Best of tar 2014 west africa by The Africa Report

54 country reports w w w.t hea f r ic a r ep o r t .c om

30 people to watch

in politics, business & culture

Double issue

N ° 6 6 • d e c e m b e r 2 014 - j a N u a r y 2 015

Africa in 2015 China down, Europe out, Africa digs deep

GroUPE jEUNE AFrIqUE INTERNATIONAL EdITION

Algeria 550 DA • Angola 600 Kwanza • Austria 4.90 € • Belgium 4.90 € • Canada 6.95 CAN$ • Denmark 60 DK • Ethiopia 75 Birr • France 4.90 € • Germany 4.90 € • Ghana 7 GH¢ • Italy 4.90 € • Kenya 410 shillings • Liberia $LD 300 • Morocco 50 DH • Netherlands 4.90 € • Nigeria 600 naira Norway 60 NK • Portugal 4.90 € • Sierra Leone LE 9,000 • South Africa 30 rand (tax incl.) • Spain 4.90 € • Switzerland 9.90 FS • Tanzania 6,500 shillings • Tunisia 8 DT • Uganda 9,000 shillings • UK £ 4.50 • United States US$ 6.95 • Zimbabwe US$ 4 • CFA Countries 3,500 F CFA

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frontline | what to watch in 2015

2015 AfricA cup of NAtioNs 17 Jan – 8 feb EQuAtoriAL GuiNEA cafonline.com

iNvEstiNG iN AfricAN MiNiNG iNdAbA 9-12 february Cape Town | south AfricA miningindaba.com

hArvArd busiNEss schooL AfricA busiNEss coNfErENcE 27 feb – 1 March

The hague | NEthErLANds ntaganda faces 18 charges of war crimes and crimes against humanity. icc-cpi.int M

powEr-GEN AfricA 15-17 July Cape Town | south AfricA Conference on electricity provision in africa. powergenafrica.com

cAiNE prizE for AfricAN writiNG July oxford | uK www.caineprize.com

Lima | pEru Bankers and academics discuss global economic governance. 2015lima.gob.pe

22Nd AfricA oiL wEEK November

worLd EcoNoMic foruM oN AfricA 3-5 June Cape Town | south AfricA weforum.org

worLd bANK/ iMf ANNuAL MEEtiNGs 9-11 october

Cape Town | south AfricA globalpacificpartners.com

uN GENErAL AssEMbLy 15-28 september

AfricAcoM November

new YorK | us The world’s presidents and diplomats set out the global agenda. un.org

Cape Town | south AfricA one of africa’s largest technology conferences. africa.comworldseries.com

calendar 2015

icc triAL of coNGoLEsE MiLitAry LEAdEr bosco NtAGANdA 2 June

BosTon | us africabusinessconference.com

AfricA cEo foruM 16-17 March geneva | switzErLANd theafricaceoforum.com

sudAN prEsidENtiAL ELEctioNs 2 April Afdb ANNuAL MEEtiNG 25-29 May aBidjan | côtE d’ivoirE The Board of governors will elect a new president to succeed donald Kaberuka in september. afdb.org

cAr prEsidENtiAL ELEctioNs June

SIA KAMBOU/Afp

ELEctioN buzz the year 2015 will be dominated by elections as hundreds of millions of Africans head to the ballot box to vote for new presidents and governments. in west Africa, Nigeria’s president Goodluck Jonathan’s battle for re-election will take centre stage (see page 20) on 14 february, but voters will also elect leaders in Guinea in June, in togo in July and in côte d’ivoire (pictured) in october. the East of the continent is no less busy, with Ethiopian federal elections in May, presidential and general elections in burundi and somaliland respectively in June, and general elections in tanzania in october. the africa report

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trending

development The BRICS nations of Brazil, Russia,

India, China and South Africa announced the launch of a new development bank to rival the IMF and World Bank.

mininG Anglo American platinum unveiled plans to sell off its Rustenburg and limpopo mines in South Africa after a series of strikes.

ebola Sierra leone’s gdp may shrink

by 4% due to the ongoing outbreak of the deadly disease, according to AfdB estimates.

capital marKet

is the reduction in the level of fees generated by investment banks in sub-saharan africa during the first half of 2014 compared to the same period in 2013. investment banking in ssa is collecting its lowest fees since 2010. FInAnCe MInISTeR SeTh TeRkpeR IS A WoRRIed MAn

loanS micro finance, biG Growth

Ghana

Region

Gross loan portfolio growth rate 2014

south america

15-20%

central america

10-15%

sub-saharan africa

15-25%

Mena

10%

central asia

15-20%

eastern europe

5-10%

south, south east and east asia

25-35%

Total

15-20%

Analysts expect a worldwide surge in microfinance projects of up to 20% in 2014, while this could peak at 25% in sub-Saharan Africa. This is still less than the prediction for Asia, which some expect to top 35%.

iMF gets bailout call

hana finally turned to the International Monetary Fund (IMF) for help on 8 August after several months of bad news on inflation, the depreciation of the cedi, the budget deficit and the current account deficit. Ghanaian officials have been disappointed by lower-thanexpected oil revenue since production began in December 2010 and remain unable to reduce a public-sector wage bill that accounts for more than half of government revenue. The government had previously said that it would go it alone with a strategy to raise revenue, improve financial management and address energy problems.

Soliciting the help of the IMF was an attempt by the government to bolster its intended sale of a new eurobond before the end of September. The IMF has not agreed to implement an aid programme in Ghana and is sending a delegation to Accra in September, nor has it supported Ghana’s plans for more borrowing through the eurobond issuance. The cost of borrowing on the domestic market is high, and the yield on three-month treasury bills hit 25% in August. Before Ghana asked for help, the IMF warned that current expenditure was eating up money that should be spent on infrastructure, health and education. ●

The AFRIC A RepoRT

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FInAnCe SpeCIAl

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S e p T e M B e R 2 0 14

25% SouRCe: ReSponSABIlITy – MICRoFInAnCe ouTlook 2014

trending

investment more than $530m in investment

finance Uptake of mobile money telephone banking, such as Kenya’s m-pesa, is soaring, with 203 million accounts held worldwide, new data revealed.

funding was raised by swiss private bank edmond de rothschild for its inaugural africa fund.

rail Kenya and china signed a $3.7bn deal

to finance the construction of a new 609km rail line linking nairobi to mombasa.

eyepress news/sipa; carl de soUza/afp; str/epa/corbis; martial trezzini/Keystone/maXppp; sven torfinn/panos-rea; str/ap/sipa

exchanges africa’s best and worst performers Av weekly trade

Nairobi

87.9%

$43.4m

Dar es Salaam

77.4%

$1.5m

Uganda

71.4%

$4.3m

Stock Exchanges

3-Year Return*

Ghana

Av weekly trade

-26.7%

$1.6m

Botswana

-4.3%

$4.5m

Mauritius

-2.8%

$10.0m

EASTERN EUROPE & CENTRAL ASIA

banKing access how far to visit your local banK

The number of bank branches per 100,000 adults in Africa compared to the rest of the world

*Us dollar-adjUsted retUrns

Africa’s has long been a draw for foreign direct investment (FDI) but much of this funding is directed towards major cities and regions. According to a survey carried out by EY, these are the locations where most investors sought to launch FDI projects. Algiers Algeria

Tunis Tunisia

soUrce: ey’ 2014 africa attractiveness sUrvey

Casablanca Morocco

Lagos State Nigeria Nairobi area Kenya Dar es Salaam Tanzania

Luanda Angola

Gauteng South Africa Western Cape South Africa

the afric a report

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Maputo Mozambique

LATIN AMERICA & CARIBBEAN

Barack Obama the US president outlining his vision of bilateral trade at the US-Africa summit in August

Kwa Zulu-Natal South Africa Eastern Cape South Africa

finance special

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s e p t e m b e r 2 0 14

17 8

MIDDLE EAST & NORTH AFRICA

SOUTH ASIA

3 2 SUB-SAHARAN AFRICA

EAST ASIA & PACIFIC

in conjunction with Geopoll, The Africa Report asked 400 people across four african countries a question:

is determined to be a partner in Africa’s success. A good partner, an equal partner, and a partner for the long term.”

A-Qahirah Egypt

Greater Accra Region Ghana

EURO AREA 9

“The US

investment africa’s fdi hotspots

Tangier-Tetouan Morocco

2004 2011

19 9

did you send or receive money electronically in the last 7 days?

SOUTH AFRICA 34%

yes

66%

KENYA

ricK bajornas/Un

3-Year Return*

soUrce: investinG in africa

Stock Exchanges

33%

67%

NIGERIA 22%

78% DRC 17%

83%

GeoPoll is a mobile surveying company that uses the mobile phone to connect with Africans and others across the developing world, using text messaging and other modes of communication. To join the global GeoPoll network and answer short surveys like this one, please visit m.geopoll.com

trending

algeria

ethiopia exploration continues

$100 billion

angola source:

thomso

s 2014 reuter

besa blues run deep

With troubles for Portugal’s Banco Espírito Santo at home in July, a case of bad loans rocked its Angolan subsidiary and caused worries about the health of the Angolan financial sector. In mid-July, Portugal’s Expresso newspaper published a document signed by Angola’s President Eduardo dos Santos in December 2013 to authorise a $5.7bn state guarantee for the troubled loans of privately owned Banco Espírito Santo Angola (BESA). BESA’s loans-to-deposits ratio grew rapidly under the tenure of former chief executive Álvaro Sobrinho, who left the bank in 2012. The Angolan government has not been open about BESA’s problems, but Banco Nacional de Angola governor Jose de Lima Massano said in July that BESA would need a capital injection in order to rebalance its books. Massano argued that BESA’s troubles would not threaten the wider banking industry. However, the central bank’s statistics showed that non-performing loans across the sector rose to 10.2% in October 2013 from 6.1% in September 2013. BESA has had a close relationship with the ruling elite in Angola. In Portugal, Banco Espírito Santo is under investigation for accounting irregularities, and bank founder Ricardo Salgado is a subject of policy enquiry in cases involving fraud and money laundering. The authorities have not issued any charges against Salgado. ●

deBt foothills

sub-saharan debt issues hit $5.2bn in the first half of 2014, the highest half-year total since 2011, and a 3% increase on the same period last year, as confidence fuels borrowing.

nigeria new money for roads with the country’s sovereign wealth fund preparing to invest and the arm infrastructure fund closing its fundraising in midaugust, there are new sources of funding for nigerian infrastructure. the arm private equity fund has a west african focus and will invest in transport, energy and utilities. it closed fundraising in mid-august with a target of $250m. its backers include the african development Bank and a number of nigerian pension funds. it will target returns of 18-20% over a 12-year period from investments in existing and new infrastructure projects.

is the level of investment that sonatrach, the stateowned algerian energy giant announced it would push into oil and gas production by 2018. it has pledged to develop shale gas reserves and combat sliding output. local energy needs have been rising fast, while production has been stagnating.

mario proenca/bloomberG via Getty imaGes

Despite oil company tullow’s recent disappointing results in ethiopia, russia’s Gazprombank Group says it may invest about $60m in exploration there. in July, Gpb Global resources signed a production-sharing agreement that covers a seven-year exploration period for a block in the afar region. toronto-listed africa oil corporation, an oil and gas company with acreage in east africa, launched a secondary listing on the stock exchange in stockholm in July. it reported a dry well in ethiopia’s chew bahir basin during the same month and said it would now focus on prospects in its south omo block.

“The problems that have naDine hutton/bloomberG via Getty imaGes

beset African Bank are, in our view, largely specific to their current business model.” Gill Marcus, the south african central bank governor said, following the announcement that the reserve bank would step in to rescue troubled african bank, which reported heavy financial losses in 2013/14. the afric a report

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finance special

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s e p t e m b e r 2 0 14

A New Major is Emerging in Africa.

An ant is only as strong as its colony. A company only as strong as its people. Our vision, resilience and teamwork have led to the successful conclusion of a landmark transaction set to redeďŹ ne the sector and position us as the ďŹ rst indigenous major. This is just the beginning. We are Oando. We are proudly African.

country profiles

west africa contents 162 PeoPle to watch 164 benin 165 burkina faso

LIBYA

166 cabo verde ALGERIA

167 cote d’ivoire 169 gambia

MALI

MAURITANIA

170 ghana

NIGER

Timbuktu Gao

SENEGAL

BANJUL

Mopti

GAMBIA

BAMAKO

GUINEABISSAU BISSAU CONAKRY FREETOWN

CABO-VERDE

CÔTE D'IVOIRE

SIERRA LEONE

YAMOUSSOUKRO

MONROVIA

LIBERIA

PRAIA

7.1%

AfDB forecast for GDP growth in West Africa in 2015. This figure is the highest among all African regions

the africa report

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n° 66

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CHAD

Zinder

OUAGADOUGOU

BURKINA FASO

GUINEA

173 guinea-bissau NIAMEY

Maiduguri

BENIN

ACCRA

Abidjan

176 niger

ABUJA

PORTOLOMÉ NOVO

GHANA

175 mali

NIGERIA

TOGO

PortHarcourt Atlantic Ocean

174 liberia

177 nigeria CAR CAMEROON

179 senegal 180 sierra leone

300 km

181 togo

calendar 2015

February Nigeria Presidential and parliamentary elections June Guinea Presidential election July Togo Presidential election OctOber Côte d’Ivoire Presidential election nOvember Burkina Faso Presidential election West africa 2014 GdP (% of regional total) Nigeria

79.7% TOTAL

$745.6bn

d e c e m b e r 2 014 - j a n ua r y 2 015

1.2% 1.8% 0.3% 4.6% 0.1% 4.8% 0.9% 0.1% 0.3% 1.6% 1.1% 2.1% 0.7% 0.6%

Benin Burkina Faso Cabo Verde Côte d’Ivoire The Gambia Ghana Guinea Guinea-B Liberia Mali Niger Senegal Sierra Leone Togo

West africa PoPulation (millions) 814 552 515 626 349 783

2015

2030

2050

SOURCE: UNITED NATIONS

DAKAR

172 guinea

161

162 Country Profiles

west africa

PeoPle to watch

Côte d’IvoIre

Amara Essy A rival for Bédié Amara Essy, a potential competitor for Parti Démocratique de Côte d’Ivoire (PDCI) president Henri Konan Bédié, is gaining in strength. Bédié is not running in the October 2015 presidential election and is instead supporting President Alassane Ouattara. Many of the PDCI’s members, including some key officials, say they are not keen to see the party without a candidate in the 2015 vote. A group of cocoa farmers that support the party say that they want Essy to be its candidate. A close ally of Côte d’Ivoire’s first president, Félix Houphouët-Boigny, Essy, 70, had a long career as a diplomat. He was foreign minister under HouphouëtBoigny and Bédié. Bédié, 79, was re-elected president of the PDCI in October 2013 during a longdelayed congress. Essy has not said whether he will run in the 2015 election.

Phillip Ihenacho Gas burns brightly A confirmed optimist about the prospects of Nigeria’s indigenous energy industry, Phillip Ihenacho has ridden the crest of a wave of acquisitions that have made his Seven Energy one of the key companies developing gas projects. This year, Seven started supplying gas to a 190MW power station in Akwa Ibom. Seven’s gas projects will be critically important for several newly privatised electricity companies. As managing director, Ihenacho finalised a deal in 2014 for $255m in funding from Singapore’s Temasek and the International Finance Corporation. Seven also raised another $170m from a consortium that includes Nigeria’s FBN Bank, Ecobank and Union Bank. Ihenacho had established his own finance house, Afrinvest, which he then sold to United Bank for Africa.

AmAndA VoisArd/un

NIgerIa

ghaNa

Mona Quartey Financial fixer Deputy finance minister Mona Quartey was appointed in June 2014 to help fight Ghana’s economic troubles. As a risk management and corporate finance specialist, she spent years in both the public and private sectors in Ghana and the US. In the next year, she will lead talks and coordinate many of the country’s planned publicprivate partnerships (PPPs) including the Lornho Atuabo port, the development of the Accra-Tema motorway and the implementation of a public-transport system in Accra. She will also lead negotiations for PPP power projects. the africa report

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163

Nigeria

Oby Ezekwesili From minister to banker and lead campaigner

BurkiNa Faso

Oby Ezekwesili first came to national attention in 2003, when President Olusegun Obasanjo – counting on her credentials as a founding director of Transparency International – appointed her to run a ‘due-process unit’ focused on curbing inflated contracts. From there, she was appointed to ministerial posts covering minerals and education. In 2007, she joined the World Bank as vice-president for Africa, serving until 2012, when she returned to Nigeria to take up a role as senior economic adviser to the Open Society Foundation. It should have been a relatively quiet life. Fate intervened with a new role as one of the leaders of the Bring Back Our Girls movement, founded to put pressure on the government after the 2014 abduction of more than 200 girls by Boko Haram. Her unswerving focus has attracted accusations that she is intent on discrediting the government and raising her own profile.

Mali

Karim Keïta EmmanuEl DaOu BaKaRY fOR ja

High-flying son Dubbed ‘the vice-president’ by his critics, Karim Keïta, 35, spends more time building his profile outside Mali than sitting in the parliamentary seat that he won to represent Commune II in the capital, Bamako. Karim is the son of President Ibrahim Boubakar Keïta (IBK), and his main achievement before his father came to power was to own two companies in Bamako, both named Konijane: an investment consultancy and a car rental company. But Paris-born Karim and his brother Boubacar blossomed early in 2013 when their father enlisted them to jet between Francophone cities – especially Libreville, Abidjan and Brazzaville – to raise funds and support for his presidential campaign. That done, Karim became a parliamentarian in December 2013. IBK appointed him to head parliament’s defence commission. Karim’s opponents regularly criticise his jet-setting lifestyle, pointing out that he has lived more years abroad – in France, Belgium and Canada – than in Mali. But his supporters say he has played an important role in bringing a new generation of politicians into parliament. the africa report

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Zéphirin Diabré

Time for a technocrat Before the resignation of President Blaise Compaoré in October, oppositionist Zéphirin Diabré, 55, had campaigned for a change in leadership since 2009. A patient and hardworking technocrat, he looks to emulate the political success of President Macky Sall in Senegal. Diabré, a former finance minister and deputy director of the UN Development Programme, is positioning himself to run for the presidency in elections planned for November 2015 under a transitional government that had yet to be named when The Africa Report went to press. The leader of the Union pour le Progrès et le Changement (UPC) reinvigorated the country’s opposition since his return from working abroad in 2009, the year that he organised a national conference for peaceful change in power. He formed the UPC in March 2010 and it won 19 of the 127 seats in parliament in 2012.

164 Country Profiles

west africa

benin

Bashing Boni Yayi BENIN

The promise of $11bn from donors will boost growth in five key sectors

political impasse

Strikes throughout 2014 showed a widening gap between the government and workers. Teachers, healthcare workers and officials from the finance ministry variously participated in a general strike that lasted several months after a police crackdownonprotestsinDecember2013. The lack of dialogue with the unions is mirroredinthepoliticalimpassebetween Boni Yayi and Benin’s opposition parties, which refuse any cooperation with the regime and harshly denounce its inertia. The debate on constitutional revisions, which seek to introduce the position of an auditor general and strengthen anti-corruption measures, once again returned to parliament in October 2014.

