N° 111 • APRIL-MAY-JUNE 2020
www.theafricareport.com
THE AFRICA REPORT
9-10 March 2020
ABIDJAN
Exclusive ranking of the TOP 50 Africans shaking up the status quo
Disruptors INTERVIEW
QUARTERLY EDITION • N° 111 • APRIL - MAY - JUNE 2020
Chimamanda Ngozi Adichie “So many problems trace back to colonial policy” THE SAHEL SQUEEZE Insurgents’ quick march across West Africa Angola’s President João Lourenço is breaking the mould
REBOOTING CAPITALISM From rent seeking to business building
JEUNE AFRIQUE MEDIA GROUP INTERNATIONAL EDITION Algeria DA610 • Belgium €7.90 • Canada CA$12 • Denmark DK80 • D.R.C. US$10 • Ethiopia Birr200 • France €7.90 • Germany €7.90 • Ghana GH¢35 • Kenya KES1000 • Morocco DH45 • Netherlands €7.90 • Nigeria NGN2000 • Norway NK95 • Rwanda RWF7,500 • Sierra Leone LE79,000 • South Africa R75 (tax incl.) Sweden SEK100 • Switzerland FS10.90 • Tanzania TZS20,000 • Tunisia DT15 • Uganda UGX40,000 • UK £7.20 • United States US$15.99 • Zambia ZMW80 • Zimbabwe US$6.20 • CFA Countries F.CFA3,900 • Euro Zone €7.90
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Une Référence Internationale
INSIGHT /
TOM BRENNER/NYT-REDUX-REA
US President Trump and Nigerian President Buhari held a joint press conference in April 2018
US/ AFRICA
Team Trump steps on the gas
Amidst cosy talk about giving small industries in the American Midwest a helping hand to find their African opportunities, the Trump administration is ramping up its trade and diplomacy on the continent with its eyes firmly fixed on China as a strategic threat THEAFRICAREPORT / N° 111 / APRIL-MAY-JUNE 2020
77
US/AFRICA INSIGHT / Team Trump steps on the gas
Twitter chief executive officer Jack Dorsey was clearly taken with his tour of several African countries, high-fiving entrepreneurs from Accra to Addis Ababa. ‘Africa will define the future (especially the bitcoin one!). Not sure where yet, but I’ll be living here for 3-6 months mid 2020,’ Dorsey tweeted. He is late to the party. Facebook chief executive Mark Zuckerberg jogged through Lagos back in 2016. And many US companies have been present in Africa for far longer: General Electric for more than a century; Coca-Cola since 1928; Johnson & Johnson since 1932. Another wave of large US corporations has spotted the opportunity since 2000, as the African macroeconomic picture improved, driven by better governance, commodity demand from China and debt restructuring. An order in 2011 from Mozambique for 10 of Caterpillar’s top-end $6m mining trucks boosted optimism; five years later Caterpillar announced a $1bn expansion plan on the continent. Dredging company DSC Dredge was mulling over opening an office in Lagos in 2010. Fast forward a decade, and they are one of the largest operators in the Nigerian market, having commissioned the largest dredge in the country in Ikorodu in 2017. Cummins, an Indiana-based manufacturer, has a similar story. In the 2000s, the engine builder sold just $240m of its products in Africa, as part of its $13.2bn in global sales. But it decided to expand to Africa in 2010, having
$9.2bn
US trade deficit with sub-Saharan Africa in 2018, made up of $15.8bn of exports and $25.1bn of imports
78
seen Chinese competitors gain a foothold. With a joint venture in partnership with local company AG Leventis, it has today become one of the largest importers of diesel generators into Nigeria, with 10 sales outlets across the country. It has not all been plain sailing. The simplistic ‘Africa rising’ narrative, so strong a decade ago, stalled with the collapse of commodity markets. Sunny predictions about the legions of middle-class consumers of the future also clouded over.
