BT 1st Edition 2019

B U S I N E S S T I M E S A F R I C A M AG A Z I N E

2 0 1 9 / V O L . 1 1 / N O .1

A ROYAL PEACE: FOR TWO DECADES THE ASHANTI KING OTUMFUO OSEI TUTU II HAS GUIDED HIS KINGDOM WITH SOLOMONIC WISDOM

2 0 1 9 / VO L . 1 1 / N O. 1 South Africa............. R29.00 (incl. VAT), Uganda ................... Ush6000.00, Botswana .................30 Pula, Ghana .......................GHC10.00

Nigeria.......... N500.00, Zimbabwe .............z$3.00 Kenya.................. Ksh220.00 Other Countries ..........US$4.50

M E S SAG E FRO M B RIG HT OWUSU AM O FAH , CEO O F APP O LO N IA CIT Y

“If your actions inspire others to dream more, learn more, do more and become more, you are a leader” – John Quincy Adams As we celebrate the joyful 20th anniversary of the enstoolment of Otumfuo Osei Tutu on the Golden Stool, we thank the Almighty God for the true leader He’s made you.

We at Appolonia City are appreciative of your wisdom and immense contribution to Asanteman and Ghana at large. Together with our clients and all stakeholders, we take this opportunity to say thank you and wish long-life to you, Nananom and Asanteman.

Congratulations

EDITOR'S NOTE A disturbing trend is emerging in Africa, a rise of authoritarianism since Donald Trump became the president of the United States of America.

Writing on her blog on politics, Fatemah Alzubairi notes that since his election as the leader of the free world in 2016, Trump has disregarded many democratic norms and practices. Particularly, he has ‘harshly criticized the leaders of other democracies, praised dictators, pardoned political allies, called for the arrest of political opponents, threatened to sue journalists over critical coverage, and exacerbated existing racial tensions by scapegoating minorities and immigrants. But his declaration of emergency in order to obtain funding for a wall along the US-Mexico border, which Congress had previously denied him, is particularly troubling.’

Through out its history, independent Africa has had its fair share of strong men: Robert Mugabe, Yoweri Museveni, Idi Amin, Paul Biya, Muammah Gaddafi, Omar al Bashir, Mobutu Sese Seko, Charles Taylor, Samuel Doe and most leaders of post independence Nigeria among others.

Democracy has its leading lights, such as Ghana, Botswana, Namibia and South Africa. But in recent times democracy has been in retreat. Countries are holding elections because polls offer legitimacy and confer the leaders the right to rule that is acknowledged and accepted. Africa is seeing many of its leaders choose ‘guided or pseudo-democracy,’ where elections are held, even regularly but the outcome is predetermined to keep the rulers in power in perpetuity or until they put others of their ilk in their stead.

Uganda, Rwanda, Zamia and Zimbabwe fall into this category. After a coup toppled political chess master Mugabe after 37 years of unchecked power, many hoped his one-time lieutenant Emmerson Mnangagwa would steer the country towards a more democratic path, away from the pariah state it had become. That proved to be false hope and shootings of civilians during demonstrations against his regime in August last year and January this year confirmed what many have been saying: that Mnangagwa was a worse reincarnation of Mugabe.

Mnangagwa’s short rule so far has showed the features of a classic dictator: installation of loyalists in positions of power, promotion of family members, fiddling with the judiciary, a narrow inner circle of trusted people, a reluctance to reform and constant reference to defective laws to defend his indefensible action.

Then there is Tanzania, one of Africa’s most stable democracies which has been steadily sliding toward authoritarianism. A popular figure in his early days in office, president John Magufuli has for many months now been targeting his political opponents, attacking journalists, and closing newspapers and other media seen as hostile to his regime. His assault on free speech and political rights has been unrelenting.

Zambia has been in steady decline since Edgar Lungu became president. In 2017, the Conference of Catholic Bishops – one of the most influential bodies in the country – said Zambia doesn’t deserve to be called a democracy and under Lungu’s presidency, had become a dictatorship.

Most of these leaders started out as populists! Africa has a long way to go to build a sustainable democracy.

Alfonce Mbizwo

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CONTENTS 2019 / VOL. 11 / NO. 1

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8 Entrepreneur 10 How a Japanese system can help African cities adapt to climate change 12 The Monetization of Garbage 13 Why Is Malaria on the Rise Again?

14 The Arab Spring’s Second Chance 16 Affordable housing makes perfect business sense 19 Setting architecture trends in Ghana one building at a time 19 Ghana’s mPharma buys Kenya chain

A ROYAL PEACE: For two decades the Ashanti King Otumfuo Osei Tutu II has guided his kingdom with solomonic wisdom

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Why Foreign Investors are Lukewarm about Putting their Money in West Africa

Will political tensions put Côte d'Ivoire's recovery at risk?

Despite the immense contribution of the Western region to the African economy, as well as its promise of huge potential returns, Africa’s Northern, Southern, and Eastern regions have more or less been the go-to for foreign investment on the continent.

With growth of 7.4% in 2018 and subdued inflation, the west African country’s prospects appear good. It has, after all, been cited among the fastest growing economies in the world every year for most of the past decade.

However, Côte d’Ivoire’s present is bookended by an unstable past and an uncertain future,

20 Ghana’s Fintech KudiGO secures seed money for expand 28 Mining overhaul fails to dent Tanzania's investment appeal 32 Malawi finance chief hopes for marketing push 33. FirstBank CEO looks to blend experience and youth in Nigeria 34. The scramble for Africa 2.0 36. Japan seeks Africa fillip 40. Zimbabwe’s cattle industry on the rebound 43. Economic empowerment of women good for all 45. Pendulum is swinging towards creeping restrictions across Africa

ENTREPRENEUR

entrepreneur.

From Ghana to Africa DEREK WILLIAMS IS THE DIRECTOR OF WILLIAMS MINING WITH OVER 8 YEARS’ EXPERIENCE RECRUITING FOR THE MINING INDUSTRY ACROSS AFRICA. HE SPEAKS TO BUSINESS TIMES AFRICA MAGAZINE EDITOR, ALFONCE MBIZWO

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ENTREPRENEUR: DEREK WILLIAMS to elders). Whilst we venture, we must give back to Africa. Givers often prosper on this continent.

With a mining network built over 3 generations, where and how has the company grown?

What exactly are you doing in Ghana and how are you doing it.?

Williams Mining (WM) improves mining companies across Africa by providing these companies with great people, through recruitment.

By doing so, we help companies making the critical choice to acquire and retain great talent, which will help them to be efficient and effective.

The company was founded in London by me, Derek Offei Williams. Williams Mining actually had its inceptions from childhood through stories from my grandfather, a 3rd generation Ghanaian miner. The company started with the aim to improve health and safety standards at mining companies by hiring great and efficient people.

Today Williams Mining’s expertise is to recruit for mining leadership across Africa by delivering both strategic and mindful solutions.

What are the opportunities?

CHANGE. Anyone with the mindset to influence change, has the opportunity to challenge the status-quo. Africa right now is subject to that change. With the influence of technology, globalisation and progressive governments this has created enormous opportunities for those who are bold enough to venture into the landscape of Africa. I am even an example of this, I have been fired three times within the recruitment industry, down to my last £500 overdraft, but when exploring for places that needed better solutions and improvement, my eyes opened to the opportunities that the Continent and in particular the mining industry unearthed and decided to start a company from my bedroom.

Africa offers a unique landscape for business.

With 54 countries on the Continent, and over 1500 languages spoken, the continent offers a vast opportunity like no other. Cultural understanding is key to cracking Africa (especially giving homage

Our mining network began in 2011 from scratch.

We've had to work extremely hard to know the best people in the industry whilst matching cultural fits for both parties. Today we have a network that consists of just over 15,000 mining professionals globally. We actively recruit in 18 countries across the African continent with experience across Gold, Copper-Cobalt, Mineral Sands, Bauxite, Iron Ore, Lithium and Potash.

We have recruited for mining projects ranging from $80m - $10bn. Operationally, our candidates have provided real economic value to our clients increased production, reduced cost of operations and ZERO Harm policy contributing towards sustainable mining. All of this has been achieved by identifying the right people for the right companies.

Whilst Africa is our core focus, we've been really pleased with our external recruitment activities in Brazil, Mexico & Oman. The growth I'm proudest of as a business owner, is the daily growth of my colleagues and myself, from an entrepreneurial viewpoint. Our curiosity is what has binds us to explore the possibilities of Africa and ourselves.

Any impediment and solutions?

There’s always impediments to all industries. Be bold, be curious and make decisions. You only miss the shots you don’t take. Here are a some obstacles the African mining industry has faced in recent times. Ensure to list them and provide the solution, so doing you show yourself as the expert.

• Lack of exploration activities; this is the life blood of the industry. Commodities are not replenishable, the need for discovery is paramount for the industry. Mining companies who stand the test of time, invest heavily on their exploration budget.

• The need for improved governance; too many times we’ve seen governments change policy over night. There must be a planned continuity of policy and greater transparency. Some governments, must be more judicious when it comes to investment and other projects to ensure than the latter benefits the local population.

• Volatile Commodity prices can scare away investors and produce diminished returns for shareholders and external stakeholders. It is said ‘rough seas make great sailors’. The same can be said for mining companies who ride a downturn, and develop a better economic efficiency.

2019 BUSINESS TIMES AFRICA | 9

OPINION

How a Japanese system can help African cities adapt to climate change // By Seth Asare Okyere, Matthew Abunyewah, Stephen Kofi Diko

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OPINION: CLIMATE CHANGE

Seth Asare Okyere Assistant Professor, Division of Global Architecture, Graduate School of Engineering, Osaka University

Matthew Abunyewah Sessional lecturer, School of Architecture and Built Environment, University of Newcastle

Stephen Kofi Diko Adjunct Instructor and PhD Candidate in Regional Development Planning, University of Cincinnati

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ub-Saharan Africa is already experiencing the realities of a changing climate – and the situation is only going to get worse.The reasons for this are complex. And they’re exacerbated by deficits in the region’s infrastructure, services and socio-economic dynamics. Urbanisation is another major factor. The continent’s current urban population is only 43% – but it’s rising fast. About 10 million people move into towns and cities each year. It’s a well established fact that good climate change adaptation strategies can reduce urban areas’ vulnerability and strengthen cities’ resilience.

But there’s a problem.

Global agendas acknowledge the critical role that urban adaptation plays towards sustainable development and poverty reduction. However, they focus on national governments and to a lesser extent urban governments. Citizens and civil society end up in subsidiary roles. This flies in the face of established evidence: urban adaptation to climate change is more effective where local citizens participate and own the process.

How can this participation and ownership be nurtured? Our researchexamined the conditions that can support citizen led urban climate adaption in Sub-Saharan

Africa through the lens of “machizukuri”.

This is a Japanese term which literally translates as “community building”.

It sees citizens and residents take ownership of the issues that affect their local environment. We assessed Japan’s successful Machizukuri system to unearth the key principles needed to engage urban residents in climate adaptation in urban Africa. We found that there is potential for citizen-led urban adaptation in sub-Saharan Africa. Learning from the Machizukuri system, we can improve existing pockets of local activities, like tree planting and recycling, and identify new ones for climate adaptation.

The research The Machizukuri system is considered to have emerged from Japan’s citizen environmental movements in the 1960s and 1970s. In essence, this system underlines two critical points. First, that national governments must prioritise the role of citizens in urban climate adaptation.

And second, the state should demonstrate commitment by actively working with citizens, community organisations and other stakeholders. By studying the system, we were able to draw out four key points. These could be considered by governments in sub-Saharan Africa that want to centralise the role of citizens in urban climate change adaptation.

First, there’s the need for support networks and cooperation. Support networks include community groups or associations, civil society, local government, business organisations, researchers and professionals. Cooperation among these groups can strengthen technical support.

It can also build local adaptive capacity and provide legitimacy to citizens’ role. Secondly, urban climate change adaptation planning and processes must integrate existing citizen activities. This is crucial for legitimacy. It is a prerequisite to build trust and cooperation between communities and local government or related agencies. It also promotes a sense of value. Local people come to feel that their opinions and initiatives matter.

Thirdly, social capital in local areas could be harnessed to support citizens’

collective activities for urban climate change adaptation. Strong social ties and relationships in local urban communities can be highly beneficial. The Yasu city of Shiga prefecture in Japan offers a good example. Its local government worked with the leaders of residents’ networks to draw attention to climate change issues and communicate with individuals within these networks. This made it possible for different residents’ groups to organise around various interest areas. They then initiated various environmental activities.

These included restoring the city’s green areas, cleaning its rivers and encouraging recycling. Harnessing social capital in this way also fosters collective organising.

It keeps communities enthusiastic about what they’re doing. Finally, the extent to which citizen-led urban climate change adaptation could be prioritised depends on the availability of resources – especially financial support. Access to regular finance is important for sustaining citizenled urban climate change adaptation.

Governments that are prepared to bring citizens on board in a meaningful way must also be willing to provide at least some of the money they need to be sustainable and successful.

