Africa Inc. Magazine April 2020 by FW Africa

AFRICA Inc. AFRICA’S LEADING BUSINESS & ENTREPRENEURSHIP MAGAZINE

SPECIAL REPORT

INDUSTRY REPORT

INVESTMENTS BY MULTINATIONALS IN AFRICA’S FOOD INDUSTRY

CARS OF THE FUTURE ELECTRIC, SELF DRIVING & SHARED TRAVEL

JINJA DISCOVER THE ADVENTURE CAPITAL OF EAST AFRICA

THE START-UP

KHADIJA MOHAMED KWANZA TUKULE FOODS INSPIRATION

JEREMY BLOCK CHAIRMANDORMANS GROUP

70 YEARS OF GROWTH TO EAST AFRICA’S COFFEE GIANT WWW.AFRICAINCMAG.COM

COMMUNITY IMPACT

MUSA OTIENO KICK-OFF TO HOPE FOUNDATION INVESTMENT TRENDS

EUGENE STALLS PHATISA ++++

COVID-19 IMPACT ON AFRICA TRENDS IN PRIVATE EQUITY IN AFRICA

YEAR 3 ISSUE 1. NO.3

CO-LOCATED WITH

UGANDA CONSTRUCTION ESTATE & REAL EXPO

SOLAR &

RENEWABLE ENERGY EXPO

JULY 8-10, 2021 • KAMPALA, UGANDA

UGANDA'S LARGEST CONSTRUCTION, REAL ESTATE & RENEWABLE ENERGY CONFERENCE & EXHIBITION The Uganda Construction & Real Estate + Solar & Renewable Energy Expo brings together 200+ suppliers of construction materials, lighting, solar & renewable energy, bathroom, kitchen, electricals, construction tools, plumbing, heavy equipment, safety & security, ICT, financial services, architectural and real estate solutions from Uganda, Africa and from across the World Join 5000+ visitors at the Great Lakes region’s conference and expo and discover all you need for your built environment and renewable energy needs.

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Start-ups and young businesses in sub-Saharan Africa face a myriad of challenges, including lack of access to technology, expertise and networks to grow. At The Nest Africa, we are creating a collaborative facility with new product development labs, production and packaging kitchens and office space for use by young companies in the region to facilitate their innovations and growth towards becoming the next big thing. SIGN UP TO SPONSOR OR BE A MEMBER ON OUR JOURNEY TO REVOLUTIONISE AFRICA'S FOOD, BEVERAGE & MILLING INDUSTRY! Visit the website today.

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AFRICA Inc.

YEAR 3 ISSUE 1. NO.3

INDUSTRY FOCUS - FOOD INDUSTRY IN AFRICA

16 Investments by multinationals soar in Africaâ&#x20AC;&#x2122;s food industry

SPECIAL REPORT - THE CARS OF THE FUTURE Electric Vehicles on Path to Revolutize the Auto Industry

AFRICA INC. TRAVEL - JINJA, UGANDA Discover the Adventure Capital of East Africa

CONTENTS EDITORIAL

Covid-19 is a wake-up call to invest in the Africa’s healthcare system

BUSINESS UPDATES

10 Dealstreet Africa 18 Africa Inc. News 18 Sustainability Business Africa Bill to improve customs and freight trade in Kenya

JEREMY BLOCK – CHAIRMAN, DORMANS GROUP

Emerging Trends in Private Equity in Africa

70 Years of inspiring Kenya’s coffee industry to global leader

Why we are focused on investing in Africa’s food industry

ARTICLES

Wycliffe Wanda - KIFWA

Kenneth Barry & Preeti Nana White & Case LLP

EUGENE STALS - CHIEF INVESTMENT OFFICER OF PHATISA

The Climate Opportunity in Africa AVCA

Global business leaders on creating female talent in business

Geraldine Matchett, Carolyn Tastad and Martine Ferland

Why Africa urgently needs an Ubuntu plan Dr. Victor Oladokun

Nigeria drug imports worrying during COVID-19 Wuraola Akande-Sholabi University of Ibadan

Covid-19 implications for business leaders Prof. Ralph Hamann - University of Cape Town

AFRICA Inc. Year 3 Issue 1. No.3

WWW.AFRICAINCMAG.COM

FOUNDER & PUBLISHER Francis Juma EDITORIAL Jacky Mbithe I Clement Muriuki ADVERTISING & SUBSCRIPTION Jonah Sambai | Hellen Mucheru CONTRIBUTORS Virginia Nyoro | Ronald Onsare DESIGN & LAYOUT Frank Bett

MUSA OTIENO - FOUNDER KICK-OFF TO HOPE FOUNDATION Growing Africa’s next leaders through football

KHADIJA MOHAMED - KWANZA TUKULE FOODS CEO

FWAfrica

INFORMING AFRICA’S BUSINESS GROWTH

FW AFRICA P.O Box 1874-00621, Nairobi Kenya Tel: +254 20 8155022, Cell: +254 725 343932 Email: info@fwafrica.net; Corporate website: www.fwafrica.net RELATED PUBLICATIONS

www.foodbusinessafrica.com

Transforming food vending in Kenya’s urban landscape Africa Inc. is published 6 times a year by FoodWorld Media Ltd. The magazine is distributed into a number of sectors of the industry in Africa. The magazine is available through subscription for the other stakeholders in the industry, including suppliers to the sector. Postage is paid at Nairobi, Kenya. Send address changes to FoodWorld Media Ltd by phone or email. Copyright 2020. Reproduction of the whole or any part of the contents without written permission from the editor is prohibited. All information is published in good faith. While care is taken to prevent inaccuracies, the publishers accept no liability for any errors or omissions or for the consequences of any action taken on the basis of information published.

AFMASS

FOOD EXPO UGANDA - NOV. 12-14, 2020 KENYA - MAY 27-29, 2021 ETHIOPIA - AUGUST 26-28, 2021

DISCOVER AFRICAâ&#x20AC;&#x2122;S

FOOD

BEVERAGE

& MILLING TRENDS OF THE

FUTURE FOR SPONSORSHIP, EXHIBITION & ATTENDANCE ENQUIRIES INFO@FWAFRICA.NET CELL: +254 725 34 39 32

VISIT THE WEBSITE FOR MORE INFO

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JOIN US AS WE REVOLUTIONISE AFRICA’S FOOD, BEVERAGE & MILLING INDUSTRY AFMASS Food Expos showcase the A-Z of the food, beverage and milling industry in Africa, including the following categories:

AFRICA

FOODTECH EXPO MILLING • PROCESSING • PACKAGING • LOGISTICS

Since 2015, one event has been defining the future of the food, beverage and milling industry in Africa. And now, with a new name and look, AFMASS Food Expo is taking on a new mandate and a broader scope - to become Africa’s best platform where food industry manufacturers, retailers and innovators can meet directly with their consumers, side-by-side with suppliers of processing, milling, packaging, ingredients and laboratory solutions to Africa. Join us as we discover and discuss the latest technologies, new product innovations, sustainability, nutrition, food safety, market trends, regulations and more at the events that open the future of Africa’s food, beverage and milling industry - AFMASS Food Expos

GRAIN HANDLING, STORAGE & MILLING TECHNOLOGY, FOOD PACKAGING & PROCESSING TECHNOLOGY, SUPPLY CHAIN & LOGISTICS, ICT SOLUTIONS ETC

DAIRY & DRINKS EXPO

FRESH & LONG LIFE MILK • YOGHURT • JUICES • CHEESE • ICE CREAM • BEER • WINE • SPIRITS • COCKTAILS

FRESH & FERMENTED DAIRY PRODUCTS, ICE CREAM, ETC; SOFT AND ALCOHOLIC BEVERAGES; COCKTAILS & BLENDS ETC

AFRICA

FOOD

INGREDIENTS SHOWAFRICA

FOOD INGREDIENTS & CHEMICALS FOR USE IN DAIRY, BAKERY, BEVERAGE, MILLED, CONFECTIONERY & OTHER FOOD PRODUCTS

AFRICA

GRAINS,

Snacks Bakery & EXPO

GRAINS • MILLED PRODUCTS • PULSES • BREAD • CAKE • BISCUITS • SNACKS • COOKIES

CEREALS, PULSES AND PACKAGED FLOURS, BAKED GOODS (CAKES, BREAD, BISCUITS, COOKIES) & SNACKS

Africa

Health & Wellness Expo NATURAL & ORGANIC PRODUCTS • NUTRACEUTICALS • PERSONAL CARE

GOOD-FOR YOU FOOD, BEVERAGE & MILLED PRODUCTS, NUTRACEUTICALS, SUPPLEMENTS, VITAMINS & MINERALS ETC.

Fresh Produce

& Grocery Expo

MEAT, POULTRY & FISH • FRUITS & VEG • HERBS & SPICES

FRESH & PACKAGED FRUITS, VEGETABLES, HERBS AND OTHER FRESH PRODUCE; MEAT, POULTRY & FISH PRODUCTS

AFRICA HOTELS RESTAURANTS & CATERING EXPO

HARDWARE & SOFTWARE SOLUTIONS FOR THE HOTEL, RESTAURANTS & CATERING INDUSTRY

AFRICA

COFFEE & TEA EXPO COFFEE• TEA • COCOA

PACKAGED COFFEE, TEA, COCOA AND OTHER HOT BEVERAGES, PROCESSED AND PACKAGED LOQUID AND NOVEL BEVERAGES

EDITORIAL By Francis Juma, Publisher

Covid-19 is a wake-up call to invest in the Africa’s healthcare system

he global pandemic that is Covid-19 that has upended the way people live, work and interact worldwide has brought to the fore many issues that Africa must find solutions to if it is to survive this pandemic or any other one in future Already the world’s poorest continent, Africa’s often dirty and congested urban dwellings make it hard to meet the basic social distancing guidelines as advised by the World Health Organisation (WHO), due to the fact that most communities lack running water and basic hygiene. Chaotic public transport and poverty in the continent exposes millions of Africans at risk of the virus, as numbers of infected persons continue to rise. Add to these concerns, is the dilapidated and poorly funded healthcare systems in Africa. According to the WHO report in 2013, African countries are on average still far from meeting key health financing goals such as the Abuja Declaration target of allocating 15% of the government budget to health, with out-of-pocket expenditure higher than 40% of the total health expenditure in 20 of the 45 countries studied. The same case still applies in most African countries. The Covid-19 situation will not only stretch Africa’s capacity to treat its people, but has also put undue pressure on the continent to even meet the basic requirements for gloves, masks and protective wear for its health workers – with a vast majority of these supplies coming in from China and India. Post Covid-19, African countries must change tact drastically in the way they handle their health ministries. One of the clarion calls from analysts is the urgent demand to produce the required medical supplies locally within each country. The other is the call for better funding of healthcare in Africa, where healthcare still competes with military spending even in some of the poorest African countries. In this issue, we have a special focus on the food industry in Africa, where big multinationals are pouring in hundreds of millions of dollars to meet the rising demand for food and beverage products. In our new travel section, we have a wonderful coverage of Jinja, one of the most important fun cities in East Africa that is worth a visit by all. We also have a special report on the future of cars, as automation and electrification change the industry in drastic ways; plus a number of articles focused on the Covid-19 pandemic and many more

APRIL 2020

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AFRICA Inc.

SUPPLY CHAIN & LOGISTICS SUMMIT & EXPO

SEPTEMBER 24-25, 2020

NAIROBI, KENYA

AFRICA'S LEADING SUPPLY CHAIN, PROCUREMENT & LOGISTICS FORUM www.fwafrica.net/supplychain

WHAT THEY SAID 10

APRIL 2020

“Blockchain technology is still confusing to many Africans and is preventing its widespread adoption. It’s a relatively new concept for many people, who don’t know how to invest, where to invest, or what cryptocurrency to invest in.” Neil Ferreira, the CEO of South Africabased cryptocurrency, SAFCOIN, opinion on the cryptocurrency and blockchain technology landscape in Africa after expanding the digital currency in Nigeria and Uganda. “By backing an experienced fund manager focused on the MENA market, IFC’s support will help signal the continued viability of private equity in the region. Greater access to such financing can help spur private sector development and job creation, which are both still much needed in the region.” Beatrice Maser, IFC’s Regional Director for MENA after making a US$20 million investment into SPE AIF I, a newly independent, institutionalized private equity fund manager operating in MENA managed by SPE Capital Partners and focusing mainly on Egypt, Morocco and Tunisia. “The coronavirus is placing countries’ health care systems under unprecedented strain, while domestic containment measures are weighing on both supply and demand.” The European Bank for Reconstruction and Development (EBRD) in a report detailing its efforts in monitoring resilience of emerging economies to Covid-19. “Through our strategic investment into Payment24, Standard Bank Fleet Management will strengthen its footprint across the African continent and will remain the ‘leading digital and analytics-led fleet management services provider in Africa.” De Vries, the Executive Head of Fleet Management at Standard Bank when

the financier acquired a 40% stake in South African digital fuel management solutions and telematics company, Payment24 Group. “Healthcare-focused private equity funds in Africa with the capability to build equipment and an integrated eco-system across healthcare facilities and service providers are very limited.” The African Development Bank Group (AfDB) after making a US$10-million equity investment in Razorite Healthcare Africa Fund 1 (RHAF1) to help improve healthcare infrastructure delivery across the continent. “Labat Africa is pleased to welcome on-board a group of leading experts in the cannabis industry who are committed to ensuring SA takes its rightful place on the world stage in the field of cannabis innovation and scientific excellence.” Labat Cannabis South Africa while disclosing a deal to acquire a 70% stake in Biodata, a technology and medical research company focused on the cannabis industry. “We believe it is the responsibility of all organisations to assist where they can during the pandemic. Believing that charity “begins at home”, the Group plans to raise R40 million for the MTN Global Staff Emergency Fund for employees in need.” Mcebisi Jonas, the Chairman of MTN Group detailing the R250 million (US$13.41 million) relief package in response to the COVID-19 pandemic across its operation announced in April this year. “The CID determined that the merger is not likely to substantially lessen or prevent competition in the Common Market or any substantial part of it. The CID further determined that the transaction is unlikely to negatively affect trade between member states.”

WWW.AFRICAINCMAG.COM

The Comesa Competition Commission endorsing the Committee Responsible for Initial Determination’s (CID) decision on Equity Group’s acquisition of a controlling stake in Banque Commerciale du Congo. “Through the proposed investment, IFC is expected to help the company optimise business operations and further strengthen its corporate governance structures. IFC will provide a food safety advisory programme that will ensure that the company complies with the Global Good Agriculture Practice (GGAP) that is more stringent than local standards.” The International Finance Corporation (IFC), a member of the World Bank Group, making a US$15 million equity investment alongside Amethis in Kenyan retail chain Naivas Supermarkets. “The management of DCP has disclosed that the proceeds of the Series 1 Bonds will be used to refinance existing short-term debt previously applied towards cement expansion projects, working capital and general corporate purposes.” Dangote Cement Plc’s management following approval by the company’s Board of Directors to access the capital markets for medium term debt funding through an inaugural issuance of bonds under its N300 Billion (US$776m) Bond Programme. “With the rapid increase in smartphone penetration, the evolution into financial services and the potential for geographical expansion, we believe the next step in M-PESA’s African growth will be more effectively overseen by Vodacom and Safaricom.” Nick Read, Vodafone Group’s CEO, after Safaricom and its South African parent company, Vodacom, acquired intellectual property rights to M-Pesa service from Vodafone. “We need to take that into account and that is really the importance of the centre we have here

and what we see in the near future as an extension of it to accommodate many other things.” President Paul Kagame inaugurating the Rwanda Cancer Centre, a facility that has cutting edge technology used in administering specialised treatment to cancer patients. The facility has a capacity to handle between 150 and 200 patients a day. “The proposed railway presents an opportunity for more investments into the 3 countries as foreign investors will leverage on the smooth transition within Southern Africa and invest in different aspects of their economies.” Railnet CEO, Donald Kress commenting on the proposed US$11 billion modern railway line and high-speed trains linking Zambia, Zimbabwe and Mozambique, whose construction is expected to begin in January 2021. “The outlook in Sub-Saharan Africa is expected to contract by 1.6 percent in 2020, and highest, you know, in per capita terms, this would be higher still at close to 4 percent. This is the lowest growth number that we can find for the region going back at least to 1970.” Abebe Aemro Selassie, IMF African Department Director, commenting on the Sub-Saharan Africa regional economic outlook in the face of the COVID-19 pandemic “An international listing in Kenyan shillings, or any other local currency, can not only help issuers raise investment without bearing foreign-exchange risk, but can also provide increased visibility and profile to set benchmark yields for future issuances.” Shrey Kohli, head of debt capital markets and funds at London Stock Exchange (LSE) after Kenya-based Acorn Holding listed the first shilling-denominated green bond programme on the LSE.

Advertise in Africa Inc. magazine and website. Reach the Key Decision Makers in Africa’s Private, Public & NGO sectors. Build confidence in your company and brand, and stand tall in a crowded market place. Be associated with the premier business and entrepreneurship magazine read by those who keep the wheels of Africa’s economy moving.

Talk to us at info@fwafrica.net today. WWW.AFRICAINCMAG.COM

APRIL 2020

DEALSTREET AFRICA WASTE MANAGEMENT

BANKING

GreenTec invests into Cote d’Ivoire wastemanagement start-up Coliba COTE D’IVOIRE – Coliba, a start-up that has developed a plastic waste recycling and management platform, has raised undisclosed funding from German firm GreenTec Capital Partners, which will also provide the company with handson assistance to help it scale. Coliba has developed a waste management web and mobile application that connects households and businesses with affiliated plastic waste collectors. The startup applies the principles of the circular economy to tackle the problem of plastic waste in Ivory Coast, allowing users to earn airtime or discounts on certain products by recycling. Its app tracks a user’s bottle collection progress and efficiently dispatches agents for collection. While over 5 million tonnes of waste are generated each year in Côte d’Ivoire, only less than half of the current waste is being collected, and about 3% is being recycled. It is also estimated that 94% of actors in the plastic waste economy operate in the informal sector on the fringe of the recycled plastics value chain. Coliba says that its platform solves these issues by offering formal employment opportunities in waste management as well as an easy solution for households to earn rewards for recycling. GreenTec said it will support Coliba in scaling its operations to create larger value and impact in Africa’s recycled plastic economy. The company has been powered by a grant from GSMA Ecosystem Accelerator and long-lasting partnership with mobile operator MTN.

Equity Group gets approval to acquire majority stake DRC bank for US$105m DRC – Kenyan financial services holding company, Equity Group has received the green light to acquire KSh10.9 billion (US$105 million) controlling stake in Banque Commerciale du Congo (BCDC), one of the top banks in the Democratic Republic of Congo. The stake had been held by George Arthur Forrest family, one of the wealthiest families in DRC, which is known for the Groupe Forrest International, a firm founded in 1922 with interests in construction, electricity, industry, mining, agribusiness, health and welfare. The clearance paves the way for Equity to finalise the transaction that will see it get 66.53% stake in the bank that has 29 branches. COMESA Competition Commission endorsed the decision by the Committee Responsible for Initial Determination (CID) saying that the deal will increase market share of Equity without hurting competition and is unlikely to negatively affect trade between member states. The deal will help deepen the Group’s influence in the populous Central African country. BCDC is the second largest bank in the Democratic Republic of the Congo, measured by balance sheet and shareholders’ equity.

FINANCE

Tanzania’s sanitary towels maker secures funding from Gray Matters Capital TANZANIA – WomenChoice Industries, a manufacturer and distributor of low-cost, affordable, reusable sanitary towels, has raised US$200,000 in funding from US-based impact investor, Gray Matters Capital (GMC). The investment, which comes under GMC coLABS, the sector-agnostic gender portfolio of the American impact investor is aimed at helping WomenChoice Industries reach out to 500,000 women and girls from low-resource settings to use its reusable sanitary towels by December 2022. The funding will be used in ramping up its production capacity, recruiting and training of vendors and sales and distribution agents.

APRIL 2020

The company produces reusable sanitary towels made by locally trained tailors, volunteers, and staff employed by the company from locally sourced materials and recruits socially disadvantaged and vulnerable young women from local communities as vendors and sales agents empowering them with menstrual hygiene management (MHM) models along with business and financial management skills. This funding marks coLABS’ first investment in Tanzania and its sixth portfolio company to be added from Africa following Rwanda’s ARED, Ghana’s Redbird Health Tech, Nigeria’s Sonocare and Kenya’s Taimba and Farmshine.

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CO-LOCATED EVENT

SOLAR &

ZAMBIA

RENEWABLE ENERGY

CONSTRUCTION & REAL ESTATE

EXPO

OCTOBER 7-9, 2021 • LUSAKA, ZAMBIA

Welcome to Zambia & SADC region’s Construction, Real Estate & Renewable Energy Expo

BUILDING INTERIORS, FLOORING & FINISHES

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www.fwafrica.net/zamcon Join over 5,000 investors and managers from Zambia and sorrounding SADC countries from across the construction, real estate and renewable energy industries at the region’s must-attend event. Meet, network and source your requirements from over 200 leading regional and international suppliers to the industry; attend high impact conferences on the latest technologies and trends and network with leading investors, property developers and leaders from Government and private sector in the SADC region.

5000+ Visitors

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TECHNOLOGY

FINANCIAL FUNDING

Nigerian data automation startup AfDB invests US$13.4m in Yeelen Fund to Youverify raises US$1.5m seed round for boost financial inclusion in West Africa development WEST AFRICA – The African Development Bank (AfDB) is

NIGERIA – Nigerian Know-YourCustomer (KYC) startup, Youverify has raised US$1.5 million in a seed funding round to help it improve its technology and accelerate business development at home and abroad. Youverify aims to help financial services companies and mobile operators automate the verification processes of different types of data treated separately today, such as identity, academic background, home address, credit history and facial recognition. Launched in Lagos in 2018, Youverify has already performed more than 300,000 customer registrations and verifications and is now planning on growth both in Nigeria and across Africa after the seed funding round. The round was led by Orange Digital Ventures Africa (ODV), which counts Youverify as the fifth company to join its portfolio, and also includes Loftyinc Afropreneurs Fund, an early-stage investment fund. The US$1.5 million investment round will help Youverify improve its technology and accelerate business development in Nigeria and the continent. “This constitutes a unique opportunity for us to take further our ambition to simplify and secure our client’s internal processes, whether in the recruitment of staff, or customer onboarding. “Our ambition is to be the leading African player in verifying people and companies’ identities by making data protection and security the core of our proposal,” said Youverify co-founder and Chief Executive Officer Gbenga Odegbami.

investing US$13.4m in the capital of the Yeelen fund to enable it to expand its capacity and support West Africa’s financial sector. Yeelen Financial Fund LP, which is a 12-year investment fund domiciled in Mauritius and Lomé aims to achieve a capitalization of US$72.44m in order to invest in the financial institutions of the eight countries of the West African Economic and Monetary Union (WAEMU): Benin, Burkina Faso, Côte d’Ivoire, GuineaBissau, Mali, Niger, Senegal and Togo. AfDB revealed that the fund will invest the capital in banks, microfinance institutions (MFIs), financial technology companies (Fintechs) and insurance companies, with the aim of helping these institutions comply with regulatory requirements in terms of minimum capital and equity The AfDB noted that the Yeelen fund is also aimed at supporting the expansion of financial institutions by widening their reach to financially excluded populations and by developing credit and insurance products adapted to their conditions. The AfDB says that the WAEMU zone remains one of the areas least well served by financial products such as microcredits, and by insurance products such as insurance, micro and meso-insurance.

H E A LT H C A R E

Health-focused incubator Villgro Kenya funds East African ed-health startups

KENYA – Villgro Kenya, an impact investor and business incubator, has awarded US$20,000 each in grant funding to three innovative e-health startups from Uganda and Kenya. 14

APRIL 2020

The India-based Villgro Innovations Foundation launched an incubator for early-stage businesses in the healthcare and life sciences sector in Nairobi in 2017 that works with early-stage forprofit social enterprises that have an impact on the lives of the poor, incubating companies in sectors such as education, health, energy and agriculture. Its Kenyan unit is a health-focused incubator offering mentoring, funding and access to networks. In this funding round, the second after the initial one in 2018, two startups from Uganda and one from Kenya were selected. Wekebere, a Uganda based social enterprise that combines

connected devices with data analytics to increase access to care, and A-lite, which has developed a low cost, noninvasive vein locator, got the nod, while the third grantee is Kenya’s Kijenzi, which has developed a 3D printing service that ensures health centres in low-income communities are able to produce medical equipment replacement parts when they need them. Villgro Kenya will offer these startups financial support, high-touch mentorship through a structured program, access to networks of healthcare and product development experts and connections to investors and strategic partners. WWW.AFRICAINCMAG.COM

FOODEX AFRICA FOOD INDUSTRY EXCELLENCE AWARDS

Gala DINNER NOVEMBER 13, 2020 KAMPALA, UGANDA

AFRICAâ&#x20AC;&#x2122;S MOST PRESTIGIOUS FOOD INDUSTRY AWARDS CEREMONY & GALA DINNER For Sponsorship, Application and Attendance queries: TEL: +254 725 343 932 | EMAIL: info@fwafrica.net

www.awards.foodbusinessafrica.com

E D U C AT I O N

South African firm Advtech takes the controlling stake of Makini Schools KENYA – Advtech, a company that operates within the education and recruitment industries in South Africa as well as several African countries, has bought additional shares in Makini Schools, giving it full control over the running of the 42year old institution. Advtech informed parents that its ownership in the school has increased to 90% after its other partners — Scholé International and Caerus Capital — sold some of their shares to the South African company. According to Business Daily, Advtech had in 2018 acquired a 71% stake in the high-end group of schools from the Makini Schools founder Mary Okello for KSh1 billion (US$9.44m) with the other two foreign investors holding the remaining shares. Scholé International, which had a 25% stake, will jointly have a 10 percent ownership of Makini with US-based investment firm Caerus Capital, which earlier controlled 4% of the school. LOGISTICS

Kenyan logistics startup Amitruck secures funding from GreenTec Capital

KENYA – Amitruck, a startup that has developed a mobile and web-based trucking logistics platform, has raised funding from GreenTec Capital to boost its growth plans. Amitruck matches cargo owners with trucking logistics professionals through a digital competitive bidding process, bringing trust and transparency into the African logistics sector. It’s solution cuts out expensive middlemen whilst increasing security as all drivers and vehicles are vetted and goods in transit insured. The startup has already seen impressive traction, and

has now secured investment from GreenTec Capital to support its growth plans and further scaling. “GreenTecCapital is very happy to announce our investment in Amitrucks an innovative Kenyan logistics platform bringing trust and transparency to the African logistics sector,” GreenTech announced on its official website. “With a presence in Germany and in Africa, GreenTec is an ideal partner as we continue to scale our business,” said Mark Mwangi, the CEO of Amitruck. GreenTec, which makes small investments in African tech startups but says its real value-add comes from its “companybuilding” model, has invested in a host of African startups, including Kenyan AI startup SuperFluid Labs, Nigerian logistics startup Parcel-it, Kenyan insurtech platform Bismart, Moroccan recruitment service KWIKS, and, most recently, Ivory Coastbased waste management startup Coliba. Amitruck is looking to bring trust and transparency into the US$160 billion African logistics sector. As of 2019, it claimed to connect traders to over 500 registered transport service providers who move their goods to different locations, as well as up to 200 fleet owners on the platform. The investment from GreenTec Capital is expected to boost the startup’s efforts at gaining a foothold in the East African market where the likes of Lori Systems and Sendy, two wellfunded logistics startups, are already making headway.