Behind the bluster
US supermarket chain Walmart announced with great fanfare the acquisition of South Africa’s Massmart – owner of the Builders Warehouse, Makro, Game, Jumbo Cash & Carry and Dion Wired brands – in 2010. But Massmart disappointed: the investment lost 80% of its dollar value. The US retailer in 2019 dispatched a ‘fixer’, Mitch Slape, who sits on the Walmart board, to help to turn things around. Speaking at the US-Africa Leadership Forum, US commerce secretary Wilbur Ross said that US agencies were trying to boost US-Africa trade, “particularly since US exports into Africa have decreased by 32% from their high in 2014”. Ross pointed out that “many small and medium-sized companies are unaware of the US government’s export, investment and risk-mitigation tools.” Despite the ambient noise about “shithole countries” and visa restrictions, there has been a small revolution in US governmental support for companies wanting to invest in Africa. The 2018 BUILD (Better Utilizing Investments to Leverage Development) Act created the International Development Finance Corporation (DFC), a merger of two previous bodies that benefits from a doubled
THEAFRICAREPORT / N° 111 / APRIL-MAY-JUNE 2020
US FDI IN AFRICA: $50.3bn $10,424 million
Mauritius S. Africa
$7,334m $5,774m
Nigeria Ghana
$1,698m
Tanzania
$1,383m
Other
$23,672m
Caterpillar mining trucks used for phosphate mining in Togo
SOURCE: CONGRESSIONAL RESEARCH SERVICES
By NICHOLAS NORBROOK
Exports:
US TRADE WITH AFRICA (in $bn) Services
Goods
Imports:
Services
Goods
$30bn $20bn $10bn $0bn 2014
2015
2016
2017
2018
Orienting small businesses
FRANÇOIS GUENET / DIVERGENCE
$40bn
SOURCE: US BUREAU OF ECONOMIC ANALYSIS
$50bn
investment cap of $60bn. It finally started work under chief executive Adam Boehler on 2 January after Congress approved funding. Republicans in Congress also allowed the US Export-Import Bank (Exim Bank) to restart its operations in 2019. Recovering from a half decade of stasis, the Bank recently agreed, for example, to give medium- and long-term guarantees or loans of up to $4bn to help US exporters to Angola. The ‘Prosper Africa’ initiative, US President Donald Trump’s Africa policy, announced in late 2018, seeks to bring under one umbrella the work of more than 15 US government agencies that work on African trade, finance and policy. For US undersecretary of state for Africa Tibor Nagy (see interview page 83) this is a key part of the process of getting the “small and medium-sized companies from Kansas City or Oklahoma City interested in Africa. They need a single point in the US government for them to go to, to say: ‘How can I connect with the embassy in Lomé to tell me about opportunities in Togo or to tell me about the business environment?’”
It seems to be working. Yvonne Ike, the head of sub-Saharan Africa (except for South Africa) at Bank of America, notes a marked uptick in the number of inquiries from US companies about doing business in Africa. “We are planning to do an investor engagement in the US in the first half of 2020 to help address this increasing interest and the knowledge gaps on Africa that exist, particularly with US investors,” Ike says. Others are more sceptical. Blogging for the Brookings Institution, non-resident fellow Witney Schneidman writes: ‘For the larger American business community, Prosper Africa is
THEAFRICAREPORT / N° 111 / APRIL-MAY-JUNE 2020
79
US/AFRICA INSIGHT / Team Trump steps on the gas
essentially a static web page hosted on the Commerce Department website. Senior-level engagement in Africa by the Trump administration […] has been virtually nonexistent.’ Schneidman points out that the new immigration bans on Nigeria, Tanzania, Sudan and Eritrea will only increase the perception of risk for American investors. He also mentioned that members of Trump’s cabinet had been conspicuously absent from the continent. Two days later the White House announced that Secretary of State Mike Pompeo would be visiting Senegal, Angola and Ethiopia from 15-19 February.