Applications in Africa There are already some examples of citizen engagement in climate adaptation in a few African cities.Malawi, Kenya, Tanzania and Zambia are tackling seasonal drought and its effects by forming community networks and associations.

In some cases, governments have noticed these initiatives and partnered with communities. They’ve provided technical and financial support to successfully implement the projects. This suggests that the Machizukuri system, or variations of it, hold great promise for African cities.

As Africa continues to experiment with different ways to ensure adequate citizen engagement in climate adaptation, the Machizukuri system offers a useful blueprint. Citizen-led action can make all the difference for cities trying to adapt to the realities of climate change. - The Conversation

2019 BUSINESS TIMES AFRICA | 11

OPINION

The Monetization of Garbage //BY STEPHEN NWALOZIRI

Stephen Nwaloziri, founder of The Greenie Project, is a program associate at the Berea College Forestry Outreach Center.

A

s a child growing up in Lagos, Nigeria, in the late 1990s, I remember women roaming through my community and chanting in Yoruba, “onigo de o! Anra bata rubber ati ayo t’on jo.” This translates as “The bottle peddler is here! We buy rubber sandals and leaky (aluminum) pots.” Some families would separate their waste, because they could give some of it to these women for cash.

There are far fewer of these peddlers nowadays, perhaps because bottling companies are no longer recycling the bottles that the women gather. But a large-scale effort along these lines to monetize waste in Lagos, if properly coordinated and funded, could potentially have a huge impact on the city’s garbage problem. And what works in Lagos could hold lessons for many other cities – and not only in the developing world.

In Lagos, action is urgently needed. The city has a population of about 22 million and, as the World Bank has highlighted, is heavily polluted. Especially in poorer areas, residents who can’t afford to pay for waste collection come out in the dead of night to dump their garbage on the streets or in the water. As a result, the city’s slums are littered with paper, household waste, and plastics.

By outsourcing most of the actual waste collection and management to some 375 private companies, the Lagos Waste Management Authority, an arm of the Lagos State government, has helped to reduce waste significantly. But much more can, and must, be done. Unless people are given incentives to monetize their garbage and minimize the amount that reaches landfills, the pollution problem will continue to fester. Three

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options in particular look promising. For starters, Lagos could introduce a green-exchange program like the one established in the city of Curitiba in Brazil. There, residents bring their waste to designated local centers in exchange for bus tickets or food.

Many workers in Lagos are already switching from cars to staterun commuter buses because they cannot afford the cost of fuel.

If poorer people in particular could receive bus tickets for their waste, life would be easier for everyone. There would be less garbage on the streets, roads would be less clogged, and people wouldn’t need to wait for waste trucks to get rid of their rubbish.

In addition, households would be more likely to separate waste if the city gave food stamps or fruit to those that recycled a certain amount of metal, clean plastic, or oil waste, for example.

Second, Lagos could reduce its plastic waste by working more closely with bottling companies and other manufacturers.

This could involve public-private partnerships that require each company to operate a recycling center where consumers can bring used plastics. Citizens will feel motivated to recycle their plastic waste at centers bearing recognizable brand names, especially if a reward program is involved. No bottling companies currently have recycle-for-reward programs in the Makoko community of Lagos, where I grew up. Introducing such schemes would certainly help to cut the amount of plastic waste that is generated or discarded.

Lastly, campaigns to raise environmental awareness would encourage better waste management. By showcasing ordinary citizens being mindful of waste and their environment in everyday life, such efforts can inspire others to do the same.

My current work in Berea, Kentucky, at The Greenie Project, a non-profit student initiative which I started, shows how environmental awareness can spread. Our film “The Carlbergs” chronicles a local family that hosts huge contra-dance events in their home in a sustainable way – by using silverware and ceramic plates instead of disposable plates and cutlery, and by recycling. The film has inspired other groups and small businesses in the community, such as Berea Coffee and Tea, to be more sustainable. Similarly creative and locally relevant approaches would work well almost anywhere. That includes Lagos, where the waste problem hits the poor particularly hard.

To address it, we should create the right incentives, as the bottle peddlers in my part of the city did two decades ago. Monetizing waste will encourage poorer communities to participate, and awareness campaigns can help to show just how easy it is to be green. The result will be a cleaner, more livable city that serves as an example for others to follow. - Project Syndicate

OPINION

Why Is Malaria on the Rise Again? // BY FREDROS OKUMU

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osquitoes are often described as the most dangerous animals on earth, because the diseases they transmit – including malaria, dengue, and Zika – cause more than a million deaths annually. But strategies for mitigating these threats remain far from adequate. Consider malaria, which, according to the World Health Organization, infected over 200 million people in 2017, killing 435,000. Until the 1940s or so, antimalaria strategies rested on three pillars: better environmental management, improved housing, and stronger health systems.

Accounting for the mechanisms of malaria transmission (first described over 100 years ago), public-health authorities focused on minimizing the proliferation of the Anopheles mosquito, people’s exposure to it, and their access to appropriate medical care. The countries that adopted this approach achieved great progress – and in most cases, have remained malaria-free. In the United States, for example, malaria deaths declined by 75% between 1920 and 1939. Then, in the 1940s, the arrival of the highly effective insecticide Dichlorodiphenyltrichloroethane (DDT) changed everything. DDT quickly became the cornerstone of malaria-control strategies, including the first attempt to eradicate malaria globally. Thanks to its widespread use, substantial progress on malaria was made in Europe, the Americas, the Caribbean, and some parts of Asia.

In Africa, however, the DDT-based malaria campaign largely never got off the ground, owing to a poor logistical capacity, ineffective public-health administration systems, or a lack of resources to scale up use. Starting in the 1960s, malaria cases skyrocketed across the continent. But the world started paying attention only in the late 1990s, when malaria was causing over one million deaths annually and contributing to economic stagnation through lost labor productivity. Finally, in 2000, African heads of state and government gathered in Abuja, Nigeria, to confront the emergency, pledging to halve malaria mortality by 2010.

Faced with limited funding and capacity, however, governments handed over much of the responsibility for fulfilling their commitment to external donors, bilateral partners, and non-governmental agencies. The strategies that emerged emphasized distributing easy-to-use commodities – including insecticides, insecticide-treated mosquito nets, and artemisinin-based antimalarial medicines – and expanding access to prompt diagnosis. From 2000 to 2015, the number of malaria deaths in Africa was halved and 750,000 malaria cases were averted. Experts credit insecticide-treated nets, house spraying, and artemisinin-based treatments with 80% of these gains. But, despite its advantages, there is a serious problem with this approach: it has fueled the rise of a massive malaria-control industry that is increasingly disconnected from the core mission of keeping communities healthy.

Fredros Okumu, a mosquito biologist and public-health expert, is Director of Science at Ifakara Health Institute in Tanzania.

The most affected African countries – Burkina Faso, Cameroon, Democratic Republic of Congo, Ghana, Mozambique, Niger, Nigeria, and Uganda, which together account for 60% of the global malaria burden – regularly import the bed nets, insecticides, and medicines being promoted by industry players. Yet malaria is on the rise again, with the number of new cases rising in 16 African countries by more than 100,000 from 2016 to 2017, according to the WHO. It does not help that “commoditization” of malaria control has also contributed to the depletion of practical malaria expertise in endemic countries. As the world pursues the Sustainable Development Goals – which include the target of ending the malaria epidemic by 2030 – it must rethink its approach. If global anti-malaria campaigns regress, malaria cases could surge by up to 74% by 2030. But even if commodity-based strategies are maintained, the result will be only a marginal reduction of global malaria incidence in 2030, relative to 2016. That is why, as major international partners continue to advance the commodity-based approach, African governments and other partners should be pursuing a longterm strategy focused on building resilience. They should be localizing the manufacture of mosquito nets, upgrading housing (such as by screening windows and closing eaves), ensuring that health systems have the capacity to identify and treat new malaria cases, and expanding health education in schools and communities. Given that malaria disproportionately affects the poorest households, there is also a need to focus on boosting food security and, more generally, on improving household economies. Since these programs are not typically managed by health ministries, alliances must be built across relevant sectors. Such a holistic approach will be crucial to progress on the entire SDG agenda. To fund these efforts, countries should take advantage of domestic resources, subsidies, tax rebates, or other innovative financing mechanisms, such as a $10 malaria levy paid by international travelers visiting endemic countries.

As progress accelerated, the burden on national health systems and economies would be reduced, freeing up more resources to support further progress on combating malaria and in related areas. Commodities can continue to deliver some short-term gains in the fight against malaria. But the only way to defeat the disease once and for all is with a long-term, resilience-building approach. - Project Syndicate

2019 BUSINESS TIMES AFRICA | 13

OPINION

The Arab Spring’s Second Chance // BY ISHAC DIWAN

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Ishac Diwan is a visiting professor at Columbia University's School of International and Public Affairs, and holds the Chaire d’Excellence Monde Arabe at Paris Sciences et Lettres.

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ass protests in Algeria and Sudan have recently removed two aging autocrats, ending 20 and 30 years, respectively, of absolutist rule. In both countries, the insurgents are now locked in negotiations with the army, the de facto managers of a transition to a new political order. The outcome of these power struggles will help to determine whether Algeria and Sudan become more democratic and prosperous, or instead add to a decade-long chain of disappointed hopes in the region. The demonstrators seem fully aware of the dangers of the “Egyptian trap,” whereby a general who takes charge of a supposedly interim government ends up becoming president for life. Egypt’s Generalturned-President Abdel Fattah el-Sisi is hoping to do precisely that by means of a constitutional amendment that could keep him in power until at least 2030. Yielding too much power to the army would not only hurt the Algerian and Sudanese protesters’ democratic hopes. It would also raise the risk that the generals continue to consume an inordinate share of scarce public resources, while blocking urgently needed economic reforms.

The legacies of the past will weigh heavily on the future. Both countries were buoyed by the oil boom of the 2000s, which reinforced aging regimes grip on power. Both failed to use oil revenues as a lever for economic development. Instead, their leaders relied on patronage and repression, reserving the lion’s share of public expenditure for their political base, and building up large security forces to guard against insurrections.

While the oil bonanza helped the Algerian and Sudanese governments to expand their armies, they were reluctant to cut spending during the subsequent bust. According to the Stockholm International Peace Research Institute (SIPRI), military expenditures in these two countries (as a share of total government spending) were among the highest in the world in 2017, rivaled by countries like Saudi Arabia and Iran. This military splurge jeopardized macroeconomic stability and transferred a disproportionate share of the burden of fiscal adjustment onto the rest of the population.

In Sudan, the secession of the country’s south in 2011 led to a dramatic fall in oil revenues – from the equivalent of 16% of GDP in 2007 to less than 1% in 2017. With external financing scarce, Sudan had to adjust sharply. Over the same ten-year period, the government cut public expenditures from 21% of GDP to 10%. Subsidies were slashed and social services were sharply curtailed, unleashing popular fury. By contrast, the military’s share of overall expenditures climbed from 21% in 2007 to at least 31% by 2017, when government spending collapsed.

Algeria was hit later, when oil prices fell in 2014. As a result, the country’s oil revenues declined by half between 2007 and 2017.

The government has so far financed the large fiscal deficit (equal to 9% of GDP in 2017) with accumulated reserves, but this cannot continue for long. Meanwhile, military spending rose from

nearly 9% to 16% of total government expenditures between 2007 and 2017, making Algeria’s army the second largest in Africa (after that of Egypt). With government spending itself increasing sharply over the same period, Algeria’s defense budget doubled and now amounts to nearly a third of the country’s oil revenues.

Both countries’ armies will strive to protect their economic interests, which are now at risk. Speeding up growth, however, will require not only macroeconomic stability, but also greater devolution of power. This includes more competition to inject dynamism into markets, more decentralization to improve publicservice delivery, and a more independent judicial system and media. None of this can be accomplished by military regimes, which tend to centralize economic and political decision-making further, for fear of losing their fragile hold on power.

Egypt’s “military republic” exemplifies these risks. Although SIPRI estimates that the Egyptian military accounts for only 4.6% of government expenditures, the army’s wide network of enterprises makes it the country’s largest economic actor. Its budget is neither audited nor taxed, and a recent law shields its members from the reach of civilian courts.

But while Sisi has sidelined courts, labor unions, and independent media, he has been unable to quash Egypt’s opposition, resulting in a rise in extremism and violence. With political risk high, private investment in 2017 was just 6% of GDP, according to the World Bank – the lowest level since 1970. To compensate for low growth, Sisi has embraced the divisive support and influence of Saudi Arabia. In Tunisia, by contrast, freedom has increased, security has improved, and the economy has started to recover. Despite the country’s overly competitive political system and still-chaotic macroeconomic situation, private investment has risen to 18% of GDP after falling to a low of 13.1% in 2013. In Algeria and Sudan, the protesters hold strong cards. So far, the military has been trying to judge the mood, with the street holding veto power. If the protests in both countries remain massive, their armies will have to make concessions.

