Southern Africa Top Companies Review Issue 2 2016

ISSUE 4, 2016

STRUGGLING FOR FOREIGN DIRECT INVESTMENT

solutions for Southern African countries

LESOTHO & SWAZILAND

and the need for better regional integration

Standard Bank Namibia

BANKING BUSINESS WITH INTEGRITY

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thers call it Africa but we call it home” is one recent campaign for Standard Bank clearly spelling out the bank’s commitment to Africa. Working in Africa for over a century, the bank can confidently say that Africa is indeed home.

We at Standard Bank are fortunate to be part of a wider group being the largest bank by assets in Africa. We have a footprint in 19 African countries excluding South Africa and are present in 5 African countries with the GDP growth in excess of 7%. From the above we can state that our growth is dependent on banking the winners of the continent we pride ourselves in not viewing economic prosperity in isolation of our own P/L but are proud to be a part of the growth of the African continent as a whole including SACU region. Hence our slogan “Africa is our home and we drive her growth”.

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Standard Bank Namibia was previously a wholly owned subsidiary of Standard Bank Group domiciled in the RSA, we are very pleased to announce that in line with the Financial Sector Charter guidance Standard Bank Namibia is now owned 10% by the Purros Trust that has beneficiaries consisting of qualifying employees from previously disadvantaged groups. Our Bank is headed by CEO Junius Vetumbuavi Mungunda previously the Deloitte Southern and Central African corridor managing partner. The bank is split in 2 distinct divisions namely Per-

sonal and Business Banking and Corporate and investment banking, however whilst these two divisions serve two very separate market segments we prefer to take a holistic view of the market we serve and see ourselves as a universal bank and partner the two divisions within the broader Namibian market as a partner to all Namibian stakeholders and drive growth on a national level as a true partner to our customers from the man on the street to the multinational corporate.

As stated above as a group we are aligned and do not take only a national view per country, but a holistic view of the continent as a whole, we partner in country teams with the group strategy as a whole and truly see ourselves as partner for the development of African industry as a whole. We also leverage of our strategic partnership with ICBC and certain development Banks to promote DFI in African countries.

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Leadership at the Standard Bank Namibia is not just a preserved for the male gender. The bank has in top management women who have taken important leadership roles to help the bank meet its business objectives. The bank has the following women leading various important portfolios as evidenced by the recent appointment of Karen van der Merwe as Head of Business Banking. Karen, a seasoned banker, comes to this position with over 23 years of service at Standard Bank Namibia. She has held various roles over the years mainly in her capacity as client account executive for business banking and most recently in the Corporate and investment banking space. Standard Bank is very proud to partner with Karen in her new role as of April 2016 as the Head of Business Banking. As the head of business banking Karen will be heading up all the banks clients in the Public Sector, Agri, SME, Property and Commercial banking space.

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Standard Bank has a long and rich history in Africa for instance we have had a presence in Namibia for over a 100 years. This gives us a unique insight into doing the right business the right way in Africa. We like to think this gives us a distinct competitive advantage in providing the opportunities African’s require to grow their wealth and eliminating the inequality we see in many genie coefficients in African countries. By addressing the above challenges in our own way we believe ourselves to be fundamental in promoting stability in the economies were we operate.

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Another cap in the feather, Rejoice Itembu takes over the reigns as Head of Workplace Banking.

An ever “green asset” for Standard Bank Namibia, Rejoice assumes this important role from another important assignment as Manager for Public Relations and Communication. She led this division with distinction over the last two years.

The bank has also taken strides to dealing with union/labour related issues in a progressive manner. The bank relates well and with mutual respect with unions representing workers at all levels possible. This relationship ensures that the bank and the unions work on an understanding that helps foster a beneficial relationship for all parties involved. Stretching history as far back as 1994, the bank has continues to uphold their relationship with the Bank Worker’s Union of Namibia. These relations help assure all parties involved of the bank’s commitment to meeting and protecting all interests with integrity.

5th Floor, Standard Bank Centre, Corner of Werner List Street Post Street Mall, PO Box 3327, Windhoek, Namibia www. standardbank.com.na

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CONTENTS 7 Editors Letter 8

Struggling for Foreign Direct Investment: A call for diversification in the region

8 34

& Swaziland 20 andLesotho the need for better regional integration Turmoil; SADC’s 34 Globalopportunity to fix intra-regional trade Turning Lemons into Lemonade: 44Adam Molai is building an empire

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by capitalizing on Zimbabwe’s past economic woes?

Climate Agility, financial 52 mobility, and sustainable small-scale farming in SADC

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SADC Top Companies Review, Issue 2, 2016

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INVINCIBLE VALVES (PTY) LTD Invincible Valves (Pty) Ltd was established in 1982 and since has grown to a medium sized enterprise located in Knights, Germiston. Invincible Valves prides itself on service excellence and flexibility by striving to enhance our customer’s bottom line.

Valve Sales, Reconditioning & Rubber Lining Stockists of the Inval Range, Babbit, Cla-Val, Insamcor & Saunders

Our 6,500m² facility in Knights is made up of 4,500m² under roof being our stores and workshop. The facility is fully equipped to offer a one-stop resource for valves and ancillary equipment which we transport globally.

As an approved supplier to all major industries within South Africa, we maintain expertise and experience across a broad spectrum of industries and applications with a wide range of products. We are Africa’s largest stockist of Saunders & Insamcor products. We offer a comprehensive range of local and imported valves and accessories for the mining, petro-chemical, power generation, water, sewerage and general industries. We have agents in all major centres around the country and service all four corners of the globe.

We offer an in-house rubber lining service for valves, pipes, fittings and vessels which is utilized by many of the country’s major valve manufacturers. In addition we offer complete service, repair and valve reconditioning services for all types of valves.

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We believe in treating our customers with respect. We grow through creativity, invention and innovation. We integrate honesty, integrity and business ethics into all aspects of our business functioning.

Our Mission Statement:

Build long term relationships with our customers and clients, to provide exceptional customer services by pursuing business through innovation and advanced technology.

Our Purpose: P.O. Box 2149, PRIMROSE 1416 Tel: 011 822 1777 / 011 027 1831 Fax: 011 822 3666 Sales: enquiries@invalve.co.za Management: pamdp@invalve.co.za

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To be a leader in the Valve Industry by providing enhanced services, customer service and profitability.

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To provide a quality service that exceeds the expectations of our esteemed customers.

Invincible Valves is a proud supplier of quality valve products and ancillary equipment backed by service excellence around the globe. It is the combination of these values that allows us to form lasting business relationships.

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TEL: +27 (0) 11 822 1777 | FAX: +27 (0) 11 822 3666 | EMAIL: enquiries@invalve.co.za | WEB: www.invalve.co.za

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From the

EDITOR

T

he merger between wireless media giant AT & T and news and content giant is just that, gigantic. The transaction is around US$85 billion. Wow! These are big numbers indeed.

The transaction is subject to regulatory and government approval looking at various aspects that include concentration of too much power into the hands of too few, impact on market say in distribution and such related issues that may arise in the market. This new deal obviously happens between two big American brands.

With these developments oveseas in mind, I came to think about business in Africa more so in Southern Africa. I believe “protectionism” is one barrier that keeps standing in the way of “massive mergers” such this American story. At some stage, mobile telephone services giant, MTN is said to have wanted to invest in the Zimbabwean mobile services industry.

One issue that “scared” the deal, industry analysts mentioned was that government and regulatory authorities pushed the “affirmative action” laws to the extent that potential investors such as MTN looked elsewhere for investment.

Foreign Direct Investment is key to the health of any country’s economy.

We look at opportunities and challenges the lack of FDIs present to economies in the Southern Africa.

At the time of going to press, preparations for AfricaCom 2016 were at an advanced stage with participating companies finalising their participation at this important business event. The expectation is that “deals” will definitely be closed but also looking at trends and innovations in the industry and market. To single out one, Kwese TV has emerged as one success story from Southern Africa. The company has concluded massive deals to have basketball, soccer etc. on their platform. Kwese TV is owned by Zimbabwe’s mobile telephone services giant ECONET. I am looking forward to the next our coming edition that will look at the Mining, Construction and Energy sectors. In addition to our valued partnership with the organisers of the Mining Indaba, the next edition takes a detailed look at trends in the highlighted sectors. Until next time, enjoy the festive break.

Grivin grivin@primediazw.com

PUBLISHER MANAGING DIRECTOR Hillary Munemo

Prime Media Network Publishing Group (PTY) 262 Voortrekker Road, Cape Town, South Africa Tel: +27 21 829 0259 Fax: +27 21 911 0249 Email: info@primediazw.com Web: www.primediazw.com

EDITOR Grivin Ngongula ADVERTISING SALES EXECUTIVES: Nyasha Gusi Henry Musanyera Mphumzi Njovana

CONTRIBUTORS Sungula Nkabinde Lani Botha DESIGN & LAYOUT Pixel Resolution

SADC Top Companies Review is a publication by Prime Media Africa Publishing Group (PTY) Ltd {Incorporated in South Africa}. Although persons and companies mentioned herein are believed to be reputable, neither Prime Media Africa Publishing Group (PTY) Ltd (2015/01235/07), nor any of its employees, advertising sales executives or contributors accept any responsibility whatsoever for such persons’ and companies’ activities. While every effort has been made to ensure that information is correct at the time of going to print, Prime Media Africa Publishing Group (PTY) Ltd cannot be held responsible for the outcome of any action or decision based on the information contained in this publication. The publishers or authors do not give any warranty for the completeness or accuracy for this publication’s content, explanation or opinion. It is advisable that prospective investors consult their attorney/s and/or financial investor/s prior to following pursuing any business opportunity or entering into any investments. Nothing in this publication should be taken as a recommendation to buy, sell, hold or trade any listed securities, or other financial instrument or asset. No part of this publication and/or website may be reproduced, stored in a retrieval system or transmitted in any form without prior written permission of the Publisher. Permission is only deemed valid if approval is in writing. © Prime Media Africa Publishing Group (PTY) Ltd. All rights reserved.

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STRUGGLING FOR FDI

Over-reliance on South Africa and lack of diversification are the main stumbling blocks for the SADC region. The solution is to improve infrastructure in order to accelerate regional integration.

SUNGULA NKABINDE

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SADC Top Companies Review, Issue 2, 2016

SADC Top Companies Review, Issue 2, 2016

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he ‘African Rising’ narrative that positioned the continent as a prime destination for Foreign Direct Investment (FDI) withered away after the downturn in China’s economy marked the end of the commodity price super cycle, having the most significant impact on oil, copper and iron ore prices and driving the slowdown of Africa’s predominantly resource-rich economies.