Talk to us at info@fwafrica.net today. 16

APRIL 2020

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BREWING

East African Breweries to raise its majority stake in Serengeti Breweries by 30%

TANZANIA – East African Breweries Limited (EABL) is seeking to acquire an additional 30% stake in its Tanzanian subsidiary, Serengeti Breweries Limited, in a deal that will deepen its grip in the East African alcoholic beverage market.

“EABL intends to enter into a conditional transaction to purchase an additional 30 percent shareholding in Serengeti Breweries,” EABL disclosed in a cautionary statement to shareholders. Completion of the transaction is subject to various regulatory approvals in Kenya and Tanzania. The deal comes barely a year after the brewer spent Sh313 million (US$3m) in July 2019 to acquire four percent additional stake in Serengeti, which raised its legal ownership in the subsidiary to 55% and and further lifted its economic ownership to 74.5%. Before this deal, EABL owned a 51% stake in Serengeti but had a larger claim in terms of assets and earnings at 72.5%. In the year ended June 2018, EABL announced the conversion of Sh15.3

FINTECH

billion (US$147.2m) loans receivable from Serengeti into equity sought to ease the Tanzanian brewer’s debt burden. This transaction increased EABL’s effective interest in Serengeti from 51% to 72.5 percent. EABL sees subsidiaries as key growth areas and continues to pump in money to increase expansion and also market the brands. According to the brewer’s half year ended December 2019 financials, Serengeti is the group’s fastest growing business, expanding by 19% and accounting for 12% of the total sales. Net sales from the unit rose 26% during this period, the fastest among its three units in Kenya, Uganda and Tanzania, driven by growing interest in its Serengeti Lite lager beer among consumers.

FINTECH

Egyptian fintech startup Khazna raises Nigerian startup Field Intelligence raises US$3.6m to roll pharma solutions funds to promote financial inclusion EGYPT – Cairo-based fintech company Khazna has closed a seed funding round to enable it offer “customer-centric services” to over 20 million active smartphone users in Egypt who lack access to formal banking and financial services. Egyptian VC Algebra Ventures led the seed round which also featured Accion Venture Lab, Accion’s seed-stage fund that recently closed US$33 million in fresh funds. Founded in 2019 by Omar Saleh, Ahmed Wagueeh, Fatimah El Shenawy, and Omar Salah, Khazna aims to provide mobile financial services to over 20 million underbanked Egyptians, who actively use smartphones but have little access to formal financial services. The fintech’s first product is Khazna HR, a salary cash advance app that allows employers (who partner with it) to offer cash advance to their employees as a benefit, helping them to cover for unforeseen emergencies. The fintech however says that the salary advance is the first of many services that it is currently working on. Khazna said it was working with major banking and corporate partners to launch different products that will allow users to pay, save, borrow and insure with minimal face-to-face or phone interactions. Khazna’s co-founder and CEO, Omar Saleh, in a statement explained that the firm will use the investment to advance their financial inclusion-focused products. “We’re seeing the rise of a new wave of Egyptian Fintech startups that are attracting interest from local and international investors. We’re excited to be leading this round with Khazna,” Tarek Assaad, Managing Partner with Algebra Ventures, said. “Omar is an exceptional entrepreneur and we believe that he and his team will grow Khazna to be one of the most transformative startups emerging from Egypt in the next few years.” WWW.AFRICAINCMAG.COM

NIGERIA – Nigeria based startup Field Intelligence has announced that it has closed a US$3.6-million Series-A funding round. In statement, the company said that the funds would be used to further roll out its product: Shelf Life, a supply chain finance platform for pharmacies in Africa. The round was led by Blue Haven Initiative, with investors including Newtown Partners via the Imperial Venture Fund and Accion Venture Lab. The startup said that the new investment will fund Shelf Life’s expansion throughout Nigeria and Kenya, as well as the development of additional services for Shelf Life clients and their patients. Using Shelf Life, pharmacies can subscribe to over a thousand quality-assured and price-stabilised drugs from 50 medical, health and wellness categories. Founded in 2015 by American Michael Moreland and Australian Justin Lorenzon, the startup says since first debuting in Nigeria in 2017, it has been able to sign on over 280 community pharmacies in Nigeria and Kenya as subscribers to its platform, and in addition claims it has maintained 96% stock availability for its clients, up from a pre-Shelf Life baseline of 60%. Field Intelligence notes that its product is an alternative to traditional inventory finance, costing pharmacies between 60% and 82% less than traditional loans. APRIL 2020

EDTECH

FUNDING

African fintech startups to benefit from US$203m Accion Quona Inclusion Fund

SA ed-tech startup Snapplify acquires educator media hub to diversify its offering SOUTH AFRICA – Snapplify, an education tech startup, has acquired Onnie Media, an educator media hub for South African teachers, and the hub’s online marketplace for teachers, Teacha!, to further diversify Snapplify’s fast-growing educational portfolio. The acquisition further diversifies Snapplify Group’s fast-growing educational portfolio and highlights the edtech company’s emergence as a serious contender in the global e-learning market. Already Africa’s largest e-book aggregator and distributor, the company is now looking for further speed its growth. Based in Cape Town but already active internationally, Snapplify provides a marketplace for digital education content, related educational services and devices, offering e-learning solutions to over 1,400 schools, colleges and universities, and more than 200,000 students. To support its plans, the company raised US$2 million in expansion capital from venture capital firm Knife Capital and African investment manager Hlayisani Capital’s Hlayisani Growth Fund in September 2019 that has been used to fund the acquisition of Onnie Media/Teacha!, South Africa’s largest independent online teacher community. The acquisition bolsters Snapplify’s aim to continue developing an offering that is compelling and valuable for teachers. “We believe that successful digital education in classrooms requires more than a simple switch from physical to digital textbooks,’ said chief executive officer (CEO) Wesley Lynch. “Expanding our offering to include teacher support tools is crucially important to us, and we’re pleased to have Teacha! join the Snapplify Group to further this mission.” 18

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AFRICA – Quona Capital, a venture firm focused on financial inclusion in emerging markets, has announced the final close of the Accion Quona Inclusion Fund at US$203 million in commitments, significantly exceeding its $150 million target, from an array of leading investors. Quona is a US-based VC company, which focuses on fintech opportunities in emerging markets in Asia, Africa, and Latin America. Accion, a nonprofit focused on financial inclusivity, acts as the fund’s sponsor, general partner, and anchor investor. Quona Capital, which has supported more than 20 financial technology companies expanding access for underserved consumers and small businesses in Latin America, South and Southeast Asia, and Sub-Saharan Africa, has a strategic relationship with Accion, a global non-profit focused on microfinance and fintech impact investing. The investors include global asset managers and insurance companies, investment and commercial banks, as well

as university endowments, foundations, family offices, and development finance institutions. The Accion Frontier Inclusion Fund is the first fund managed by Quona and sponsored by Accion, and will pursue Quona’s usual strategy, which was deployed in a strong portfolio of investments with two exits to date. “This oversubscribed fund represents a significant milestone for financial inclusion and the impact investing industry,” said Monica Brand Engel, Quona Capital co-founder and partner. “Fintech for inclusion brings marginalised consumers and small businesses to the mainstream and can inspire even more entrepreneurial problem-solving in traditionally underserved communities.” To date, the fund has invested in African companies such as South Africa’s LulaLend and Kenya’s Sokowatch, as well as companies from Brazil, India, Pakistan, and Mexico supporting more than 20 fintech companies.

CONSTRUCTION

BUA Group snaps controlling stake in construction and mining firm P.W. Nigeria NIGERIA – BUA Group, a leading food, cement and infrastructure conglomerate, has acquired majority shareholding in P.W. Nigeria Limited, one of the largest construction, engineering and mining companies in Nigeria. The acquisition, which follows the recent completion of the consolidation of the firm’s cement arm, BUA Cement, is part of the conglomerate’s ambitions to further deepen its investments in the infrastructure business in Sub-Saharan Africa. The founder and Executive Chairman of the group, Abdul Samad Rabiu, said that BUA’s acquisition of the construction firm provides a prime opportunity to increase investments in the entire value chain of the cement, mining and construction industry. The expansion will be supported by BUA Cement’s strong market position in Nigeria, already ranking as the secondlargest cement company in the country, as well as investments in other areas including mining, quarrying, construction,

power and logistics amongst others. Rabiu expressed the belief that P.W. Nigeria Ltd provided a strong value proposition too difficult to ignore with its solid experience in building dams, roads, airports, water projects and other infrastructure projects in Nigeria. He further disclosed that as Nigeria and most of West Africa looks to improve infrastructural development in coming years, it became quite necessary for BUA to position itself strategically to support critical investments and unlock untapped opportunities in the infrastructure development sector. Ranking as the second-largest cement company in the country, as well as investments in other areas including mining, quarrying, construction, power and logistics amongst others, the acquisition of P.W. Nigeria, will extend BUA Group’s investments, leadership and capacity in the infrastructure space and is expected to benefit from tight integration of BUA Cement’s business and P.W. Nigeria’s construction business. WWW.AFRICAINCMAG.COM

R E TA I L

ICT

Amethis Fund II acquires minority stake US-based web builder GoDaddy acquires in Kenyan retail chain Naivas SA social media content startup Over

KENYA - Amethis, a Paris-based private equity fund has acquired a minority equity stake in Kenyan retail chain, Naivas, in a deal estimated to be worth billions of shillings, seeks ‘the emergence of a national leader in the retail sector’ in Kenya. The value was not disclosed. Amethis made the acquisition using its Amethis Fund II, alongside its partners DEG, MCB Equity Fund and IFC, a member of the World Bank Group to further expand the retailer’s operations and store network while ‘keeping at the same time a strong Kenyan identity,’ according to Jean-Sebastien Bergasse, Partner at Amethis. Amethis becomes the first external investor outside the family to join the capital of the company, in a country where family owned retail chains have been the norm. The acquisition, which has since been approved by the regulator, sets the stage for the continued expansion by Naivas as it seeks to grow its footprint across the country in the fight for market share in an increasingly competitive market, after the demise of Nakumatt Supermarkets and the entry of giants Carrefour, Game and Shoprite into the market. Naivas is the leading mass distributer in Kenya with a 60 stores’ network throughout the country. Established in 1990, Naivas started as a small family business on the outskirts of Nakuru town in Kenya. It has become one of the top retail chains in Kenya, with an aggressive store openings strategy, which has included some of the most iconic set ups in Kenya – where formal retail is on the increase. This investment, the fourth of Amethis Fund II, will support the strategy implemented by the family and the management team towards the emergence of a national leader in the retail sector, says Amethis, adding that they aim to continuously improve the retailer’s supply chain, develop its private label segment and strengthen its relationships with suppliers - and then to consolidate its position and to further expand with new store openings in the country. “In a Kenyan retail landscape where many competitors from abroad are settling in, we are proud to support a very successful Kenyan business who understand the better the Kenyan consumer. We look forward to working jointly with the shareholders and management team to further expand the business’ operations and store network and keeping at the same time a strong Kenyan identity,” said Jean-Sebastien Bergasse. Other deals by the French equity firm are minority acquisitions in printing and packaging firm Ramco Plexus in 2014, confectionery maker KenAfric in 2016 and Mozambique’s largest integrated wheat and maize miller, Merec Industries in 2018 which earned them recognition at the prestigious Africa Food Industry Excellence Awards for one of the Deals of the Year in Africa’s food industry.

SOUTH AFRICA – Over, a startup that developed an app that allows businesses to easily create content for social media, has been acquired by American publicly traded internet domain registrar and web hosting company, GoDaddy for an undisclosed amount. Launched in Cape Town in 2012, Over began life as a simple “text over photos” app for sharing goals and inspirational quotes but developed into a multifaceted tool that allows businesses to easily create photos and videos to post on their social media platforms and is now used by more than one million active users, becoming a global business. The startup’s 76-person team will now join the US-based company but will continue to operate out of its Cape Town office. Matt Winn, co-founder and chief executive officer (CEO) of Over, said the acquisition was a huge moment for the company, especially as it was being acquired by a firm with a vision the same as its own – to empower entrepreneurs. “When we first spoke with GoDaddy last year, it was clear GoDaddy was aligned with who we are, who we serve, and how we can help people succeed online. Over will help bolster GoDaddy’s focus on enabling entrepreneurs and small businesses to look great everywhere online that matters via Websites+Marketing. Putting their website builder together with our best-in-class social content creator on the largest platform for entrepreneurs is an incredible combination,” said Winn. GoDaddy’s recently relaunched its website-building tools under the name “Websites+Marketing”, offering a host of additional features, and the Over acquisition adds to its product suite on that front. As part of GoDaddy, over will continue to develop its app, while also expanding its capability to serve entrepreneurs everywhere with impactful creative tools necessary to succeed online.

AFRICA INC. NEWS AGRO-PROCESSING

INFRASTRUCTURE

AfDB to invest US$300m in the development of agro-processing zones in Nigeria NIGERIA – The African Development Bank (AfDB) is planning to support the implementation of the Special Agro-Industrial Processing Zones (SAPZs) project in Nigeria worth US$300m. According to the Senior Special Adviser on Industrialisation to AfDB President, Prof. Oyebanji Oyelaran-Oyeyinka, the SAPZs are designed to concentrate agro-processing activities within areas of high agricultural potential. The zones, which are also expected to create jobs, boost food security and reduce food imports, will enable agricultural producers, processors and distributors to operate in one vicinity. Prof. Oyebanji Oyelaran-Oyeyinka said the project’s road map was developed completely as a private-driven venture that would boost government’s efforts at revitalising agriculture in the country. Oyelaran-Oyeyinka further revealed that in the first phase of the project, the agro-processing zones would be spread among the six geopolitical zones of the country. This he said would create more access for both farmers and entrepreneurs. Noting that AfDB was supporting similar projects in 15 countries, he said Nigeria should emulate success stories in countries like Gabon and Senegal where SAPZs had contributed to economic growt.

Railnet International plans US$11bn railway project to connect southern Africa SOUTHERN AFRICA – Railnet International, a U.S.-based railway line construction company, is planning to invest an estimated US$11 billion in a modern railway line and high-speed trains linking Zambia, Zimbabwe and Mozambique. Railnet CEO, Donald Kress said that his railway development and construction company was in talks with governments in the three countries and signed an agreement to start feasibility studies in Zambia. “We have a group known as Magcor International and their CEO has arranged financing through a group of investors,” Kress said following the signing of an agreement. “Until we have signed a contract with the investors, they have requested to remain anonymous.” The investment in the project, running from Zambia’s Copperbelt province to the port of Beira in Mozambique via Harare in Zimbabwe includes the cost of locomotives and wagons, he said. Feasibility studies are expected to begin in the second half of 2020 and would be followed by detailed engineering design for the project on the Zambian side, Kress said. Construction is expected to begin in January 2021, Kress said, adding that Railnet would replace the existing system to allow freight trains to travel at 120 km/hour and passenger trains at 160 km/hour. The company will operate the modern railway for a number of years and hand it over to the government after recovering its investment from the profit made, Lungu said. With the total population of over 63 million people living in Zambia, Zimbabwe, and Mozambique, reducing road congestion is a major benefit of this regional railway service. The project is expected to promote economic integration, which will create better trading opportunities for locals in the three countries while increasing the overall productivity.

MOTORING

GA Insurance officially launches in Uganda after acquiring Nova Insurance Company UGANDA – GA insurance, a Kenyan insurance company, has officially launched in Uganda after acquiring 100% of Nova Insurance Company in November 2019. GA Insurance, which is rated by the Global Credit Rating Agency with its underwriting premiums growing to US$66 billion, brings to the Ugandan market its financial strength and strong customer experience. Speaking during the launch, Vijay Srivastava, the GA Insurance Kenya CEO, said that the firm will go along with the rapid technological innovation and will soon launch new features, including a document management software that will enable the management of huge volumes of data and information for its 20

APRIL 2020

general and medical insurance. “I am hopeful that the new brand we are unveiling today will go a long way in contributing to the development of the insurance industry in Uganda,” Alhaj Ibrahim Kaddunabbi Lubega, the Chief Executive Officer of Uganda’s Insurance Regulatory Agency (IRA) said. Despite a slower insurance penetration in Uganda, pegged at 0.84% compared to 3% in Kenya, analysts say that the market is very receptive, spiced by the accommodative regulator. GA joins more than 25 companies driving up insurance sector penetration in East Africa. The firm already has operations in Kenya and Tanzania. WWW.AFRICAINCMAG.COM

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THE CONTENT OF THIS PROMOTION CAMPAIGN REPRESENTS THE VIEWS OF THE AUTHOR ONLY AND IS HIS/HER SOLE RESPONSIBILITY. THE EUROPEAN COMMISSION DOES NOT ACCEPT ANY RESPONSIBILITY FOR ANY USE THAT MAY BE MADE OF THE INFORMATION IT CONTAINS.

WWW.AFRICAINCMAG.COM

APRIL 2020

TRADE

WTO warns that trade set to plunge by a third as COVID-19 pandemic global economy

WORLD – The World Trade Organisation has warned that world merchandise trade could drop by as much as between 13-32% in 2020 due to the COVID-19 pandemic, depending on the duration of the outbreak and the effectiveness of the policy responses by governments – exceeding the slump wrought by the 2008-9 global financial crisis. In the report, the WTO, which is responsible for the regulation of international trade between nations, says that nearly all regions in the world will suffer double-digit declines in trade volumes in 2020, with exports from North America and Asia hit hardest and trade likely falling steeper in sectors with complex value chains, particularly electronics and automotive

products. The report adds that the services sectors may be most directly affected by the pandemic due to transport and travel restrictions. The crisis, which has upended world trade, will add to a business environment that saw merchandise trade value of exports in 2019 fall by 3% to US$18.89 trillion (volume fall by 0.1%) weighed down by trade tensions and slowing economic growth. The value of commercial services exports rose 2% to US$ 6.03 trillion in 2019. Although the WTO projects a 2021 recovery in trade, there exists huge uncertainty, with outcomes depending largely on how long the outbreak goes on and the effectiveness of the policy responses. World trade was already slowing in 2019 before the virus struck, weighed down by trade tensions between China and the US and slowing economic growth. "This crisis is first and foremost a health crisis which has forced governments to take unprecedented measures to protect people’s lives," WTO Director-General Roberto Azevêdo said. "The unavoidable declines in trade and output will have painful consequences for households and businesses, on top of the human suffering caused by the disease itself. The immediate goal is to bring the pandemic under control and mitigate the economic damage to people, companies and countries. But policymakers must start planning for the aftermath of the pandemic,” he added

TRADE

Covid-19 disrupts global supply chains as it creates 'manufacturing deserts'

WORLD – The Covid-19 pandemic has produced an unprecedented global supply chain crisis, stemming from a lack of mapping and flexibility around the multiple layers of global supply chains and a lack of diversification in sourcing strategies. According to a new report from Baker McKenzie and Oxford Economics, Beyond COVID 19: Supply Chain Resilience Holds Key to Recovery, the pandemic has created temporary 'manufacturing deserts', whereby a city, region or whole country's output dries up so substantially due to lockdown conditions that they become a no-go zone to source anything apart from essential items such as food stuffs and pharmaceuticals. The report highlights that the immediate impacts of a failing global supply chain are already being felt, from auto plants in Korea shutting down because of a lack of parts from China to smart phone manufacturers running dangerously low of components. As a result, global trade is expected to fall by more than 4% in Q1 2020, and decline even further in Q2. The report, however, forecasts that the hardest-hit manufacturing sectors across the world will be also the first to recover by H1 2021 as a release in pent-up demand is driven by a 22

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recovery in sentiment, and production ramps up to make-up for previously lost output. Oxford Economics' baseline forecast shows that global manufacturing will take a 5% hit in the first six months of this year compared to 2019, recover much of that drop in H2 2020 and finally exceed the 2019 position by early 2021. The automotive sector is set to see the biggest output falls globally in H1 2020 of 13%, followed by textiles (8%) and electronics (7%) although the forecast also shows the auto and other transport equipment sector is likely to see the swiftest recovery, along with textiles. Marc Yudaken, Partner and Head of the Industrials, Manufacturing and Transportation (IMT) sector at Baker McKenzie in Johannesburg says that in Africa, the manufacturing and industrial sectors have been heavily impacted by both a global reduction in demand for products and a decreased supply of key components from China and other regions. Access to skilled workforces has also been impacted by numerous government lockdowns and travel bans around the world. “Manufacturing products, industrial machinery and transport equipment constitute over 50% of Africa's import needs, with the most important suppliers being Europe (35%), China (16%) and the rest of Asia including India (14%). Supply chain disruptions in these regions have severely impacted Africa’s ability to access essential products and components. However, while the effect of COVID-19 on Africa’s IMT sector will be detrimental, there is light at the end of the tunnel in that the supply chain delays are expected to be mostly short term,” said Yudaken WWW.AFRICAINCMAG.COM

MARKET TRENDS

COVID-19 pandemic threatens to hamper India’s solar energy plans, says GlobalData

INDIA – The global Covid-19 pandemic is set to hit the growing Indian solar industry hard, as a surge in the price of components and supply chain constraints from China make it impossible to meet tight deadlines. According to research company GlobalData, about 2.3GW of solar plants were expected to be commissioned from June to August 2020 in the country, with the virus upending the delivery of these projects as per earlier scheduled. “Before the pandemic, these plants were expected to be supplied with modules by the end of March 2020, but the ongoing situation has impacted capacity addition plans and is expected to delay future bids. To overcome this situation, the All India Solar Industries Association has asked the government to consider subsidizing the cost differential and urge domestic manufacturers to ramp up their production,” says Somik Das, the Senior Power Analyst at GlobalData. According to the Confederation of Indian Industry (CII), the solar sector is expected to see a surge in the prices of components due to decreased production, as well as constraints faced by the supply chain and logistics around procuring components from China, where production is reduced due to the pandemic. The virus outbreak has created other issues for the Indian solar industry, with shipping companies having stopped uploading materials from Chinese ports and transporting them to other countries, including India. Das comments that the pandemic has caused major trouble for the solar components supply chain, which in turn has negatively impacted the projects in the pipeline, raising questions over the deadline within which these projects are to be completed. The All India Solar Industries Association has suggested exempting solar module producers in Special Economic Zones (SEZs) from 25% safeguard duty on imports of solar cells and modules for domestic facilities. The CII has also recommended removing the higher customs duties imposed on any products that are primarily sourced from China that may need to be sourced from other countries due to the pandemic. The Indian Government may have to reconsider the recent imposition of higher duties as well. WWW.AFRICAINCMAG.COM

H E A LT H C A R E

African Development Bank Group unveils US$10bn response facility to curb COVID-19 AFRICA – The African Development Bank (AfDB) has announced the unveiling of a US$10 billion COVID-19 response facility to help its regional member countries in fighting the pandemic. The package, which will be available to African governments and institutions, is split into three parts: US$5.5 billion of it will go to the sovereign operations of the AfDB countries, US$3.1 billion will go into sovereign and regional operations for countries under the African Development Fund—AfDB’s concessional arm which caters to fragile countries, while an additional US$1.35 billion will be channeled to the operations of Africa’s private sector The facility comes after the Bank recently launched a US$3 billion social bond to fight the global pandemic, which was the world’s largest US dollar denominated social bond ever on the international capital market on the London Stock Exchange and also the Board of Directors also approved a US$2 million grant to the World Health Organization (WHO) to support its efforts in Africa. According to Akinwumi Adesina, the President of the AfDB, the package took into account the fiscal challenges that many African countries are facing. “Africa is facing enormous fiscal challenges to respond to the coronavirus pandemic effectively. The African Development Bank Group is deploying its full weight of emergency response support to assist Africa at this critical time. We must protect lives. These are extraordinary times, and we must take bold and decisive actions to save and protect millions of lives in Africa. We are in a race to save lives. No country will be left behind.

APRIL 2020

A G R I C U LT U R E

ICT

YouTube appoints Alex Okosi as the new MD for emerging markets in EMEA

Sierra Leone secures US$14m financing to strengthen innovations in agriculture SIERRA LEONE – The African Development Bank has committed US$14 million to help Sierra Leone implement innovations in agriculture focusing on challenges in fertilizer distribution, seeds acquisition and distributions to farmers. The announcement was made at a meeting between the President of the African Development Bank (AfDB) Dr Akinwumi Adesina and the President of Sierra Leone H.E Julius Maada Bio, where the leaders discussed ways to improve farming in Sierra Leone, scale up nutrition and defeat stunted growth in children. Dr. Adesina noted that African had no reason to go hungry as the continent possessed 65% of the world’s remaining uncultivated arable land, had an abundance of freshwater and experienced about 300 days of sunshine a year. Adesina highlighted the Brazilian model of reducing malnutrition, adding that the country had a zero hunger programme that prioritized high level of hygiene, high quality of food and feeding in schools and made sure that most of what was supplied and served were produced by local farmers. According to the USAID, agriculture (including forestry and fisheries) is the mainstay of the Sierra Leonean economy employing over 60% of the labor force mostly at the subsistence level but is however constrained by several factors including lack of improved inputs, labor shortages, and post-harvest losses. 24

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AFRICA – YouTube, a video-sharing platform, has appointed Alex Okosi, a Nigeria-born American media expert as managing director of emerging markets for YouTube in Europe Middle East and Africa (EMEA). The tech giant said in a statement said that Alex would be responsible for running YouTube’s business and partnership teams across emerging markets in EMEA including Russia, the Middle East, North and Sub Saharan Africa. Alex Okosi, a US-educated media executive responsible for developing and launching MTV Africa in February 2005. He has also spearheaded the launch of other localized Viacom brands in Africa encompassing Nickelodeon and Comedy Central. Okosi will be reporting to the head of YouTube EMEA, Cécile Frot-Coutaz based in the London office. He described YouTube as a game-changing platform that plays an increasingly important role in people’s lives today through the dynamic content and innovation that it delivers. Cécile Frot-Coutaz, head of YouTube EMEA, noted that Alex brings a wealth of experience in the content industries

and has a track record for building businesses and audiences in established and new markets. “Alex will be leading our existing teams in Russia, Sub Saharan Africa, Turkey, the Middle East and North Africa to drive further expansion in these key markets” Prior to joining YouTube, Alex served as a long-time TV executive. Most recently he was executive vice president and managing director of Viacom/CBS Networks Africa & BET International.