The game is not zero-sum. Army chiefs and demonstrators agree on the need to shrink the bloated police, semi-legal militias, overbearing secret service, and overpaid National Guard, all of which mushroomed under the previous oil-fueled regime. Cutting these groups’ size and influence would enable the military to emerge as the sole guardian of national security.

The Algerian and Sudanese demonstrators seem to have learned hard lessons from the Arab Spring. So far, they have shown an unwavering commitment to reducing the governance role of their countries’ armies. The next few weeks will show whether they can wrestle enough control from the generals to start building a more hopeful future. - Project Syndicate

2019 BUSINESS TIMES AFRICA | 15

ENTREPRENEUR

Affordable housing makes perfect business sense When he decided to pursue the affordable housing market in Kenya, his family and friends thought it was a mistake.

But more than six years later, Ravi Kohli (Managing Director of Karibu Homes) is already mulling his next project after building over 500 affordable houses on the outskirts of Nairobi.

Take us back to the beginning of this business.

Kohli and co-founders Nick Johnson and Irfan Keshavjee were looking for ways to capture the biggest housing market in Kenya: the low-income earners currently excluded from any hope of owning a home due to high prices. “In Kenya you basically have an annual shortfall of 200,000 housing units. You have a situation where 92% of the population in Nairobi has to rent. And yet you have a population that is hungry for property.

Demand outstrips supply by over ten times,” he says. Their dream was to bring the home-ownership model, mostly witnessed in developed countries, to Kenya. According to Kohli, most people in developed markets, such as the US and UK, can easily access mortgage finance and own homes. “What happens is that you end up securing your family’s financial security for generations.

These are the kind of opportunities that Karibu Homes wanted to offer in the market,” he adds.

According to Karibu Homes’ research, home ownership also adds values, such as patriotism, to the country. Home owners feel that they have invested a lot of resources and in turn they protect their investments from threats such as political violence.

“Around the 2007 election violence that was a big trigger for us, because from our research we saw that where there were high levels of home ownership, there were low levels of violence,” Kohli states. Currently Karibu Homes has launched over 500 lowcost housing units and is gearing to add another 500 units at its Athi River development. Noted. How did the company grow into the business it is today.“We had to look for land, which took a long time, and then for investors. It was a chicken-egg moment for a while. As the founders, we put in our equity first, but that wasn’t enough. We had two other investors who were ready to put in money to buy the land,” he says.

Since Karibu Homes’s first project was mostly seen as a social impact project, the founders attended impact conferences around the world where they met investors such as the Blue Haven Initiative. They also work with finance institutions like Shelter Afrique to fund their projects. “Once we bought the land, we rolled out a design that would achieve affordability. We have a standard unit, which is not tiled and the owners can finish them to their own taste but live there from day one; and enhanced units, which are fully finished. The standard units allow the customers 16 | BUSINESS TIMES AFRICA 2019

ENTREPRENEUR

Kenya’s real estate is competitive with many high-rises and complexes coming up on every corner. However, due to cost, most are financially out of reach of the majority of the population.

The Enhanced 2 by Karibu Homes, a two bedroom home with enhanced finishes.

to bring their own touch and we can lower the price,” Kohli says.

Using extensive value engineering and other cost efficiencies, the company aims to bring affordable, decent and dignified housing to Kenyans. Karibu Homes’ unit prices range from approximately US$20,000 to $50,000.

It couldn’t have been that easy. He must have faced some challenges? Being a pioneer in this field was definitely a challenge for Kohli and his co-founders. Convincing financiers to get on board with this idea was a major hurdle. Most banks gave short-term repayment conditions whereas real estate is a longterm investment. “When we started this we thought the SACCO (Savings and Credit Co-Operative) movement and the banks would offer loans to our customers to complete their purchase,” Kohli says. The banks would tell them that the only reason they were not providing mortgages in the lower end of the market was because there were no housing stock. Karibu Homes has since addressed the housing stock challenge, but the banks were still reluctant to lend long-term to the customers in this market.Kohli applauds the government’s move to set up the Kenya Mortgage Refinance Company (KMRC) that will work with SACCOs and other financial lenders to offer affordable, fixed rate and subsidised mortgages to those who are currently cut off from accessing home loans. The cost of land was also a challenging factor. “The closer you are to Nairobi the higher the prices. We had to find a peri-urban region where this works,” he adds. “You need to have honest developers because the numbers are so big.

You also need a team that understands value engineering and a project team that understands cost control,” Kohli advises.

Anything we can learn from his experiences?

Kenya’s real estate is competitive with many high-rises and complexes coming up on every corner. However, due to cost, most are financially out of reach of the majority of the population.

This offered an opportunity for Karibu Homes. “When we started this no one believed us. Our families and friends thought we were crazy. So you got to be resilient. You got to know your numbers and know it will work out financially,” Kohli says. “You have to believe in yourself because you will have a lot of hurdles along the way.

In Kenya administration and the lands office is quite difficult.

Closing cost is also difficult. You have to work really hard to get the formula right so that your customer wins,” he explains.“Our investors are putting money into the most expensive asset in their lives,” Kohli says. “This means that you as a developer have to think of the customer first, when putting up affordable housing and estimating favourable pricing.”Kohli’s resilience has turned many to believers. Next up is a 1,300 unit development, based in Tatu City – a mixed-use development that has special economic status in Nairobi. This is set to begin at the end of this year. Howwemadeitinafrica 2019 BUSINESS TIMES AFRICA | 17

GHANA BRIEFS

Setting architecture trends in Ghana, one building at a time

Ghana’s mPharma buys Kenya chain

G I

f one manages to see through the rough, the end result is wonderful.” The founder of Ghana’s first women-led architecture firm, Nana Akua Birmeh, held onto this belief during the difficult first years of her venture. A graphic designer turned architect, she launched ArchXenus in 2011. Although there were many sceptics at the time, the firm grew along with the country’s economy. In 2017 ArchXenus designed 53 projects with a total budget of about $140 million. Like law firms and private attorneys, architecture firms are not allowed to advertise in Ghana, but Birmeh is happy for their buildings to speak for them, saying, “Isn’t a building a far bigger billboard than any other?” Nowadays ArchXenus is known not only for their designs but also for the company’s ‘child-friendly’ offices where it’s not unusual to see a toddler running down the passage with a nanny hot on their heels. (There is an on-site nursery and an area where older children can do their homework after school.) “The inclusive office is not a rejection of men. We are simply filling a gap. Having to care for your children while working is something women and men have to do,” Birmeh says. Ghana’s economic growth has slowed somewhat since 2017. “Business has generally been rough for everyone from the contractor to the supplier to the client,” Birmeh says. “It has affected clients’ ability to pay on time and the usual stream of clientele is no longer in a position to start or finish projects.”

Therefore Birmeh has begun to look outside Ghana and to form longer-term relationships. “We now offer a package that goes beyond the basics and which builds a rapport with each client.

They pay less, but we get more value and it’s consistent.”

While breaking glass ceilings and winning awards like the 2018 Africa Women Innovation and Entrepreneurship Forum Award in the Creative Industry category, Birmeh has another aim: “We don’t have any architectural firm in Ghana that has outlived its founder. It is sad. I want ArchXenus to be different, to outlive me and the people working here. Our children’s children should be able to see a thriving company that was built on the hard work of their mothers’ mothers and fathers’ fathers.” Howwemadeitinafrica

hanaian drug benefits and inventory manager mPharma is buying Kenya’s pharmacy chain Haltons. The buyout is a cash deal, though it is subject to final regulatory approval.

The move has come as a surprise as established companies normally acquire start-ups and not the vice versa. According to a report by Quartz, mPharma will take control of the 20 Haltons stores spread between Nairobi and Mombasa. This has come at a time when mPharma is working to complete a USD 12 million Series B funding round led by 4DX, an Accra/San Francisco venture capital firm, and Nairobi-based Novastar Ventures. mPharma is a six-year old Ghanaian startup that manages prescription drug inventory for pharmacies and their suppliers.

It was founded by Gregory Rockson to improve the efficiency of pharmaceutical supply chains in African countries.

Reportedly, Its proprietary Vendor Management Inventory (VMI) system is already being used in over 250 pharmacies in Ghana, Nigeria, Zambia and Zimbabwe. The new deal will see the startup making a debut into the East Africa regional market.

“What excited me about Haltons was its vision to bring high quality and safe medicines to the mass market. The pharmacy plays an important role in increasing access to affordable healthcare in Africa. We look forward to using our experience in vendor managed inventory and conversion franchising to build Haltons into a mass market retail pharmacy brand in Kenya,” Gregory Rockson who is the CEO and founder told Weetracker.

“We’ve not always been able to control the customer experience and fully address the issue of drug affordability with our pharmacy clients particularly because they manage their profit margins,” saidGregordy. “Through our QualityRx service, we’re starting to invest in improving the customer experience and pricing that patients get from pharmacies,” says Rockson.

“Haltons will serve as testing ground for us to develop patientcentered services we can provide to our franchise pharmacies.

This way we can encourage lower margins and pass the savings on to the customers.” The startup is taking control of Haltons from Fanisi Capital, a private equity firm. However Haltons’s senior management will retain a stake in the business. Mary Ngige, Haltons’ managing director, says the attraction to the deal was in a bid to better efficiency within the pharmacy’s supply chain using better inventory management software which ultimately aligned with Halton’s own mission to improve drug accessibility and affordability. “This is a volume business and their technology will help us fine-tune our model and improve competitively.”

Pharma is believed to have paid under USD 5 Mn for the chain but the reports are not clear yet. Last year, Haltons did around USD 1.5 Mn in revenue, according to Ngige. Ngige anticipates that its new ownership and better systems could see it start to expand again following the closure of a few of its branches that were unprofitable. - Weetracker 2019 BUSINESS TIMES AFRICA | 19

GHANA BRIEFS

Ghana’s Fintech KudiGO secures seed money for expansion people they employ. “So if you take Ghana and Nigeria as a pilot, where you have over 400,000 of these retailers, the impact of a solution like KudiGo’s will have on them is immeasurable”.

Moving up the value chain, one would discover the FMCG and manufacturers who have no visibility of product movements at the final retail points, leading to the influx of fake products, especially in the pharmaceutical industry. There are as well artificial shortages and price escalations which affect the bottom line revenue and growth of these manufacturers and distributors.

“This is the outlook of the industry we are looking to redefine,” Kingsley Abrokwah, KudiGo’s Chief Enabler, told WeeTracker.

Market Fit & Penetration Being the fintech’s seed round, the funds will be used to achieve full product-market fit and market penetration in the startup’s two primary markets. KudiGo also told WeeTracker that it is trying to spread its tentacles to make inroads into Kenya, Rwanda, and Uganda by the end of 2019. The round, according to Kingsley, will hopefully be followed up by a Series A before the end, to champion its lofty ambitions of market expansion.

Founders Factory Africa offers a six-month bespoke accelerator program that enables startups to direct their operations and focus all their attention on what’s essential to the business, compared to what most regular accelerator programs are out to achieve. “Being selected, we believe, is a great approach and will help us achieve our set goals,” the fintech disclosed. Alongside the investment, KudiGo will have access to global capital, talent and knowledge transfer through the investor’s network – mentorship, investors, corporates, renowned entrepreneurs and startups from Africa, Europe, the UK, and the U.S. - Weetracker

A

ccra and Lagos-based fintech firm KudiGo has been shortlisted alongside four others of its kind to receive seed investment from Founders Factory Africa (FFA) and Standard Bank. The startup which creates solutions for the customer retail industry in Ghana and Nigeria, sequel to the development, has raised USD 450 K, being the first known funding for the company.

Tech. Capital. Skill.

KudiGO’s focus is on the informal & micro consumers retail in Africa, an industry which makes up “more than 90 percent” of the consumer retail space on the continent and accounts for “over USD 100 Bn” in annual revenue across the continent.

“However, there are the most underserved in terms of access to suable technology, accessible to affordable capital, and overall enabling skill-set to help them grow their business,” the startup said in a statement. The impact these retailers have on the overall economic outlook of the continent cannot be overemphasized as most of these business owners support at least three people directly and double that number indirectly on average asides the

20 | BUSINESS TIMES AFRICA 2019

COVER STORY

A ROYAL PEACE FOR TWO DECADES THE ASHANTI KING OTUMFUO OSEI TUTU II HAS GUIDED HIS KINGDOM WITH SOLOMONIC WISDOM

// BY KIZITO CUDJOE MANHYIA

2019 BUSINESS TIMES AFRICA | 21

COVER STORY

Enthroned on April 26, 1999, the 16th occupant of the Golden Stool otherwise known as ‘Sikadwa Kofi’, has reigned for two decades ensuring peace in his kingdom and other traditional areas in the country. The most recent one is the role he played in bringing peace to Dagbon

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pemsuo, Asantehene Otumfuo Osei Tutu II, is indeed the embodiment of peace and tranquility and a rare gem that epitomes culture and tradition in modernity. Otumfuo’s astuteness and abhorrence of conflict has no limitations, and this has earned him the appellation of ‘King Solomon’, akin to the one in Biblical teachings, for successfully pursuing and brokering peace in many instances across the country. Enthroned on April 26, 1999, the 16th occupant of the Golden Stool otherwise known as ‘Sikadwa Kofi’, has reigned for two decades. And the symbolism of ‘Asante Kɔtɔkɔ’ has undeniably harnessed the fighting spirit and enterprising nature of his ancestry in the pursuit of uncountable initiatives - many

22 | BUSINESS TIMES AFRICA 2019

of which have changed the dire fortunes of many less-privileged people in numerous communities across the country over these past years. Kɔtɔkɔ, the porcupine, is a fearless animal that never attacks anyone. However, it will defend itself to the finish if it is attacked.