African countries, over-reliant on their natural resources, have since struggled to attract FDI. According to the UN Conference on Trade and Development (Unctad) world investment report, FDI flows to Africa fell to $54 billion in 2015, while flows into South Africa were down 69% to $1.8 billion, hitting their lowest level in 10 years.

This does not bode well for many countries in the Southern African Development Community (SADC) whose dependence

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on South Africa is so entrenched that the performance of its economy has a multiplier effect on theirs.

For members of the Southern African Customs Union (SACU)- Botswana, Lesotho, Namibia, and Swaziland, this reliance on South Africa is more pronounced, as revenue from the customs union is the largest single source of income. For Lesotho, those receipts finance 50% of the national budget, according to Deloitte’s SA Investor’s Handbook 2014/2015.

SACU seeks to maintain the free interchange of goods between member countries. It provides for a common external tariff for the common customs area. All customs duties collected in the common customs area are paid into South Africa’s national revenue fund and the revenue is shared among members according to an agreed revenue-sharing formula.

According to the 2016 edition of the African Economic SADC Top Companies Review, Issue 2, 2016

SADC Top Companies Review, Issue 2, 2016

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Outlook (AEO) report South Africa is also the top investor in the region, accounting for about 80% of foreign investment into Botswana, Lesotho, Namibia and Swaziland.

“If SA performs well, economic activity filters through to those countries,” says Abdullah Verachia, lecturer at the Gordon Institute of Business Science. “In isolation, these economies are very small. I mean, Lesotho’s economy is about 1.1% of South Africa’s GDP.” Verachia says Swaziland is also a laggard small economy with no real opportunities for growth and no real prospects of a return on investment from an FDI perspective.

“It’s always useful to look at it from the perspective of a foreign investor. If you were looking at 195 different markets in the world as potential investment destinations, do you think countries like Swaziland and Lesotho would come to mind?

Probably not,” he says.

Need for incentives Unless there is a commodity play, like Oil Angola or copper in Zambia, SADC countries need to give large incentives to investors in terms term of tax break and a business-friendly regulatory environment.

One example is the film industry in South Africa, which has become particularly attractive because of policy-driven incentives. The incentives consist of the Foreign Film and Television Production and Post-Production incentive to attract foreign-based film productions to shoot on location in

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South Africa and conduct post-production activities, and the South African Film and Television Production and coproduction incentive, which aims to assist local film producers in the production of local content. The South African Emerging Black Filmmakers incentive, a sub-programme of the South African Film and Television Production and co-production Incentive, which aims to assist local emerging black filmmakers to nurture and grow them to take up big productions and thus contribute towards employment creation As soon as these incentives came into play there has been a boom in the local film industry, with Hollywood blockbusters like Safe House and District 9 being shot in South Africa.

South Africa’s automotive industry is also very attractive for FDI because of government’s incentives. In May this year the country’s minister of Trade and Industry Rob Davies said announced the establishment of a team of technical experts to develop a “post-2020 Automotive Master Plan”, which would guide support for the sector beyond the current Automotive Production and Development Plan.

“Deployment of R7.8 billion of government incentives has spawned R28.5 billion of investments by original equipment manufacturers in the auto sector,” said Davies.

Need to set up a common market Verachia says one of the main challenges for SADC is its geographical location, explaining that it is far South and quite removed from the rest of the continent, making it difficult to

SADC Top Companies Review, Issue 2, 2016

set up an investor proposition as there is no connectivity with a thriving like Nigeria, for example.

It is why many people argue that one can look at SADC as a common market for investment. But, right now that not feasible because when the requisite infrastructure is not in place.

Africa’s regional communities can lay the foundation for diversification by creating common markets, pooling resources and providing a framework for the regional management of infrastructure such as transportation corridors. They can also strengthen human resources capacity, health, security, the environment and services across the regions. In addition, harmonising technological standards and regulations, and reforming customs and border controls will improve Africa’s business climate.

“One can’t expect company to set up a base in Lesotho if they are not going to have direct access to the all 15 countries in the SADC. Infrastructure is poor. Connectivity is poor. Movement of people is poor. There is no common VISA regime. I think that is the biggest issue,” says Verachia.

“If you start looking at the SADC as a total of 15 countries with 260 million people, coming off a low base, then it’s attractive.

But the problem is the ability, or lack thereof, these countries to come together and say ‘let’s be seen as a collective, let’s hunt (for FDI) as a pack’….”

He says this would make the SADC a much bigger market and a much better value proposition. But, in his opinion, politicians’ talks about integration haven’t amounted to much.

However, according the AEO report, the SADC, along with the East African Community (EAC) are Africa’s most integrated regional communities, stating that in 2014, the SADC had the highest proportion of intra-regional trade at 19.3% of its total trade followed by the EAC at 18.4%.

Intra-African trade by regional economic communities (USD million) Collectively, the SADC could position itself as a very diversified economy with comparative strengths that enable each of those countries to feed off each other. The region has oil, gas in SADC Top Companies Review, Issue 2, 2016

Mozambique, Tobacco in Zimbabwe, Gold and Platinum in South Africa, and Madagascar has a thriving textile industry.

“That should be the play. SADC has to move beyond politics and turn itself into an economic centre. That would be attractive for investors, especially from a BRICS perspective. If the ‘S’ in BRICS stood for SADC, and not just South Africa, then investors would really take notice” says Verachia.

Business needs to play a larger role Although the various SADC governments are largely to blame for the lack of progress in advancing regional integration, Verachia believes the business communities should share some of the responsibility.

There is no business-to-business engagement...seldom would you find South African entrepreneurs that can name 10 to 15 companies within the SADC region. Its reflective of how far we are in terms of business engagement, and that’s unfortunate,” he says.

However, in order to get businesses closer together, governments need to build the infrastructure that will encourage entrepreneurs to look for opportunities within the region. Verachia cites the N4toll road, which corridor has created alignment between Johannesburg, Pretoria and Maputo, as a prime example.

“It is amazing what it has done in terms of increasing trade between the two. It’s a fantastic case study of how connectivity can bring our geographies closer to drive trade and investment.” the Zambia-Tanzania-Kenya Power Interconnector Is another example. it will link the Southern Africa Power Pool and the East Africa Power Pool to create a large regional electricity market.

The Grand Inga Hydro Power Plant on the banks of the River Congo in the Democratic Republic of the Congo, when fully developed, could have a power generation capacity exceeding 44 000 megawatts – half of Africa’s current installed electricity capacity. The AEO report states that the average global citizen receives $14 301 annually using 2011 purchasing power parity prices, while the average Southern African receives $6 800, so the is a long way to go in terms of building wealth and reducing inequality in the region.

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ADVERTISING FEATURE

Venturing into sectors where other private investors dare not – leading the way

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orizon Group Ltd was established in 2007 by the Rwandan government. The creation of the company was prompted by the need to contribute to accelerated socio-economic development of Rwanda. The group would focus on those critical sectors of the Rwandan economy where local private players are less willing or unable to venture.

The initial focus was on the launch of the Horizon Construction Company.

Currently, Horizon Group consists of three established subsidiary companies: Horizon Construction Ltd, Horizon Sopyrwa Ltd, and Horizon Logistics Ltd. The company is also involved in several joint ventures, including Agropharm Africa for value addition to pyrethrum, S&H Industries Ltd for manufacturing of roofing materials, and Afriprecast for production of precast materials for construction.

Horizon Construction is the first subsidiary of the group. The com-

Eugene Haguma, CEO, Horizon Group pany was born out of the engineering regiment of the Ministry of Defence and has focused primarily on roads and large infrastructure projects.

Horizon Sopyrwa is a pyrethrum processing business. Prior to being acquired by the Horizon Group in 2008 the company was privately

Cactus Green Park, one of our estates under development, is designed to be environmentally friendly. It is a pilot project in implementation of Green Cities as enshrined in Rwanda’s Economic Development & Poverty Reduction Strategy

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run. Horizon Sopyrwa has over 3,000 hectares under cultivation. This acreage is cultivated by seven farming cooperatives that produce a combined annual output of some 600 metric tons of dry flowers. Horizon Sopyrwa contributes an estimated 10 percent of the world’s supply of pyrethrum.

Horizon Logistics is the successor company to both Horizon Clearing and General Services and the Sudan Maintenance Project which have been in existence since 2009. Services include import/export trade, clearing services, equipment maintenance and leasing of construction equipment. The company has specialised in peacekeeping logistics, and is a UN Registered Vendor.

The Horizon group of companies aims to build a strong future for Rwanda through investments that deliver value, social impact, and prosperity.

Horizon Group maintains a number of independent subsidiaries.

There are, however, structural ties between the operating subsidiaries and the holding. The core responsibility of the holding company is the formulation of a clear strategy in addition to serving as an incubator of businesses. The holding is also responsible for taking investment decisions, enhancing capacity, policy formulation, and monitoring and control of operations.

Horizon Group is wholly-owned by the government of Rwanda but registered as a private company. The government is not in charge of the day-to-day oversight of the company but acts through the board of directors.

Horizon Group is aware that in the emerging global economy – where the internet, the news me-

SADC Top Companies Review, Issue 2, 2016

dia, and the information revolution shine light on business practices around the world – companies are more frequently judged on the basis of their environmental stewardship.

This transparency of business practices means that for many companies, corporate social responsibility including environmental conservation and protection is no longer a luxury but a requirement. Rwanda’s Economic Development and Poverty Reduction Strategy (EDPRS), to which Horizon Group is a major contributor, acknowledges that sustainable poverty reduction and environmental conservation and protection are inextricably inter- linked.

The country’s reconstruction process in the 2000s prompted the establishment of Horizon Construction Company to take advantage of the opportunities offered by the emerging market. In 2007, Horizon was awarded its first construction contract for an asphalt concrete road in Kigali. The successful com-

Eco-friendly pest control products produced by AgroPy Ltd

One of the pyrethrum fields in Musanze District

One of the many roads in Kigali City, recently constructed by Horizon Construction

pletion was followed by many other construction projects both road and infrastructure developments like the Kigali public library landmark and the first dyke in Rwanda, built in Bugesera District.

An example of the Horizon Group’s dedication to sustainable business practices may be found at Horizon Sopyrwa, one of the world’s leading producers of pyrethrum – the main ingredient of eco-friendly pest control products.

Compared to many other pesticides, most notably the synthetic pyrethroids, pyrethrins have a fa-

vourable profile. While all pesticides can be toxic to aquatic and other organisms, pyrethrins are ten to over hundred times less toxic than some of the synthetic pyrethroids.

Because of the relatively water insoluble nature of the pyrethrins, they are considered immobile in soil. This property greatly limits their ability to migrate into groundwater. The binding of pyrethrins to soil makes microbial metabolism in the soil an important component of their degradation, with half-lives of 10.5 days under aerobic soil conditions, and 86.1 days in anaerobic conditions.