Geopolitical tool
Trade does not exist in a vacuum, and when President Trump’s then national security adviser John Bolton introduced the Prosper Africa initiative it was in a speech larded with references to China. Bolton didn’t mince his words, saying: “China uses bribes, opaque agreements and the strategic use of debt to hold states in Africa captive to Beijing’s wishes and demands.” Since then the competition to grab some of China’s market share has hotted up, with Russia and the UK hosting African leaders for investment summits. Eric Olander, managing editor of reporting initiative The China Africa Project, says: “Insiders in DC joke that just a few years ago if a government agency wanted to get a project funded all they had to do was put ‘ISIS’ or ‘Al-Qaeda’ in the title […] Now, they say all you have to do is put ‘China’ at the top of the brief and you’ll get all the money you need for your programme.” Aside from the magnanimous mission to rescue Africans from China’s unscrupulous ways the US makes no secret that it considers China in Africa a security risk – particularly regarding Huawei’s 5G technology. The DFC “coordinates
80
458
deals raised $726m of venture capital for investment in Africa in 2018, according to WeeTracker
very heavily” with the National Security Council, Boehler told the Financial Times, and wants to offer an alternative to Huawei: “It doesn’t have to be a US-based company. But we do care quite a bit about that data being secure,” Boehler said. Beyond the security agenda, the potential to export technology has galvanised interest from US companies. The venture-capital community has been taking Africa very seriously. In 2018, some $726m was invested in 458 deals according to WeeTracker. Much of it is US money; and much of it is in fintech. Most of it is in Nigeria, South Africa and Kenya. For veteran venture-capital investor Steven Grin at Lateral Capital, which specialises in small and medium-sized businesses, there are similarities between where Africa is today and where
THEAFRICAREPORT / N° 111 / APRIL-MAY-JUNE 2020
South-East Asia was in 2013. He explains that the main difference between the two is that in SouthEast Asia venture capital has been driven by “consumer-led plays, versus more enterprise-led plays in Africa. And our focus is on enterprises, given that consumer growth is still fairly nascent.” The traditional pillar of US engagement in Africa – energy – is a mixed picture. In recent years some of the biggest US oil and gas companies have exited the continent, especially Nigeria’s onshore. New players have taken their place, however, and others are active elsewhere. Anadarko and its partners’ $25bn commitment to Mozambique natural gas sector last year will be the biggest single investment in the continent – ever. While technology and energy investment continue their rise, there is also a push to look for new opportunities. The Corporate Council on Africa, a trade body that brings together large US investors, is taking its summit to Morocco in June 2020. It is the first time the meeting will be held in North Africa.
Bechtel’s lessons learned US engineering and construction company Bechtel launched a regional headquarters in Kenya in 2017, but the future of the Nairobi-Mombasa expressway, which Bechtel was set to build, has been called into doubt. Kenya wanted a publicprivate partnership (PPP) with Bechtel raising the cash, whereas Bechtel thought the Kenyan government should borrow the money, which it could repay through revenue from tolls. “We were adamant that this was the best deal for Kenya, and we didn’t want to get involved in a public-private partnership,” says Bechtel president for Africa Jim Dutton. “So in an agreement with our CEO Brendan Bechtel and the government of Kenya last July, we agreed to put the expressway on hold.” What the episode has highlighted was the need to respond to Chinese firms that arrive with a package deal. “Unlike some of our big competitors, we can’t actually come with the money,” says Dutton. “But if you want to build an expensive piece of infrastructure in Africa, you have to provide the engineering expertise, construction expertise and the financial expertise.” The US government’s recent doubling the budget of its development finance body (see article), will help here, says Dutton. But Bechtel also works with the Chinese regularly, including on stadiums in Gabon, for whom it drew up a $25bn master plan. In the meantime, Bechtel is looking at other road projects in northern Kenya.
MESSAGE
CÔTE D’IVOIRE EMBASSY IN WASHINGTON USA
EXPERT ADVICE
Email : info@ambacidc.org. www.ambaciusa.org
Flourishing bilateral cooperation Energy, agribusiness, healthcare,
to Côte d’Ivoire in July 2018 the US Un-
drinking water, education... these are
dersecretary of Commerce,Gilbert Kaplan,
all sectors that testify to the dynamic
signed an agreement for improving the
cooperation between Côte d’Ivoire and
competitiveness of customs services and
the United States of America.
a grant protocol for financing feasibility
This flourishing cooperation is multi-
studies in the energy sector.