When it is attacked, it crouches in a defensive position and shoots its quills in rapid succession at the attacker. At the same time, it grows or reproduces new quills to immediately replace those it shot out. In this fashion, the porcupine successfully fends off and repulses attacks by even lions and tigers. When the Asante nation, modern-day Asanteman, was formed in the year 1701, Asante adopted the porcupine as a symbol of military resilience and relentless

COVER STORY defence. The Kɔtɔkɔ fighting prowess became part of the Asante military conscience and battle plan.

So, like the Kɔtɔkɔ, if attacked Asante will fight to the finish - and successfully too. The great Asante folklores captures that in the event a thousand Asante soldiers perish on the battlefield, “We will not be discouraged.

Rather, like the porcupine which quickly replaces its quills, there will be another thousand soldiers to join in the battle - hence the saying “Asante Kɔtɔkɔ, wo kum apem aa, apem bɛba”.

Accordingly, on this historic ‘Akwasidai Kese’ that was chosen to climax and memorialise the 20th anniversary celebrations of Asantehene, Otumfuo Osei Tutu II, the youth were charged to “rise to battle stations once more - not to shoot at any foes but to shoot for the stars; the stars of glory, of peace and of development”.

This clarion call, according the Asantehene, should position the country to end “the culture of dependency now afflicting the body-politic”. He said: “We need to remember that the heritage of Asante is the very antithesis of the culture of dependency. It is a heritage of rugged enterprise and boundless endeavour. It was the spirit drawn from that heritage which was transformed into economic development when Asante ended its years as a warrior nation”. But while he said this at the colourful ceremony crowded by royals from the world’s wide array of cultures and religions, emissaries and statesmen among others, the Asantehene also called on the political leadership to unite toward building a vibrant economy in an atmosphere of peace and harmony. He urged the politicians to eschew negative political tendencies - adding that time has come to embrace a new era of peace, and thus advised political parties to expel rancour, bitterness and violence from the political discourse. Otumfuo Osei Tutu II, who was addressing a massive turnout of high-profile dignitaries including President Nana Addo Dankwa Akufo-Addo and former Presidents, the leadership of Parliament, emphasised the importance of ensuring peaceful coexistence as a people with a common heritage.

He noted that the 20 years of his reign as the King of Asante has not come without challenges despite the successes. While paying glowing tribute to all those who have contributed in diverse ways to support and sustain efforts made over the years, he noted that the theme for the 20th Anniversary Celebration, ‘Deepening Our Cultural Heritage Through SocioEconomic Development’, was chosen upon extensive consultations. In reference to this, he said: “The ultimate goal of governance is to provide for the well-being of the people; and for years, responsibilities for the economic development that provides for the people’s well-being has been deemed to belong almost exclusively to government. “But traditional leaders, who are the custodians of an undying heritage, have had no space in the development of the process,” he noted. However, he acknowledged that as the frontline leaders of the

people - particularly in rural communities, traditional leaders should be the ones who inspire and encourage effective development. It was against this backdrop, he said, that he began to pursue his vision on his ascension to the throne, to complement the efforts of government.

The Asantehene said he is encouraged by the number of projects which have taken place in the region through these efforts, and the number of major corporate bodies who have had recourse to the office of the Manhyia Palace in resolving issues and enhancing their operations in Ghana. But projecting into the future, he committed to work jointly with government and eligible and willing institutions and partners to accelerate the pace of economic development throughout Asanteman and Ghana. President Nana Addo Dankwa AkufoAddo, while congratulating the Asantehene also recognised his immense contributions, particularly, toward education and peace in the country. He said the efforts of the Asantehene in development of the country cannot go unnoticed. The Vice-President of Suriname, Michael Ashwin Satyandre Adhin, who led a 15-member delegation to the Akwasidae Kese which marked the climax of year-long celebrations for the 20th anniversary of Asantehene Otumfuo Osei Tutu II, said his experience affirms the bond that exists between the people of Suriname and Asanteman. He said the development-oriented leadership portrayed by the Asantehene is a testimony of his commitment to enhancing the people’s wellbeing through the pursuit of several initiatives which address issues relating to achieving sustainable development.

“Most praiseworthy is the prestigious Otumfuo Education Fund, providing education for the talented and less privileged.” This, he noted, is an investment in the people’s future. He said the Asantehene’s visit to Suriname last year, on the occasion of the 43rd Anniversary of the Independence of the Republic of Suriname, had left a deep impression on the people of Suriname. He said following the visit and discussions which have gone on, the country decided to establish its presence in the country by opening an Embassy in Accra.

2019 BUSINESS TIMES AFRICA | 23

WEST AFRICA

Why Foreign Investors Are Lukewarm About Putting Their Money In West Africa

24 | BUSINESS TIMES AFRICA 2019

WEST AFRICA

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t was July 2017 when a submission from the World Bank left many reeling from the implications of the figures that had just been made public. In what was a shocking revelation, the World Bank had placed the amount of Foreign Direct Investment (FDI) accounted for by West African countries at a miserly 5 percent.

The revelation left many perplexed as it was difficult to understand how a region boasting countries like Nigeria – indeed Africa’s most populous country and largest economy – whose GDP stood at USD 406 Bn as of 2016 (single-handedly accounting for around 29 percent of the total output from Sub-Saharan Africa in the same year), could be seeing so little interest with respect to investments from foreign institutions and individuals. The same region is home to the largest and most dynamic francophone economy; Cote d’Ivoire, and around the same time the World Bank revealed its findings, the country’s GDP stood at USD 36 Bn. And then there’s another West African powerhouse in the form of Ghana; a USD 47 Bn economy which, according to a recent UNCTAD Report, is currently the most sought-after destination of foreign investment in the region, having overtaken ‘perennial friendly foe,’ Nigeria – the once untouchable leaders in the FDI segment. Although the fortunes of the West African region have improved significantly since that disturbing revelation by the World Bank in 2017, there’s still something of an unspoken feeling that, when juxtaposed with what is in the offing from other areas and the region’s potential, the region is underperforming and could do much better.

In fact, according to the already mentioned report titled ‘UNCTAD Global Investment Trends Monitor,’ which was released in January this year, Nigeria recorded a 36 percent decline in FDI in 2018.

For the sake of clarity, FDIs are investments made by a firm or individual into business interests located in another country. It is distinguished from portfolio investments in that it has a lot to do with establishing ownership or controlling interest, whereas, portfolio investments are mostly concerned with buying up equities in foreign companies.

According to UNCTAD, in the past year, Africa recorded a 6% percent increase in FDI inflows (USD 40 Bn, up from a revised USD 38 Bn in 2017), although the growth was centred around few economies. This growth was attributed to what looks like a shift from the natural resources-dominated FDI profile of the continent towards a more balanced sectoral distribution. Due to this, African countries with relatively more diversified economies, such as Egypt, South Africa, and to a lesser extent, Kenya, were deemed more stable, and thus, were the recipients of increasing FDI inflows.

Seeing an increase of 7 percent from USD 7.4 Bn in 2017 to USD 7.9 Bn in 2018, Egypt was the biggest recipient of FDI in Africa in 2018 with several diversified investments in real estate, food processing, oil and gas exploration, and renewable energy. The story wasn’t as pleasing for Nigeria which saw its FDI numbers shrink to USD

2.2 Bn; a 36 percent drop from what was recorded the previous year. Actually, compared to the previous year, 2018 was generally a good year for FDI in Africa, as weak oil prices and the harmful macroeconomic effects of the commodity bust of 2017 saw FDI flows shrink in major host African economies that year, with the West African region especially taking a hit. So, what’s the deal?

Why The Lukewarm Foreign Investor Interest In West Africa?

Despite the immense contribution of the Western region to the African economy, as well as its promise of huge potential returns, Africa’s Northern, Southern, and Eastern regions have more or less been the go-to for foreign investment on the continent. Back in 2017, Jack Ma; the Alibaba chief and one of Asia’s richest men, was accompanied by a group of individuals with pockets that are just as deep as his and some of them even bearing swollen wallets, on a trip to Africa. Kenya was the first stop of Ma and his entourage – a country with an economy that is barely one-fifth Nigeria’s in terms of size – and that was before the party paid a visit to neighbouring Rwanda; a small, landlocked country in East Africa.

It is true that the corruption, terrorism, and the occasional rebellion that troubles parts of Nigeria and Cote d’Ivoire do not exactly help matters, but learning that countries like Ghana also get snubbed does raise concern. For starters, Ghana plays host to a thriving economy that is just about as large as Kenya’s.

When compared to East Africa’s leading nation, the West African country boasts a democratic record that is basically impeccable and over the years, it has proven itself as one of the continent’s most stable countries. Apart from that, just as Nigeria can’t seem to shake off the menace of the Boko Haram sect which continues to wreak havoc in isolated parts of the country’s North-Eastern region, Kenya seems to still be haunted by Al-Shabaab rebels whose dastardly attacks are known to shake the very heart of the capital city, Nairobi, time and again, with the most recent attacks happening early this year. In addition, for all the talk of Nigeria’s political shortcomings and misgivings, when it comes to fullblown politically-motivated violence, it could be argued that the country is still far less prone compared to Kenya. Bearing all that in mind, it does come across as baffling how it is that the likes of Jack Ma are more suited to exploring relatively smaller African countries as opposed to taking on larger coastal countries in West Africa which play host to such cosmopolitan cities as Abidjan and Lagos. Actually, you need not do that much digging before it becomes evident why a number of foreign investors – Jack Ma and his 38 billionaire friends included – would rather do without the risk and preferably not make a play in the region. Although quite a tempting prospect, there are certain factors at play which makes taking a pass on West Africa seem like the best choice.

2019 BUSINESS TIMES AFRICA | 25

WHY FOREIGN INVESTORS ARE LUKEWARM ABOUT PUT TING THEIR MONEY IN WEST AFRICA

The Bottlenecks Impeding The FDI Flow Some of the lukewarm investor interest in the region is down to administrative procedures that come across as cumbersome, and corruption at the ports hindering timely clearance of goods.

Actually, this is the case for most African countries but some seem to be worse off than others. And then, there are those difficulties associated with access to finance. Even as this is not much of an albatross since the whole point of foreign investment is bringing in foreign capital (and the investors do bring it), the process could still be hampered if policies related to exchange rates within a country and repatriation of funds are stiff and complicated (see the MTN-Nigeria saga). Going back to the choice destination of Ma and friends, for instance, in terms of financial policies, East African countries are known to offer better terms – letting their currencies trade smoothly without undue interference and not making frantic attempts to curtail the flow of capital in and out of their jurisdictions by deploying biased, complicated policies, even during periods of restiveness and political uncertainty (again, see the MTN-Nigeria saga). While East Africa has done a good job of relaxing its policies, West Africa hasn’t exactly been as cooperative, with Nigeria, in particular, not only rationing hard currency until recently but also throwing spanners in the works 26 | BUSINESS TIMES AFRICA 2019

of foreign investors when it comes to the area of repatriation of funds. Besides that, there is relatively greater ease of doing business in other regions when compared to the West African region. They may be smaller countries but both Rwanda and Kenya rank 29th and 61st respectively out of 190 countries in the most recent ease of doing business index. Countries like Ghana and Nigeria respectively occupy the 114th and 146th positions.

Empirically, it follows that the duo from East Africa is definitely getting something right.

Although the economic struggles and difficult business terrain in West African countries may have something to do with corruption, it would be out terribly of place to brand it the singular factor that makes the region come across as a less attractive destination for investments. Kenya, for example, was adjudged to be just as corrupt as Nigeria in 2018 by Transparency International via its Corruption Perception Index. Even though the story has since changed and Nigeria now ranks higher in that unenviable list, it makes for an interesting note that Kenya still raked in significant foreign investment during the same period it was deemed just as corrupt. So, it’s not entirely a corruption issue, even though the ugly trend does weigh-in to some extent.

Looking at the bigger picture might reveal that the reason West Africa appears to be missing out is the fact that the region is not as economically-integrated as other African regions. All the countries in the region are tied to an organisation known as the Economic Community of West African States (ECOWAS). But the said organisation has brought more of political stability to the region than any form of economic integration.