In both production and processing of pyrethrum, Horizon Sopyrwa has consciously adopted a number of environmentally friendly approaches, including sun-drying pyrethrum flowers and the rotation of pyrethrum with food crops to keep soil depletion to a minimum. www.horizongroup.rw

Horizon Construction introduces the Road Recycling Technology to the Rwandan construction market

SADC Top Companies Review, Issue 2, 2016

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Coca-Cola Beverages to reconsider SA investment plans

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frica’s biggest Coke bottler, Coca-Cola Beverages Africa, will rethink its spending plans in South Africa if Pretoria’s proposed tax on sugary drinks gets the green light, a spokesperson said on Thursday.

In a bid to fight a growing obesity rate in the continent’s most lucrative market for Coca-Cola and fast-food chains in sub-Saharan Africa, the government has proposed a 20 percent tax on sugar sweetened drinks under a plan that has delighted health campaigners and angered drink makers.

Coca-Cola Beverages Africa is the continent’s biggest

bottler of Coke. Coca-Cola Beverages Africa was created earlier this year through a combination of SABMiller and Coca-Cola African soft drink operations. The deal won an anti-trust go-ahead on several conditions that included a commitment to spend 800 million rand to develop farmers and retailers.

“It is not what the company wants to do but when you look at the impact the tax would have, we will have relook at some investment commitments we have made,” said CocaCola southern African spokeswoman Vukani Magubane. The proposed levy, which was first announced by

Finance Minister Pravin Gordhan in February, is expected to be implemented this year. Treasury asked the South Africa public to submit comments on the proposed levy by August 22. Further, Treasury has already received endorsement from lobby group Public Health Association of South Africa, saying it was a cheaper intervention measure to fight obesity-linked diseases such as diabetes. More than half of South Africa’s adults are overweight, with 42 percent of women and 13 percent of men obese, according to National Treasury data. Sub-Sahara’s most industrialised economy also has its most overweight

population, the figures show.

A local soft drinks industry body, Beverage Association of South Africa, has already dismissed the proposed tax as “discriminatory” and warned it could lead to job losses. The industry employs about 200 000 people.

MTN empowers African businesses with AWS Direct Connect

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TN Group continues to offer business solutions for all sizes of enterprises. The company is the first African company to offer Amazon Web Services (AWS) Direct Connect to business customers across multiple countries on the continent.

The new service will leverage the extensive footprint of MTN’s *Global MPLS network, to provide customers with connectivity between their data centres or businesses and the AWS EU Ireland region. This will give enterprises across Africa a dedicated link with which they can access the flexible, scalable and reliable AWS cloud.

“The relationship with Amazon Web Services is an important step in our plans to address the needs of enterprise customers in emerging markets, particularly Africa,” says MTN Group Chief Executive Officer, Mteto Nyati.

“As MTN Business, our purpose is to enable and inspire growth on the continent. We believe that by working with a global technology leader such as Amazon Web Services, MTN will be better placed to enable customers to grow their businesses by providing them with reliable connectivity and access to world-class digital solutions,” says Nyati.

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MTN’s Global MPLS network connectivity offers improved manageability, reliability and performance. As a result, AWS Direct Connect is expected to bring significant benefits to multinational and large enterprise customers by providing a more consistent network performance when they access AWS. “We are excited to be working with MTN to bring the security and reliability of AWS Direct Connect to customers across Africa,” said Steve Midgley, Head of EMEA, Amazon Web Services Luxembourg Sarl. “By utilising AWS Direct Connect customers are able to reduce network costs, increase bandwidth throughput and provide a more consistent network experience helping African businesses of all sizes to rapidly expand their organisations.” Customers are also assured of good quality of service as a result of the service level agreements which MTN offers on MPLS. In addition, customers will benefit from reduced bandwidth costs, as the dedicated connection to AWS will result in a lower data transfer rate than normal Internet data transfer rates. AWS Direct Connect is one of the ways in which MTN is addressing the needs of its enterprise customers. To this end, the company will also be enhancing its Cloud offering with new services in the coming months.

SADC Top Companies Review, Issue 2, 2016

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SADC Top Companies Review, Issue 2, 2016

SADC Top Companies Review, Issue 2, 2016

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LESOTHO, SWAZILAND

and the need for better regional inetgration The two landlocked nations have to leverage the strengths of the South African economy in order to reduce their reliance on it.

SUNGULA NKABINDE

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SADC Top Companies Review, Issue 2, 2016

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ountries like Lesotho and Swaziland are in a precarious situation when it comes to stimulating their own economic. Being landlocked within another country, their economic performance is more often than often determined by the prosperity, or lack thereof, of the South African economy.

The banks, restaurants, supermarkets and clothes stores are overwhelmingly South African. The countries also depend on the neighbouring economy to provide jobs for its citizens.

While the relatively poor performance of many landlocked countries can be attributed to distance from coast there are several aspects of dependence on transit neighbours, which is this case is South Africa, are also important. Four types of dependence outlined by Michael Faye et al in their 2004 research paper on the ‘Challenges Facing Landlocked Developing’ are dependence on neighbours’ infrastructure, dependence on sound cross-border political relations, dependence on neighbours’ peace and stability, and dependence on neighbours’ administrative practices.

To that end Swaziland and Lesotho are heavily reliant on South

SADC Top Companies Review, Issue 2, 2016

Africa and there is not much that can be done about that.

“They have to understand how the South African economy works better than what the South African economy knows itself,” says Dr. Lyal White from the Gordon Institute of Business Science.

“What is very important for them is that the South African economy performs well. They have no other option. They thus have to open up and integrate and they have to provide incentives for South African entrepreneurs and consumers to buy from them.”

The countries’ complete dependence on South Africa in terms of gaining access to the coast, tips negotiating power against the landlocked countries, which means that Lesotho and Swaziland have to find creative ways of simulating the economy. It is why White suggests policy reform as the only weapon with which to attract investment.

They have to open up and integrate and they have to provide incentives for South African entrepreneurs and consumers to buy from them. The best thing for them, he says, would be to create an Export Processing Zone, or something to that effect, where they could give tax-breaks and other such incentives to pull

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investors in. They could also the labour costs down and allow the free movement of labour, which would enhance the attractiveness of investing those countries.

“Both those countries have struggled with issues of governance over the last few years. If they implement these policy initiatives, the attract investment not only from South Africa, but from all over the world,” says White. At the end of the day, it is all about building some form of comparative advantage.

But it would all have to be in conjunction with South Africa because both those countries are largely at the whims of the performance of the South African economy.

Intra-regional trade The other challenge for Lesotho and Swaziland speaks to a universal problem for African countries, which is, the lack of intra-regional trade.

Since 2010, White says the continent has failed to advance the share of intra-regional trade in Africa, as a percentage of global trade. It has always stood between 11% and 12%. There are many reasons for this, not least of which that many African countries produce the same products at the same time of the year as each other. The legacy of colonialism is that African countries have never been designed to trade within each other. So, while proximity to the coast is an issue for landlocked countries like Lesotho and Swaziland, the lack of movement in goods or services in countries in closer proximity is another challenge.

To that end it is vital that South Africa opens up to other countries to stimulate economic activity, but very little has been achieved in terms of opening up trade with other African countries.

“We are still very far. haven’t moved beyond the rhetoric in terms of achieving real connectedness. We’re still obsessed with gathering in large convention centres and talking about regional integration, but not much is being done,” says White.

Negotiations for a tripartite agreement to link three major regional blocs – the East African Community (EAC), the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA) – are yet to be concluded. That said, neither of those sub-regional blocks are not connected enough either, within themselves. If connectedness is measured in terms of the by the movement of goods, services people, information and capital, then by-and-large most African countries don't even trade with each other.

There have been a few efforts, but nothing significant enough to significantly impact trade. The SADC has instituted the Southern African Transport and Communications Commission to integrate transport policy, freedom of transit, and regional infrastructure. COMESA has created the Yellow Card initiative, which guarantees third-party insurance across signatory states, removing the need to acquire additional insurance coverage for each country.

Even the Southern African Customs Union (SACU), which maintains free trade among members and comprises South Africa, Botswana, Lesotho, Swaziland and Namibia, can be a liability. The union charges non-members a common external tariff and revenues are shared among members from a common pool run by South Africa under an agreed-upon formula. But

24

in Lesotho, revenue from the union amounted to 60% of the government budget in 2011, according to then Central Bank Governor Retselisitsoe Matlanyane in an interview with a local magazine ‘Visions’ earlier that year. Now that revenue from the union has declined due to the global economic slowdown, the government’s budget is reported to have halved.

A similar picture can be painted for the economy of Swaziland.

The analogy that can drawn is that when South Africa Sneezes, both Lesotho and Swaziland catch the flu.

A lot can be learned from East Africa In order to improve, the prospects of regional trade blocks has to improve. And, according to white, that means commodity prices to rise again. The crash in commodity prices has largely beenn responsible from the demise of the ‘Africa rising’ narrative that was so prevalent at the turn of the decade. There will also have to be infrastructure development to tune of $94 billion a year

SADC Top Companies Review, Issue 2, 2016

to achieve these levels of infrastructure for African countries to catch up to the rest of the world in terms of development.

“And It all has to work at once,” says White. “Political will is also very important. Because It's not only finance that is required but also to make sure that finance is translated into real projects and into real action. But political will is lacking. There are only a few heads of state that are truly committed to regional integration,” White argues that Kenyan president Uhuru Kenyatta is one of the biggest drivers of regional integration and that this is why Kenya is the strongest economy is East Africa, the EAC is the most advanced form of sub-regional integration that we have on the continent.

They are by far the most connected. And they have implemented the free movement of people as well. That free movement of goods services people and capital is in action.

Their stumbling block at this stage is hard infrastructure. They're building their trans-east African railway at the moment, but

within the next five years - that's going to be one of the most exciting things to watch in Africa.

Says White: “They don't produce the same products but they are all coffee producers. So, I think what they have done is they haven't worried too much about trade the same products at the same time of they year. They're looking at trying to us regional integration as a way to create economies of scale by clubbing their resources together and think that's a very important lesson to be learned.“ The big take away for Swalizland and Lesotho is that, while they may not be able to separate themselves from South Africa’s fate, they can been heavily from ensuring the the country they are lanlocked in prospers. And one way to do that, given global economic hedwinds that the global economy faces, is to encourage more regional integration so as to ensure that the pie that is the South African economy grows well enough to stimulate their own economies.

‘The big take away for Swalizland and Lesotho is that, while they may not be able to separate themselves from South Africa’s fate, they can been heavily from ensuring the the country they are lanlocked in prospers.’