faceted. One of the latest major actions
At the end of 2018, Côte d’Ivoire’s Minister
His Excellency Mamadou Haïdara,
Ambassador Extraordinary and Plenipotentiary of the Republic of Côte d’Ivoire to the United States of America
to date is the convening of the AGOA
of Foreign Affairs, Marcel Amon-Tanoh,
Lastly, in January 2020, my meeting
(African Growth and Opportunity Act)
and the US Secretary of Commerce,
with Kimberly A. Reed, Chairman and
summit in August 2019. Added to this is
Wilbur Ross, signed a memorandum of
President of the Export-Import Bank of
the signing of several memorandums of
understanding in Washington regarding
the United States (EXIM), focused on
understanding,amounting to 2,724 billion
the implementation of various projects
the conditions for the establishment of a
CFA francs earmarked for the implemen-
(agriculture, industry, transport and
partnership for the import of USA-made
tation of various projects. During his visit
energy).
goods and services to Côte d’Ivoire.
Understand Africa’s Tomorrow, today N° 111 • APRIL-MAY-JUNE 2020
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INTERVIEW
Chimamanda Ngozi Adichie “So many problems trace back to colonial policy” THE SAHEL SQUEEZE Insurgents’ quick march across West Africa Angola’s President João Lourenço is breaking the mould
REBOOTING CAPITALISM From rent seeking to business building
JEUNE AFRIQUE MEDIA GROUP INTERNATIO ONAL EDITION Algeria DA610 • Belgium €7.90 • Canada CA$12 • Denmark DK80 • D.R.C. US$10 • Ethiopia Birr200 • France €7.90 • Germany €7.90 • Ghana GH¢35 • Kenya KES1000 • Morocco DH H45 • Netherlands €7.90 • Nigeria NGN2000 • Norway NK95 • Rwanda RWF7,500 • Sierra Leone LE79,000 • South Africa R75 (tax incl.) Sweden SEK100 • Swittzerland FS10.90 • Tanzania TZS20,000 • Tunisia DT15 • Uganda UGX40,000 • UK £7.20 • United States US$15.99 • Zambia ZMW80 • Zimbabwe A Countries F.CFA3,900 • Euro Zone €7.90 US$6.20 • CFA
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US/AFRICA INSIGHT /
Business is high on Washington’s agenda. Here are some key actors keen to strike up deals between US firms and African operators and policy-makers MELISSA GOLDEN/REDUX-REA
Adam Boehler Money man
ALL RIGHTS RESERVED
Businessman Adam Boehler was appointed the first CEO of the US International Development Finance Corporation (IDFC) in 2019. The IDFC’s goal is to advance US foreign policy by countering the growing influence China and Russia are gaining through project finance in developing countries. Together, the IDFC and AfDB aim to invest $2bn and mobilise another $3bn from the private sector in Africa.
James Quincey
Sugar-sweet deals
James Quincey has been the CEO of Coca-Cola since 2017 and became chairman of the board in 2019. After his visit to Africa last year, when he met with many top business people, including Aliko Dangote, he said: “Having operated in Africa for over 90 years as a local business in every country, we believe Africa is a region that will increasingly influence the growth trajectory of our global businesses in just a few years.”
Darren Woods
Florizelle Liser
Under Darren Woods’ leadership since 2017, ExxonMobil is said to be planning to sell up to $25bn of oil and gas fields in Europe, Asia and Africa in its biggest asset sales for decades, seeking to free up cash to focus on a handful of mega-projects. This doesn’t mean, however, that ExxonMobil is leaving Africa completely.
Florizelle Liser is the third CEO of the Corporate Council on Africa – the first woman to take on this role. The CCA is the leading US business association focused on connecting business interests in Africa, putting member firms in touch with government and business leaders. This year, CCA will host the 13th US-Africa Business Summit in Marrakech, health and ICT a focus under Liser’s leadership.
Continental connector
Kimberly Reed Export-minded
Attorney by trade, Kimberly Reed is the first woman chairman and president of the ExportImport Bank of the United States (EXIM), a position she has held since 2019. EXIM is an independent federal agency that facilitates the export of US goods and services. Under her leadership, EXIM is backing major gas projects in Mozambique, which is EXIM’s largest deal ever.