Parakou TOGO NIGERIA

GHANA PORTO NOVO Cotonou

150 km

Gulf of Guinea

Population: 10.3 million Population growth: 2.7% ■ GDP per capita: $872 ■ Life expectancy: 59.3 ■ Adult literacy: 38.45% ■ Inflation: 1.65% ■ Human development index (out of 187 countries): 165 ■ Foreign direct investment: $320m ■ Current account as % of GDP: -9.16% ■ Mobile phone penetration: 93% ■ Key export: Cotton ■ Last change of leader: 2006 ■ GDP growth (%) ■ ■

5.4 ■

5.6

5.5

business relations sour

5.2

GDP ($bn)

7.5

8.3

9.2

10.1

2012*

2013*

2014*

2015*

*Estimation Oct. 2014

resident Thomas Boni Yayi is entering the terminal stages of his second term in office, facing widespread strikes, endemic corruption and trouble organising elections. His opponents are not yet convinced that he plans to retire and argue that he will try to change the constitution in order to run again. The government is planning a major infrastructure drive with the $11bn promised at a Paris roundtable in July 2014. There has been a great deal of tension between Boni Yayi and the opposition. Fighting over the management of the electoral register, the Liste Electorale Permanente Informatisée (LEPI), has dragged on since 2011 and is set to continue. Delayed municipal polls are supposed take place at the same time as the legislative vote planned for January 2015. However, the opposition accuses the government of excluding voters from the register and LEPI officials said in October that the government had not provided the finance to correct the list.

the Autorité Nationale de Lutte contre la Corruption in 2011 and most of its cases against former officials have collapsed. The government has sacked a succession of directors of the port of Cotonou due to governance concerns. Given the strength of the informal sector, the government depends greatly on its customs revenue and the re-export trade to Nigeria. The government laid out the country’s investment targets at the July 2014 donor roundtable and investment conference. Its main spending priorities until 2018 are in agriculture, energy, health, infrastructure – including ports, airports and the Cotonou-Niamey railroad – and tourism. The ambitious Route des Pêches (Fishing Route) tourism project covers 40km between Cotonou and Ouidah.

BURKINA FASO

Unions and oppositionists are frustrated with a government prone to delays

It is unlikely that legislators will rapidly agree on how to proceed as the debate has been ongoing for more than a year. Politicians are already preparing themselves for the 2016 race. Likely candidates include Boni Yayi’s former military cabinet director Général Robert Gbian, former prime minister Pascal Irénée Koupaki, 2011 presidential contender Abdoulaye Bio Tchané, Cotonou deputy mayor Léhady Vinagnon Soglo, national assembly president Mathurin Coffi Nago and oppositionist Eric Houndété. The government has promised to fight corruption but not been able to do much against the scourge. It launched

The country’s business council refused to participate in the investment summit due to what they describe as a poor business environment and weak rule of law. The case of businessman Patrice Talon is illustrative of their criticisms. Talon was one of Boni Yayi’s campaign financiers until the two fell out and Boni Yayi accused Talon of trying to assassinate him. The government then revoked contracts awarded to Talon’s firms before the issue of a presidential pardon in May 2014. The cotton sector is experiencing its typical ups and downs. The state has reclaimeditspredominantroleinthesector after breaking ties with Talon’s agribusiness interests in 2012. The government expects production to hit 400,000tn for the 2014/2015 season. The 2012/2013 harvest was 240,000tn and 350,000tn in 2013/2014. The country has industrial capacity to process 600,000tn per year. The economy will be less dependent on agriculture in the years to come as Benin becomes an oil producer. Nigeria’s SouthAtlanticPetroleumdiscovered87m barrels of oil in its Seme field in October 2013 and is set to produce the first oil in early 2015 – a modest 7,500 barrels per day. The government is awaiting the results of drilling conducted by Royal Dutch Shell and Petrobras in 2014. ●

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west africa

Country 165 Profiles

burkina faso

Beyond Blaise The transitional government faces many obstacles before a vote in 2015

MALI NIGER

Gold production boosts government revenue but is not reducing poverty

B U R K I N A FA S O

military rule

Civil society groups are worried about the politicisation of the armed forces during the days immediately after Compaoré’s downfall and sought to minimise the role of the armed forces in the transition. A mutiny within the ranks spread instability throughout the country in 2011 and pointed to problems in civilian control of the institution. High-ranking soldiers will be on guard against any attempts by •

n° 66

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Bobo-Dioulasso GHANA

BENIN TOGO

CÔTE-D'IVOIRE

100 km

Population: 16.9m Population growth: 2.8% ■ GDP per capita: $767 ■ Life expectancy: 56.3 ■ Adult literacy: 36.02% ■ Inflation: 1.5% ■ Human development index (out of 187 countries): 181 ■ Foreign direct investment: $374m ■ Current account as % of GDP: -7.21% ■ Mobile phone penetration: 66% ■ Key export: Cotton ■ Last change of leader: 2014 ■ GDP growth (%) ■ ■

6.6

6.7

mining to suffer

6.8

9.0 ■

GDP ($bn)

11.0

12.0

13.4

14.8

2012*

2013*

2014*

2015*

*Estimation Oct. 2014

urkina Faso will be preparing elections in 2015 in order to end the transitional period after the late October 2014 downfall of President Blaise Compaoré, who faced a popular uprising after attempting to change the constitution to remove the term limits that would force him to step down. The civilian opposition and the country’s senior military officers expressed distrust about each other’s ability to manage a successful transition. The economy remained stable in late 2014, and the country’s international mediators urged donors to refuse to impose sanctions, as civilians planned to take over from the military leaders who first claimed power. The main task of the transitional government is to organise elections within a year of taking office. Delays in organising the vote are likely. The leaders of the transitionalgovernmentcannotruninthe upcoming elections. Oppositionists and civil society representatives were keen to weaken the Congrès pour la Démocratie et le Progrès, the ruling party under Compaoré, meaning that it is likely that one of the leading opposition figures would win the new presidential polls. Zéphirin Diabré, Roch Marc Christian Kaboré and Bénéwendé Stanislas Sankara are some of the potential candidates.

the africa report

OUAGADOUGOU

the transitional authorities to reform the armed forces. Highlighting dissent in the ranks, General Honoré Nabéré Traoré was the first armed forces official to claim the leadership mantle after Compaoré stepped down in October 2014 and was quickly followed by Lieutenant Colonel Isaac Zida, who later agreed to hand power over to civilians. Burkina Faso’s neighbours played a critical role in the transition and in mediating between the parties and Africanintergovernmental organisations. Senegal’s President Macky Sall was the Economic Community of West African States’ mediator and he was supported

d e c e m b e r 2 014 - j a n ua r y 2 015

by Ghana’s John Mahama and Mauritania’s Mohamed Ould Abdel Aziz, who is the chairperson of the AU. Over the past few years, Burkina Faso’s economy has been growing faster than most of its West African counterparts, but the International Monetary Fund (IMF) estimates that about 45% of the population has remained below the government-determined poverty line since the mid-1990s. A lack of infrastructure and unreliable and high-cost energy supplies are obstacles to growth. Gold is Burkina Faso’s most valuable export. Miners are unlikely to pursue expansion projects under the transitional regime out of fear of political instability. Exploration levels, which are amongst the highest in Africa, could also suffer. Gold production was expected to rise from 32tn in 2013 to 25tn in 2014. Weaker global prices will also discourage investment in gold mining in the year ahead. The sector has not contributed much to development of the local economy, and companies rely on foreign outfits for most mining-related services. The IMF advised the government to revise its mining code to raise more revenue and yet attract enough investor interest. Nonetheless, other minerals are also attracting attention. In May 2014, the government awarded Pan African Minerals an exploration licence for manganese at Tambao, a deposit estimated to contain more than 100m tonnes of the mineral. In August, Pan African Minerals and France’s Bolloré signed an agreement for an $895m project to rehabilitate a railway line from the Ivorian port of Abidjan and link it to Tambao. The companies estimate that it will take three years to complete, but the political instability is expected to cause delays. The cotton sector accounts for just under 4% of gross domestic product but is responsible for much of the employment in rural areas. Prior to the political crisis, actors in the sector were predicting record production of 800,000tn for the 2014/2015 season. ●

166 Country Profiles

west africa

Cabo Verde

Election debate heats up The governing PAICV is looking for a new candidate to replace the prime minister

High unemployment and rising public debt are among the biggest concerns

attracting investment

The opposition MpD, headed by Ulisses Correia e Silva, already has the leadership that will represent the party in the 2016 elections. The leader of the centre-right party says that its priority is job creation, attracting private investment and generating more revenue from tourism. He wants to decentralise and reform state expenditure and taxation, with a hallmark policy of eliminating taxes on savings and investment. The reforms of the leftist PAICV in 2014 were not popular. Prime Minister Neves started the year with the announcement that the government would

ISLES Atlantic Ocean ISLES ARD PRAÏA

50 km

beaches, spa resorts

Population: 0.5 million ■ Population growth: 0.8% ■ GDP per capita: $3,809 ■ Life expectancy: 75.1 ■ Adult literacy: 87.58% ■ Inflation: 0.76% ■ Human development index (out of 187 countries): 123 ■ Foreign direct investment: $19m ■ Current account as % of GDP: -5.84% ■ Mobile phone penetration: 100% ■ Key export: Mackerel ■ Last change of leader: 2011 ■ GDP growth (%) ■

1.2 ■

3.0

0.5

1.0

1.8

1.9

2.0

2.1

2012

2013*

2014*

2015*

GDP ($bn)

*Estimation Oct. 2014

abo Verde’s political parties are preparing for national elections in 2016. Economic management is the main topic of debate as the ruling party is liberalising labour laws and facing strikes. The government’s debt levels are rising and economic growth has slowed rapidly since 2011. The Partido Africano da Independência de Cabo Verde (PAICV) took 51% of the vote in the last legislative elections in 2011, so the opposition Movimento para a Democracia (MpD) is looking to score points ahead of the polls. Late 2014 brought the end to a political era with the retirement of Prime Minister José Maria Neves of the PAICV. The party was set to hold leadership elections in December 2014. The three main candidates in the race to replace Neves are youth and employment minister Janira Hopffer Almada, health minister Cristina Fontes Lima and parliamentary leader Felisberto Viera. The party will seek to forge unity after the leadership election in order to face the MpD in 2016.

yet to do so. The donors that provide budget support – including the African Development Bank, World Bank, EU, Spain, Luxembourg and Portugal – are concerned that the public debt might increase to up to 108% of gross domestic product by 2016. In an attempt to stimulate the economy, in July the central bank announced a decrease in the main interest rate from 4.25% to 3.75%.

CABO VERDE

slow down its investment in order to reduce spending. All political parties agreed in August 2014 that unemployment, estimated at about 16%, is the most pressing challenge that the country faces. Unions started the year protesting against labour law reforms that make it easier to sack workers. Another area where the government has faced difficulties is in improvements to the management of state-owned enterprises, including electricity and water company Electra, the TACV airline and port company ENAPOR. The government was due to produce a report on a programme of privatisation but has

Tourism is a major economic sector, and actors in the industry have been discussing how the country’s performance can be improved. After holding a tourism workshop late in the year, the government is planning to launch a national tourism council to promote the country and coordinate plans for the industry. In the second trimester of 2014, tourist arrivals rose to 110,991 – up by 4,606 from the same period in 2013. In October, Meliá Hotels International opened the country’s largest tourist resort. At a cost of €120m ($151m), the complex on the island of Sal has the capacity to host more than 3,000 tourists and is expected to create up to 1,000 jobs. Cabo Verde’s economy relies heavily on the EU, and the government is continuing to improve its relations with the region. In 2014, the government signed agreements on facilitating the issuance of visas and on the readmission of the illegal immigrants from EU countries. Foreign policy is often a point of contention between President Jorge Carlos Fonseca of the MpD and Prime Minister Neves of the PAICV. Following a long and slow negotiation process, Praia and Brussels agreed a new deal for the fishing sector in 2014. The accord that came into force in September 2014 allows 71 European vessels to fish in exchange for €550,000 ($693,000) per year in the first two years and €500,000 for each of the following two years. Prime Minister Neves said he was disappointed at the low fees agreed, but that they represented a €365,000 increase over the total of the previous deal. ●

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Country 167 Profiles

cote d’ivoire

Polls test the post-conflict peace MALI

GUINEA

The FPI of former president Gbagbo is likely to boycott the 2015 elections The agriculture sector continues to be the country’s main growth pole

wages get a boost

Many Ivorians complain they are not seeing the fruits of this growth in their daily lives. Some progress has been made for workers though. As part of a vast reform of the cocoa industry, the government has set up a minimum guaranteed price for farmers. The government raised the farm-gate price for cocoa to 850 CFA francs, up from 750, in October 2014. The minimum wage for workers in the formal sector and civil servants was nearly doubled to 60,000 CFA francs a month in November 2013. Agriculture is the principal driver of economic growth. The country rethe africa report

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GHANA

YAMOUSSOUKRO Abidjan Gulf of Guinea

200 km

Population: 20.3 million Population growth: 2.3% ■ GDP per capita: $1,370 ■ Life expectancy: 50.7 ■ Adult literacy: 43.11% ■ Inflation: 0.63% ■ Human development index (out of 187 countries): 171 ■ Foreign direct investment: $371m ■ Current account as % of GDP: -3.02% ■ Mobile phone penetration: 95% ■ Key export: Cocoa ■ Last change of leader: 2010 ■ GDP growth (%) ■ ■

10.7 ■

8.7

8.5

7.9

27.7

32.0

34.0

38.2

2012*

2013*

2014*

2015*

GDP ($bn)

ported record cocoa production for the 2013/2014 season, which ended in September2014.Whilefarmersproduced 1.7m tonnes of cocoa in that season, early predictions for the 2014/2015 season were in the region of 1.6m tonnes. Growth is set to continue elsewhere. The finance ministry estimates that cotton production will rise to 480,000tn in 2015, up from 417,000tn in 2014. It predicts that cashew production will reach 610,000tn in 2015, up from 555,000tn in 2014. The agriculture sector has not been affected by the outbreak of Ebola in West Africa, in part due to the weakness of intra-African trade in the region.

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Unemployment remains a major issue. According to the International Monetary Fund, employment in the formal sector rose by 5% in 2013, but jobless people still account for at least 20% of the working-age population. Inflation remains moderate, mostly due to the role of the CFA franc. The single currency for West Africa’s eight-country economic and monetary bloc is pegged to the euro. To tackle unemployment, the Ivorian government launched a $300m programme in 2014 to support small and medium-sizedenterprises(SMEs),which account for most of Côte d’Ivoire’s formal economy.TheprogrammewillhelpSMEs to access credit and aims to create 70,000 SMEs and 600,000 jobs in six years. mixed results

*Estimation Oct. 2014

CÔTE D'IVOIRE Bouaké

LIBERIA

ess than a year before next presidential election – the first one since the 2010 turmoil – Côte d’Ivoire presents a contrasting picture: while the economy is booming, particularly thanks to public investment ininfrastructureprojects,reconciliationis more rhetoric than reality. Without major opposition, President Alassane Ouattara is set to win the October 2015 vote. Côte d’Ivoire’s economy is bouncing back three years after the end of a decade-long political crisis. Once West Africa’s economic locomotive, Côte d’Ivoire aims to rebuild itself. President Ouattara has pledged $19bn for investment in infrastructure projects. This includes rehabilitation of roads, construction of a third bridge spanning Abidjan’s lagoon, a highway linking Abidjan and the political capital Yamoussoukro, expansion of the country’s main ports and energy projects. The state’s budget has risen nearly 50% in the past three years to 5.1trn CFA francs ($9.9bn) in 2015 thanks to increased tax collection on the back of a surge in cocoa and cashew-nut production.

BURKINA FASO

Côte d’Ivoire successfully returned on the international market – after defaulting in 2011 amid the post-election crisis – by issuing a $750m eurobond in July. The debt was more than six times oversubscribed. It has been less easy to raise money locally, however. The regional bourse hosted a 120bn CFA franc bond issue in May that was largely undersubscribed, and four of five rounds of treasury bills issued by the regional central bank raised less than expected. Côte d’Ivoire sought to raise 810bn CFA francs locally in 2014. Despite the country’s impressive growth figures, some investors have appeared reluctant to commit. This is changing. Public investment has supported growth in the past three years, but private investment is on the rise and reached 20% of gross domestic product in 2013, up from 8% in 2011. French retailer Carrefour will open its first store in sub-Saharan Africa in Abidjan in 2015, while Standard Bank, Africa’s largest lender, also aims to open a branch and make Côte d’Ivoire its West Africa hub. One thing preventing some companies from investing in Côte d’Ivoire is the business climate. The authorities have set up commercial courts and revived the competition commission but there is much more that could be done. An audit reviewing no-bid public contracts

168 Country Profiles

west africa

cote d’ivoire Polls test the post-conflict peace

party divisions

Bédié’s support is likely to exacerbate divisions in the PDCI and may lead to some defections, especially from the youth wing, which seems to be willing to present a candidate. Kouadio Konan Bertin, leader of the PDCI’s youth wing, insists that the party’s goal should be to win the election and exercise power. Such divisions may be used by the Front Populaire Ivoirien (FPI), former ruling party of ex-president Laurent Gbagbo,

Production of cocoa beans (millions of tonnes)

2 1.7

1.6*

1,5 1.4 *prediction 1

2012-2013

2013-2014

Source: conSeil du café-cacao

granted between 2011 and 2013 revealed abuses in how these contracts were awarded and executed. The audit showed that 95% of them should have been tendered. The government repeatedly said no-bid contracts were used due to the urgent need to rebuild. Untendered deals surged to 57% of Côte d’Ivoire’s public procurement by value in 2013 but dropped to less than 10% in the first half of 2014. Other investors are waiting to see how the next election will unfold. President Ouattara is seeking re-election, and he is strongly favoured to win. Former head of state Henri Konan Bédié, leader of the Parti Démocratique de Côte d’Ivoire (PDCI), which backed Ouattara’s Rassemblement des Républicains in 2010 and is part of the ruling coalition, has called on his supporters to vote for Ouattara in 2015. That endorsement came earlier than expected and will boost Ouattara’s chance of securing victory.