SADC Top Companies Review, Issue 2, 2016

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SADC Top Companies Review, Issue 2, 2016

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GLOBAL TURMOIL

SADC’s opportunity to fix intra-regional trade

BY LANI BOTHA

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SADC Top Companies Review, Issue 2, 2016

SADC Top Companies Review, Issue 2, 2016

29

D

uring the World Economic Forum (WEF), held in Davos for the 45th time this year, it was clear that global ‘headwinds’ by far surpassed the world’s recent infatuation with Africa.

The three most reported preoccupations in 2016 were the Chinese economy’s current position and prospects, implications of the current low international oil price, and asset price adjustments in global markets.

In his report “No longer the centre of attention”, written for tralac (a trade-related capacity-building organisation for east and southern Africa), David Christianson reports that the European Union’s coherence in the face of migration pressures, collapsing investment in emerging markets outside India, and conflict in the Middle East further removed attention from Africa. 1 At a time when growth prospects of the Southern African Development Community (SADC) have been hit hard by a soft commodity cycle and El Niňo, with the IMF revising GDP prospects for the region down, Africa’s economic growth is forecast to remain subdued for another three years, while the global and domestic economic influencers described above continue.

Advent of the Fourth Industrial Revolution (4I) WEF 2016 CEO, Claus Schwab, published an article predicting that the first three Industrial Revolutions (steam, electricity and digitisation) would be followed by intensification of the digital era, mainly via developments in cellular telephony. It makes sense that the two most-voiced concerns at WEF 2016 were job implications and economic readiness, with WEF predicting 5 million job losses by 2020 due to technology shifts.

This lends weight to Ernst & Young Vice Chair of Global Markets Uschi Schreiber’s warning that low-tech solutions should

not be ignored. If Africa’s significant rural voices are not heard, the digital revolution will do little to aid the continent’s ambitious developmental goals.

Ernst & Young (EY), which launched a flagship Africa attractiveness programme in 2010 to promote the business case for Africa, highlights in a special report Africa 2030: Realizing the Possibilities that the proliferation of mobile telecoms and technological convergence in Africa carry the promise of improved financial inclusion, government efficiency and trading opportunities, as well as better education, healthcare and service delivery for both urban and rural people.

Cleaning house and breaking barriers While Africa’s growth story is tangible and digital disruption is on every African’s lips, there are numerous non-technological hurdles that need to be crossed as SADC prepares for closer trade ties with its neighbours, to ensure progress that is more immune to global pressures.

The EY report stresses that intra-regional trade is substantially below what can be achieved, with regulation and legislation identified as the major stumbling blocks to cross-border trade and prosperity.

EY Africa chief executive Ajen Sita mentions that, despite the importance of providing ongoing evidence of the continent's progress, it may now be more important to shift focus to Africa’s future – how to sustain and accelerate the progress of the past 15 years. Many barriers to doing business in the region have been identified in recent years by countless surveys and indices, but little has been done to address these issues. This led the SA Institute for International Affairs (SAIIA) to launch a SADC Regional Business Barriers project in 2011, together with the SADC Secretariat and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ).

The expansion of information and communications technology, such as mobile banking, can also assist in reducing the large transaction costs incurred when exchanging information between commercial banks and isolated farmers.

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SADC Top Companies Review, Issue 2, 2016

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SADC Top Companies Review, Issue 2, 2016

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On the premise that poverty eradication is an overarching priority in SADC’s Regional Indicative Strategic Development Plan (RISDP), upskilling of the workforce; economic and financial integration; appropriate sectoral diversification; value addition and beneficiation are the vital means to this end.

By applying a process of cross-matching, assigning a weighting of importance to the poverty eradication imperative, and by merging similar categories of business and investment barriers, a working list of the ten most significant barriers was identified as follows (in no particular order): ● Access to and cost of finance. ● Tax rates and/or administration (including direct and indirect taxes, double taxation policies and harmonisation). ● Access to skilled labour (including issues related to the free movement of people in the region). ● Economic and regulatory policy uncertainty. ● Fluctuations of the exchange rate/foreign currency regulations, including with respect to remittances. ● Customs regulations, procedures and bureaucracy. ● Supply of reliable and efficient infrastructure, including transport, telecommunications, IT and energy. ● Corruption. ● Inefficient bureaucracy, including transparency of rules and regulations, business licensing and investment permits. ● Non-tariff and other trade barriers, including technical barriers to trade (TBT), sanitary and phytosanitary measures (SPS) and

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standards, quality assurance, accreditation and metrology (SQAM) issues.

As a second phase, the project team assessed how these ‘academic’ barriers actually played out in the real worlds of agriculture, mining, transport and trucking, financial services, tourism and pharmaceuticals. The ultimate aim is to include the surveyed businesses in advocacy work designed to eliminate and alleviate business obstacles in the SADC region.

These firm-level and public-private partnership (PPP) case studies point to practical solutions that could nip recurrent constraints in the bud, once and for all, by promoting innovative resolutions to ageing problems. So while the rest of the world’s attention is drawn away to deal with its own major issues, the opportunity is present and very real for SADC to focus on boosting intra-regional trade in the interim.

CASE STUDY Access to and Cost of Finance in Agriculture This ground-breaking public-private sector dialogue used the opportunity to bring to closer alignment differing perspectives on financing for agriculture in Malawi by encouraging dialogue between two business sectors: agricultural traders, and financial services providers (including several development finance institutions and international cooperating partners).

The lessons learnt are applicable to most SADC countries. The Malawian economy is largely based on agriculture, in particular cash crops such as tobacco and maize. In 2014, 91% of Malawian SADC Top Companies Review, Issue 2, 2016

households were involved in farming and 86% relied on farming or casual farm work as sources of income. The lack of agricultural infrastructure (such as irrigation) in rural areas, as well as Malawi’s volatile climate, presents a serious threat to agricultural production in the country. There are also significant, uncaptured opportunities in downstream agri-processing and agricultural exports that would boost the industry.

This constraint on current and potential agricultural production is often the result of a lack of access to agricultural financing, particularly among smaller producers. Boosting agricultural production requires investment in irrigation systems, new seed varieties and fertiliser. Agricultural exports incur significant bulk transport and customs costs. Diversification of agricultural production to downstream processing requires upfront capital contributions. All of these factors depend on ready and affordable access to finance.

The two major obstacles in accessing agricultural finance in Malawi are, firstly, cost of private sector finance with commercial loan interests ranging from 20–40%, with some producers quoting rates as high as 55%. Second, there appears to be an asymmetry of information on access to alternative financing within the sector.

The purpose of development financial institutions (DFIs) is to recognise these types of market imperfections and correct them – offering finance in key sectors that is cheaper and has less stringent regulations. However, existing financing opportunities for agricultural production, such as those offered by the African Development Bank, are not being used.

SADC Top Companies Review, Issue 2, 2016

The problem of risk in agricultural financing in Malawi is a textbook ‘market for lemons’ failure. The asymmetry of information between formal lending institutions and smallholder farmers creates an adverse selection problem in which FFIs are unwilling or apprehensive to provide credit.

To overcome this problem, agricultural producers must be able to signal that they are creditworthy as large commercial banks and DFIs cannot deal with individual, small-scale farmers.

Isolated farmers are almost always served by itinerant middlemen, who bulk and transport at a considerable cost.

They also traditionally provide short-term financing to help farmers meet emergency cash needs through pre-financing future procurement – again at high cost to the farmer, who receives a much lower price than on the open market.

Farmers can play an important role by organising themselves for collective action through the formation of co-operatives and agricultural producers’ organisations. However, this has rarely been accomplished without outside assistance (either from non-governmental organisations private sector support) or government by-laws in favour of co-operatives linked to marketing boards.

The expansion of information and communications technology, such as mobile banking, can also assist in reducing the large transaction costs incurred when exchanging information between commercial banks and isolated farmers.

About 72% of Malawians have access to a mobile phone, but only 4% of adults actually use mobile money services.

The majority who do not use mobile money services simply are not aware that the service exists. This is a significant information and marketing gap identified by the FinScope Survey – and an area which mobile telecommunication companies, and also banks interested in this market, should consider carefully.

‘Well-functioning and inexpensive transport systems are particularly critical in the SADC context since SADC, as a regional economic community (REC), has the highest number of land-locked countries in Africa.’

Parting shot The Southern Africa Business Forum (SABF), a private sector-led platform to engage the SADC Secretariat and member states in unlocking barriers to business development in the region, launched six working groups in August 2015. They have been working on projects to accelerate regional development by unlocking value chains in the region, opening up transport corridors, doing trade facilitation, movement of services and skills, water, and energy.

Their results, as well as a public-private roundtable with SADC Heads of State, will be discussed at its second annual forum during the SADC Heads of State Summit this August in Swaziland.

We look forward to reporting on the outcomes in our next issue.

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SADC Top Companies Review, Issue 2, 2016

TURNING LEMONS INTO LEMONADE Zimbabwean Entrepreneur Adam Molai is building an empire by capitalizing on Zimbabwe’s past economic woes.

SUNGULA NKABINDE

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SADC Top Companies Review, Issue 2, 2016

‘Zimbabwe and its neighbours lack infrastructure, goods and services on a number of fronts, presenting a wealth of opportunities for entrepreneurs’

Z

imbabwean entrepreneur Adam Molai is making the right moves in his hopes of becoming Africa’s next Aliko Dangote. He is slowly building an empire by taking advantage of opportunities that his country’s recently forlorn economy now presents.

Thanks to the abandonment of the Zimbabwean dollar as the official currency, Molai believes the country is longer at the mercy of exchange such rate volatility as most other African countries. Since the US dollar became the universally accepted for all transactions in Zimbabwe, there has been created an air of stability for investment and business growth and the environment is now ripe for business.

He sees so many opportunities that he feels like the challenge can actually become trying to chase too many opportunities at once, causing one to lose focus. But the problem is that too many people are limited by their everyday challenges, so much that cannot see the gaps.

There is no shortage of stories about the plight of Zimbabwean people, for many whom abject poverty is their daily reality.

According to the World Food Programme, the country is considered a low-income, food-deficit country, ranked 156 out of 187 developing countries on the Global Hunger Index, which

SADC Top Companies Review, Issue 2, 2016

measures progress and failure in the global fight against hunger.

But, although, Molai does not dispute that his country’s economy is experiencing one it’s most challenging periods ever, there is a silver lining.

“What needs to happen is that we need people to start seeing the opportunities in the adversity rather than ending at seeing the “problem”, says Molai. “For example, Many citizens in the rural diamond rich Marange area in Zimbabwe had a problems digging graves for their lost family members because the stones were too tough. But what they didn’t realise was that the tough stones that were creating this challenge for them were actually diamonds.”

He says there is high need in economy for improved roads and water provisions, while the abundance of land is an opportunity to produce foodstuffs effectively. Meanwhile, the availability of highly educated unemployed youths is also much a challenge as it is an opportunity.