Another factor could be found in what could be referred to as the influence of innovation and technology, with countries in the Southern, Eastern, and Northern regions of Africa taking the lead. For example, Kenya saw FDI go up by 71% in 2017 due to “strong domestic demand and inflows in the information and communication technology sector”; although countries in West Africa aren’t exactly lagging behind with Ghana, Senegal, and Nigeria increasingly demonstrating technological progress as well. A development worthy of mention is the fact that Facebook’s Chief Executive, Mark Zuckerberg, visited Nigeria in August 2016, for instance. But not without stopping by at Kenya too.

So, What Can West African Governments Do To Attract More FDI? One thing is sure; the current policy frameworks can be better, and this implies that a return to the drawing board is imperative.

West African governments have to make doing business in their countries a lot easier. The ‘Improved Business and Investment Climate in West Africa Project’; an initiative of the World Bank that has set out to improve the situation via a four-year plan funded by the European Union (EU), does offer a glimmer of hope to West African nations. It is hoped that, through the initiative, the ECOWAS Investment Climate Scorecard will bring about speedy progress with just the right amount of integration.

- Weetracker

TANZANIA

Mining overhaul fails to dent Tanzania's investment appeal // BY JASON MITCHELL

D

espite the government's drastic reform of its mining laws, Tanzania has retained an allure to foreign investors, helped in no small part by the country's thriving economy and abundance of natural resources. Jason Mitchell reports.

Tanzania continues to offer foreign mining companies significant opportunities, despite the government completely changing the legal framework around the industry in both

28 | BUSINESS TIMES AFRICA 2019

2017 and 2018. In July 2017, the country made a series of changes to the 2010 Mining Act, which law firm Herbert Smith describes as ‘drastic’. It also enacted two laws asserting the state’s ‘permanent sovereignty’ over its natural resources.

The government now has the power to re-negotiate terms in mining contracts that it considers ‘unconscionable’, including those relating to international dispute resolution mechanisms. It

TANZANIA

THE IMF EXPECTS TANZANIA’S ECONOMY TO SURPASS $60BN IN 2019. GDP IS THOUGHT TO HAVE GROWN BY 5.8% IN 2018 AND IS FORECAST TO GROW AN ADDITIONAL 6.6% IN 2019.

immediately banned the exportation of unprocessed minerals.

It gave the state 16% of the equity (non-dilutable free-carried interest shares) of all existing and future mining projects and suggested this could rise to 50% in the future.

Tanzania also hiked royalties on gold, copper, silver and platinum exports from 4% to 6%. It increased the royalty on uranium exports from 5% to 6%. The new regulations allow the government to reject a company’s own valuations if it believes the prices are too low. It also said it planned to impose a 1% clearing fee on the value of exported minerals. The corporate income tax rate is now set at 30%. Furthermore, in January 2018, the government issued regulations that mean an ‘indigenous Tanzanian company’ must have 5% ownership of any project before a new mining licence is granted. Also, foreign miners must only conduct their business through Tanzanian banks.

Unforeseen consequences Acacia Mining – Tanzania’s largest gold miner, majority owned by Canadian company Barrick Gold – is locked in a long-running dispute with the government over accusations of tax evasion. The firm denies any wrongdoing. “The country’s entire mining and oil and gas industries face new rules stemming from the dispute between the government and Acacia,” says David Mestres Ridge, chief executive officer of Swala Oil & Gas, a Tanzanian oil and gas exploration company. “Acacia had in place ‘transfer pricing’, which could have looked provocative to a developing world country.” Tanzania’s president, John Magufuli, who represents the centre-left Chama Cha Mapinduzi party and took office for a five-year term in November 2015, has refused to hold any negotiations with Acacia, which has three mines in north-west Tanzania. He has accused the company of owing the country of tens of billions of dollars by understating by more than 10 times the gold and copper concentrate levels in its mineral exports.

“The legislative changes were pretty restrictive but the country still offers foreign miners big investment opportunities,” says Patricia Rodrigues, east Africa analyst at consultancy Control Risks. “Many foreign players continue to have a healthy and productive relationship with the government.”

Mineral wealth Tanzania has a population of 54 million and is endowed with vast natural resources. Key minerals include gold, iron ore, nickel, copper, cobalt, silver, diamond, ruby, garnet, limestone, soda ash, gypsum, salt, phosphate, coal, uranium and graphite.

Tanzanite is a mineral exclusive to the country. The country’s gold reserves are estimated at about 45 million ounces and it is the fourth biggest gold producer in Africa after South Africa, Ghana and Mali. Diamonds are also found in abundance. Since it started operations in 1940, the Williamson diamond mine in the country’s north-east has produced more than 19 million

carats (3800 kilograms) of diamonds. Coal reserves in Tanzania are estimated at 1.9 billion tonnes, 25% of which are proven. The country has huge deposits of uranium in Bahi, Galapo, Minjingu, Mbulu, Simanjiro, Lake Natron and Manyoni. One of the biggest uranium development projects is at Mkuju River in the country’s south, where geological surveys indicate 36,000 tonnes exist.

“The national resources legislation now provides clarity,” says Andrew Moorfield, co-head of investment banking and head of natural resources at Exotix, a London-based investment adviser.

“A 16% free-carry rate is not unreasonable and the corporate tax rate is not punitive. The reforms help to ensure that the projects have government participation and support. Firms get a 10-year mining licence, extendable up to a further 10 years. There is always a concern when a state impose major changes but this is a risk everywhere.”

Leaning towards local It is becoming more common for African countries to require mandatory local ownership. In Mauritania, for example, the state requires 10% free-carried interest in mining projects and in 2018 the Democratic Republic of Congo increased the state’s free-carry from 5% to 10%. However, Tanzania’s reforms have undermined its international competitiveness. The country is now ranked 144 among 190 economies in the World Bank’s 2019 Doing Business ratings. In the 2018 ranking it was at 137th and in 2017 132nd.

“We are competing for FDI but the question is how aggressive we are to win it,” says Shabbir Zavery, second vice-chairman of the Confederation of Tanzania Industries. “We need to bolster confidence [in] foreign investors that Tanzania continues to have stable policies and a conducive business environment.”

On the up The IMF expects Tanzania’s economy to surpass $60bn in 2019.

GDP is thought to have grown by 5.8% in 2018 and is forecast to grow an additional 6.6% in 2019. During 2017, the country attracted $1.18bn in FDI, a decline of 13% on the previous year and of 24% on 2015, according to Unctad.

The country has witnessed strong economic growth rates – averaging 6% to 7% annually – for the past decade and has seen the slow emergence of a middle class. In central Dar es Salaam – the country’s main city with 4.36 million inhabitants, located on the Indian Ocean – a large number of new residential and commercial skyscrapers have sprung up. The country’s pension funds have largely provided the finance behind the construction boom, with TSh13000bn ($5.6bn) under their collective management.

Tanzania also has a fast-growing tourism sector. It is home to Mount Kilimanjaro, the tallest mountain in Africa, and Zanzibar, the Indian Ocean island that is a semi-autonomous region of the country and attracts 500,000 tourists a year. - fDi intelligence

2019 BUSINESS TIMES AFRICA | 29

IVORY COAST

Will political tensions put Côte d'Ivoire's recovery at risk?

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ôte d’Ivoire's economy has been booming in recent years, and the investors have been flocking in. However, elections in 2020 bring with them the potential to shake the country's stability, as Adrienne Klasa reports. When the IMF wrapped up its most recent assessment mission to Côte d’Ivoire at the end of March 2019, the economic news to come out of the delegation was mostly breezy. With growth of 7.4% in 2018 and subdued inflation, the west African country’s prospects appear good. It has, after all, been cited among the fastest growing economies in the world every year for most of the past decade. However, Côte d’Ivoire’s present is bookended by an unstable past and an uncertain future, both of which percolate below the placid surface presented by its topline economic figures. These could come to a head as the country heads for hotly contested presidential elections in 2020. Recent political developments are giving investors pause for thought. “I think that for investors, the forthcoming presidential election is the big, hot issue,” says Maja Bovcon, senior African analyst at risk firm Verisk Maplecroft. “You don’t see them holding back investment, but there is a wait-and-see attitude. For companies that are already there, they’ve been there for a long time and they are adapted.”

However, she adds: “They are certainly more worried than they were a year or two ago”.

On a knife edge Two recent political developments stand out. First, at the end of 2018 the long-term coalition between the parties of current president Alassane Ouattara and ex-president Henri Konan Bedie fell apart. The alliance, first formed during the 2010 elections, involved an understanding that following Mr Ouattara’s triumph in 2015, he would support a candidate fielded

by Mr Bedia in 2020. Following a win for the alliance in October 2018 local elections, Mr Ouattara now appears to be positioning himself for a third term in office following the split with Mr Bedie. He surprised many observers in 2018 when he claimed a new constitution adopted in 2016 allowed him another term in office. Côte d’Ivoire has a two-term limit for presidents, but the president implied the previous two should not count. Then, in January, the International Criminal Court in the Hague released former president Laurence Ggagbo. The acquittal took many observers by surprise; Mr Ggagbo was facing charges for crimes against humanity, including murder and gang rape, for his role in the post-election violence that hit the country in 2011.

While Mr Ggagbo has not yet announced any formal political intentions, his release opens up the possibility that he could seek to compete in the 2020 elections. “The Ggagbo acquittal is a very bad omen,” says Ms Bovcon.

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IVORY COAST

RAW COCOA BEANS ACCOUNTED FOR 37% OF ALL EXPORTS IN 2017. AS A RESULT, FLUCTUATIONS IN THE PRICE HAVE AN OUTSIZED IMPACT ON THE ECONOMY.

African Economic and Monetary Union currency union,” says Mr Ashbourne. Because of this, once order was restored, Côte d’Ivoire was “not like what would happen in the Democratic Republic of Congo, where there is nothing to start from – this was more like getting back up to speed. It was much easier [for the country] to jump back on the path of rapid development that it had been on in the 1970s and 1980s,” adds Mr Ashbourne.

FDI boom In 2018, according to investment monitor fDi Markets, greenfield FDI into Côte D’Ivoire hit $1.6bn – its highest level since the commodities crash of 2015. The country remains heavily dependent on the cocoa industry, however. Raw cocoa beans accounted for 37% of all exports in 2017. As a result, fluctuations in the price have an outsized impact on the economy. Cocoa paste and cocoa butter only accounted for 16% of exports in 2017, and processed chocolate just over 1%, despite government efforts to increase domestic processing capacity for the country’s most important commodity.While over the past 15 years investment in coal, oil and gas has garnered the most investor interest, in 2018 foreign investors focused on warehousing, communications and building materials in line with Côte d’Ivoire’s continued ambitious investment in construction and infrastructure.

The lacklustre showing in energy sector investment points to another potential weakness in the economy. Despite years of drilling, Côte d’Ivoire’s oil concessions have yet to yield a big find.

Energy investors are “waiting for a big discovery, because drilling has been disappointing in the past year or two,” says Ms Bovcon.

Oil hopes

Investor questions “Côte d’Ivoire has had this huge economic and investment boom in the past four to five years; a lot of that predicated on the fact that this is a country that was hugely politically unstable for a decade, then was brought together,” says John Ashbourne, senior emerging markets economist at Capital Economics.

This political shift “underpinned the second Ivorian [economic] miracle. Anything that causes investors to question this, whether the upcoming presidential elections or the acquittal of Mr Ggagbo, will be seen very negatively”, adds Mr Ashbourne. Some of the momentum could be credited to the solid foundations that had been laid in decades prior to the country’s civil unrest.

“Infrastructure was not maintained but it was quite well advanced compared with its neighbours, and the country had traditionally played the role of economic hub for the whole West

Côte d’Ivoire was late to develop its energy sector despite being situated on the oil and gas-rich Gulf of Guinea, preferring to focus instead on developing the country’s agricultural sector. Since 2016, the government has been pushing for more investment into energy. Following the settlement of a maritime border dispute with neighbouring Ghana, Tullow Oil – the biggest operator in Ghana’s vast deepwater Jubilee oil fields – acquired a new block from Côte d’Ivoire to explore. Of the 48 oil blocks the country has demarcated, 24 are being explored and only four are in production. The country produces some 50,000 barrels per day, a fraction of the 200,000 pumped every day in Ghana.

Despite the fact that there has not yet been a blockbuster find, the government remains undeterred. It plans to license a further six blocks by June 2019, saying it is in talks with French and Italian oil majors keen to expand their operations in west Africa.

Political uncertainty, however, will lean heavily on all of these decisions. “Mr Ouattara has hinted he will run. My assumption is if he runs he will win, but his alliance is fracturing. It really is too soon to tell,” says Mr Ashbourne. - fDi intelligence

2019 BUSINESS TIMES AFRICA | 31

MALAWI

Malawi finance chief hopes for marketing push

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inance minister Goodall Gondwe tells Jason Mitchell that Malawi needs to step up its marketing efforts to realise its full FDI potential and make the most of its abundant natural resources.

Q: What are the greatest opportunities for foreign investors in Malawi?