CORPORATE COUNCIL ON AFRICA
Mega focus
81
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US/AFRICA INSIGHT /
INTERVIEW
Tibor Nagy VINCENT FOURNIER/JA
‘For the US, there is a global power competition’ The US assistant secretary of state for Africa talks to The Africa Report about China, global competition and the drive to get more US companies active on the continent
Africa, to bring the various US government agencies that have something to do with Africa, thanks to technology, under the digital umbrella.
By NICHOLAS NORBROOK
How does that help US companies connect to opportunities on the ground? The other side of Prosper Africa is every single one of our embassies. We have formed deal teams, which means every single person in the embassy from the first tour officer to the ambassador is going to give a priority to increasing trade and investment, which means helping the companies that are looking for deals. It also means engaging with the host government.
TAR: How does the administration want to encourage the US private sector to engage in Africa? TIBOR NAGY: They’re looking throughout the world for opportunities. So how do they end up in Africa? That’s where African leadership has a responsibility of putting in place the type of environment which is welcoming to businesses that believe in a fair process, that believe in the sanctity of contracts, that don’t believe in paying people off to get the job. But then these companies of ours create employment. They’re very responsible. They take care of the environment. They don’t smuggle out ivory. They follow the rules. How will you convince small and medium-sized businesses in places like Kansas City to actually get involved with the continent? And not only Kansas City [...] I totally agree with you. I’m Hungarian, but my US home is west Texas. And I always use that as an
example with folks: I would like to get the west Texas companies, Kansas companies, the small and medium-sized enterprises [active in Africa] because at the end of the day, they’re the ones that create the most business. And this is where the next initiative comes in, which we call Prosper Africa. For decades, those of us who took the continent seriously would go visit ministers of finance. I remember in a couple of countries, I would do that and say: ‘You need to introduce a guichet unique [one-stop shop].’ Well, the sad truth is that the US government never had a guichet unique for us businesspeople wanting to go to Africa. You will get small companies from Kansas City or Oklahoma City to be interested in Africa if there’s a single point with the US government for them to go to to see it’s okay. ‘How can I connect with the embassy in Lomé, to tell me about opportunities in Togo or to tell me about the business environment?’ That’s the whole concept behind Prosper
Some African leaders say that while there is Prosper Africa, the security or competition prism comes first for Washington. For the US, there is a global power competition. And there are many facets. It’s a very complicated relationship with China. On the other hand, our leadership has made some very frank and direct speeches regarding the various facets of the global power competition, and that is being played out everywhere – most especially in places like Africa.
THEAFRICAREPORT / N° 111 / APRIL-MAY-JUNE 2020
83
MESSAGE
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U.S. African Development Foundation (USADF) 1400 Street NW, Suite 1000 Washington, DC 20005 Email: info@usadf.gov
The U.S.African Development Foundation’s community - led development model Creating pathways to prosperity for underserved communities in Africa
W
hen the United States African Development Founda-
tion (USADF) was established by the U.S. Congress in 1980, it set out to create a different development model that focused on underserved and marginalized populations,was locally-driven, and would move African grassroots communities out of poverty and onto pathways to prosperity.