MOTORING

Hyundai appoints Bang Sun Jeong as Vice President of Africa and Middle East

AFRICA – Hyundai Motor Company has appointed Bang Sun Jeong as the new Vice President of the Middle East and Africa region. Jeong replaces Mike Song, who recently got promoted, and will now work with the Genesis Division Headquarters. He will oversee Hyundai’s operations in the region will be responsible for

strengthening company’s presence and brand value across the region. Prior to this appointment, Jeong worked as Hyundai’s Vice President of Asia Pacific, Africa and the Middle East Operations Division and also held the Executive Director – sales and marketing role for Hyundai Motor India. He has also served in different positions in Poland and Turkey. With over six plants in the U.S., India, China, Turkey, the Czech Republic, Russia and Brazil, Hyundai Motor is the world’s fifth-largest automaker. It was established in 1967 and has over two dozen auto-related subsidiaries and affiliates. Hyundai Motor exports over one million vehicles per year, ranging from sedans, SUVs, trucks and buses to countries across the globe. WWW.AFRICAINCMAG.COM

MOTORING

H E A LT H C A R E

Rwanda officially opens new state-of-the-art cancer treatment centre

Nigeria’s automotive industry attracts US$1bn investments, creates 50,000 jobs NIGERIA – Nigeria’s automotive sector has attracted investments worth US$1 billion since the commencement of the National Automotive Industry Development Plan in 2013. This was confirmed by the DirectorGeneral, National Automotive Design and Development Council, Jelani Aliyu, who was speaking in Abuja at the unveiling of vehicles assembled in Nigeria. Minister of Industry, Trade and Investment, Adeniyi Adebayo said since launching the plan, 62 companies had been registered to assemble vehicles at both the Semi-Knocked Down and Completely Knocked Down units, resulting in the creation of over 50,000 direct and indirect jobs. He further revealed that the companies had a combined total installed capacity of 423,790 units and actual assemblage of 10,342 units achieved in about six years. Jalani however noted that Nigerians still had a penchant for imported automobiles adding that the country was spends US$8 billion annually on importation of vehicles. To address this, the government has set out plans to encourage the patronage of locally assembled vehicles through effective implementation of the National Automotive Industrial Development Plan. The Minister revealed that the NADDC was currently discussing with Jaiz Bank Plc and Zenith Bank Plc on a N5 billion (US$ 12.8 million) revolving vehicle financing scheme that would enable interested Nigerians to take loans to purchase new locally assembled cars. Adeniyi Adebayo noted that with Nigeria’s signing of the African Continental Free Trade Agreement, the objective of government was to make Nigeria the automotive hub in Africa. WWW.AFRICAINCMAG.COM

RWANDA – President Paul Kagame has inaugurated the Rwanda Cancer Centre, a facility that has cutting edge technology that is used in administering specialised treatment to cancer patients. Located at the Rwanda Military Hospital in Kanombe, the centre houses the country’s only radiotherapy facility and expects to have both chemotherapy and surgery facilities in the near future. The centre is

equipped with two linear accelerators that offer treatment using VMAT (Volumetric Modulated Arc Therapy), a technology that accurately administers radiation to a tumour while minimising the dose to the organs surrounding it. The facility has been operational since March 2019 and up to 317 patients have been treated from it and has the ability to handle 150 to 200 patients a day. Presiding over the launch of the facility, President Kagame praised the facility for having already worked to save lives, as he reflected on its future impact on Rwandans Cancer is the second leading cause of death globally, with about 70% of cancerrelated death occurring in low- and middleincome countries. As of 2015, over 8.8 million people died from cancer in Africa. This figure is expected to increase to about 15 million in 2020. The government of Rwanda launched the cancer centre to curb cancer prevalence in the country.

ENERGY

KenolKobil to acquire Samfuel Limited in its expansion strategy ZAMBIA – KenolKobil, a pan African downstream oil company, has got the nod to acquire a Zambian oil marketer Samfuel Limited through its Zambian subsidiary, Kobil Zambia Limited for an undisclosed fee. Samfuel is a private limited liability company with operations in Zambia with core business in storage, distribution and supply of petroleum products, lubricants, bitumen and chemicals. The acquisition will see Kenol Zambia acquire 10 petroleum retail outlets owned by Samfuel Limited, deepening its presence in the landlocked

country of southern Africa. KenolKobil’s head office is in Kenya with subsidiaries in Uganda, Rwanda, Burundi and Ethiopia. The oil major’s financial muscles were strengthened in 2019 after it was wholly acquired by Rubis, a French multinational with annual revenues of US$5.96 billion. The deal was valued at KSh36 billion (US$360 million). Rubis then followed it up with acquisition of Gulf Energy Holdings Limited Kenya at a cost of KSh9.72 billion (US$97 million), adding Gulf petrol stations to those of KenolKobil. APRIL 2020

PEOPLE

R E G U L ATO R Y & P O L I C Y

Kenya enacts new guidelines for mergers and acquisition

South African diplomat Wamkele Mene appointed first secretary-general of AfCFTA AFRICA – Wamkele Mene, one of South Africa’s top trade negotiators has emerged as the new secretary-general of the African Continental Free Trade Area (AfCFTA). Mene, who was Pretoria’s chief negotiator during the African Union’s (AU) discussions on the formulation of the AfCFTA assumed the new office after endorsement by the AU heads of state summit in Addis Ababa. He will now be in charge of the day-to-day operations of the newly created continental trade body, which will oversee the implementation of a tariff-free trade regime. He holds an LL.M in Banking Law and Financial Regulation from the London School of Economics and Political Science, an M.A. in International Studies & Diplomacy from the School of Oriental & African Studies (SOAS), University of London and a B.A. Law from Rhodes University. He is also a senior trade law expert and negotiator on behalf of South Africa at the World Trade Organisation. AfCFTA will be headquartered in the Ghanaian capital of Accra and is expected to be fully operational by end of March.

MENE HOLDS AN LL.M IN BANKING LAW AND FINANCIAL REGULATION AN M.A. IN INTERNATIONAL STUDIES & DIPLOMACY A B.A. LAW FROM RHODES UNIVERSITY. 26

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KENYA – Kenya has enacted a new guideline for mergers and acquisitions which streamlines the process of combining two separate business entities operating in the country, becoming the first COMESA country to domesticate the new regulations. The new guidelines, which will enable the domestication of the new Common Market for Eastern and Southern Africa (COMESA) rules, will eliminate double notifications. According to the new guidelines, companies based in Kenya with at least two-thirds of their combined turnover or assets generated or located in the country will only need approval from the Competition Authority of Kenya (CAK) to merge. Furthermore, transactions that meet the COMESA notification threshold will be required to only make at the COMESA Competition Commission (CCC) and not the CAK. The competition authority said the new regulations address dual notification to CAK and CCC, thus eliminating red tape and bureaucracy. Companies with a minimum combined turnover or assets

of US$10 million that want to merge must notify the authority, while those with assets of below US$5 million do not need approval. The regulations stipulate that where at least two-thirds of the merging companies’ combined turnover or assets are generated or located outside Kenya, the companies will only require the CCC approval. According to Kenyan Digest, under the previous rules companies pursuing mergers in Kenya were subjected to an expensive and rigorous approval process by both the CAK and CCC, often causing delays in transactions and leading to collapse. In the new rules, Kenya has also doubled the merger filing fees to US$40,000 for companies with turnover and assets in excess of US$500 million, US$20,000 for companies with a turnover of between US$100 million and US$500 million, and US$10,000 for those with a turnover of between US$10 million and US$100 million. Those below US$10 million will not pay any fees.

ICT

UK-based robotics firm Blue Prism opens shop in South Africa

SOUTH AFRICA – Blue Prism, a UKbased robotic process automation (RPA) specialist has announced that it is opening a local office in Cape Town and formalising its presence in South Africa. Blue Prism’s former sales director for Africa, Greg Newton, will be relocating from Blue Prism’s UK office to Cape Town to serve as the new South Africa country manager. Newton says the establishment of a local office comes on the back of a

highly successful Blue Prism roadshow in Johannesburg and Cape Town in 2019, and a surge in demand from local enterprises for Blue Prism’s enterprisegrade RPA solutions. He adds that they have been working in the South African market since 2016, with in excess of 20 major clients, including major financial services organisations plus an array of large enterprise clients across multiple industry sectors. “We saw a need to formalise a South African office to work more closely with our rapidly growing customer base, as well as to support South Africa’s digital transformation process,” said Newton. The new office will help raise awareness of RPA in the local market and aims to collaborate with partners and academia to help build RPA and artificial intelligence skills pools in-country, the company says.

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ENERGY

Exxon-Mobil and Petronas plan to dispose stakes in Chad-Cameroon oil pipeline

ENERGY

African oil producers to take major hit from low oil prices and Covid-19 pandemic AFRICA - African oil-producing and reliant countries have been among the most hard hit by the COVID-19 pandemic and declining oil prices, with Senegal, Nigeria and Angola facing mounting challenges amid the threat of economic fallout. According to a report by The African Energy Chamber, many African countries have been forced to reduce expenditure while most countries will report negative growth figures as the pandemic spreads and oil prices remain. In Angola, the government which relies heavily on oil

IN NUMBERS

US$15.4B

CHAD – Petroliam Nasional Bhd. (Petronas) is considering selling its 35% stake in the Chad project with Exxon Mobil Corperation (Exxon) working with another adviser to sell their 40% stake as well. The project for sale includes oil fields in southern Chad and a pipeline that transports crude oil to a marine terminal in Cameroon for export. According to Michael Carter, Head of Global Equities at Osaka Matsui Management, the combined holdings of both oil companies could be worth over US$1 billion. Officially commissioned on October 3, 2003, the ChadCameroon pipeline is an important infrastructure for the transportation of crude oil from Chad to Kome terminal, in Kribi, for exportation. The over 1,000-km long infrastructure was funded by the World Bank and a consortium of oil firms including Exxon-Mobil, Petronas, and Chevron-Texaco. In 2014, Chevron-Texaco sold its stake in the project to the Chadian government. Exxon is the operator of the Chad-Cameroon pipeline. Apart from Petronas, the other partner in the project is the Chad government, which bought the remaining 25% stake from Chevron Corp. in 2014. Sale deliberations are still preliminary and the massive plunge in oil prices could add uncertainty to any deal.

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EXPECTED LOSS BY NIGERIA DUE TO THE LOW OIL PRICES, OR 4% OF ITS GDP, IN 2020 revenue has declared a state of emergency and made a decision to review its national budget, freezing 30% of its goods and services budget and suspending it capital expenditure (CAPEX). The country has also reviewed its reference oil price to US$35 per barrel from the initial US$55, with the country’s oil production expected to tumble to 1.36 million barrels per day (bpd). In Senegal, the global market turbulence has had a hard knock-on effect on Senegal’s promising oil future since it discovered oil and gas in 2014, with the country’s first oil development, the US$4.2 billion Sangomar deep water offshore project partner failing to finalize debt arrangements, citing current environment as a major contributor. The low oil prices will also affect the country’s first offshore licensing round which was launched earlier this year by the national oil company, Petrosen. Further, Senegal has also seen Cairn Energy reduce its planned investment to below US$330 million from the initial forecast of US$400 million. Nigeria is projected to suffer substantial revenue losses due to the low oil prices. The Atlantic Council has predicted that COVID-19 would cause the country to suffer the biggest loss in the continent with US$15.4 billion, representing about 4% of the nation’s GDP, with over US$58bn in oil projects in the country set to suffer delays or cancellations.

APRIL 2020

SUSTAINABILITY BUSINESS AFRICA AV I AT I O N

TRENDS

Affordable renewable energy is putting US$640bn coal investments at risk, new research shows

Delta Airlines to invest US$1bn on carbon emissions reduction, sustainability

USA – United States carrier, Delta Airlines, has said that it will be committing US$1 billion over the next 10 years on its journey to mitigate all emissions from its global business. The airline said it would invest in driving innovation, advancing clean air travel technologies, accelerating the reduction of carbon emissions and waste, and establishing new projects to mitigate the balance of emissions. Delta notes that its approach to tackling carbon reduction and sustainability reflects the focus and rigour it that it used to build a financially secure airline and has become known for. The airline says that aviation industry contributed roughly 2% of global carbon dioxide emissions. It further highlighted that carbon footprint was its largest environmental impact, with 98% of emissions coming from its aircraft. Delta said it would be focusing its efforts to become carbon neutral through reduction, carbon removal and stakeholder engagement, where 2020 would see a number of milestones to demonstrate its progress and commitment to environmental sustainability. Air travel, which was once a rapidly expanding and lucrative sector, has been subjected to widespread criticism due to its significant carbon print. According to media reports, realization by European tourists that one passenger’s share of the exhaust from a single flight can cancel out a year’s worth of earth-friendly efforts has made many to start rethinking their travel options. So far, the biggest shift has been in green-conscious Sweden, where airline executives blame increased train travel — up one-third this summer compared with a year ago — for a drop in air passenger traffic. This changing travel trends have already caught the attention of Airlines with some of them including Delta airlines pledging to intensify their climate mitigation efforts. 28

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GLOBAL – Nearly US$640 billion of investment in coal power capacity worldwide is at risk because it is cheaper to generate electricity from new renewables, research by Carbon Tracker Initiative showed has revealed. The report examined the economics of 95% of coal plants which are operating, under construction or planned worldwide. It noted that institutional investors are increasingly withdrawing from fossil fuel companies due to the risk their assets becoming stranded as tougher emissionscuts targets discourage their use and renewable energy becomes even cheaper. Globally, 499 gigawatts (GW) of new coal power capacity is planned or under construction with an investment cost of US$638 billion, the report noted. It also noted that more than 60% of global coal plants are currently generating electricity at a higher cost than could be produced by building new renewables. According to the report, by 2030 at the latest, it will be cheaper to build new wind or solar capacity than continue operating coal in all markets. Further, capital recovery period for new investments in coal capacity is usually 15 to 20 years, making these investments risky. “Renewables are out-competing coal around the world and proposed coal

investments risk becoming stranded assets which could lock in high-cost coal power for decades,” said Matt Gray, coauthor of the report and co-head of power and utilities at Carbon Tracker. According to a major U.N. report in 2018, the share of coal power in electricity generation worldwide needs to fall to under 2% by 2050 for global warming to stay within a 1.5 degree Celsius limit. Carbon Tracker said that in the European Union, 96% of the bloc’s 149 GW of operating coal capacity costs more than new renewables and has been reducing its dependency on coal due to higher carbon costs. The report noted that China, the world’s biggest coal producer, US$158 billion of investment is at risk, with 100 GW of coal capacity under construction and 106 GW planned. In India, US$80 billion is at risk, with 37 GW of coal power under construction and 29 GW planned. The United States on the other hand, has 254 GW of coal capacity, with 47% costing more than new renewables. The report said market forces will drive coal power out of existence in deregulated markets, where renewable energy developers will take advantage of the growing price gap.

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FUNDING

SOLAR

Proparco commits US$10m in Metier’s new sustainable energy-oriented fund AFRICA – Proparco, a development financial institution, has committed US$10 million to Metier’s Sustainable Capital International Fund II to continue its support for renewable energy, resource efficiency and energy efficiency projects in Africa. The Metier Sustainable Capital International Fund II aims at a final amount of more than US$150 million to invest in renewable energies, resource efficiency and energy efficiency across Africa. Projects that could be financed in the short term could create 1,700 jobs and reduce emissions by the equivalent of more than 220,000 tonnes of CO2 per year. They would also improve the access to green energies to about 390,000 people in Kenya and Uganda. Proparco noted that the investment contributes to achieving four of the Sustainable Development Goals: clean and affordable energy; industry, innovation and infrastructure; measures relating to the fight against climate change and decent work and economic growth. Proparco, a subsidiary of the French Development Agency has been instrumental in ensuring that the fund’s strategy and the fund manager’s investment decision process are fully aligned with the Paris Climate Agreement. S T R AT E G Y

BP commits to fighting climate change, unveils new ambitious goal to be carbon neutral by 2050 UK – British oil multinational BP has unveiled a new ambitious goal to be a net zero company by 2050 or sooner. In a statement, the oil major explained that its net zero ambition seeks to get rid of greenhouse gas emissions from its operations worldwide, currently around 55 million tonnes of CO2 equivalent (MteCO2e) a year. It also revealed that the new goal also sought to reduce the carbon in the oil and gas that it produces, equivalent currently to around 360 MteCO2e emissions a year – both on an absolute basis. Taken together, delivery of these ambitions would equate to a reduction in emissions to net zero from what is currently around 415 MteCO2e a year. BP also revealed that it also aims to help its customers reduce their emissions by halving the carbon intensity of the products it sells, again by 2050 or sooner – offering customers more and better choices of low- and no-carbon products. “This is what we mean by making BP net zero. It directly addresses all the carbon we get out of the ground as well as all the greenhouse gases we emit from our operations,” said BP’s new CEO, Bernard Looney. The company says it will install methane measurement at all of its existing major oil and gas processing sites by 2023 and then reduce the methane intensity of its operations by 50% adding that it also aims to increase the proportion of investment it makes into non-oil and gas businesses. WWW.AFRICAINCMAG.COM

Off-grid solar industry grows to US$1.75bn annual market - World Bank report GLOBAL – The off-grid solar industry has grown into a US$1.75 billion annual market, providing lighting and other energy services to 420 million users, a new World Bank Group and GOGLA report has revealed. The 2020 Off-Grid Solar Market Trends report finds that the industry has made tremendous strides in the past decade and remains on a solid growth curve. According to the report, revenues from the off-grid solar industry continue to grow rapidly since 2017, increasing by 30% annually. To date, more than 180 million off-grid solar units have been sold worldwide and the sector saw US$1.5 billion in investments since 2012, it reveals.

IN NUMBERS

US$11B

AMOUNT OF INVESTMENTS NEEDED BY THE OFF GRID SOLAR SECTOR AROUND THE WORLD The report also observed that with 840 million people still lacking access to electricity, the growth of the off-grid solar industry is critical to meeting the Sustainable Development Goal (SDG7) for universal access to affordable, reliable, sustainable and modern energy by 2030. “The off-grid solar industry is instrumental for achieving universal electricity access,” said Riccardo Puliti, Global Director, Energy and Extractive Industries and Regional Director, Infrastructure, Africa, at the World Bank. “We are scaling up our support to client countries by helping them leverage this potential through innovative and financially sustainable solutions,” he added. According to the report, the sector would need an additional boost of up to US$11 billion in financing and the sector would need to grow at an accelerated rate of 13%, with up to US$7.7 billion in external investment to companies and up to US$3.4 billion of public funding to bridge the affordability gap. APRIL 2020

FUNDING

SOLAR

CrossBoundary Energy receives US$16.5m commitment from ARCH EM Partners

Nigeria launches sustainable energy project to low income communities

AFRICA – ARCH Emerging Markets Partners’ Africa Renewable Power Fund (ARCH ARPF) has announced its commitment to fund CrossBoundary Energy (CBE) with up to US$16.5 million in equity funding. This fund seeks to develop and finance new Commercial & Industrial (C&I) solar assets that will provide businesses across Africa with access to cheaper, cleaner power, representing the first stage of a larger transaction under finalisation by CrossBoundary Energy to scale solar for business across Africa. CrossBoundary Energy has pioneered the solar-as-a-service business model in Africa, through which corporate customers avoid upfront capital expenditure and instead enter into longterm solar service agreements. Under these agreements, CBE, in partnership with local developers and solar contractors, finances, installs and operates solar assets that provide customers with cleaner and cheaper power. CBE has already developed landmark projects in Kenya, Rwanda, Ghana, and Nigeria, with its clients including Unilever, Diageo, Heineken, Actis and leading local companies. This additional funding will allow CBE to reach new markets and customers across Africa and deploy solar PV and battery storage solutions that reduce energy costs, improve power reliability and lower carbon emissions. “Partnering with an industry leading investor like ARCH ARPF highlights the proven viability of captive commercial and industrial solar projects in Africa,” Pieter Joubert, Chief Investment Officer, CrossBoundary Energy said. “We’re very excited to work with ARCH ARPF to continue providing Africa’s leading businesses with cheaper, cleaner, more reliable power at no upfront cost.” The announcement comes as the International Energy Agency (IEA) predicts a strong acceleration in the global adoption of distributed solar photovoltaic (PV) solutions. The IEA report, Renewables 2019, forecasts that distributed solar PV will account for almost half of the near-term growth in the overall solar PV market, with global installed capacity expected to increase by over 250% by 2024.

NIGERIA – The Government of Nigeria, in partnership with the African Development Bank (AfDB) has launched the National Electrification Project (NEP), to address critical energy access deficits by channeling private sector investments into mini grid and off-grid solutions. The project, which will be implemented by Nigeria’s Rural Electrification Agency, comes as a boost towards the country’s efforts of achieving the target of universal energy access by 2030. The National Electrification Project will boost Nigeria’s electricity production by approximately 76.5 MegaWatts (MW), of which 68 MW will be solar generated. The project is expected to benefit over 500,000 people. Joint financing of US$200 million from the Bank and Africa Growing Together Fund (AGTF) will de-risk and scale-up private sector investment in the off-grid sector, nurturing a business ecosystem conducive to the rapid electrification of Nigeria’s offgrid communities. The project is expected to connect eight universities to reliable energy and provide 150 female students with training on renewable energy solutions. An additional 20,000 micro, small and medium-sized enterprises (MSMEs) will also be supplied with appliances and equipment.

FUNDING

Partnership fund attracts US$160m in commitments for small-scale renewable energy in Africa AFRICA – The African Development Bank (AfDB), the European Commission, KfW, the Clean Technology Fund, Norfund, and other investors have committed US$160 million to the first close of the Facility for Energy Inclusion (FEI). FEI is a targeted US$400 million fund to improve energy access across Africa through small-scale renewable energy and mini-grid projects. Spearheaded by the AfDB, FEI serves as a financing platform to catalyze financial support for innovative energy access solutions. The bank, as the Facility’s anchor sponsor, has put up US$90 million in financing, which includes US$20 million that the Bank is providing in its capacity as the implementing agency of the Clean Technology Fund. In addition to the Bank’s commitment, the European Commission committed US$27.4 million to the Fund, the Norwegian Investment Fund (Norfund) committed US$23 30

APRIL 2020

million, and German Development Bank KfW committed US$27.4 million. FEI will also include a US$10 million Project Preparation Facility from the Global Environment Facility that will provide reimbursable grants for transaction advisory to facilitate financial close. The facility will support small-scale Independent Power Producers (IPPs) in delivering power to the grid, mini-grids and captive power projects in sub-Saharan African countries where electricity access rates are comparatively lower receive priority. Other eligibility criteria include the requirement to use renewable energy technology, to have capital expenditure of less than US$30 million and generation capacity below 25MW. Initial pipeline projects have been identified in Burundi, Cape Verde, Madagascar, Malawi and Mozambique. WWW.AFRICAINCMAG.COM

Africa offers some of the most breath taking and yet undiscovered destinations. From gorgeous physical features, extensive food choices, deep cultural heritage and welcoming communities, the Continent is abuzz with activities that offer the business and leisure traveller thousands of options to choose from. The Africa Inc. Travel section in the Africa Inc. magazine is your go-to platform to discover some the many destinations that your tour guide may not have informed you about. Appearing in every issue of the magazine, the Travel section is filled with important information for those who just want the fun side, the business side or both. Join us on a journey of discovering Africa!!

AFRICA Inc.

TRAVEL

Showcasing Africaâ&#x20AC;&#x2122;s most outstanding business and leisure destinations WWW.AFRICAINCMAG.COM

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APRIL 2020

INSPIRATIONAL

African CEO Insights & Company Profiles

Your business has a unique story. Work with us to showcase your organisation to our readers in Africa and across the World. AFRICA INC. magazine is read by some of the most important business owners, C-suite managers and other key decision makers from the private sector, Government, NGOs, embassies, consulates, development organisations and other sectors across the breadth of Africa and the World. Full of inspirational and impactful interviews with CEOs and other leaders, the magazine, available in print and digital formats, is the voice of business in Africa. We tell African business stories better than any other publication. The magazine tracks, reports and celebrates the huge strides that are made by organisations in the Continent - from well established multinationals operating in Africa to young enterprises that are inching their way to greatness in future - thereby catalysing the next wave of enterpreneurs and investors in the world’s remaining growth engine. Having your organisation featured in this magazine provides your organisation and brands with the best opportunity to stand out in the crowded marketplace and for you story and impact to reach key decision makers across the Continent and beyond. Join leading organisations that have received FREE coverage in this magazine to receive extensive, quality editorials, a FREE marketing brochure and extensive social and digital coverage across various channels. In case you would like to have your story told here, please contact our Editorial team on +254 725 34 39 32 or info@fwafrica.net to discuss how we can work together to deliver an impactful story for your organisation.

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Inc.

APRIL 2020

AFRICA INSPIRING AFRICA’S BUSINESS FOUNDERS & LEADERS

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Inc.

INNOVATION

PATRICIA OBOZUWA GE AFRICA

WOMEN IN BUSINESS

INNOVATION

PATRICIA OBOZUWA GE AFRICA SUSTAINABILITY

WASTE- TOENERGY TECHNOLOGY

MICHELLE WILLIAMS-SWARTZ

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Inc.

WOMEN IN BUSINESS

AFRICA INSPIRING AFRICA’S BUSINESS FOUNDERS & LEADERS

WASTE- TOENERGY TECHNOLOGY

PATRICIA OBOZUWA GE AFRICA

WOMEN IN BUSINESS

AFRICAN CEO INSIGHTS

INSPIRATION

SUNNY VERGHESE

CEO & CO-FOUNDER, OLAM INTERNATIONAL

AFRICAN CEO INSIGHTS

CEO & CO-FOUNDER, OLAM INTERNATIONAL

HOW WE GREW FROM NIGERIA TO GLOBAL FOOD & AGRO GIANT

RAJAN SHAH - CAPWELL INDUSTRIES

20 YEAR JOURNEY TO FOOD GIANT

LEAH WANJIKU SOKONI AFRICA CHANGING UGANDA’S HOSPITALITY & AGRO SECTOR

RICHARD GOUGH AFRICA LOGISTICS PROPERTIES CHANGING THE WAREHOUSING GAME IN KENYA

WASTE- TOENERGY TECHNOLOGY

UNILEVER SOUTH AFRICA

AFRICAN CEO INSIGHTS

INSPIRATION

SUSTAINABILITY

MICHELLE WILLIAMS-SWARTZ

UNILEVER SOUTH AFRICA

SUNNY VERGHESE

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Inc.