A: There are tremendous opportunities in many business sectors. In electricity generation, we are already seeing many proposed investments. In five years’ time, the country could have a lot of independent power producers. Solar power is at the top of the list but there are also great opportunities in the hydroelectric sector and in wind power. We have been receiving many enquiries from foreign investors about the agriculture sector. Irrigation is ripe for large sums of investment. Coal mining is another industry with strong appeal to investors. We have approved quite a few licences to develop new mines.

Q: If so many new electricity projects are coming on stream, why does the country still suffer from regular power cuts?

A: Many of the projects are still awaiting power purchasing agreements from the Electricity Supply Commission of Malawi [Escom], the country’s state-owned electricity distribution company. It has presented foreign companies with a very thick volume of documents that need completing.

It takes companies time to complete all of the paperwork.

Q: Isn’t bureaucracy a problem here? Can’t you push Escom to approve this kind of contract?

A: You try pushing them! It is not easy. The World Bank has suggested that we take a regulatory template from another country so that companies are able to complete all the paperwork within a couple of days. Here it takes a month or so. Senegal could provide such a template. But this is not an easy reform for us to make. We were a British colony and I think we have inherited a commitment to procedure from the British.

Q: Traditionally Malawi has been a big producer of tobacco but, as the price of tobacco has dropped internationally, it has become a less attractive crop for Malawian farmers. What other crops could be produced here and could be considered for foreign investment?

A: The country has extremely good soil and all sorts of tropical crops grow very well here. People have even suggested producing marijuana on a giant scale but that is a controversial idea. Certainly, foreign investors should look at investing in the production of peanuts, cashew nuts and soya beans. Something that Malawi has not done too well is marketing. The country’s first president, Hastings Banda, really emphasised the importance of the country marketing itself well and that is something that the current government

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must get more involved in; marketing the country to foreign investors, marketing all the possibilities in agriculture that exist, for example.

Q: What are the country’s mineral resources that are ripe for foreign investment?

A: Many geological surveys have taken place and they show the country is abundant in rare earth minerals and graphite, for example. British geologists also tell us that there is a considerable amount of oil under Lake Malawi. It should be possible to sink wells offshore and for it to be done in a way that does not spoil the lake. - fDi Intelligence

NIGERIA

FirstBank CEO looks to blend experience and youth in Nigeria non-interest revenues stood at 25.3%, up from 21.2% in the same period in 2017. More than 80% of the lender’s customers transact using digital banking channels with about 6.5 million using the USSD channel alone. In addition, the service offerings on the bank’s mobile platform, FirstMobile, have been expanded to include the provision of micro-loans.

FirstBank is hoping to replicate this success in the retail space in its corporate banking business. “What is a priority for us in 2019 is to ensure that in the corporate banking space we achieve the same level of digitisation,” says Mr Adeduntan.

To reach its digital objectives, FirstBank is looking to its people.

By bringing young graduates into its workforce, the bank is hoping to inject fresh ideas into its ranks with the knowledge and tech awareness to push its ambitions to the next level. “We have brought in more than 700 fresh graduates and that is part of the rejuvenation of the bank. We want to bring in fresh blood and new ideas,” says Mr Adeduntan. In common with a number of other Nigerian lenders, FirstBank is also pressing ahead with its ambitions in the realm of artificial intelligence (AI). Through this, Mr Adeduntan hopes to reduce the bank’s cost-to-income metrics over a long-term time horizon. The lender’s cost-toincome ratio has climbed in recent times, reaching 59.5% by the end of the third quarter of 2018 from 53.4% over the same period in 2017. “Large [financial] institutions such as FirstBank have a lot operations that marry well with AI and machine learning.

We process 150 million transactions every month, for example, and we use AI to help us with that. Machines and technology can work non-stop with no incremental costs,” says Mr Adeduntan.

Growth prospects

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n March 31, 2019, First Bank of Nigeria (FirstBank) celebrated the 125th anniversary of its founding. The bank, Nigeria’s oldest, has come a long way in that time, while remaining a fixture on the country’s financial sector landscape. From its earliest days as the monetary and fiscal policy regulator for the west Africa region to the present, where the lender is pursuing pioneering digital product and service innovation, FirstBank has always played an outsized role in the Nigerian banking sector. Having weathered the worst of the commodity price downturn of recent years, the bank is now looking to the future.

And FirstBank’s chief executive officer and managing director, Adesola Adeduntan, is keen to emphasise its direction of travel.

“We are 125 years old. In terms of age we look like an old bank but we are a young institution in terms of our DNA. We have age and experience on our side, but we are youthful in terms of workforce and ideas,” he says.

Gone digital To this end, FirstBank is looking to a digital future. By the end of the third quarter of 2018, electronic banking contributions to

Mr Adeduntan remains upbeat about the prospects for Nigeria’s economy, as well as the untapped growth prospects in the bank’s home market. Noting that the country’s economic growth remains below the average for sub-Saharan Africa, he sees an opportunity for an improved 2019 as a number of positive factors, including a higher price of oil, contribute to a promising near-term horizon. “We are of the view that the economy will grow in the course of 2019, and we expect it to really kick into gear later in 2019,” says Mr Adeduntan.

Nevertheless, key challenges remain. For one, competition in Nigeria’s banking sector is likely to deepen as consolidation between some larger institutions occurs – the recent deal involving Access Bank and Diamond Bank offering a case in point. This is happening as a number of the country’s second-tier banks, as well new fintech start-ups, are coming into the market with niche and highly innovative offerings, particularly in the retail sector. “The competition is getting stronger and steeper.

But a bank like ours is used to this. We remain confident in our ability to lead the market,” says Mr Adeduntan. - The Banker

2019 BUSINESS TIMES AFRICA | 33

AFRICA

The scramble for Africa 2.0

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hina and the Gulf States are pumping billions of dollars into Africa. Knight Frank’s Justin Eng (Senior Manager, Asia Pacific Research) and Taimur Khan (Research Manager, Middle East) review their influence in terms of trade, investment, and access. Back in 2013 the African Union announced Agenda 2063, an ambitious 50-year strategy to improve the overall economic and social well-being of the continent via the acceleration and implementation of pan-African initiatives to drive growth and sustainable development. In the same year, China announced its Belt and Road Initiative (BRI) – a new platform to help forge better multilateral co-operation with the Asia-Pacific, European and African regions via trade and commerce. One of the major economic corridors identified as part of the BRI was a maritime route that would link South-East

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Asia and Oceania to India and then Africa and the Middle East.

While independent of each other, Agenda 2063 and the BRI share many common objectives that bridge or further cement existing relations between China and the African nations. China itself is no stranger to Africa and has had a long history of investing into the continent prior to 2013’s BRI. Taking the five years between 2009 and 2013 as an example, Chinese private and public enterprises invested $27.4 billion on average annually into various African economic sectors such as transportation, energy and real estate. However, following the BRI announcement, the rate of investment has seen a marked increase with Chinese investments averaging $34.5 billion per annum – up 25% – for the five years between 2014 and 2018. China also now has more embassies and consulates in Africa than any other

AFRICA nation. Within the BRI, infrastructure and real estate are big necessary features as they lay the foundations needed to drive investments into other sectors. These two sectors have accounted for more than half of all the investments since the BRI announcement. Some notable deals struck under the BRI umbrella include the 2016 $6.7 billion rail contract awarded by Nigeria to China Civil Engineering Construction Corporation (CCECC) for the construction of a railway linking its economic capital Lagos to its second largest city Kano.

Another in the real estate space, was Egypt’s 2018 $3 billion contract to China State Construction Engineering Corp for the construction of a new CBD in Cairo, which will also house the continent’s tallest skyscraper. Looking ahead, with the BRI and Agenda 2063 key policies for China and Africa, we expect Chinese investment activity, especially for the infrastructure and real estate sectors, to pick up momentum in the coming years, which will be a boon for Africa’s property markets.

and Special Economic Zones. Essential investments given that maritime traffic is expected to increase from an estimated 300 million tonnes in 2017 to over two billion tonnes by 2040.

UAE-based airlines also fly to 20 African countries facilitating commerce with the rest of the world – via the Emirates a third of the world is accessible within four hours and two thirds of the world within eight hours. Infrastructure investments and transport links such as these not only strengthen the historic ties between the Africa and the Gulf States but are crucial for the potential of Africa to be fully realised. This article was first published in Knight Frank’s Africa Horizons report.

The Gulf States – gateway to Africa For centuries the Gulf States and Africa have traded enthusiastically with each other and the two land masses share a rich heritage. Historically, these ties were strongest with North Africa, however over the course of the last decade we have also seen links strengthen further with sub-Saharan Africa. As a result, bilateral trade between the two regions has increased by more than nine-fold over the last two decades and as at 2018 stands at over $65 billion. The UAE has been a key contributor to this growth, with bilateral trade growing almost 4,000% over the same time period. Currently, the UAE accounts for over 50% of the Middle East’s trade with the African continent.

The catalyst of this growth has been the significant amount of capital invested into Africa’s relatively poor infrastructure.

This has been the case across a range of countries and sectors.

The scale of investment required is immense, the World Bank estimates that up to $96 billion per year is required to bridge Africa’s existing infrastructure gap alone.

Accordingly, Gulf States have been very active in the region over recent years with the likes of Kuwait, Qatar, Saudi Arabia and the UAE all being involved in significant agricultural, port and telecom investments across Africa. The Middle East has 33 FDI projects accounting for 5% of total FDI into Africa, but the UAE is leading the way by a considerable distance and is the ninth largest investor in Africa with 19 FDI projects in 2017. These projects have created an estimated 74,000 jobs, according to fDi Markets data.

Agricultural investments look set only to increase further given the lack of arable land across the Gulf States to service their growing populations – food security is becoming an increasingly paramount issue. Dubai-based DP World, the global port operator, which operates across 40 countries and boasts a portfolio of 78 marine and inland terminals has invested considerable sums in its African business. Currently, DP World operates eight ports in Africa, which cover almost 200 hectares in total. In addition to this, DP World continues to develop its broader portfolio across the continent with the addition of inland container depots, logistics facilities

Kilamba, a Chinese-built housing development in Angola near Luamba.

2019 BUSINESS TIMES AFRICA | 35

AFRICA-JAPAN

Japan seeks Africa fillip ShinzĹ? Abe is a Japanese politician serving as Prime Minister of Japan and Leader of the Liberal Democratic Party since 2012.

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AFRICA-JAPAN

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acking both resources and a youthful population, Japan is targeting African countries' nascent markets and plentiful commodities with generous development finance and infrastructure partnerships. At the end of the Second World War, imperial Japan surrendered to the Allies and, within two years, the Allied occupying forces led by Douglas MacArthur imposed a new constitution on the country. Article 9 stripped Japan of right to an offensive military force, with “the Japanese people forever renouncing war as a sovereign right of the nation and the threat or use of force as means of settling international disputes”. That tenet has remained a foundational principle of Japanese foreign engagement to this day.

It sends a pointed signal, then, when Japan established its first international military base since the fall of imperial Japan in Djibouti, a small country in the horn of Africa that sits astride the shipping chokepoint of the Straits of Bab el-Mandeb.

When Japan established the base in 2009, it had a very specific mandate: namely, fighting piracy on the shipping route out of Somalia. By 2015, however, instances of piracy in the Gulf of Aden had fallen close to zero. Instead of packing up the base, however, Japanese forces remain in Djibouti to this day. As of the end of 2018, two Kawasaki patrol aircraft, a naval destroyer and about 180 ground troops remain there. Plans are now in place to expand the base. At first glance it may seem odd that Japan has chosen this small, remote country for such activity. However a number of forces are pushing Japan to look for resources and commercial opportunities beyond its borders, with a noted push into African markets through development deals over the past few years.

Even with the recent increase in engagement, there is scope for much more. “Japan’s current economic commitment to Africa is extremely low compared with what it could be. We believe it should double in size in the coming years,” says Katsumi Hirano, executive vice-president at the Japan External Trade Organization (Jetro). “We would like to see Japanese companies with more progressive, well balanced commitments to Africa.”

Neighbours and rivals

Competition with China is one of the strongest motivators, and helps to explain Japan’s presence in Djibouti. The African country plays host to military installations for the US and France, among others, while China also chose to make Djibouti its first permanent extraterritorial installation. For regional rival Japan, this is a worrying manifestation of China’s increasingly expansionist military and foreign policies.

“The gravity of Japan’s base in Djibouti diversifying its operational capabilities is made all the more evident when considering that China, as one of Japan’s principal security rivals, has also established a new military base in the same country, linked to its [Belt and Road Initiative] through central Asia,” Ra Mason, a Japan expert at the University of East Anglia in the UK, wrote in a recent article. “In this context, the Djibouti base can also be expected to become a key site of strategic competition as the US-Japan alliance challenges Chinese interests seeking to invest further in African infrastructure and gain political leverage to exploit natural resources in volatile regions.” Japan’s economic engagement in Africa has indeed gathered pace, albeit at a fraction of the volume of investment that China has pumped 2019 BUSINESS TIMES AFRICA | 37

AFRICA-JAPAN

into the region over the past two decades.