Business ventures Molai established Savannah Tobacco, a company that resurrected the Zimbabwe’s tobacco industry and started to destabilise the monopoly that British American Tobacco has

37

and investors the world over. But, in less than five years, that same enthusiasm towards resource-rich countries has dissipated along with the recent fall in commodity prices.

Says Molai: “It grinds my gut that Africa is a producer of platinum, and yet there is no catalytic converter production in Africa. We have an abundance diamonds and yet the jewellry production is happening in Surat, India… Until or unless we create industries that will leverage our resources, we will remain susceptible to vagaries of price fluctuations associated with trading in commodities.

Entrepreneurial spirit

Mr Adam Molai had in Southern Africa. Founded Savanna Tobacco in 2002 as a green fields tobacco processing operation that introduced a value-add element to the sector, the company has since turned over 70 000 subsistence farmers into middle income earners, generating more than $600 million for the country’s economy.

He was also instrumental in the launch of liquid fuel logistics company, Dharwizi, which specialises in freight management and liquid logistics planning in Mozambique, Zimbabwe, Zambia and the Democratic Republic of Congo, and is now the largest liquid logistics company in Zimbabwe.

Most recently, he struck a deal with Indian billionaire Ravi Jaipura to build a US$30 million canning and bottling plant in Harare, known as the Pepsi-Varun project, which is expected to create 600 direct jobs and 6000 downstream jobs.

But he is only getting started. Molai sees Zimbabwe, along with the rest of the African continent, as a place awash with consumers and small businesses whose basic needs are sparsely catered for.

“Zimbabwe and its neighbours lack infrastructure, goods and services on a number of fronts, presenting a wealth of opportunities for entrepreneurs,” he says. “If there is a lack of water, power or roads, I see an opportunity to supply them” he says.

In one word, Molai’s formula for success is about ‘beneficiation’.

He wants to create value from the raw materials that Africa is natural endowed with. It irks him that the prospects of most African countries are largely determined by the market prices of the commodities they are endowed with. During the mining supercycle, the ‘Africa rising’ narrative was postulated by economists

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Aged 45, Molai’s leadership and entrepreneurial qualities have been celebrated far and wide. In Canada the Lakehead University has the Adam Molai Small Business Consulting Award in his honour.

In 2004 he won the Zimbabwe National Chamber of Commerce’s (ZNCC) Businessperson of the Year in 2004, an award once given to Strive Masiyiwa, the richest man in Zimbabwe. Two years later, Molai was again decorated as the Manager of the Year runner-up by the prestigious Zimbabwe Institute of Management.

He says he started been honing his business skills at the age of 10 when he would sell stock from his father’s supermarket to students at a markup. His father was very thrifty and didn't believe in spoiling children with money, but he always had pocket money until he finished high school, from purely buying and reselling goods from my father's shop for items that were in short supply or by high school, supplying other boarding school kids with meat and other requirements for weekly braais.

In university, while studying in the UK, he found an network marketing opportunity where I was selling frozen food from a brochure.

“I quickly realized the formula for successful selling and then roped in other students who didn't have summer jobs and over the summer created employment for over 50 other students and pocketed thousands of pounds which I then used to migrate to university in Canada and paid for my first full year fees,” he says.

Cigarette smuggling and political ties The of majority of Molai’s business ventures were started during years of economic turmoil, political instability and hyperinflation in Zimbabwe. However, while some applaud his feat of managing to build noteworthy companies in a shrivelling economy, others suspect there is an element of corruption to his success as he has strong ties to the political leadership.

Molai is married to the Zimbabwean President Robert Mugabe’s niece, Sandra Mugabe, but he maintains that none of his companies have been received government tenders.

He has been accused of using his political links to evade taxation, with his company Savanna Tobacco criticised for being heavily associated with cigarette smuggling “If anything, being related to a political figure has been extremely difficult because you are found guilty of crimes you have not committed in the school of public opinion. There's always an impression that you can't have done this other than SADC Top Companies Review, Issue 2, 2016

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“Zimbabwe and its neighbours lack infrastructure, goods and services on a number of fronts, presenting a wealth of opportunities for entrepreneurs through some political favours,” he says.

Molai believes that Africans need to rid themselves of the stereotype that to be a successful entrepreneur one has need to have political relationships. From graduation, he never looked for a job and used money that he saved from his three jobs as a full time student to start his first business, which was a chicken farming business at his late father's farm.

“Most of the businesses in which I am involved were start-ups and what they all have in common is that none of them do any business with government in Zimbabwe or anywhere else. They are purely commercial concerns.”

Molai always that there is a tendency among African people to think negatively of successful people, assuming the worst of their achievements. This, he says, is largely the reason for many

40

people calling him a corrupt businessman. As he sees it, there is a ‘pull-him-(or-her)-down’ syndrome that many black African people seem to still have.

Also, African leaders tend not to give as many chances to young black entrepreneurs as they do to white Africans and Europeans. And this is a big part of the problem. He says that there is still have a significant inferiority complex where Africans don't believe in our own entrepreneurs as much as they should yet. Instead they have a propensity to support foreigners.

Says Molai: “A case in point is we recently employed a new CEO at Savanna, a very experienced person with over 27 years of experience in the industry. However; the same proposals I, as an indigenous African entrepreneur, have presented to African governments, and which they couldn't believe in, they now embrace with excitement.”

At the end of the day, For Africa to take its rightful place, it’s up to African entrepreneurs to take it there. To be successful, it must build industries that have the potential to scale across Africa and globally. This requires entrepreneurs to think outside the box in how they approach challenges, but they also need government support in order to do so.

SADC Top Companies Review, Issue 2, 2016

SADC Top Companies Review, Issue 2, 2016

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CLIMATE AGILITY,

financial mobility, and sustainable small-scale farming in SADC

BY LANI BOTHA

A

s 2015 drew to a close, vistas of parched croplands and emaciated livestock greeted travellers traversing South Africa’s countryside en route to rural family gatherings. The country, which usually supplies two-thirds of SADC’s maize imports, is at risk of becoming a net maize importer this year.

The drought did not spare the broader Southern African Development Community. By March this year, SADC had declared it a regional disaster, leaving a tenth of the affected 277 million population in need of urgent food aid.

Africa’s lifeblood Agriculture remains SADC’s main trade export item to Asia Pacific and EU markets along with oil, electricity and textiles.

The industry contributes 17% ($97 billion per year) to SADC’s

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and forms the backbone of rural self-reliance.

Rising climate uncertainty coupled with evermore fluctuating markets intensify the farmer’s need for good data and advice, as well as timeous, affordable financial services when required.

Below table, compiled from public data released by the CSIR’s Meraka Institute in February this year, illustrates the very real needs felt currently by small-scale farmers during a typical production cycle. These challenges and as yet largely unmet ICT opportunities presented in the agricultural value chain reinforce the importance of information-sharing and mobile banking innovations if the industry is to receive the digital support so sorely needed across the SADC region.

Opportunity and intent Opportunities for the information and communications SADC Top Companies Review, Issue 2, 2016

Agricultural process

Challenges

ICT opportunities

Inputs

Access to sufficient land, labour and capital; finance, quality and low-cost inputs including price information; and payment mechanisms

Information collection & dissemination; electronic applications; remote asset valuation; mobile banking

Production

Record-keeping, financial and cost management; consistent production volumes; disease management and production practices; extension services such as information, mentoring and communication with government bodies

Information collection & dissemination; technical & business online trading; access to environmental information; extension services; access to remote experts & mentors; decision support

Post-harvest (packing & processing)

Pack house & slaughterhouse infrastructure facilities

Access to facility & service information; facilitation of collaboration for

Distribution channels & logistics

Sufficient scale for and access to logistics service providers, high cost of remote distribution

Information collection & dissemination; facilitation of collaboration; enablement of traceability and compliance; mobile banking & payment systems

Domestic retail & exports: regional & global

Market intelligence, access, compliance & payment mechanisms

SADC Top Companies Review, Issue 2, 2016

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technology (ICT) sector to innovate solutions are vast, and feature high up on most developmental agendas. The quest for reliable and up-to-date demographic, geological and market data and insight has itself become a massive industry, with research reporting generated continuously by audit firms, research houses, academia and developmental organisations.

Product and service contenders On the one end of service provision are the digital technology and software developers, who work across vertical and horizontal markets in partnerships, joint ventures and client relationships with banking, credit and telecommunications service providers and retailers.

The disruptive and very successful forays by the telco’s and retailers into broader service offerings, many of a financial nature, has challenged the policy-makers and affected industries to find, debate and clarify the grey areas naturally created by these exciting and often very practical conversions.

Logistics – cutting edge of the commercial knife Providing models that are workable, scalable and adaptable in support of SADC’s subsistence and small-scale farmers usually falls short at the logistical edge of service provision.

Africa’s rapid urbanisation rates notwithstanding, rural markets in developing countries demand highly localised apps. A World Bank 2011 study found that only 16% of m-apps reached sustainable value (a business case beyond the two-year mark).

Where the stark realities of power and connectivity disruptions vie with labour and political strife for disruptive power, the twin blades of field experience and partnerships shape the market uptake (and upkeep) divide.

Additionally, mobile applications for agricultural and rural development in developing countries should focus on second-generation handset technology rather than smartphones, targeting diverse:

Providing models that are workable, scalable and adaptable in support of SADC’s subsistence and small-scale farmers usually falls short at the logistical edge of service provision. a) markets i.e. farmers, buyers, suppliers, cooperatives, content providers and government bodies, and b) supply chain integration functions i.e. market pricing and links, extension services such as financial, governance and supplier databases.

The incomes of Kenyan farmers using the agri-app DrumNet, for example, have risen by a third owing purely to comprehensive price negotiation, contracting and value chain access.

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SADC Top Companies Review, Issue 2, 2016

‘

Only 10% of Africa trades formally with its neighbours and moving goods within Africa still costs twice as much as anywhere else, at 3-4 times higher tariffs.

Informal access to banking

’

In developed banking markets such as South Africa, Nigeria and Botswana, only about a fifth to a third of the population trust the use of bank transfers to send money locally, although the rates of cash transactions are still relatively high in these countries (Gallup 2012).

The knock-on effect of developing software with market appeal This world leadership in money transfer and direct payment innovation kicked off with Safaricom’s launch of M-Pesa in 2007 and its subsequently lauded ventures in the mobile money space. Other Kenyan innovators were quick to the mark, with Ma3Route, Eneza, Mawingu and the ₤5bn 2,000ha Konza Technology City that will be African headquarters to Google, Microsoft and Facebook.

Two agri-specific innovations include a world-first to help cattle farmers increase their breeding potential (iCow) and a SADC Top Companies Review, Issue 2, 2016

real-time producer price platform featuring 42 crops across five markets, collective crop selling and collective input buying via an online trading platform (M-Farm). The latter launched in 2010 by three young Kenyan women already supports over 7000 registered smallholder farmer subscribers.