INNOVATION

SUSTAINABILITY

INSPIRATION

SUNNY VERGHESE

CEO & CO-FOUNDER, OLAM INTERNATIONAL

HOW WE GREW FROM NIGERIA TO GLOBAL FOOD & AGRO GIANT

RAJAN SHAH - CAPWELL INDUSTRIES

HOW WE GREW FROM NIGERIA TO GLOBAL FOOD & AGRO GIANT

20 YEAR JOURNEY TO FOOD GIANT

LEAH WANJIKU SOKONI AFRICA CHANGING UGANDA’S HOSPITALITY & AGRO SECTOR

RICHARD GOUGH AFRICA LOGISTICS PROPERTIES CHANGING THE WAREHOUSING GAME IN KENYA

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RAJAN SHAH - CAPWELL INDUSTRIES

20 YEAR JOURNEY TO FOOD GIANT

LEAH WANJIKU SOKONI AFRICA CHANGING UGANDA’S HOSPITALITY & AGRO SECTOR

RICHARD GOUGH AFRICA LOGISTICS PROPERTIES CHANGING THE WAREHOUSING GAME IN KENYA

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APRIL 2020

JEREMY BLOCK â&#x20AC;&#x201C; CHAIRMAN, DORMANS GROUP 34

APRIL 2020

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70 YEARS OF INSPIRING KENYA’S

COFFEE INDUSTRY TO GLOBAL LEADER DORMAN’S GROUP, THE LEADING COFFEE PRODUCER, PROCESSOR & TRADER IN EAST AFRICA IS CELEBRATING 70 YEARS OF OPERATIONS. AS THE COMPANY CELEBRATES THIS MILESTONE, AFRICA INC. HAD AN INTERVIEW WITH THE CHAIRMAN JEREMY BLOCK, WHO IS LEAVING THE DAY-TODAY OPERATIONS OF THE FIRM AND HANDING OVER THE REINS TO A NEW SET OF LEADERS TO TAKE THE COMPANY FORWARD. WWW.AFRICAINCMAG.COM

Take us back to 70 years ago, when the company was founded, how you joined the company and how you’ve seen it grow.

The company was founded in 1950 by Charles Dorman, but he was in the coffee business before the war (World War II) in the mid-1930s. The actual company, C. Dorman however, was founded in 1950. Dorman died prematurely in 1960 and his wife Ellen Dorman, who came to Kenya in 1939, took over from where he had left at his death and carried on with the business. I got involved in 1986 in partnership with an English multinational and it was just by luck, being at the right place at the right time. I knew nothing about coffee. Initially they had one of their employees running the business, who after about 3 months thought he couldn’t make it work and opted to sell. I called him and offered to try to run it. They wanted me to commit for at least one year, which I thought was fine and so I started. I fell in love with the business and began learning it from the bottom up. Initially I didn’t think I needed to learn how to taste (liquor) coffee, but after 3-4 months I knew that I needed to know what was going on here and so I started learning how to taste. Mrs. Dorman was adamant that it would take at least 3 years to acquire a liquoring license, but I guess it wasn’t to be because I managed to get it within one year. That was just the license; one has to continually learn about tasting coffee. That’s how it really began.

APRIL 2020

INSPIRATION

You talk of luck and being at the right place at the right time, but tell us how you made sure the business succeeded from the start

I had a drive and a need to succeed. I worked from 6am to 10pm at night for those early years, while loving what I was doing; that was a big thing. When I took over the business the turnover was 12,000 bags a year. The good thing was that the company had a good reputation and I tried to leverage on that. By the mid 1990s we had expanded into Tanzania and Uganda and our turnover had increased to half a million bags a year. I had great financial support and the trust of my partners. We controlled our costs and I think we understood the market better than most.

There is this saying that for someone to succeed in the coffee industry, you must fall in love with coffee. Do you think it is a pertinent requirement to succeed in the sector? The love for coffee is imperative. Coffee is a very complicated business. It’s a commodity but not like wheat, corn or rice. It’s NOT a homogeneous sort of commodity. Arabica coffee, particularly in East Africa, has 36

APRIL 2020

such an incredible range of qualities that one must really, really understand the business to be successful. I believe that to do that one must love the industry. Dormans has been part of the coffee sector from very early on and has seen itself through the turbulence in the sector over the decades. However, it is one of the few players to have survived and grown substantially.

What is the DNA in Dormans that has enabled it to succeed and grow to its current stature as the leading coffee company in the region?

It is something to do with my philosophy of doing business - which is to give and take in equal proportion. I believe you should do to others what you would like to be done to yourself. The farmer is the key to the industry; if the farmer didn’t produce the coffee, there wouldn’t be an industry. So one has to support the farmer. The main ‘raison d’etre’ in business is to make a profit, but if we do that at the expense of the farmer, there wouldn’t be any business down the road. We work very hard to help all the farmers that we work with to produce the best quality coffee and hence to get the very best prices basis the current world market. Kenya is a tiny producer of coffee globally. Today WWW.AFRICAINCMAG.COM

DORMANS GROUP

IN NUMBERS

600,000

BAGS OF COFFEE KENYA PRODUCES PER YEAR, FROM 2 MILLION BAGS IN LATE 1980s the world’s production is over 160 million 60-kg bags of coffee. Kenya produces around 600,000 bags, Brazil 60-65 million, Vietnam 33 million and Colombia 16 million. So, we cannot compete in that regard (volume), but we are very lucky that we are able to produce the very best coffee in the world. Kenyan coffee, compared to these other countries, receives and achieves by far the highest price of any coffee in the world. There is nowhere in the world you can sell container loads of coffee at the prices we get here in Kenya. For me it has been incredibly important to attempt to maintain the heart of Kenya’s competitive advantage. That is why I was opposed to the hybrid Ruiru 11 variety. It was developed with the right idea in mind, to try and produce a variety of coffee plant which would be resistant to “Coffee Berry Disease” (CBD). You need copper-based fungicides to prevent CBD, which are very expensive. The idea of producing a hybrid which would be resistant to the disease was brilliant. But the way it was produced to have a resistance was by incorporating genes from basically the Robusta types of coffee. This was at the expense of what gives Kenya its competitive advantage, the taste of the coffee. I believe we must keep our uniqueness, which is our superior flavour which comes from our traditional varieties.

You talked about 600,000 bags but Kenya at the late 1980s had much greater numbers, did Kenya just give up on growing the numbers?

To put it in perspective, yes Kenya did produce at its best about 2 million bags of coffee in 1987/8 but 2 million versus 65 million bags is still a drop in the ocean. Where we are here (the company’s headquarters, storage and processing facility) was a coffee estate before. There is huge urbanization around Nairobi. No matter how good the agriculture industry is, we are not going to be able to compete with urbanization. We are certainly not going to get back to the acreage of production of coffee that we had in Kenya in 1987/8. Productivity can certainly increase and that’s one of the major value additions that the farmer can achieve, with better husbandry, to produce more kilos of cherry per tree. Unfortunately, the weather also has a say in this and no matter how good your husbandry is, you’re not going to get your top production if the weather is against you. At the same time, you have to be realistic. Many coffee farmers are limited in education and financial ability and hence a limit to the amount of production they can achieve. We try to help the farmers to achieve as much production as possible. Last year with the drought, it was a very uphill battle; we produced less than 50% of what we had produced the previous year despite our ability in WWW.AFRICAINCMAG.COM

APRIL 2020

INSPIRATION

NEW FACTORY, NEW PERSPECTIVES - DORMANS GROUP’S NEW FACTORY IN RUIRU, NEAR NAIROBI, KENYA IS SETTING UP THE COMPANY TO MEET RISING DEMAND FOR ITS COFFEE AROUND THE WORLD

the coffee farming sector being as good as anyone in the world.

Looking at the growth in the industry, despite all the challenges, you recently opened a bigger facility in Ruiru to increase your storage and processing capacity. How important is this investment, especially when looking at how it impacts local processing and consumption of coffee?

What I inherited was a factory in the Industrial Area of Nairobi, an office in the center of town and then we had at one point a business of coffee shops. We then developed a business in the agri-sector at a farm in Ruiru. Logistically that made things difficult. Getting from the CBD to Industrial Area could take half an hour or three hours. I can remember a couple of our senior traders taking 5 hours to get home after the auction; leaving at 6.00pm and getting home at 11.00pm. I have always wanted to be out of that chaos and to be in this part of the country. I bought this land ten years ago but there were all sorts of problems between the owners and some other people. So it took longer than I had hoped to get the place built. It is expensive but I would like to 38

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think that this is here for the future. It’s a lovely place and environment; very efficient, very effective. It’s a nice place for all employees to work and by being all under one roof there are already some cost savings. We have had a lot to do with local consumption of coffee, but I think there is a lot of misunderstanding. We have a product in Kenya, which is the most expensive coffee product in the World. Unfortunately, our population is not the richest in the world. So, one of the competitive advantages is that we can actually sell our coffee to the richer countries in the world where they pay those huge prices for our coffee. This is not to say we don’t sell excellent coffee here in Kenya, we do, but the market for that is very small. One of the things I am extremely proud of is developing certain blends for the local market which are the very best that Kenya can provide. However, the market for that is tiny on the World scale. A big specialty coffee shop in New York would sell in a day what we would probably sell in a year, so one has to put that into perspective. Yes, it will grow, but it will only grow at the level of Kenyan’s disposable incomes. If you earn US$500 a month, you’re not going to spend US$10 of that on a single cup of WWW.AFRICAINCMAG.COM

DORMANS GROUP coffee; it is just logic. In time it will grow, but slowly. So, when someone says we have to roast all our coffee and sell it roasted, they don’t really know what they are talking about.

What has changed in the marketing and consumption of coffee across the World since you entered the business?

Well, in the 1980s when I started, there was no internet and there were no mobile phones. We used to communicate with our buyers via telex. Most coffee that was drunk in the World was brewed as a fullsize cup of coffee through a percolator. Of course, the French press or cafetière was trying to come in, but basically this was regular coffee. There was of course espresso in Italy and France but very little elsewhere. I think Starbucks was probably key to the expansion of coffee consumption in the World and coffee really started getting on the map in the early 1990s. There has been a lot of changes in the method of consumption since then. The largest consumer of coffee back in the 1980s was the sink. You could make a big pot of coffee, have a cup and your wife another and dash to the office. What was left went down the sink. Now we have pods and drive through coffee shops at petrol stations. The sink as a leading consumer has reduced enormously. So huge changes in marketing and consumption of coffee.

ROZY RANA, THE MANAGING DIRECTOR DORMANS COFFEE.

Consumption far from home has increased drastically, but are we far off in the coffee culture compared to the rest of the World? What is the prospect for the coffee chains in Kenya and the region?

We are still a long way from that. Travel to Muranga, Machakos or say Kisii, tell me how many people are in any food establishment drinking coffee; 1% may be? It is still a very expensive drink. What does a traditional cup of tea cost versus the cheapest cup of coffee? The cheapest cup of coffee you’re going to get I would say is Kshs 20. In the towns yes, it is an aspirational commodity but once again the people who are going to afford that are certainly not numerous enough to encourage a Starbucks by a long way. It will probably come in time, but to see any substantive growth the disposable incomes must grow too.

THE PRODUCTION & QUALITY TEAM TASTES THE COFFEE TO ENSURE THE RIGHT QUALITY IS ACHIEVED EVERYDAY

What do you have to say about the role and progress of women in the coffee business in Kenya?

I don’t have any favoritism as far as gender goes. Our previous Managing Director was a woman and our head of our the roasting company is a woman. I bought the company from Mrs. Dorman. Women definitely have ‘equal opportunity’ at Dormans WWW.AFRICAINCMAG.COM

THE NAIROBI SCHOOL OF COFFEE GROOMS THE REGION’S BARISTAS INTO SKILLED ARTISANS OF COFFEE BREWING AND AMBASSADORS OF THE COFFEE DRINKING CULTURE APRIL 2020

EUGENE STALS, THE CHIEF INVESTMENT OFFICER OF PHATISA 40

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WHY WE ARE FOCUSED ON INVESTING IN

AFRICA’S FOOD INDUSTRY AFRICA INC. TALKED TO EUGENE STALS, THE CHIEF INVESTMENT OFFICER OF PHATISA ON THE PRIVATE EQUITY FUND FOCUSED ON THE FOOD AND HOUSING INDUSTRY IN AFRICA. THE OPPORTUNITIES IN AFRICA’S FOOD INDUSTRY VALUE CHAIN ARE INCREASING, AND EUGENE BELIEVES THAT PHATISA’S APPROACH FITS PERFECTLY IN CHANGING THE NARRATIVE IN THE CONTINENT.

Eugene, you joined the Phatisa team as Chief Investment Officer in November 2018, after almost a year back on the continent, what are your impressions on the growth of the asset class in your absence?

I think the asset class in Africa is still working towards finding its own characteristics and nuances. The exuberance of a few years ago has changed into a realisation that it is a difficult market with unique challenges requiring unique solutions. What is noticeable is the scarcity of pure commercial investors (LPs) for most fund managers (GPs). The market is driven largely by developmental and development finance institution capital at the moment, who are playing a critical role in developing and shaping the asset class in Africa. There are still questions about whether the traditional fund model is appropriate for Africa at this stage of its development; more people are considering the merits of longer dated funds or permanent capital vehicles. However, I am very optimistic about the future of the asset class in WWW.AFRICAINCMAG.COM

Africa. The emergence of extremely successful local and regional funds and the overall broadening of the talent pool and experience among African-based funds and people are amazing.

How does your philosophy meet up with Phatisa’s corporate vision and goals?

Private equity in Africa, in my view, is about capacity building, growth and having a positive impact on the broader community. Do that well and follow traditional private equity disciplines and you should deliver the required returns to your investors. Similarly, at the heart of Phatisa’s investment philosophy is development equity, which encompasses moving beyond traditional private equity to consider the impact we create. Phatisa follows a blended-value approach, where financial value is considered within the broader context of creating lasting positive economic, environmental and social value. Phatisa’s goals are primarily aligned with the UN Sustainable Development Goals 1 and 2: to attract capital to APRIL 2020

INVESTMENT TRENDS PRIVATE EQUITY IN AFRICA, IN MY VIEW, IS ABOUT CAPACITY BUILDING, GROWTH AND HAVING A POSITIVE IMPACT ON THE BROADER COMMUNITY.”

invest in emerging markets to alleviate poverty, and contribute to food security in Africa through responsible and sustainable investments. We believe that meaningful focused impact enhances returns.

Please tell us about the investment opportunities you see in Africa’s food value chain.

There is both a demand and supply angle to the opportunities. According to the World Bank, the African food requirement is expected to double in the next 30 years. Demographics, including urbanisation, will drive demand for food security. On the supply side, the world’s food demand is also growing and Africa has fertile (underutilised) land, abundant water in certain areas and relatively cheap labour. There are compelling opportunities in the whole value chain: improving yields at input through seed selection, fertiliser, mechanisation and contract farming; food processing and manufacturing; food services, including logistics, cold chain and aggregation; food distribution; wholesale and specialist retail. We also believe technology is going to play a major part in the future of the food value chain in Africa. We are looking at opportunities, for example, involving organic and bio foods and drone technology. As a sector-specific fund, Phatisa has the luxury that our portfolio value-add partners are not generalists but people who have run and been operationally involved in some of the major food companies operating in Africa. Africa is big and diverse and opportunities differ from market to market. The key is to understand the dynamics, the driving forces and competitive landscape of each market. Having people who have been actively involved in operations in those countries in our team is a tremendous advantage.

In April 2019, you signed off your first exit from the African Agriculture Fund (AAF). Have you delivered more divestments since then or are you planning to exit any investments soon?

The Meridian exit you refer to was a successful investment for our LPs and proved the point that focused strategic impact initiatives lead to enhanced returns. During this period, Meridian’s turnover grew at 15% CAGR; employees increased from 1,900 to 2,300; and EBITDA margin improved with operating efficiency enhancements across six business units. In October 2019, Phatisa was awarded the prestigious Chairman’s Award at the Southern African Venture Capital and Private Equity Association (SAVCA) 2019 Industry Awards for this transaction, recognising investments that have achieved exceptional financial and social returns. This accolade speaks to Phatisa’s ability to combine successful dealmaking with meaningful and sustainable impact through our investments. 42

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Our capital, strategic oversight, ESG action plan and technical assistance facility resulted not only in healthy financial returns but delivered on Phatisa’s impact objectives through job creation, improved food production, the upliftment of woman farmers and overall economic growth. In February 2020, we announced our first investment, the delisting from the JSE of Rolfes Holdings, into our second food fund - Phatisa Food Fund 2 - which will be followed by a second investment shortly. We are also currently concluding our third exit, which will finalised by the end of April 2020.

Phatisa was one of the first African fund managers to focus on impact generation over and above financial return. How did the AAF’s Technical Assistant Facility help to achieve development impact and enhance financial returns?

Phatisa was indeed a pioneer in deploying a so-called side-car fund. We think it is a model that works very well and intend to continue the concept in Phatisa Food Fund 2. In TechnoServe, we had an extremely competent and dedicated implementing agent for AAF’s (our Fund 1) Technical Assistance Facility. WWW.AFRICAINCMAG.COM

PHATISA has registered and is actively supporting 13,298 smallholders (69% are women) with advice and product. This project has assisted Meridian in more than doubling its volumes over a few years and contributed to the success of the investment and enhanced returns. Similarly, Goldtree (palm oil plantation in Sierra Leone) buys produce from over 6,300 outgrowers (small scale farmers) following a TAF project. Goldtree recently became organic, commanding a price premium for its end product and passing the price benefit on to its outgrowers. In most instances, our portfolio companies have taken over the TAF projects to fund these from company resources in the future – a true measurement that they see the financial benefits in the projects.

Tell us more about Phatisa Food Fund 2’s investment strategy and your game plan.

IN NUMBERS

US$10M

VALUE OF PHATISA’S INVESTMENT IN COMPANIES, UP TO US$25 MILLION Over 79 projects were undertaken across various AAF portfolio companies and impact was measured on an ongoing basis. For example, a TAF project for Meridian was designed to develop and market tailormade fertilisers in Malawi by promoting soil testing. This service provides data-driven recommendations for fertiliser blends, tailored to specific soil nutrient requirements. Up till now, smallholder farmers in Malawi have relied on standard fertiliser requirements, developed some 30 years ago, that are sub-optimal and not based on soil or crop type. The tailor-made blends are improving yields by more than 18%. Meridian WWW.AFRICAINCMAG.COM

As mentioned, we are looking at opportunities throughout the value chain: inputs, poultry and meat production, food processing, food manufacturing, food services and food distribution including wholesale and specialist retail. We are an African fund with a focus on Southern Africa, East Africa and West Africa, supplemented by our own internal country risk assessments. We are looking for businesses with a proven concept, financial and operational track record and, importantly, an ability to scale (in country, vertically or regionally). A realistic entry multiple is paramount. It is extremely difficult to recover from over-paying. Also important is the ability to project a liquidity event in the medium term. Our investment cheque is in the range of US$10m (initially or with further growth follow-ons) to US$25m and we prefer control, although we are willing to work with likeminded investors in pursuing an agreed investment strategy. Above all, we invest in good management teams.

Best advice given, and the greatest lesson learnt to date?

“WE ARE LOOKING AT OPPORTUNITIES THROUGHOUT THE VALUE CHAIN: INPUTS, POULTRY AND MEAT PRODUCTION, FOOD PROCESSING, FOOD MANUFACTURING, FOOD SERVICES AND FOOD DISTRIBUTION INCLUDING WHOLESALE AND SPECIALIST RETAIL”

For me, the best advice and greatest lesson learnt is the same thing: the major part of successful private equity investing is investing in excellent managers who are passionate about what they are doing. The easy part is evaluating whether the company’s commercial fundamentals are good, the difficult part is whether the management team is the right one to deliver on the investment strategy

Eugene is a seasoned private equity and investment professional with deep operational experience and over 18 years in the executive, board and investment committee capacities, with a successful track record over the whole private equity value chain in Africa. APRIL 2020

GROWING

AFRICAâ&#x20AC;&#x2122;S NEXT LEADERS THROUGH FOOTBALL

THROUGH HIS FOUNDATION, MUSA OTIENO HAS TURNED HIS LOVE FOR THE GAME TO BRING CHANGE TO YOUNG PEOPLE AND THE COMMUNITY IN NAIROBI 44

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he name Musa Otieno is synonymous with football in Kenya – especially in the Eastlands area of Nairobi, where the love for football comes as second nature to young people and adults alike. As a former captain of the national football team of Kenya, Harambee Stars, Musa has been one of the few players to play in the local football premier league, play and captain the national team on many occasions, join a foreign team and then later, even become an Assistant coach for the national team. Few players have managed to rise to the heights that Musa reached in his football career, especially in Kenya, where only a few of the promising football players ever get to succeed beyond playing for local clubs. With 105 games for the Kenyan national team, Musa’s professional football career took him to South Africa as a young man, where he played for the leading Premier Soccer League side Santos FC for 15 years, breaking records, including one that still stands to date for the most number of appearances by any player in the club. After more than 300 appearances and scoring more than 30 goals for WWW.AFRICAINCMAG.COM

Santos, Musa had a brief stint in the USA before retiring back to Kenya in 2011. A highly disciplined and God-fearing individual, Musa says that it is these two character traits that enable him to scale the ladder of success in his football career, and which he is imparting on to the next wave of footballers and other leaders in Kenya through his Kick-Off to Hope Foundation, which is based in Nairobi, Kenya.

TURNING PASSION INTO A MOVEMENT

Born and raised in Maringo Estate in the Eastland’s side of Nairobi city, Musa was born as the 7th child in a family of 11. “We were several boys in the family and football was my and my brothers’ passion. I was raised a community child, and this centre is all about passion for football,” Musa informs us, as we settle down to an interview at the centre. It is this passion for the game, which he has turned into the passion to bring forward the next wave of leaders in his community that drives Musa forward. The Kick-Off to Hope Foundation runs a community centre and football academy at Dr. Krapf Primary School in Maringo, that has enrolled more than 200 children, many of them from Eastlands for APRIL 2020

MUSA OTIENO

FOUNDER KICKOFF TO HOPE FOUNDATION

APRIL 2020

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KICK-OFF TO HOPE

football and life skills training. “I look at this centre and football as a tool that can bring this community together. You know sometimes you don’t need to have much. Our centre is not just about football, it’s a matter of these kids coming in here and we give them hope. That hope that they can do something and achieve more in their lives. We started this Foundation to give these kids hope by using the tool of football after we realised that for us to change this community, we need to have a healthy community.” At the centre, the children are categorized the kids into 4 different groups: the recreation group, who are 5 to 8 years and just want to come to the centre to have fun, observe and begin learning the game from the older kids; the foundation group, which is for those between 9-12 years. This group joins their age group, where they begin playing the football training system that has been put in place by Musa and his team. The next group is the ready-tocompete group that are 13-14 years old and is ready to go and start playing competitive football, while those beyond 15 years are in the seniors group. “At the centre we have both boys and girls and all are encouraged to come, learn and play,” Musa informs us, adding that each age group has a coach and an assistant coach who are former senior players in the game. He reveals that the coaches and assistant coaches are continuously being guided and given positions of leadership to ensure the sustainable growth of the Foundation and its activities, even when Musa is not available. Musa reveals that running the football academy and the centre has its many challenges but he is WWW.AFRICAINCMAG.COM

appreciative of the support given to them by past team mates and other well-wishers who have been supporting the centre, even as they struggle to make ends meet most of the time. “We have several challenges but we are trying our level best to do our job. The ratio of coaches to players is very low but the children understand us and we are managing with the resources we have to produce quality players who are also well rounded in other life skills. Remember our centre is not all about football, it’s a place where they can feel they are loved. It’s a place where they feel that whatever talent they have, they can pursue it to higher levels. We currently have 5 coaches who are graduates coming from this same community who come to help these children with their training and support, including academic matters,” he reiterates. “These kids need role models. Kenya needs role models and every member of the society needs a role

CROSS-CULTURAL EXCHANGES - THE FOUNDATION’S BOYS TEAM WHEN THEY PARTICIPATED AT A YOUTH FOOTBALL TOURNAMENT IN CHINA

“OUR CENTRE IS NOT ALL ABOUT FOOTBALL, IT’S A PLACE WHERE THEY CAN FEEL THEY ARE LOVED. IT’S A PLACE WHERE THE KIDS FEEL THAT WHATEVER TALENT THEY HAVE, THEY CAN PURSUE IT TO HIGHER LEVELS”

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COMMUNITY IMPACT

THE GIRL CHILD IS NOT LEFT BEHIND THE COACHING TEAM WITH ONE OF THE GIRLS FOOTBALL TEAM AT THE FOUNDATION

“ONE MAJOR CHALLENGE WE FACE LIES IN THE PROVISION OF MEALS TO THE CHILDREN DURING THE WEEKENDS AND THE SCHOOL HOLIDAY PERIODS, WHEN THE CHILDREN ARE ALWAYS AT THE CENTRE TO CONTINUE WITH THEIR DEVELOPMENT”

model - somebody who can walk with them and for me coming back to where I was born, grew up and went to school is a great honour, especially seeing the kind of impact we have managed to achieve in this community, in our own special way.” Through his friends, with whom he played football in South Africa, and later, USA the centre has been receiving some critical support to facilitate the delivery of its goals. “My friends have been supporting us with used playing kits that the kids wear during practice and games; these kits seem old but here in Africa, they are well appreciated and seem new. I cannot do it alone. It’s a journey … it’s a journey which we want these kids to go through with the talents they have. The new curriculum in Kenya recognizes talent, sports being one of them; it’s about sports and education. The kids need to trust in God and believe in God and for me when they look at me they see a story, and when I look at their eyes I see a story … may be one of the kids will go on to become a successful engineer, a doctor, some may even become soccer players - not all, but at least they will learn something at this centre. They will have hope. This place is for them and they can feel they are at home.”