2014-2015

$300m

A government programme to support small and medium-sized enterprises now detained at The Hague’s International Criminal Court (ICC) on charges of crimes against humanity. But the FPI is itself facing huge divisions between the hardliners of the Gbagbo-or-nothing camp, who include Laurent Akoun and Alphonse Douati, and the moderates like party president Pascal Affi N’Guessan. In September 2014, the FPI withdrew from the electoral commission, saying the composition is unbalanced and its president Youssouf Bakayoko, whose mandate has been renewed, is illegitimate. The party had agreed to participate in the commission in August 2014 but

changed tack. Although the party has not taken any official position, analysts say the FPI is likely to boycott the 2015 vote. Such conditions may reassure investors, but they are not likely to help bring legitimacy to Ouattara. The security situation keeps improving and many Gbagbo loyalists have been released from detention in the past year, but the government is regularly accused of pursuing victor’s justice. No Ouattara supporters have been charged so far for crimes committed during the fight against Gbagbo. The ICC insists it is investigating crimes committed by all sides in the conflict. Political dialogue in the country has stalled. The Commission Dialogue, Vérité et Réconciliation started public hearings in September 2014 to general indifference. N’Guessan’s camp might be persuaded to participate in the upcoming election if the government were to facilitate the return of those in exile and unblock frozen money in certain FPI militants’ bank accounts. The government has refused to send Gbagbo’s wife Simone to The Hague and postponed her trial and that of 82 others, for threatening state security, in October 2014. N’Guessan argues that the trial is politically motivated and designed to harm the opposition ahead of the upcoming polls. The government did not announce when the case will proceed, but it is likely to add to tensions between the FPI and the Ouattara government in 2015. ●

The prioriTy of privaTisaTion Motivated by President alassane outtara’s support of free-market principles, Côte d’ivoire is planning to sell some of the stakes it owns in about a dozen companies for an estimated 32bn CFa francs ($64m). the targeted companies are in the sectors of finance, agriculture, mining and telecommunications, and have often struggled to turn

a profit. a few banks are part of the privatisation plan, including Banque Internationale pour l’Afrique de l’Ouest en Côte d’Ivoire and Société Ivoirienne de Banque, which is 51% owned by Morroco’s attijariwafa bank and 49% by the ivorian state. Stakes in Côte d’ivoire telecom – 48% owned by

majority owned by private operators, the plan is to sell the state’s shares to ivorian investors and the companies’ employees through the abidjan-based regional stock exchange. these privatisations were scheduled for the first half of 2014 but have been delayed. the plan may soon include other companies, the government says. ●

the state and 51% by France’s orange – and the ity gold mine – 65% owned by Canadian miner La Mancha Resources and 25% by the government – are part of the plan of privatisations. in September, the telecoms ministry called for the fusion of Côte d’ivoire telecom and orange Côte d’ivoire. For the companies the africa report

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Country 169 Profiles

gambia

A game of cat and mouse The EU suspended development aid amid pressure for human rights improvements

dissidents in senegal

Relations with neighbours have become almost equally strained, as when Jammeh ordered a sudden and unexplained week-long closure of all land borders with Senegal in April 2014. As a member of the Jola tribe to which many Casamance rebels in southern Senegal also belong, Jammeh has promised to use his influence to find a peaceful solution in CasamanceifSenegalalsostopsGambian dissidents establishing a political base on its soil. Until the latest Casamance ceasefire in April, some observers suspected him of providing the rebels with arms and shelter to prolong the fighting. At home, Jammeh maintained a stranglehold grip through 2014 with the africa report

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GAMBIA BANJUL SENEGAL

50 km

Population: 1.8 million Population growth: 3.2% ■ GDP per capita: $476 ■ Life expectancy: 58.8 ■ Adult literacy: 55.55% ■ Inflation: 5.29% ■ Human development index (out of 187 countries): 172 ■ Foreign direct investment: $25m ■ Current account as % of GDP: -10.65% ■ Mobile phone penetration: 100% ■ Key export: Wood ■ Last change of leader: 1994 ■ GDP growth (%) ■ ■

5.3 ■

6.3

7.4

7.0

1.0

GDP ($bn)

0.9

2012

2013*

2014*

silencing critics

*Estimation Oct. 2014

fter pulling out of the Commonwealth in 2013 to dodge criticism of his government’s appalling human rights record, President Yahya Jammeh is now playing a similar cat-and-mouse game with the UN. After he rescinded invitations for a visit by UN human rights rapporteurs in August 2014, he allowed them to visit in early November. They said that they were prohibited from investigating in certain areas but still heard evidence of torture and abuse. The visit of the rapporteurs preceded the publication of the UN Human Rights Council’s latest review, an assessment that will no doubt be harsh – but Jammeh’s political positioning seems secure nonetheless. International outrage at repeated human rights violations – especially the high-profile execution by firing squad of nine death-row prisoners at Mile 2 Prison in September 2012 – was eventually followed by determined action in 2014 when the EU suspended €150m ($191m) in development aid.

SENEGAL

Atlantic Ocean

Efforts to diversify away from groundnuts and tourism are making little headway

of diaspora journalists and bloggers that try to check on the government’s activities. Political rivals are at a loss to even identify potential leadership candidates, especially in the largest opposition group, the United Democratic Party (UDP) – whose 66-year-old leader Ousainou Darboe will not be eligible to run in the 2016 election due to a rule banning candidates aged over 65. Calls from the UDP for inter-party dialogue were rejected out of hand by the National Reconciliation Party’s Hamat Bah.

2015*

homophobic rants and seemingly impromptu policy shifts – unexpectedly announcing in March that English would be dropped as the country’s official language. In July, he celebrated 20 years as president. There are no serious challengers to him or his Alliance for Patriotic Reorientation and Construction ahead of the 2016 presidential elections. Jammeh’s associates are often rapidly promoted before being sacked, but two close colleagues, vice-president Isatou Njie Saidy and interior minister Ousman Sonko, have lasted longer than most. Opposition groups remain weak and divided, and there is a strong community

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Independent media remain muzzled following the controversial 2013 amendments to the Information and Communications Act, which introduced penalties for those convicted of “spreading false news” to 15 years in prison or a fine of up to $75,000. The intimidation campaign against journalists continued with the January 2014 arrest of freelance reporter Sainey MK Marenah and the editor-in-chief of The Voice newspaper Musa Sheriff following the publication of a story claiming 19 youth supporters had defected from the ruling party to the UDP. As The Africa Report went to press, their trial was ongoing. Despite promising gross domestic product (GDP) growth estimates, the country’s economic security remains fragile, tied as it is to financial aid from international donors, diaspora remittances and volatile revenue from tourism and groundnut exports. Efforts to diversify Gambia’s economy have failed to gain much traction. Under pressure from the International Monetary Fund (IMF), the government has reined in some of its soaring public spending. It revealed a host of fiscal and monetary reforms in early 2014. Inflation, which peaked at 6.1% in October 2013, fell back to 5.6% in February 2014 and the African Development Bank predicted this would drop to 5.3% by 2015. The IMF warns however that the government’s debt is still rising too rapidly and was set to hit 90% of GDP by the end of 2014. ●

170 Country Profiles

west africa

ghana

Setbacks on the road to prosperity Tamale

The opposition NPP hopes to rebuild its support base after its last election defeat

restoring confidence

Mahama will have his work cut out trying to convince the electorate that he has a handle both on his party and the economy. An International Monetary Fund (IMF) financial assistance programme which would go some way to restoring confidence among investors, if not with the general public, could be initiated by early 2015. While former finance minister Kwesi Botchwey was negotiating the terms and conditions of the IMF package, the current minister, Seth Terkper, was on a global roadshow in a bid to attract

TOGO

GHANA Kumasi

CÔTE D'IVOIRE

ACCRA Takoradi

150 km

raising bean prices

Gulf of Guinea

Population: 25.9 million Population growth: 2.1% ■ GDP per capita: $1,353 ■ Life expectancy: 61.1 ■ Adult literacy: 76.57% ■ Inflation: 15.73% ■ Human development index (out of 187 countries): 138 ■ Foreign direct investment: $3,226m ■ Current account as % of GDP: -9.93% ■ Mobile phone penetration: 108% ■ Key export: Gold ■ Last change of leader: 2012 ■ GDP growth (%) ■ ■

8.8

■

7.1

GDP ($bn)

41.7 2012

47.8 2013*

4.5

4.7

35.5

32.6

2014*

2015*

*Estimation Oct. 2014

hana will have an uphill struggle in 2015 as the government tries to stabilise the economy after the rough and tumble of a bad year. The rapidly depreciating cedi and soaring utility costs have increased the cost of living. As a direct consequence of the daily hardships that Ghanaians face, analysts say that many are losing confidence in President John Dramani Mahama after his two years in office. The governing National Democratic Congress (NDC) has come in for sharp criticism from civil society groups for overstating its economic ambitions during the latest election campaign of 2012, but at the same time the opposition New Patriotic Party (NPP) has been accused of doing too little to keep the government on its toes after the long-drawn-out dispute over the election results in 2013. The opposition had been preoccupied with party elections that took place in October 2014, where incumbent leader Nana Akufo-Addo prevailed. The NPP is certain to be more vocal about economic issues in the year ahead. Some NPP activists have already suggested legislation to limit budget deficits.

Bank of Ghana. The IMF mission said the government had to tighten its fiscal consolidation efforts, reduce the public sector wage bill and scrap subsidies for energy and fuel. After the loss of so much purchasing power in the past year, members of the public are saying such measures are hard to swallow (see box).

BURKINA FASO

The soaring cost of living has called the president’s priorities into question

interest in the country’s $1bn eurobond, Ghana’s third since 2007. When the bond was launched in September, it yielded a coupon rate of 8.1%, compared with the much more favourable 5.38% on Côte d’Ivoire’s $750m eurobond in July. An IMF mission in September estimated that real gross domestic product growth would decelerate in 2014 to its lowest level for a decade, with inflation averaging more than 15% over the year. The government expects its tight monetary stance to reduce inflation to about 9.5% in 2015. Elsewhere, the cedi depreciated by about 30% in the first eight months of the year, according to the

There has been some revival of confidence in the cocoa sector. The government secured a $1.7bn loan to go towards cocoa purchases for the 2014/2015 season, to boost production and see that industry regulator, Cocobod, pays farmers more for their beans. Farmers complained about static prices over the past three years, at 3,392 cedi ($1,060) per tonne. The government reacted by raising the price per tonne to 5,520 cedi for the 2014/2015 season, for which production is expected to reach 900,000tn. The government’s short-term goal is to push production to 1m tonnes. The gold industry is yet to recover from a slump in prices from $1,700 per ounce to close to $1,200 in 2014. The drop saw the temporary closure of Anglogold’s Obuasi mine and a large number of job cuts. However gold continues to be the country’s foremost export, accounting for 40% of total exports in 2013, with oil at 22% and cocoa at 20.9%. The completion of the chronically delayed $850m Atuabo gas plant at last seemed to be a possibility by the end of 2014. Once online and at full capacity, the plant will save the country $500m in crude oil imports. The delays meant that oil production at the Jubilee field was limited to 100,000 barrels per day (bpd) against a target of 120,000. In July 2014, Tullow, the largest stakeholder in the field, began flaring gas to increase production. The delay is said to have cost the company $100m is sales in 2014. The projected value of the government’s oil earnings in 2014 was $820m, and there are high hopes for the Tweneboa-Enyenra-Ntomme (TEN) oilfield. Tullow and its partners plan to invest $2.2bn in Jubilee and TEN in 2015.

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171

rolling blackout

After a year of power outages in 2013, Ghana’s power supply issues are still unresolved. The country entered another period of load shedding in September 2014 that was set to last until December.

Barriers to business Access to ﬁnance Electricity supply Water supply Access to land Access to technology Education workforce

Manufacturing Services

Corruption Crime 0

source:ghanaian authorities

TEN is set to begin production by 2016. Other fields hold promise, and Lukoil made a new find in the Cape Three Points field in September 2014. The government’s goal is to increase production to 500,000bpd within a decade. In a move to reduce imports, the government launched a ‘Made in Ghana’ campaign. However, factories that are currently operating are already underresourced, and no solid plan to boost infrastructure for manufacturing has been put in place. Expensive and unreliable sources of energy hold the sector back. ThepresidentoftheAssociationofGhana Industries (AGI), James Asare-Adjei, said the industry group has been working with government to develop policies that would deliver more assistance to local manufacturers. The AGI has also made proposals for technical and financial assistance to boost the capacity of agriculture, agro-processing, aluminium and plastics, so raw materials can be processed and used in Ghana. Many small and medium-sized enterprises (SMEs) dependonthesematerials.TheAGIplans to set up a bank to enable SMEs to access medium- and long-term loans.

$1.7bn

Government loan to fund cocoa purchasing for the 2014/2015 season The rationing came at a time when the Volta River Authority said the Akosombo Dam had low water levels. Additionally, irregular gas supply and ongoing maintenancetotheAboadzeandSunon-Asogli thermal plants also contributed to the load shedding. The first phase of the Kpone thermal power project will produce 220MW and is expected to be online in early 2015, with France’s EDF to build a second phase to add another 300MW. In July 2014, the government decided to only take half of a contentious $3bn loan from the China Development Bank. The money will go toward the Atuabo gas

plant, and several infrastructure projects will now be shelved. The opposition had long criticised some of the terms of the loan, particularly the commitment fee of 1% per year on unused credit. Development in the north of the country has been hindered by the failings of the Savannah Accelerated Development Authority. Established to push socioeconomic and infrastructure development, the authority has been mismanaged. The government investigated the misappropriationoffundsandappointed a slate of new board members in early 2014. Members of the opposition in the Northern Region have complained that long overdue plans to build rice and shea-nut processing factories have not produced results. Malpractices in the public sector continue to haunt the government as issues of misspent monies have come to the fore. Deals under the Ghana Youth Employment and Entrepreneurial Development Agency and bad ‘judgment debt’ payments have gone unresolved. In August 2014 Otumfuo Osei Tutu, the monarchoftheAshantikingdom,saidthe country was on a “corruption carousel”. In September 2014, Accra was chosen asheadquartersforaUNmissionworking to combat the Ebola crisis across West Africa. By focusing on coordinating logistics, policy and expertise, the mission’s goal is to defeat the threat from the virus in the shortest possible time. ●

Red shiRts spotlight goveRnance, coRRuption and tax hikes disaffected workers, teachers, nurses, labourers, bankers and members of civil society have taken to the streets to express their concern about the way the country is being run. a number of strikes took place in quick succession in mid-2014, attracting thousands of demonstrators. Mostly middle-class organisers of a campaign the africa report

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calling itself occupy flagstaff House, targeting President John dramani Mahama’s official residence, declared fridays to be ‘red fridays’. demonstrators donned red clothing and posted pictures of themselves on social media. Governance analysts say Ghanaians are becoming more vocal in their protests and the discontent is

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non-partisan. the common complaints are about rapid increases in prices and austerity measures such as tax hikes and the removal of fuel subsidies. Protesters say they will adapt to austerity measures if the government tackles corruption. Nongovernmental organisations PenPlusBytes and financial accountability and

transparency africa launched a citizen’s budget in august, where spending can be monitored. they also canvassed for citizen input for the 2015 budget statement. another project, inform Ghana, is an offshoot of the Ghana decides outreach project that aimed to keep the public updated on voting matters during the 2012 election. ●

172 Country Profiles

west africa

guinea

Ebola casts a long shadow It is not clear if Guinea will postpone the 2015 elections due to the Ebola crisis

GUINEA BISSAU

ethnic divisions

The country’s politics are influenced by ethnicity, with opposition leader Cellou Dalein Diallo counting on support from his Peul ethnic group and Condé depending on the Malinké vote. The army has tended to play an influential role in politics in recent times, too. Prior to Condé’s arrival in power, the army was indisciplined and weakened by ethnic and generational conflicts. He has ensured that the soldiers have returned to their barracks, but elements of the armed forces are unhappy with the privileges given to Malinké soldiers and officers. Condé has not succeeded in calming the political atmosphere since his arrival

Kankan

CONAKRY SIERRA LEONE

Atlantic Ocean

CÔTE D'IVOIRE

LIBERIA

200 km

Population: 11.7 million Population growth: 2.5% ■ GDP per capita: $593 ■ Life expectancy: 56.1 ■ Adult literacy: 30.41% ■ Inflation: 10.07% ■ Human development index (out of 187 countries): 179 ■ Foreign direct investment: $25m ■ Current account as % of GDP: -17.11% ■ Mobile phone penetration: 63% ■ Key export: Gold ■ Last change of leader: 2010 ■ GDP growth (%) ■ ■

investment delays

4.1

3.8 ■

2.3

2.4

GDP ($bn)

5.6

6.2

6.8

7.5

2012*

2013*

2014*

2015*

*Estimation Oct. 2014

disputes look likely to continue as Condé often adopts a hardline approach. The numbers may seem exaggerated, but Guinea’s mines minister Kerfalla Yansané estimates that the country is expecting about $50bn in investment over the next decade in the mining sector. Mining is the principal earner of foreign exchange for the country, which also expects sizeable investments in manufacturing and hotels. However, the Ebola epidemic is casting doubts on those predictions. The government is now expecting negative growth rates for 2014.

MALI

GUINEA

Long-term plans for the Simandou iron ore mine are progressing he 2014 Ebola epidemic started inGuineaandisthesinglemost important factor in the country’s political and economic future. The government declared a state of emergency in August and the World Health Organisation cautiously said that the spread of the disease had shown signs ofstabilising in lateSeptember.Hundreds of Guineans died from Ebola in 2014, and the healthcare system of this country with poor infrastructure was considerably weakened. The holding of presidential elections planned for 2015 and investment decisions on mining projects will depend on how the government handles the crisis over the next few months. The international response has been slow, but France promised in October to build several new treatment centres. If elections can be held while Ebola is still spreading, the power of incumbency is likely to carry President Alpha Condé through to re-election in 2015. He is set to benefit from the fact that the opposition coalition seems unable to decide on a candidate to represent the alliance.

SENEGAL

in power in 2010. The opposition regularly accuses him of manipulating the electoral register and says he has not implemented the policies agreed in a previous round of talks with the government. Leading up to the presidential poll, the opposition has promised to restart its street protests if Condé does not cancel the Commission Electorale Nationale Indépendante’s contract with the company Waymark. Dalein Diallo has also hardened his negotiating position by calling for the government to appoint a new leadership team at the electoral commission. He says that its members are too close to the Condé regime. Those

In May 2014, the government signed an investment framework agreement with Anglo-Australian mining company Rio Tinto for the development of the two southern deposits of the Simandou iron ore deposit. It includes plans for the constructionofamineinBeylaandthebuilding of a 650km rail line and a deepwater port at Forécariah on the Atlantic coast. Simandou is by far President Condé’s largest economic project, with an estimated cost of $20bn, according to official figures. Rio Tinto and its principal partner Chinalco have agreed to deliver feasibility studies by April 2015. For now, the only other two parties involved in the project are the World Bank’s International Finance Corporation and the Guinean state. Other interested investors are waiting to see how the Ebola crisis plays out and for the presidential election, if it is held. Most other investments in the mining and power sectors also face delays, but the World Bank delivered a financing package of $50m to improve electricity services in July 2014. The two northern blocks of Simandou were held by the Israeli company BSG Resources and its partner Vale until early 2014, when the government withdrew the licences following an anti-corruption investigation. BSG Resources says that it has done nothing illegal and the revocation was a political move. The two parties have brought their conflict to the International Centre for Settlement of Investment Disputes in Washington DC. ●

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west africa

Country 173 Profiles

guinea-bissau Change for the better at last? President Vaz intends to take on the military and narco-traffickers

SENEGAL

The economy and cashew sector have suffered from the political instability

WEAK INSTITUTIONS

Guinea-Bissau’spoliticalsystemhasdeep and structural problems. The opaque origins of party finance hint at layers of corruption. Another problem is the extreme weakness of vital national institutions, particularly the judicial system. With his immediate predecessors – and adversaries – out of the way, President Vaz is confident that he is in a good position to address structural issues, even though he is keenly aware that the army is unlikely to give up its prominence and prerogatives without a fight. With a reputation of being an efficient technocrat, he the africa report

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GUINEA BISSAU BISSAU

GUINEA Atlantic Ocean

ARMY REFORM

50 km

Population: 1.7 million Population growth: 2.4% ■ GDP per capita: $598 ■ Life expectancy: 54.3 ■ Adult literacy: 59.91% ■ Inflation: -1.27% ■ Human development index (out of 187 countries): 177 ■ Foreign direct investment: $15m ■ Current account as % of GDP: 1.6% ■ Mobile phone penetration: 74% ■ Key export: Cashew nuts ■ Last change of leader: 2014 ■ GDP growth (%) ■ ■

-2.2 ■

0.3

2.6

4.0

GDP ($bn)

1.0

2012*

2013*

2014*

1.1

*Estimation Oct. 2014

ormer finance minister José Mário Vaz won a convincing victory in the second round of the presidential polls in May 2014 and now has a serious and long list of priority areas to address. He has started to reform a military prone to launching coups and will look to improve agricultural production and the country’s relations with international donors. As he is set to take on undisciplined soldiers and their allies in the drug trade, his tenure in office could be a bumpy one. Vaz took 62% of the vote against his main rival Nuno Gomes Nabiam, who ran as an independent. Concurrently with the first presidential round on 13 April, the ruling Partido Africano para a Independência da Guiné e Cabo Verde (PAIGC) obtained an absolute majority in parliament, taking 55 of 102 seats. In many ways, winning the presidency was the easier battle: Vaz first had to see off his main rival within the PAIGC, former prime minister Carlos Gomes Júnior, whose certain election as president was thwarted by a coup in April 2012. Vaz has since succeeded in uniting the ruling party.