Starting operations in 1984, when the early chapters of Africa’s growth story were first being written, USADF decided to do development differently to make inclusive growth part of that story. With a bottom-up approach and focus on African-owned and led grassroots small- and medium-sized enterprises, agribusinesses, and entrepreneurs, USADF meets communities on the ground to understand their needs and puts them in the driver’s seat of their development. USADF provides seed capital of up to $250,000 and technical support to African enterprises and entrepreneurs that are addressing some of Africa’s biggest challenges around food insecurity, insufficient energy access, and unemployment. Over the last five years (2015-2019), throughout Africa but with a focus on the Great Lakes, Horn, and Sahel regions, USADF directly invested more than $114 million dollars in over 1,000 African-owned and operated entities and impacted over four million lives. USADF intervenes in the first phase of development and, through its participatory process and network of local
implementing partners, takes projects from start up to scale up, pulling the solutions out of the community so grantees design the solutions, deliver the intervention and own the results. USADF investees are attractive to other funders that can continue to scale them,with a pipeline to follow-on funding that leads to trade and investment, in line with the African Growth and Opportunity Act (AGOA). Central to the success of the USADF development model and mandate is its focus on African institution building. USADF’s 100% African local implementing partners work with every entrepreneur, cooperative and smallholder farmer USADF funds. These local implementing partners are trained and empowered to provide technical and financial management, business advisory, capacity building, and other assistance. USADF promotes the development of these African institutions so they can grow, man-
Jack Leslie,
C.D. Glin,
Chairman, USADF
President and CEO, USADF
age broader portfolios, and become implementers for other locally-driven development efforts. USADF believes greater and broader development success in Africa requires innovative partnerships and synergistic approaches. The Foundation expands and extends its development impact and leverages U.S. taxpayer dollars by partnering with African governments, other U.S. government agencies, and private corporations and
foundations. Over the past five years, USADF received over $12 million in matching funds from African national and sub-national governments. Currently, USADF has active co-funding partnerships with eight African governments that have pledged $40 million in funds for the next five years, which USADF will match. USADF considers this a clear sign that African governments value USADF’s development model, expertise, and dedication to African institution building. As a U.S. Congressionally-funded Foundation, USADF aligns its work with U.S.government priorities in Africa. USADF’s focus on fragile states and emphasis on improving livelihoods, increasing incomes, creating jobs, and fostering self-reliance contribute to lasting peace, security and economic stability in Africa. USADF will be a key implementer of the Global Fragility Act
for U.S. companies, particularly those providing off-grid energy inputs and technology to African energy enterprises. USADF’s investments in African solutions today result in stronger trading partners for the United States tomorrow. USADF’s work with grassroots agricultural organizations and smallholder farmers to promote economic growth
of 2019, which will entail the first-ever U.S. government strategy to tackle violence and instability around the world. USADF is also an integral component of the whole-of-U.S.government Women’s Global Development and Prosperity (WGDP) initiative. Under W-GDP, USADF will provide up to $10 million in catalytic funding and technical support to approximately 1,000 African graduates of the Department of State’s Academy for Women Entrepreneurs.
advances the objectives of the U.S. government’s Feed the Future (FtF) initiative and has improved the food security of 3 million people in Africa. USADF has been instrumental in moving African communities and organizations from food aid dependency to self-sufficiency, investing $61 million over the past five years in 573 enterprises in 20 countries, including in refugee settlement areas, to develop key crops such as cashews, coffee, maize, rice, shea, and soybeans.
The Foundation is also an active member of the U.S. government’s Prosper Africa initiative that will increase twoway trade and investment between Africa and the United States. Several USADF investments generate business
By funding African renewable energy entrepreneurs working on off-grid solar, wind, hydro, and biomass solutions in their communities, USADF contributes to the U.S. government’s Power Africa initiative to end energy poverty.
Over the past five years, USADF has launched several renewable energy funding programs – including the Women in Off-Grid Energy, the Smart Communities Coalition Off-Grid Energy (focused on refugee settlements), and the Sahel-Horn Off-Grid Energy challenges – and invested over $9 million in 90 off-grid energy enterprises. General Electric provided nearly $1 million to assist USADF in expanding energy connectivity to rural communities in nine African countries. Under its entrepreneurship portfolio, focused on youth and women, USADF has invested $7.4 million in job training and job placement for over 7,000 Somali youth and women, helping to increase incomes from $50 to $300 a month. USADF is expanding this model to the Democratic Republic of Congo, Nigeria, South Sudan, and Uganda. In support of the U.S. government’s Young African Leaders Initiative (YALI), USADF, in partnership and collaboration with Citi Group and Citi Foundation, has also provided $4.7 million in financial and technical support to 225 youthled entrepreneurial ventures in 35 African countries. USADF puts people and their needs, challenges and desires at the forefront of its strategic approach and development model, with the firm conviction that peace, security and stability lead to better trade and investment opportunities that benefit both the United States and Africa. USADF is open for business and welcomes opportunities to expand its partnerships with African governments, the U.S. interagency, and private corporations and foundations to impact even larger number of Africans with solutions to their communities’ most pressing challenges.