IMPROVING THE SCHOOL’S CAPACITY

Having grown up just a few meters from Dr. Krapf Primary School, Musa’s choosing of the school as the location for the Foundation’s activities came easily. He is an alumnus of the school, where he went through his primary school education, before proceeding to the nearby Ofafa Jericho Secondary 48

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School, venturing into youth football and graduating to the regular level of the game by the time he was 16 years old. Part of the activities that Musa is involved in at the school has been to help improve the infrastructure of the school, which considering its location within the low income area of Maringo, had seen its infrastructure dilapidated and with it, the standards of education offered at the school had deteriorated significantly. “The conditions of this school when I came here was pathetic, if I could say so. I could not believe that this is the school that has produced all the big names in Kenyan football history, including my younger brother Erick Omondi, George Owino and Brian Mandera, who have all made their names plying their talent for local and international teams and the national team,” he moans. “But, we also had to contend with the fact that poor funding and lax management of public schools in Nairobi are cancers that have eaten into the very future of our communities, which has resulted into the schools failing to guide young students towards the path of excellence and success in life,” Musa explains. It is this sad state of affairs in the school and the community that convinced Musa to look for ways he could make a change in his community and his former school. By setting up the Foundation and having its activities at the school, which is located in one of the most deprived parts of Nairobi, where high levels of poverty has led to high rates of crime, alcohol and drug abuse and dysfunctional families, he seeks to empower the next group of young WWW.AFRICAINCMAG.COM

KICK-OFF TO HOPE

talent. “We just took football to the community and said that football will bring the discipline side and the healthy side too to our kids and the community at large.” The Foundation has, through its friends, equipped the school’s computer lab with 20 computers, as it seeks to improve the digital skills of the school’s more than 600 students. However, as the number shows, the computers are badly inadequate to meet the needs of the students. Further, to improve the health status of the kids, Musa and the team have just finished a major project that removed the banned asbestos roofing from the entire school, replacing them with corrugated iron sheets; while a new dining room for the students is awaiting the installation of the right seating to enable students to have their meals in a better environment. “These are things that I did not have when I was growing up in this same environment but now we have them through the donation of friends who have come to support us,” he says. He intends to continue with the improvement is infrastructure, whenever funding allows, with plans to install water harvesting and hand washing facilities in the school, considering the emergence of the corona virus in the country.

CHALLENGES GALORE

Musa believes that the Foundation’s WWW.AFRICAINCMAG.COM

work with the kids can be better served with corporate or individual partners joining together with them to improve the capability of the centre – which he says receives young people from across Nairobi. “One major challenge we face lies in the provision of meals to the children during the weekends and the school holiday periods, when the children are always at the centre to continue with their development. These are quite difficult times for me because I also have a family to take care of and I have these kids. My joy would be if we can at least get some porridge for the kids to drink before coming to train and even more, at lunch time to get something to eat. If a kid is training twice in a day then we find that they do not have energy to handle afternoon sessions whenever they have not had any meal,” he appeals. Musa believes that everybody has been given a gift in life, and it is important to use this gift to impact others in the society. “I always ask, what are you doing with the gift that you have been given? God has given you a gift. What can you do to help the society wherever you are?” he poses. With the Kick-Off to Hope Foundation, he believes he has found his calling and is confident and hopeful that the future of young children will continue to be impacted positively for many years to come APRIL 2020

KHADIJA MOHAMEDCHURCHILL - KWANZA TUKULE FOODS CEO 50

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TRANSFORMING

FOOD VENDING

IN KENYA’S URBAN LANDSCAPE

nnovation is on the rise in Africa and the use of technology to solve day to day problems is moving full steam ahead, and with it the kinds of enterpreneurs and solutions being launched in the Continent. Khadija Mohamed-Churchill, the CEO of Kwanza Tukule may not be the kind of regular entrepreneur. Born and raised in Tana River county, Kenya, Khadija’s stints at Standard Chartered Bank in the UK and senior management consulting position at Infosys Consulting, after an MBA from Imperial College London and General Manager position at Inuka Kenya, a youth and women empowerment platform, seem worlds apart from her current venture, Kwanza Tukule Foods. Kwanza Tukule, which is less than 2 years in operation is a subscription based B2B enterprise in Kenya, is well on its way to changing the way healthy foods are availed to the urban poor, while providing market access for farmers and saving the environment by using green energy and utilising the latest digital technology. Started in 2018, Kwanza Tukule operates a cashless last mile distribution system to ensure that nutritious food, especially plant based protein and fish is accessible and affordable to operators of food vendors in Nairobi. Khadija explains that having started in late 2018, the company ran a pilot to test the hypothesis, which was very successful, launching the business WWW.AFRICAINCMAG.COM

officially in January 2019. The pilot phase indicated to the start-up that there were very huge amounts of inefficiencies in the food supply chain for food vendors in Nairobi, with opportunities for improvements which could be made into a business concept that could be implemented in a sustainable and affordable way. With board members who have been specifically selected based on their expertise in the industry, she says that the business concept took about 8 years to refine, adding that explaining it took to potential partners and other stakeholders time to get the concept right.

THE JOURNEY

With the business case sell secured, Kwanza Tukule, which is a Swahili word that means ‘First, Let’s Eat’, was then launched with the primary focus on directly serving food vendors in Nairobi with pre-cooked food products to feed urban dwellers and workers workers, especially the in the urban low income areas. The company ensures that street food vendors have the right food and the necessary assets for them to make food available in a faster, better and more nutritious way. ‘More than anything what Kwanza Tukule brings to the table for our customers is a business model that works for them and is organised around how they generate their revenues. Our customers receive

THE COMPANY IS A SUBSCRIPTION BASED ENTERPRISE THAT OPERATES A CASHLESS LAST MILE PRECOOKED FOOD DISTRIBUTION SYSTEM IN KENYA

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START-UP

WOMEN FOOD VENDORS MAKE UP 98% OF THE CLIENT DATABASE FOR THE COMPANY. THEY ARE HIGHLY RELIABLE AND TRUSTWORTHY

APRIL 2020

supplies early morning on a daily basis and pay at the end of the day.’ Khadija added. Research indicates that street foods contribute significantly to local diets, especially among the urban poor, since they are convenient, cheap and easily accessible. According to a survey, people living in urban centres in Kenya get 33% of their nutritional intake from street food, while in low income neighbourhoods, more than 40% of households consume street food. We sought to know more about the food provided by the enterprise. “Ours is subscription based business model where vendors pay a daily for products we provide. We provide six food products, they are all plant based, highly nutritious and range from various varieties of beans, green peas, green grams, githeri and muthokoi, which are two local variants of blends of maize and beans that are commonly consumed around Nairobi. These foods usually take a lot of energy and time to cook and because of that, we do the boiling for the vendors. The vendors, on receiving the pre-cooked food, would then finish the cooking process, reducing the time it takes to prepare the food substantially, ” Khadija informs us. They also supply dagaa or omena, the small highly nutritious fish variety. “We are a processing company that procures the supplies in bulk, prepares the food and supplies to our customers thereby taking advantage of economies of scale. We supply partly prepared food because it’s easier and cheaper for us to do it at scale. We also provide the vendors with assets like chairs, tables and tents for use in their canteens, which they pay for in small instalments on a daily basis until their full ownership. We use three-wheel vans (tuktuks), motorbikes and solar bikes for distribution that is done very early in the morning, planning our routes very carefully in the morning when there is no traffic,” Khadija informs us. By providing tents, tables, chairs, branding and other assets, the company has improved the visual appeal of the road side food vendors substantially, enabling them to attract a more diverse clientele. “For the customers who are able to take advantage of our package they have seen an increase on their revenues on a day to day basis because they are attracting office employee, middle level managers to eat at their locations, because they look cleaner and more presentable.” By the time we went press the company’s products were being availed to vendors in Nairobi’s Industrial Area, South B, South C, Embakasi, Donholm and Syokimau estates, with plans to venture into Upper Hill and other parts of Nairobi, plus surrounding counties of Kiambu, Thika and Machakos.

BUILDING WOMEN ENTREPRENEURS

Khadija notes that majority of the vendors are women, who make up 98% of the customer base for the company. She reveals that she is particularly proud of the work the company does to empower these women entrepreneurs in the course of their work, considering the impact this has on the greater society at large. “These women food vendors are highly reliable and trustworthy, more than even supplying to supermarkets, because they pay on a daily basis,” she reveals. The CEO notes that their customers make payments even when they shift from one location to another using their mobile phones. “More than just food, what we bring to the table is a business model that makes sense to our customers that works within their framework of their business. Rarely do our customers default because the payments are small amounts paid on a daily basis and because they need their next day delivery, they prioritise paying Kwanza Tukule.” ‘In addition, the payment habit of customers is also allowing us to build a credit rating that can give us reliable data to grow the business in provision of other products. In many ways we are making what is considered a risky demographic less risky because we are taking the time to understand the demographic WWW.AFRICAINCMAG.COM

KWANZA TUKULE FOODS

in detail,’ Khadija added. Khadija contends that their business model enables vendors to derive several benefits: lower price for the food they buy through the company, savings on energy, reliability of deliveries, support with other important assets and the unique one of enabling them expand their menu offering without a corresponding increase in capital expenditure.

thereby providing more affordable, pre-cooked food directly to the vendors. This way, they are also able to work directly with farmers, availing an important market to them and boosting their incomes. Health and nutrition are very close to the heart of this business. One of their key goals is to improve the nutrition of medium and low income earners by availing a variety of plant proteins primarily because they are much more healthier and more affordable. “Research indicates that in Nairobi’s low income areas, 79% of the foods sold by food vendors were carbohydrate based, higher than other critical food groups, like protein. With high prices for meat, poultry and fish, we thought that if we availed affordable, high quality and nutritious plant based protein sources, like beans, we would improve the nutritional profile of the consumers in such neighbourhoods. Further, if you look at the nutritional needs of Kenyans right now you will find, for example, that over 80% lack zinc, especially males. Females, pregnant mothers and children are also in this group. These are nutrients that can easily be found in plant based proteins.” She adds that some of the products supplied by the company such as the yellow beans are biofortified with zinc, iron and vitamin A. “What we noted is that almost 100% of our vendors have converted to selling the bio-fortified yellow beans due to the fact that we take a very deliberate decision to include nutritional education of the vendors as

“WE THOUGHT THAT IF WE AVAILED AFFORDABLE, HIGH QUALITY AND NUTRITIOUS PLANT BASED PROTEIN, LIKE BEANS, WE WOULD IMPROVE THE NUTRITIONAL PROFILE OF OUR CONSUMERS”

DIGITAL AND CASHLESS

The adoption of digital food technologies has seen one of the most phenomenal uptakes in Kenya. Kwanza Tukule has been able to utilize mobile phones and cashless systems to run their business model with great success. “Our vendors subscribe for daily delivery of food once they have signed up as our customers by signing a contract with us which indicating their details, food type and amount they want delivered every morning. They place their order via phone, we deliver the order and they pay us.”

AFFORDABLE, HEALTHY FOOD

Khadija informs us that by buying in bulk, the company manages to shorten the supply chain from the farmer to the user, which in many cases could lead to more than 7 layers of traders and agents, WWW.AFRICAINCMAG.COM

APRIL 2020

START-UP

THE COMPANY HAS ADOPTED MOBILE TECHNOLOGIES AND USES SOLAR ENERGY AND BIOGAS AT ITS FACILITIES. IT IS ALSO USING THREE-WHEEL TRUCKS THAT USE SUSTAINABLE ENERGY SOURCES

APRIL 2020

part of our duty. When we started the business, most of the vendors were buying the Nyayo beans variety, which is cheaper but it’s not bio-fortified and has high acidity,” she explains happily to us. With food safety and quality concerns some of the top priority issues for consumers in Kenya, Khadija informs us that by the vendors receiving pre-cooked food, they have no reason to add chemicals to hasten the cooking process. “We are improving the quality of the food being served by the vendors. We are also making it easy for them to do things right, knowing that we are on the look-out for any complaints from their clients. We also enable the vendors to diversify their food offering, which in the long run improves the availability of nutritious food to their consumers. If a vendor used to sell chapatti and meat, now they can easily sell chapatti, beans, green grams and dagaa, because they don’t have to worry about buying another pot so as to add another item on the menu. We are reducing their capital expenditure.”

SUSTAINABILITY AT THE CORE

Kwanza Tukule places sustainability at the core of the enterprise, starting right from sourcing of produce to the way they reach out to the market with their products. “Our factory uses solar power for all our lighting and cooling needs. We also use biogas for of all our cooking. We use green energy because it’s cheaper and also good for the environment. And by supplying pre-cooked food that require lots of energy to cook like beans, we are reducing the food vendors’ exposure to wood and charcoal smoke by about 70%. When each and every vendor is boiling their foods individually on small scale on fire wood, emissions are much higher, which has been exacerbated by the Kenyan government’s ban on the usage of wood and charcoal.”

BRIGHT FUTURE WITH CHALLENGES

The business is not without challenges as Khadija explains, with raising capital growth at the top of WWW.AFRICAINCMAG.COM

KWANZA TUKULE FOODS

Khadija and the board members’ mind. “We want to expand very quickly; we want to take Kwanza Tukule to cover the whole of Nairobi and surrounding areas by end of 2021. We need to approach funders and raise the right capital and attract the right investors that we can work with, who believe in our values and our way of doing things and can work with us. The other challenge I guess would be just normal challenges with last mile distribution; recruitment for example, it takes a long-time to find the right people.” She adds that they are seeking a partnership with the Nairobi County to come up with a strategy or policy of how the local authority engages with food vendors. Once they have that partnership in place, they will use it to duplicate the strategy in other cities in Kenya. She adds that the business is interested in venturing into other neighbouring countries in future. “Every African city has this problem we are seeking to solve. If you go to Nigeria, you will find the same problem, same in Ghana. We can take this template and implement in any African city.” The future is so bright for Kwanza Tukule, she concludes

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APRIL 2020

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AFRICA’S FOOD INDUSTRY INVESTMENTS SOAR Multinational food comßpanies from Europe and the US face tough times back home, as growth prospects dwindle and consumer attitudes change. But in Africa they find consumers with aspirational dreams and who are ready to consume their products - from soda, beer, fast food and more . . . . WWW.AFRICAINCMAG.COM

APRIL 2020

INDUSTRY REPORT GREAT LAKES REGION - AS NEW INVESTMENTS ENTER AFRICA, NEW GEOGRAPHIES ARE OPENING UP. IN THE PICTURE, THE AFRICA IMPROVED FOODS PLANT IN KIGALI THAT HAS THE LIKES OF DSM AND IFC AS FUNDERS IS ONE OF THE MOST MODERN FOOD FACTORIES IN AFRICA

usinesses are not created equal in terms of profitability. Entrepreneurs, financial institutions as well as established organizations are always looking to pursue opportunities with stronger growth prospects. It’s all about opportunity for return, helping brands get to the next level — and having something delicious in the portfolio. In the recent turn of events, the global tech industry, the renewable energy sector, real estate as well as the financial industries have garnered significant growth rates and investment owed to their strong prospects. Despite not being among the major investment destinations in the global investment arena, the food and beverage industry stands out as one of the most critical sectors for the survival of any given economy. Owed to this, the industry is also setting its pace and demarcating its boundaries and has been projected to grow at an impressive annual rate of 5%, with the global expenditure on food products by consumers expected to reach US$20 trillion by 2030. Comparably, this is just 1% below the financial service industry, which was valued at US$22 trillion in 2019 and is projected to grow at a 6% growth rate. Part of the reasons the food and beverage industry is experiencing significant growth is the sector’s relative resistance to economic downturns: in the event of a recession, people will continue to buy food — and are likely to buy more food to eat at home. The latest trends and innovations in the food and beverage industry have given a clear indication that the sector is evidently going through rapid transformations and, it is not inappropriate to say that there is no looking back for food and beverage companies.

AFRICAN MARKET CATALYZING GROWTH

Projections in the global expansion rates are always a combination of various metrics as regions and markets experience varying growth rates depending on consumer spending power among other factors. Times are changing and so are consumer needs. Ultimately, food and beverage companies that revitalize themselves with the changing market trends will be successful in their venture to top the list of customers’ preferences. It is for this reason, well, among other factors that the African market has turned out to be a gem in the food and beverage industry - attracting industry heavy weights from all the corners of the world, even as family-owned local enterprises continue to grow substantially in the continent, led by the likes of Trade Kings Group, the Bakhresa Group, Flour Mills of Nigeria, Dangote Group and other regional heavyweights such as the Bidco Africa Group. The demand for milk products, soft and alcoholic 58

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beverages, milled grains such as wheat, maize and rice; plus sugar, confectionery and meat products is projected to grow nearly double digits per year as we approach 2030, and with that growth, more and more investments are pouring into Africa’s food manufacturing, food service and retail industry. It therefore goes without saying that some of the world’s biggest multinationals, from Coca-Cola, PepsiCo, Heineken, Diageo, Castell, Fonterra, Danone, AB InBev and many more have undoubtedly pitched camp in the continent to tap into this rising demand amid a more urban and affluent consumer base.

MULTINATIONALS GRAB THE BEVERAGE SECTOR

The beverage sector continues to attract some of the biggest multinationals into the continent, where recent moves have seen these market leaders make bolder and stronger investment moves, after many decades of stagnation. Africa offers significant growth potential in the beverage industry due to the significant rise in personal disposable income, fast changing consumption habits and a fast-growing young population. WWW.AFRICAINCMAG.COM

FOOD IN AFRICA

A few years ago, the continent celebrated one of the biggest global deals in the food and beverage industry. In 2016, the Belgian multinational brewer AB InBev, announced that it had acquired SABMiller’s business from its number two rival for US$103 billion. The brewer said that the acquisition of SABMiller, (which has its origins in South Africa), was critical in delivering to AB InBev new geographies especially in Africa, Latin America and Eastern Europe. The US$103 billion SABMiller deal, which closed in September 2016, has been billed by AB InBev as its ‘most successful business integration ever’ enabling the maker of Budweiser, Stella Artois and other beer brands to deliver its best performance several years in a row. Following the deal, the beer giant has since introduced its iconic Budweiser beer brand into more African countries, to tap into the rising incomes and urbanization in the Continent – egged on by the increasing sophistication of the African beer drinker, who is on the lookout for these premium brands To further strengthen its footprint in the continent, AB InBev completed the construction of a new brewery in Sagamu, Nigeria in 2018 at an initial WWW.AFRICAINCMAG.COM

cost of US$250m. The company indicated that the final investment reached about US$400m. AB InBev, which holds 75.1% equity stake in International Breweries, has also injected US$339m into the breweries operations, committing to participate fully in new capital raising exercises. In 2019, Diageo, the world’s leading spirits make, pledged to invest US$220million in 11 of its African breweries. The investment by the Guinness brand owner is intended to explore green energy and water recovery solutions in seven African countries where it operates in order to reduce its carbon footprint. The investment represented the company’s largest environmental investment in over a decade. Diageo recently announced that it has also completed the expansion of its US$14m non-alcoholic beverage factory in Ethiopia, Meta Abo Brewery – where it produces its Malta Guinness brand. The British company has also invested US$140 million in building a new beer production facility in Kisumu, Kenya. The plant is operated by its subsidiary, East African Breweries through Kenya Breweries Limited, and where the beer giant has focused its attention to the brewing of its Senate beer brand from sorghum – an abandoned crop with huge possibilities to be Africa’s food industry cash crop. This capital injection added to Diageo’s more than US$300 million investment to boost production capacity, enhance distribution channels and drive brand growth in the past 10 years in the region. Add to these investments, are huge outlays of funds to grow its strong spirits and beer businesses across Africa, with plants in Tanzania (where it added an extra 30% stake), Nigeria, Cameroon, Ghana, Uganda and South Africa, where it continues to grow its market share – despite being present in Africa for less than 30 years. Heineken, a global leading beer maker, has also commissioned its first brewery in Mozambique after investing to the tune of US$100 million in developing a new modern plant. Located in the district of Maputo, the new brewery has a production capacity of 800,000 hectolitres (80 million litres) per year. The plant produces four international brands – Heineken, Amstel, Sagres and Strongbow – as well as Txilar, a new beer specially made by Mozambicans for Mozambican consumers using locally sourced maize. The beer giant has also made aggressive moves into Ethiopia, becoming the leading beer maker in the country in a few years, having entered the country after the privatization of the breweries by the Ethiopian government. With three brewing plants, with one world-class plant opened in 2014 at Kilinto on the outskirts of Addis Ababa, Heineken has leads the way ahead of the Castel Group, Diageo and Bavaria as the global giants shape the future of

“OUR COMPANY GIVES PARTICULAR CARE AND EMPHASIS TO ECONOMICAL AND EFFICIENT USE OF MATERIALS AND RESOURCES”

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US$103B VALUE OF AB INBEV’S BUY-OUT OF SABMILLER, BASED IN SOUTH AFRICA, IN 2016 TO MAKE WORLD’S BIGGEST BREWER

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INDUSTRY REPORT the beer and drinks industry in Ethiopia. In what seems like a ‘big brothers’ dominated race, French spirits Group Pernod Ricard said in February 2019 that it is looking to increase its market share in the African alcoholic beverage market as it seeks to capitalise on the opportunities in the continent. To affirm that the beverage giant was here to stay, Alexander Ricard, chief executive officer at Pernod Ricard said “we have a clear vision – Africa is Asia in 15 to 20 years from today.” The group has so far opened six offices in sub-Saharan Africa in the last six or seven years, now operating in South Africa, Namibia, Angola, Nigeria, Kenya, Ghana, and more recently in Mozambique. As part of its investments to bolster its presence in Africa the Chivas Regal whisky, Jameson whisky and Absolut vodka producer has also unveiled plans of setting up a manufacturing factory in Kenya. Further south, Pernod Ricard South Africa, the groups subsidiary in SA, recently acquired a majority stake in South African craft spirit brand Inverroche. The French beverages distillery and the world’s second largest wine and spirits company has also invested in Jumia, the leading ecommerce player for an unspecified stake to strengthen its position in spirits and wines on the continent.

INDUSTRY-WIDE INVESTMENTS

As diverse as the food and beverage industry is, companies are pushing for investments across all frontiers. Global agribusiness company, Cargill is investing over US$113 million to expand its cocoa processing sites in the heart of world’s cocoa production, Ivory Coast and Ghana. The Minnesota, USA-headquartered company has set aside US$100 million to increase production capacity of its Yopougon plant in Ivory Coast by 50% and a US$13 million investment at its Tema site in Ghana to increases its capacity by 20%. In the grains sector, the company’s acquisition of Nakuru, Kenya based Lesiolo Grain Handlers in a few years ago opened the path to the company’s quest to grow its grain origination and trading business in Kenya. Further south, in 2017, Cargill bought Provimi, an animal nutrition business that was previously owned by the integrated poultry producer Astral Foods – a move which sits very well with the company, as it focuses its future to growing its animal nutrition business to complement its strong meat business around the world. The global push for sustainable investing has also seen Unilever invest in a 619 kWp solar plant in its Kericho tea factory in Kenya as part of the firm‘s ambitions of exploring renewable energy solutions and implement energy cost savings initiatives. This was the first on-site solar installation for a Unilever facility in Sub-Saharan Africa, and it brings the

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company closer to its goal of sourcing 100% of total energy from renewables by 2030. With the addition of solar PV to its existing hydroelectric and biomass resources, over 90% of Unilever Tea Kenya’s energy needs will now be met with clean energy. The company has also co-invested in Mr. Green Africa, a Nairobi based recycler and recycled plastics supplier, as it ups its sustainability drive in Africa, that will to expand the recycler’s ability to handle plastics. But Unilever is not just investing in solar projects. One of the largest and oldest players in Africa’s food, beauty and personal care players, the company unveiled a world class oral care plant, a first of its kind in Ethiopia and its third plant of its kind in Africa, at it’s factory in Ethiopia. The new plant produces Signal, an oral care brand that is an additional investment to its soap, detergent and cooking cubes manufacturing plants that the company opened earlier in 2016 and 2017.

NIGERIA, KENYA AND NIGERIA TAKE LION’S SHARE The food and beverage industry in Nigeria has managed to attract several global investors as companies look to have a share in Africa’s largest economy. But Nigeria is not alone, with Kenya and Ethiopia and South Africa, the perennial leader of the

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FOOD IN AFRICA Continent, taking the lion’s share of the investments. With big youthful populations, bigger economies, fast growing economies and a population whose palettes are changing substantially, these four economies have taken the lead in sub-Saharan Africa, as big corporates in the food sector seek to pick the cherry off the Continent before others join the queue. However, even some of the smallest countries in the Continent, like Rwanda, where a partnership between Dutch major DSM, in partnership with the IFC, government of Rwanda and the CDC Group and other lenders invested in one of the region’s most modern nutritious food products maker, Africa Improved Foods. In Zambia, one of the leading agribusiness giants in Africa, the CDC Group, the British development agency, now holds a controlling stake in Zambeef Products, the leading agribusiness and retail giant with products from processed meat, wheat and maize flour, bread and other food products. Zambeef has operations in Zambia, Nigeria and Ghana, with ambitions to be a leading player in the Continent.

GRAINS & DAIRY INDUSTRY ATTRACTIVE

THE RETAIL SECTOR IN AFRICA IS UNDERGOING A TRANSFORMATION. KENYA’S NAIVAS CHAIN HAS GROWN TO BE A LEADING RETAILER AND HAS RECEIVED NEW INVESTORS INCLUDING IFC AND FRENCH PE FUND

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The grains processing industry, which handles and processes the bulk of Africa’s grains, legumes and pulses is still largely run by family owned businesses across the Continent, and remains extensively fragmented. But this is set to change, considering the growth of some of the giants including the Bakhresa Group growing into several African countries. In Nigeria, where a few family owned millers – including Flour Mills of Nigeria, Olam Grains and Honeywell Flour Mills – have dominated the sector for decades, international companies have made a dent into the sector, as more opportunities for entry by others beckon over the next few years. Olam International, the multinational food and agribusiness company recently acquired Dangote Flour Mills in a deal that gives Olam economies of scale to operate in Nigeria’s milling sector. Olam paid US$331m to acquire Dangote Flour Mills through its Nigerian subsidiary, Crown Flour Mills Limited. The acquisition doubled Olam’s production capacity by adding 5 flour mills that it already operates across Nigeria into Crown Mills operations. Olam, which started off in Nigeria 30 years ago, is majority owned by Temasek Holdings, an investment company headquartered and owned by the Singaporean government and Mitsubishi Corporation, the Japanese conglomerate, among others. One of the rising stars in the food industry is the dairy sector, which has seen the entry of leading international dairy giants into the Continent, and leading the way is Danone, the French dairy

IN NUMBERS

US$1TN

PROJECTED VALUE OF AFRICA’S AGRICULTURE AND FOOD INDUSTRY BY 2030 - WORLD BANK giant. Through targeted acquisitions, Danone has acquired stakes in leading dairy companies in Africa, including at Brookside Dairy (Kenya and Uganda), South Africa, Egypt, Tunisia, Algeria and Morocco. In one fell swoop, the company took a 100% stake in west Africa’s largest dairy player Fan Milk in 2019, grabbing important upcoming and fast growing dairy markets in 7 countries such as Nigeria, Cote d’Ivoire and Ghana. Dutch dairy processing giant, FrieslandCampina is also in for a bite. The company has secured a deal to acquire the dairy business of UK-based consumer products company, PZ Cussons in Nigeria. The Dutch firm reached the agreement to buy assets associated with Nutricima’s business through its local subsidiary, FrieslandCapina WAMCO Nigeria. Arla Foods, Denmark-based dairy firm has also partnered with the Kaduna State Government in Nigeria – which is one of the 5 company’s key focus markets in the world - to establish a dairy development programme that aims at developing the dairy sector. The private-public partnership will see Arla Foods invest in establishing milk collection centres. In Ethiopia, New Zealand’s biggest dairy player Fonterra has invested in a milk powder repackaging plant to serve the country’s demand for quality, locally processed milk products.