General António Indjai on 16 September 2014. General Biague Na N’Tan, Indjai’s successor, declared that his priorities are reorganising the army, rendering it subservient to the political process and training new recruits. Indjai was the instigator of the April 2012 coup and is wanted by the US for charges related to the narcotics trade.

2015*

is trying to relaunch the economy, which contracted by 5% after the coup and by 2% in 2013. Production of cashews, the country’s main export, declined steeply during the crisis and smuggling is on the rise due to high government levies. Problems in the agriculture sector have also led to high rates of non-performing loans. An International Monetary Fund mission visited Bissau in September 2014 and is expected to extend a facility to the government that should enable it to improve fiscal revenue and present a credible budget for 2015. Signalling his intention to touch the untouchables, Vaz fired army chief of staff

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The army is top heavy, considers itself the midwife of national independence in 1974 and has frequently interfered in civilian politics. Carving an economic niche for itself, it has been facilitating logistical support for Venezuelan and Colombian drugs barons. Army reform will deal with recruitment practices which ease relatives of high-ranking officers into its ranks. This results in the domination of the military by one of the country’s ethnic groups, the Balanta, who form 27% of the population but constitute three-quarters of the armed forces. In April 2014, former president Kumba Yala, himself a Balanta whose divisive politics contributed much to Guinea-Bissau’s violent polarisation, hinted at dark consequences should his candidate, Nabiam, not win. It was to be his last political stand: on 4 April, Kumba Yala died. The Economic Community of West African States has congratulated itself on having brought Guinea-Bissau’s postcoup transition to an end. Its 750 soldiers helped secure the peaceful elections, bringing the country back into the regional fold. Relations with Senegal will remain crucial, especially now that the Senegalese government is seeking to end the crisis in the Casamance region, which borders Guinea-Bissau. Aid to the government from Europe and the US will remain vital in 2015. China, having already completed the construction or reconstruction of a large number of public buildings, is expected to continue providing support to the new government. Angola is set to strengthen its role after temporarily losing ground following the 2012 coup. ●

174 Country Profiles

west africa

liberia

Virus devastates the economy The world response shapes up after Ebola wreaks social and economic havoc Distrust between people and government threatens to undermine Johnson Sirleaf

SUSPENDED ELECTION

After consultations between Johnson Sirleaf and the Liberian senate, legislative elections that were scheduled to take place in mid-October were postponed. The government backtracked shortly thereafter and announced it would hold the polls in December. Ebola also resulted in dislocation across the economy. Production at the country’s large rubber

CÔTE D'IVOIRE

MONROVIA Buchanan

LIBERIA Atlantic Ocean

100 km

Population: 4.3 million Population growth: 2.6% ■ GDP per capita: $495 ■ Life expectancy: 60.6 ■ Adult literacy: 47.6% ■ Inflation: 11.43% ■ Human development index (out of 187 countries): 175 ■ Foreign direct investment: $1,061m ■ Current account as % of GDP: -36.35% ■ Mobile phone penetration: 60% ■ Key export: Iron ore ■ Last change of leader: 2006 ■ GDP growth (%) ■ ■

8.3 ■

8.7

4.5

2.5

GDP ($bn)

1.8

2.0

2.1

2.2

2012*

2013*

2014*

2015*

dollar lost value and the finance ministry recordedabudgetshortfallofmore$70m. The government was criticised for allowing the outbreak to spread after the first cases appeared in a remote north-western region. Newspapers carried claims that $5m allocated to battle Ebola was mismanaged. Despite presidential promises to reign in theft by officials, the government was seen as unaccountable. This impression was confirmed in October when justice minister Christiana Tah resigned after Johnson Sirleaf blocked an investigation into the National Security Agency, which is headed by the president’s son Fumba Sirleaf. A leaked US Agency for International Development report noted that the issues that triggered the violence of the 1990s “remain just below the surface”. rESOUrCES bLOCkED

*Estimation Oct. 2014

he government’s ability to tackle Ebola will shape 2015 in Liberia. A lengthy spell of relatively peaceful and progressive conditions in the country was brought to an untimely end by the worst outbreak of the virus in history. As the death toll soared to more than 5,000 by the end of October 2014, the disease was provoking a mixture of quiet determination and steady panic among residents of Monrovia and surrounding areas. President Ellen Johnson Sirleaf declared a state of emergency in August, enabling quarantines and curfews across the country, to the point that some feared the severity of some measures might provoke political instability. An intensive public health intervention launched by the US military in October will inevitably come under scrutiny, however well intentioned or effective it is. Critics bemoaned the slow international response, and in late 2014, there were not yet signs that Ebola in Liberia was under control. The healthcare system was clearly overwhelmed, with more than 80 healthcare workers succumbing to the virus in the first months of the crisis. Residents reported difficulties in obtaining routine medical services, and international health organisations made dire predictions, saying that deaths could reach tens or hundreds of thousands.

GUINEA

SIERRA LEONE

and palm oil plantations was cut back and day-to-day food farming and trading became increasingly difficult. In Monrovia, imported food prices rose as shipping companies struggled to find crews willing to board cargo ships headed for Liberia. Most airlines suspended their routes into and out of Monrovia, isolating the country. Investors faced difficulties as contractors withdrew staff and some temporarily suspended operations. Finance minister Amara Konneh downgraded growth projections, saying that the disease “threatens our post-war recovery process for sustainable, inclusive, and pro-poor growth”. The Liberian

Prior to the Ebola outbreak, expectations were high that commodity exports would boost government spending on services and infrastructure. But resource concessions continue to be plagued by difficult relations with local populations. In July 2014, violence broke out at ArcelorMittal’s mining site in Nimba County after youth groups blocked railway lines. Oil palm producers struggled to acquire land from farming communities, and in her state of the union address Johnson Sirleaf accused local environmental watchdog groups of “undermining sovereignty”. Before the crisis, economic growth had been strong. The iron ore sector was a bright spot in early 2014 when China Union began shipping ore from its mine in Bong County and Putu Iron Ore Mining Company applied for a licence to begin full operations. A new bidding round for four oil blocks was announced during the crisis despite the fact the government had not passed its new oil laws. The bidding round will give preference to big internationals that partner with companies partly owned by Liberians. But with allegations of corruption by former officials from the National Oil Company of Liberia, it remains to be seen whether this will be truly competitive. ●

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Country 175 Profiles

mali

No peace, no reconciliation ALGERIA

The government is seeking investment for infrastructure from China

questionable spending

IBK has appointed family members to senior government positions and his son, Karim Keïta, is in charge of the parliamentary defence commission. IBK has sought to isolate potential threats, like General Amadou Sanogo, who led a coup attempt in 2012, and former president Amadou Toumani Touré. The government is in conflict with donors over its spending. Using a budget clause allowing tender-free contracts in the interest of national security, the government purchased a Boeing 737 in April, even though Mali already had a presidential plane. The government also guaranteed a $200m loan for military procurement which appears to have been used to buy new uniforms, troop carriers and tanker trucks. The the africa report

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MALI MAURITANIA SENEGAL

Gao

BAMAKO Ségou

NIGER BURKINA FASO

GUINEA

GHANA

BENIN

Population: 15.3 million Population growth: 3% ■ GDP per capita: $693 ■ Life expectancy: 55 ■ Adult literacy: 38.7% ■ Inflation: 1.47% ■ Human development index (out of 187 countries): 176 ■ Foreign direct investment: $410m ■ Current account as % of GDP: -8.89% ■ Mobile phone penetration: 129% ■ Key export: Cotton ■ Last change of leader: 2013 ■ GDP growth (%) ■ ■

0.0 ■

1.7

5.9

negotiating table

4.8

GDP ($bn)

10.3

10.9

12.0

13.1

2012*

2013*

2014*

2015*

*Estimation Oct. 2014

he optimism around President Ibrahim Boubacar Keïta’s (IBK) arrival in power in September 2013 has largely faded as the government has failed to deal with the Tuareg and Islamist forces in northern Mali. After quarrels about government spending, direct budget support from donors is expected to resume in 2015 with new strings attached. Investors remain cautious, citing a lack of political stability. The delayed local authority elections – which could take place in April 2015 - could provide a wake-up call for IBK and his allies. In 2014, IBK was focused on insider political machinations and overly keen to crush the Tuareg rebels by force. Mali was still a divided country when its first case of the Ebola virus was discovered in late October 2014. Its security will be dependent for the foreseeable future on France and the presence of 10,000 UN peacekeepers.

the governing party, the Rassemblement pour le Mali. The army was not up to the task of retaking the northern city of Kidal in 2014. Elsewhere in the north, Malian troops abandoned their positions to rebels. By the time a ceasefire was agreed, the government had lost control of most of the north of Mali apart from the city centres of Timbuktu and Gao. Islamist forces including Al Qaeda in the Islamic Maghreb and the Mouvement pour l’Unicité et le Jihad en Afrique de l’Ouest staged several deadly strikes against the UN forces and the 1,500 French troops.

300 km

The rebels in the country’s north show no sign of putting down their arms

International Monetary Fund (IMF) queried the procedure used for the transactions. In June 2014, the fund suspended disbursement of a $6m tranche of a $46.2m loan. The World Bank and EU followed the IMF’s lead. Six other direct budget donors are awaiting IMF guidance before paying out. The IMF was due to deliver its report in December 2014. April 2014 brought a cabinet reshuffle in which Moussa Mara, an inexperienced 39-year-old firebrand from a small opposition party, became prime minister. IBK’s appointment of Mara was unpopular among the rank-and-file of

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Peace talks, which had been demanded by the international community ever since IBK’s election, finally opened briefly in Algiers in July 2014 and resumed in September. Mara says the government will not consider redrawing Mali’s borders, but some separatists attending the talks still believe in an independent homeland. The talks could go on for months. Overall, the Malian economy is back to its pre-crisis levels of growth, but the security crisis continues to dampen expectations. Citing a ‘’lack of political stability’’, the Swiss Bullion Company delayed for a second time - until at least mid-2015 - the opening of a $71m gold refinery. The mines ministry cancelled a swathe of dormant exploration contracts in 2014 but these have yet to be made available to new takers. In August, after a breakdown in negotiations with the government, the Union Nationale des Travailleurs du Mali staged a popular two-day strike for higher salaries, an increased minimum wage and reduced electricity prices. IBK promises ‘’big projects’’ for the years ahead, such as a fourth bridge for Bamako and a railway connection to Conakry. Letters of intent have been signed in China, but the government does not have the capacity of Nigeria to pay China for infrastructure, and these programmes will not address the lack of development in Mali’s north. ●

176 Country Profiles

west africa

niger

Living in a rough neighbourhood 300 km

Islamist forces in Mali and Nigeria are posing threats to Niger’s security

ALGERIA

Low prices have slowed some oil and uranium developments

NIGER MALI

BORDER SECURITY

In May 2014, Boko Haram launched its first raid inside Nigerien territory in the far eastern region of Diffa. Tens of thousands of refugees from Nigeria have moved to Diffa, and the Nigerien government remains concerned about the potential for radicals to infiltrate these settlements. Niger has continued its vocal efforts on the global stage to draw attention to it being caught between these two conflicts – some in the opposition would say to the detriment of its wider governance programme. Niger has pledged, along with Chad, Nigeria, Benin and Cameroon, to set up a regional unit to increase intelligence sharing and border patrols. In

Agadez

NIAMEY

Zinder

BURKINA FASO

CHAD

POWER STRUGGLE

NIGERIA

BENIN

Population: 17.8 million Population growth: 3.9% ■ GDP per capita: $484 ■ Life expectancy: 58.4 ■ Adult literacy: 19.13% ■ Inflation: -1.08% ■ Human development index (out of 187 countries): 187 ■ Foreign direct investment: $631m ■ Current account as % of GDP: -24.71% ■ Mobile phone penetration: 39% ■ Key export: Uranium ■ Last change of leader: 2011 ■ GDP growth (%) ■ ■

11.1 ■

4.1

6.3

4.9

GDP ($bn)

6.7

7.4

8.3

9.0

2012

2013*

2014*

2015*

*Estimation Oct. 2014

ith Nigeria’s Islamist Boko Haramrebelsoperatingin north-easternNigeriaand continued instability in Mali and the wider Sahel, security is the most serious threat for the government in 2015. With his main opponent, Hama Amadou, seeking refuge in France and having renegotiated uranium mining contracts with Areva in 2014, President Mahamadou Issoufou enters 2015 facing few political challenges. On the economic front, low oil and uranium prices will prove difficult to manage for the national budget. Niger has continued to be touched by instability in the wider West African region, principally by the threat of extremism from remnants of Al Qaedalinked groups in northern Mali and by the growing menace posed by Boko Haram. While there has yet to be a repeat of the suicide attacks of May 2013, Niger has struggled to step up border patrols and curtail the activities of extremists in its poorly controlled north.

focused on greater transparency in the growing extractives industry, but others have taken on an overtly political tone. Police broke up an opposition march in former President Mamadou Tandja’s stronghold of Zinder in June, and a number of protests in Niamey were called off after police said they were illegal.

LIBYA

July 2014, Niger confirmed that it would allow France to base about 300 troops in Niamey to support intelligence gathering as part of the new French Sahelian deployment called Operation Barkhane. Niger also signalled it would agree to allow the US to set up a drone base in the northern city of Agadez. This would complement the US base established in Niamey in early 2013 with about 100 US air force personnel. There has been a considerable ratcheting of political tension ahead of presidential elections scheduled for early 2016. A number of political and student rallies were held throughout 2014. Some have

In August 2014, the simmering tension between Issoufou and his rival Amadou, the president of the national assembly, broke out into the open. A Niamey court agreed to lift Amadou’s immunity from prosecution,leavinghimvulnerabletoarrest in connection with a baby-trafficking scandal that engulfed several key political figures, including his wife. Amadou, who could be the most powerful challenger to Issoufou in the 2016 contest, fled Niamey, claiming he feared for his life. He is seeking refuge in France. The economic outlook has steadily improved but low oil and uranium prices risk reducing economic growth levels in 2015. In the field of agriculture, the country showed signs of a good harvest as the rainyseasondrewtoacloseinSeptember 2014.OilproductionbytheChinaNational PetroleumCorporationfromtheAgadem fields is slowly increasing, although the Zinderrefineryisstilloperatingwellbelow capacity. There is yet to be any concrete action on plans to begin exports through a proposed pipeline linking Agadem to Chad’s pipeline. A dispute broke out in 2014 between the government and French nuclear giant Areva, which operates two uranium mines near Arlit. The company’s operating licence ran out in 2013. Negotiations turned sour and in early 2014 production briefly stopped, which Areva claimed was for maintenance. A new deal was agreed in May 2014. The government claims Arevawillincreaseroyaltypaymentsfrom around 5% to 12%, but the contracts have yet to be made public. This is in breach of the constitution. The authorities have made their position on this clear, having arrested transparency activists before a protest march in July 2014. ●

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Country 177 Profiles

nigeria

Harnessing optimism against despair NIGER

FEDERAL MIGHT

On the other hand, Jonathan can earn sympathy from southerners who view the crisis as a deliberate ploy by northern power brokers to undermine a southern president. Boko Haram and the government signed a tentative ceasefire in October to allow for the release of the girls kidnapped in Chibok, but it quickly fell apart. In seeking a second and final term in Aso Rock, Jonathan will be banking the africa report

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ABUJA

NIGERIA Lagos Port Harcourt

CAMEROON

Gulf of Guinea

poLLInG unIT suspIcIons

Population: 173.6 million ■ Population growth: 2.8% ■ GDP per capita: $484 ■ Life expectancy: 52.5 ■ Adult literacy: 59.57% ■ Inflation: 8.29% ■ Human development index (out of 187 countries): 152 ■ Foreign direct investment: $1,811m ■ Current account as % of GDP: 3.67% ■ Mobile phone penetration: 73% ■ Key export: Petroleum and crude oil ■ Last change of leader: 2010 ■ GDP growth (%) ■

5.4

7.0

7.3

467.1

521.8

594.3

657.2

2012

2013*

2014*

2015*

4.3 ■

GDP ($bn)

*Estimation Oct. 2014

CHAD

Kano

BENIN

E-commerce gets a boost from investors and catches the public imagination otwithstanding the country’s extraordinary challenges, a general wave of optimism seems to hold sway among Nigeriansathomeandabroad.Economic growth is continuing at a fast pace, and the government impressed many with its efforts to contain the recent outbreak of the Ebola virus. Unless a fresh outbreak manages to slip past the authorities, the sectors of the economy worst hit by the panic – hospitality and aviation – are expected to return quickly to normality. In the crucial election year of 2015, the Boko Haram terrorist insurgency will cast an especially gruesome shadow. Now in its seventh year, the crisis has displaced more than half a million people and disrupted the latest farming season in an important livestock and food-growing area. Apart from the fact that the legitimacy of the presidential election will be in doubt if no voting takes place in the three most affected states, the insurgency will continue to be the biggest theme during the remaining weeks of campaigning. The opposition All Progressives Congress (APC) will capitalise on it to argue that President Goodluck Jonathan does not deserve a second term and will be seeking to draw on support from other parts of the north where Boko Haram has already staged spectacular attacks.

the Nigerian National Petroleum Corporation did in the past year at the height of a public squabble over claims of missing oil monies. Several state governorship elections conducted in recent months suggest an improvement in INEC’s capacity to manage vital logistics. Critics have been quick to point out that the nationwide polls, due in February, will be a much bigger test.

