environmental practices, and continued air quality monitoring confirms that the dust generated by mining activities is in no way impacting negatively on employee or community health. Proactive water quality practices at the mine have maintained its water discharge status within safe categories. The restart at BNC involves the re-establishment of sound environmental practices, including programs to reduce impacts, and the Trojan Mine aims to obtain ISO14001 certification next year. Mwana Africa recognizes its obligation to rehabilitate the sites where it has operated. In addition, financial provisions are in place for costs associated with the closure of the company’s operations in Zimbabwe and South Africa, as prescribed by local laws.

Corporate Africa 2013

Technology

n a clear early evening on 25th June 2013, the internet and telecoms industry experienced a profound paradigm shift as O3B’s four satellites rocketed skyward aboard the Arianespace Soyuz launch vehicle. Hours later, contact was made with the O3B gateway in Hawaii and the landmark achievement was confirmed: O3B had control of the satellite industry’s newest and most innovative hardware. Steve Collar, CEO of O3B Networks, said during the celebrations following the launch: “We believe in a world where affordable, high speed connectivity is always within reach.” In the context of one of the most significant satellite launches in recent years, his claim is difficult to refute.

Boosting development O3B’s intention with the launch of their four satellites is to provide fast, reliable broadband Internet to the “other 3 billion” people on Earth who are not currently exposed to internet connectivity. Africa’s Internet Service Providers (ISPs), telecoms companies, its oil and gas sector, and general infrastructure are set to receive a huge boost as the satellite constellation will deliver significantly more bandwidth with four times lower latency and at a much lower cost than traditional satellite solutions.

to support economic growth in the emerging markets, particularly throughout Africa, while having an impact on ordinary people for whom digital connectivity is either unavailable or unaffordable. O3B Chairman, John W Dick, said of the project: “In only a few years, we have designed and launched a revolutionary system: one that will transform the way our communications are handled in many of the world’s under-reserved markets. Working with our customers, O3B will open up a new and exciting world to billions of people who, up to now, have not experienced the benefits of fast internet connectivity and who, as a result, are not on a level playing field.” The benefits of this increased broadband availability are immediately clear: ISPs will be able to make their services available at a cheaper price to a wider customer base; the agriculture sector will be able to advise farmers online, rather than specialists being sent out into the field; the telecoms industry will be able to utilize faster, cheaper connectivity in order to connect businesses, including both SMEs and major corporations alike; while governments’ communications will be made faster, safer, and more reliable.

Existing and future business Already, O3B has announced a major, longterm capacity deal to provide high-speed, low-latency capacity to companies such as Glocall Telecomms LLC, one of the leading service providers in the Federal Republic of Somalia. This deal is significant both in the difference it will make to industry in Somalia, and also as a symbol of the effect that the O3B satellite is capable of having. Glocall invests in and builds data networks in emerging markets, and will deliver both broadband and voice products throughout Somalia. This will allow corporations and people to connect, store data and do business quicker and cheaper than ever before. This is just the start of the potential that O3B has in Africa: The company intends to work with Google and

The O3B network will deliver broadband connectivity everywhere on Earth within 45 degrees of latitude north and south of the equator. This area covers all major emerging and insufficiently connected markets, with a collective population of 3 billion people. The technology is intended

Connecting the O3B founder Greg Wyler had a vision to provide fast, reliable broadband to the three billion people on Earth for whom it is currently unavailable. Through exhaustive fund raising and innovations in technology, this year Greg’s vision became a reality. 22

Corporate Africa 2013

that tower it has to reach Google’s servers. That’s the backhaul part. And most of the world does not have access to backhaul.

The difference the satellite constellation will have across all infrastructure and business sectors in Africa is vast. Offshore communications, such as those used in the oil and gas sectors, will be delivered in a cost-effective, reliable, and quicker way using satellite technology. O3B offers unlimited scalable bandwidth while reducing network latency to one quarter of that for existing geostationary satellites. This will translate to sea-travel and trade, providing increased revenue generation, enhanced crew welfare, and the potential for greater IT operational efficiency for ship operators.

“In most of the world, you could put up a tower somewhere and reach it from your cell phone, but then you couldn’t reach the server in California to get the information. That’s where we come in.”

HARNESSING INNOVATING TECHNOLOGY The satellite will act as a “fiber in the sky” and will change the broadband experience by providing an alternative to backhaul traffic. O3B’s satellites will also serve as backhaul for the ubiquitous 3G mobile networks in underdeveloped countries. In the United States, data sent over cell phone networks is carried over fiber optics. However, many regions around the globe lack the capital needed to build fiber optic networks. O3B hopes to serve these regions by providing a workable alternative.

Technology

The technology is intended to support economic growth in the emerging markets, particularly throughout Africa.

other major developers in order to “level the playing field” of economic opportunity throughout the underdeveloped world.

Funding O3B, a Channel Islands-based outfit, has raised more than US$ 1bn to build its space and ground infrastructure. O3B’s largest debt facility, over US$ 0.5bn, is provided by HSBC, ING, CA-CIB, and Dexia, and is underwritten by the French export credit agency, Coface. The agency has been extremely active in supporting the new space constellations involving Thales Alenia Space (TAS), one of Europe’s major satellite manufacturers. The company is also partners with the Development Bank of Southern Africa.

Working with our customers, O3B will open up a new and exciting world to billions of people.

O3B founder Greg Wyler explained: “When you pull out your mobile phone and type google.com on it, it sends a signal from your phone to a tower nearby. From

Other 3 Billion Corporate Africa 2013

Technology

Why we are all 4Afrika Fernando de Sousa, General Manager for Africa Initiatives at Microsoft, is optimistic about the future for online African development. He explains why the world should take notice.

Corporate Africa 2013

The backbone of this growth will be the expansion and improvement of Africa’s continent-wide infrastructure. With around 60 per cent of Africans living in rural and often remote areas, infrastructure projects will need to be far-reaching in order to get the utilities people need to the smallest and hardestto-reach towns. Microsoft, whose first African office was established over 20 years ago, has a vested interest in encouraging this infrastructure growth. Firstly, like any company, we want to help secure the future of our business in Africa, but we also want to help the people in Africa to take a leading role in the internet economy. Microsoft’s heritage is rooted in creating technology platforms that enable people to monetize their ideas, and that’s exactly why we developed our 4Afrika Initiative: turning African ideas into tangible economic benefits for African people. With its huge growth potential, the African continent is on its way to being a game-changer in the global economy.

WITH its huge growth potential, the African continent is on its way to being a gamechanger in the global economy.

Microsoft’s 4Afrika Initiative, as the name suggests, is trying to achieve more for Africa and for Africans. It was launched in February 2013 with the aim of improving Africa’s global competitiveness through technology. By 2016, 4Afrika aims to help place many millions of smart devices in the hands of young Africans, bring 1 million African small and medium enterprises online and a step closer to participating in the internet economy, and help hundreds of thousands of Africans develop entrepreneurship and employability skills. It is less about “hand outs” and much more about giving Africa’s digital connectivity a legup. We’re proud to say that 4Afrika is gaining momentum. In the three-month period after the initiative’s launch we saw nearly 400 apps created by our AppFactory interns, and we influenced more than 1100 developers through DevCamps in Kenya, Ghana, Rwanda, and Tunisia alone. We also trained 1,100 partners and government leaders across 14 countries through our Afrika Academy. Only 10 per cent of all phones across Africa are smartphones, so in partnership with Huawei, we have launched the Huawei 4Afrika phone, running full Windows Phone 8 and featuring Windows Phone apps designed by African developers. The phone is aimed at university students, developers and first-time smartphone users. In February, we launched Project Mawingu (“Mawingu” is Kiswahili for “cloud”) to help create new opportunities for commerce, education, and health care across Kenya. This pilot, in partnership with local internet service provider Indigo, delivers an affordable solar-powered “super WiFi” service to 6000 Kenyans who currently have no internet access. Project Mawingu does this via unused TV radio frequencies, known as “white space” spectrum. This pilot project was our first step toward assessing the commercial feasibility of delivering low-cost access using TV white space technology. Since February, we have launched two other white space projects: one in Tanzania and another more recently in Limpopo, South Africa. In Tanzania, we worked alongside the Tanzania Commission for Science and Technology (COSTECH), and local internet service provider, UhuruOne, to get tens of thousands of university students and staff better connected by installing low-cost wireless broadband at the University of

Technology

frica accounts for around 15 per cent of the world’s population, but only 2.5 per cent of its gross domestic product. To put this in context, the United States accounts for only 4.5 per cent of the global population and yet generates around 20 per cent of total GDP output. There are many ways to read these facts, but one interpretation, one that few would dispute, is that Africa has enormous economic growth potential. Back in 2010, McKinsey & Company predicted that four key industries – agriculture, resources, consumer-facing industries, and infrastructure – could generate an extra US$ 1 trillion for the African economy by 2020. There is already real evidence that this potential is being realized: Growth rates of around 6 per cent in sub-Saharan Africa are backed up by the micro-economic examples of Ivory Coast, Nigeria, and Mozambique, which are just some of the African nations looking at growth rates of 7 or 8 per cent, compared to a global average of four per cent.

By 2016, 4Afrika aims to help place many millions of smart devices in the hands of young Africans.

Dar es Salaam. This collaboration has also introduced Windows 8 devices and service packages to several universities in Dar es Salaam. In Limpopo, our focus has been on targeting secondary schools in the remote parts of the province. We’ve partnered with the Council for Scientific and Industrial Research, the University of Limpopo, and local network builder, Multisource, to bring wireless connectivity to the schools. Through this partnership, we’re also bringing Windows-based tablets; projectors; teacher laptops and training; education-related content; solar panels for device charging where there is no access to electricity; and other support. White space technology is only one piece of a larger solution, which needs to include quality educational material and tools, mentorship services, and professional development for school leaders and educators. For businesses, we will also soon be opening an online hub, aggregating free Microsoft and non-Microsoft resources to help small African businesses expand locally, increase their competitiveness and find new business opportunities outside of their common business locations. Projects like these are part of the 4Afrika strategy of addressing youth unemployment, helping recent graduates develop skills for employability, and supporting the development of young software developers and entrepreneurs. Right now, Africa is getting up to speed with its digital connectivity and social engagement with the internet economy. But it won’t take long. The demand is there, the skills are there and, in the near future, Microsoft sees Africa becoming a major player in the global technology industry. Will the next major internet start-up come from Africa? Don’t bet against it.

Corporate Africa 2013

Technology

ICT Investment Opportunities IN Africa A

cross Africa there is no shortage of people who believe in the transformative power of the ICT sector and its potential for innovative solutions and economic growth.

ICT is a vital driver of economic growth in Africa. Boosted by increasingly competitive markets, mobile phones are now rapidly becoming a basic necessity across the region, and act as major contributors to GDP, contributing substantially to government budgets in a number of Least Developed Countries, worldwide, according to ITU’s role of ICTs in advancing growth in Least Developed Countries report. Africa’s thirst for ICT development is not likely to be quenched anytime soon. As more and more markets liberalize and embrace competition, mobile penetration is expected to continue to skyrocket, according to the report, topping 90 per cent in Senegal by end 2015 or over 80 per cent in Tanzania. But getting the message across to the rest of the world, including prospective investors in ICT in Africa, may not always be easy. That’s why ITU offers countries across the world the opportunity to showcase their ICT industries and investment opportunities at our annual event, ITU Telecom World, taking place this year in Thailand from the 19th-22nd November 2013. ITU Telecom World is an influential knowledge sharing, networking and innovation showcasing event for the global ICT community. Because the event is organized by ITU, the United Nation’s lead agency for ICT issues, ITU Telecom World events gain an exceptional reach both across the industry and across the globe. To help event participants achieve their aims and reach their target audience, ITU Telecom World 2013 brings together an unparalleled mix of leaders from public, private and research sectors, including Heads of State and Government, Ministers, Heads of UN Agencies, Heads of 26

Corporate Africa 2013

Regulatory Authorities, industry CEOs from across the entire ICT ecosystem, thought leaders, consultants, academics, and digital innovators. The theme of World 2013 is “Embracing Change in a Digital World,” focusing on five key topics: changes in the way people communicate with each other, the need for new business models in a data-centric era, shifting industry dynamics, changes in technology, and the need for new regulatory and standardization approaches. Debates will center on interactive panel sessions and ministerial roundtables, visionary keynote speeches and workshops, moderated by experts and influential leaders in their respective fields. These include McKinsey, exploring how the Internet in Africa is enabling countries to leapfrog development milestones and transform economies; Intel, co-hosting a series of sessions on the tremendous promise of eeducation; and sessions on key topics such as cybersecurity in the developing world, delivering broadband in rural areas, and making the most of the digital dividend. Beyond the debates, country pavilions, industry showcase opportunities, networking spaces, and events are carefully constructed to facilitate the meeting of minds that inspires new thinking and new partnerships. “ICTs allow the state to provide better quality services at lower costs to more people. No other environment allows this,” said Bruno Nabagné Kone, Minister for ICT in Cote d’Ivoire. “[At ITU Telecom World] we can win time in Africa, gain several years by drawing on the experience of other countries to go more quickly in the services and technologies offered. We leave enriched by the exchanges we have had here at every level,” he said. The showfloor at World 2013 offers a global stage to showcase innovative solutions, technologies, projects, and potential partnerships, in particular from emerging

markets. Traditionally, National Pavilions drawn from countries across Africa and around the world have been a key feature of ITU Telecom events. This year, pavilions from throughout Africa will include Gabon, Ghana, Kenya, Nigeria - who will additionally host an Investment Forum - Rwanda, Senegal, South Sudan, Sudan, Tanzania, Uganda, and Zimbabwe. Key regional players such as Telkom S.A. will also join the conversation and exhibit on the showfloor. A National Pavilion enables countries to showcase their ICT highlights to the event’s influential audience. In 2012, for example, Gabon used their National Pavilion to highlight the country’s three-year digital plan,

Digital Gabon, and a number of flagship projects including Cybercity of Mandji Island, IT Park of Nkok and Cloud Gabon, and to seek interested parties for possible public private partnership arrangements.

global discussion which shapes the future but it also helps others….we hope that our experience in our small way can also inspire others.”

Similarly Tanzania used their National Pavilion to gather investors in their digital opportunities, which included e-banking projects and subsidized opportunities to increase internet access in rural and underserved regions of the country.

ITU Telecom World 2013 in Bangkok will provide a neutral platform for all concerned to explore a host of different opportunities throughout Africa and across the world, and to join the conversation that matters, embracing change for the good of people across the globe.

Speaking recently to ITU Telecom, Rwanda’s Minister for Youth & ICT, Jean-Philbert Nsengimana, noted that being involved at ITU Telecom events “helps us be part of a

To find out more about how you can participate at, or to register to attend ITU Telecom World 2013 visit: http://world2013.itu.int/.

Technology

GSMA mAgri: A brave new world for Africa’s farmers

Fiona Smith, Senior Director at GSMA, explains how the greater use of technology is developing agriculture and sustainability in Africa.

n Embu North, a district 120 kilometers from Kenya’s capital city Nairobi, Jackson answers his mobile phone and speaks to Mercy who is a smallholder farmer living in the area. Mercy is calling to ask for advice on how she can treat her banana crop that has large black spots on the fruit, and Jackson recommends she uses an insecticide that is available locally. Jackson is one of seven extension workers employed by the Kenyan Ministry of Agriculture to provide advice to over 17,000 farming families in the Embu North district. Every day more African farmers are receiving help in this way because they now own or have access to mobile phones. In the days before mobile phones were common in Embu North, Jackson could help fewer farmers because the only way to provide advice was to travel and speak to farmers in person at their farm or a field day. In many African countries, there is only around one extension worker for

Corporate Africa 2013

every 4000 farmers, meaning people like Mercy have limited access to the help they need. Mobile phones have brought instant communication, but there’s one problem Jackson faces: He can’t answer all the phone calls from the thousands of farmers

the Nigerian government claims to have saved US$ 185 million in 2012 by using mobile phones to distribute vouchers for fertiliser subsidies to farmers. in his region. This is why he, and many others working in agricultural development in Africa, recognizes the need for mobilebased services that can provide advice and

information to farmers like Mercy at the touch of a button. With timely and relevant information around pest and disease management, market prices, weather updates, and farming tips, African farmers can increase their yields and income, and prevent losses from disease outbreaks. The opportunity for mobile in the African agriculture sector is substantial. First, the majority of Africans work in or rely on agriculture for their livelihoods (in some countries 80 per cent of the workforce works in agriculture). However, the agriculture sector is less efficient and yields are much lower than in developed world countries (crop yields are 60 per cent of those in developed countries). In terms of telecoms, Africa is not only the fastest growing mobile market in the world, and the second-largest market based on number of connections, but future growth for the mobile industry will come from “untapped” populations who mainly live in rural areas in developing countries. Finally,

The growth of the Mobile Agriculture (mAgri) industry over recent years is testament to the ability of mobile solutions to benefit African agriculture in many different ways. There is evidence of Ghanaian farmers increasing their revenue by 10 per cent as a result of accessing upto-date market information via their mobile phones. In Uganda, where the probability of buying counterfeit agricultural products is as high as 50 per cent, farmers can now save money by simply sending an SMS with the product code to a number and 20 seconds later receiving an SMS that confirms if the product is genuine or fake. Mobile-based solutions are reducing some of the endemic inefficiencies in the Kenyan dairy supply chain and the Nigerian government claims to have saved US$ 185 million in 2012 by using mobile phones to distribute vouchers for fertilizer subsidies to farmers.