EXPERIENCE MATTERS

Worth noting, multinationals that have had a presence in Africa for several decades are also making stronger strategic moves seeking to operate their African operations as separate entities, with the beverage sector acting as a good example. The true potential in Nigeria’s huge market is clearly demonstrated in the soft and alcoholic beverages sectors, as the AB InBev investment above demonstrates. In a deal that put a stamp of the sector’s potential, in January 2019, The CocaCola Company acquired full ownership of Nigeria’s leading juice producer, Chi Limited, after having first acquired a minority investment in the company in 2016 from Tropical General Investments Group. Chi Ltd, which is a leader across the juices, beverages, APRIL 2020

INDUSTRY REPORT ETHIOPIA IS AMONG NEW INVESTMENT DESTINATIONS IN AFRICA. THE BEER INDUSTRY IN THE COUNTRY HAS SEEN THE ENTRY OF BEER GIANTS HEINEKEN, DIAGEO & BAVARIA, WHILE CASTEL GROUP HAS ALSO INVESTED MORE IN THE COUNTRY

dairy products and snacks. In 2014, the world’s leading soft beverage company, The Coca-Cola Company agreed to merge its non-alcoholic ready-to-drink beverages businesses in Southern and East Africa with SABMiller Plc and Gutsche Family Investments. This led to the formation of a new entity, Coca-Cola Beverages Africa (CCBA), with a presence in 12 countries accounting for about 40% of all Coca-Cola beverage volumes in Africa. In 2017, the Atlanta-based soft drinks giant acquired SABMiller’s 54.5% stake in Coca-Cola Beverages Africa from AB InBev for US$3.15 billion, following AB InBev’s acquisition of SABMiller. With more than 30 bottling plants and over 14,000 employees, CCBA became the largest Coca-Cola bottler on the continent. CocaCola said that the move allowed the new outfit to develop best operating practices and invest in production, sales and distribution, and marketing to benefit from growing demand and drive profitability. The combined companies have operations in South Africa, Eswatini, Ghana, Kenya, Ethiopia, Mozambique, Tanzania, Uganda, Namibia, Mayotte, Comoros, Botswana and Zambia. Since formation of CCBA, the The CocaCola Company has expanded its territories in the continent. In December 2018, the company acquired its bottling business in Zambia from Zambian 62

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Breweries. A few months later CCBA acquired Zambia’s leading soft drinks manufacturer, Fairy Bottling Zambia Limited. It also later bought a 60% shareholding in the soft drinks business of Eswatini Beverages. In October 2019, CCBA through its wholly owned subsidiary Coca-Cola Sabco East Africa Limited (CCSEA), completed the acquisition of stakes in two Kenyan Coca-Cola franchise bottlers for US$194m. CCSEA now owns 53.9% shareholding in Almasi Beverages Limited and 27.6% shareholding in Nairobi Bottlers Limited (NBL) in addition to controlling stake in Equator Bottlers, the third largest Coca-Cola bottler in Kenya. This acquisition further signaled Coca-Cola’s optimism about Africa’s consumer opportunity and a commitment to its long-term investment and growth plan on the continent, where it has been present for more than 90 years. The Coca-Cola Company has also unveiled plans of investing US$1 billion in its Southern and East Africa region operations. The Southern and East Africa regions are already the top 10 regions for the group in the world in terms of size, both in terms of volume and profit. The company has already earmarked a US$300 million investment in Ethiopia as part of its expansion strategy in the region, where it is building a new plant in Addis Ababa. The company WWW.AFRICAINCMAG.COM

FOOD IN AFRICA says that it believes Africa will be a very important growth engine for the group in the next five to ten years both for the sparkling and clear drink markets. Coca-Cola’s biggest and closest competitor in the soft drinks market, PepsiCo has also made a “formal” entry into the continent. In July 2019, New-York based PepsiCo tabled a US$1.7 billion offered to acquire all the outstanding shares of South African food and beverage company, Pioneer Foods Group. The deal, which is PepsiCo’s biggest outside of the US market to date, was part of the food and beverages giant’s plan to expand into the African market. For Pioneer Foods, the deal would enable the company to gain access to leading research and development and brand expertise, along with global scale and distribution. PepsiCo said that the transaction creates a leading food and beverage company in Africa, led from South Africa, with a commitment to supporting sustainability and local suppliers and will see PepsiCo create a new operating sector for Sub-Saharan Africa, named PepsiCo SSA. Before the deal closed, PepsiCo also announced another strategic investment in the African market, this time acquiring a majority stake in snacks maker Senselet Food Processing Plc in Ethiopia. Another food giant with tentacles across Africa, Nestle, continues with its growth focus in the Continent, even as it has faced headwinds in meeting investors’ appetite for more returns. The company in 2018 opened a new Nido dairy drink plant in Cameroon, part of its US$16.5 million plan to invest in the country, having earlier invested double that figure from 2010. In Nigeria, where the world’s biggest food company has over 2,300 staff members and 3 manufacturing sites, the company produces and markets several iconic brands including Maggi, Milo, Golden Morn, Nescafé and Nestlé Pure Life. It has invested hundreds of millions of dollars in the past 20 years to produce locally manufactured food products – from cooking cubes, dairy beverages, water and infant nutrition products.

RETAIL AND FOODSERVICE PICK UP

According to research company Nielsen, several population attributes point to positive prospects for retail growth in Africa, namely a growing and increasingly young population, rising urbanization, and a growing middle class, which will likely be the growth engines for consumption. Out of South Africa, where 70% of the consumer spend goes through the formal retail, the rest of the continent lags way behind in terms of this key determinant of a resilient retail industry. Kenya, which at 30% is second to South Africa in terms of formal retail trade penetration, has seen a huge shift in terms of retail ownership, with French retail chain WWW.AFRICAINCMAG.COM

Carrefour, which is also present in Uganda, taking over as the leading retailer, taking over the space left by the downfall of Nakumatt Supermarkets, the former retail giant. In a major shift of the retail industry leadership, Naivas Supermarkets has also welcomed the entry of French private equity fund Amethis Finance, IFC, a member of the World Bank Group plus DEG and MCB Equity Fund as the formerly family businesses-led sector opens up to international investors. In the foodservice sector, the scramble for the rising demand for convenient foods offered by international giants such as KFC, Subway, Dominos, Burger King and Pizza Hut has changed the game completely, offering chicken, pizza, burgers and more to consumers that had been weaned on American television series, and had taken a liking for the brands before they opened their first shops in the continent. KFC, which has more than 900 outlets in South Africa, is in the middle of an investment drive into the rest of the continent, where it has more than 150 outlets in Egypt, nearly 20 in Kenya, nearly 30 in Nigeria and nearly 60 in Angola.

FAST FOOD IS GETTING HOTTER - A YOUNG, GROWING CONSUMER BASE IN AFRICA HAS ATTRACTED THE LIKES OF KFC, BURGER KING, PIZZA HUT AND SUBWAY TO SET UP SHOP ACROSS THE CONTINENT

HUGE POTENTIAL FORWARD

With the World Bank projecting that Africa’s food and beverage market potential estimated to hit US$1 trillion by 2030, it is a no brainer that the pace of investments in this decade will increase substantially, with more multinationals expected to enter the region, while those already present will boost their investments substantially – either through direct investments or buy outs into existing food companies. With these scale of investments, the food and beverage industry in Africa is poised to significantly benefit from the multinational’s vast experience in various markets and hence accelerating growth in the industry, with the multinationals bringing in more funds, more ideas and more attention to different areas of the industry APRIL 2020

ELECTRIC VEHICLES

ON PATH TO REVOLUTIZE THE AUTO INDUSTRY

APRIL 2020

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he world’s most second most valuable car company is a 16 year old electric car manufacturer, Tesla. The company’s total market valuation was standing at an eye-watering figure of US$108 billion as we went to press with this publication, coming in second only to the Japanese behemoth Toyota, which had a value of US$173.85 billion, with German automaker VW, the brand owner to the likes of Audi, Porsche and its namesake brand VW, a distant third with US$75.44 billion. The electric vehicle maker’s market worth was more than the combined valuation of America’s oldest and most iconic and successful motor companies: General Motors (GM) and Ford. WWW.AFRICAINCMAG.COM

To add even more twist to the tale, Tesla is still largely a very minor player in the global vehicle market, having only sold a paltry 367,500 vehicles in 2019, compared to VW’s 10.8 million, Toyota’s 10.74 million and Nissan-Renault-Mitsubishi alliance’s 10.16 million. Largely still in the red despite making some profits in 2019, which contrasts with the US$7 billion and US$5 billion in estimated profits that General Motors and Ford made in 2018, Tesla has become a darling of motor enthusiasts – and stock exchange investors - around the world for its bold and futuristic electric cars. The company has announced plans to enter the pick-up truck and commercial semi-trailer markets in the next few years. Led by eccentric South African-born businessman Elon Musk, who has been greatly credited with the emergence of APRIL 2020

SPECIAL REPORT

the electric and autonomous cars as a viable business venture - from the days such cars were mainly for geeks or rich young men with loads of family cash to burn the future of the vehicle as we know it – powered by an internal combustion engine that requires petrol or diesel to enable it to function, and in need of a driver to move – is at stake. The vehicles of the future, which use just a pack of rechargeable batteries are the rage, as climate change and concerns with non-renewable, unsustainable sources of powering the future takes hold around the world. This change in the way cars are powered is touted to be the most disruptive change ever for the motor industry, which for more than a century has churned out billions of vehicles over the years to a consumer base that has continued to grow around the world, with China and a resurgent Asia leading the way in the last decade. The future of the motor industry is not only being impacted by the emergence of electric and automatic cars. The changing attitude towards a shared economy has brought into the fore companies such as Uber, Didi, Ola and Lyft, which have enabled the creation of a new industry, where the ownership of a car is no longer necessary in many urban cities across the world. Further, the current Covid-19 pandemic will further exacerbate the dim prospects of the auto industry, worsening the already reduced forecast for global vehicle sales in 2020, projected to fall by 10 million from the 2019 figures, with research company Global Data revealing that the revenue loss could be more than US$300 billion in the year. 66

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MOTOR COMPANIES SET NEW GOALS

As the world starts to feel the heat of the electric car craze, the year 2019 saw the established motor vehicle industry harvest substantial profits from improving vehicle sales, but in a twist of fate, it also turned out to be a decisive year for them to reflect and plan for a more disruptive future, as the rising prospects of the electric car market started to dampen the future fortunes of the industry. Mergers and acquisitions, plant closings, alliances and trouble with unionized employees grabbed the headlines in 2019, as the major auto companies sought ways to adjust to a future of electric and self-driving cars that will upend the prospects of the industry in many unseen and painful ways – by spending huge sums of money to make them relevant for this new paradigm that requires cleaner, more fuel efficient cars and ultimately, electric and self-driving cars. "It's been a hell of a year. A lot of the plans made in 2019 are going to be played out over the next decade to create a much different auto industry," Kristin Dziczek, vice president of industry labor and economics for the Center for Automotive Research, a Michigan think tank, told CNN. Changes to the auto industry had been forecast for years, but 2019 was the year that the industry started to spend big money to get ready for that future, she added. And the industry has had to make some deals that could have been impossible just a few years earlier. As the year neared a close, French automaker Peugeot announced a merger with the Italian-American Fiat-Chrysler,

creating the third biggest automaker in a deal worth US$50 billion, that the partners say will save them up to US$4 billion, and help them cope with slowing demand for cars and meet the cost of developing cleaner cars that meet tougher emissions regulations. Sweden’s Volvo AB also sold its Japan-based UD Trucks business to Isuzu Motors and share technology to help cut rising costs. In the US, the auto giants General Motors (GM) and Ford are committing billions to develop the next generation of vehicles, announcing new investments and alliances to give them the edge. Ford will invest US$1.45 billion and add 3000 new direct jobs up to 2022 at its two manufacturing facilities in Michigan to build new Ford Bronco and Ranger vehicles and a new modification center to support autonomous vehicles and other vehicles and to support production of the all-new Ford F-150, F-150 hybrid and the allelectric F-150, including battery assembly. Part of the company’s more than US$11.5 billion global electrified vehicle investment, the company will debut the F-150 hybrid, followed by the fully electric Ford F-150 thereafter. GM, hit by a lengthy strike after closing three of its plants in the US to save money for investments in new technologies, has pledged to spend US$20 billion by 2025 in building new technologies and capital expenditure for electric and autonomous cars, with a target of unveiling 20 new cars by 2023. “This is a huge opportunity for us. The biggest opportunity any of us has ever seen for this company, certainly,” GM President Mark Reuss told CNBC. “And we are all-in. It represents a chance to reinvent the company and reset our brands. It will change this company and people’s perception of it forever.” The world’s largest auto maker, Germany’s Volkswagen, plans to have 70 electric cars by 2030, with a target of becoming the largest electric auto maker in the world. As part of its investment plan, the company broke ground on a US$800 million electric vehicle production plant in the US, where production begins in 2022, and will be its North American assembly base for electric vehicles, with the giant saying that electric vehicles are the future of mobility and it will ‘build them for millions, WWW.AFRICAINCMAG.COM

CARS OF THE FUTURE

CHANGE IS COMING

According to a 2019 report by research firm BloombergNEF (BNEF) electric vehicles, or EVs, are on track to dominate global sales of passenger cars and buses by 2040, with China, Europe and the US continuing to firmly hold onto their lead as the world’s centres for electric vehicles adoption. Even though originally EVs have been developed for the saloon car market, new analysis shows that increasingly, they will continue to encroach significantly on the market for vans and shortdistance trucking. BNEF’s Electric Vehicle Outlook 2019 revealed that electric vehicles will likely take up 57% of the global passenger car sales by 2040, while electric buses are set to hold 81% of municipal bus sales by the same date. In the commercial vehicle market, the projections show electric models taking 56% of light commercial vehicle sales in Europe, the U.S. and China and 31% of the medium commercial market. However, it notes that the heavy trucks segment will prove the hardest segment for EVs to enter into, taking 19% of the market in 2040, mostly be in shorter-distance applications. Colin McKerracher, head of advanced transport for BNEF says the future of fossil fuel use in road transport is bleak but that the adoption of EVs will take time as the global fleet changes over slowly but, once it gets rolling in the 2020s, it will spread to many other areas of road transport. “We see a real possibility that global sales of conventional passenger cars have already passed their peak,” he predicted.

SHARED MOBILITY GROWS

The report notes that shared mobility services such as ride-hailing and car-sharing will also impact the future of the vehicle industry substantially, with the share of these services accounting for 19% of all passenger miles travelled globally by 2040 from less than 5% at the moment. However, if doesn’t expect autonomously driven vehicles to have an impact on global transport and energy patterns until the 2030s. WWW.AFRICAINCMAG.COM

“Providers of shared mobility services will choose to go electric faster than private individuals. There are now over a billion users of shared mobility services such as ride-hailing globally. These services will continue to grow and gradually reduce demand for private vehicle ownership,” says Ali Izadi-Najafabadi, BNEF’s head of shared mobility. BNEF reveals that the main driver for the electrification trend over the next 20 years will be further sharp reductions in EV battery costs, which is currently one of the key obstacles, making electric cars cheaper than internal combustion engine (ICE) alternatives in the mid-to-late 2020s in almost every market.

CHINA CONTINUES TO LEAD

The report notes that China will continue to lead in electric cars adoption, accounting for 48% of all passenger EVs sold in 2025 and 26% in 2040, as other markets will play catch up, with Europe getting ahead of the U.S. as the number two EV market globally during the 2020s. However, a fragmented global auto market will be experienced due to the slower adoption of EVs in emerging markets outside of China, but the aggregate increase will be impressive. BNEF expects passenger EV sales to rise from 2 million worldwide in 2018 to 28 million in 2030 and 56 million by 2040, while conventional passenger vehicle sales will fall to 42 million by 2040, from around 85 million in 2018 – driven by policy support such as fuel economy regulations and China’s new energy vehicle mandate that are expected to drive the EV market in the next 5-7 years before better economics drive the adoption of the technology in the latter half of the 2020s. The rise of EVs will adversely impact the oil, electricity and battery industries, where the report has nearly doubled its earlier projections to reduce oil demand by 13.7 million barrels of oil per day, due to a slower improvements in fuel efficiency of regular internal combustion vehicles.

“WE STAND AT THE PRECIPICE OF BIGGEST SHIFT IN TRANSPORTATION SINCE [THE ONE] HENRY FORD INITIATED OVER 116 YEARS AGO. OUR INDUSTRY AND THE WORLD IS BEING UPENDED BY TECHNOLOGY AND INNOVATION” Ford Motors CEO, Jim Hackett

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SPECIAL REPORT

not just millionaires.’ The company will also build an assembly plant for batteries at the same site. It has also commenced production of electric vehicles in Germany, and will open another one in China in 2020 and two more German sites by 2022. Toyota is not left behind, announcing plans to bring forward its goal of 50% (about 5.5 million) of its vehicles being hybrid or electric by 2025, from an earlier goal of 2030. The company has also recently partnered with Hino Motors to jointly develop a heavy-duty fuel cell truck in Japan, with a range of 600 km that meets environmental performance and practicality as a commercial vehicle. Meanwhile, Tesla, the clear winner is not sitting pretty. The company opened a new electric vehicles plant in 2019 in Shanghai in China, and announced plans for a third factory in Berlin,

Germany to service the demand for its products in Europe. Even as the auto companies announce their investments plans, most automakers have been forced to cut employee numbers, including GM, which was hit by a 4-month strike after announcing the 3 plant closures on 2019. Mercedes brand owner Daimler Benz, announced plans to cut 10,000 of jobs in late 2019 with plans to save US$1.5 billion by 2022, as it seeks to improve its competitiveness, innovation and investment strength. VW’s Audi brand has plans to reduce its workforce by 10% (or 9,500 people) up to 2025, as it seeks to save US$6.6 billion, while it will also create 2000 jobs focused on new technologies, including electric cars. Meanwhile, Ford announced in 2019 that it will be forced to shed thousands of jobs across the world, including 12,000 jobs in Europe, while Nissan plans to reduce its global employee figures by 12,500.

ALLIANCES EMERGE

As the future of mobility changes, auto makers are getting into grips with the fact that they may not go it alone and succeed in this new market place, either due to lack of skills, technology or cash, and many of the small and even big majors are coming together to confront the uncertain future. Be they alliances between auto makers or with technology providers including Uber and Google, the alliances are set to define who wins and who loses in this new paradigm. German automaker Volkswagen has jointly invested US$2.6 billion with America’s Ford in Argo AI, the autonomous vehicle platform company that is working on developing self-driving technology for ride sharing and goods delivery services in dense

SOME OF THE DEALS AND ACTIVITIES IN THE ELECTRIC CAR MARKET SINCE JULY 2019 DATE

COUNTRY

ACTIVITY

July 2019

India

Hyundai reveals India’s most powerful electric car, Hyundai Kona Electric, plans to construct charging stations as well in the country

July 2019

China

French automaker Renault invests US$145 million for a 50% stake in Chinese company Jianglin Motor Electric, one of the leading Chinese electric motor makers

July 2019

US, Germany

Ford and VW announce plans to work closely on self-driving cars and electric vehicles

August 2019

UK, China

BP teams up with Chinese ride hailing giant Didi Chuxing to build a network of charging stations in China

August 2019

Netherlands

The Dutch capital Amsterdam reveals bold plans to ban all gasoline and diesel powered vehicles from the city by 2030

September 2019

Germany

Porsche reveals its first electric car, the Taycan

September 2019

Germany, Sweden

VW signs a deal with Sweden’s Northvolt to build a giant battery factory in Germany

September 2019

Germany

VW unveils the ID3 hatchback, its first fully electric car to go into full production, to be sold in Europe from 2022

September 2019

USA

Lamborghini unveils its first electric hybrid supercar, the Sian, the fastest Lamborghini ever made

October 2019

Japan

Toyota reveals a new version of its hydrogen powered electric vehicle Mirai.

October 2019

US, Germany

Boeing and Porsche team up to develop electric cars that can fly

October 2019

Sweden

Volvo unveils its first fully electric car, the XC40 Recharge

APRIL 2020

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CARS OF THE FUTURE urban areas. Meanwhile, Ford said it will use Volkswagen's electric vehicle architecture to build electric vehicles for the European market beginning 2023. "We stand at the precipice of biggest shift in transportation since [the one] Henry Ford initiated over 116 years ago. Our industry and the world is being upended by technology and innovation," said Jim Hackett, Ford’s CEO at the announcement of the enhanced alliance in 2019. Ford has also invested US$500 million in US electric truck maker Rivian to jointly develop an electric pickup truck, where also technology provider Amazon has invested, adding to its investment in Aurora, a self-driving technology provider. Further, Germany's BMW and Daimler have formed a joint venture that will develop ride-sharing and charging services, while Jaguar Land Rover and BMW are having an alliance focused on new electric engines. On the battery manufacturing side, Toyota has joined Panasonic in a business-integration contract and a joint-venture contract in establishing of a new battery company to develop and make lithiumion, solid-state, and next-generation batteries, as it to seeks to hone its ‘competitiveness in batteries, which represent one of the core technologies of electrified vehicles.’ Other alliances and deals, among many others, include Google’s Waymo self-driving technology company; Uber’s deal with Nissan to introduce for a fleet of its Nissan Leaf hatchbacks for its drivers in the UK and Hyundai venture with the ride hailing company to produce and deploy the electric aircraft, while Uber will provide airspace support, ground operations the app, which customers will use to book flights. Others are Apple’s acquisition the startup Drive.ai and Honda’s partnership with General Motors’ Cruise unit that recently unveiled the Origin, a six-seater self-driving vehicle that has no steering wheel, brake or accelerator pedals, windshield wipers or rear view mirror

SOME OF THE DEALS AND ACTIVITIES IN THE ELECTRIC CAR MARKET SINCE JULY 2019 DATE

COUNTRY

ACTIVITY

October 2019

Europe

Honda announces it will sell only electric and hybrid vehicles in Europe beginning 2022, 3 years ahead of schedule

October 2019

USA

Ford announces the launch of it’s the largest vehicle charging network in the US – 12,000 charging stations with 35,000 plugs

November 2019

USA, China, Germany

Tesla reveals its Cybertruck electric pick-up truck and begins the release of the first electric vehicles from its new Chinese factory. It also announces the location of its 3rd factory to be in Berlin, Germany

December 2019

USA

GM and LG announce plans to build a US$2.3 billion factory for electric cars in the US

January 2020

USA

GM and Honda unveil self-driving electric car without steering and pedals

January 2020

US, Japan

Uber and Hyundai unveil a flying taxi

January 2020

USA

Jeep unveils plug-in hybrid versions of Wrangler, Cherokee and Compass

February 2020

UK reveals plan to go all electric by 2035

March 2020

UAE

W Motors announces plans to open the first hypercar plant in the Middle East

March 2020

India

Altigreen announces plans to launch its first electric three wheel rickshaw in India

March 2020 March 2020

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Dubai's Roads & Transport Authority signs an MoU with British company Beemcar to develop driverless pods that would operate above the city traffic. USA

GM announces that it has created a new electric vehicle battery that offers up to 400 miles (640 km) of range and will be cheaper to produce than currently available batteries. APRIL 2020

AFRICA Inc.

TRAVEL

APRIL 2020

WWW.AFRICAINCMAG.COM

JINJA, UGANDA

DISCOVER THE

ADVENTURE CAPITAL

OF EAST AFRICA

Photo: www.raftafrica.com WWW.AFRICAINCMAG.COM

APRIL 2020

TRAVEL

he East African country of Uganda doesn’t make it to the list of the must-visit locations for leisure and business in the region. However, with an abundance of natural resources including mountains, rivers, lakes and some of the widest array of undiscovered wildlife in Africa, the country should be on your next itinerary whenever you want to move beyond the beaten paths of Kenya, Tanzania and Rwanda – and one amazing place to visit is Jinja. Located some 85 kilometers to the east of the capital city Kampala on the major highway to Kenya, Jinja – often referred to as the Adventure Capital of East Africa – is full of life, thrill and places to discover for all manner of traveler.

ADVENTURES AND MORE

SOURCE OF THE NILE - JINJA IS LOCATED ON THE SHORES OF LAKE VICTORIA AND HOSTS THE SOURCE OF RIVER NILE - AFRICA’S LONGEST & MOST ECONOMICALLY IMPORTANT RIVER

APRIL 2020

Already a famous location for local people – including huge droves of those from Kampala, who are looking for a great place to get away from the hustle and bustle of the capital, mainly during the weekends and holidays - and international travelers alike, Jinja’s attractions are primarily around its biggest attraction, Lake Victoria. Jinja is located on the shores of Lake Victoria and has the unique profile of hosting the source of River Nile, Africa’s longest and most economically important river. Founded in 1907, it is one of the oldest cities in East Africa and the second largest and the second busiest city in Uganda. The town has always drawn in visitors over the decades, who are attracted by its unique tourism, agriculture and fishing and other business ventures. For fun activities, Jinja is unlike any other city in East Africa. From bungee jumping, white water rafting, fishing, kayaking, boat cruises, bird watching, visits to museums and islands, to bike riding or just lounging at the city’s lodges and hotels, Jinja has it all. With vast lush vegetation around the town, including the famous Mabira forest plus the many islands that can be accessed easily by boat, Jinja is a bird watchers paradise. The city has also become a haven for festivals of any kind – including food and drink festivals – of any size, shade and craze. For the young at heart, do not miss the 4 days of wild celebration that is the Nyege Nyege Festival, the underground music fest that takes place in September every year, drawing artists and revelers from across east Africa. To add a splash to Ugandans love for food, there are tens of food festivals focused on ice cream and cake, pork, fish etc. that you should give a try. A visit to Jinja is, however not complete without getting to the source of the Nile – what is considered by many as a life changing experience. For the

culturally inclined, take some time to visit the Kyabazinga Royal Palace, which houses the King of Busoga, who are the majority ethnic community in the vicinity of Jinja.