300 km

The Boko Haram threat will overshadow both the election and its results

on the power of incumbency or “federal might” as Nigerians like to call it. The most powerful elements in his People’s Democratic Party (PDP) have publicly endorsedhiscandidacy.Thepartyfaceda roundofdefectionsin2014,andJonathan will have very little opposition within the PDP. His main obstacle will be the newly confident APC but only after a hotly contested race for the ticket between longstanding aspirants, the former military head of state Muhammadu Buhari and former vice-president Atiku Abubakar. The Independent National Electoral Commission (INEC) will dominate the headlines the way the central bank and

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INEC plans to improve the transparency of the elections with the issue of chipbased permanent voters cards to replace the slips of paper that were the norm four years ago. Distribution so far has been far from hitch-free. INEC’s problems have been compounded by a controversial decision to allocate the bulk of the 30,000 newly created polling units to the country’s north, which has awakened age-old suspicions that northern Nigeria is bent on political domination. Ethnic, geographical and religious divisions still define Nigerian politics. The ‘zoning’ debates that occur at the national level – with the overall aim being to ensure an equitable rotation of power among the key ethnic interests – also play out with similar passion across the 36 states. Unwritten rules stipulate that opportunities for governorships should rotate among each state’s senatorial districts. Much of the scheming for 2015 will proceed along those lines. In Lagos, the economic capital, the APC will be looking to maintain its 16year grip on the governorship of a state that according to ratings agency Fitch accounts for up to 25% of Nigeria’s GDP, 10% of its population and more than half of the tax revenues generated by all the 36 states combined (see box). Another key battleground is the oil and gas hub of Rivers State, which since 1999 had been solid ground for the PDP until the defectionofitsgovernor,RotimiAmaechi, to the APC left pundits guessing on the outcome in 2015. The APC is confident of expanding beyond its heartlands in the south-west and north-west, while the PDP is counting on maintaining support

178 Country Profiles

west africa

nigeria Harnessing optimism against despair

tight monetary policy

The central bank will have to contend with the inflationary impulse of election-year spending, but Godwin Emefiele, the bank’s low-key governor who took office in June, is expected to maintain the tight monetary policy of his predecessor. Emefiele will struggle to

Nigerian State Governors by party (as of 31 October)

PDP (People's Democratic Party) 21 1 APGA (All Progressives Grand Alliance)

APC (All Progressives Congress)

2 million

Barrels of oil per day on average in 2014, well under the 2.4m target

shake off perceptions that he will be a pliable governor, beholden, unlike Sanusi, to powerful banks and political pressure. The controversial bill to revise the fiscal termsoftheoilindustrywillnotbepassed into law by the current parliament before its tenure expires in 2015. The resulting uncertainty is likely to affect the take-off of much-awaited projects like a $9bn refining and petrochemical plant in Lagos and Nigeria Liquefied Natural Gas’s seventh production train. The oil industry has seen a spate of divestments by oil majors. ConocoPhillips completed the sale of its upstream business to Oando,

source: the africa report research

in of the oil-rich states and the south-east. In most of the north and the Middle Belt, loyalties are harder than usual to predict. Jonathan hopes to reap the goodwill arising from reports of improved electricity supply across Nigeria. To a populationlongusedtolengthydailypowercuts, even modest gains would be quickly noticeable. More than a dozen state-owned power plants have been handed over to private investors, but there is a risk of the reforms losing momentum. In September 2014, the government announced a $1.3bn bailout to help the power companies cover revenue shortfalls. Alongside security and infrastructure, the APC is seeking to make federal corruption a major issue. It will point to a continuing lack of transparency in the management of crude oil revenue after the hounding out, in early 2014, of the whistle-blowing former central bank governor Lamido Sanusi. But the latent cynicism in an environment where politicians are generally seen as corrupt means that an anti-corruption agenda on the soapbox could have limited impact.

a local player, and Shell was finalising plans for the $5bn sale of four oil blocks in late 2014. Oil production in 2014 averaged about 2m barrels per day, well under the government’s target of 2.4m. There has been a return of initial public offerings to the Nigerian Stock Exchange. The listing by oil company Seplat on the London and Lagos exchanges in April 2014 was the first since the market crashed six years ago. Conglomerate Transcorp followed suit with an offer that opened in September, as did Stanbic IBTC. E-commerce is thriving, at the behest of venture capital firms like Kinnevik, Rocket Internet and Tiger Global Management, which have invested tens of millions of dollars in internet-based startups peddling everything from discount deals to movie streaming. In 2014, PayPal extended its services to Nigeria, a move analysts see as game-changing in its ability to connect the country to the global marketplace. A national broadband policy launched in 2013 could catalyse the ongoing revolution. Nigeria has struggled to meet many Millennium Development Goals and will not meet the one on poverty by the end of 2015, though it is set to meet some healthgoals.Universalprimaryeducation has been strong in places but national statistics mask vast regional differences. Talk of bringing more development to the north has not led to big improvements. ●

The man who Tamed The chaos of Lagos When former Lagos State governor Bola Tinubu picked Babatunde fashola as his chief of staff in 2003, it was a shock to the system for the lawyer. When Tinubu chose him as successor in 2007, fashola learned quickly on the job and in the last seven years has attracted admiration for his style. he never uses a siren on his car – the

trademark of nigerian big men – and insists he has kept the same mobile phone number and made it publicly available to citizens. he is best known for his efforts at taming the chaos of a city that swells by an estimated 2,000 migrants daily. his government put up street signs, traffic lights and zebra crossings, fixed

anointed a successor. frontrunners are Akinwunmi Ambode, a member of fashola’s All Progressives Congress and a former accountantgeneral; obafemi hamzat, currently a commissioner; Jimi Agbaje, a pharmacist and member of the People’s Democratic Party; and musiliu obanikoro, deputy national defence minister. ●

roads, seeded gardens amid the concrete sprawl and introduced a dedicated-lane bus system. In 2014, the state launched a successful scheme to provide mortgages at single-digit interest rates, in a country where the average commercial bank rates are 15-20%. fashola will step down in may 2015 and has not the africa report

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Country 179 Profiles

senegal

Sall’s plan is emerging 100 km Atlantic Ocean

The government is facing challenges in turning the economy around

ike President Barack Obama, Senegal’s Macky Sall swept into office on the promise that he would deliver change. The two have both found that to be easier said than done. The Senegalese government’s framework for its first term in office is the Plan Sénégal Émergent (PSE), launched in 2014 with the goal of making the country an emerging economy by 2035. Economic change has so far been slow and the poor performance of Sall’s Alliance Pour la République (APR) in 2014’s local elections shows that his backing could be fleeting. With his Benno Bokk Yakaar coalition taking 119 of 150 seats in the 2012 legislative elections, Sall has few political obstacles to the implementation of his government’s programme. In 2014, Sall’s team went on a road show to attract financing for the PSE and secured about$7.8bninpledges.Thegovernment estimates that it will finance 56% of that sum while donors will contribute 36% and the private sector 8%. multi-sector development

The PSE includes 18 key projects that the government wants to develop as public-private partnerships. They span the fields of infrastructure, mining, tourism, education and agriculture. Structural projects include a desalination plant, the development of the iron ore mine at Falémé and a special economic zone at Thiès. The government says that the programme will double economic growth rates over the next decade. Large swathes of the population are still unhappy with the pace of change which they say does not live up to Sall’s promises, despite the cuts in the price of rice, the introduction of universal health coverage and the reduction of rents. the africa report

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Saint-Louis

DAKAR Thiès

SENEGAL MALI

GAMBIA

GUINEA-BISSAU

GUINEA

Population: 14.1 million Population growth: 2.9% ■ GDP per capita: $1,092 ■ Life expectancy: 63.5 ■ Adult literacy: 57.67% ■ Inflation: -0.53% ■ Human development index (out of 187 countries): 163 ■ Foreign direct investment: $298m ■ Current account as % of GDP: -9.83% ■ Mobile phone penetration: 93% ■ Key export: Petroleum oils ■ Last change of leader: 2012 ■ GDP growth (%) ■ ■

3.4 ■

oil promise

4.5

4.6

3.5

GDP ($bn)

14.0

14.8

15.9

16.9

2012*

2013*

2014*

2015*

*Estimation Oct. 2014

A discovery of oil in October 2014 will attract more attention from investors

tion, the former ruling party, the Parti Démocratique Sénégalaishasbeenonthe back foot and has a weak representation in parliament. Former prime minister Idrissa Seck of the Rewmi party has been widely campaigning against Sall but has yet to show that he will provide much of a challenge in the 2017 presidential polls. As the country faced a very poor rainy season in 2014, observers are expecting bad harvests and a rise in food insecurity. To increase agricultural growth, the government has set up a programme targeting the production of rice, peanuts and fruits and vegetables. It plans to invest 581bn CFA francs ($1.1bn) to help the country become self-sufficient in those products by 2017. The Senegalese government stymied the small Ebola outbreak that took place in the country in 2014, but the continued closure of its border with Guinea has hurt the economy of border regions.

MAURITANIA

They sent a strong signal to President Sall during the June 2014 municipal and provincial elections. There was infighting in Sall’s APR and it failed to win control of the capital city, Dakar. Afterwards, Sall sacked all ruling party officials holding governmental positions, including prime minister Aminata Touré. Sall is trying to score points by going after fraudsters from the government of his predecessor, Abdoulaye Wade, and has set up an agency to fight fraud. Karim Wade, the son of Abdoulaye, is on trial after more than a year in jail, and is accused of illegally amassing $248m while in office. Since Sall’s 2012 elec-

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Senegal now has a future as an oil producer after Cairn Energy discovered what appears to be a commercially exploitable deposit of at least an estimated 250m barrels at the Sangomar Deep Block in October 2014. Development will not take place for several years, but exploration is continuing and more decisions about how to proceed will be taken in 2015. Also in August, US-based Kosmos Energy pursued a farm-in agreement with the state-run Petrosen and Timis Corp for a 60% stake in the Saint Louis and Cayar blocks. Electricity provision was one of the previous government’s weaknesses. Sall’s administration is pushing for the rapid construction of the 87.5MW power plant at Tobène so that it can begin production in 2015. The development of the mining sector is mostly on hold after the government and ArcelorMittal finally parted ways in 2014 following a dispute about delays in the investment. The government is looking for a new investor for the Falémé mine, but iron ore prices are low, so prospects are dim. ●

180 Country Profiles

west africa

sierra leone The battle for survival Efforts to combat the spread of Ebola have been too little, too late The prospect of economic collapse looms as food and mineral production fall back

slow response

Early efforts to combat the spread of the virus proved ineffective because of grossly inadequate precautions and facilities. Health workers became infected and many of them died. It was only in September 2014 that the government decided to enforce a three-day lockdown in which all citizens were ordered to stay at home while contact tracers went to as many households as they could reach to identify the sick, and body collectors tried to gather up those who had died for rapid burial. The move was controversial but later seemed to have produced a greater public awareness of the risks. Subsequently, the most-affected areas of Kailahun, Kenema, Port Loko, Bombali, Mayambo and parts of Freetown were

Makeni

SIERRA LEONE

FREETOWN

Kenema Atlantic Ocean

LIBERIA

100 km

eConoMIC IMpACT

Population: 6.1 million ■ Population growth: 1.9% ■ GDP per capita: $868 ■ Life expectancy: 45.6 ■ Adult literacy: 42.1% ■ Inflation: 8.81% ■ Human development index (out of 187 countries): 183 ■ Foreign direct investment: $579m ■ Current account as % of GDP: -10.94% ■ Mobile phone penetration: 44% ■ Key export: Iron ore ■ Last change of leader: 2007 ■ GDP growth (%) ■

■

9.9

20.1

8.0

3.8

4.9

5.4

6.1

2012

2013*

2014*

2015*

15.2 GDP ($bn)

*Estimation Oct. 2014

he nationwide spread of Ebola wrecked Sierra Leone’s high hopes of ushering in a period of economic transformation. In turn, it is certain to create questions aboutthecountry’spoliticalfuturebut,for at least most of the year ahead, the focus willprimarilybeoncontainingthespread of the virus and providing for human survival at a time of widespread economic and social disruption. It was only towards theendof2014thatsubstantial,ifbelated, efforts to combat the virus were at last being mounted by the international donors, non-governmentalorganisations(NGOs) and diaspora organisations. With almost half of the country’s farms abandoned as people emigrated from infected zones, a food crisis will be almost unavoidable. Companies in the mining and farming sectors will struggle to maintain output, and new investments have been put on hold. Only if the virus can be contained soon will there be any hope of a rapid recovery.

October by President Ernest Bai Koroma and health minister Abubakarr Fofanah at a special World Bank roundtable on Ebola included the provision of 169 care centres around the country as well as treatment centres with 1,500 beds. In terms of personnel they said there was a need for 750 doctors, 3,000 nurses and 1,500 other support staff. Maintaining these could turn into a major long-term commitment by the donors.

GUINEA

subject to greater controls on movement. In October, Britain took a lead in international efforts with a coordinated military support mission to deliver beds, protection suits, tents and vehicles, and the construction of five emergency treatment facilities and an Ebola training academy. A conference in London also produced pledgesofmedicalfacilitiesandstafffrom 20 governments, 12 NGOs, the UN and some multinational companies. To ensure sustained financial support for the affected countries, the International Monetary Fund and World Bank pledged $530m to Guinea, Liberia and SierraLeone.Theproposalsputforwardin

Estimates of Sierra Leone’s economic growth are highly uncertain. Much will depend on output at African Minerals’ iron ore mine at Tonkolili, which started production in 2011 and recruited 7,000 workers. But with iron ore prices dropping, there will at least be a severe impact on royalty payments to the government.Operationshavecontinued,but the company’s shares have fallen sharply. At the same time, London Mining, with operations at Marampa, was looking for an investor to rescue its business in late 2014. Diamond and rutile mining companies scaled back their activities. The construction industry, which had beenbooming,hasslumped,andtourism has collapsed since the cancellation of flights by most international airlines. By September 2014, hotels and hostelries were estimated by the finance ministry to have laid off at least 24,000 workers. The outlook for agriculture is disastrous. The Ebola-hit areas normally produce most of the country’s cassava, rice, cocoa and coffee. With crop production badly affected, food prices soared but market activity slowed. Trade between Sierra Leone and its neighbours, Guinea and Liberia, plummeted after their common borders were effectively closed. Political issues will have little meaning until the crisis over Ebola begins to clear, but the question of whether President Koroma will stand for a third term in office was a live issue before the crisis and is likely to return once the ruling All People’s Congress contemplates its strategy ahead of elections due in 2017. ●

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west africa

Country 181 Profiles

togo

Five more for Faure Backed by the power of incumbency, President Gnassingbé will be re-elected

BENIN

Port and airport projects are reinforcing Togo’s position as a trade hub

calls for reform

The opposition groups’ leaders argue that interior minister Gilbert Bawara is regularly interfering with the day-to-day running of the Commission Electorale Nationale Indépendante. Fabre regularly calls Togo a dictatorship and has campaigned for reforms of the constitutional court and media regulation agency, institutions that he says support the ruling the africa report

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Sokodé Lake Volta

TOGO

NIGERIA

GHANA LOMÉ 200 km

Gulf of Guinea

Population: 6.8 million Population growth: 2.6% ■ GDP per capita: $691 ■ Life expectancy: 56.5 ■ Adult literacy: 66.55% ■ Inflation: 1.5% ■ Human development index (out of 187 countries): 166 ■ Foreign direct investment: $84m ■ Current account as % of GDP: -8.98% ■ Mobile phone penetration: 63% ■ Key export: Gold ■ Last change of leader: 2005 ■ GDP growth (%) ■ ■

5.7

5.9 5.1 ■

privatising state banks

5.6

GDP ($bn)

3.9

4.3

4.8

5.3

2012

2013*

2014*

2015*

*Estimation Oct. 2014

resident Faure Gnassingbé is slated to win the March 2015 presidential elections, giving him a third term in office. While the economy continues to grow, people complain that public services remain poor. In October 2014 the country’s two main opposition alliances chose Jean-Pierre Fabre of the Alliance Nationale pour le Changement as its sole candidate for the polls. Recalling past electoral violence and the unwillingness of the ruling party to accept term limits or a two-round presidential vote, many oppositionists did not rate Fabre’s chances. On the political front, despite the opposition’s attempts to push for institutional and constitutional reforms, 2014 was mostly a year of electoral preparations. Opposition leaders from the Collectif Sauvons le Togo and the Coalition Arc-en-Ciel umbrella groups called for international mediation in the process in order to avoid the tension and conflict of the elections in 2005 and 2010. They say that President Gnassingbé owes his political position to the constitution that his father, autocrat Gnassingbé Eyadéma, designed without term limits before he died in power. An agenda for reform was agreed by the regime and the opposition in a global political accord signed in 2006, but several attempts at dialogue between the two sides failed in 2014.

to Togo’s recent economic growth. The expansion of Lomé’s port and international airport are two important projects. France’s Bolloré is investing €450m ($563m) in improvements at the port. The third quay was inaugurated in October 2014 and Bolloré plans to triple the port’s capacity to 1.2m containers per year by 2024. The government is using a $150m loan from China Exim Bank to more than triple passenger and cargo capacity at the airport. Togo’s role in the West African transshipment trade has weakened due to the competition provided by its regional rivals.

party. The 2015 polls mark the first time that President Gnassingbé will go to the polls under the banner of his own party. In order to sweep away the barons of his father’s party, the Rassemblement du Peuple Togolais, he founded the Union pour la République in 2012. He is running on his economic record, which he strengthened in his second term of office by increasing spending on roads and electricity projects. As a consequence of the government’s efforts, Togo also rose 15 places in the World Bank’s 2015 Doing Business report. Agriculture, construction and mining are the main sectors contributing

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Analysts expect an uptick in activity when the government finally gets around to the privatisation of Banque Togolaise pour le Commerce et l’Industrie and Union Togolaise de Banque. France’s Société Générale bank is also working on setting up operations in the country. Phosphates account for about 20% of Togo’s exports, as do cement and clinker. The World Bank and the International Monetary Fund (IMF) have been calling for reforms to the phosphates sector, in which the state plays a large role. The IMF criticises vested interests for blocking reform of the energy, mining and telecoms sectors. The government has been due to award a contract to a private consortium to mine carbonate phosphates and set up a fertiliser plant since early 2014 but has yet to do so. The authorities expect that an investment of about $2bn is necessary to get the projects off the ground. The IMF warns that Togo’s growth is not fighting poverty or inequality. It reported in 2014 that around 60% of the country’s population live below the poverty line and that growth has strengthened inequalities in recent years. Tax collection remains weak and has yet to match the 1990 level of more than 20% of gross domestic product. The country is far from meeting the Millennium Development Goals on improved access to water sources and infant and maternal mortality. ●

afoLaBi sotunde/reuters/photo montage: christian kasongo for tar

country focus Nigeria

Game of Thrones A

Veteran politicians regard national elections as monumental, epoch-changing events, often reaching into history for parallels such as power struggles in the Yoruba kingdoms or Shakespeare’s history plays. This time they are not exaggerating, judging by the build up to the Nigerian elections due next February By Tolu Ogunlesi in Lagos and Patrick Smith

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gainst the backdrop of Nigeria’s worst conflict since the civil war in the 1960s, billions of naira are sluicing through the political system, thousands of activists are on the street and the two main parties are beset by high-level intrigues. Much will depend on the election outcome and how it is achieved. Will it reaffirm support for national unity and pluralism or will it fire up divisions and deepen regional rivalries? The poll will resonate far beyond Nigeria’s borders. Nigeria is the ● ● ●

country focus | nigeria

● ● ● newly crowned largest economy in Africa, so what happens there matters more than ever. Until now there has been a strange disconnect between commercial opportunities and political realities. Suddenly, companies planning to invest billions in electric power, retail chains and food production are looking more critically at developments. “It’s good that people are trying to understand our politics better,” said one of President Goodluck Jonathan’s political allies attending the US-Africa Leaders’ summit in Washington DC in August. “They can at least see the complexities. He [Jonathan] can’t snap his fingers and make things happen. There is this myth of the all-powerful president sitting in Aso Rock, and the trouble is everyone believes it until you work here,” he explained.