The mFarmer Initiative In light of this sizeable market opportunity, the GSMA (the global trade association for the mobile industry) launched the mFarmer Initiative in 2011 in partnership with the Bill and Melinda Gates Foundation and USAID. Through the initiative, the GSMA’s mAgri Program works with mobile network operators and private and public sector agricultural organizations to create agricultural information and advisory services that are scalable, replicable, and commercially sustainable. It aims to reach 2 million smallholder farmers with these mobile agricultural information and advisory services. The strength of the mFarmer Initiative model is its ability to leverage private sector assets and funding to match investment provided by donors, thereby increasing the long-term investment and ownership and ultimately contributing to sustainability of the projects. Donors who invest in Africa’s agricultural development are attracted to the public-private partnership model offered by the GSMA and other private sector organizations that can channel funding into commercially viable solutions to the problems they aim to tackle.

Details of Investment Since its launch the mFarmer Initiative has provided grants to four mobile service providers (Airtel Kenya, Tigo Tanzania, Handygo Technologies India and Orange Mali). They were selected by an independent fund panel from a pool of 65 organizations that put forward concept notes. mFarmer grantees receive seed funding (up to US$ 400,000), technical assistance from the GSMA mAgri team around content development, service design, usability

testing and partnership brokering, as well as a tailored monitoring and evaluation framework and the resources to implement it. Through the mFarmer Services, farmers can access agronomy tips, market prices and weather information on simple handsets via different channels including SMS and IVR. They can also choose to call a helpline to speak to an agricultural expert who has access to a full content database and the ability to offer more detailed information and advice.

on providing an affordable channel for farmers to access timely, relevant and actionable information when they need it. The service providers recognize that farmers face multiple challenges and access to high quality information is just one important service they can provide. In time, these services can build additional value for farmers by helping to tackle some of the other challenges such as getting a loan to buy seeds, finding a buyer for their produce, or record keeping.

The long term aim of the mFarmer Initiative is that smallholder farmers will have improved resilience and will be able to make better decisions.

As with all GSMA Mobile for Development programs, the mFarmer Initiative places strong emphasis on sustainability and commercial viability, building on the fact the mobile operators see these services as a business opportunity rather than a CSR effort. By working closely with the four different mFarmer services, the GSMA team is able to share the strengths and weaknesses of each project, document what is and is not working, and help create a strong business case to get more service providers creating new products.

Partnerships with agricultural organizations such as CABI and the International Livestock Research Institute (ILRI), are central to the information services being rolled out by the mFarmer projects. With each service, partners focus on their core strength, with the mobile network operators contributing telecom infrastructure, strong marketing power of their brands and training existing agents to promote the service, while the agricultural organizations create relevant, actionable and mobile-ready information for farmers. In the case of Airtel Kenya, they have partnered with the international research organization CABI who in turn has strong links to the Kenya Agricultural Research Institute (KARI), a government body that validates and quality assures the information before it goes out to farmers.

mFarmer Initiative’s impact on local communities The long-term aim of the mFarmer Initiative is that smallholder farmers will have improved resilience and will be able to make better decisions as a result of being able to access relevant agricultural information. In reality, this means farmers are getting up-to-date market prices and are in a position to negotiate a better price with the middle man who comes to buy their produce at the farm. By subscribing to receive daily or 5-day weather forecasts, farmers can make better informed decisions about when to plant. Initial results from a study on Handygo’s mKisan service in India show that, to date, the most popular information amongst livestock farmers is advice around pests and diseases affecting cows and buffalo. The four services supported under the mFarmer Initiative are currently focusing

Technology

there is growing evidence that, with access to better information, inputs, and finance via mobile technology, farmers can improve their livelihoods.

With new investment from the UK government, the mFarmer Initiative will open a second challenge fund later in 2013 to support mobile services that give farmers in sub-Saharan Africa and South Asia access to nutritional and agricultural advice and information. As the mAgri industry continues to mature and we see more advanced products and services on offer to the agriculture sector, the second round of the mFarmer Initiative will support services that can not only meet meet farmers’ demand for information, but also their demand for loans, insurance, savings or a more efficient supply chain, for example. In the near future, Mercy and her fellow farmers in the Embu North region of Kenya will be able to sign up to Airtel Kenya’s service. On even the most basic mobile phone, they will receive up-to-date market prices, daily weather updates, and tips on better farming techniques. No doubt, they’ll still value Jackson’s advice, but they’ll also have the choice to speak to the agricultural experts in Airtel’s call center who can answer their questions about treating pests, for example. As mobile phones become more and more a part of daily life among African farmers, smart phones get cheaper and many Africans experience the Internet for the first time on their mobile, the market will continue to meet the demand from this vital section of the African population.

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Finance

SIX trends of AFRICA’s extractive industries Rolake Akinkugbe is a natural resources expert, and Head of Energy, Oil and Gas Research, at pan-African Ecobank Group. Here she reviews the resource extraction industry in Africa, and devises six trends investors should be aware of.

rom the West Africa Transform Margin (WATM) and the Mount Nimba iron ore deposits straddling Cote d’Ivoire and Liberia, to East Africa’s gas-rich Rovuma basin and southern Africa’s gold and diamond mines, no exploration frontier in Africa is out of reach for the reward-seeking and savvy investor. However, the foreign private sector’s dual search for investment stability on the one hand and profit on the other means that its commercial interests will often need to be balanced against the strategic interests of African governments, given the socioeconomic context of oil and mineral exploitation in the region.

Resource rich The continent is resource-rich, containing 30 per cent of the world’s total hydrocarbons and mineral reserves, 12 per cent of the world’s crude oil reserves, 42 per cent of the world’s bauxite, 38 per cent of uranium, 42 per cent of gold, 88 per cent of diamonds, 44 per cent of chromite, 82 per cent of manganese, and 95 per cent of vanadium. In 2012, according to United Nations Conference on Trade and Development (UNCTAD), Foreign Direct Investment (FDI) flows into sub-Saharan Africa (SSA) were highest (above US$ 3 billion) in Nigeria, Mozambique, South Africa, Democratic Republic of Congo (DRC), and Ghana. Worthy of note is that they are all resource-rich countries, in oil, gas, or minerals, thus underscoring the sector’s continued central role in attracting FDI to the continent. Despite the clear push toward economic diversification, natural resources are likely to remain FDI priorities for the region, in the nearterm. East Africa’s prime geographic location to Asian markets is, in particular, a key 30

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attraction for emerging Asian investors targeting hydrocarbons projects. Tanzania and Uganda have been attracting FDI due to recent hydrocarbons discoveries and FDI inflows for the East Africa region increased from US$ 4.6bn in 2011 to US$ 5.3bn in 2012. In southern Africa, investors’ interest in Mozambique has been remarkable, and the country received an estimated US$ 5.2 billion in FDI on the back of world-class gas discoveries in 2012. Mining has also been hot cake; FDI flows to the Democratic Republic of Congo (DRC) rose from US$ 1.7 billion to US$ 3.3 million in 2012, largely reflecting steady investment into the mining sector, including the copper-cobalt mines at Tenke Fungurume in the south east. However, given the enormous infrastructure challenges involved in oil and mineral extraction in Africa, it is likely that up to 40 per cent of FDI investment directed towards other sectors such as infrastructure and utilities is actually co-invested with oil and mineral FDI, suggesting that the latter will account for an even greater share of FDI inflows into the region for the foreseeable future. Against this backdrop, here are six important trends for investors to watch for in the extractives industry in the region: The slow but gradual emergence of private equity (PE) In the energy space in 2012, private equity (PE) accounted for an estimated 12 per cent of global buyout deals, while the oil and mining sectors have accounted for nearly 46 per cent of all cross-border Merger & Acquisitions (M&A) in Africa by PE firms in the past four years. But the private equity sector in Africa is nascent.

PE investments are slowly gathering momentum. In 2013, global asset manager, The Carlyle Group stated that it had built a new team focused on energy investments in Africa. A decade ago American Warburg Pincus and Blackstone Capital Partners (an affiliate of The Blackstone Group), two large private equity companies, provided US oil firm Kosmos Energy, which has a portfolio of African assets, with US$ 300

million in capital. In June 2008, Kosmos secured an additional US$ 500 million in equity funding, again from Warburg and Blackstone, making the company the first and largest private equity-backed oil and gas venture focused on Africa. The equity expanded Kosmos’ capital base and provided substantial financial resources for ongoing oil and gas exploration, appraisal and development activities in West Africa, including the first-phase development of Ghana’s world-class Jubilee Oil Field. As recently as June this year, Warburg Pincus announced that it would commit US$ 600m to a new Africa-focused oil and gas explorer, India’s Delonex Energy, focusing on central and east Africa. Meanwhile, the mining sector in Africa has typically relied on stock markets for funding. However, with some of the world’s largest mining companies pushing to sell assets and cut costs, following high profile asset write downs at the start of 2013, PE funds may

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Due to the relatively small and illiquid stock markets in SSA, many PE funds will worry about exits. Moreover, the long gestation period of most exploration and production projects in the extractive sectors means that exits for oil, gas, and mining have been as low as 3 per cent each compared with exits in financial services which accounted for more than 20 per cent of all exits in 2013. Equity in financing generally allows extractive companies to more quickly access cash to finance their expansion and development plans.

be more swayed to invest in African mining prospects, with its high risk high reward curve. Globally, around US$ 48 billion of mines and assets have been on the block for sale in 2013. PE investors accounted for 21 per cent of mining deal activity in the nine months to September 2012, against just 12 per cent for the same period in 2011. Of this, Africa’s share is even lower, and many would-be mining focused PE funds in Africa are generally put off by the longtime lines that mineral extraction in Africa requires. Nevertheless the PE investments that do exist in African mining hold a fairly diversified range of assets, with a diverse range of investor-region profiles throughout Europe, America and Asia. New exploration frontiers: West Africa remains one of the world’s richest and most prospective hydrocarbons provinces, with world-class exploration prospects. East Africa has also offered

Corporate Africa 2013

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two highly prolific exploration zones, the rift system and the Rovuma basin, while the Gulf of Guinea has yielded even greater appetite for more complex plays in its terrain such as pre-salt plays off the Republic of Congo, Gabon, Angola, and Namibia. This unyielding appetite for new frontiers has been accompanied by a general rise in Capex expenditure for oil and gas across the continent, with Africa likely to register an increase by the end of 2013 of close to 15 per cent. In 2012, SSA experienced the second-largest increase in both percentage and dollar terms in exploration activity in minerals. Despite global economic uncertainty, the budget for non-ferrous metals exploration increased to record levels in 2012, helping to underpin continued industry investment, including in SSA. The continent’s global exploration budgets rose to 17 per cent in 2012. The DRC remains the prime spot for exploration spending for the second consecutive year, an increased focus on West Africa translated into gold receiving the largest dollar increase in 2012 in places like Burkina Faso. Indeed, West Africa’s iron ore frontiers have been increasing compared to Australia’s Pibara region, with a variety of investors pursuing new opportunities in the former. Up to 20 mining companies have commenced iron ore projects in the region, as West Africa’s iron ore deposits are reputed to be high-grade, generally attracting low processing costs, due to the low levels of impurities found in them. Guinea’s Simandou region and Senegal’s Faleme region are two of the promising ironore frontiers on the minds of mining explorers focused on Africa, and deposits in both regions could run into millions of tons. Although mining companies find these types of ores extremely attractive due to the fact that there is often no need to process them before exporting, the recent drop in global iron prices has raised questions about the sustainability of the new appetite for ironore frontiers in Africa. However, as many current investment decisions are based on long-term prices estimates, it is likely that current prices for iron ore will have only a limited impact on the supply side and investors’ appetite. Overall, mining exploration targets in Africa have focused primarily on Burkina Faso, Ghana, the DRC, Namibia, Tanzania, Botswana, Mali, South Africa, and Zambia. Unlike the oil and gas sector, across the mining and metals sector exploration activity over the past year has been focused on identifying new mining frontiers, rather than expanding the resources at previous discoveries. Nevertheless whild Africa’s oil and mineral exploration frontiers have expanded in relative terms, in absolute terms global growth in finance available for

Corporate Africa 2013

exploration across the extractive sector has slowed, and Africa could still feel some of this impact. The missing infrastructure-resource link Africa’s infrastructure gap continues to hamper resource development, while, ironically, resource-based opportunities will primarily be the only ones with the requisite rents needed for the development of key infrastructure – energy, water, and transportation - necessary for the development of other sectors such as agriculture. In Mozambique, millions of dollars have been invested in the country’s rail infrastructure linking its remote coal fields with the country’s Beira port. Nevertheless, heavy rains flooded the rail line in February for two weeks, practically paralyzing coal exports and forcing Brazilian mining giant, Vale, to declare a force majeure in May. Vale later went on to cut its 2013 export projections and is now expecting to export only 3.4 million tons: a 30 per cent fall from the 4.9 million tons earlier anticipated. Infrastructure constraints also hampered exports at another Vale mine in Mozambique, but the expansion of the company’s coal production to 22 million tons by 2018 will largely hinge on a planned

US$ 4.4 billion rehabilitation of the northern Nacala corridor, including repairs to its rail link to Malawi and the Nacala deep water port. Across the continent, other projects are hampered by the lack of adequate infrastructure. Many resource projects remain “stranded”, warranting a renewed focus on cross-border infrastructure and resource corridors such as the Maputo Development Corridor (MDC) between Mozambique and South Africa. African governments have attempted to overcome the challenge of physical infrastructure and financing for such infrastructure by pursuing those deals that involve simultaneous mining and oil investments and infrastructure. One way they have attempted to tackle this is through innovative financing structures that attempt to tie resource exploitation to infrastructure development. Many institutional projects are looking to phase out the “colonial” – resources-to-coast framework for infrastructure development and are attempting to prioritize projects that focus on boosting regional integration, domestic and regional markets for Africa’s oil and mineral resources. Proposals to tackle the problem have been numerous, and have now centered on spatial development initiatives (SDIs) first pioneered by South Africa in 1995. SDIs have helped spur the development

corridors and regional infrastructure initiatives such as the Maputo Development Corridor (MDC), the Central Development Corridor (CDC) in Tanzania Trans-African Highway or the LAPPSET project in East Africa. Known more generally as “resource corridors,” these projects can often prove to be a hard-sell for investors due to the transnational negotiations and the financial

But the private equity sector in Africa is nascent. Due to the relatively small and illiquid stock markets in SSA, many PE funds will worry about exits. commitments they involve. In a bid to eliminate the investment and political risks involved, innovative financing techniques, such as public-private partnerships (PPPs), are emerging and they help spread risk between public and private actors. The diverse mix of beneficiation, local-content and value-chain policies “Beneficiation,” the term used to describe the proportion of the value derived from

Mining giant De Beers has formed joint ventures with the Botswanan and Namibian governments to accelerate local beneficiation of raw diamonds, and is also in talks with the South African government. Earlier in the year, Zambia banned First Quantum Minerals (FQM) from exporting 60,000 tons of copper concentrates for processing, asking the miner to exhaust all local options for processing first. Similarly, in neighboring DRC, in April 2013 the mines ministry banned exports of copper and cobalt concentrates in a bid to encourage local processing. In April 2011, Zimbabwe banned the export of unprocessed chrome ore in a bid to boost domestic processing capacity. With varying degrees of implementation of such policies across the continent, a tangible measurement of the success of beneficiation will be the extent to which it creates sound linkages with parts of a country’s real economy as well as its impact on job creation. Natural resource policies have to strike the right balance between distributing the benefits of resource extraction to the wider population and creating incentives for investors to extract minerals in the first place. A fundamental challenge in the region is that such linkages are few and far between and are underdeveloped, primarily due to a lack of other critical infrastructure such as power. Thus resource extraction on the whole must generate enough output to make local value-added processing viable, while large domestic and regional markets would be necessary to absorb locally manufactured outputs.