In 2014, following a whirlwind trip across the region with stops in Mozambique, Côte d'Ivoire and Ethiopia, Japan’s prime minister, Shinzo Abe, pledged $32bn in new aid, investment and loans for the region over the period to 2017. This was a major increase on the $9bn in aid Japan directed towards the continent between 2008 and 2012. This was followed rapidly by another trip in 2016 to host the 6th Tokyo Conference on Africa’s Development summit in Nairobi, Kenya, during which Mr Abe committed an additional $30bn in Japanese investment into the region. Some 67% of the 2014 package had already been deployed, he said, while $10bn of the new package would go towards urgently needed infrastructure financing, to be executed in partnership with the African Development Bank. “This is an investment that has faith in Africa’s future, an investment for Japan and Africa to grow together,” he told gathered leaders. “Today’s new pledges will enhance and further expand upon those launched three years ago. The motive is quality and enhancement.”

Japan’s links with development in Africa are not new, but they have scaled up and become more commercial in recent years.

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Japan’s aid programmes in the region go back to the 1960s. During the oil crisis in the 1970s those relations took on a more commercial character, as Japan diversified its regional ties, with a focus on oil exporters such as Nigeria. It also played a sizeable role in debt cancellation for highly indebted developing countries – many of them concentrated in Africa – at the turn of the millennium. “Of total cancelled debt, some 70% came from Japan,” says Mr Hirano.

Aid is still an important piece of the financial flow between Japan and Africa. As of 2016, Africa accounted for 28% of Japan’s development grants, 15% of technical assistance, and 4% of concessional loans, largely coordinated through the Japan International Co-operation Agency (Jica).

Natural resources However Japan’s more energetic approach to commercial ties across Africa in recent years reflect more mercantile interests. As a highly industrialised but resource-poor country, Japan has long been keen to secure the base materials it needs to fuel its economy.

Figures from Jetro show imports from Africa to Japan rose 13.8% year on year in 2017. Japan imports a huge percentage of key minerals

AFRICA-JAPAN

and metals from a small number of markets in Africa, according to think tank Institut Français des Relations Internationales.

These include some 78% of its rhodium, 72% of its platinum (largely from South Africa) and 46% of its manganese (a key ingredient in both aluminium and alkaline batteries). Oil, metals, precious stones and seafood are also major Japanese imports from the region. In recent years, however, liquefied natural gas (LNG) has become one of Japan’s biggest interests as huge gas fields come on line in places such as Mozambique, Tanzania and Egypt. “LNG is certainly key for us, and the Indian Ocean route [from Mozambique] is very convenient to come to the Asian region,” says Mr Hirano.

China competition In this area, competition with China is more direct. When Japan’s LNG demand dropped slightly at the end of 2018 as nuclear power stations picked up in activity (a sign of recovery following the Fukushima Daichii nuclear disaster of 2011), China overtook it to become the world’s biggest natural gas importer. Prior to the Fukushima Daichii disaster, which followed an earthquake and tsunami, nuclear power accounted for 27% of Japan’s domestic energy supply. The backlash against nuclear power meant that had to be replaced, largely by LNG supplies.

Competition for supplies is increasing, however, as major economies try to move towards cleaner energy options. Japan, China and South Korea together account for about 60% of global LNG demand. African markets remain a relatively small piece of Japan’s gas imports; however, this could change – especially with the size and scale of Mozambique’s Rovuma Basin Fields. Japan sourced 2% of its LNG from Nigeria in 2016, while heavy crude oil from Nigeria, Angola and Gabon are also important elements in its energy mix. “It’s remarkable that even after Mozambique’s recent economic troubles, everyone’s still up for [investing in] it,” says Christopher Marks, managing director and head of emerging markets at Mitsubishi UFJ Financial Group (MUFG). Mozambique went from a development darling to donor pariah in 2016 after the country concealed about $2bn in off-book government-backed loans from the International Monetary Fund. As a region, Africa is now the world’s third largest LNG exporter by volume, and major finds in Mozambique, Tanzania and Egypt look likely to boost that share.

Industrial opportunities While securing imports is key to Japan’s regional economic strategy, so is finding growth markets for its companies. With their young, growing and increasingly wealthy populations, African markets are prime targets. The world’s youngest region is set to boom, and Lagos, Nigeria’s bustling commercial capital, is a case in point. In the 1950s, Lagos’ population was about 300,000 people.

Today some 20 million live there, a number the UN predicts will reach 40 million by 2050. This mirrors broader demographic trends: the population of the African continent is set to double over the next three decades. The opposite is true for Japan, meanwhile, as a rapidly ageing population and shrinking workforce puts negative pressure on gross domestic product growth. This explains why Africa’s fastgrowing, rapidly urbanising young markets present a sizeable draw for Japanese companies. As the region looks to fill its power and infrastructure gaps, Japan is keen to push for deals in renewable energy, with projects in places such as Kenya and Ethiopia of

particular interest, Mr Hirano at Jetro notes. “In terms of this new technology, Japan is one of the frontrunners for innovation,” he says. Jica, for example, has provided several billions dollars in loans to build a geothermal plant in Kenya at Olkaria. Japan’s Marubeni Corporation won the construction contract for the project, while Fuji Electric and Mitsubishi Hitachi Corporation will provide turbines and other equipment. For Japan’s private financiers, however, the reality is somewhat more complicated, with banks being crowded out of clean energy transactions by multilaterals. “You can’t swing a cat in clean energy in east Africa without hitting a development bank,” says Mr Marks.

Infrastructure deals Mr Marks notes that Japan’s approach to financing projects in the region differs from China’s, where the top-down state model enables Chinese state-linked contracts and financiers to go into deals as a package. In Japan, companies and financiers must make their own way, though government support often follows.

One example is Malawi and Mozambique’s Nacala Corridor infrastructure project, which will link Mozambique’s mining interior to coastal ports via a new rail network. The Japan Bank for International Co-operation (JBIC), a public entity, helped co-finance the project alongside a consortium of financial institutions that included MUFG, Nippon Life, Mizuho Bank and the African Development Bank.

The project is seen as key to securing strategic resources for Japan. As JBIC notes, Japan is “totally dependent on the import of coking coal from abroad which is used to produce steel”. JBIC will “provide financial support... while proactively encouraging Japanese companies to participate in the development of mineral resources abroad or acquire interests in those resources”, the company said in a statement.

Automotives is one potential key area of activity. Japanese companies such as Toyota have had operations in Africa for 60 years, with a major plant in South Africa. In September 2018, Suzuki announced it was exiting its factory operations in China in order to focus investment on growing markets in India and across Africa. “The car industry depends on domestic market size. In Africa, this is growing though it is still a very small market,” says Mr Hirano. As of now, about one-third of all exports from Japan to the region are used cars but as wealth increases, this could change.

“There is capacity to have more production in Africa,” adds Mr Hirano. He also believes there are big opportunities for Japanese pharmaceutical companies, as greater wealth and better nutrition changes the disease profile in African countries. The drop in child mortality in Africa over the past 60 years is one of global health’s greatest achievements. However, non-communicable diseases such as cancer, heart disease and diabetes in older people are on the rise. Mr Hirano believes that Japan and African countries ultimately have much to offer each other, and that all investment partners can bring different benefits to the table. “China doesn’t always understand what Africa is; it thinks more in an ‘Asia’ way. The large size of loans demonstrates this, but they yield quite different results outside east Asia. If China can provide big infrastructure, that’s okay for us – we can use it,” he says. “Japan is different compared with other development partners.” - The Banker 2019 BUSINESS TIMES AFRICA | 39

ZIMBABWE

Zimbabwe’s cattle industry on the rebound

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imbabwe’s famed beef industry, which collapsed in the 2000s following outbreaks of foot-and-mouth disease, is now rebounding. The Southern African country’s global beef exports resumed in 2017, 10 years after they slowed to a crawl when the country’s economy tumbled. In addition to the foot-and-mouth disease, the beef industry had been hit by crippling economic sanctions imposed on the country by Western nations, which contributed to hyperinflation, huge foreign debts and obsolete transport fleets. Mismanagement of livestock farms worsened the situation. President Emmerson Mnangagwa, who assumed office in November 2017, is now 40 | BUSINESS TIMES AFRICA 2019

seeking to revive the nation’s most strategic asset by actively wooing investors. The country’s top commercial farmers, whose herds of livestock were decimated, are slowly returning.

A joint $48 million cash injection by private investors from Rwanda, Switzerland and the United Arab Emirates is revving up the beef industry, which in 2018 also benefitted from a $130 million investment partnership deal between Zimbabwe’s state-owned beef processing firm, the CSC, formerly the Cold Storage Commission, which is Zimbabwe’s foremost beef processing agency, and the UK-based company Boustead Beef, an international beef processing company.

ZIMBABWE

The country’s pension fund, the National Social Security Authority, has also pledged to invest $18 million in the CSC. Innovative breeding technologies, including artificial insemination, have been successfully used on a new breed of beef bulls and heifers, scooping big earnings in the global beef market.Big commercial and rural farmers are dreaming once more of the glory days of the 1990s, when Zimbabwe’s beef industry was the envy of its Southern African neighbours.

Good old days In those good old days, Zimbabwe’s beef cattle herd topped 1.4 million and raked in about $50 million yearly from exports to the lucrative European market, particularly the UK, Germany and the Netherlands. For most beef-producing provinces of Zimbabwe, commercial beef sales accounted for about 80% of income. At that time, the state-owned Cold Storage Commission enjoyed the privilege of a whopping $15 million up-front payment before delivery to countries in Europe.

Isaiah Machingura, marketing director of the CSC, connects the rebound to the fact that “the UK has opened up big markets. Our canned product is one of the best. We can slaughter 700 animals a day. We do deboning and packaging ahead of export overseas. Beef in Zimbabwe is one of the best. It only falls second to Scotch beef from Scotland,” he says, referring to a popular breed. A resurgent beef industry is attracting thousands of rural farmers. In the past, a small number of white commercial farmers monopolised the sector. The CSC’s new approach is to expand the beef value chain with five new products: ox tongue, stewed steak, corned beef, hair tails (for brushes) and tallow (for soap).

As a result, local start-up cattle growers and abattoirs are experiencing a change of fortunes. One indigenous beef start-up, the Makera Cattle Company (MCC), manages hundreds of bulls and currently trains 10,000 rural farmers to be paravets, or animal health breeders. “We began with a pedigree Tuli herd species of cattle. They are indigenous to Zimbabwe and are known to be very fertile,” explains Max Makuvise, the MCC’s chief executive. A good Tuli cow can calve every 11 months, he says. “Traits like growth and conformation are easy to improve on through selection, but not fertility.” The Tuli takes in little food and needs less space than other breeds, which maximises earnings. Makuvise adds that the Tuli breed is a better value than other breeds also because it has a better meat-to-bone ratio. “They calve easily, and veterinary costs are minimal. They are usually without horns. This makes dehorning unnecessary – another reduction of expense and handling problems. It’s such an easy breed,” says Makuvise.

Although new to Zimbabwean farmers, livestock genetics is bolstering the growth of the beef industry. “On genetics,

through the use of bulls and artificial insemination [AI], we have succeeded in helping rural farmers improve the quality of their herds,” he adds. “AI works by inserting semen straws drawn from rich-quality bulls. This produces offspring that resist pests and diseases better, solves low calving problems and produces species that have healthy grazing attitudes.”

The Zimbabwe Agricultural Society, which promotes agricultural development in the country, in 2018 announced plans to use 6,000 high-quality semen straws to inseminate cows and increase the number of herds in the country.

Lingering troubles But despite the growth in the beef industry, experts say that the quality of herds is still a worry.

Makuvise explains that the majority of Zimbabwe’s cattle herds are in rural communities, not in large-scale commercial farms as in the past, and that inbreeding is compromising quality. Experts advise against inbreeding (father-daughter mating, for example), because it reduces growth rate, fertility and vigour in the herd. Another problem is that corrupt beef dealers buy up bulls from rural farmers at ridiculously low prices and make huge profits selling to the CSC. The practice shortchanges the rural farmers.

Worse still, the beef industry is grappling with drying weather occasioned by climate change. “We preach productivity. Doubling herd size strains grazing grass and water. Climate change is a reality,” warns Makuvise.

To address the problem, he recommends innovative measures such as “feeding cattle with crop residues that would have been cut in winter. Also, we are currently doing trials on the use of maize stalks and other grasses that would have been cut during the rainy season. These could be used as supplementary feeding for cattle from September through to November.” Muhle Masuku, an official at Livestock Zone, a beef startup, cautions farmers to continue to feed herds organic food. “I believe our meat is a niche, not contaminated by any inorganic feeds,” he says. Another huge challenge occurs when Zimbabwean livestock, some diseased, wander into neighbouring Botswana and are killed by officials acting on the orders of that country’s agriculture ministry.

Botswana, which is a major beef supplier to the EU, wants to comply with international safety standards for beef export.