In South Africa, digital information portals for small-scale farmers include CARA (with a rural agri-hub focus), Haygrove “farm in a box” with web and email support, Fruitlook sustainable water use and MYSTART.FARM precision farming online tools.

Modelling methods These success stories serve as models to inform SADC ICT policy, investment decisions and business strategy, with the guiding light always to create a stable support framework so that small-scale farmers can focus on their core function of food production, which drives GDP growth and elevates living standards.

From a banker’s perspective, Safaricom’s success in establishing a preferential partnership with one bank instead of equal partnerships with all banks, and specifically a corporate brand not interested in competing in that market segment ensured price parity, client control and stability – areas where ICT/ banking partnerships often fail due to unnecessary power struggles.

Weathering predictive ease Weather trend perdiction is becoming more perilous each year

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The fundamentals of modern agricultural production are being challenged on many fronts – not in the least its impacts on global economic, ecological and community structures.

that the Earth’s surface temperatures rise. While the SADC MESA programme’s THEMA initiative arms the bigger role players and policy-makers with agricultural and environmental resources management data, there is huge scope for live, online growth and adaptation advisory services to rural farmers.

Light at the end of the tunnel By 2019, sub-Saharan Africa is expected to generate 24 000 MW of electricity, or three times the current shortfall, shifting power to the 70% of the region’s population or 600 million people currently lacking access.

Still some paces to free trade Although the Southern African Customs Union predates multilateral system by some decades, regional integration has been low. Only 10% of Africa trades formally with its neighbours and moving goods within Africa still costs twice as much as anywhere else, at 3-4 times higher tariffs.

But 43 of the 162 World Trade Organisation members are African. The WTO’s Trade Facilitation Agreement of 2013, already

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implemented successfully in the East African community, aims to cut trade costs by 14.5% through cutting the time and expense of moving goods between countries.

The first multilaterally agreed deal in the WTO’s history and its biggest reform of agricultural trade rules in 20 years, the Agreement helps to level the playing field by eliminating agricultural export subsidies, so that developing nation farmers can compete on better terms.

It would seem that the developing world is seeking a middle ground between the simple trade and barter of agricultural goods and practices inherent to the Classical Age, and the fossil fuel-driven Industrial Age. The fundamentals of modern agricultural production are being challenged on many fronts – not in the least its impacts on global economic, ecological and community structures.

Africa is the fastest-growing mobile phone market globally and Sub-Saharan Africa is second only to Asia in terms of mobile technology market size, with world mobile operator representative body – GSMA – predicting 346 million users by next year

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ANGOLA Angola was a rising star until the oil price began to plummet.

The country, which recently overtook Nigeria as Africa's largest oil producer, pumps 1.78 million barrels of crude oil per a day and has a population of about 26 million people.

Although the country’s GDP dependency on petroleum dropped from 65% in 2009 to around 40% in 2014, the economy is still heavily reliant on the commodity, which dropped to its lowest price since 2003 this year, to less than $30 per barrel.

Driven by oil and diamonds, Angola’s GDP once soared to over 20% in 2007 but has since collapsed. According to the African Economic Outlook 2016 report, the economy only grew by 3.8% in 2015, and is expected to remain subdued, at 3.3% in 2016 and 3.5%, due to lower oil prices. The same report puts Angola’s inflation among the highest on the continent at 10.2% in 2015.

The cash-strapped government is now looking to the Interna-

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tional Monetary Fund (IMF) for emergency financing.

Political environment: Although he is credited for leading the country to recovery after the end of a 27-year civil war in 2002, President José Eduardo dos has been criticized for staying in office for too long and failing to distribute the proceeds from the oil boom more widely. He appointed his daughter Isabel as chief executive of the state-run oil firm Sonangol in this year and recently fired the country’s finance minister, Armando Manuel, in an unexpected move, which only aggravated those suspicions.

Top Company: State-owned company Sonangol manages Angola’s oil and gas reserves, which contribute to about half of the country’s annual GDP

SADC Top Companies Review, Issue 2, 2016

BOTSWANA According to a recently released report from market research company Research and Markets, Botswana is the richest SADC country and the fourth richest on the continent, with a per capita GDP of $8 400. However, although its budget has been in surplus for the last three financial years, the country’s diamond-dependency remains a challenge.

But Botswana’s pristine wildlife has given rise to a booming Safari tourism with travel guide website Lonely Planet putting the country at the top of its list of places to visit in 2016.

Botswana's annual Inflation averaged 7.56% between 1997 2016 and slowed to a record-low of 2.6 percent in August this SADC Top Companies Review, Issue 2, 2016

year.

Political environment: Botswana is heralded as one of Africa's most stable countries. It is the continent's longest continuous multi-party democracy and widely considered to be relatively free of corruption.

Top company: Grocery retailer Choppies is the largest, most profitable and fastest growing grocery retailer in Africa, outside of South Africa. It is only the fourth African company to have an inward listing on the Johannesburg Stock Exchange.

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DEMOCRATIC REPUBLIC OF CONGO (DRC) With 80 million hectares of arable land and over 1 100 minerals and precious metals identified, the DRC has the potential to become one of the richest countries on the African continent and a driver of African growth. However, the country is still recovering from a series of conflicts that broke out in the 1990s creating a protracted economic and social slump, with fewer than 40% of the nearly 70 million inhabitants living in urban areas, according to the World Bank. According to the Africa Outlook Report 2016, the economy grew by 7.7% last, driven the extractive and manufacturing industries, transport, and telecommunications.

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Political environment: Joseph Kabila, who has been president since his father Laurent was assassinated in 2001, has now served the permitted two terms since he was democratically elected in 2006, but has sparked civil unrest in his apparent intent to extend his rule unconstitutionally.

Top Company: Telecommunications company Airtel has become the largest financial service provider in DRC through its mobile banking service, Airtel Money.

SADC Top Companies Review, Issue 2, 2016

LESOTHO As a consequence of the harsh environment of the highland plateau and limited agricultural space in the lowlands, Lesotho is a resource-poor country that is heavily dependent on South Africa’s economy. With a population of around 2 million people, thousands of workers have historically been forced by the lack of job opportunities to find work at South African mines.

Apart from textile exports and a share of regional customs receipts, the state’s other big earner is water piped to South Africa, making it of strategic importance to the water-scarce nation. That said, Lesotho’s mining industry contributes about 8% to gross domestic product, primarily through diamond mining.

SADC Top Companies Review, Issue 2, 2016

Political environment: Pakalitha Mosisili heads a coalition government formed after early elections were held in February 2015, following an alleged coup that saw the previous prime minister Thomas Thabane flee to South Africa in August 2014.

Top Company: Gem Diamonds’ Letšeng mine has been the only diamond producer in the country but it may soon be outdone by Firestone Diamonds’ Liqhobong diamond mine, which promises to add a million carats of diamonds to the global market every year after starting production in October 2016.

Listed on the London Stock Exchange, the company’s market capitalization is at around £140 million.

MADAGASCAR Economic growth in Madagascar is estimated to have plateaued at 3.2% in 2015, according to the African Economic Outlook 2016 report, but GDP growth is expected to accelerate to 4.0% in 2016 and 4.5% in 2017. The economy has been driven by the secondary sector, which includes export processing zones, agro-industry, and the metal and wood industries and the services sectors of banking, tourism, insurance and construction.

over 22 million, 90% of whom live on less than $2 per day.

Political environment: Despite the return of democratic elections in 2013 – after a coup in 2009, which led to five years of political deadlock, international condemnation and economic sanctions - the political situation remains fragile.

Top company: Air Madagascar

In 2012, the population of Madagascar was estimated at just

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SADC Top Companies Review, Issue 2, 2016

MALAWI The Republic of Malawi is a largely agricultural country. It is among the world’s least-developed countries, with 85% of its estimated 17 million population living in rural areas.

Because agriculture accounts for about one-third of GDP and 90% of export revenues, the economy was significantly affected by devastating floods and dry spells in 2015, slowing real GDP growth to an estimated 2.9% from 5.7% in 2014. High inflation, which surged to 24.9 % in December 2015 as food supplies ran low, continues to undermine Malawi’s prospects for economic growth and poverty reduction.

The economy was heavily dependent on foreign aid from the IMF, the World Bank, and individual donors who withdrew their financial support in response to a high-level corruption scandal in 2013.

The government has failed to address barriers to investment such as unreliable power, water shortages, poor

telecommunications infrastructure, and the high costs of services.

Political environment: In addition to corruption, there are concerns about human rights violations entrenched in the legal system. Homosexuality is outlawed, while there are limits to free speech and freedom of the press, and it is not uncommon for police to make arrest citizens arbitrarily.

Top company: Press Corporation is the largest holding company in Malawi, with interests in different sectors of the economy, including: financial services, telecommunications, food and beverages, energy and consumer goods. The highly diversified company has stakes in thirteen companies comprising of eight subsidiaries, four joint ventures and one associate.

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MAURITIUS Mauritius has been one of the highest recipients of foreign direct investment (FDI) per capita in the world. Their residency by investment programme - which requires property investors to invest a minimum of $500 000 into a Property Development Scheme (PDS) to get the fiscal and lifestyle benefits that come with acquiring residency – has been major source of FDI. The fiscal benefits include a flat 15% corporate and personal tax rate, but can be as low as 3% after allowing for tax credits.

Mauritius is also a tax haven. It has no taxes for offshore companies and offshore bank accounts; and the jurisdiction provides confidentiality and privacy for both individuals and corporations

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and has laws which allow flexibility.

Political environment: It is rated as one of the continent’s most well- governed countries , as was shown when by prime minister Anerood Jugnauth asked his environment minister to resign following corruption allegations.

Top Company: Rockcastle Global Real Estate Company is the top company on the Stock Exchange of Mauritius in terms of the annualised total return since listing, achieving a 34% return since listing in 2012.

SADC Top Companies Review, Issue 2, 2016

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MOZAMBIQUE Mozambique is an agricultural economy with considerable mineral reserves. A huge discovery in the country’s Rovuma basin has been touted as the third-largest dry gas find in history and will see large LNG investments shape the recovery of the economy with growth projected to reach 6.9% by 2018, according to the World Bank.

After a decade of average annual economic growth above 7%, Mozambique saw an economic slowdown to 6.3% in 2015.

Meanwhile, more than half of the country’s population of over

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25 million people remains below the poverty line ($1.80 per day).

Political environment: According to the African Economic Outlook 2016 report, The political situation remains uncertain with renewed low-intensity conflict between the government and RENAMO opposition party, which refuses to recognise the result of the 2014 presidential election.

Top company: Petrochemical giant Sasol has invested in $1.4 billion to grow Mozambique’s gas infrastructure.