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mineral exploitation which stays in country and benefits local communities, is hardly a recent phenomenon in Africa, and has often been termed “resource nationalism’” The push toward local value-creation has been particularly strong in the minerals sectors of South Africa, Zimbabwe, the DRC, and Zambia, and in the oil and gas sectors in Angola and Nigeria. Mining and energy and other hard commodity sectors have been less labor-intensive than other industries, a fact which has deepened social expectations and spurred the emergence of new industry policies aimed at opening up linkages between the extractive industry and the rest of the economy. However, a key challenge remains the extent to which local conditions prove conducive to the local processing, refining or smelting of raw hard commodities, and clarity in legislation around local content policies. The beneficiation push has been greatest in the southern African region, especially in South Africa which has introduced a tax incentive for research and development (R&D) for the mining sector in relation to the mineral beneficiation. In South Africa, up to ten of the country’s main commodities have also been identified for beneficiation.

With regards to local content legislation, the picture is mixed. Nigeria provides another example of how linkages between primary sectors and industry are creating high-end value chain activities. In Nigeria’s oil and gas sector, the local supply chain has grown and expanded, underpinned and encouraged by government policy over the past couple of decades. From around 3 per cent in the 1970s to an estimated 50 per cent by 2012, local content development in Nigeria’s energy sector has been a long and hard process that appears to be yielding some results. Many local Nigerian companies now own and operate upstream oil and gas assets and provide high-end drilling and engineering services to multinational oil companies. Across Africa, success will remain mixed. Many local companies face persistently high business and trade costs: barriers that could still undermine the impact of these beneficiation or local content policies. China’s evolution from resources-forinfrastructure activist to acquisition protagonist Sino-African trade remains buoyant, surpassing US$ 120 billion in 2011, and the trend is not likely to shift over the next decade. Indeed Africa’s share of China’s mineral imports has increased 15 times in the last 10 years. Thus, the extractives industry remains the main focus of Chinese investment in Africa. China is now the second-largest global importer of oil, while Africa supplies close to 28 per cent of China’s crude oil requirements. In one sense, China’s model of engagement in Africa’s extractive sector has not radically changed, whether it is granting soft loans at globally competitive rates or commodities for infrastructure bartering. But there is a notable and observable shift, which could eventually and gradually displace the older model of large concessionary loans in exchange for infrastructure projects. Pre2008, oil and mineral-rich countries were the top priorities for such infrastructure for resources loans. Now Chinese loans are not automatically linked to access to mineral equity for Chinese firms, and many negotiations are now being handled as a stand-alone process. China has gradually increased its appetite for direct acquisitions as a form of market-entry in Africa. Under the present model of engagement, Sinopec’s direct acquisition of oil explorer Addax Petroleum in 2009 stands out, and was the largest foreign acquisition by a Chinese firm. Another Chinese state firm, CNOOC has also pursued a similar tact. In 2010, for US$ 1.4 billion, Chinalco acquired a 47 per cent stake in Guinea’s Simandou iron ore project from Rio Tinto; Chinalco already had a 9 per cent stake in Rio Tinto. In 2011, Chinese Nickel firm, the Jinchuan Group, acquired South African miner Meteorex Corporate Africa 2013

Finance

for US$ 1.3 billion to access copper and cobalt assets in Zambia’s copper belt and in the DRC. In some recent cases, China has pursued joint venture and partnership opportunities with local firms or other international investors as a means of creating attractive financing structures for projects; a variation on its commodities for infrastructure development model. In the Democratic Republic of Congo’s (DRC) cobalt sector for instance, China Railway Engineering Corporation (CREC) and Sinohydro have entered into an agreement to establish a joint Sino-Congolese venture, Sicomines. The era of disclosure Transparency in oil and mineral extraction in SSA remains a major policy issue for governments and industry stakeholders. In a ground-breaking move in 2012, Sierra Leone’s government created an internet database for mining contracts that would allow public access to revenue data for the country’s extractive industry, covering everything from license payments to contributions made to local traditional leadership structures. In Guinea, following a mining contract review process, enacted by the government, a new mining code was adopted in 2011, and was followed in February 2012 by the online publication of more than 60 documents relating to 18 mining projects in the country. These two examples are interesting for the following reasons: the adoption of technology as the modern platform for transparency improvements, the emphasis on public access to information that would otherwise have remained confidential in an elite political domain or inner circle of government insiders, and finally the fact these two pioneering countries - Guinea and Sierra Leone - are relatively small countries, with more recent histories of conflict, and thus relatively weaker institutional capacity than the more established, and relatively less transparent (at least as far as public access to oil and mining contract information is concerned) resource-rich countries such as Nigeria or Angola. Meanwhile, well-known initiatives such as the Extractive Industries Transparency Initiative (EITI) continue with varying degrees of compliance by African countries. Section 1504 of the US DoddFrank Reform Act will become operational from the end of 2013 with important implications for foreign companies involved in oil and mineral extraction in Africa. The US Securities and Exchange Commission (SEC) has mandated that companies subject to Section 1504 must begin disclosing payments on an annual basis, after September 2013. Given the wider investor profile now operating in Africa’s extractives sector, section 1504 will also have implications for non-US registered

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Despite the clear push toward economic diversification, natural resources are likely to remain FDI priorities for the region, in the near term.

companies who are listed on US stock exchanges or registered with SEC. In addition, from a finance perspective, lenders to African extractive projects are now likely to place greater and more stringent demands on creditors seeking funds to invest in extractive industry projects, since the funding of such projects could potentially create avenues for payments which could violate section 1504 stipulations within Dodd-Frank. The EU has also passed legislation mirroring the Dodd-Frank Act. While there are likely to be differences of opinion among investors’ home countries on the interventionist nature of Section 1504, there is likely to be more general consensus on the fact that disclosure requirements are more likely to create a level playing field for investors in Africa’s oil and minerals industry. There are, however, limits to the impact that transnational resource governance initiatives such as Dodd-Frank 1504 can have in Africa in the absence of strong local institutions. Notwithstanding the regulatory strengthening of extractivesindustry operations in Africa in recent years, initiatives such as the EITI are still voluntary in their reporting stipulations. Dodd-Frank has taken a step further, given its ability to become legally enforceable. While several companies in the oil and gas sector are seeking a clawing back of Section 1504, and the relaxing of reporting rules, it is clear the global trends has clearly swung in favor of disclosure. Whether such disclosure is adopted voluntarily or as part of an obligatory process is a moot point.

Finance

Africa Grows by Funding SMEs

Dr. Wiebe Boer is Chief Executive Officer of The Tony Elumelu Foundation. Dr. Boer recognizes the huge potential of the SME sector in Africa and here devises a strategy to help boost the sector.

uilding Africa’s small- and medium-sized enterprises (the SME sector) will be critical to solving the continent’s employment challenges, raising living standards, and achieving sustainable economic growth. Yet, today, Africa has a long way to go to catch up to the rest of the world in terms of SME productivity. Sub-Saharan Africa’s SME sector accounts for 90 per cent of all enterprises in the region, of which the vast majority are micro and very small enterprises, according to the Development Bank of Southern Africa. But SMEs contribute less than 20 per cent to GDP in sub-Saharan Africa. In China, by comparison, SMEs account for 60 per cent of GDP, half of tax revenues, and 70 per cent of employment. In Germany,

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SMEs account for 52 per cent of total economic output and 60 per cent of all formal employment. We Africans must do better. There is broad recognition in the rest of the world that SMEs are critical to job creation. According to a 2012 report from the European Commission, 85 per cent of the new jobs created in the EU between 2002 and 2010 were in the SME sector; small and micro enterprises have an employment growth rate two to three times that of large enterprises; and micro enterprises are most likely to hire the long-term unemployed. Given the strength of these numbers, it was not surprising that Germany agreed, in June, to a US$ 1.3 billion loan program for small businesses in Spain, in an effort to combat high unemployment there.

I have previously cited results from a recent research initiative commissioned by The Tony Elumelu Foundation and Lion’s Head Global Partners. The survey focused on the SME sector in Nigeria, but we believe the results can be seen as a microcosm of the African SME sector overall, in terms of size and distribution of companies, as well as primary challenges. We found that access to finance was the number one roadblock to SME growth, cited by 25 per cent of respondents, versus 19 per cent who cited infrastructure, and 16 per cent who cited power and water. Other roadblocks to growth ranked in the single digits. Nigerian businesses rely almost entirely on retained earnings and supplier credits to make up a shortfall in bank lending.

from emerging markets. However, in sub-Saharan Africa, 61 per cent to 75 per cent of SMEs are currently underserved - the highest percentage in the world. Banks must make a deliberate effort to create products and solutions for the SME sector, not just for African development, but also for their own bottom-line growth and profitability.

2. Diversify lending across economic sectors: The findings

revealed that bank lending is concentrated in a few economic sectors (E.G., oil and gas). Broader bank lending could help diversify Africa’s economy, which in turn will help spur growth. According to a small business lending report by the U.S. Congressional Research Service, diverse economies grow faster than specialized ones.

3. Restructuring

McKinsey estimates that up to 60 per cent of global banking revenue growth over the next decade will come from emerging markets.

The process of formalizing nearly half of Africa’s economy offers enormous opportunity for growth and job creation and a significant business opportunity - if we can get it right. So, how do we get it right? The AfDB suggests that access to formal financing channels and raising awareness in the banking sector to the opportunity will help us make progress, and, while we agree that those elements are essential, they do not provide nearly enough specificity.

What to Do Next: Ten Lessons from the Nigerian SME Survey Our survey findings suggest actions that African business and governments can take to improve the SME outlook in Africa:

1. A deliberate commitment by banking institutions: According

to the survey data, SMEs rate finance as their top concern. But according to other data, lenders stand to benefit just as much as borrowers from an expansion of business credit. McKinsey estimates that up to 60 per cent of global banking revenue growth over the next decade will come

loan

terms:

According to our research, SMEs identify a wide range of difficulties in complying with standard loan terms offered by African commercial banks. For example, 60 per cent of bank credit in Nigeria is less than one year, whereas SMEs report needing longer terms. SMEs say that collateral requirements are burdensome – for example, as high as 150 per cent of loan value, or higher. And SMEs report having difficulty paying the high rates of interest. SMEs and banks need to work together to identify adjustments to lending terms that create affordable finance for SMEs while presenting acceptable risk to banks.

4. Access to business insurance:

The insurance industry, like the banking industry, must make a deliberate commitment to meeting the needs of SMEs - creating new products specifically for Africa’s SME sector where necessary, and educating SME clients on how to purchase and maintain their business insurance. Nearly 80 per cent of Nigerian SMEs believe that they can meet lenders’ requirements in the area of insurance. At the same time, only 20 per cent to 50 per cent of businesses actually carry insurance, with problematic lags among key strategic sectors like agriculture and manufacturing, where only 31 per cent and 36 per cent, respectively, carry insurance.

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A Snapshot of Nigeria’s SME Sector

5. Improved credit bureaus and reporting compliance: The

Credit Risk Management System (CRMS)/Credit Bureau was established in 1990 as a response to the rising non-performing credit portfolio of banks. The CRMS is currently webenabled, thus allowing banks and other stakeholders to dial directly into the CRMS database for the purpose of reporting or conducting status enquiries on borrowers. However, compliance with credit reporting (rules, guidelines, requirements) is still quite low, which makes it difficult for lenders to get up-to-date information on potential credit customers. Improved reporting compliance would help commercial banks better appraise risk and increase their comfort level in lending to the SME sector.

6. High interest rate regime:

Monetary policies may be the thorniest and most difficult to address, as they are tied into larger macroeconomic issues. Chief among these is banks’ cost of capital. One banking executive in our survey said: “Our cost of funding is too high, so we cannot offer the single-digit rates that SMEs need. We need access to cheaper funds.” Regulatory requirements like capital reserve and general loan provision contribute to the high cost of capital and, as such, commercial banks find it difficult to lend below specific reasonable thresholds. African governments and financial sector regulators must work to resolve these macroeconomic-related issues if the SME sector is ever to fully deliver on its potential. In addition, the government should facilitate efforts to reduce interest rates for SME lending through guarantees and other workable financial structures.

7. Loan size commensurate with need: Nigerian borrowers do

say they need access to larger loans. By comparison, in the U.S. the Small Business Administration reported that its average loan size in 2012 was US$ 338,000. In Nigeria, commercial SME loans ranged between US$ 7,000 and US$ 160,000. For start-ups, that funding level may be appropriate, but in our survey approximately 90 per cent of businesses were more than six years old. Businesses, if they have survived to that stage, likely have proven strategies and warrant higher levels of funding to get to the next level of growth. Corporate Africa 2013

Finance Broader bank lending could help diversify Africa’s economy, which in turn will help spur growth.

8. More training and consulting:

A big shortfall in Africa’s SME sector is a lack of financial and management expertise. Banks have started to address the issue, but current programs need expansion. For example, South Africa’s Nedbank has partnered with Business Partners Ltd., an organization that deploys 800 retired business professionals to mentor SME owners. Barclays Africa’s Business Club operates on a fee-forservice consulting model, offering similar services, plus formal education and events. Consulting firms like Ernst & Young are developing customized advisory service offerings for larger scale SMEs. And around the continent, incubators and accelerators such as Raizcorps and Venia also provide such services. Sixty-six per cent of respondents to the Nigerian SME survey said they would be willing to pay for a consulting service - if it was fairly priced and could save them time and money in the loan application process.

9. More business acumen for bank loan officers: SMEs

expressed concern that bank credit departments lack sufficient business acumen to judge the viability of their business, or tailor appropriate loan terms. For example, SMEs frequently said that credit officers misjudge the business cycle and end up offering unrealistic terms, especially for revolving credit. One SME owner said: “Most of the time the credit banks give does not suit your business as they don’t understand your business.”

10. Greater commitment from SMEs to improve: SMEs must assume an equal part of the burden for change. In key metrics, like bookkeeping, auditing, governance, and business planning, they believe they meet lenders’ requirements, when in fact, lenders say that they don’t. SMEs need to be realistic about the quality of their management efforts and spend more time shoring up managerial weaknesses — whether that means using affordable SME focused professional services firms, leveraging donor-funded support

Money alone will not solve Africa’s SME funding challenge. programs, or pursuing guarantee funds to reduce interest rates. African SMEs must take the initiative and use all available resources to improve the financial integrity of their operations.

Corporate Africa 2013

Money alone will not solve Africa’s SME funding challenge. In South Africa, for example, domestic credit to the private sector is twice that of Brazil as a per cent of GDP, but early-stage SME participation by working-age adults is only half that of Brazil. Africa needs a coordinated, systematic plan to boost the SME sector: a plan with regulatory policy, education, and business practice components. Insights from our recent survey present cues for initiatives we can start on right now to get to that plan. Most of all, what Africa needs is vision and explicit acknowledgment that SME growth is worthy of diligent effort. It must be a day-to-day priority for governments, philanthropies, banks, and insurers, and especially SMEs themselves. For the commercial entities involved, the potential “prize” of additional revenue and profits through specialized SME services stands to be astronomical. Together, we can do it for Africa’s sake, we must. Dr. Wiebe Boer is Chief Executive Officer of The Tony Elumelu Foundation, an Africanfounded and –funded philanthropy charged with the mission of supporting entrepreneurs in Africa by enhancing the competitiveness of the private sector. In his capacity as CEO of the Foundation, Dr. Boer is a Director of Mtanga Farms, Tanzania; a Director of East Africa Exchange, a member of the advisory board of Digital Divide Data (DDD) Kenya, and serves on the board of the African Grantmakers Network, among several other committees. Born and raised in Jos, Nigeria, Dr. Boer earned his doctorate in history at Yale University and undergraduate degree at Calvin College, Grand Rapids, Michigan, USA. He is married to Joanna-Marie, a citizen of Trinidad and Tobago, and together they have three young sons.

Finance

RUNNING A TIGHT SHIP

World Marine’s well-placed geographical location makes them a leader in the field of bunker supply to southern Africa and surrounding regions, setting them apart from other traders and giving them a competitive edge.

World Marine & Offshore Supply Company is a proudly South African bunker trading organization specializing in supplying duty-free/duty-paid marine gas oil, fuel oil, marine lubricants, and all marine-related products to a wide range of clients in the following industries:

Corporate Africa 2013

• • • • • • •

The South African fishing industry The global fishing industry The shipping industry The diamond mining industry Navy vessels Antarctic expeditions Research vessels.