Simangaliphi Ngwabi, a Zimbabwean government livestock specialist, says, “We can’t blame Botswana for shooting our cattle. They can’t risk foot-and-mouth disease contamination and ruin their EU export licence because our farmers let their cattle wander across the border.” Despite the challenges, the current beef business is incontestably better than it was just a few years ago. And indications are that its growth has only one way to go – upward. This article was originally published by Africa Renewal.

2019 BUSINESS TIMES AFRICA | 41

AFRICA

Economic empowerment of women good for all

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overnment staffer Souhayata Haidara enjoys talking about her life in a patriarchal society. Her career is a triumph of patience and perseverance, she tells Africa Renewalwith a smile and a wink. Ms. Haidara, currently the Special Adviser to Mali’s Minister of Environment and Sustainable Development, says she was lucky not to be married off at age 14 like some of her peers. Her father resisted pressure from suitors and relatives and insisted that the teenager be allowed to complete high school before getting married. “In our culture, people believe education is for boys and that the women must marry and stay at home,” she says. Women’s economic empowerment is anchored by education, maintains Ms. Haidara, who earned a degree in environmental science in the US on a scholarship from the United States Agency for International Development. “I couldn’t be where I am today without education. I earn an income. I educated my three children—a boy and two girls, now grown. I have a six-year-old granddaughter who is getting the best grades in class. That makes me very happy.” But Brandilyn Yadeta, a 32-year-old Ethiopian, missed out on education. “I had a baby at 19 and the father traveled abroad without letting me know. Since then, I continue to struggle to take care of my child, which is my priority, above my education.” She is a small-scale trader.

If the father refuses to pay child support for his child, what

options does a woman have? “What can I do?” Ms. Yadeta asks with frustration and regret.Ms. Yadeta and others like her in Africa are unsung heroes—taking care of the family, a job mostly unrecognized by their society. Yet in monetary terms, women’s unpaid work accounts for between 10% and 39% of GDP, according to the UN Research Institute for Social Development, which provides policy analysis on development issues.

The International Labour Organisation states that women are disproportionately laden with the responsibility for unpaid care and domestic work. It highlights this issue to make the case for economic empowerment of women, which is now a front-burner topic in development literature.

Countries making reforms A World Bank report titled Women, Business and the Law 2019: A Decade of Reformstates that sub-Saharan Africa “had the most reforms promoting gender equality [of any region].” In fact, six of the top 10 reforming countries are there—the Democratic Republic of the Congo, Guinea, Malawi, Mauritius, São Tomé and Príncipe, and Zambia. Despite a protracted political crisis, the DRC made the most improvement based in part on “reforms allowing women to register businesses, open bank accounts, sign contracts, get jobs and choose where to live in the same way as men,” states the report. Mauritius introduced civil remedies 2019 BUSINESS TIMES AFRICA | 43

AFRICA: ECONOMIC EMPOWERMENT OF WOMEN GOOD FOR ALL

for sexual harassment at work and prohibited discrimination in access to credit based on gender. Among the civil remedies, employers are prohibited from sexually harassing an employee or a job seeker while an employee must not sexually harass a fellow employee. Mauritius also mandated equal pay between men and women for work of equal value. $95 billion is the amount that sub-Saharan Africa loses yearly because of the gender gap in the labour market São Tomé and Príncipe equalized mandatory retirement ages and the ages at which men and women can receive full pension benefits—a move that increased the country’s female labour force participation by 1.75%. The World Bank’s report by no means suggests that all is well with women in these countries. The report merely highlights the positive incremental changes that these countries are making. The DRC, for example, may have implemented some pro–women’s empowerment reforms, but women in that country still have no land or inheritance rights, according to the Global Fund for Women, a nonprofit.

Theodosia Muhulo Nshala, Executive Director of the Women’s Legal Aid Centre, a nonprofit in Tanzania, tells Africa Renewal that “men and women [in Tanzania] have equal rights to land ownership, thanks to the Village Land Act of 1999; however, customary laws exist that prevent women and girls from inheriting land from their husbands and fathers.”

While women’s participation in the labour force (mostly in the informal sector) is high in many sub-Saharan Africa countries—86% in Rwanda, 77% in Ethiopia and 70% in Tanzania—only in eight countries (Gabon, Ghana, Kenya, Libya, Namibia, South Africa, Uganda and Zimbabwe) do more than 50% of women own bank accounts, according to the Global Financial Inclusion Database, which regularly publishes country-level indicators of financial inclusion.

Not a zero-sum game Economically empowering women is not a zero-sum game in which women win and men lose, notes Urban Institute, a policy think tank in Washington, D.C. Rather, Mckinsey Global Institute, a US-based management consulting firm, forecasts that, “A ‘best in region’ scenario in which all countries match the rate of improvement of the fastest-improving country in their region could add as much as $12 trillion, or 11 percent, in annual 2025 GDP.” And UN Women, an entity for gender equality and women’s empowerment, states: “Investing in women’s economic empowerment sets a direct path towards gender equality, poverty eradication and inclusive economic growth,” On the flip side, since 2010 sub-Saharan African economies have lost about $95 billion yearly because of the gender gap in the labour market, says Ahunna Eziakonwa, Director of UNDP’s Regional Bureau for Africa (see interview on page 22). “So imagine if you unleash the power, talent and resolve of women.”

Empowerment is limited when women enter the labour market on unfavourable terms. Experts believe that women’s economic empowerment is the key to achieving the African Union’s Agenda 2063, a continental framework for socioeconomic transformation of the continent, and several goals in the UN’s 2030 Agenda for Sustainable Development. That includes Goal 1, ending poverty; Goal 2, achieving food security; Goal 3,

44 | BUSINESS TIMES AFRICA 2019

ensuring good health; Goal 5, achieving gender equality; Goal 8, promoting full and productive employment and decent work for all; and Goal 10, reducing inequalities. Aspiration 6 of Agenda 2063 envisages an “Africa whose development is people driven, relying on the potential offered by people, especially its women and youth, and caring for children.”

Taking action What can countries do to empower women economically?

In a blog for the World Bank, Cape Verde’s Minister of Finance, Planning and Public Administration Cristina Duarte and the World Bank’s Vice President for Infrastructure Makhtar Diop recently encouraged “support [for] young women during adolescence—a critical juncture in their lives.” The Empowerment and Livelihood for Adolescents programme in Uganda, which “uses girl-only clubs to deliver vocational and ‘life skills’ training,” is a good example, according to Ms. Duarte and Mr. Diop. The World Bank recommends, among other actions, the passage of laws that foster financial inclusion. Ms. Eziakonwa believes that countries must expunge laws that are obstacles in women’s way, including those that prohibit them from owning land. South African journalist Lebo Matshego is urging women’s rights activists to use social media to lobby against those customs and traditions that infringe on the rights of women. Vera Songwe, head of the Economic Commission for Africa, the first woman to lead the organization, says women, especially in rural areas, need access to the internet to be able to take advantage of new technologies.

The UN Secretary-General’s 2018 CSW report titled Challenges and Opportunities in Achieving Gender Equality and the Empowerment of Rural Women and girls advises countries to “design and implement fiscal policies that promote gender equality and the empowerment of rural women and girls by investing in essential infrastructure (ICT, sustainable energy, sustainable transport and safely managed water and sanitation).” According to Ellen Johnson Sirleaf, a former president of Liberia, affirmative action is the way to go. She says that “now is the time for preferential treatment of women,” such as quotas on jobs and access to credit.

UN Women supported a review of Kenyan public procurement in 2013, and Kenya now reserves a minimum of 30% of annual government spending for women. In 2017, through its Women’s Economic Empowerment programme, UN Women reported successfully training 1,500 women vendors in Nairobi to participate and benefit from the government supply chain. This is one example of an action in line with Ms. Sirleaf’s suggestion.

The quality of jobs that women do also matters, writes Abigail Hunt, a researcher with the Overseas Development Institute, a UK-based think tank. “Empowerment is limited when women enter the labour market on unfavourable terms. This includes women’s engagement in exploitative, dangerous or stigmatized work, with low pay and job insecurity.” In other words, women need access to high-paying, safe and secure jobs.

“The road to women’s economic empowerment is irreversible,” maintains Ms. Sirleaf. “It’s taking a while to get it, but it’s coming; no one can stop it.” - Africa Renewal

AFRICA

Pendulum is swinging towards creeping restrictions across Africa

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n recent months, persistent protesters in Algeria and Sudan have faced down government repression to depose long-time political leaders. Unfortunately, these two countries are the exception rather than the norm.

More often than not, political opposition in countries across the continent has met a different fate as governments have used a variety of tactics to restrict freedoms and dissent. These include shutting down the internet (Cameroon, Zimbabwe), imposing social media taxes (Uganda), and imposing blogger licenses (Tanzania). Governments have also resorted to outright violence in Burundi, Senegal, Togo and Zambia. Freedom House’s 2019 Freedom in the World Report suggests that political liberalisation in countries like Ethiopia and The Gambia belies “creeping restrictions” and a general trend toward authoritarian behaviour.

This trend is confirmed in the most recent survey conducted

by Afrobarometer, an independent African research network. It was conducted between late 2016 and late 2018 in 34 countries.

On average across all the countries surveyed, citizens appeared to confirm that civic and political space was closing. Many also expressed a willingness to accept restrictions on their liberties in the name of security.

Shrinking political space Two-thirds (67%) of the respondents said they were at least “somewhat” free to say what they thought. This represents a 7 percentage point decline across 31 countries tracked since 2011/2013. When it came to the freedom to discuss politics, the picture was more troubling: 68% felt that they needed to be careful about what they said. Across a sample of 20 countries tracked over the past decade, expressions of caution had increased by 9 percentage points.

If freedom is weakening, so is popular demand for it. Six in ten respondents (62%) believed that citizens should be able to join any political organisation they choose. Yet, popular insistence on freedom of association declined by at least 3 percentage points in 21 of the surveyed countries. It grew in just seven

2019 BUSINESS TIMES AFRICA | 45

PENDULUM IS SWINGING TOWARDS CREEPING RESTRICTIONS ACROSS AFRICA ZIMBABWE ELECTION SPECIAL

countries (Figure 1). Figure 1: Changes in support for freedom to join any organisation (percentage points) | 33 countries | 2008-2018.

Note: The Gambia is not shown because it was first surveyed in 2018. In Gabon and Togo more than 80% of citizens rejected the idea that the government should have the right to ban organisations

that went against its policies. In both countries growing popular discontent with political processes was met with government efforts to repress discontent. In contrast, in Tanzania just 39% of citizens favoured full freedom of association. The government in Tanzania has recently taken steps to close political space. Likewise, there was some underlying support in Kenya for increasing efforts of social control. Only 47% of respondents supported freedom of association.

Individual freedoms versus security?

A second troubling trend was the considerable willingness to accept government restrictions on individual freedoms in the name of public security. For example, a slim majority (53%) of respondents stood for people’s right to private communication.

But a substantial minority (43%) were willing to accept that governments should be able to monitor private communications to make sure that people weren’t plotting violence. This included monitoring their cellphones. More than two-thirds supported the right to private communication in Zimbabwe, Gabon, and Sudan, 46 | BUSINESS TIMES AFRICA 2019

all countries where civil liberties are still contested. But only about one-third or less of citizens in Cameroon, Burkina Faso, Tanzania, Senegal, and Mali opted for freedom over security when it came to private communication.

Forty-nine percent of respondents favoured complete freedom of religious speech, while 47% thought the government should be able to regulate what was said in places of worship. The lowest. levels of support for religious freedom came from Tunisia (21%), Mali (23%), and Senegal (31%). (Both Mali and Tunisia have experienced major incidents of extremist violence.)

Support for freedom of movement is even less robust.

Only about one in three Africans (35%) said that even when their country is faced with security threats, people should be free to move about the country at any time of day or night.

Political liberalisation Since these trends in demand for and supply of freedoms vary considerably by country, more detailed country-level analysis would be instructive. Looking in particular at countries that have experienced significant political liberalisation in recent years, we found that Gambians generally embraced freedoms of association, communication, and speech in religious settings. But they supported the idea that the government should be able to impose curfews and roadblocks. In contrast, in Burkina Faso and Tunisia, the majority of people supported government monitoring of private communications, regulation of religious speech, and restrictions on free movement, with average support for freedom of association. These levels of support for government restrictions in Burkina Faso and Tunisia are concerning, given that political liberalisation in both countries is relatively recent and still vulnerable.

In Zimbabwe, where the new government has argued that a “new dispensation” is afoot since the ousting of former President Robert Mugabe, citizens generally embraced basic freedoms, and saw no change in the level of freedom of expression over the past decade.

But Zimbabweans expressed high levels of caution about exercising basic freedoms, suggesting scepticism about the government’s gestures toward political liberalisation.

Finally, more established democracies presented a mixed picture.

On the one hand, citizens in Cabo Verde and São Tomé and Príncipe generally embraced basic freedoms. They also rejected restrictions on freedoms because of perceived security threats. Yet, the high degree of tolerance for restrictions on basic freedoms in Ghana highlights the power – across much of Africa – of the security argument for restricting individual freedoms. - The Conversation

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