BUSINESS THRIVES IN JINJA

Having made its name as an industrial city, Jinja and Uganda went through trying times in the 1970s to the late 1980s due to the civil wars that swept the Great Lakes region of Africa, when vital businesses and tourism virtually collapsed. Improvements in infrastructure spend around Jinja, which includes the revamped iconic Jinja Nile bridge, the planned Kampala-Jinja Expressway and the three recently built hydroelectric power stations, Bujagali, Kiira and Isimba continue to place Jinja at the forefront of the economic resurgence of Uganda and the region. WWW.AFRICAINCMAG.COM

JINJA, UGANDA

ken.sika.com

FUN PARADISE - JFOR FUN ACTIVITIES, JINJA IS UNLIKE ANY OTHER CITY IN EAST AFRICA. FROM BUNGEE JUMPING, WHITE WATER RAFTING, FISHING, KAYAKING, BOAT CRUISES, BIRD WATCHING, VISITS TO MUSEUMS AND ISLANDS, TO BIKE RIDING

Jinja’s history as an industrial and tourism hub is on the mend, considering the many businesses that call Jinja home. Already a centre for various businesses, Jinja has seen the entry of new businesses in the hospitality, food, beverage and milling processing, banking, retail and real estate and service industries in the last 10 years to tap into the city’s rising population and its access to eastern Uganda and yonder, including Kenya. The city hosts some of the most iconic brands in Uganda, including Uganda’s premier brewing company Nile Breweries, the maker of the Nile Special Lager beer, which opened its first brewery on the edge of River Nile in 1951 and continues to brew its popular beers using the Nile’s waters nearly 70 years later. Kakira Sugar, which has operated its sugar cane business through the good and bad times in Jinja since 1930, is another historical giant located WWW.AFRICAINCMAG.COM

in Jinja. Others include Bidco Uganda Limited that refines cooking oil from its facility in the city’s outskirts, plus other factories processing packaging materials, textiles, bread, personal care products, steel and other building materials, grain, confectionery, tobacco and many more. The town has seen an up rise in grain trading and processing activities with a number of maize mills set up in the city in recent times to tap into the increase in agricultural activity. Another major infrastructure project by the government of Uganda in Jinja, the 182 acres Jinja Industrial & Business Park is set to upgrade the city’s industrial heritage significantly. Already, the solar bus company Kiira Motors has begun the construction of its facility at the Park, with plans to be the leader in providing sustainable mass mobility solutions in Africa. Th initial phase of the plant has a target of producing 5,000 solar buses per year APRIL 2020

TRAVEL WHERE TO EAT

WHAT TO DO WHITE WATER RAFTING

SURJIOâ&#x20AC;&#x2122;S

Surjios is a guesthouse and pizzeria located at Kisinja Road in Jinja, Uganda. It offers amazing pizza and Italian cuisine

BUNJEE JUMPING

THE BLACK LANTERN RESTAURANT

The Black Lantern Restaurant is located near Bujagali in Jinja. It prides in providing the best ribs and is a hot spot for lunch and dinners with outdoors setup and cosy rooms

RUMOURS AT THE SOURCE OF THE NILE

Rumours is located at the source of the Nile, Jinja and is also the gateway to Samuka Island, a key attraction hotspot.

AASWAD FOREVER RESTAURANT

The Aaswad Forever Restaurant is located in the Main Street of Jinja. It offers Indian and Asian vegetarian friendly and vegan options for lunch and dinner.

BOAT RIDING

WHERE TO STAY

BRISK HOTEL TRIANGLE

The Brisk Hotel Triangle is a low budget hotel with amazing lake view of Lake Victoria. It offers an outdoor pool and views of the lake from most of the property

LIVING WATER RESORT

TUBING THE NILE

The Living Water Resort is located on Speke Memorial Road in the Njeru locality, offering accommodation, a terrace and a garden. The property is 200m from Speke Memorial and a 3-minute walk from Source of the Nile viewpoint.

MADA HOTEL

Formerly called Jinja Nile Resort before it was taken over by the Mada Hitel Group, the hotel is located some 4.3 km from the city centre and is the biggest hotel in Jinja with a bed capacity of 190. Situated on the banks of the River Nile, Jinja it is set on over 30 acres of landscaped gardens. 74

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JINJA, UGANDA

WHERE TO VISIT

Source: www.travel256.com

Source of the Nile - The Source of the second longest river in

the world, marketed as a discovery of one of the first European explorer, is an internationally unique attraction.

Itanda Falls - The Itanda Falls are also found on the Nile, 18 kilometers north-west of Jinja town. The falls offer opportunity for bird watching (especially the weaver birds), camping and picnic outings.

Kyabirwa Falls - Located 8 kilometers from Jinja, the falls offer

Lake Victoria beaches - The lakeâ&#x20AC;&#x2122;s beaches have been partially

Islands in Lake Victoria - These include Samuka, Ndaiga

Antiquities / Historical sites - These include Bujagali ancestral site, for Soga tribe ancestral spirits, at Bujagali falls; the current Busoga Kingâ&#x20AC;&#x2122;s palace at Nakabango; Mpumudde hill, the historical meeting place of the Busoga chiefs and the British colonial Governors and where King Kabalega, of the Bunyoro Kingdom died.

a good scenery and landscape for campsites that is not yet fully exploited. Potential also exists for bird watching and Ethnobotany.

and Lwabitookel. However, only Samuka, has been exploited for tourism purposes.

WWW.AFRICAINCMAG.COM

exploited for location of tourism developments, especially hotels. These beaches include the sites at Sailing Club, Tilapia Club and Masese.

APRIL 2020

Wycliffe Wanda is the Executive Director, Kenya International Freight and Warehousing Association (KIFWA)

BY WYCLIFFE WANDA

Why a new bill is important to professionalize customs and freight trade in Kenya

he rise of regulators to protect consumer interests has served consumers well in setting and applying rules on corporate action and delivery - be it by setting fuel prices in Kenya, by regulating insider trading on the world’s stock markets, or by banning mergers that damage competition. But the debate has got hotter on when taxpayers should be funding industry regulation and when other paths are a better solution, such as structures that push professional responsibility onto professionals themselves, and leave the consumer paying only for their services. It’s a policy debate that stretches back almost 50 years to the initial burgeoning of regulators, in the 1980s, when many countries created new organisations to ensure utilities, such as electricity, water and gas, were provided to consumers in a way that was fair. The trigger was often the presence of a monopoly supplier that was able to set prices as it wished, and sometimes in ways that damaged consumers. Widespread privatisation then created many new players in these vital sectors creating further 76

APRIL 2020

regulatory needs and fuelling a rapid expansion of regulatory agencies. The UK, for instance, began with just three regulators, The Civil Aviation Authority, The Monopolies and Mergers Commission and the Office of Fair Trading, but this quickly rose to more than 10. Indeed, the Journal on The Rise of the Regulatory State in Europe reports that from the first regulators in the 1950s, such agencies then grew steadily to span finance, energy, transport and telecoms, as their roles expanded too. The finance regulator’s role, for instance, expanded to ensure the failure of one financial firm did not hit others, to implement financial policies to avoid a global financial crisis, and to keep the banking system safe. At the same time, the advancement of science, education and law demanded more knowledge in many professions, increasing the need for oversight. For instance, in healthcare, citizens had less knowledge about local practitioners and often suffered at the hands of impostors labelling themselves as ‘doctors’, ‘nurses’ and other professionals. Thus, governments created agencies outlining minimum entry requirements and issuing licenses to practise.

WWW.AFRICAINCMAG.COM

CHANGING ROLE REGULATION

(AND

COST)

Over the years, these regulators’ responsibilities expanded into designing, enacting and reforming policies, setting capital requirements and disclosure requirement, auditing, stress tests, providing professionals’ supervision, and managing liabilities insurance and financial infrastructure. But the growth came at a cost. In fact, analysis found the cost of deciding on the rules, monitoring and sanctioning had come to far outstrip the costs for regulated companies and industries of changing their behaviour to comply. As a result government costs ballooned into public deficits and borrowing. In Kenya, for instance, it cost KSh3.8 billion (US$38 million) to set up the Agriculture Food Authority (AFA) and KSh113 million (US$1.13 million) to set up the National Construction Authority. But running such authorities has generated ever greater costs. The National Construction Authority spends Sh1.72 billion (US$17.2 million) a year, the AFA spends KSh4.2 billion (US$42 million), Kentrade spends KSh732.7 million (US$7.32 million) and the Pharmacy and Poison’s Board spends KSh17 million (US$170,000) Moreover, the highest part of the regulators’ ongoing spending is for employee training at approximately Sh1.2billion (US$12 million) in the financial year 2016/17. But as new problems around professional regulation arise, alternative regulatory models using professional associations have been adopted in nations such as Canada, Australia and the US. This is opening the way to addressing further areas of unregulated practice without generating new public costs, with a case in point being the cargo industry.

NEW BILL AND ITS BENEFITS

Since independence, customs agents and freight WWW.AFRICAINCMAG.COM

forwarders have been operating under the East African Customs Management Act of 2004 and the subsequent 2010 regulations. The Kenya Revenue Authority (KRA) has been applying this act, which only focuses on the customs revenue, and fails to address aspects such as the individual professionalism of agents. This has seen the Kenyan government spend heavily dealing with industry challenges including frequent disputes among agents and cargo owners. Yet such issues could now be handled by enacting the proposed draft Kenya Customs Agents and Freight Forwarders Bill, 2020, which would save taxpayers more than KSh600 million (US$6 million) a year in costs covered by the professionals themselves. The Bill proposes that the industry regulate its professionals, through a council and board that handle agents’ certification and registration, code of ethics, disciplinary proceedings, and mandatory training in a Continuing Professional Development (CPD) program. It’s a model already in place with the Institution of Surveyors of Kenya, the Institute of Certified Public Accountants of Kenya (ICPAK) and the Law Society of Kenya. Indeed, over the last two years, ICPAK has spent KSh613-720 million (US$6.3-7.2 million) in operational costs to ensure accountants maintain the highest levels of professionalism and integrity, in programmes funded through member subscription and payments for continuous professional development training. Canada, Australia and the US also use this model in their cargo industries. Individual customs agents pay a mandatory annual registration fees with their societies of US$400 to US$600 and for the Customs Border Professional Examination, administered each year at the ports, for licensing. Now Kenya, too, can end cargo errors and knowledge gaps that are costing billions in lost revenues by moving to professional regulation by the cargo professionals themselves

ALTERNATIVE REGULATORY MODELS USING PROFESSIONAL ASSOCIATIONS OPEN THE WAY TO ADDRESSING UNREGULATED PRACTICE WITHOUT GENERATING NEW PUBLIC COSTS

APRIL 2020

Kenneth Barry is a Partner and Preeti Nana is an Associate at White & Case LLP, London, UK.

BY KENNETH BARRY AND PREETI NANA

Emerging Trends in Private Equity in Africa

P IN NUMBERS

US$25B VALUE OF PRIVATE EQUITY DEALS IN AFRICA FROM 2013-18 FROM 1022 TRANSACTIONS ACROSS THE CONTINENT 78

APRIL 2020

rivate equity in Africa has come a long way since the early 1990s, which saw development financial institutions investing in government-initiated development projects across the continent. The period that followed was characterised by the emergence of a limited number of South African focused private equity funds, which over the next decade started to invest more widely across the continent. By 1997, there were twelve private equity funds that had collectively raised US$1 billion to invest in Africa. As we fast forward to 2019, the African private equity ecosystem has significantly matured with over 1022 African private equity deals, with a total value of US$25 billion, being reported between 2013 and 2018, including the first billion dollar sub-Saharan African funds, Helios Investors III and Equatorial Guinea Co-Investment Fund. In terms of sector focus, information technology (19%), consumer discretionary (15%), and consumer staples (13%) accounted for almost half of the total number of private equity deals in 2018, while communication services (which includes deals in telecommunication services) was the largest sector by value. Information technology’s share of private equity deal volume has grown significantly in recent years, accounting for 19% of private equity deals in 2018 (compared to only 10% in 2016). With the new narrative of ‘Africa Rising’ that pervaded the media from 2000 and in the aftermath of the 2008 economic crisis, private equity funds increasingly turned to emerging markets for levels of growth that were unattainable elsewhere. Although certain countries on the continent have

experienced headwinds in recent years (in particular, in 2016 when growth came to a halt in South Africa and Nigeria entered a recession, the two economies being the largest in Africa and accounting for the vast majority of private equity activity in the region), one thing we can be certain of is that African private equity has significantly evolved over time. Many features typically reserved for private equity transactions in Europe and North America are becoming increasingly prevalent in African private equity.

STRONGER EXIT OPPORTUNITIES EXIST

In the past, a key concern for private equity funds and their Limited Partners regarding African private equity investments was the quality and availability of exit routes. Illiquid domestic exchanges and political and foreign exchange risk have historically contributed to a limited number of exit paths. However, with the maturation of the African private equity market, the number and scope of exit opportunities have notably improved with the African Private Equity & Venture Capital Association (AVCA) reporting a record number of private equity firms in Africa exiting in 2017 and 2018 (52 and 46 respectively).

a) Trade sales dominate exits

Trade sales to strategic investors continue to be a common exit route, constituting over 39% of exits in 2018. This is expected to continue to be the case in the next twelve months. A notable feature of the evolving market, is the increased prevalence of auction sales, such as the sale of Brandcorp in June 2016 by Ethos Private Equity to The Bidvest Group. Given the increased WWW.AFRICAINCMAG.COM

competition for quality African assets in recent years, it is likely that auction processes will become increasingly common.

b) Secondary transactions

After trade sales, secondary buyouts (sales to other private equity funds and financial buyers), such as the sale by LeapFrog Investments of its stake in Ghanabased pension trustee Petra Trust to pan-African investment firm African Capital Alliance in 2018, account for the next largest proportion of exits, at 37% of deals surveyed in 2018. With strong fundraising by domestic, international Africa-focussed and global funds, we expect that secondary buyouts will continue to be a growing feature in the African private equity market. As the quality of assets and deal sizes gradually increase over time, we would also expect to see more sophisticated secondary transaction structures, such as ‘portfolio’ deals that package up several assets together to be sold to another fund, or deals which involve the breaking up of larger investments into smaller divisions for sale.

c) Initial public offerings (IPOs)

Although public listings remain one of the most attractive exit routes in the global private equity industry, the converse has historically been true in African private equity. Fragmented regulation, political uncertainty, underdeveloped capital markets and low levels of market capitalisation compared to the developed world, result in low usage of IPOs as a private equity exit route - only 3% of all 98 private equity exits in Africa during 2017 - 2018 took place through IPOs. Despite the aforegoing, Vivo Energy’s IPO on the Premium Segment of the London Stock Exchange in 2018, with a secondary inward listing on the Johannesburg Stock Exchange, and the launch by Jumia (the largest e-commerce operator in Africa) of its IPO on the New York Stock Exchange in 2019 indicate that viable IPO options do exist. A number of initiatives have been introduced to improve the attractiveness of IPO markets, including: (i) the East Africa Community stock markets integration project, (ii) the introduction of the Growth Enterprise Market Segment by the Nairobi Securities Exchange; and (iii) new mechanisms to trade and settle ordinary shares of London listed or dual-listed Nigerian companies. As such initiatives come to fruition, we expect that exit options on a limited number of exchanges will become more viable.

INCREASINGLY SOPHISTICATED FEATURES AND CAPITAL STRUCTURES a) Equity and debt instruments

The illiquidity of domestic capital markets, as described above, presents challenges for companies seeking funding. The small size and conservative WWW.AFRICAINCMAG.COM

nature of many African banks has resulted in African private equity deals being significantly less leveraged than equivalent deals in the developed world. Accordingly, the primary source of funding in African private equity has historically been equity finance with a simple capital structure. As the market matures and aims to close the funding gap, mezzanine debt is becoming a key component in the capital structures of African companies, and there are a number of dominant South African funds in the mezzanine debt market. While specific forms of ‘mezzanine debt’ in a European context are generally clearly defined, in African countries it refers more broadly to subordinated debt or unsecured senior debt. A number of private equity funds have raised credit funds specifically targeting these types of investments in Africa. Going forward, we expect to see an increasing number of such funds being established. The challenges posed by the African financing market and the increased complexity of companies’ investment needs, means that we also expect to see an increase in the use of tiered capital structures, with a broader range of share classes and debt instruments, including convertible instruments, loan notes, warrants, high yield instruments, and payment in kind notes.

b) Warranty and indemnity insurance

Private equity has been a driving force in the increased use of warranty and indemnity (“W&I”) insurance on global M&A transactions, particularly on the buy-side. Such policies are beneficial for buyers with limited recourse against sellers who have poor covenant strength. It also allows private equity and institutional sellers to achieve a clean break and distribute proceeds to their Limited Partners. Historically, insurers’ have been wary of emerging markets, however, AIG reports that this is a growing area. Before offering W&I insurance, insurers assess the legal, political and regulatory risks in the relevant jurisdiction, and reflect the level of risk through pricing and exclusions. We expect that the trend to take out W&I insurance, and the increased appetite to underwrite W&I policies on African private equity transactions, will continue.

DESPITE RECENT HEADWINDS IN CERTAIN REGIONS AND SECTORS, THE OUTLOOK FOR PRIVATE EQUITY INVESTMENTS IN AFRICA IS UNDENIABLY POSITIVE, WITH 53% OF LIMITED PARTNERS INDICATING THAT THEY PLAN TO INCREASE THEIR ALLOCATION TO PRIVATE EQUITY OVER THE NEXT THREE YEARS

CONCLUSION

Despite some recent headwinds in certain African regions and sectors, the outlook for private equity investments in the continent is undeniably positive. According to a 2018 AVCA report, 53% of limited partners interviewed indicated that they plan to increase their allocation to private equity in Africa over the next three years, with limited partners, overall, indicating their belief in the long-term attractiveness of Africa; especially, when compared with developed markets Source: Avca-africa.org APRIL 2020

BY AVCA

The Climate Change Opportunity in Africa

frica stands to be amongst the regions worst-affected by the climate crisis. The World Bank argued in a 2016 report that sub-Saharan Africa and South Asia are most vulnerable to climate change-induced poverty, given that they have the highest initial number of people in poverty, and face the steepest projected increases in agricultural prices caused by expected yield losses. In a 2018 report, the World Bank also argued that a worst-case scenario could see internal climate change migrants within sub-Saharan Africa number 86 million. The wide-ranging impact of climate change on Africa’s prosperity, from health and watersupply to agriculture and forestry, is clear, as is the challenge that Africa’s governments face in meeting the projected costs of adaptation, with potential annual adaptation costs of US$20-50 billion by midcentury in the event of a 2°C warming, and up to US$100 billion in the event of a 4°C warming. For the worst effects of climate change to be mitigated, Africa must shift towards climateinformed development, such that new projects are adaptable to (and do not exacerbate) climate conditions, with steps also being taken to reduce people’s vulnerability to the impact of climate change.

PRIVATE CAPITAL HAS A ROLE

IN NUMBERS

US$100B PROJECTED ANNUAL COSTS BY AFRICAN COUNTRIES BY 2030 FOR CLIMATE CHANGE ADAPTATION. 80

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What role can private capital play, then? Consider renewable energy. With two-thirds of Africa’s population not having access to electricity, investors have taken important steps to financing renewable energy projects in Africa. For example, the Desert to Power Initiative, launched by the African Development Bank and supported by institutions such as the Green Climate Fund and the Africa50 Infrastructure Fund, seeks to provide 10 GW of solar energy to the countries of the Sahel region by 2025, providing access to green electricity to over 250 million people, from Senegal to Ethiopia. Meanwhile, the Kathu Solar Park was inaugurated in 2019 in South Africa. Providing up to 179,000 households with constant power, the 100 MW plant will prevent the emission of six million tonnes of carbon dioxide into the atmosphere over the next twenty years and was financed by a consortium that included PE firm Metier, development finance institutions FMO and DEG, as well as South African government-owned asset manager, the Public Investment Corporation.

Climate-focused energy funds have also appeared on the African scene. Climate Fund Managers, for example, recently announced the final close of Climate Investor One’s Stichting Development Fund and Coöperatief Construction Equity Fund U.A. at a combined US$850 million and will look to deliver renewable energy infrastructure across Africa, South Asia and Latin America, preventing the emission of 1.9 million tons of carbon dioxide per annum. Similarly, GPs such as Metier and AIIM (in partnership with SOLA Group and Nedbank Energy Finance) have launched funds focused on developing clean energy and resource-efficient infrastructure, while outside of renewable energy, firms like FMO have extended financing to companies seeking to massively boost forestry plantation in Africa.

CHALLENGES STILL ABOUND

However, structural challenges remain for climate change funds active on the continent. According to Andrew Johnstone, Chief Executive Officer at Climate Fund Managers: "There is still a huge need for private sector investment in renewable energy in Africa. Pension fund regulations restrict the amount that can be allocated to alternative illiquid investments to around 5% of total assets, meaning that infrastructure, real-estate, and climate-related assets are all competing within a relatively small allocation. Also, accounting standards and regulation WWW.AFRICAINCMAG.COM

require that for investments made in illiquid assets, the investor must reserve on the balance sheet a corresponding amount in liquid assets such as cash or bonds, which in the current environment are earning very low yields. This raises the cost of capital for alternatives. For example, if you’re a European institution looking to invest in a renewable energy project in Morocco, the matching capital that dollar needs to put in reserve is probably earning a negative

yield, so the active investment would need to achieve a return high enough to deliver an acceptable average return. Also, there is insufficient capital available for renewable energy projects in early project development stage, resulting in projects stalling or trading and flipping, which is detrimental to both momentum and embedded cost.”

TECHNOLOGY CRITICAL FOR SUCCESS

Another critical element of the climate challenge in Africa will centre on harnessing technology to adapt the continent’s key industries for a warmer future, particularly when one recalls that sub-Saharan Africa’s population is projected to grow by 1.05 billion by 2050, representing 52% of the added global population. Here, sectors like agriculture, which still accounts for 55% of sub-Saharan Africa’s employed population, stand out. One example is the Climate Finance Lab, a public-private partnership which counts the AFC and African Development Bank amongst its partners, which is developing the West African Initiative for Climate Smart Agriculture as a blended finance solution to support the adoption of climate-smart practices by smallholder farmers in West Africa. Companies like the Kenyan agritech start-up Lentera, which is currently raising a US$560,000 WWW.AFRICAINCMAG.COM

funding round, are also developing climate-smart solutions for Africa’s farmers, using remote weather sensors, satellite data, and drone imagery to provide farms with information about the health of their crops, which crops to plant and when to plant them. As institutions like the IMF have noted, climatesmart agriculture can help soften climate change’s impact by helping farmers to produce more nutritious crops in a more sustainable and efficient way. Here, private capital can, and should, do more. The Technical Centre for Agricultural and Rural Co-Operation (CTA) and Dalberg Advisers recently pointed out that only a fraction of the addressable market for agricultural digitalisation in Africa is currently being realised, with estimated realised revenues of EUR127 million compared to total addressable market revenues of EUR2.3 billion. Moreover, they estimated private sector investment into African or Africa-focused agricultural digitalisation enterprises to be EUR47 million in 2018, with Africa-based start-ups in this sector receiving only 3-6% of all Africa tech start-up investment in 2018. By way of comparison, they noted that nearly EUR1.8 billion was invested globally in agricultural technology in 2017. Another challenge relates to raising awareness amongst farmers about the benefits of climatesmart advancements. According to Jerry Parkes, Managing Principal at Injaro Investments: “The uptake of technology is not as high as one would like with smallholder farmers in West Africa, who still prefer to use seeds leftover from the previous year, as opposed to using drought-resistant, professionallyproduced seeds; they observe that droughts are not regular and culturally remain wedded to traditional approaches. However, when there is a drought, we’ve seen demand for drought-resistant seeds rocket the next year. This technology is particularly popular in Sahelian countries like Burkina Faso and Mali, where there is more concern about the impact of climate change. Climate impact, awareness and the ready availability of mitigating solutions vary greatly even just within West Africa, in our experience.”

FOR THE WORST EFFECTS OF CLIMATE CHANGE TO BE MITIGATED, AFRICA MUST SHIFT TOWARDS CLIMATEINFORMED DEVELOPMENT, SUCH THAT NEW PROJECTS ARE ADAPTABLE TO CLIMATE CONDITIONS

FUNDAMENTALS REMAIN

In order to safeguard the continent’s transition to an era of climate-informed development, then, the challenge for private capital is to continue to finance, nurture and encourage the enterprises of innovation that are utilising existing and emerging technologies not only to reduce development’s carbon footprint, but also to protect Africa’s peoples and industries from the worst impacts of climate change. The good news is that many of the key themes that draw private capital to Africa, such as population growth, the youth demographic and rapid urbanisation, also harbour great potential for harnessing the opportunities of investing through a climate-focused lens to build climate resilience and adaptation into Africa’s economic growth Source: Avca-africa.org APRIL 2020

Geraldine Matchett is the Chief Financial Officer and co-CEO, Royal DSM NV Carolyn Tastad is the Group President, North America & Chief Sales Officer, Procter & Gamble Martine Ferland is the President and CEO, Mercer

BY GERALDINE MATCHETT, CAROLYN TASTAD AND MARTINE FERLAND

3 global business leaders on creating a pipeline for

FEMALE TALENT IN BUSINESS Since leadership shapes how we operate and what we deliver, business can contribute to gender parity by hardwiring diversity into those value-adding roles that have the biggest potential impact on our outcomes, and on the customers and society, we serve. Ensuring diversity of mindset and approach is not only the right thing to do, but it also makes good business sense by bringing different perspectives to the table, and ultimately delivering solutions that better solve all of our customers' problems.