300 km NIGER

CHAD

Kano

BENIN

ABUJA

NIGERIA Lagos CAMEROON

Port Harcourt Gulf of Guinea

nigeria in numbers 173.6 million

PoPulation urban PoPulation (% of total)

51%

life exPectancy at birth

52 (2012)

fDi (current US$)

power at the centre

$7.1bn (2012) $522.6bn

GDP Growth (annual %)

7.3%

inflation, consumer Prices (annual %)

8.5%

total reserves (includes gold, current US$) $47.5bn (2012) internet users (per 100 people)

mobile cellular subscriPtions (per 100 people)

Source: World BaNk 2013

GDP (current US$)

gdp GDP by sector in Q2 2014 (%) Industry

25.96

20.89

Agriculture

Services

53.15

growth Oil and non-oil quarterly real growth (%) 40

Non-oil

Oil

20 10 0 -10 -20

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011

2012

2013

2014

Source: Nigeria NatioNal Bureau of StatiSticS (2014)

“In fact, some of President Jonathan’s greatest successes have been getting the government out of the way,” he added, pointing to the US investors’ interest in Nigerian business. “We now have a private electricity industry with an incentive to deliver, we have our own major private oil companies and we want to see more of that in agriculture and manufacturing. We would make more progress if politicians and officials were less fixated on power at the centre.” The focus on power at the centre, however, is relentless and more fiercely partisan. In February 2015, Nigerians are to elect a president, 369 federal legislators, and governors and legislators in at least 29 of the 36 states. For the first time since the return of civilian rule in 1999, the ruling People’s Democratic Party (PDP) faces a national opposition party, the All Progressives Congress (APC), formed in 2013 when the four largest opposition parties merged. Since the APC’s founding, political sentiment has been yo-yoing. Initially, the opposition coalition seemed to be making all the right calls: its ranks were quickly swelled by leading PDP members such as former vice-president Atiku Abubakar and five state governors including those of Kano, Nigeria’s second most populous state, and oil-rich Rivers State – both key strongholds for the ruling party. Until the beginning of this year, the PDP and the government were on the back foot, consumed by internal divisions and failing to respond to height-

Campaigning has begun, even though Jonathan has not formally agreed to stand for a second term

ening claims of grand corruption in the oil industry and worsening insurgency in the north. But, under Adamu Mu’azu, its new national chairman, the PDP has fought back aggressively this year, hitting at the opposition’s weaknesses and using its power of incumbency to the hilt. “This will be the most expensive election ever in Nigeria,” says Nasir el-Rufai, a former minister and leading stalwart of the APC. “The PDP is offering billions to us to defect. It’s about misspending the people’s money, not policy or strategy.” Next year’s contest still looks more evenly matched – and more unpredictable – than any of the past five national elections. The PDP has solid support in the oil-rich south-south states and the south-east. The APC has strong backing in the south-west and the north-west. Loyalties are fluid in the Middle Belt. Some doubt elections can be held in the north-east, where Boko Haram insurgents continue to launch attacks and claim to control territory. Godswill Akpabio, governor of Akwa Ibom (see page 61), told The Africa Report that there was no question of postponing national elections: “This terrorism is the africa report

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NIGERIA | country focus

Nigerian speaker accused the APC of being dominated by Muslims. Another suggested that it had some responsibility, direct or indirect, for Boko Haram’s jihadist insurgency. Certainly, the APC’s two main national figures – General (retired) Muhammadu Buhari and Bola Tinubu – are Muslim, as are 11 of its 14 state governors. Buhari, from the northern state of Katsina, has a reputation in the south for sympathies towards fundamentalism. This is despite his choice of a Christian pastor for his running mate in the 2011 elections. a shot at hillary clinton

Akintunde Akinleye/ReuteRs

A report by American academic Jacob Zenn for the Bow Group, a lobby group within the ruling Conservative Party, echoed those views, describing the APC as “an Islamist-leaning political party founded in 2013 for the purpose of challenging President Jonathan in Nigeria’s 2015 presidential elections.” The report heavily criticised US presidential hopeful Hillary Clinton, criticising her failure to put Boko Haram on the US terrorist list. Zenn concluded that “a US government that continues to be led by the Democratic Party would welcome the consultant who worked with major oil rise of the APC in Nigeria – as it initially companies and regional governments, did with Egypt’s Muslim Brotherhood.” made those claims in early September. Outgoing Ekiti State governor Kay“If the government is unwilling to ode Fayemi, a Catholic, dismissed such investigate and, if necessary, prosecute labels as “grotesque” in an interview these people, we want these cases to with The Africa Report in July. “I do be taken to the International Criminal not believe APC is a religious party. I Court at the Hague,” Lai Mohammed am sufficiently senior in APC to know if told the British members of parliament. we are running a religious organisation. “In view of the fact that the alleged Boko As a matter of fact, some of us Haram sponsors are either are quite resentful of the idea members of the ruling party A recent survey by of bringing religion at all into or friends of the president, polling ﬁrm NOI the politics of nationhood and it is clear the PDP-led fedfound that 51% development,” he said. eral government is unwillof people in After losing a state election ing and unable to try them.” Nigeria reported and with its loyalists being tarMohammed went on to improved geted for impeachment, the accuse the Jonathan govdomestic APC has lost momentum. As ernment and the PDP of electricity supply it struggles to hold together its exploiting the insurgency to component parts, it has to face win kudos from attending a bigger question: Is it really international security summits, boosting the security so different from the ruling budget to $7bn this year party? Many of the APC’s senior figures seem united and selectively declaring by little more than a desire emergency laws in APCto unseat Jonathan. ruled states. The PDP, also an uneasy Some of the ferocity of coalition of rival interests, this attack seems to have benefits from the centripetal force of been triggered by the government’s presidential power. As long as Jonathan attempts to label the APC as a party of can secure the presidential nominaIslamists and Boko Haram sympathisers. Indeed, at the Westminster meeting one tion and pacify the party’s sceptics in

an international crisis. We have seen it here before and we have dealt with it. We won’t stop elections. We are organising state elections in Adamawa in October. The terrorists will have no veto.” Yet terrorism and the threat of violence have ramped up the political rhetoric on both sides. APC leaders accuse Jonathan’s government of incompetence and a disregard for northerners in its handling of the Boko Haram Islamist insurgency. “I have heard one of the president’s advisers say that the insurgency is seen in Abuja as a fight among northerners, not a concern for the government,” says El-Rufai. “The question they have to answer is how do they let a ragtag insurgency defeat the biggest army in Africa – 100,000 strong – that is why we hear about so many conspiracy theories.” attacked in london

In an extraordinary meeting at the House of Commons in London on 8 September, El-Rufai and Lai Mohammed, the APC’s national publicity secretary, called on the Jonathan government to investigate claims that former chief of army staff Lieutenant General Azubuike Ihejirika and senator Ali Modu Sheriff had been financing Boko Haram. Dr Stephen Davis, an Australian security the africa report

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51%

country focus | nigeria

the north, he can rely on a formidable national organisation and billions of naira of patronage. The PDP has turned the tables on its opponents. Apart from winning the Ekiti governorship election in June, which gave it a foothold in the APC-dominated south-west, the PDP has benefited from a string of high-level defections. Jonathan’s team has also been hyping improvements made to electricity provision over the past few months. A recent survey by the Gallup-affiliated NOI Polls found that 51% of respondents “experienced an improved state of power supply to their households”. candidates for the throne

Both parties have to choose their presidential candidates and quieten the malcontents. An advocacy group with backing from powerful figures within the government has been holding large rallies canvassing signatures urging Jonathan to run for a second term. Governor Akpabio has no doubts: “President Jonathan will run. The people want him to run and he will win next February.” The APC is more taciturn about its favourites for the presidential ticket, but it is likely to field a northerner. Frontrunners include Buhari, Abubakar, Kano State governor Rabiu Kwankwaso and former Kwara State governor Bukola Saraki. Its handling of the primaries will be critical for the cohesion of the opposition coalition. “There’s an assumption we are going to have a strong [APC] candidate. But that will only be valid in the event of successful primaries that do not lead to a walkout by those who lose,” says Jibrin Ibrahim, director of the Abuja-based CentreforDemocracyandDevelopment. For Omano Edigheji, a Nigerian political economist and consultant for TrustAfrica, there are grave risks should the election be reduced to a north-south contest: “If President Jonathan wins, it’ll be more difficult to quell Boko Haram. If a northern candidate wins the elections, the Niger Delta [militants] are likely to take up arms again.” For Edigheji, the best approach at this point would be to ratchet down the regional rivalries and agree on “an inclusive government” rather than the winner-takes-all model, giving strong executive powers to the presidency in Abuja and the 36 state governors. But as election fever starts to envelop the country, power-sharing looks even less likely than a rancour-free vote. ●

What happens after the elections in February 2015? SCENARIO ONE: PDP VICTORY President Goodluck Jonathan, the candidate of the People’s Democratic Party (PDP), wins outright in the first round. To get the numbers, Jonathan will have to keep all his core support in the south-south and south-east states. The toughest struggle will be in Rivers State, where outgoing governor Rotimi Amaechi has defected to the opposition All Progressives Congress (APC). Jonathan’s other priority will be to hold onto the electoral support that he won in south-western states such as Lagos, Ondo, Ekiti and Ogun in 2011. Then, he was helped by a back-room deal with Bola Tinubu, the godfather of Lagos politics. There is talk of another such deal for 2015. In 2011, Jonathan lost in the three largest northern states of Kaduna, Kano and Katsina. Many now argue Jonathan is more unpopular in the north than he was four years ago. Suspicions of vote rigging could provoke serious street protests in the north, which could be exploited by insurgents to ramp up confrontation with the authorities. Jonathan may try to dampen down the crisis by offering to form a government of national unity, like his predecessor President Umaru Musa Yar’Adua. If Jonathan wins by a substantial margin again, the APC could disintegrate. ●

SCENARIO TWO: APC VICTORY The opposition APC wins by running an energetic and well-organised campaign. To counter Jonathan’s and the PDP’s use of the advantages of incumbency, the APC would have to be well funded with a strong northern candidate who exploits Jonathan’s unpopularity there and a dynamic running mate, probably from the south-west, the opposition heartland. For victory, the APC would have to shore up its support in the south-west, energise its substantial following in the north, make some inroads into the Middle Belt and hold on to its new base in Rivers State. It would face strong opposition in Rivers, and elsewhere in the Niger Delta, from the militants who have pledged loyalty to Jonathan. This would put great pressure on the leadership skills of the new president and vice-president to reassure the south-south and south-east after the election. A change at the centre would make little difference to the Boko Haram insurgents who are opposed to all northern politicians. After 16 years in power, the experience of losing office could deal a fatal blow to the coherence of the PDP. ●

SCENARIO THREE: STALEMATE AND POWER SHARING Neither of the two parties gets the required 25% minimum vote in 24 states to be declared winner and the election goes into a run-off, the first time in Nigerian history. This also results in a stalemate in which both parties quibble over results amid allegations of rigging and manipulation, as they have in Afghanistan. This could lead to more flashpoints of violence or even more insurgencies in the north, the Middle Belt and the Niger Delta. There would be grave concerns about the ability of the much-weakened military to contain such pressures, running at least two major security operations at the same time. This could encourage a new elite pact, perhaps along the lines of the powersharing deals in Zimbabwe and Kenya. New to Nigeria, such an arrangement might just stop the dangerous political and regional polarisation in the country. ● T. O. and P. S. the africa report

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ADVERTORIAL

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country focus | nigeria

Afropolitan Vibes, the monthly roots music night at Freedom Park, where the palm wine flows

Andrew esiebo/PAnos-reA

Lagos Fashion & Design Week kicked off in 2011 and swiftly acquired heft with partnerships with MTN, GTBank and the British Council. “In an international fashion world where a blasé boredom often engulfs the audience, the Lagos Fashion & Design Week was a tonic,” former International Herald Tribune style editor Suzy Menkes wrote about the 2012 edition. This year’s events will take place from 29 October to 1 November (see page 88). book fests galore

The Lagos Book & Art Festival has taken place annually since 1999. In recent years it has made Freedom Park its home and this year’s edition, from 14-16 November, will celebrate Soyinka’s life. CulTure LagosPhotoFestival is a month-long gig that describes itself as “the first and only international arts festival of photography in Nigeria.” This year it will be held from Whether it’s Fela, film or fiction, Nigeria’s economic 25 October to 26 November. capital has a non-stop calendar of cultural events, The enthusiasm for the arts extends beyond Lagos. After years of unrest but other cities have their offerings to the muses too caused by militants, the return of calm to Port Harcourt made it possible for the like Open Mic Night and Afropolitan reedom Park, a former colonial city’s bid for 2014 World Book Capital prison, has become the symbol of Vibes, which draws attendees to Freeto be taken seriously. The ambition an artistic renaissance in Lagos – a dom Park on the third Friday of every city of 21 million people that can itself paid off, and last year Port Harcourt month and plies them with live music became the first city in subsometimes feel like an overcrowded and fresh palm wine. Saharan Africa to be named prison. Where the prison’s gallows once During the fourth quarter of a World Book Capital. Book stood is an open-air stage that overlooks the year, the pace becomes feactivist Koko Kalango, an an art gallery named for Nobel laureate verish. The season unofficially Wole Soyinka. kicks off with the three-yeararchitect of the bid, has orTerra Kulture is another popular arts old Lights, Camera, Africa ganised a literary festival venue, home to the annual Taruwa Festfilm festival from 25 September in the city since 2008. This year’s Port Harcourt Book ival of Performing Arts and a year-round to 1 October. This year’s festFestival will take place on schedule of visual arts exhibitions and ival focuses on “connecting the 20-25 October and will be a theatre. Alongside Freedom Park, it hosclassics to the avant-gardists More than celebration of the city’s new ted a recent series of plays to commemin an audiovisual history that 100 musical artists status. In November, film orate Soyinka’s 80th birthday. spans the times and genres”. are expected buffs will shift their attention FollowingthisisFelabration, Adenrele Sonariwo, a curator of arts to take part in the to Calabar and the literati events and founder of the Modern Day a week-long festival commem2014 Felabration will turn to Abeokuta for the School of Arts, says: “There are really inorating who else but Fela music festival Africa International Film teresting things going on in the cultural Anikulapo Kuti, the musical in October Festival and the Ake Arts & space in Lagos, some superficial, some genius who invented Afrobeat Book Festival, respectively. with a lot of depth. Either way, it takes a in Lagos in the 1960s. The festAbuja, Nigeria’s capital, is struglot of courage to do anything in Lagos, ival, from 13-19 October, is timed to coso everyone deserves commendation.” incide with Fela’s birthday on 16 October. gling to cast off a reputation for culThe month ends with the Musical Sotural limpness. In the city, political feverish pace ciety of Nigeria (MUSON) Arts Festival, intrigue seems to be the only show in The city’s arts calendar is an impressive Lagos Photo Festival and Lagos Fashion town. This is slowly changing but, for one, featuring weekly events like In& Design Week. MUSON is the most innow, Lagos – long-standing muse of artist and scam artist alike – continues dustry Nite at Club Royale, Ikeja – bringfluential promotor of classical music in to hog the cultural limelight. ● ing together the money and the talent in Nigeria. Its annual festival takes place Tolu Ogunlesi in Lagos the music business – and monthly ones this year from 16-26 October.

The beat goes on in Lagos

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country focus | nigeria

The NorTh

Hanging on in there

Wracked by insurgency, northern Nigeria is fighting against the odds to revive its farms and processing plants with the help of major investors

Development estimates that 4.2 million hettima Haruna is a farmer in Chibok, the village in north-east people in northern Nigeria require huNigeria that Boko Haram militmanitarian assistance. ants attacked on 14 April. The insurgents “There is a direct correlation between kidnapped more than 250 schoolgirls, the violence [in the north-east] and a prompting the international ‘Bring Back decline in productivity,” says Omano Our Girls’ campaign to demand their reEdigheji, a consultant at the nonlease. Haruna’s daughter was kidnapped governmental organisation Trust that day and is among the more than Africa and a political economist. “People have been dislocated from their normal 100 still missing. economic activities – agriculture, SMEs As he desperately awaits the safe return of his daughter, Haruna has to face [small and medium-sized enterprises], another side of the crisis: the growing the service sector – which will have an economic destruction in the north as the impactonGDP[grossdomesticproduct].” insurgents have killed, abducted, looted In July, finance minister Ngozi and chased more than half a million Okonjo-Iweala said the insurgency people from their homes. Like many of could reduce GDP growth by 0.5% in the men in Chibok and the surrounding 2014. Some fear still more damage. The villages, Haruna grows maize and beans: fact that the Boko Haram attacks have the maize for his family and not harmed the national economy reveals the dominance the beans as a cash crop. of other regions in the counUsually, the planting seatry’s economic performance. son is June to September, when the rains come. But the Despite feeding much of insurgency has stopped the the country, the north has farmers. “The rain is almost lagged behind in terms of gone, just one more month,” social development. Boko Haruna told The Africa Report Haram’s insurgency has The number of by phone from Chibok. “I’ve made those disparities children aged lost all my crop because of even worse. According to a between 12 and Boko Haram.” National Population Com23 months who mission survey last year, the With no prospect of a harare immunised number of children aged vest, Haruna and his fellow in Nigeria's farmers worry about how they between 12 and 23 months north-east is only will feed their families. “This that are immunised in the a third of the is the second year in which north-east was just a third number in the people have not farmed at all of the number in the southsouth-west. in southern Borno and parts west. “Northern Nigeria’s of Yobe,” says Jibrin Ibrahim, pooreducationindicatorsare director of the Centre for Democracy a deterrent to investors seeking skilled and Development, a thinktank in Abuja, labour,” noted a 2013 report from the Nigeria’s capital. investment bank Renaissance Capital about Nigeria’s 36 states. food shortages Renaissance Capital added that Borno Most of Nigeria’s grain and livestock State – the heartland of the insurgency – “has the lowest per capita power supply comes from the north. Its commercial centre, Kano, has the largest grain marin the country at seven watts.” School attendance rates in the region are in single ket in West Africa. Food shortages are digits. Boko Haram has also attacked worsening in the north, and prices are rocketing in faraway cities like Lagos, which depends heavily on beans, tomaDespite the insurgency, tanning toes, onions and meat from the north. and leather goods manufacturing continues to thrive in Kano Britain’s Department for International

economic and social institutions. Most schools in the state are now shuttered. In July, the Islamist sect destroyed a bridge linking Nigeria to Cameroon. Since last year, mobile phone networks in the worst-hit states have been patchy. Boko Haram has destroyed cellphone masts. The government has also ordered mobile phone operators to shut down networks to stop the insurgents from coordinating attacks by phone. The authorities closed the main airport in Borno after an attack, and now most people have to use the roads that are stalked by insurgents. Nigerian religious leader, Father Matthew Hassan Kukah, Bishop of Sokoto does not believe the problem

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NIGERIA | country focus

is irredemable, but that, “The political class has to develop a bipartisan attitude that helps them appreciate that this is not about the triumph or failure of Jonathan”. Andthenorthisprovingresilient.Some entrepreneursaredefyingtheinsurgency, and some of the country’s strongest companies have their roots in the north’s economy. Paul Lubeck, a professor at the University of California, told reporters: “The leather industry is booming in Kano. They are producing leather, shoes, some textiles, some plastics, and there’s a large amount of food processing.” rice mills multiply

Akintunde Akinleye/ReuteRs

There are many new projects that could revive and expand the economy. In July, President Goodluck Jonathan visited the sleepy town of Rukubi – some five hours byroadfromAbuja–tocommissionarice mill built by Olam, the Singapore-based agribusiness company that describes Nigeria as its homeland. It started operations there in 1989 before becoming one of the world’s largest commodity traders.