The company has dedicated itself to becoming a leading bunker trading company, focusing on the supply of all marine, aviation fuel, and associated lubricant products. World Marine has established secure relationships and partnerships with all the major reputable oil companies in South Africa, therefore positioning itself to assist clients in almost every port in southern Africa and globally.

“Through our years of operation, we have maintained strong relationships with all of

our local and international suppliers, ensuring product availability and cost reductions for our clientele. Although our supply focus is mainly southern Africa, with which we are extensively familiar, we are capable of supplying bunkers world-wide through our affiliated trading partnerships/agents.” PRODUCTS AND SERVICES Thanks to an excellent understanding of regional markets and its ability to tap into a strong network of international partnerships, World Marine is able to satisfy industry needs. The company’s products and core services are: Bunker fuels High-quality marine fuel products are blended to the client’s requirements and tested thoroughly to ensure client satisfaction. Marine bunker fuel can be supplied via the following methods, depending on port infrastructure: • Pipeline – available in hub ports • Barge – available in hubports • Operational tanks – we have our own operational tanks in some smaller ports • Road tankers – used when the vessel cannot be accessed via barge, or is not close to a bunker pit • Offshore tanker vessels – for supply to vessels, oilrigs and drilling ships operating around the South African and Namibian coast, facilitating ship-to-ship transfer on high seas. Aviation fuels and lubricants World Marine provides a full range of services and products to service ice breakers calling in Cape Town en route to Antarctica. The company offers a broad range of aviation related services, including: • Handling, transportation and delivery of jet A1, Avgas, polar diesel, and aviation lubricants • Storage of aviation lubricants • Into-aircraft delivery at Cape Town international airport • Sampling of product via industry approved surveyors • Surveying of jet A1 “tanktainers” • Specialist aviation-fueling equipment for pumping product on board icebreaker and aircraft fuel systems.

Finance

World Marine seeks to satisfy industry needs through excellent knowledge of regional markets and the ability to tap into a strong network of international partnerships. “At World Marine we are confident that we can offer you a first-class product, competitive pricing, and flexibility required to effect prompt and on-time supplies for your vessels,” says bunker director, Gherda Louw.

Marine lubricants Engine oil, hydraulic oil, and degreaser are available in all grades and brands in drums or delivered in bulk via barge. As a bunker trading company dealing with international clientele, World Marine trades and supplies all industry brands, including Mobil, BP Castrol, TotalFinaElf and Shell. Due to the complex nature and implications of supplying the correct marine lubricants, the company also offers technical support in terms of product specifications, and prides itself on liaising with all parties if and when technical queries arise and resolving such queries in good time. Offshore bunker ship-to-ship supply Thanks to a strong working relationship and joint venture with a reputable international company boasting a specialized bunker and trading division plus various tankers operating along the West African coast, World Marine has been able to expand its services to supply clients with offshore ship-to-ship services. Clients requesting such services include fishing vessels, diamond-mining vessels, offshore drilling vessels that are too large to enter port and container vessels en route to West African ports. Inland bulk supply World Marine understands the importance of competitive pricing and unequaled service delivery. The company currently supplies 500ppm diesel and illuminating paraffin. Technical equipment and spares World Marine’s technical department offers cost-effective procurement and logistics services to clients in Africa and further afield. With more than 21 years of handson experience in the shipping, offshore and land-based diamond-mining industries including operations, procurement, supplychain management, and all transport, freight and customs clearing arrangements, the company has established a reputation for resourcefulness, dedication, and perseverance, and for delivering quality products on time at the best possible price. For more information on the wide range of products and services offered by World Marine, visit the company website at www.worldmarine.co.za; email info@worldmarine.co.za, or call +27 21 511 0178.

Corporate Africa 2013

Finance

FInancing Africa’s Infrastructure Zakhele Mayisa is the Principal Infrastructure Finance Officer for Regional Integration and Trade at the African Development Bank (AfDB). He spoke with Corporate Africa during the G20 Africa Infrastructure Investment Conference. The non – concessional window that lends to MICs at market rate for eligible countries - essentially, North African countries and Southern African countries - has an annual average disbursement of about US$ 3 billion Private sector lending is applicable to eligible private sector companies that meet capital and governance structures, and regulatory and legislative protection criteria. Direct lending or equity participation are commonly used instruments.

SMEs have the potential to boost growth and employment, particularly among the youth population, but they are characterized by low capital utilization and low labor productivity. Does this mean they will fall behind in terms of investment? What is the AfDB’s policy toward SMEs?

One of the main tools highlighted as part of the AfDB’s Private Sector Development Policy is “sovereign financing operations, including project and program financing.” Can you give examples of some of these financing operations? And give us an idea of the level of investment the AfDB is putting into the African private sector? The Bank’s traditional financing hinges on project and program financing and budget support, financing which is essentially country based (Country Strategy Papers - CSPs) and we are now upscaling our regional operations.

AfDB’s policy on Micro, Small and Medium Enterprises (MSMEs) supports the general consensus on the key role that MSMEs can have in reducing poverty and achieving the MDGs in African countries. In order to make use of their potential, MSMEs need increased access to bank credit. African MSMEs historically lack access to finance, and this is likely to be exacerbated by the effects of the financial and economic crisis on the continent.

African MSMEs historically lack access to finance, and this is likely to be exacerbated by the effects of the financial and economic crisis on the continent.

The Bank’s traditional financing uses two key windows: African Development Fund (ADF) window which essentially is a concessional window that lends to poorer African countries; and African Development Bank window which is a non– concessional window that lends to Middle Income Countries (MICs) at market rate and private sector without sovereign guarantees. The ADF concessional window is replenished every three years and is performance based on country allocations. The Current ADF-XII – is US$ 9.5 billion. 42

Corporate Africa 2013

The Board of Directors of the African Development Bank (AfDB) approved, in July 2013, the Africa Small and Medium Enterprises (SME) Program: a four-year, US$ 125 million funding program combined with a US$ 3.98 million technical assistance package granted by the Fund for African Private Sector Assistance (FAPA), aimed at supporting micro, small and medium enterprises in Africa. The program will provide standardized lines of credit (LoCs), mostly in local currency, and technical assistance to targeted financial institutions, predominantly in low-income countries spread over all five African regions. The SME Program will avail important longer-term resources to thousands of SMEs including women and youth, thus contributing to job creation, poverty reduction, and inclusive growth on the continent.

The African Development Bank’s Nepad Regional Integration and Trade department is the champion of the PIDA program within the AfDB and is working closely with the African Union Commission, the Nepad Planning Commission Agency, and the private sector to ensure successful implementation of the PIDA program.

What are your thoughts on a BRICS-led development bank?

Africa’s challenges are vast and therefore the more resources that are put in place for the greater transformation of the continent in various aspects the better. The BRICS-led development bank is welcomed.

Africa faces a massive infrastructure deficit. The continent invests only 4 per cent of its collective GDP in infrastructure, compared to China’s 14 per cent. In 2012 59 per cent of Africans had access to safe water, while only 28 per cent have access to improved sanitation facilities, with investment only just ahead of population growth. With an opportunity for Africa to invest in sustainable and green energy and infrastructure, what real-term, pragmatic steps are being made to tackle these issues? Infrastructure has been identified as a key priority under the African Union’s Strategic Plan, which seeks to promote integration, socioeconomic development and cooperation on the continent. The resulting Program for Infrastructure Development in Africa (PIDA) was approved by the African heads of state and government at their summit in Addis Ababa, Ethiopia, in January 2012, signifying high-level political buy-in and ownership of the program.

Africa’s challenges are vast and therefore the more resources that are put in place for the greater transformation of the continent in various aspects the better. Developed by the African Union Commission in partnership with the United Nations Economic Commission for Africa, African Development Bank and the Nepad Planning and Coordinating Agency, PIDA specifically calls for new models of partnership between business, government and donors to implement the 51 Priority Action Plan (PAP) infrastructure programs already identified. The projects and programs in the Priority Action Plan span sectors from power generation and transportation to water and telecoms, with an overall capital cost of US$ 68 billion through 2012 to 2020,

It is estimated that Africa’s population will be 1.6 billion by 2030, and more and more will be living in cities. This means food demand will rise and agricultural productivity will need to massively increase. However, the stable crops yield index is static…only 7 per cent of African agriculture is irrigated, making yields heavily dependent on increasingly unpredictable rainfall. How do you plan to invest in agricultural infrastructure? On the 9th May 2013, Donald Kaberuka, the President of the African Development Bank (AfDB); Rajiv Shah, the Administrator of the US Agency for International Development (USAID), and Gunilla Carlsson, the Swedish Minister for International Development Cooperation, announced the creation of an Agriculture Fast Track Fund for Africa. The creation of the US$ 23 million fund is designed to stimulate greater private investment in agricultural infrastructure in subSaharan Africa. The fund will serve members of the New Alliance for Food Security and Nutrition launched by the United States’ President Barack Obama at the 2012 G8 Summit. The six member countries of the alliance are Burkina Faso, Côte d’Ivoire, Ethiopia, Ghana, Mozambique, and Tanzania.

Finance

or US$ 7.5 billion in expenditure per year up to 2020. Power generation alone consists of 15 projects worth US$ 40 billion focusing mainly on creating hydroelectricity generation capacity, building interconnectors between power pools and constructing regional oil pipelines. Transportation consists of 24 projects worth US$ 25 billion to link the major production and consumption centers, provide connectivity among the major cities and open the landlocked countries to enhance regional and continental trade. Although it represents an impressive figure, the PAP would take only 0.2 per cent of African gross domestic product and 1 per cent of national budgets, meaning it is a realistic, convincing proposal.

Finance

Despite its relatively new creation, the FSF has made tangible achievements under all its three pillars. Since its inception, it has channeled supplemental financial resources to nine fragile states, cleared the arrears of two regional member states and provided targeted technical assistance and institutional capacity building operations to sixteen eligible fragile states. The fund is designed to strengthen the links between farmers and markets to consumers. Providing funding of up to US$ 1.5 million per project, the Agriculture Fast Track Fund will finance feasibility studies, project design, market analyses, site surveys, business plans, financial modeling, and other upstream activities that ensure project quality and bankability. These project preparation grants will facilitate access to more funding for agricultural infrastructure from banks and other investors. The Agriculture Fast Track Fund was developed with the support of USAID, which has committed US$ 15 million, while the government of Sweden pledged US$ 10 million. The fund will be managed by the African Development Bank. In addition to the above, the PIDA program supports access to markets through development of transport corridors and investment in trade infrastructure, including agricultural trade and creation of cross-border water infrastructure to support agricultural productivity through irrigation schemes and food security for economic growth.

Despite the fact that Africa’s middle class is ostensibly growing, and that Africa continues to enjoy economic growth, many Africans still live in extreme poverty, face very poor life expectancies, and are illiterate. How important is it to the AfDB to improve basic living standards for Africa’s poorest, and how do you plan to do this? The African Development Bank Group established the Fragile States Facility (FSF) and its implementation arm, the Fragile States Unit, respectively in March 2008 and July 2008 with the objective to effectively assist eligible fragile states to consolidate peace, stabilize economies, and lay foundations for sustainable povertyreduction and long-term economic growth.

Corporate Africa 2013

It’s clear from looking at press releases from the AfDB that transparency is a very important part of what you do, in helping to tackle corruption and helping to set a precedent for making Africa a continent where investment is attractive. Do you feel that protecting whistle blowers, leaks, and supporting freedom of information is vital in terms of promoting African development, and helping to eradicate corruption and illegality, particularly at this nascent stage of Africa’s development? The African Development Bank Group views corruption, fraud, and other sanctionable practices as highly inimical to the achievement of its mandate. In order to spur sustainable economic development and social progress on the continent, AfDB endorses a multipronged approach to combating these harmful practices. The Integrity and Anti-Corruption Department (IACD) of the AfDB uses proactive measures including risk assessments and sensitization programs to deter sanctionable practices and prevent their occurrence in internal corporate procurement issues and operations financed by the Bank Group. Sound governance is a strategic pillar of the Integrity and Anti-Corruption Strategy.

Much has been made of “Afrocapitalism” and using the free market to sustain economic growth and alleviate poverty. Do you feel that this will change the way the world looks at investing in Africa? Do you feel philanthropy from other countries should be centered more on investment in businesses? Do you feel that, by investing in businesses and the private sector, Africa can alleviate poverty and, if so, where do you feel it is most vital to focus investment? Aid landscape is indeed shifting. Recent research confirms that Africa is probably the next destination for investments with high returns expected; therefore, a shift toward private investments and aid as we know it should be seen through the lens of creating opportunities. It is good business not charity.

Energy

Calabar: General Electric’s new frontier in Nigeria

General Electric’s Billion-Dollar Investment in Calabar is providing Nigeria with sustainable, regional growth. The company’s executives provide an overview of the project.

alabar, Nigeria’s southeastern coastal city, is better known in the region as a seasonal tourist destination - thanks to the growing reputation of the annual Calabar Christmas Carnival. As every Christmas season beckons, Calabar loses its characteristic calmness as commercial activities attain a feverish height with processions, masquerades, music, and food. But as the New Year dawns, the lights dim, Calabar sleeps back to its routine tranquillity and the long wait for another yuletide burst of life begins. However, global infrastructure and technology giant General Electric (GE) is set to take Calabar beyond its present stature to become a constantly vibrant business and economic hub for the West African sub-region. As part of a US$ 1 billion investment in Nigeria, GE is building a manufacturing and assembly plant in Calabar which will give the infrastructure giant an improved ability to support a broader range of product lines in power generation as well as oil and gas exploration. The planned investment is expected to create 2300 jobs, 300 of which will be direct GE hires and the remaining 2000 indirect jobs created through GE suppliers that will support its expanded operations. Going by GE plans, the Calabar factory will become a supply hub for manufacturing, service, and innovation for the West African sub-region. President and CEO for GE Nigeria, Dr. Lazarus Angbazo, says GE’s “planned investment will significantly increase the local content of our operations in Nigeria by increasing local ownership of equipment, in-country

Corporate Africa 2013

project execution expertise and use of local legal, financial and engineering services. Our annual spending on locally sourced goods and services is expected to increase from US$ 4 million to over US$ 60 million.” Phil Griffith manages the Global Supply Chain for GE Africa and the Calabar project is directly under his purview. Phil is excited at the sheer size and capacity of the manufacturing plant and the positive ripple effect this will have on the entire oil and gas sector, as well as the power sector. According to him, “The Calabar facility will have almost 80 different product lines.” These will cover the assembly and manufacture of sophisticated equipment for offshore exploration and production: well heads, and special connectors and pipes. The Calabar plant will also have the capacity to disassemble and re-assemble certain categories of GE turbines and rotor repairs. The facility, as being envisioned by GE, is being run in such a way that it has the capacity to become the center of excellence for service for these particular products in West Africa. The investment in Calabar will primarily support the power sector, as well as the oil and gas sectors, but GE is already active in both industries. For instance it has signed a Joint Development Agreement (JDA) with five Independent Power Projects (IPPs) to bring 10 GW of incremental power to the national grid. For Nigeria, a country that currently generates and distributes less than 3000 megawatts of electricity, this engagement will greatly improve the power situation in the country.

Similar progress is being made in the oil and gas sector. Last year, a state-of-theart gas testing tank was built at the GE Oil & Gas Subsea Systems facility in Onne, in Nigeria’s Niger Delta region. The tank was the first of such testing facilities in the country. More importantly, its arrival has allowed the Onne workshop team to start work on a new project: the assembly of subsea “Christmas trees” on the site. These “Christmas trees” (surface or subsea) are mining equipment, nicknamed for their crude resemblance to a decorated tree. Two-part assembled or “flat packed” “Christmas trees” arrived in Nigeria in January 2013 from GE’s Centre of Excellence for subsea tree manufacture in Aberdeen, Scotland. The final 30 per cent of assembly of the 36 ton trees has been undertaken in Onne by a “New Generation” team of Nigerian technicians – a first for the workshop. But are these huge investments meeting local content requirement in Nigeria? Dr. Angbazo says that, for GE, local content has a deeper meaning. According to him, “The investment in Calabar is not just about the factory. It is about building a competitive supply chain to support Nigeria’s growth in the global economy; it is about technology transfers and job creation and human capital development. It is about changing lives wherever we go.”