Carolyn Tastad, Group President, North America, P&G: Most corporate leaders and

GERALDINE MATCHETT CO-CEO, ROYAL DSM

“TRANSITION OR RESKILLING PROGRAMMES, PARTICULARLY FOR MID-CAREER OR WOMEN RETURNING TO THE WORKFORCE, WILL ENSURE THAT WOMEN ARE NOT LEFT BEHIND” Geraldine Matchett, co-CEO, Royal DSM

istory is peppered with great female leaders. Just think of Boudicca or Christine Lagarde, Rosa Parks or Ruth Bader Ginsberg. Their legacies live in everything from monetary policy to civil rights. Yet, despite earning the majority of university degrees, women are still outnumbered in positions of power. We asked women at the top of their companies what they were doing to create a pipeline of strong female leaders. Here’s what they said:

According to Global Gender Gap Report 2020, only 36% of senior roles and 18.2% of top managers are women, and the World Economic Forum believes we should aim to achieve gender parity in leadership by 2030. What role do businesses play in achieving this goal? Geraldine Matchett, co-CEO, Royal DSM:

With women making up 50% of our company, we know it is unwise to forget half the population. 82

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decision-makers believe they are already addressing gender equality. But bias – both conscious and unconscious – gets in the way. And the result is a blind spot. As leaders and decision-makers, we only see part of the picture instead of the total landscape. This limits the way we act, react, believe and behave. It limits our effectiveness. In the case of gender equality, we need to check our blind spots, so we can see the total picture. That’s the only way we’ll stop going backwards and start making forward progress. Let’s take workplace policies, as one example. Many companies have taken steps to improve maternity leave. And yet the workplace gender gap continues to grow. Why? Because maternity leave is a career inflection point that uniquely affects women. What if workplaces developed policies and programmes that support women as mothers and men as fathers, with sufficient paid maternity and paternity leave? As more men experience the process of taking leave – securing manager approval, creating coverage plans, and navigating re-entry after several weeks away – company processes will improve for everyone, and more managers will be more empathetic to the needs of expectant parents.

Martine Ferland, President and CEO, Mercer: The business case for gender equality has already been

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made, and now we need to move to getting it done. We know that diverse teams bring value to organizations, and a substantial and growing body of research shows that companies with a more equal gender balance substantially outperform those without. But study after study shows that women, people of color, LGBTQ+ people and those with disabilities remain vastly under-represented in senior roles. Businesses can use data-driven insights to inform decisions and measure success, set clear and visible diversity and inclusion goals, and drive accountability and culture from leadership throughout the organization. It’s no longer just a focus for mature economies – it has evolved into an imperative for businesses around the world. Within that framework, there are many areas for improvement on achieving gender parity. Mercer’s When Women Thrive 2020 global report – which surveys more than 1,150 companies in 54 countries and represents over 7 million employees worldwide – shows that a significant gap persists in data-driven and evidence-based decision-making. For example, 81% of organizations globally report that improving diversity and inclusion in high on their agenda, yet only 64% track gender representation. Even fewer track hires, promotions and exits by gender. And only 42% of organizations have a documented multi-year strategy, while just half set formal, quantitative D&I goals and targets. As businesses, if we want to get serious on accelerating the gender parity, we need to start taking actions rooted in data.

How will changes associated with the Fourth Industrial Revolution affect these strategies and need for inclusive business practices? Geraldine Matchett, DSM: Digitalization

offers many opportunities that can benefit and empower women, improve access to education and employment. However, history shows that women do not always benefit from this because of a lack of access to technology, skills gaps, and social or cultural barriers. It doesn’t have to be this way; the future does not design itself. If transition in the Fourth Industrial Revolution is handled well, it could open the door to new and more highly rewarded roles for women. So this is a pivotal time for business to act consciously and make deliberate choices to ensure we are building inclusive organizations. We can start by reviewing the emerging roles that will be critical to our growth, and ensuring diversity in the pipelines that feed them. We can use the benefits of data available to review the impact of digital transformation on our workforce, ensuring that no group is adversely affected. Finally, we can create workplaces that enable WWW.AFRICAINCMAG.COM

digital upskilling, embed new ways of working, and build resilient and empowered employees.

CAROLYN TASTAD GROUP PRESIDENT, NORTH AMERICA, P&G

Martine Ferland, Mercer: Just as organizations

leverage technology to improve the efficiency and effectiveness of their business, the technology of the Fourth Industrial Revolution should be used to enhance diversity and inclusion (D&I) by delivering real-time data and insights, empowering leaders to make more informed people decisions. In most aspects of D&I efforts – from data analysis, candidate-sourcing and selection, learning and development, talent management, employee communication, and health and well-being – correctly applied technology can enable consistent implementation of practices, processes and programs that support D&I. Yet our research shows only 30% of organizations are using technology to address such challenges. It’s important for companies to ensure women are not at risk of falling even further behind in workforce participation, leadership roles and equal pay. The latest 2020 Global Gender Gap Report shows that women are more highly represented in roles hit hardest by automation. Generally, women tend to have shorter careers, are at lower wages, take more time off work to care for children or the elderly, and they live longer. It will be important for companies to review the changes that are needed in the workforce strategy with a gender lens to develop reskilling and transition plans accordingly.

“AS WE LOOK WITHIN OUR OWN ORGANIZATIONS, WE NEED EVERY INDIVIDUAL, EVERY CEO AND EVERY LEADER TO CHECK THEIR BLIND SPOTS AND EMBRACE A BROADER SET OF STEPS REQUIRED TO CLOSE THE GENDER GAP” Carolyn Tastad Group President, North America, P&G

Source: weforum.org APRIL 2020

MARTINE FERLAND PRESIDENT AND CEO, MERCER

“COLLABORATION AMONG MULTIPLE STAKEHOLDERS IS KEY FOR IMPROVING GENDER EQUALITY. CIVIL SOCIETIES, GOVERNMENTS AND BUSINESSES CAN WORK TOGETHER BY DRIVING LEGISLATIVE REFORMS AND IMPLEMENTING INCLUSIVE WORKPLACE POLICIES AND PROGRAMMES”

How can businesses, governments and civil society collaborate to strengthen each other on the path to gender parity by 2030? Geraldine Matchett, DSM: Business is not separate from society – we are part of it, and DSM makes this very clear in our purpose. Working in partnership with governments and civil society is core to how we deliver sustainable growth. We need to change the rules of the game together. There are many ways to do this. Looking at the potential opportunities and risks for women in the future of work, we need to collaborate on education and skills programmes that enable access to highvalue employment. DSM works hard to promote women in science and needs the support of policies and campaigns that encourage girls and young women into STEM education. Transition or reskilling programmes, particularly for mid-career or women returning to the workforce, will ensure that women are not left behind. And we know that women’s access to education is often limited by caring responsibilities, so childcare subsidies for women (and men) in reskilling programmes would accelerate the transition. Carolyn Tastad, P&G: Over the last few years,

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several big companies have been heralded for identifying and fixing pay gaps between women and men in the same roles. One could argue whether fixing a problem that shouldn’t have existed in the first place deserves celebration, but regardless, this is only the first step. What if – instead of being satisfied with fixing pay inequality – big business made fair pay the minimum standard, and income equality the new priority? The Gender Gap Report describes the difference between the wage gap and income gap. The wage gap is the gap between how women and men are paid in similar positions. This is easy to spot and easy to fix in organizations committed to fair pay. The income gap is the difference in total wages earned by women vs. men. When more men than women hold more senior roles in an organization, there’s an income gap. The only way to address this is to achieve 50/50 representation at every level of the organization, including the C-suite. Getting to 50/50 requires intentional, long-term talent planning at every level, including targets or quotas. But here, too, the typical approach of setting targets only for women is too narrow. We must tackle the numerator and the denominator by declaring hiring targets and representation quotas for women and for men. Our talent plans must encompass our total talent pool – not just a piece of it. As world leaders internalize the stark realities in the Gender Gap Report, and as we look within our own organizations, we need every individual, every CEO and every leader to check their blind spots and embrace a broader set of steps required to close the gender gap.

Martine Ferland, Mercer: Collaboration among multiple stakeholders is key for improving gender equality. Mercer has partnered with the WEF on Closing the Gender Gap Accelerators to develop country-specific, data-driven approaches for enacting policies that will drive parity. Over the past few years, pressure has grown for companies to report on the gender pay gap or comply with equal pay legislation that has begun around the globe. In the US, laws are being introduced at the city and state level, and at the national level in Europe and Australia. But many countries still have policies that impede women’s economic participation. Civil societies, governments and businesses can work together through their advocacy efforts, by driving legislative reforms, and by implementing inclusive workplace policies and programmes to ensure there is a systemic approach to addressing gender inequality

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GROW YOUR BUSINESS FASTER, MORE SUSTAINABLY READ AFRICA’S LEADING BUSINESS & ENTREPRENEURSHIP MAGAZINE

AFRICA Inc. AFRICA’S LEADING BUSINESS & ENTREPRENEURSHIP MAGAZINE

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AFRICA INSPIRING AFRICA’S BUSINESS FOUNDERS & LEADERS

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COVID-19 IMPACT ON AFRICA TRENDS IN PRIVATE EQUITY IN AFRICA

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YEAR 3 ISSUE 1. NO.3

AVAILABLE IN PRINT & FOR FREE ONLINE AT

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Dr. Victor Oladokun is the former Director of Communication & External Relations at the African Development Bank Group.

BY DR. VICTOR OLADUKON

The Covid-19 Crisis Shows Africa Urgently Needs An Ubuntu Plan

“COVID-19 WILL ALTER THE WAY WE LIVE, WORK, AND SOCIALISE. THE FINANCIAL COSTS AND THE ECONOMIC DEVASTATION ARE EPIC. THIS IS WHY AFRICA IN URGENTLY NEEDS A GLOBALLY COORDINATED FISCAL STIMULUS PLAN THAT RECOGNISES OUR SHARED AND CONNECTED HUMANITY.”

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frica urgently needs a globally coordinated Ubuntu Plan in response to COVID-19, a fiscal stimulus that recognises our shared and connected humanity, as we find ourselves in the midst of an unprecedented crisis. The world's largest cities are eerily silent. One virus has disrupted the whole world in a manner never seen before in history. COVID-19, a term that did not exist in our vocabulary a couple of months ago, has brought virtually everything to a grinding halt. It's a surreal almost cinematic scene. Except that we are all living through it. With governments balancing economies and the welfare of their citizens, entire industries and institutional systems find themselves fighting for survival in the midst of mandatory lockdowns. Food supply chains, transportation networks, educational systems, governance and judicial systems are either strained or barely functioning with medical services being the worst hit. Unlike any other pandemic, COVID-19 will alter the way we live, work, and socialise. The financial costs and the economic devastation are already of epic proportions. This is why Africa in particular urgently needs an Ubuntu Plan. A globally coordinated fiscal stimulus plan that recognises our shared and connected humanity.

to 1.8% in 2020. On 27th March, The Secretary General of the UN Antonio Guterres said: “Africa is a continent with very little capacity to respond and I am extremely worried that in those situations, we might have millions of cases with millions of people dying.”

THE CASE FOR AN UBUNTU PLAN

Prior to the crisis, 41% of sub-Saharan Africa’s population lived on less than $1.90 a day which is very little to survive on. Seven out of ten persons (70%) in Africa are in vulnerable and precarious forms of informal employment eking their living on a daily basis. Lockdown, homeworking and teleconferencing is therefore not an option. Family support systems from blue and white-collar workers and the diaspora, are themselves under threat. Job losses will strain these critical informal support systems to breaking points. Global demand for oil and gas and commodity products - the mainstays of Africa's leading economies - has stalled. In Africa, formal social safety nets rarely exist. Therefore, stockpiling food items for extended periods of isolation is out of consideration. Linked with this, Africa requires vast food supplies to meet the needs of the continent's poorest who can barely afford a decent meal. Recent cyclones, Kenneth and Idai, and a plague of locusts, have already put considerable pressure on immediate food supplies

United States of America passed a US$2 trillion stimulus package that will keep markets operational, support Americans out of work, and help reduce Federal Reserve lending rates. It is the largest bailout in the history of the United States. European economies likewise have announced stimulus measures in excess of 1 trillion Euros. Chinese factories are ramping up again, backed by a $344 billion stimulus package. In contrast, Africa's economies are already buckling. Global demand for oil and gas and commodity products - the mainstays of Africa's leading economies - has stalled. Revenues which were already overextended have dried up and small, medium, and large enterprises are at risk of total collapse. Last Thursday, the United Nations Conference on Trade and Development (UNCTAD) estimated that the pandemic could reduce the growth of the region's gross domestic product (GDP) from 3.2%

LOCKDOWNS ARE NOT EQUAL

Even though the United States, Europe and many parts of Asia are better suited economically and infrastructurally to a lockdown, they are struggling to cope with the burden of this sudden pandemic. A situation that will likely will be worsened by the duration and unpredictability of the pandemic. If these societies are struggling, the impact on Africa is best imagined.

IN NUMBERS

800 M

NUMBER OF PEOPLE WORLDWIDE WITHOUT ACCESS TO CLEAN WATER, 40% FROM AFRICA

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Photo: qz.com

for the continent. Which is why an Ubuntu Plan is now critical in order to cushion the harsh social and economic impacts of the COVID-19 pandemic in Africa. Such a plan would include a fiscal stimulus package, the development of critical infrastructure and support for the continent's most vulnerable populations. The fact is that in the 21st century, clean water supplies and access to electricity are the stuff of dreams for millions of Africans. Globally, almost 800 million people are without access to clean water. Of these, 40% live in sub-Saharan Africa. The simple act of hand washing, which the pandemic requires for prevention is still not possible for millions. Linked with this, less than 58% of Africa's population has access to modern healthcare facilities.

A RACE AGAINST TIME

Africa and its partners have already been striving hard to tackle the challenge of eradicating poverty with measures such as the UN’s Sustainable Development Goals, and the African Development Bank's High5 strategy. The COVID-19 pandemic however shines the spotlight on Africa’s poor healthcare delivery systems and facilities and its vast challenges. Africa has one of the highest population densities in the world. For people living in tens of thousands of informal settlements, the idea of social distancing is inconceivable. Millions of vulnerable low-income people live in cramped communal houses and rooms and in areas that lack basic amenities, especially water and sanitation. In the short term, to effectively combat COVID-19, we urgently need self-testing kits, personal protective equipment (PPEs), makeshift living spaces and hospitals, recovery units and WWW.AFRICAINCMAG.COM

inexpensive easy-to-operate ventilators. The World Health Organisation (WHO) has already issued a ten-point strategy that calls for the creation of corridors on the continent to facilitate emergency deployments and material shipments. The plan also calls on governments and the private sector to help increase supplies, medical equipment and care, and to strengthen surveillance and public awareness, in order to prevent continent-wide community transmission. In the short window available, global cooperation is imperative. The African Union's Vision Agenda 2063 and action plan states among other things, that “We are part of the global drive through the United Nations and other multilateral organisations to find multilateral approaches to humanity’s most pressing concerns including human security and peace, the eradication of poverty, hunger and disease ...”

“IN THE MID TO LONG TERM, WE MUST URGENTLY RETHINK SOCIAL LIFE, URBAN AND RURAL PLANNING AND OUR BUDGETARY PRIORITIES, DECONGEST INFORMAL SETTLEMENTS AND DEVELOP AFFORDABLE HOUSING.”

RETHINKING THE FUTURE

In the mid to long term, we must urgently rethink social life, urban and rural planning and our budgetary priorities, if life is to be preserved. We must decongest informal settlements rapidly and in their place develop affordable housing that is suitable for isolation and quarantine, in the event of future pandemics. There is no better time for a globally coordinated Ubuntu Plan. To stop the global spread of COVID-19 and its global devastation, it must be stopped in Africa. The world must pay attention and lend a helping hand by strengthening global cooperation, now more than ever before. Ubuntu - The preservation of human dignity, health, lives and wellbeing, demands nothing less APRIL 2020

Wuraola Akande-Sholabi is a lecturer at the Department of Clinical Pharmacy and Pharmacy Administration, Faculty of Pharmacy, University of Ibadan.

BY WURAOLA AKANDE-SHOLABI

Nigeria relies heavily on drug imports. Why this is worrying in the time of COVID-19

he spread of COVID-19 has been slow in Nigeria compared to other countries on the continent. Nevertheless, the federal government has taken steps in readiness for a more rapid outbreak. Schools have been closed, public gatherings banned by some state governments and most public workers are required to work from home. An international travel ban has also been imposed and the country has announced a lockdown of major cities. Nigeria’s health system will find a full onslaught of COVID-19 difficult to handle. The main reasons are its lack of sufficient isolation centres and testing kits. The other major challenge is that Nigeria has a very high dependency on imported drugs – 70% are brought in from abroad, chiefly China and India. On top of this, Nigeria relies on imported active pharmaceutical ingredients as well as equipment used in drug manufacturing. This dependency is of particular concern in the face of a threat such as COVID-19. The reliance on foreign countries may lead to a serious medical crisis in the country if it is unable to source the drugs it needs. China and India have both been hit hard by the pandemic. It’s important for Nigeria to take stock. It needs to look at lessons learned and build on them to respond better to ensure uninterrupted pharmaceutical supply during pandemics.

DRUG SECURITY IS IMPORTANT

With the numerous health challenges that Nigeria faces – ranging from communicable to non-communicable diseases – pharmacotherapy is the mainstay for vast majority of conditions. Ensuring national sufficiency and drug security is crucial in tackling diseases, reducing mortality and catering for other health care needs. This no mean task with a growing population of over 200 million. It is important at the same time to combat falsified, substandard and counterfeit 88

APRIL 2020

pharmaceutical products. All pose threat to the economy and security of the nation. There are steps the country can take to offset the very high dependency on imports. Manufacturing is one such route. The manufacture of drugs in Nigeria is on the decline. The main reasons for this are infrastructural challenges – like a lack of consistent energy supply – as well as inadequate financial support to the up-andcoming pharmaceutical scientists. Others constraints include difficulties in the over-dependence of imported raw materials, weak technology and engineering base, weak industrial linkages and supply chain with high taxation. Nigeria nevertheless has a relatively sizeable industry. The country is home to more than 115 pharmaceutical companies. These produce for the local markets and for export to neighbouring countries. Nearly all of the local drug manufacturers purchase active pharmaceutical ingredients from other manufacturers and formulate them into finished drugs. This means that they are limited to purchasing drugs and repackaging them for use. There is, however, some manufacturing. This includes analgesics, antimalarials, antibiotics, antiretrovirals and vitamins including tablets, capsules and syrups. Others include antitussive syrups, infusions, antacids, antiseptics/disinfectants and injectables. But there is no significant research and development activity in the country. And most of the pharmaceutical companies in Nigeria have not been able to fully navigate the challenges which makes the operation in the country sub-optimal. The overall impact of this pandemic may be felt soon, leading to shortages of active pharmaceutical ingredients. This should raise concern about the potential of an increase in fake and counterfeit medicines and drugs. Fighting the sale of fake, counterfeited and sub-standard drugs is a ongoing struggle in the country.

OPPORTUNITIES EXIST

The COVID-19 pandemic should be an

opportunity for drug manufacturers to pressure government into doubling efforts to ensure local drug manufacturing. The federal ministry of health too needs to ensure that the medicines and drugs supply chains are well-coordinated and regulated to ensure that people who need them have access. It should ensure that all drugs listed on the national essential drug lists are readily available and well distributed across the country. Nigeria is blessed with thousands of medicinal herbs. This is equally an opportunity for the country to strategically improve its research on herbal medicines for diseases management and improve access to medicines. Developing a sustainable and efficient local drug industry in Nigeria would take decades of dedication by both the private sector and government. It is therefore important for the government to make the country attractive for foreign pharmaceutical companies and also to complement the development of drug manufacturing. The National Agency for Food and Drug Administration and Control and Pharmacists Council of Nigeria have been making meaningful efforts to ensure and encourage local drug production. Both organisations should do more especially in getting government’s political commitment to encourage local drug manufacturing. The food and drug agency recently ordered manufacturing of chloroquine for emergency stock for possible clinical trial for COVID-19 treatment. Interestingly, the federal government has directed the National Institute for Pharmaceutical Research and Development to start research on herbal drugs that will help combat COVID-19. The challenges facing local drug manufacturing in the country cannot be completely solved during this pandemic. However, it should provide the opportunity for reflection as regards drug security during pandemic Source: The Conversation WWW.AFRICAINCMAG.COM

Ralph Hamann is a Professor at the UCT Graduate School of Business, where he teaches and researches on business sustainability, social innovation, and cross-sector interactions.

BY RALPH HAMANN

5 ways the Covid-19 crisis will have long-term implications for business leaders that spread to humans from animals) have risen as people increasingly squeeze wildlife into ever tighter corners. As noted by the author David Quammen, as we disrupt ecosystems… we shake viruses loose from their natural hosts. Many scientists – and also an increasing number of business leaders – thus see COVID-19 as a tragic example of the broader risks to business and societies from our seeming inability to address environmental risks associated with climate change, biodiversity loss, and other “planetary boundaries.”

STRENGTHENING THE ‘SOCIAL IMMUNE SYSTEM’

s the COVID-19 crisis unfolds, the focus of business leaders and others has been on immediate responses and short-term time horizons. This is for good reason. Yet there are initial signs of how the crisis may be shaping longer-term assumptions about business and its context. The spread of the pandemic has brought to the fore the need for business leaders to recognise the crucial interdependencies between business and its environmental, social, and governance context. In addition, given the massive public sector contributions to companies during the crisis, and recognising companies’ reliance on healthy societies, business leaders will need to appreciate amendments to the social contract that underlies societal support for their operations. They will need to do much better in working with others in safeguarding planetary boundaries, strengthening the social immune system, and building capable and accountable states. Below I set out five implications of the pandemic for business leaders:

PAYING ATTENTION BOUNDARIES

PLANETARY

The emergence of the virus is linked to humans’ callous treatment of wild and domesticated animals for food and dubious medicinal benefit. COVID-19 thus shows that current approaches to the trading and consumption of wild and domesticated animals are not only ethically and ecologically problematic, but also highly risky to ourselves. More broadly, the risks of zoonotic diseases (those WWW.AFRICAINCMAG.COM

COVID-19 highlights for businesses their interdependence with the social fabric in which they are embedded. One implication is that businesses are directly affected by the scope and quality of countries’ social welfare systems. Provisions of the welfare state, including sick leave, have turned out to be crucial. They not only cushion the blow to vulnerable workers, but also help reduce the spread of the disease. A related concern is the vicious cycle between COVID-19 and poverty and social inequality. Poor people are particularly exposed to contracting the disease, and they are less likely to receive good medical attention if they get sick. They are also much more exposed to the negative economic impacts. The health of the society on which businesses depend thus depends on the existence of a decent social welfare system and the absence of extreme poverty and inequality. This has been referred to as the “social immune system.” Business leaders will need to recognise how vital it is for their companies’ long-term health, as well.

“MANY SCIENTISTS AND BUSINESS LEADERS SEE COVID-19 AS A TRAGIC EXAMPLE OF THE BROADER RISKS TO BUSINESS AND SOCIETIES FROM OUR SEEMING INABILITY TO ADDRESS ENVIRONMENTAL RISKS, BIODIVERSITY LOSS, AND OTHER “PLANETARY BOUNDARIES.”

BUILDING CAPABLE AND ACCOUNTABLE STATES

For the last 50 years, many business leaders inspired by Milton Friedman and his doctrine, or just motivated by selfishness, have chipped away at the idea that we need a strong state. The emphasis has been on reducing the role of the state and leaving more and more responsibilities to market actors. But now business leaders are crying out for decisive government action in response to COVID-19. The assumption that we don’t need capable governments has been turned on its head. Business leaders have also stood idly by in recent years as political leaders have self-servingly eroded APRIL 2020

“MANY BUSINESS LEADERS AND MANAGERS ARE ENGAGING IN A RADICAL SHIFT TOWARDS COORDINATION AND COLLABORATION WITH THE GOVERNMENT AND CIVIL SOCIETY ORGANISATIONS AS WOULD HAVE BEEN UNIMAGINABLE.”

confidence in science. COVID-19 has highlighted the folly of this. The US’s President Donald Trump and Brazil’s Jair Messias Bolsonaro openly derided scientific advice on the pandemic. President John Joseph Pombe Magufuli of Tanzania has urged churches to stay open because the coronavirus is “satanic.” COVID-19 is showing how leaders’ lack of interest in or inability to make good use of science can have disastrous consequences. It is showing up with great urgency a similar problem with other serious but more longer-term challenges, such as climate change. At the same time, there are concerns that some government leaders are using the crisis as an opportunity to deepen their authoritarian grasp on societies. They are applying surveillance mechanisms to control the pandemic, but also to control people. This is expressing itself in states known for their authoritarianism, such as China and Hungary. But a much broader range of states are using technologies to monitor people in ways that would have been considered preposterous a few months ago. So, on the one hand, business leaders will need to recognise the need to build capable states and evidence-based government. At the same time, they will also need to be proactive in ensuring that states remain accountable and respectful of individual freedoms.

APRIL 2020

MANAGING CRISES RESPONSIBLY

The COVID-19 crisis is many ways unique. But it is also part of a broader pattern of increasingly frequent crises, as we push beyond planetary boundaries. In South Africa, businesses were just recovering from a record-breaking drought when the crisis hit. In Australia, people were still reeling from disastrous fires. Business leaders will need to recognise that crises will become less exceptional and thus their responses must become better prepared, more proactive, and more responsible. They must respond to both the synergies and tensions between business and community resilience. Often, ensuring business continuity is a vital contribution that business leaders can make to the communities in which they operate. For example, in many countries pharmacies and retailers still have products in store. This isn’t an accident but the result of highly sophisticated and energetic responses that commenced already in January. The news has also been full of impressive efforts by companies to repurpose their production facilities or to make products and services available to medical workers. Other efforts to continue with business during the crisis have been less benign. Some have sought to keep operating despite public health warnings to the contrary, such as some gyms. Others are more brazenly opportunistic, for instance by peddling questionable “health products” or through price gouging. Another form of opportunistic

behaviour is for companies or associations to make use of the crisis to influence public spending or policy in their favour. For example, coal companies have lobbied hard (and in the US, quite successfully) to benefit from government stimulus packages. This has been despite widespread calls to align such stimulus efforts with the imperative to address climate change. In coming decades, business leaders will need to distinguish themselves by showing strong crisis management capabilities in maintaining business continuity, and by contributing more clearly to societal resilience.

COLLABORATING IN A NEW SOCIAL CONTRACT

The crisis is of such scope and depth that many business leaders and managers are engaging in a radical shift towards coordination and collaboration with the government and civil society organisations. In South Africa, for example, business leaders have established working groups interacting with national government to coordinate the crisis response in terms of public health, as well as social and economic impacts. This shift is as swift, far-reaching, and seemingly natural as would have been unimaginable a few months ago. The challenge for the next few years will be for a similar commitment to collaboration to address shared social and environmental problems before they manifest in crises like this one Source: The Conversation WWW.AFRICAINCMAG.COM

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