Olam says the mill, which can process of the highest unemployment rates in 105,000tn of rice per year, is the largest the country. Too many people lump all the northin Africa. Over the past four years, 17 ern states together as devastated by the new rice mills have opened in the north. Locally produced rice is fast replacing insurgency, according to Gambo Manzo, who hails from Gombe State. He says the imports from Asia. Joining the new investors in commerpicture of regional chaos in the north cial agriculture in northern Nigeria is is widespread because “nobody wants Africa’s richest man, Aliko Dangote. After building a Some of Nigeria’s strongest cement empire, the Dancompanies have their roots gote Group has acquired in the north’s economy 150,000ha to grow rice in five states, four of which are to travel there and see things for themin the north. Dangote is building another selves.” A local government councillor tomato-paste factory to process local in Lagos, he remains a strong advocate tomatoes in the north after his first one replaced imports from China and Italy. for business in the north. The group is also planning to build sevmarshall plan for the north eral rices mills with a combined capacity Reviving activity and bringing more that will dwarf Olam’s. development to the north will require This kind of new investment could determined government action as well lead to the creation of much-needed as a change in perceptions. In 2012, jobs. Nigeria’s National Bureau of Statistics reports that the northern states of then central bank governor Lamido Katsina, Gombe and Bauchi have some Sanusi called for a ‘Marshall plan’ for the north. Since then, the federal government launched the Presidential Initiative for the Northeast (PINE). Soji Adelaja, the coordinator of the PINE programme who works with the national security adviser’s office, calls it a comprehensive framework to coordinate the efforts of business, international development agencies and the government to rebuild the regional economy. Thatmeanseverythingfrombackingnew enterprises and keeping schools open and safe, to providing entrepreneurship training for young people. Building new infrastructure and supporting agriculture are two of PINE’s other focuses. In recent years, the government has allocated billions of naira to support dry-season farming. This should boost production, with the help of irrigation, in the months after rains have ended. This year, President Jonathan announced a N14bn ($86m) grant for the scheme. This means that farmers such as Haruna, having missed this year’s rainy season, will no longer have to wait an entire year to start planting and harvesting. Such efforts will make sense only if the farms and surrounding villages can be protected from the Boko Haram insurgents. Sadly, Chibok and many of the surrounding towns and villages in the north-east corner of the country remain vulnerable to deadly attacks and kidnappings. ●

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Tolu Ogunlesi in Abuja

ADVERTORIAL

Dr. Lanre Towry-Coker Ph.D Biopic

r. LanreTowry-Coker is the son of a distinguished Civil Engineer who in the early 60’s was the planning adviser to the late Malayan Prime Minister,Tunku AbdulRahman. Dr. Lanre Towry-Coker was educated at the popular St. Matthias Roman Catholic (Primary) School, Lafiaji, in Lagos, and at the Kingston College, Surrey, in the United Kingdom, where he obtained the GCE ‘O & A’ Levels. He later received his academic training at the prestigious Architectural Association School of Architecture, London, (after passing the entrance examination). He then went to Thames University where he completed his Royal Institute of British Architects’ part 1 exams. He completed his RIBA part II at the N E London University. Dr. Lanre Towry-Coker, who holds a Post-Graduate qualification in Architecture from the University of North East London, completed his professional training at the World famous Royal Institute of British Architects (RIBA). He is also an Associate of the Chartered Institute of Arbitrators in the United Kingdom (ACI.Arb.) and a Fellow of the Nigerian Institute of Architects (FNIA). A graduate of the renowned Harvard University Graduate School of Business Administration (OPM), in the United States of America (which he attended as a full-fledged professional in the course of his brilliant career). He later undertook a five year PhD programme at the Lagos State University, culminating in the award of the Degree of Doctor of Philosophy (Urban planning and Geography), with his thesis subject, “Housing Policy AndThe Dynamics Of Housing Delivery In Nigeria UpTo 2008: Lagos State As Case Study”. A seasoned Architect, who started his own architectural practice in 1976. Dr. Lanre. Towry-Coker has originated numerous prestigious buildings all over Nigeria and has won numerous competitions. He was one of the original planners of Abuja and takes credit for originating the initial concept of the first hotel in the relocated Federal Capital, Abuja Sheraton Hotel (now re-christened NICON Luxury Suites Hotel) and won the competition to design the Abuja Conference Centre both of which were completed. Not long ago he was adjudged the best entry in an international competition (WHICH ATTRACTED A TOTAL OF 110 ENTRIES) to design

the World Bank Resident Mission Headquarters, and Residences in Abuja, which was commissioned. He has in his professional career designed and supervised several major buildings all over Nigeria, and trained over 150 archtects. A past Chairman of the Public Relations Committee and International Relations Committee of the Nigerian Institute of Architects (NIA). Dr. Lanre. Towry-Coker has led numerous delegations of the NIA to different types of organized parallel international and regional professional bodies. He was NIA’s representative at the World photo – voltaic association arranged by the International Union of Architects and led the Institute’s delegation to a forum held in Australia under the auspices of the Commonwealth Institute of Architects. More

recently in 1997, he was the head of a Nigerian mission to the United States Building Business Symposium. He is an ex-member of the Lagos StateTenders Board. In 1999, Dr. Lanre Towry-Coker was appointed the pioneer Honourable Commissioner for Housing in Lagos State. He served as a full cabinet member for 4 years, and subsequently was a key adviser to President Olusegun Obasanjo, before returning to the private sector in 2003. He was a Member of the Presidential Committee on Housing and Urban Development, inaugurated by the President Commander-in-Chief of the Armed Forces, Chief Olusegun Obasanjo, in 2001-2002. During his tenure as Hon. Commissioner he completed no less than four large abandoned estates and initiated another ﬁfteen housing estates in Lagos State. Dr. Lanre.Towry-Coker, entered partisan politics in 1992 when he contested the Lagos Central Senatorial Seat under the banner of the former Social Democratic Party (SDP). He has over the years authored different publications on wide-ranging topical subjects which are of timeless relevance. These include ‘Towards a Lagos State Environmental Protection Agency’ (a seminar blue print), “Low-income Housing”, “Technology Transfer: The Construction Dimension” and “The Metro –Line Affair (a review / plan for mass Transportation in Lagos State”). In 2011, he published a 350 page-book titled “Housing Policy and the Dynamics of Housing Delivery: Lagos State as Case Study” to coincide with thirty-ﬁve years of architectural and urban planning practice. A much traveled individual whose professional practice has taken him to no fewer than 36 countries scattered all

over six continents. He is a member of the Nigerian-ASEAN Chamber of Commerce, Nigerian-British Chamber of Commerce and the Nigerian Institute of International Affairs (NIIA). A founder member of the Nigerian-German Business Council. He is also a member of the Nigerian Finnish Chamber of Commerce. He belongs to the boards of a number of companies and bodies including charitable organization like the Chris Ogunbanjo Foundation, Centre for Conﬂict Resolution and the Centre for the Promotion of an Industrial Society, United Way Nigeria, where he is a member of the Governing Board. A warm and outgoing personality who in 1984 was nominated Outstanding Young Person (OYP) of the metropolis by the Jaycees (diminution of the Junior Chamber of Commerce International), a non-governmental organization. Dr. Lanre. Towry-Coker is a member of a number of charitable, social and sports clubs and organizations, notably the Lions Club International, Metropolitan Club (Lagos), Ikoyi Club (Lagos), Polo Club (Lagos), The Lagos Motor Boat Club and Yoruba Tennis Club, all in Lagos. Architect, Urban –Planner- Transportation Planner, Project Manager and Author all rolled into one, Dr. Lanre. Towr-Coker speaks French, and has studied German, Russian. He enjoys writing, and organizing in addition – doing charity work. He plays badminton, golf, squashrackets and tennis occasionally. Dr Lanre Towry-Coker was awarded a Doctorate degree in Urban Planning, after defending his thesis titled ; «Housing Policy AndThe Dynamics Of Housing Delivery In Nigeria UpTo TheYear 2008: Lagos State As A Case Study».

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DR. LANRE TOWRY-COKER. PHD RIBA. FNIA. DIPL.ARCH. ACI.Arb. OPM (HARVARD), Ph.D (Planning and Geography)

country focus | nigeria

RegiOns

Diversity in all its states

A breakdown of Africa’s largest economy into its 36 states shows striking differences. Poorer states need to expand their revenue bases to catch up

aving become Africa’s largest the lack of processing facilities. A weak economy with a gross domestic industrial base holds back job creation product (GDP) of more than and deprives Benue State of potential $500bn this year, Nigeria has been living tax revenue. According to state governor up to its claims to represent the continGabriel Suswam, as much as 90% of govent’s diversity – economically, politically ernment revenue goes to paying salaries. and culturally. That diversity becomes To balance budgets, many states take bank loans and issue bonds, which are clear in any research on conditions in serviced from their monthly Nigeria’s 36 states. allocations. “These debt over“While Nigeria’s rise is well hangs weigh heavily on the documented, little is known monthly allocations due to the about the composition of states, preventing them from its state economies,” noted meeting their minimum baRenaissance Capital in a desic obligations to the citizens,” tailed report last year. The reIn 2012, Lagos port found big differences in generated more Elias Mbam, chair of Nigeria’s incomes and social conditions than double the federal revenue allocation across states. Primary school body, said in 2012. tax revenue of completion rates vary widely This unleashes a vicious the 19 northern cycle of debt and dependbetween north and south, as Nigerian states does life expectancy. ency on the centre. One way combined Lagos – the state with the out would be for the states to expand their revenue bases by largest share of GDP – has exattracting new investment. Simplified panded its tax base and set up lucrative land policies and infrastructure upgrades but controversial public-private infracould go a long way towards bringing structure partnerships that other states in investors. have copied. A survey of 29 African cities published the impact of oil revenue by the UK’s Economist Intelligence Unit Monthly oil revenue allocations from last year argued that paying attention to the central government account for only the demographic profile of African cities about a third of revenue for Lagos State. That is far lower than most other states. TheNationalBureauofStatisticsreported in 2012 that Lagos generated more than double the tax revenue of the 19 northern Nigerian states combined. Without the monthly allocations from the federal oil revenue, most states would be insolvent. Eight states are classified as oil producers, which earns them an extra shareofrevenuefromthederivationfund. These relatively high oil revenue allocations have meant that productive sectors such as manufacturing and agriculture have largely been neglected until now. In Benue State, known as the country’s food basket, copious amounts of fruit go to waste every year because of

could reveal “interesting market opportunities”. Lagos, Abuja, Port Harcourt and Ibadan made the list. Port Harcourt is home to what is claimed to be the largest gated, luxury real estate development in Nigeria. This collaboration between the state government and private developers is due for completion in 2015. Abuja had a per capita incomemore than double the national average, according to Renaissance Capital, before the government announced the results of this year’s GDP rebasing. Private equity firm Actis is investing in a 27,000m² riverside mall in Abuja, also due for completion in 2015. regional groupings

For state governments, there could be strength in numbers. States have joined together to form regional economic groupings. Under the Development Agenda for Western Nigeria’s (DAWN) strategy, the goal is for “closer integration of neighbouring south-west states as the first step in creating a larger regional market for development, trade and investment.” Similar groupings have emerged, including the BRACED Commission – an acronym derived from the names of the six member states in the oil-rich Niger Delta – and the South East Nigeria Economic Commission. The six northeastern states – three under a state of emergency due to the onslaught of Boko Haram – came together last December to host a joint economic summit, a possible prelude to a formal grouping. ● Tolu Ogunlesi in Lagos

Gwenn DUBOURTHOUMIeU fOR ja

Lagos is thriving on successful tax collection and lucrative public-private partnerships the africa report

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profile

Godswill Akpabio Governor, Akwa Ibom State

SonAL KAntArIA for tAr

A party man par excellence Akpabio is campaigning for the 2015 senatorial elections in a state that is crucial to the ruling pDp. He talks to The Africa Report about Akwa iborn’s transformation and the party’s prospects

olding court at London’s opulent Dorchester Hotel, governor Godswill Akpabio explains the lengthy economic strides that Akwa Ibom State has taken under his tutelage. Sporting a tailored dark suit with matching red tie and handkerchief, Akpabio does not hide his light under a bushel: he describes himself as Nigeria’s foremost developmentoriented politician. Akwa Ibom has seen, he says, beaming, “an uncommon transformation” from a state that had produced mainly civil servants and home helpers to a place with a “new economic ambience”. It has free education, gas-fired power plants and grand plans for a petrochemicals complex and a new deep-sea port. Down the corridor in the London hotel, staff are setting tables for a private banquet in Akpabio’s honour. It was delayed a month, apparently to accommodate a visit by President Goodluck Jonathan to Akwa Ibom to inaugurate two billion-dollar energy projects.

rally the troops. A year later, the PDP is back on the offensive, and Akpabio is taking the credit. “We’ve been able to answer the yearnings of the people in all facets of life,” Akpabio tells The Africa Report. “From the education sector to the health sector all the way down to good infrastructure [...] that’s why the people call it an uncommon transformation.” In fact, the “uncommon transformation” line comes from Akpabio’s energetic and well-financed political campaigning. After two terms as state governor, he is now standing as a candidate for state senator in next February’s elections,andhedoesn’texpecttolose.

Akpabio owns a Bombardier jet, estimated cost $45m, and a luxury bullet-proof van

rallying the troops

In the hierarchy of the loyal in the ruling People’s Democratic Party (PDP),Akpabioisnearthesummit. When six state governors broke away from the PDP last year and formed a rival faction Akpabio became chairman of the PDP Governors’ Forum with a mandate to the africa report

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“My people believe that my chances are very high. They think mychancesareover90%,” Akpabio says. Some of the confidence he exudes comes from having closely hitched his political fortunes to the incumbent party and president. AkwaIbom,oil-andgas-richand inthesouth-east,isoneofthestates the PDP must win to achieve national victory. And it has the funds to make that possible. Last year, the state’sshareoffederal-government revenuewasN260bn($1.7bn)–the biggest allocation in the country,

accordingtofinanceministerNgozi Okonjo-Iweala. Akpabio has a reputation for spreading state largesse. Some of this he has used to attract investors such as Frontier Oil and Seven Energy. Their Uquo gas-processing project is set to generate 1,000MW of power, more than a quarter of current national capacity. In the sameleague,QuantumPetrochemical,establishedbytheformerchief executive of Zenith Bank, Jim Ovia, is to build a $1.5bn petrochemicals plant at Abeno. splashing cash

Elsewhere, the Akpabio method is more contentious. His entourage splashes cash around at naming ceremonies, sports and social events. In 2012, Akpabio bought a Bombardier jet, estimated cost $45m, and a luxury bullet-proof van. A plan this year to award the governor and deputy governor pensions of around N200m a year for life was hastily modified downward after, it is said, a discreet intervention from Abuja. Aiming to head for the Senate next year, Akpabio remains a party man par excellence: “What is happening is that the only truly national party is the PDP. I don’t want toadvocateaone-partysystem,but I can see other parties collapsing and coming to support the PDP during the election.” ● Patrick Smith in London

OandO Plc

Oando’s July acquisition makes it the top dog of indigenous producers

Oil and gas

Local firms replace majors in the Delta

As multinationals lose their stomach for the fractious onshore fields in the Niger Delta, indigenous companies are increasing their footprints

nternational oil companies (IOCs) like Shell and Chevron are selling off many of their onshore joint-venture stakes to Nigerian companies after a divestment programme attracted little interest from abroad, but opinion is divided about whether this will lead to a thriving locally owned oil sector. Antony Goldman, an oil expert and owner of PM Consulting, explains: “The government characterisesthisdivestmentprogramme as a triumph for local content and points to the capacity of Nigerian companies to manage Nigerian assets better than

Europeans and even to convince stock markets in London with successful IPOs [initial public offerings], but there are well-placed people in Nigeria who are more sceptical. They see the IOCs jumping before they are pushed from assets that they regard as marginal or peripheral for prices that appear to be out of step with market value, with speculation over the sourcing of some of the funds that have gone into financing these deals.” Two high-profile Nigerian operators, Oando and Seplat, illustrate some of the elements of the debate about the future

of the industry. Oando has gone from producing a few thousand barrels per day (bpd) to more than 50,000bpd following its much delayed July acquisition of the lion’s share of ConocoPhillips’s Nigerian assets. The company claims the largest reserves of any indigenous company and targets 100,000bpd of oil production within five years. Seplat, in contrast, has not yet built on the optimism generated by its $500m IPO on both the London and Nigerian stock exchanges in April. The company led by Austin Avuru has the rights to 30,000bpd produced from onshore assets mostly acquired in 2010 from Shell. They include stakes in oil-mining licences (OMLs) 4, 38 and 41. However, a more recent acquisition holds serious risks for the company. Seplat, along with indigenous companies Amni Petroleum and Belema Oil, agreed in late 2013 to purchase Chevron’s 40% stakes in Niger Delta OMLs 52, 53 and 55 for $800m. The prior frontrunner for the deal, local company Brittania-U, has delayed the deal through litigation, claiming its bid for all three OMLs was unfairly rejected. The delay is problematic given the rationale for Seplat’s IPO: to acquire additional assets and invest after modest debts are paid from the IPO funds. Seplat has also been unsuccessful in its bid for assets Shell is offloading. This time the catch was the hefty price. Shell is set to earn around $5bn from the sale of Niger Delta OMLs 18, 24 and 25 and the jewel in the crown OML 29. Those deals are going ahead following the execution of sales agreements in August. As with Chevron’s Niger Delta assets, indigenous buyers are set to profit – even if industry experts believe the sellers are obtaining top dollar. multi-billion purchases

It is unclear whether Shell and the local bidders will face the delays that Oando and ConocoPhillips experienced in obtaining approval from powerful petroleum minister Diezani Alison-Madueke. Taleveras and Aiteo look set to take OML 29 for around $2.8bn; Mart Resources and Midwestern Oil & Gas are in line to pay $1.2bn for OML 18; and Pan Ocean plans to secure OML 24. The pending Shell and Chevron sales should certainly change the game, where the IOCs account for the vast majority of Nigeria’s more than two million bpd in oil production. The Shell fields produced approximately 90,000bpd in 2012.

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Estimates suggest that Shell’s OML 29 could produce up to 170,000bpd within five years and as much as 300,000bpd thereafter. This reflects the view that the acquirers will be focused on maximising output rather than being distracted by opportunities elsewhere – a charge levelled at the majors. where is the expertise?