Energy

The Calabar project is well on the way to changing lives. The facility will have a training facility on its manufacturing site to ensure on-going employee development. The company will provide one-year to four-year training programs locally and internationally for repair engineers, welders, fabricators, and machinists for special processing. The plan is to systematically build capacity in the indigenous human resources that will ultimately take over most of the operations. Derek Christie, Regional Services Leader for the GE Oil & Gas Pressure Control System business, has been leading the knowledge transfer activity for the Nigerian flat pack assembly project. Derek says GE’s goal “is to create a new generation of Nigerian leaders for the business, develop employees, and maximise our local manufacturing and service capability.” Beyond part assembly, the Nigerian team has undertaken various testing operations in the plant. As experience is gained, they move on to additional aspects of tree production such as insulating the equipment, manufacturing the tree framework and engineering design. The flat pack tree project is just one of a number of local content development projects at GE’s Onne facility. An Early

Career Development Program is now in place with the first tranche of 15 Nigerian graduates participating in the scheme. There are plans to recruit more technical trainees in the next few months to add to the number of Nigerian service technicians. GE is already collaborating with Cross River state educational and

“The investment in Calabar is not just about the factory. it is about building a competitive supply chain to support Nigeria’s growth in the global economy.” political leaders to implement curriculum, instructor development, and equipment enhancements that will support the development of top notch vocational school graduates. What’s more, Nigerians will make up 90 per cent of the staff and management of the planned manufacturing facility.

Suppliers will not be left out. In a bid to deepen its supplier base, GE has held four successive supplier fairs – Lagos, Abuja, Amsterdam and Calabar. The Calabar fair had over 200 Nigerian owned companies in attendance. The string of supplier fairs is a strategic initiative to grow its supplier base which presently stands at 10 to at least 100 that will service the Calabar plant and others across the country. “GE firmly believes in the capability and capacity of our Nigerian supplier partners in engineering and other sectors to work with us to deliver on this investment commitment.” Phil Griffith believes that GE’s strategic engagements in Africa are models for foreign direct investment. In his view, “There isn’t another company that is doing something like this. Not just in terms of the complexity of what we are trying to do locally but the scope. This project is about job creation, it is localizing technical capability, and it is about localizing our partners and vendors through a holistic supplier development process. The Calabar investment is just another proof point of what GE is about the world over – working on the things that matter.”

Corporate Africa 2013

Energy

even Energy is an indigenous Nigerian oil and gas exploration, development and production company with a vision to be the leading supplier of gas to the domestic market for power generation and industrial usage. Based in Lagos and with core operations in the northwest and southeast Niger Delta, they have every chance of soon being the leading oil and gas company in Nigeria.

Although strong, the pace of economic development has been constrained due to a lack of investment in Nigeria’s power infrastructure.

Nigeria is one of the fastest growing economies in Africa, with real GDP growing at a compound average growth rate of 8.6 per cent from 2000 to 2012 and projected GDP growth at a compound annual growth rate of 6.7 per cent between 2012 and 2017. Nigeria has a large, young, and urbanizing population of 160 million people, making it the most populous country in Africa. Although strong, the pace of economic development has been constrained due to a lack of investment in Nigeria’s power infrastructure. With low levels of installed power capacity of approximately 6 GW, Nigeria has significantly lower per capita electric power consumption than other major African countries (at 136 kWh per person), in spite of its huge population. As Nigerian industry and infrastructure grows and develops, so will its power consumption.

Powering Africa’s most populous nation

The demand for oil and gas in Nigeria is growing. Patrick Lee meets with Seven Energy’s Executives to discuss how they plan to meet this demand.

Corporate Africa 2013

Recognizing the need to significantly expand domestic power generation capacity, the Federal Government is seeking to implement power sector reforms, with domestic gas utilization as a central part of this strategy. Under the Gas Master Plan, the Federal Government is seeking to increase installed power capacity to 40 GW by 2020, with the majority of this additional capacity expected to come from newly constructed gas fired power plants. Owing to the significant price differential between domestically produced gas and imported refined petroleum products (in particular diesel) and the expected growth in demand for domestic energy, demand for gas is projected to grow from 1.8 billion cubic feet per day (Bcfpd) in 2012 to 6.7 by 2025. Seven Energy, as an integrated gas business in the Niger Delta, has a substantial first mover advantage, given that the barriers to entry for new competitors are considerable due to capital expenditure required and time it takes to replicate a sustainable business model. As such, Seven Energy is well position to capitalize on the projected opportunities in the Nigerian gas market. And it has been preparing well to take advantage of its opportunities. In the last 1218 months Seven Energy has been investing in power infrastructure. It has built the first 100 MMcfpd (million standard cubic feet per day) Gas Processing Facility in Uquo, and has furthered this investment with the commission of a 62-km pipeline to Ibom power station. Further to this the Right of Way has been acquired for 37-km of pipeline to supply gas to Calabar’s NIPP power station, displaying an indication from governments and Seven Energy to utilize land and resources in order to invest in Nigeria’s energy sector.

As Nigerian industry and infrastructure grows and develops, so will its power consumption.

Seven Energy has many projects ongoing throughout the Niger Delta, including a 55 per cent stake in Seplat Energy’s oil and gas operations and 49 per cent stake in Chorus Energy’s Matsogo oil operation. This is further to selling operations to Calabar and Ibom power stations. Seven Energy also has a 40 per cent interest in the Uquo oil field and owns 62.5 per cent of Universal Energy’s oil operations in Stubb Creek. All of these plants are developing oil and gas projects and providing resources throughout Nigeria. Midstream Activities Seven Energy uses a separate business, called Accugas, in order to supply gas to the domestic market. Accugas processes and distributes gas from Seven Energy’s affiliates and then distributes this gas for

Energy

State intervention

upstream partners and third parties. Their agreement with Ibom power station is a ten year contract to supply 43.5 MMcfpd; while there is a 20 year contract to supply 131 MMcfpd to Calabar NIPP power station. Accugas owns the Uquo Gas Processing Facility for processing gas from the Uquo and Stubb Creek Fields. The processing facility comprises two trains: Train one, which was completed in 2012 and has the capacity to process 100 MMcfpd; and Train two which is due for completion later in 2013 and will double the processing capacity to supply the 560 MW Calabar NIPP power station. The first leg of the distribution infrastructure, a 62km 18-inch pipeline from Uquo to Ikot Abasi to deliver has to the 190 MW Ibom power station, was completed in 2011. This pipeline has transportation capacity of over 200 MMcfpd. An additional 37km 24-inch pipeline from Uquo to Oron is under construction to supply gas to the 560 MW Calabar NIPP power station. With spare capacity built into its processing and distributing infrastructure, Accugas is capable of providing a long-term supply of gas to additional offtakers for power generation and lower cost fuel for local industry. This is leading to an influx of inward investment opportunities for gas-based enterprises in the southeast Niger Delta and Accugas is working closely with those partners to help them realize their projects. Tangible differences Seven Energy’s investments into infrastructure and the power sectors are making a huge difference in the day-to-day lives of Nigerians. This ethos fits in with the philosophy of Africapitalism: that the African private sector has the power to transform the continent through long-term investments, creating both economic prosperity and social wealth. Chief Executive Officer of Seven Energy, Phillip Ihenacho, said “We aim to conduct our business in a responsible and transparent fashion and we remain committed to sustainability and the health, safety, and security of our workforce and the communities in which we work.” The achievements of Seven Energy help to display the potentials of the Africapitalism model. By the end of 2012 Seven Energy had provided 6 million man-hours with a Lost Time Incident, and had encountered or been investigated for no environmental issues or major security incidents. Seven Energy works with their host communities to provide employment, education, training, and essential infrastructure and therefore has had a tangible impact in Nigeria. Corporate Africa 2013

Energy

Opening new oil frontiers Dianne Sutherland, Chief Editor and Jennifer Nickle, Deputy Editor Petroleum Africa

The African continent has long been a producer of crude oil with countries like Algeria, Angola, Egypt, Gabon, Libya, and Nigeria producing oil and gas for decades; but what about those countries on the continent that have yet to enter the production game?

West Africa New frontiers are opening up on a regular basis in various regions of the continent. While North Africa and West Africa are well-established petroleum zones, they still have pockets of frontier territory that could pay off for an intrepid explorer, especially in West Africa. The West Africa Transform Margin has been highly under-explored until recently, but recent campaigns by international oil companies (IOCs) have given hope that this frontier territory could become one of Africaâ&#x20AC;&#x2122;s next producing regions. From Senegal in the north, all the way down to Togo and Benin in the south, IOCs are plugging away to discover the next big hydrocarbon zone. Giving them encouragement and the impetus to continue is Ghana, who not so many years ago was off the radar for most companies and is now one of the hottest spots in West Africa with 660 million barrels of proven oil reserves and more likely to accrue with ongoing exploration. IOCs such as Anadarko Petroleum Corp. and Tullow Oil Corp. have been testing the potential of Liberia and Sierra Leone. While the results of their exploration have been mixed, successes like the Venus B-1 in 2009, the Mercury-1 in 2010, and the Jupiter-1 in 2012 have demonstrated the existence of reserves. There is also the Montserrado exploration well offshore Liberia that, while not a commercial discovery, has underlined the potential of the basin which extends nearly 1500 km along the coast from eastern Ghana, across Cote dâ&#x20AC;&#x2122;Ivoire, and Liberia, and to the west of Sierra Leone. Exploration offshore Guinea has not been as successful as the companies involved would have hoped for, 50

Corporate Africa 2013

but there is hope that further exploration will turn this around. Senegal has seen very little exploration since the 1970s, but that is set to change. African Petroleum holds a 90 per cent operated interest in 18,277 sq km of acreage in the Rufisque Offshore Profond and Senegal Offshore Sud Profond blocks in the deepwater Senegal Basin. The company licensed over 10,000 km of 2D seismic data and completed a 3600 sq km 3D seismic survey over the Offshore Sud Profond. With the results of the surveys, African Petroleum hopes to be in a position to drill a well in Senegal during 2014. State oil company Petrosen is looking to license three of the five onshore blocks it has remaining through direct negotiation, and parlay that into an active onshore E&P bonanza.

Energy

North Africa

Southern Africa

When looking at North Africa you see a host of mature producing countries Algeria, Egypt, and Libya for example - but even these mature producers have vast swathes of acreage that have seen little to no exploration take place. In the case of Algeria, there is an entire coastline just waiting for the lucky explorer with the right technology to find reserves. Libya has so much under explored acreage that it is thought the country could increase its current reserve base of 47 billion barrels by another 10 billion barrels on the conservative side, and on the high side even double its current reserves. Egypt has seen very little exploration in the southern portion of the country, and what little has been done has, for the most part, been marginally successful. Look to see more exploration take place in Upper Egypt in the coming years. The only glitch at the moment is the political and security situations in these three countries: both Libya and Egypt with various degrees of civil strife, and Algeria with its ongoing terrorism threat, which in January led to an attack on BP and Statoil’s In Amenas facilities. These security issues have resulted in a downturn in investment and only those with a huge appetite for risk are currently looking to enter.

Angola is the producing superstar in the south of the continent, Africa’s second largest producer behind Nigeria only, and just by a bit. Some of the world’s most sophisticated oil and gas developments can be found in Angola’s deep offshore. Some of the country’s fields are seeing production on the downswing, but new developments will be brought online over the next few years aiding it in keeping its production totals up. While a mature producer itself, there is a bit of frontier exploration taking place onshore and several companies are drilling away in Angola’s pre-salt concessions with positive outcomes. Neighboring Namibia is now a hot spot for explorers. Numerous companies have entered agreements for exploration permits offshore the country and seismic surveys and geophysical work are ongoing with a view to drilling this virgin territory. A couple of companies have dropped the drill bit and while not one of these companies has any results to write home about, the information garnered during drilling has established that, besides the natural gas discovered on the Kudu field quite a few years ago, Namibia could join neighboring Angola as an oil producer in the future. One of Africa’s latest darlings is Mozambique. Over the past few years the country has gone from modest proven natural gas reserve totals to having mega gas reserves. Exploration programs led by Anadarko and ENI have soundly put Mozambique on the natural gas map and there is still a lot of unexplored acreage to attract a crowd. The country’s already discovered reserves, estimated by the companies at a combined total of 110 trillion cubic feet (Tcf), up from 4.5 Tcf in 2009, have lured some major players who until now have not wanted to engage in the risky behavior of exploring in this virgin territory. Asian and Indian NOCs have joined the fray, buying stakes in both Anadarko and ENI’s concessions.

Let’s not forget Morocco who has yet to make a big strike, finding only modest oil and gas reserves to date. Oil companies keep signing up for exploration privileges and both deepwater and onshore basins may firmly land the country on the map as a solid gas producer. Chad and Niger are also relatively new producers and ongoing exploration has been paying off for a few firms.

Tanzania’s natural gas reserves increased significantly, rising from 0.230 Tcf in 2009 to a BG-estimated 13 Tcf in July 2013, and there is hope that these figures will continue to rise.

Production Comparison World Production Top 5 World Producers

Production Totals (million barrels per day)

Total Africa Production Top 5 African Producers

Production Totals (million barrels per day)

World Russia Saudi Arabia United States Canada Iran

76.308 9.81 9.64 7.316 3.507 3.2

Africa Nigeria Angola Algeria Libya Egypt

9.212 2.4 1.89 1.51 1.42 0.541

Source: Energy Information Agency (May 2013) Corporate Africa 2013

Energy

East Africa Until about a decade ago East Africa was vastly underexplored with only Tanzania producing modest amounts of natural gas. What a difference a decade can make. The region is probably the hottest spot for exploration since oil was found in Uganda with the drilling of its first commercial discovery in 2006, leading to vast pockets of oil being discovered in the Albertine Basin. Since that time IOCs of all sizes have scrambled for acreage in Uganda, Tanzania, Kenya, and Ethiopia. This scramble has paid off for some of these companies in a big way. Like Mozambique to the south, Tanzania had only modest proven natural gas reserves until a recent exploration program launched by Ophir Energy (later joined by now major UK operator BG Group) made hit after hit offshore the country. Tanzania’s natural gas reserves increased significantly, rising from 0.230 Tcf in 2009, to a BG-estimated 13 Tcf in July 2013, and there is hope that these figures will continue to rise. Tanzania still has unexplored acreage and the government will be offering it up for bid in October. Kenya, until recently, had seen very little exploration and what did take place in more recent years was focused offshore in the Lamu Basin led by Woodside Petroleum. Woodside’s foray into Kenya did not pay off but that could be because it was looking in the wrong place. Prior to the past couple of years, Kenya’s onshore blocks were virtually virgin territory and primarily ignored however; Africa Oil Corp. and Tullow Oil bet the bank that there was oil onshore Kenya, and recently they were proved right. The two companies are partnered on a number of blocks and have drilled several wells with great success which has led to a surge of interest in Kenya’s frontier. While onshore Kenya has seen the most action lately, explorers have not given up on the country’s offshore potential and a number of programs are in the works to exploit it. Ethiopia has remained virtually unexplored for myriad reasons until recently with Tullow and Africa Oil, partnered with Marathon, exploring in the country and seeing some success. Petronas had been exploring in the Ogaden Basin with a modicum of success but the security situation in the Ogaden Basin led to Petronas exiting the area. The basin remains frontier although one small independent firm, Southwest Energy, picked up the assets. Southwest Energy, the first Ethiopian E&P firm, is set to begin a drilling program soon.

Corporate Africa 2013

A Promising Hydrocarbon Investment Africa’s vast potential is proven, as can be surmised from the continued discoveries in areas previously thought barren of reserves. Companies are often deterred by a difficult operating environment, whether because of the terrain, lack of infrastructure and supporting services, or the political situation. Africa’s hydrocarbon potential, combined in many cases with very attractive entry and fiscal terms in these frontier areas, will ensure that Africa receives its share of the global E&P investment for decades to come.

From Senegal in the north, all the way down to Togo and Benin in the south, IOCs are plugging away to discover the next big hydrocarbon zone.

Energy

Africa’s renewable Green Shoots Start to Show: SESSA’s Stephen Folder on Africa’s growing green potential.

hile global investment in renewable energy technologies in many OECD countries slowed somewhat in 2012, a trend largely attributable to the global economic downturn, the same could not be said for Africa and other emerging economies. In 2012 Africa was buoyed by a growing awareness of the potential of renewables, greater economic stability, enabling policy developments, and a decrease in technology costs (as much as 30 per cent in 2012 in the case of solar photovoltaic modules). South Africa managed to increase its investment in renewable energy from a slightly over 100 million US dollars to US$ 5.7 billion, becoming the eighth highest investor globally in 2012 in terms of allocated finance to renewable energy projects, with other significant investments from Morocco and Kenya at about US$ 1.8 billion and US$ 1.1 billion respectively. On the policy front, 20 African countries have now adopted formal renewable energy policies. Among them is the ECOWAS region’s target of 10 per cent of electricity from renewables by 2020 and 19 per cent by 2030, with other ambitious targets from North African states such as Egypt with a target 2800 megawatts (MW) of concentrated solar thermal power and 700 megawatts (MW) of solar photovoltaic (PV) power by 2027, 10 per cent renewables by 2025 from Libya and 100 per cent renewables from Djibouti by 2020.