SADC Top Companies Review, Issue 2, 2016

NAMIBIA Namibia has a population of around 2.1 million people.

Agriculture, herding, tourism and the mining industry – including mining for gem diamonds, uranium, gold, silver, and base metals – form the basis of its economy, and it has the second largest securities exchange on the continent. that Gross domestic product (GDP) growth moderated to 4.4% in 2015 from 6.4% in 2014 on the back of weak commodity prices and prevailing drought conditions.

The cost of living in Namibia is relatively high because most of the goods including cereals need to be imported.

SADC Top Companies Review, Issue 2, 2016

Political environment: Namibia’s stable multi-party parliamentary democracy and sound macroeconomic management has promoted investments and is largely the reason for its sustained high growth rates.

Top company: Namdeb, joint venture between De Beers and the Namibia government, is the world's second largest diamond producer by output.

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SEYCHELLES In July 2015, Seychelles, whose economy depends heavily on the fishing industry and upmarket tourism, reached high-income status having averaged 5.3% GDP growth from 2011-2015. This reflects the government’s sound macroeconomic policies and comprehensive structural reforms in recent years that have supported robust economic growth. The country is also renowned for its tax haven status, as it has no exchange controls in place.

Also, Corporations and individuals can move funds in and out of the country with no restrictions or without having to declare the source of funds.

In 2013, the International Monetary Fund declared that Seychelles had successfully transitioned to a market-based economy with full employment and a fiscal surplus.

Tourism employs about 30% of the labour force and provides more than 70% of foreign exchange earnings, but the country’s overdependence on the sector presents a challenge.

Although unemployment is at a lowly 3%, youth unemployment is about three times higher than the national level.

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Last year, the government adopted National Development Strategy, which will look to create a blue economy to exploit its vast marine area, which is the second largest in Africa at 1 374 000 km2. To achieve inclusive growth, the country targets the sustainable use of ocean resources, via oil and mineral wealth extraction, bio-prospecting, sustainable energy production and marine transport, as well as branding Seychelles as a “blue” tourism destination.

Political environment: Seychelles President James Alix Michel, recently announced he was stepping down from office after a unanimous constitutional amendment to cap presidential and vice-presidential tenure at two terms. It was a move that reinforced confidence in the country’s political system, as e is one of a few African leaders to have voluntarily left the office without creating chaos.

Top company: Indian Ocean Tuna is one of the largest tuna canneries in the world.

SADC Top Companies Review, Issue 2, 2016

SOUTH AFRICA South Africa is a middle-income, emerging market with an abundant supply of natural resources. It has well-developed financial, legal, communications, energy, and transport sectors, a stock exchange that is 17th largest in the world, and modern infrastructure supporting an efficient distribution of goods to major urban centres throughout the region.

However, the economy has been hindered by electricity shortages, low commodity prices and low consumer and business confidence. As a result, GDP growth declined from 1.5% in 2014 to 1.3% in 2015, and the World Bank expects it to reach 0.4% in 2016. High inequality and an unemployment of around 27%, which is significantly higher for black youth, are two are the countries primary challenges.

South Africa’s economic policy has focused on controlling inflation. However, the country faces structural constraints that SADC Top Companies Review, Issue 2, 2016

also limit economic growth, such as skills shortages, declining global competitiveness, and frequent work stoppages due to strike action. The current government faces growing pressure from urban constituencies to improve the delivery of basic services to low-income areas and to increase job growth.

Political environment: Jacob Zuma’s presidency has been mired with controversies and corruption allegations, and is facing calls to step down from business, civil society and members of his ruling party, the ANC. Top company: Standard Bank was the highest ranked company in Forbes’ list of the world’s 2000 biggest publiclytraded companies.

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SWAZILAND The landlocked Kingdom of Swaziland is the only absolute monarchy in Africa, ruled by King Mswati III who rules by decree over his people.

With a population of about 1.2 million, Swaziland has little-to-no economic prospects with sugar as it’s only export.

Even more so than Lesotho, its government budget relies on shared receipts from the Southern African Customs Union.

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Top Company: Coca-Cola is the most important company for Swaziland, reportedly contributing 40% to the country’s economy.

Political Environment: The political scene has remained relatively calm since the September 2013 elections, but the ranking in participation and human rights remains low.

TANZANIA Tanzania is one of the poorest countries in the world. The economy depends heavily on agriculture, which accounts for more than 40% of GDP, 85% of exports, and employs 80% of the work force. According to the African Economic Outlook 2016 report, its GDP grew by 7% in 2014 and estimates suggest the same growth rate in 2015, mainly driven by the services, industry, construction, and information and communication sectors.

The financial sector in Tanzania has expanded in recent years and foreign-owned banks account for about 48% of the banking industry's total assets. Competition among foreign commercial banks has resulted in significant improvements in the efficiency and quality of financial services, though interest rates are still relatively high, reflecting high fraud risk.

All land in Tanzania is owned by the government, which can lease land for up to 99 years. Proposed reforms to allow for land ownership, particularly foreign land ownership, remain unpopular.

With a population of over 40 million people, urbanisation

has become a major development challenge in Tanzania, particularly in the capital, Dar-es-Salaam, and other major cities, where unemployment is higher than in the rural areas. Basic infrastructure (roads, electricity, water, bus transit, etc.) have become highly insufficient to meet the demands of users and there is inadequate provision of recreational facilities, sewage systems, water drainage channels and environmental protection.

Political environment: Successful and peaceful general elections in October 2015 saw Dr. John Magufuli come to power. He has committed to prudent resource management, fighting corruption and pursuing inclusive growth by addressing land ownership, water, health services, education, agriculture, electricity and justice delivery issues.

Top company: CRDB Bank is Tanzania’s largest bank. It also has a partnership Tanzanian Postal Corporation, which has helped it to increase customer deposits.

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ZAMBIA Zambia has had one of the world’s fastest growing economies for the past ten years, with real GDP growth averaging roughly 6.7% per annum, although growth slowed in 2015 to just over 3% as it grappled with falling copper prices, a rapidly depreciating currency and an acute energy shortage.

Fast rising expenditures and a fiscal deficit that more than doubled in 2013 has led to the country now trying to negotiate a $1.2-billion loan from the International Monetary Fund.

According to the African Economic Outlook 2016, the electricity-supply deficit, which began in June 2015, has affected manufacturing and other businesses. It is estimated at 40-50% of baseload, necessitating considerable daily load shedding.

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Meanwhile, two-thirds of Zambia’s population of around 13 million people is still living in poverty.

Political environment: Zambia has a reputation of consistent political stability. Although the August 2015 elections were preceded by violent civil unrest, they were arguably free and fair.

President Edgar Lungu narrowly clinched victory with 50.35% of vote.

Top Company: Zambeef, listed on both the Luanda and the London Stock Exchange, is one of the largest agri-businesses in Zambia and the region.

SADC Top Companies Review, Issue 2, 2016

ZIMBABWE: Zimbabwe's economy depends heavily on its mining and agriculture sectors. Following a decade of contraction from 1998 to 2008, the economy recorded real growth of more than 10% per year from 201013, but declined to 3.8% in 2014 to an estimated 1.5% in 2015.

Until early 2009, the Reserve Bank of Zimbabwe (RBZ) routinely printed money to fund the budget deficit, causing hyperinflation. Dollarization in early 2009 - which allowed currencies such as the Botswana pula, the South Africa rand, and the US dollar to be used locally - ended hyperinflation. inflation declined from -0.2% in 2014 to -2% in 2015. Inflation is projected to remain negative in 2016 and 2017. Cash-strapped and impoverished, Zimbabwe's economy faces severe challenges. Unemployment and poverty are endemic and political strife and repression commonplace.

Many Zimbabweans have left the country in search of work in South Africa.

ZIMBABWE

Political environment: President Robert Mugabe, who has held his position for over 30 years, has come under pressure from citizen activists, who believe he is at the root of endemic corruption and lack of economic opportunities, with the majority for country’s 16-person population unemployed. Zimbabwe has also come under fire lack of free press, with Journalist’s frequently being arrested and intimidated by police.

Top company: Econonet Wireless Zimbabwe is the largest telecommunications provider in the country. It is part of the Econonet Group, which was founded by the richest man in Zimbabwe, Strive Masiyiwa.

SADC Top Companies Review, Issue 2, 2016

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Bringing West African food to the world Homefoods Processing and Cannery Limited (HFPCL) is a food processing and agro-foods export company. For twenty years, HFPCL’s core business is exporting of West-African food ingredients to Europe, United Kingdom, Switzerland, Italy, North America, The Gambia and Equatorial Guinea.

Homefoods brings “Natures Best Collections” Ready-ToEat Meals of West African taste to the world.

It is made to suit both the international and local consumer demands.

Our RTE categories are Soups and Rice Meals.

- Four distinct flavors of soups: Mixed Vegetable Soup (locally called Light-Soup), Groundnut Soup, Neri Soup and Palm Cream soup.

- The Rice Meals are to be enjoyed in 4 delightful tastes; Seasoned Rice, Jollof Rice, Fried Rice and Waakye Rice (made of Rice, black eye Beans and Sorghum leaves).

All Meals come packaged under international standards in attractive stand-up pouches.

Our traditional products include:

Oil products – Homefoods Vegetable Oil, Palm Oil and Palm Zomi.

Our seasonings range – Jollof Rice, Waakye, Fried Rice, All purpose, chicken and Fish seasonings.

Derivatives of Palm – Laundry and Carbolic soaps.

HOMEFOODS PROCESSING & CANNERY 150/11, Off Odokor - Mallam Road, Accra, Ghana, Postal: P.O. Box KIA 16519, Airport, Accra, Ghana, West Africa Tel.: +233 302 303 914 Fax/Tel: +233 302 318 119 Email: info@homefoodsghana.com

Watch out for our ready–to-cook range soon! http://homefoodsghana.com

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SADC Top Companies Review, Issue 2, 2016

Company Profile

H

omefoods was started by Felicia Twumasi on her kitchen table and incorporated in August 4th 1995 as a limited liability company, with focus to engage in processing and packaging of various types of ethnic foods for the export market. The company is also engaged in the importation of partly processed food items from all over the world for re-processing and packaging, fusing flavours and spices from around the world to suit both domestic and international markets.

Homefoods has been in business for the past 20 years solely in export of Red Palm Oil and other ethnic foods to Europe, America, South Africa, Equatorial Guinea and the Gambia and has been able to keep up our business-level strategy; the issue of how to build a sustainable competitive advantage in a discrete and identifiable markets for all these years. In Europe alone and in Britain in particular, Homefoods has been able to keep 70% market share in the Red Palm Oil business for nearly 13 years under custom brand names like “BLUE BAY”, “TROPIGOLD”, “AFRICA’S FINEST” In 2009, we embarked on a new business model by adding value to the palm oil into vegetable oil and expanded to other food product lines.