Corporate Africa 2013

According to REN21’s Renewables 2013 Global Status Report, key factors toward the rapid uptake of renewable energy on the continent include: world-class resources, particularly solar, wind, geothermal and sustainable hydropower; robust economic growth; and stable governance and policy making among a surging energy demand. As a relative late-comer, Africa is in an enviable position to leapfrog some of the teething problems associated with the adoption of new technologies such as wind, solar PV, and solar water heating now being regarded as mature. An example of this is the increased capacity of wind turbines. Whereas a 30 MW wind farm not so long ago would have consisted of 15 turbines, increased capacity per turbine means that one can now get the equivalent capacity out of 10 turbines.

On the policy front, 20 African countries have now adopted formal renewable energy policies.

Energy

energy ambitions A demand for power Some of the challenges faced on the continent include securing adequate investment for a surging power demand; short-term socioeconomic challenges which tend to dominate national and regional agendas; and negative international perceptions in many instances. Energy poverty is still prevalent and there is a strong case to be made for rural electrification with 68 per cent of the population lacking modern energy services in Africa and an even higher proportion in sub-Saharan Africa.

South Africa managed to increase its investment in renewable energy from 100 million US dollars to US$ 5.7 billion.

Recent developments in the renewables sector in South Africa have been dominated by the much acclaimed Renewable Energy Independent Power Producer Procurement (REIPPP) program. Currently, 47 wind, solar PV, concentrated solar PV, concentrated solar thermal power and small hydropower projects from windows one and two of the five-window preferred bidding process are in various stages of construction with one solar PV plant already feeding power into the national grid. This marks an important milestone in the democratization of the country’s electricity supply which, until now, has been controlled by the state owned utility, Eskom.

The REIPPP aims to have 3725 MW of utility scale renewable energy online by 2015, with an additional 3200 MW by 2020. Included in the preferred bidding process for independent power producers (IPPs) are stringent requirements around localization and commitment to socioeconomic development and local enterprise development. It is hoped that the emerging renewables industry will be one of the primary drivers of the green economy and that localization thresholds will stimulate manufacturing in the wind and solar sectors. Already, a wind turbine tower manufacturing facility is being constructed at Coega in the Eastern Cape and a number of solar PV assembly plants are in operation. However, it will take a firmer commitment from government toward more renewable megawatts, possibly with an eye on the export market, before a local renewable energy manufacturing industry can flourish. This also needs to be considered in the light of the Department of Energy’s stated aim of increasing the nuclear fleet with a firmer announcement to be made on this in early 2014. With all the hype around the current utility scale developments, the smaller scale

building and rooftop agenda should not be forgotten. Under certain conditions, grid-connected solar PV is at grid parity and a number of South Africa’s local authorities are developing legislation around embedded generation and net metering, making smaller commercial scale and even residential scale renewable energy installations financially viable. Coupled with the country’s well-developed energy efficiency program, including its solar water heating rollout, there is good potential for green growth and enterprise development in the SMME sector. Other developments on the continent include the potential for geothermal development along the Great Rift Valley. According to REN21, Kenya boasted a capacity of around 200 MW of geothermal power at the end of 2012 and is aiming to add another 560 MW. Estimates point to a potential of around 14000 MW along the Rift Valley with the Rwandan government currently funding exploratory drilling for 700 MW. In the wind sector, Tunisia almost doubled its capacity in 2012, adding 50 MW and Ethiopia installed 52 MW.

Other developments on the continent include the potential for geothermal development along the Great Rift Valley.

Corporate Africa 2013

Energy

Oil in Nigeria

Heritage Oil describe its projects in Africa’s most populous nation.

eritage Oil is an independent upstream exploration and production company engaged in the exploration for, and the development, production and acquisition of, oil and gas internationally. Heritage has producing assets in Nigeria and Russia and exploration assets in Tanzania, Papua New Guinea, Malta, Libya, and Pakistan. The company has discovered four of the five largest onshore discoveries in sub-Saharan Africa, excluding Nigeria, in the last ten years and has an exceptional record of generating value and monetizing assets, having raised US$ 2 billion in asset sales with the current management team. The company looks to acquire assets that are underdeveloped or overlooked, providing it with an early mover advantage. In addition, Heritage has a proven ability to mitigate risk associated with political and security issues through local partners, on-the-ground experience, and engagement with local communities.

Corporate Africa 2013

In November 2012, Heritage completed a transformational deal providing balance to the portfolio and a step change in reserves, cash flow, and revenues with geographic and operational diversity. Heritage through a joint venture, Shoreline Natural Resources Limited (“Shoreline”) with Shoreline Power Company Limited, a local Nigerian company, purchased a 45 per cent interest in the OML 30 licence for US$ 850 million. This world-class asset is one of the largest onshore licenses in Nigeria, with eight producing fields, independent estimated reserves of over 1.1 billion barrels of oil and associated infrastructure, including an interest in a segment of the Trans Forcados pipeline. The acquisition, reportedly the largest ever upstream asset transaction in sub-Saharan Africa on a 2P basis, increased Heritage’s 2P reserves by 564 per cent and, with gross production recently reported at c.44,000 bopd, has increased production levels, net to Heritage, almost twenty fold. OML 30 is

one of a number of licenses that has been divested in the Niger Delta recently and has been referred to as the premier asset due to location, reserves, production levels, availability of facilities, and proven development capability. The world-class nature of OML 30 and the significance to Heritage was highlighted in May 2013, with Africa investor (Ai) Infrastructure Investment Awards 2013 naming Shoreline as Developer of the Year. The acquisition was secured at an attractive cost of US$ 1.7/2P reserves versus an average of US$ 5.9 for precedent transactions in the region. The deal was substantially funded by the sale of Heritage’s Kurdistan asset for $450 million, underpinning Heritage’s reputation for the ability to discover and monetize major assets at the appropriate opportunity. This followed similar success in Uganda where Heritage eventually sold its interests in the Albert Basin for US$ 1.45 billion.

The company has discovered four of the five largest onshore discoveries in Sub-Saharan Africa excluding Nigeria. OML 30 was initially developed in the mid1960s and has been in production since the late 1960s. The license contains eight producing fields, with first production in 1969 and peak production of c.280,000 bopd from the 200 or so wells drilled on the licence. During the last two decades the licence had been ill maintained and underdeveloped with a sporadic drilling history.

Increasing production There is massive upside, with the potential to both stabilize and increase production in the near term through the refurbishment of infrastructure and the re-starting of nonproducing existing wells. In addition, existing wells will be worked over to improve completions and gas lift can be installed in a number of existing wells which do not have artificial lift. Longer term, there is potential to increase gross production for the field to c.300,000 bopd through the drilling of new wells which is expected to begin in the second half of 2014. The license benefits from having all infrastructure already in place. There are nine flow stations with the capacity to handle 395,000 bpd, thereby handling several years of projected production growth. The facilities have been robustly designed and constructed, benefiting from standard design, enabling equipment to be easily replaced if necessary. The license includes an ownership interest in the Trans Forcados pipeline which transports production from OML 30 and several other licenses to an export terminal on the coast.

Gross production for the license has recently been reported as peaking at c.44,000 bopd and Heritage remains confident of achieving increased production over the coming months and into 2014. The increase in production from OML 30 for the remainder of this year is anticipated to be achieved by the procurement and installation of new equipment, and working over existing wells. Three new compressors, to be installed in Kokori, Afiesere and Olomoro fields, are scheduled to come on stream through a phased installation by November 2013, as part of an ongoing effort to refurbish and improve facilities within the license. In addition the Uzere West field, which has been shut-in for nearly two years, is due to commence production shortly. Overall, gross production from OML 30 in 2013 is expected to average c.30,000 bopd. Further production increases are expected for 2014. Current estimates for 2014 average gross production stand at between 60,000 to 65,000 bopd with development drilling of OML 30 to commence in the summer of 2014. As a result of ever increasing production levels, OML 30 continues to be a prize asset in Heritage’s portfolio.

Energy

Shoreline has established itself as one of the leading indigenous companies producing in Nigeria, drawing on a combination of Shoreline Power’s respected network of relationships within Nigeria and Heritage’s strong technical team and relevant geographic expertise. Shoreline has a critical mass of reserves and production which has enabled it to become a leading player in the Nigerian oil sector and create a reputable platform with execution experience for potential future transactions.

Overall, gross production from OML 30 in 2013 is expected to average c.30,000 bopd. has been formed jointly between Shoreline and NPDC in order to provide an aligned response to any community issues that may emerge. Despite OML 30 covering an extensive area, the appointed NGO has undertaken needs assessments across local community clusters to ensure that their concerns are addressed and they feel included as stakeholders in the license. Key projects in the Corporate Social Responsibility program to date have included drilling water wells, installation of a water distribution system, and commencement of a series of training programs. These initiatives have been pursued over the last three months and, together with increased targeted employment from local communities, have resulted in a marked improvement in relationships and a reduction in downtime.

The company looks to acquire assets that are underdeveloped or overlooked, providing it with an early mover advantage.

Community projects Heritage has attributed the marked increase in production, generated since June 2013, to the implementation of a number of comprehensive operational, engineering and community projects. In early 2013, the Company determined that increased engagement with local communities would be fundamental to driving an improved performance from OML 30 and generating shared wealth to all stakeholders. Through Shoreline, Heritage has committed to a series of community initiatives in Nigeria. Since June 2013, a not for profit NonGovernmental Organization, registered and working in Nigeria, has been engaged to work with the National Petroleum Development Company (“NPDC”), the OML 30 operator, and Shoreline in order to ensure a cohesive approach to these communities. A community relations group Corporate Africa 2013

Energy

General Electric

Transnet partnership to modernize Africa’s rail industry and drive regional integration and growth Significant partnership will create jobs, boost growth and provide essential infrastructure for African industry, By Thulisile Phiri, Manager at General Electric. Public and private partnerships This revitalization of Africa’s rail sector requires partnership between the public and private sector. A good example of such a partnership is that between General Electric Transportation (a subsidiary of US company General Electric) and South Africa’s Transnet Rail Engineering (a division of state owned freight and logistics group Transnet).

he continent of Africa is on the brink of being one of the world’s most important economic blocs. It has an abundance of resources that have great economic value to the global economy. Currently, there is minimal modern rail infrastructure to move such material across the continent, limiting the country’s ability to export materials around the world. To unlock Africa’s potential, the first step is to improve the aging railroads, which need to be revitalized and connected to boost intra-African trade. At present, Africa has 47 different rail systems in 32 countries. These complicated, disconnected rail systems significantly hamper the movement of freight. More often than not, material has to be transferred between trains several times on a journey across multiple countries. Additionally, the cost to African countries by the rail networks is among the highest in the world. For landlocked countries, transportation costs account for as much as 70 per cent of the value of exports.

Corporate Africa 2013

An integrated and adequately capacitated rail system will provide an efficient and cost effective mode of moving goods and commodities, thereby boosting intraAfrican trade, deepening regional market integration and engaging in global trade. The further development of rail infrastructure will also have an indirect benefit on the African economy. This improvement in trade will encourage countries and industries to increase production which, in turn, will create new industries and jobs.

To unlock Africa’s potential, the first step is to improve the aging railroads, which need to be revitalized and connected to boost intra-African trade.

In 2008, GE Transportation signed an agreement with one of South Africa’s foremost Broad-Based Black Economic Empowerment (BBBEE) companies, the Mineworkers Investment Company (MIC), to establish a subsidiary GE South Africa Technologies (Pty) Limited (GESAT). This partnership provided GE Transportation with a channel to the South African market for all of its products and services, thus actively participating in the country’s social and economic transformation. In the same year as the BBBEE partnerships, GE Transportation provided LOCOTROL® technology for the Western Cape Orex line, which had the longest production train in the world. This technology provided distributed power and braking control systems throughout the length of the train on the critical Western Cape Saldanha Bay iron-ore export line. Orex is the only heavy-haul iron-ore railway line in South Africa and the second-longest iron-ore railway line in the world at 861 kilometers. “Prior to the installation of LOCOTROL, the increased carrying capacity was a major barrier to iron ore exports,” says Tim Schweikert, President and CEO for GE Transportation in Africa.

Improving services The South African government wanted to boost industrial production, encourage foreign direct investment and create greater economic diversity in 2009, so they committed to invest US$ 10 billion in infrastructure and rolling stock. As part of that commitment, Transnet Freight Rail (TFR) ordered 100 GE Model C30ACi locomotives - GESAT’s first order. This engine significantly improved the hauling capability compared to previous engines and reduced fuel consumption, subsequently reducing greenhouse gas emissions. Additionally, it was the first AC diesel-electric locomotive to be introduced in sub-Saharan Africa, the first locomotive to meet International Union of Railways (UIC) II emissions standards in Africa and the first locomotive to be assembled on African soil. President and CEO of GE South Africa, Tim Schweikert claims: “The C30ACi can reduce emissions by 1500 metric tons of CO2 annually, equivalent to eliminating the emissions from 310 cars on South African roads. It deploys three C30ACi models :to haul a load that would require four older locomotives, reducing annual diesel fuel consumption by 600,000 liters under typical operating conditions.”

Recently, GE Transportation and Transnet entered into an export alliance agreement that will see the two companies bringing together their experience of working in rail outside of South Africa to deliver world class locomotives to the rest of Africa. The export of locomotives to the rest of the region will increase South Africa’s export revenues whilst ensuring that the Southern Africa region continues to be a competitive and progressive trading block in Africa. “This agreement will also mark a historic milestone of producing locomotives for Africa in Africa for the very first time in the history of the continent. ” Schweikert explained. Schweikert went on to say, “The agreement will see GE and GESAT partnering on the modernization of locomotives across 13 African countries and the manufacturing of GE locomotives in Africa. The heavyhaul locomotives will be built at Transnet’s Koedoespoort facility outside Pretoria in South Africa. This is a key milestone in our partnership with Transnet, because it will enable Africa to procure world class locomotives from the continent and strengthen the continent’s position as a fast growing emerging market.” This new venture is already yielding positive returns. Mozambique has already ordered 10 locomotives, and Angola is expected to order 100 locomotives.

A sustainable partnership GE’s partnership with Transnet represents a significant investment in job development, economic advancement and infrastructure growth on both sides of the Atlantic. To deliver on the initial 100

Energy

For landlocked countries, transportation costs account for as much as 70 per cent of the value of exports.

Integrating Africa

locomotives, which was later extended to 143 locomotives, GE had to ensure that a significant portion of the assembly was done locally and skills were transferred to local teams. The first 10 of the 100 locomotives were manufactured in the US, but the remaining 90 were delivered in kitform for local assembly at Koedoespoort, South Africa. “GE is proud to have provided over 53,000 hours of training and skills transfer on this order and empowered a number of local small and medium enterprises. We are committed to supporting the government’s plan to develop and support black industrialists from previously disadvantaged groups,” Schweikert says. He notes that the order incorporated over 30 per cent local content and was delivered ahead of schedule. Paul Nkuna, the CEO of the Mineworkers Investment Company, says: “The benefits of this partnership include job creation here in South Africa, skills and technology transfer and the renewal and modernization of South Africa’s transport infrastructure at a time when greater balance in road and rail transport capacity has become a national priority”. GE’s partnership with South Africa demonstrates that GE is a willing and able partner in growth. GE is committed to helping Africa improve and modernize its railroad system to meet its needs, while sharing our expertise with the local teams. While there is much more room for growth and interconnectedness within the railroad

The further development of rail infrastructure will also have an indirect benefit on the African economy. system, GE has helped Africa revitalize some of its existing infrastructure and get ever closer to realizing its full potential as a large and powerful trading bloc in the global economy. Mr. Schweikert says: “We are pleased to be helping Africa build its manufacturing economy by localizing and regionalizing the production of locomotives. We look forward supporting Africa’s infrastructure system as it ushers in a new era of growth.”

Corporate Africa 2013

Interview

Treading carefully through Africa’s development. Rebecca Costa is an American scientist, radio presenter, and author of The Watchman’s Rattle, which was released to mass critical acclaim. Her theories on singularity and overly-complex global structures have captured the attention of policy-makers and academics. Rebecca argues that global structures have outgrown human’s evolutionary ability to cognitize and, historically, this could signal the imminent destruction of our civilization. Here she applies her theories to African development.

Corporate Africa 2013

I think that what tends to happen is that we look at nations and continents separately. But we should agree that we are, at this point, all interconnected. All it takes is one bad subprime mortgage policy in the US to take down every stock market and financial institution in the world. So in some sense to look at Africa as somehow an “African issue,” where somehow complexity and reproductive rate of data which is growing at an exponential rate are only their problems, is an error: a misjudgment. Every nation is struggling with job creation, from China to the US to Nigeria. Debt, energy, growing water needs, wild swings in finance markets, education and immigration and terrorism…the list looks remarkably similar whether you take the most industrialized and technologically advanced countries or you take the least advanced countries. They’re all dealing with the same list of problems, so at some point a light bulb needs to go off and we need to realize we are encountering a species-wide phenomenon. Q. So, how would you utilize new technologies to simplify issues, and ensure future African development is made safer and more sustainable, and, as you were saying, the global situation is also made safer and more sustainable? Well a sociobiologist like myself stands back and looks at the long haul of human history. I don’t mean the last few hundred years, I mean the last few billion years from when we emerged as single cell organisms. If you ask a question like “where is African heading?” in this complex, interdependent global economy, my answer would be that Africa has the same advantages - which people will characterize as a disadvantage but I disagree

As Africa leapfrogs the rest of the world into greater efficiencies, I think it is going to be overwhelmed by data and by choices.

- the same advantages that post-war Japan had. Africa is not saddled with the enormous expense of supporting old infrastructure, for example land phone lines: while the industrialized world is trying to move to an all cellular and digital world, we still

Interview

Q. Do you feel that the exponential growth rate in technologies and industry is having a positive or negative effect on the African continent?

hang on to analogue technology, so we have the financial burden of supporting ancient technology which is going nowhere fast;. Whereas Africa can move to strategies like the one Google announced whereby they will put blimps in the air, in order to allow cellular technology to function across the Sahara desert. Imagine trying to put blimps up over London or New York City! Environmentalists would be aghast. Africans don’t have that problem; they don’t have legislation and bogged down laws or bureaucracy to get through, nor do they have to support infrastructure that really needs to be abolished in order for countries to move forward at a rapid rate. I’m not a betting woman but I would bet on Africa for that reason alone. Q. As I was reading your lectures, I was reminded of the sociologist Max Weber who said countries new to the free market have an advantage because they don’t have to develop new technology – it can be imported, like you say with blimps, etc. I want to ask if you subscribe to that view. I do but I think also countries new to the global market need to stand back and learn from industrialized nations: that complexity is a double edged sword. On one hand you have people like Eric Schmidt who says that we generate as much data in two days as we did from the start of human kind to year 2003. If that is occurring every 48 hours, in my view we have entered a high failure rate environment as the human brain is not capable of taking advantage of that content. As Africa leapfrogs the rest of the world into greater efficiencies, I think it is going to be overwhelmed by data and by choices. There are more wrong choices than right, and so you need the right culture and strategy about how to develop, as it’s not as easy as it sounds. Q. You have said that you believe “nowhere is in more danger of complex systems than in Europe and Africa.” Why is this, in particular in regard to the fact that many of the world’s leading markets are African? Most of my economic comparisons are taken from nature because, after all, nature is the longest running sustainable model that we have. So, the rules that govern sustainability, we have derived from nature. Even early economists who invented economics drew many theories from Darwinism – gradualism and markets for example, came out of the theory of evolution. We can look to nature to ask “what is sustainable?”, and one of the rules that governs the sustain-

Africa is not saddled with the enormous expense of supporting old infrastructure.

ability of any species is the rule of singularity. Any drive toward singularity is a drive toward extinction. We can substitute the word “extinction” for the word “collapse” in this case. As we move to more homogenous economic markets around the world for the sake of being able to do business quickly from country to country, we become more fragile. Our economic systems have become more simple post WW2. Before that we had vastly varied economies around the world. As a business person you would go in to a new environment and you might as well have landed on Mars! Now, the vehicle for raising capital and investments, and laws themselves, all look remarkably similar. As we move toward a more homogenous, worldwide global economy where differences are very minor, we set ourselves up for collapse. And as I mentioned earlier, a big policy on the part of one major nation can now have an influence on every economy in the world. Q. I want to ask you about technology’s impact on politics. In the last few years we’ve had the Arab Spring, witnessed the fall of Colonel Gaddafi, there are the current protests in Brazil, and protests we’ve seen in Turkey, even to some degree the Occupy Wall Street Movement. Are these, to you, an example of a crisis in the global population, or are they examples of technology and social media bringing the world to a more democratic, egalitarian state? Good question. We always have to go back to diagnosing the problem correctly. And over a period of time a narrowing has occurred. This narrowing concerns how we now have a tendency to describe every problem we have as either economic or political. And we’ve left no room for the possibility our problems may be biological in origin. I think this is why I’ve been invited to speak at the G20 conference: We have to leave room for the fact that we are biological organisms. I know we all have cell phones, iPads, and

Corporate Africa 2013

Interview

laptops and we like to think we have nothing in common with other creatures on the Earth. The fact is, whether you’re talking about President Obama or you or me, we are trapped in a biological suit which is pre-programmed to behave in certain ways; many of the political problems, violence, and instability come from this fact. I have to say, when the Arab Spring occurred, people felt I was being negative as I said: “This will not last.” We are going into an enormous period of turmoil in Egypt as the problems have been misdiagnosed. Using Egypt as an example for the rest of Africa I would say that when Mubarak took office, I believe in the 1980s, the population was somewhere around 30 million; now it’s pressing 100 million. So over, say, 30 years, he had to build twice the schools, hospitals, and two times the amount of jobs in order to keep up with population growth. I would argue that their problem is reproduction. All the protestors were protesting issues which can be explained by population growth – not democracy, or fascism, or government, or unemployment, lack of education, food, water, poor health, etc. All these problems can be

This narrowing concerns how we now have a tendency to describe every problem we have as either economic or political.

explained by rapid population growth, coupled with the fact that less than 3 per cent of the land in Egypt is arable for crops and cattle. So, that is the explanation for Egypt’s turmoil today. So when someone cornered me and said that these problems cannot be fixed overnight, I said: “You’re right. I don’t care who is in office, it doesn’t matter what political system they adopt, their problems won’t go away. The conditions for the human being on the ground on the street are not going to change unless they get hold of the population problem.” So when I was asked the solution, I offered one that is politically incorrect but is correct anyway: the solution is to tell the same people who risked their lives by protesting to leave the country immediately! Two thirds of Egypt’s population must leave Egypt immediately, find jobs and send money back to Egypt. That is the only short-term solution. Otherwise they’re in for a long period of political turmoil, which discourages foreign investment.

Corporate Africa 2013

Q. I recently watched a debate on population growth and have to say I agree with you that it is one of the biggest threats facing mankind. Nigeria’s population is set to surpass that of the US by 2030. So, a two part question: do you see this as mankind’s biggest threat? And what kind of sustainable global order do you envision as being sustainable in the context of population growth?

People may not know that the largest migration of humankind is going on right now.

Another excellent question! There is an author called Doug Saunders who wrote, in my view, an incredible book called Rival Cities which was largely ignored. He went to several continents and studied cities where…well, people may not know that the largest migration of humankind is going on right now, so if we’re going to talk about population growth’s impact on politics and discouraging investment, then we need to discuss Doug Saunders. He discovered that the mass movement from rural to urban areas means that people are setting up on the outskirts of cities where land is cheap. Historically what he observed is when the government creates a way in which these people who arrive with nothing but who want to send money back to villages which will in turn bring more people to urban areas… when the government invests in creating an assimilation and builds schools, hospitals etc., in shanty towns, these people become the new middle class, as they move to urban centers in search of a better life. They initially take jobs as janitors, selling fruit etc., but eventually they will assimilate into the middle class. When they are ignored, however, they become hotbeds for violence and political unrest. We know this. So if you ask me “what is the new sustainable model?” I would say to come to terms with the fact that the biggest migration in human history is taking place now, as we speak; we are moving to urban centers, and governments must invest in marginal neighborhoods.

Q. And that would be especially relevant in regards to the developments taking place in Africa as the middle class ostensibly grows, relative to African economies. However, in comparison to the rest of the world that middle class is still quite poor. This leads me to ask in regards to Africa’s economic growth, and investing in Africa’s emerging middle class; do you feel optimistic as to Africa’s development? And as you said at the start of this interview, therefore, global development? I do feel very optimistic about the potential for Africa to leapfrog the rest of the industrialized world within a couple of decades. It depends a lot on the people who are attending this G20 summit. Their ability to translate this information into projects and behavior which is actionable and can garner immediate results which affect people’s daily lives is essential. This is a big task to turn theories into results. We are not known for our patience, particularly in the technological age. Our leaders are now graded on how quickly they can get a result and so I think meetings like the G20 conference are very important as they are essential for collaboration, which is a great tool against complexity. Even in a collaborative environment, it is important to produce results.

I do feel very optimistic about the potential for Africa to leapfrog the rest of the industrialized world within a couple of decades.

Agriculture

Migration and its effects on sub-Saharan African farmers

More and more Africans are migrating from the countryside to urban areas across sub-Saharan Africa. EMRC reviews the research into this growing trend.

his movement has grown bigger over the last few decades as the world becomes more global: The youth head to towns to find “white collar jobs” and farming communities find conditions getting harder. For the first time in human history, more than half the world’s population lives in urban areas. Over 90 per cent of urbanization is taking place in the developing world, and is particularly concentrated among young adults (aged 15–30) in Africa and Asia as a result of rapid population growth during the mid-20th century. For example, projections for Ethiopia, currently one of the least urbanized countries in the world, indicate that the proportion of people living in urban centers will double over the next 40 years (from 17 per cent in 2010 to 38 per cent in 2050). Policymakers agree that this movement needs to be changed: that urban areas are not and will not be able to cope with the stream of incoming families and even entire communities. More importantly, as the world population grows, the need for food grows which puts further importance on finding solutions for the agri-food sector. In order to change the tide, the agricultural sector needs to be considered as a significant if not as the most significant across the continent in terms of providing jobs, incomes and food for the majority of society. To achieve success, a good hard look at the sector’s current status needs to be taken by all policymakers and leading international food companies. As Prof. Monty Jones, former Executive Director of the Forum for Agricultural Research in Africa (FARA) and keynote speaker at this year’s AgriBusiness Forum says: “Africa’s poor agricultural performance is traceable to inappropriate policies and weak

Corporate Africa 2013

farming communities are facing some very tough conditions. Agriculture and migration are also affected by a rapidly rising demand for meat in middle-income developing countries that can accelerate deforestation as land is cleared for pasture. Deforestation may accelerate climate change and increase demand for biofuels that can push up food prices.

Education, technology and linking the various parts of the value-chain are critical to get the agricultural sector stable and growing. Some experts are calling for a back-to-basics approach and simple innovative techniques that can actually be used by farmers. Laurent Stravato, Country Director, iDE – Burkina Faso, has seen a significant improvement in outputs since iDE has been developing lowcost, small-scale drip systems for irrigating home gardens and small plots. With low-cost technology, iDE makes it accessible for small scale farmers. “What we often see,” Stravato explained, “is the failure of solutions and technologies that are introduced from the top down: They tend to fall into disrepair soon after being initiated.”

However, there is still much hope for Africa’s youth, women and farmers to successfully develop the sector, and some innovative and inspiring ideas are coming out of the continent.

Parallel to this, the Balton Group has developed the Amiran Farmer’s Kit (AFK), a major innovation that is revolutionizing small scale farming in Africa. The Amiran Farmer’s Kit is an affordable, integrated toolkit aimed at improving yields, protecting crops and bringing them to market. Increasing yields, reducing post harvest losses, easing access to financing for Small and Medium Enterprises are just the tip of the iceberg in terms of what needs to be improved. Although many barriers still need to be surmounted, there has been a turning point in the last few years by African leaders in terms of agriculture. This is the attitude Rwanda has taken in the last few years. Dr. Agnes Kalibata, Rwanda Minister of Agriculture and Animal Resources, states: “The economic recovery which started around 2005 has been growing at 8 per cent per annum on average. Rwanda has moved from a basket case to food security; since 2007 Rwanda’s food production has been on a stable increase. Export earnings have also grown very steadily. The government has invested in rural transformation to the extent that poverty dropped by 12 per cent and 1 million people moved out of poverty between 2008 and 2012 alone.” Investment opportunities are on the rise and government has worked very hard on its “doing business” indicators to make it possible for investments to happen. Rwanda has topped the doing business chart for the last 3–4 years. Although countries such as Rwanda have seen an important revival and significant growth, there is no denying that African

Agriculture

planning processes. He adds: “Our experts should encourage the youths to go back to farming and agriculture by making agriculture an attractive enterprise through provision of inputs such as seeds, fertilizers, etc. and adequate simple equipment to reduce the drudgery in agriculture and incentives to improve profitability through innovative funding and tax breaks.”

Success: How small ideas can create big change From a small rural village in the heart of Eastern Africa to a standing ovation in the bustle of Johannesburg: this may sound like a impossible dream but it is the real life of Everlyne Cherobon, heading Emeden Kenya, and hailing from rural Kenya. She was awarded the EMRC-Rabobank Project Incubator Award in 2011, receiving a cash prize of US$ 15,000 during the EMRC-UNDP AgriBusiness Forum in Johannesburg for innovative and sustainable agricultural business. Known more for its long-distance runners than its agriculture, the dry-lands of Kenya are viewed by Cherobon as holding the key to her and her community’s future success. “Most parents educate their children with the sole aim of making them get white collar jobs. Very few ever advise their children to go to school, and help create jobs by themselves. The focus should be in developing entrepreneurial skills and changing attitudes toward rural life. In Africa more than 80 per cent of the population lives in rural areas and indeed most African economies rely on agriculture. This means our sole focus should be on developing this key strength. My advice therefore to all aspiring entrepreneurs is to look back to rural Africa, see the opportunities and develop systems to exploit it. There is a lot of unexploited gold in rural Africa.” So what is the key to creating a sustainable business project in Africa? Maria Odido, who won the Project Incubator Award at AgriBusiness Forum 2010 in Uganda for her impressive bee project in Uganda, has a clear answer: “I am a local investor. For that reason a sustainable business project for me is of high importance. Africa rightly relies on Foreign Direct Investments. However, our role as local investors is even more important. We understand our communities better, are more in touch with their realities and are able to understand their intricacies. In understanding a community, it is easier to work with them and to gain success, not just for the community but for the company as well, and longer term sustainable growth for our economies in Africa.” Corporate Africa 2013

Agriculture

Malawi’s warm heart mining sector Mkango CEO William Dawes explains the huge potential to be found in Malawi’s natural resources and the importance of sustainable development.

alawi has been known as a rare earths mineral province since the 1950s and was the first country in Africa where carbonatites, one of the main host rocks for rare earths, were recognized. As the clean energy, consumer electronics, and other technology sectors have emerged as major growth areas for rare earths demand over recent decades, Malawi is now positioned to be one of Africa’s largest producers, if not the largest, with a number of exploration and development stage rare earth projects historically identified ,and in some cases drilled. We at Mkango Resources have been working in Malawi for the past seven years and are spearheading development of the rare earths sector with our advanced stage Songwe Hill rare earth project.

Corporate Africa 2013

Prior to focusing on Malawi, the management team evaluated a large number of projects throughout Central Asia and the Middle East, as well as other countries in Africa, before deciding to focus on Malawi based on the mineral potential and the ease and ability to conduct business as an exploration company. Mkango believes that Malawi is uniquely positioned to be a long-term sustainable rare earth producer and ticks the boxes in terms of resource potential, stable political environment, infrastructure and government support, and sees itself as being a catalyst for regional rare earth development in the country. Potential

efforts to promote both our project and the country as a mining jurisdiction. Success stories will be the best advertisement for the country’s potential, and it will be crucial for Malawi to be competitive compared to its neighbors, in terms of its fiscal regime, and operating environment in order to attract new investment. Historically Malawi’s major focus in terms of development was the agricultural sector and therefore the mining sector is relatively underdeveloped when compared to other countries in Africa. Through the Mining Governance and Growth Support Project, the World Bank, European Union, and France are assisting development of the mining sector, which will help close the gap.