Homefoods has grown exponentially from the kitchen table to the factory floor and expanding further to our “state of the art” factory soon at Tema freezone enclave, Ghana.

100% owned Ghanaian company within the FMCG marketing industry (which is dominated by multi-national companies) producing and marketing locally produced Palm Oil in Ghana and working with over 5,000 co-operative women out growers and suppliers saving a chunk of foreign exchange for the country, resulting in spillover of wealth within the farming communities especially women farmers.

Homefoods is unique, creative, focused and innovative Agro-based company with a mission to empower women farmers in our community.

Our core business is linked to improving Nutrition: Linking Health, Agriculture and Productivity. Our supply chain starts from the FARM GATE with more than 5,000 women cooperative members, and its still growing.

OBJECTIVES 1. process local agro based products to create, build and establish food processing industry fusing flavors and spices around ,the world ensuring our farmers have ready markets for their produce through an effective supply chain concept 2. To focus attention and creativity on food ingredients to food industry, homes and individuals, food ingredients they absolutely want and need through adaptive production, inventory management and product design to cater for every need.

3. Create Value and wealth for our nation through agriculture and ensuring leaving a sustainable legacy for posterity.

Vision: The Company’s vision is to create, build and establish a SADC Top Companies Review, Issue 2, 2016

Felicia Twumasi – Founder / CEO quality food chain industry, fusing flavours and spices from around the world to meet the needs of consumers.

Mission: To focus attention and creativity on basic food ingredients and services to as many people and homes, Catering, Hotel and Fast Foods Industry; food products they absolutely need and want and making every meal an experience.

Our Achievements and Awards • The Otherways, Top Quality Customer Satisfaction Aptitude Seal for High Quality • The Otherways Golden Award for Quality and Business Prestige, 2007 • National Export Achievement Award (Silver Award Winner), 2006 for Palm Oil • National Export Achievement Award (Gold Award Winner), 2007 for Gari and Palm Oil • 4th Ghana-Africa Business Award (Silver Award Winner), 2009 • UNCTAD Nominee for Entrepreneur Woman of the year, 2009 • GOLDEN Award for Business Prestige, Geneva, 2009 • African Brand Leadership Merit Awards 2016 Winner “African’s Best Premium Food Products Company of the year 2016” • Ernst & Young Entrepreneur Finalist, for West Africa • Millennium Agribusiness Award in London 2014

ENJOY!! Explore our brands.

For more information about our products and services contact us on Homefoods Processing and Cannery Ltd P.O.Box 16519 KIA Accra Ghana Phone: +302 303 914/325 570 http://homefoodsghana.com

YOU CAN ALWAYS BANK ON SADC Mauritius and SA are leading the way as the region establishes itself as the continent’s banking and financial services leader SUNGULA NKABINDE

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SADC Top Companies Review, Issue 2, 2016

A

strong case can be made for Southern Africa as the continent’s banking and financial services leader.

According to Africa Report magazine’s 2015 list of Africa’s top 200 banking institutions, which is based on the previous year’s financial results, 55 are from the SADC. With a combined asset value of around US$704 billion, banks from the 15-member regional bloc account for nearly half of all 200 banks’ asset base, which exceeded US$1.5 trillion for the first time since the magazine published the list in 2006.

Old Mutual Investment Group’s African Equities Manager Cavan Osborne says that, in an environment where commodity prices are close to record levels and show little signs of improving, Africa’s economies can no longer rely on their endowment of natural resources to create growth. Banking is one such sector, which is among those with the biggest potential to create growth, because the majority of the continent’s population is unbanked.

Says Osborne: “A good example is a place like Egypt, where on 8% of people have bank accounts. In terms of corporate banking, the market is well developed and growing quite steadily, particularly in Southern Africa. But when it comes to individuals, there is still a big opportunity, both within the region and throughout the continent.”

The SADC banking sector is mainly driven by South Africa, whose total banking sector assets reached US$361 billion last year (almost half region’s collective total) and 14 of the top-200 listed banks are based in South Africa, six of which are among the top 10. But other countries, like Angola, which has 13 banks among the top 200 and, according to a recent KPMG banking

SADC Top Companies Review, Issue 2, 2016

sector report, has third-largest banking sector in Sub-Saharan Africa, are making progress.

Mauritius, which ranks third in the report with nine banks on the list, is most noteworthy in the strides it is making towards becoming the continent’s banking and financial services leader.

It has positioned itself as the region’s most attractive foreign direct investment destination. Its low tax environment and business-related legislation make it attractive for global businesses. It is one of the fastest-growing economies in sub-Saharan Africa and consistently ranked by the World Bank as the easiest country in which to do business in the region, ranking 19th out of 189 global economies for starting a business, according to the World Bank’s ‘Doing Business 2014’ report. And, according to the 2016 forecast Mauritius is ranked as the easiest country to do business on the continent.

More than a tax haven Mauritius’ double tax avoidance treaty with India, which last year saw Mauritius replace Singapore as the top source of foreign direct investment (FDI) into India, was the first and most significant of tax agreements with other countries. Mauritius and Singapore both have double tax avoidance (DTA) agreements with India, making them popular choices for establishing a holding company to enter the Indian market.

It is largely responsible for the development of the country’s offshore financial sector which saw Mauritius replace Singapore as the top source of foreign direct investment (FDI) into India in 2014, attracting $4.19 billion in FDI from Mauritius, $1.19 billion more than Singapore, in the first quarter. Mauritius’ tax treaty network now extends to 26 countries and has led to the

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country becoming somewhat of a tax haven.

A big challenge facing Mauritius now, however, is the pressure to renegotiate its DTA with India, which many believe has been abused by companies that operate in India who use the Mauritian jurisdiction purely for tax purposes.

Altough it is one the it’s biggest selling points, Maurtius’ tax regime is not the only factor that has put it on it’s way to becoming Africa’s banking and financial services leader.

Speaking to South Africa’s Financial Mail Kamal Taposeea from Minerva Fiduciary Services in Mauritius said it was also due to the sophisticated level of professional skills, the rule of law, democracy, the lack of crime as another strong, along with the absence of restrictions on the movement of capital and the fact that there was no capital gains tax, donations tax or hereditary tax.

“There’s a laissez faire attitude that lets you run your business without your having to suck up to politicians. That’s our success, and it doesn’t sound like many other countries in Africa,” he said.

According to the IMF Financial Access Survey (FAS) database, the number of deposit accounts with commercial banks per 1,000 adults (deposit account penetration) was highest in Namibia in 2013, followed by Nigeria, Botswana, Angola and Ghana. Mauritius has most penetration in terms on bank branches.

Doesn’t mean much for the unbanked According to a recent report from the SADC Financial Inclusion Indaba held earlier this year, there are still many people both in

South Africa and the wider SADC region, who do not benefit for the progress that the banking sector has made. Because, even though it has contributed to a higher degree of financial integration in the region, the Common Monetary Area (CMA) in Southern Africa still presents limitations in reaching the significantly unbanked population.

The report quotes a study conducted in 2012 estimating the SADC remittance market at around R 11.2 billion annually of which 60% or R 7.6 billion was through informal channels as many migrants cannot access the formal channels.

Reads the report: “Only 51% of the SADC adult population that saves money, only 11% save with banks. The rest either save at home (17%) or through other non-bank formal (6%) or informally (17%). Very few people have access to formal and informal credit with 68% of adults not borrowing at all.”

This is worrying in that a lack of credit facilities can hamper growth and the development of small businesses in any economy. According to the report, the situation is the same for insurance with 73% of the population not insured.

‘Africa rising’ is a term so frequently quoted that it is becoming a cliché. Nevertheless, it should not be taken for granted that the continents growth story has been the silver lining on the dark clouds of economic turmoil that have plagued the world since the 2008 global financial crisis. Pockets of excellence are emerging throughout the continent. And, while Kenya is leading the drive for internet connectivity in East Africa, Mauritius is making strides towards the same for banking and financial services in Southern Africa.

‘There’s a laissez faire attitude that lets you run your business without you having to suck up to politicians. That’s our success, and it doesn’t sound like many other countries in Africa’

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SADC Top Companies Review, Issue 2, 2016

71

TOP BANKS IN THE SADC CEO or Managing Director

Company

Country

Total assets $ thousands

Sim Tshabalala & Ben Kruger

Standard Bank Group

South Africa

163 815 926

7 249 983

Maria Ramos

Barclays Africa Group

South Africa

85 350 831

3 064 890

Sizwe Nxasana

FirstRand Bank Group

South Africa

81 401 108

2 572 197

Mike Brown

Nedbank Group

South Africa

69 673 756

3 337 451

Stephen Koseff

Investec Limited

South Africa

40 775 065

471 773

James Formby

Rand Merchant Bank

South Africa

33 593 007

ND

Jacques Celliers

First National Bank

South Africa

23 387 295

2 609 044

Sanjay Bhasin

Banco Economico (Ex-BESA)

Angola

11 328 924

308 012

Mario Alberto Barber

Banco Angolano de Investimentos

Angola

10 691 408

359 406

Emidio Pinheiro

Banco de Fomento de Angola

Angola

10 419 378

ND

Paixao Antonio Junior

Banco de poupanca e Credito

Angola

10 099 214

453 780

Brian Riley

African Bank Limited

South Africa

4 261 627

1 261 305

Carlos Jose da Silva

Banco Privado Atlantico

Angola

3 648 100

157 881

Jairaj Sonoo

SBM Bank Mauritius (Ex-State Bank of M)

Mauritius

3 491 330

178 055

Tshokolo Petrus Nchocho

Land Bank

South Africa

3 490 825

92 439

Jose Reino da Costa

Millenium bim

Mozambique

3 129 650

288 012

Paulo Sousa

Banco Commercial e de Investimentos

Mozambique

2 970 176

203 775

Manual Neto da Costa

Banco Desenvolvimento de Angola

Angola

2 773 575

34 465

David A. Polkinghorne*

Grindrod Bank

South Africa

2 705 789

ND

72

Net profits $ thousands

SADC Top Companies Review, Issue 2, 2016

SADC Top Companies Review, Issue 2, 2016

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SADC Top Companies Review, Issue 2, 2016

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• Attractive, modern retail office assets forms the base of Mara Delta’s footprint in Africa • Offers investors exposure to USD yields in high growth economies • Strategic anchor shareholders • Management team with over 45 years’ combined experience and relationship on the continent • In-country asset and property management teams • Current footprint: Morocco, Mozambique, Zambia, Mauritius, Kenya, • Future target countries: Tanzania, Botswana, Uganda

76For more information contact Mara Delta on communications@maradelta.com or visit www.maradelta.com

SADC Top Companies Review, Issue 2, 2016