Investors are only beginning to understand Malawi’s potential, and we are making

Since being granted the exploration license for Songwe in January 2010, Mkango has

Existing infrastructure One of the benefits of working in Malawi is that the existing infrastructure has facilitated progress of the exploration and drilling programs. When compared to other mining projects in Africa or even North America, the Songwe Hill project benefits from being only a two-hour drive from Malawi’s major commercial center, Blantyre. There are also major road refurbishments in progress and there is year-round access to the license areas. The new railway line being constructed and refurbished by Vale, to export coal from Mozambique to Nacala port via Malawi, is also likely to facilitate the import and export of materials in and out of Malawi, and should boost development of the country’s power sector. Most of the power is currently produced by hydroelectric plants, but the railway line is likely to facilitate the development of coal-fired power stations. There are many power projects in the planning stages, and hopefully future mining projects will be able to transition from using diesel-powered generation.

regard to infrastructure, we refurbished and constructed roads and bridges, which have facilitated access to markets and other areas for the local villages. Lastly, we have also provided schools with basic supplies, such as notebooks, pens, and footballs. We continue to discuss further projects with the local chiefs and plan to leave a positive legacy in the region. Mkango has also put a strong focus on research programs geared toward rare earths, particularly in relation to the mineralogy and processing characteristics of the rare earth bearing host rock at Songwe Hill. Mkango has successfully collaborated with the Camborne School of Mines, UK, and Mintek, South Africa, and this has greatly assisted in both moving the project forward within the timeframe. This is important not only for the ever-evolving rare earth industry but also to showcase the opportunities within Malawi. Value added growth There are 17 rare earth elements; however ,we see most growth potential in those which are geared to high value products, such as Neodymium, Dysprosium, and Praseodymium, which are used in

Agriculture

undertaken a comprehensive multimillion dollar exploration program which included regional exploration, geological mapping, ground geophysics, surface sampling, trenching, high definition mineralogical studies, scoping metallurgical test work, environmental and social studies, and a two phase drill program totaling approximately 6850 meters, which culminated in the announcement of a maiden mineral resource estimate in October 2012. Mkango is currently completing the prefeasibility study for Songwe and, in parallel, regional exploration is also ongoing on its two license areas. So in a relatively short period of time, when compared to the normal time frames for exploration, Mkango has rapidly taken the project to an advanced stage of exploration and development.

have these critical elements, the mineralogy and metallurgical characteristics of the ore tend to play an even larger role in the economics and viability of rare earth projects versus other commodities. So far, Mkango has been successful in its initial

Investors are only beginning to understand Malawi’s potential. test work associated with this crucial aspect of project development, with continued optimization work being completed. We are looking forward to seeing the project move into the next stages of development, as well as identifying and building on other opportunities within our license areas and Malawi as a whole. Mkango has a strong commitment to the country supported by a growing local management team based in our Malawi office, which recently moved to new corporate headquarters in Blantyre. We are just starting to scratch the surface when it comes to understanding the potential

Benefiting communities As the Songwe Hill project moves through the feasibility stages into production, our social development programs will be scaled up and we anticipate that the project will bring significant benefits to local communities. During the exploration stage, we initiated a number of programs to benefit the local communities. Water boreholes were drilled and refurbished in the local area, one of which is located in the nearest village to the project near a primary school, which has greatly improved access to water. We also have a soybean program, which aims to boost agricultural production and food security in the surrounding communities. With

permanent magnets, and Europium, Terbium, and Yttrium, which are used in color phosphors. These are critical components of consumer electronics, clean energy, electric vehicles, and many other high growth sectors, and companies that have deposits geared toward these critical elements are well positioned to become future market leaders. Over 80 per cent of Mkango’s in-situ value is currently derived from these rare earths. Processing rare earths is more complex than base or precious metals, so as important as it is to

opportunities we can unlock through development of a sustainable mining operation at Songwe and as the project moves through the development stage, we anticipate that it will offer not only further employment for the local communities but add to the infrastructure and overall health and well-being of the citizens. We believe the future is bright for Malawi and since it’s already known as the “warm heart of Africa” we also hope it becomes the shining star within the mining sector. Corporate Africa 2013

Agriculture

From subsistence farmers to successful entrepreneurs Connecting Africaâ&#x20AC;&#x2122;s smallholder farmers to the future

he challenges are immense and never far from the headlines: population growth, urbanization, vulnerable communities hit hardest by climate change, families going to bed hungry every night.

Translated into numbers, the United Nations Food and Agricultural Organization (UN FAO) estimates that by 2050 the global population will be over 9 billion; that 70 per cent of that figure will live in urban areas; and that food production will need to leap by 70 per cent to meet escalating needs. Growth in agriculture could help meet the consequent rise in food demand, in particu70

Corporate Africa 2013

lar the smallholder sector which is at least twice as effective at benefiting the poorest as growth in the nonagriculture sector. But while smallholder farmers in Africa contribute up to 90 per cent of Africaâ&#x20AC;&#x2122;s agricultural production, their yields remain stubbornly low - often just 30 per cent of global averages.

Food security, therefore, could not be more important. It means people having enough to eat and a surplus to sell, a reduction in hunger and improved nutrition. It puts reliable income in the hands of farmers and their communities, stimulating demand in local economies and nurturing ambition for a future which is not reliant on aid.

Itâ&#x20AC;&#x2122;s these low yields that are driving food insecurity in sub-Saharan Africa. And in human terms the consequences could not be more serious: a world of shortage, fluctuating prices, hunger, and, for families struggling for basic needs, the end of hope.

So how to boost food security and hope in a region beginning to creak under the pressure of expanding populations and the effects of climate change?

From theory to practice: connecting cassava farmers to research institutes.

Farm Africa’s approach to building a sustainable future for food starts at the grass roots level with the fundamental belief that Africa’s farmers can feed Africa’s people.

Farm Africa is connecting smallholder farmers with specialist institutions in a number of ways. One example is our work with the Kenya Agricultural Research Institute (KARI). The institute has a specialist cassava research unit to develop improved varieties that are resistant to the cassava mosaic virus. Combining scientific expertise and innovation with practical training on identifying disease and pests, the partnership’s focus on improved cassava is having a dramatic impact in the field.

What makes Farm Africa’s approach so innovative is the role the charity is playing as a bridge between smallholder farmers and governments, research institutions, funders, ,and the private sector. As these institutions begin to work together with smallholders, they are increasingly harnessing the hitherto untapped potential of farmers determined to take charge of their futures. What does this work look like on the ground? Farm Africa works with partners on pilot programs, typically reaching 1,000 to 10,000 farmers to test innovation at the local level. The charity tests new approaches and identifies new ways to help farmers move from traditional methods to more effective ways of farming. The charity also identifies what works, with successful models scaled up to maximize their impact among wider communities. These models also help Farm Africa to build a robust base of evidence to influence policy from local to national levels. And to make its work as sustainable as possible, Farm Africa also delivers training in enterprise skills and building market linkages so that farmers are able to reap the benefits of increased productivity in the long term. Case Study: Cassava Production for Food Security and Income Generation in Western Kenya In a project funded by the National Farmers’ Union, Farm Africa has worked to restore the fortunes of cassava farmers in Nyando and Ugenya Districts in western Kenya following an outbreak of the mosaic virus that decimated traditional cassava varieties. Thanks to Farm Africa’s introduction of improved cassava, yields have doubled in the area. Previously, May through July were traditionally food deficit months with the previous year’s harvest used up. But since Farm Africa’s project got started, farmers who had more than a year’s involvement in the project saw no such depletion. Instead they were able to generate both enough food for their families and a surplus to be sold at market. This demonstrated to their neighbors the benefits of improved cassava and the economic viability of cassava as a cash crop, championing further uptake. So far, nearly 3000 farmers in the region have gained knowledge and skills in cassava growing; 34 demonstration sites for at least 3 different cassava varieties have been established to share knowledge of new

Demonstration plots and farmer field schools set up by Farm Africa’s agricultural experts give farmers’ groups hands-on experience of new farming techniques to maintain healthy, pest-and disease-free plants. Farmers invest in buying high-quality cuttings, avoiding dependency on hand-outs.

Farm Africa’s approach to building a sustainable future for food starts at the grass roots level with the fundamental belief that Africa’s farmers can feed Africa’s people. But this innovative partnership is achieving much more than simply putting food on the table. A key priority of Farm Africa’s work is to build the enterprise skills of farmers so they can market their surplus cassava more effectively, developing sustainable businesses as a result. The shelf-life of fresh cassava is short. So, to maximize market potential from increased production, farmtechniques; and at least 20 cassava value chain actors (traders, input suppliers, millers) have been identified. One such farmer is Celine Adhiambo, a widow and mother of five. Her experience of traditional cassava had been bad due to the outbreak of the cassava mosaic disease. Farm Africa’s crop specialists demonstrated to Celine and her women’s farming group the benefits of growing new cassava varieties that aren’t susceptible to the virus. The new varieties mature in half the time of the traditional varieties and produce much larger tubers. The women tested the new varieties out on a demonstration plot to see for themselves the difference before growing the new cassava on their own land. Not only are the new cassava plants healthy, but they also produce a much larger crop than the older varieties. Having seen the excellent results at the demonstration plot, Celine

Agriculture

Innovative approaches to boosting food production in sub-Saharan Africa

ers are trained in post-harvest processing techniques that add value to their crops. This can take the form of producing cassava chips, cakes, biscuits, or even flour. And just as important as adding post-harvest value is linking farmers more effectively into market chains so they can get the best possible price for their processed cassava. Farm Africa organizes farmers into groups that can collectively market their produce, increasing farmers’ bargaining power and opening up market opportunities to them that previously did not exist.

But while smallholder farmers in Africa contribute up to 90 per cent of Africa’s agricultural production, their yields remain stubbornly low often just 30 per cent of global averages. The impact that Farm Africa has had on Celine and her community in Kenya is replicated right across South Sudan, Uganda, Tanzania, and Ethiopia where the charity is operating its projects. In each country Farm Africa is creating change that lasts. This is because it is not just helping farmers to grow more food but, perhaps more importantly, because it is fostering an entrepreneurial spirit among farmers, helping them develop businesses capable of sustaining them and their families for their long-term futures. Food security in sub-Saharan Africa requires a potent combination of investment of funds, innovative solutions, policy expertise, knowledge dissemination and confidence in Africa’s farmers to bring prosperity to rural Africa. Farm Africa’s vision is to bring these hitherto disparate elements together to create a prosperous rural Africa where Africa’s farmers have the power to feed Africa’s people. has given over more of her land to growing cassava. Her fortunes have been transformed as a result. Whereas she was able to produce just 7 tons of cassava per hectare using the traditional variety, Celine is now able to produce 22 tons per hectare. What’s more, cassava is popular at her local market and demand outstrips supply – so Celine is already earning good money. As well as managing to pay for the school books and uniforms her children need, she has been able to save a little money for emergencies. When the roof of her home collapsed during a storm, she could buy a new corrugated iron roof to keep the family dry and safe. Corporate Africa 2013

Events

AFRICA South Africa Power Gen Africa

17th – 19th March 2014 Convention Centre Cape Town, South Africa Tel: +44 1992 656 617 exhibitpgaf@pennwell.com www.powergenafrica.com

Power & Electricity

11th – 12th March 2014 Johannesburg, South Africa www.terrapinn.com

20th Africa Oil Week

25th – 29th November 2013 Cape Town, South Africa Tel: +31.70.324.6154 babette@glopac-partners.com www.petro21.com/events

Public Private Partnership Africa

3rd – 5th December 2013 Gauteng, South Africa Tel: +44 207 697 1064 appp@ametrade.org www.africappp.com

Future Bank Africa

11th – 12th March 2014 Johannesburg, South Africa Tel: +27 (0) 11 516 4015 www.terrapinn.com

ICASA - 17th International Conference on AIDS and Sexually Transmitted Infections in Africa

7th – 11th December 2013 Cape Town, South Africa Tel: +27 12 816 9070 registration@icasa2013.org www.icasa2013southafrica.org

Angola Angola International Oil & Gas Conference and Exhibition

25th - 26th November 2013 Epic Sana Hotel Convention Centre Luanda, Republic of Angola Tel: +44 207 697 1064 sergio@ametrade.org

ASIA Nigeria

Thailand

Nigeria Oil & Gas Exhibition

ITU TELECOM WORLD

24th – 27th February 2014 ICC, Abuja, Nigeria www.cwcnog.com

WAPIC The West African Power Industry Convention 26th – 27th November 2013 Eko Hotel, Lago, Nigeria Tel: +234 809 800 8906 mej.obada@spintelligent.com www.wapicforum.com

World Economic Forum on Africa

7th – 9th May 2014 Abuja, Nigeria Tel: +41 (0) 22 869 1212 contact@weforum.org www.weforum.org

Niger 16th Africa OilGasMine Trade & Finance

19th – 23rd November 2013, Niamey, Republic of Niger Tel: +227 20733969 adolphe60baguidi@gmail.com www.ogtfafrica.com

Mozambique Power & Electricity Mozambique

2nd -5th December 2013 Girassol Indy Congress Hotel Maputo, Mozambique www.powermozambique.com

19th – 22nd November 2013 Bangkok Tel: +41 22 730 6161 itutelecom@itu.int www.world2013.itu.int

Israel Israel Energy & Business Convention 19th – 20th November 2013 Ramat Gan, Israel Tel: +972-9-7687450 dvorad@netvision.net.il www.energianews.com

United Arab Emirates MENA Business Infrastructure Protection 2013 Summit

4th – 5th December 2013 Dubai Tel +44 (0) 20 7111 1615 BenH@irn-international.com www.businessprotectionsummit.com

Singapore CommunicAsia

17th – 20th June 2014 Marina Bay Sands, Singapore Tel: +65 6233 6638 pinpin.tan@sesallworld.com www.communicasia.com

Ghana Ghana Summit

8th – 10th April 2014 International Conference Centre Accra, Ghana www.cwcghana.com

Offshore West Africa Conference & Exhibition

21st – 23rd January 2014 Accra, Ghana Tel: +44 (0) 1992 656 658 tonybm@pennwell.com www.offshorewestafrica.com Corporate Africa 2013

Event

EUROPE United Kingdom

Spain

Texas

Africa Oil & Gas Summit

EWEA Europe’s Premier Wind Energy Event

World LNG Fuels

Norway

OTC Offshore Technology Conference

27th – 28th January 2014 London, UK Tel: +44 (0)207 127 4501 info@oliverkinross.com www.africaoilandgassummit.com

Middle East & North Africa Energy

New Uncertainties and New Opportunities 27th – 28th January 2014 London, UK Tel: +44 (0)20 7957 5729 conferences@chathamhouse.org www.chathamhouse.org

4th Annual Global LNG Forum

3rd – 4th February 2014 London, United Kingdom Tel:+ 421 257 272 143 www.oilgas.flemingeurope.com

All-Energy

21st – 22nd May 2014 Aberdeen, United Kingdom Tel: +44 (0)20 8271 2179 ae.helpline@reedexpo.co.uk www.all-energy.co.uk

France World LNG Summit 18th – 21st November 2013 Paris, France Tel: +44 20 7978 0061 LNG@thecwcgroup.com www.cwclng.com

ICOGPE 2014: International Conference on Oil, Gas & Petrochemical Engineering 29th – 30th April 2014 Paris, France Tel: +971559099620 www.waset.org

AMERICA

Corporate Africa 2013

10th – 13th March 2014 Barcelona, Spain Tel: +32 2 213 18 60 events@ewea.org www.ewea.org

3rd Arctic Region Oil & Gas Conference

25th – 26th February 2014 Stavanger, Norway Tel: +44 (0) 20 7596 5076 evgeny.makushin@ite-events.com www.ar-oilgas.com

21st – 23rd January 2014 George R. Brown Convention Centre Houston, Texas Tel: +1 713-952-9500 conference@zeusintel.com www.worldlngfuels.com

5th – 8th May 2014 Houston, Texas Tel: +1 972-952-9494 meetings@otcnet.org www.otcnet.org

Germany Energy Industry

21st – 23rd January 2014 InterContinental Berlin, Germany Tel: +49 (0)2 11.96 86 – 34 33 daniela.nelles@euroforum.com www.energy-industry-conference.com

Switzerland The Africa CEO Forum

17th – 19th March 2014 Geneva, Switzerland www.theafricaceoforum.com

OCEANIA

World Economic Forum Annual Meeting

22nd – 25th January 2014 Davos, Klosters, Switzerland Tel: +41 (0) 22 869 1212 contact@weforum.org www.weforum.org

Australia 20th International AIDS Conference 20th – 25th July 2014 Melbourne, Australia Tel: + 41 22 710 0800 info@aids2014.org www.aids2014.org