Only a few indigenous producers – including Seplat, Oando and Amni Petroleum – currently produce more than 10,000bpd. A Nigerian joint venture

between Shoreline Power Company and Jersey-headquartered Heritage Oil produces around 15,000bpd. It will take additional divestment and production increases from their existing assets for Nigeria’s oil companies to account for 20% of Nigeria’s oil production and 50% of gas production, targets that Seplat’s Avuru says are achievable by 2018. Indigenous production faces a number of unknowns, including the much-questioned expertise of Nigerian stakeholders and operators. Whereas Oando and Seplat, among others, have

respectable industry expertise, albeit less offshore, energy-trader bidders like Taleveras have meagre upstream experience. So little, in fact, that oppositionists have suggested Shell’s preference for Taleveras and Aiteo indicates foul play. Continued support from the regulatory authorities and passage of the delayed oil bill remain other wild cards. Although government officials say the Petroleum Industry Bill will increase investment, a number of the IOCs are unhappy at some of its provisions. ● Martin Yeboah in Lagos

Wale Tinubu

Chief executive officer, Oando

The market now understands that developing oil deposits in Nigeria is not just reserved for foreign companies TAR: You have finally taken control of the ConocoPhillips assets in Nigeria. Why did it take so long? We signed in December 2012, but the launch date was September 2013. Our market cap at the time was $300m, and we had to absorb a company that was worth $1.7bn. It was always going to be quite complex to raise the funding. We did three rounds of equity in tranches of $350m, $200m and $250m, and three rounds of debt financing of $450m, $250m and $100m. This took time. We had some regulatory delays, which was inevitable. It took another six months to get consent from the regulator. But what is six months when these things are going to be producing for the next hundred years? The deal gives you the Brass River oil terminal, the Kwale-Okpai gas plant and the associated pipeline network. What opportunities does that bring? These facilities are designed for 300,000 barrels per day [bpd] of production, and we the africa report

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are only currently at How do you now fit into the What does it say about 100,000bpd, so there is a lot Nigerian energy landscape? the Nigerian banking of latent capacity available. It’s transformational because sector that it could follow That’s important when this makes us the largest you on this acquisition? we seek to ramp up indigenous producer. We are Nigerian banks have come production. The facilities often the largest indigenous reserve of age. With every deal we take a lot longer to develop holder by far, and it makes do, we de-risk the Niger Delta. than drilling a well. You are us the first indigenous Among those who helped talking about challenging company to be a joint-venture us are FBN, FCMB, Diamond terrain and swamp. With [JV] partner with the NNPC Bank, Ecobank and Zenith today’s security concerns, [Nigerian National Petroleum Bank. Nigerian banks brought it’s good to know that it’s Corporation]. The JV status nearly half of the total financing already in place. We was reserved for the majors and were ready to give more have our own export pipeline and we will be the first if the international banks were and terminal, so we don’t indigenous JV partner with unwilling to take the risk. have to pay handling charges an interest in several blocks, The market now understands to the majors, which not just a farm-in on one block. that developing oil deposits oftentimes is very expensive. We have “We will be generating cash flows of over 40 different up to half a billion dollars net annually” discoveries that have been drilled, mapped and are available Are you ready for all the in Nigeria is not just reserved to be linked into the existing associated cash calls that for foreign companies. Local production system. We come with that? banks have given their backing also have a 480MW power It’s a mature asset, and to our company because plant, with phase two already those cash calls are already we service our debts and pay approved on the same part of our financial planning. dividends to global location, to off-take gas from It runs right now at around shareholders. We have Asian the same gas fields. We $25m a month. We will banks in our consortium, can inject this power into the be generating cash flows banks from America and lots national grid, so there are of up to half a billion dollars of Europeans who say: a lot of things from the net on an annual basis, “We trust this company.” ● infrastructural side that will so we are more than ready Interview by help us exploit this opportunity. for the cash calls. Nicholas Norbrook

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MArk LENNIhAN/NBC/AP/SIPA

interview

I am Théthé Nzoka Rice Farmer Kingabwa DRC

We have learnt that Africa can help us. GrowinG toGether.

eineken has had a close relationship with Africa for more than one hundred years. in this time, we’ve learnt the importance of partnering for growth. To this end, we are committed to sourcing 60% of our agricultural raw materials from farmers in Africa by 2020. Today, collaborative projects are flourishing in nigeria, Sierra-Leone, egypt, Rwanda, Burundi, ethiopia, South Africa and the Democratic Republic of Congo (DRC). We launched our rice project in the DRC in 2009, together with the Dutch Government and nGO Partner eucord. An extensive programme has been put in place to train smallholder rice farmers and tens of thousands of them have been reaping

the benefits. From 2009 to 2012, Heineken has redirected 26 million euros to the local economy. During this time, both total rice production and yield per farmer increased by 62%. And in kinshasa alone, the average income per farmer increased by 323%. Heineken has also been reaping the benefits. This successful collaboration between community and our company has helped create a sustainable source of raw materials, a shorter supply chain, a reduction in transport and importation costs and a lower carbon footprint. We truly are growing together.

Many people still believe that Africa needs help. We have learnt that Africa can help us.

country focus Sierra Leone Slow transformation in

Chris JaCkson/Getty imaGes

Freetown

A decade after the civil war ended, Freetown is rebuilding

Six months after his election for a second term, President Ernest Bai Koroma is telling the population to be patient as new iron-ore mines and a drive for oil exploration improve the economy more slowly than predicted the africa report

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By Gemma Ware in Freetown

s the rainy season arrives, the streets of Freetown are beginning their transformationfromsunny and dusty thoroughfares to fast-flowing rivers of muddy red water. The country’s economic growth has been like one of those early rainstorms: despite a flood of high percentages, most of the benefit has been quickly absorbed by a country thirsty for jobs and investment. Running on promises of job creation and infrastructure spending, President

Ernest Bai Koroma and his All People’s Congress (APC) were re-elected for a second term in November 2012 with 58.7% of the vote. It was a largely peaceful poll, praised by international observers. “Naturally we’re relieved that we’ve won,” says Koroma’s chief of staff, Richard Konteh, “but we have a challenge in ensuring that we keep our people happy, that we fulfil the mandate that we set out for ourselves to achieve.” However, as in neighbouring Ghana, the opposition Sierra Leone People’s

country focus | sierra leone

GUINEA

Makeni

SIERRA LEONE

FREETOWN

Kenema

LIBERIA

Atlantic Ocean

100 km

KEY FACTS PoPulation

6 million

urban PoPulation

38%

life exPectancy

adult literacy

43%

Mobile Phone Penetration

36%

Size of budget

$739m

annual inflation (2012)

12%

foreign direct inveStMent flowS doing buSineSS ranking

$49m

140 (up 8 from 2012)

18.5

Inﬂation GDP growth %

16.7

12.1 6

7.2

11.6

2011

7.1

2012

2013

6.9

2014

SOURCE: AFRICAN ECONOMIC OUTLOOK AFDB; OECD

gdp growTh/inFlATion

ExporTS/imporTS Exports (% of GDP) Imports (% of GDP)

55.9

12.7

2011

48.5

44 46.6

2012

2013

2014

SOURCE: AFRICAN ECONOMIC OUTLOOK AFDB; OECD

up the Agenda for Prosperity, a five-year Party (SLPP) and its candidate Julius poverty reduction-strategy that follows Maada Bio, a former junta leader, challenged the results, filing a petition at the the Agenda for Change. A draft seen by end of November against national elecThe Africa Report set a target for Sierra Leone to achieve middle-income status tion commissioner Christiana Thorpe by 2035, which would require the ecoand the APC on the basis of ballot stuffnomy to triple in size. ing and irregularities in vote counting. The supreme court threw out the case new borrowing strategy on 14 June on proceedural grounds. With less money than expected for now, Bu-Buakei Jabbi, a barrister and SLPP thegovernmentislookingfornewwaysto member of parliament, believed the keep its promises and is pinning its hopes party had “ample evidence” to win the case. As The Africa Report went to press, on the private sector. Finance minister the SLPP leadership was considering its Kaifala Marah implemented a ‘no new next move. The party – itself in the midst domestic borrowing’ rule in January that of reorganisation – was divided over takhas dramatically lowered interest rates on ing the case to court. domestic debt in an effort to stimulate Fuelled by revenue from foreign incommercial bank lending to the private sector (see page 62). “The strategy is to isvestment in iron-ore and diamond suealong-termbond,” Marahsays,andhe mines, Sierra Leone’s economy grew is looking to launch a 200bn leone ($46m) 15.2% in 2012, according to the central infrastructure bond “sometime in July”. bank, which expects growth to slow to The government is also planning to es13.2% in 2013. “Impressive as it still is, tablishasovereignwealthfund,calledthe it could have been better,” says Bank of Sierra Leone governor Sheku Sesay. The Transformation and Development Fund government’s original prediction was (TDF). “There will be special procedures 52%, but companies only produced half for ensuring that TDF expenditure only as much iron ore as was projected and goes towards projects and programmes ore prices plummeted. “Luckily, we did which meet pre-determined criteria for not make over-ambitious expenditure bringing about transformation and deexpectations,” he says. Inflation, which velopment,” says Marah. stood at 16.6% in 2011, fell To achieve middle-income to 11.4% in 2012. Most Sierra Leoneans status by 2035 would require have seen little of this new the economy to triple in size growth. The middle-class consumerism sweeping the continent is yet to arrive. While the numMineral revenue is still small (see page ber of people living in absolute poverty 60) and substantial oil revenue is still a in urban areas dropped to 30% between long way off. Last year’s awarding of eight 2003 and 2011, 72% of the rural populaoffshore blocks raised eyebrows when the tion still lives on around $30 per month. governmentputsomebidderstogetherin forced marriages. Kosmos Energy, which no jobs for youth won a block with African Petroleum, a InanalleywayoffWilkinsonRoadinFreeventure backed by Romanian-Australian town next to the new building housing businessman Frank Timis, quietly pulled away. Adekunle King, senior legal officer the five-month-old National Minerals at the Petroleum Directorate, admits Agency (see page 60), two young men the government could have received are studiously hammering away at the more money if it had waited until finds chain of a broken generator. Watching on, Milton Sam, a 38-year-old pastor and in four existing blocks became commerformer carpenter, says things are hard. cially viable. Anadarko and its partner “We have all these minerals, but they are Tullow are still assessing data. “[The new not actually capacitating the economy licences] increased the government take,” says King, explaining that the previous of this country,” he says. “There are no four blocks came without government jobs for the youth. Young guys are dostakes and signature bonuses. ing nothing,” Sam says, bemoaning the standard of education for his two young On the political agenda is a review of children. “[The President] is trying but the 1991 constitution, which is expected to take around two years. State House he needs to do more.” The government has spent much politstrongly denied that Koroma was eyeing ical energy since the election on drawing changes to allow him to run for a third the africa report

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Rebecca blackwell/aP/SIPa

sierra leone | country focus

Koroma’s US trip in March was an opportunity to raise his regional profile

term in 2018. Other reforms include a review of the public procurement act, a freedom of information bill and ongoing reform of the public sector. Privatisation will also be another tool to raise cash. So far the government has chosen management contracts rather thanoutrightprivatisation:Lebanesefirm MDIC manages state-owned telecoms firm Sierratel and French group Bolloré runs Freetown’s container terminal. The government intends to list its 51% shareholding in Rokel Commercial Bank on the fledgling stock exchange, but progress on other privatisation deals has stalled. struggling on many fronts

SierraLeone’sprivatesectorhasstruggled to take advantage of foreign investment. “There’s not a single Sierra Leonean bank funding anything in the mining sector,” says Claudius Bart-Williams, chief executive of consultancy Pennarth Greene. Although a couple of local companies are winning contracts in the extractive sector, such as drilling company EDAL and engineering group CEMMATS, they are the exception. Onlookers suggest the government is sensitive about losing control. During the war years it was locally-owned businesses that sustained the country when foreign firms fled. International donors still play a large role. They consult on and help to draft key government policy documents. They also provide a large share of government financing: 22.2% of total revenue in 2013. A milestone is approaching in March the africa report

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2014: the United Nations (UN) Integrated Peacebuilding Office, which has helped manage the post-conflict transition since Sierra Leone’s civil war ended in 2002, is due to complete its draw down. It will transfer many of its responsibilities to the UN Development Programme. Sierra Leone will struggle to meet the UN Millennium Development Goals (MDGs) by 2015. There was a 29.6% reduction in infant mortality between

1990 and 2010, although it is still the highest in Africa, at 114 per 1,000 deaths, according to the 2012 progress report on the MDGs. The maternal mortality rate is also one of the highest, with 857 out of every 100,000 women dying in childbirth. A free maternal healthcare programme is making progress, but poor rural roads mean women often get to clinics too late. The poor performance of the health system was compounded by the disappearance of more than $1m earmarked for vaccinations from the GAVI Alliance between 2008 and 2012, causing the programme’s suspension. Anti-corruption commissioner Joseph Kamara indicted 29 people, and cases are progressing well through the courts. Kamara explains that there were 29 convictions and 13 acquittals for corruption cases in 2012. Hesaysheisfrustratedwiththetreatment of cases by the judiciary, most recently in the case of Momoh Kemoh Konte, a vice-presidential aide on trial for taking a bribe in last year’s ‘Timbergate’ scandal, who was acquitted in late May. On 6 June, the courts handed down two custodial sentences to officials from the finance ministry. They were the first custodial sentences for corruption since 2004. But a Ugandan judge, one of two Commonwealth judges working in Sierra Leone, delivered them. “The fact speaks for itself,” says Kamara. ●

chinese promises are on the cards Two Chinese logos have appeared on the slew of boards advertising road rehabilitation projects around Freetown: CiF and CRCC. For now, the space left for the start and completion dates are blank. China is an old hand at building infrastructure, including the national stadium and the Youyi building, but two memorandums of understanding (MoUs) could signal a new dynamic. Announced on 8 november, the MoU with a consortium led by

the China international Fund (CiF) and the China Railway Construction Corporation talked of investments in infrastructure, agriculture, mining and petroleum. CiF has signed resources-forinfrastructure deals in Angola and guinea, where infrastructure promises have been slow to materialise. Details in sierra leone are still scant, and officials stress that an MoU does not signal a deal has been done. however, finance minister Kaifala Marah

told The Africa Report: “if company A is getting something wrong across the border, it doesn’t necessarily mean they will get it wrong here.” The government signed another MoU in May with China Kingho energy group. The firm has an ironore exploration licence, but the president’s chief of staff Richard Konteh revealed Kingho is looking for an “ore-forinfrastructure type of arrangement” and that “the government is keen on it.” ●

Sierra Rutile focuses on long-term value for all stakeholders With the prospect of an improved economic outlook for both China and the US on the horizon, Sierra Rutile’s programme of expansion, which will see its natural rutile output more than double by 2015, has ideally positioned the company to capitalise on predicted increases in global demand for titanium dioxide (TiO2). Natural rutile – Sierra Rutile’s main product – is a raw form of TiO2, used to manufacture white pigment for paint, plastics and paper. It is a high-grade feedstock, making the manufacturing process cheaper, more efﬁcient and more environmentally friendly. Based on improved global growth and demand for pigments by the paint industry, analysts are more positive about the prospects for higher titanium dioxide feedstock prices. As part of its strategy of creating longterm stakeholder value, Sierra Rutile has focused on investing in growth and improvement, and this year it has ploughed back most of its record 2012 pre-EBITDA earnings of US$107.8 million into improving and developing its mining operations, and increasing exploration capacity. This has included the new Lanti Dry Mining operation – commissioning was completed earlier this year, and a second dry mining project at Gangama,

which is at the feasibility study stage. These operations are expected to deliver 30-35,000t and 83,400t of rutile respectively and increase the company’s annual rutile production to over 200,000t by 2015 – a 2800% increase on the company’s ﬁrst postwar shipment of 7,000t in 2006. The company’s exploration capacity has also been signiﬁcantly increased with the purchase of three drilling rigs to sample underground mineral deposits, and analysis equipment for its laboratory. A commitment to community development is a further plank of Sierra Rutile’s strategy of long-term stakeholder value creation and the company’s investments in this area exceed its statutory obligations. Its medical facility treated over 22,000 people last year, and offered free health education, mosquito nets for the prevention of malaria, and HIV testing. The Sierra Rutile Foundation, set up and funded by the company, provides support and funding for community development projects such as school buildings, court houses, a local radio station, grain storage, sanitation, well drilling and generator sets for local health clinics. It also supports a local technical college which provides training to over 300 students.

Taking responsibility for legacy disturbed land in its area of operations has been a natural outcome of Sierra Rutile’s respect for people and the environment; and in 2011, the company began the process of returning all mining-affected land to a useable state. To date the company has rehabilitated 141 hectares of disturbed land last year, 20 hectares above its target. This has included planting trees with economic potential such as acacia, neem, cashew and coconut, as well retaining some of the dredge lakes in consultation with the community for aquaculture projects. Looking to the future, the company is developing agricultural opportunities within Sierra Rutile land, to provide substantial employment opportunities for the surrounding population. CEO, John Sisay says: “Ensuring Sierra Rutile can deliver long term value for all our stakeholders is our primary objective. The efﬁcacy of our strategy of improving the company through low-capex growth projects and enhanced efﬁciency is demonstrated by our increased production potential, making us ideally placed to capitalise on the TiO2 market when it returns to full strength, and safeguarding our ability to make a lasting and positive contribution to the communities in our area of operations.”

30 Siaka Stevens Street. 2nd Floor Access Bank Building, Freetown, Sierra Leone.

www.sierra-rutile.com

country focus | sierra leone

2 PeoPle to Watch

Freetown’s reformers, auditors and influencers With public sector reform, adjustments to the mining sector and a constitutional review on the agenda, these are the people at the forefront of change

s revenue management remains a top political priority, auditor general Lara Taylor-Pearce (1) is standing tough. The conclusions of her 2011 audit of public accounts, ministries, agencies and schools were scathing. Her 290-page report, released in December 2012, was clear and unabashed about the lack of financial accountability. TaylorPearce had the full support of donor countries, which had been clamouring for an accurate audit. Tasked with increasing revenue and enforcing legislation, the new head of the National Minerals Agency (NMA), Sahr Wonday (2), could do with some of Taylor-Pearce’s determination. A mining engineer who worked for the national diamond company and Sierra Rutile, he is new to the quagmire of government agencies. The United Kingdom’s Department for International Development and the World Bank supported the creation of the NMA, but Wonday wants his agency to become self-funded.

deterred after failing to win an oil licence during last year’s bidding round, Mano Holdings submitted a bid for the stateowned National Insurance Company, which is being privatised. Within government, the November 2012 election brought little in the way of new blood. Former finance minister Samura Kamara now has the foreign affairs portfolio, while President Ernest Bai Koroma moved former chief of staff Kaifala Marah (3) to the finance ministry. He is driving the government’s new Agenda for Prosperity (see page 49). Information minister and former journalist Ibrahim Ben Kargbo, who owns The New Citizen newspaper, now has an even stronger role in Koroma’s circle as a special adviser. Another newspaper publisher, Sylvia Blyden, has become a special executive assistant to the president. She changed her party allegiance in the run-up to the 2012 presidential campaign and appears to have been rewarded. Blyden takes to Facebook to extol Koroma’s virtues, often posting hateful comments about the opposition, calling her detractors ‘mammals’ and stoking tribal fires. It is unclear what her job description is, but she has called for local journalists to be rounded up on criminal libel charges. With public-sector reform back on the agenda, Koroma appointed Sidratu ‘Sidi’ Koroma, who founded human resource consultancy Positive Change, as head of the public sector reform unit. She has the will and determination to make changes, but she may not have the muscle. The office of Franklyn Bai Kargbo, the attorney general and justice minister, will oversee the planned review the 1991 constitution. Within the opposition Sierra Leone People’s Party (SLPP), jostling is under-

As politicians call loudly for the renegotiation of the government’s contract with African Minerals Ltd (AML), it is the executive chairman of its Sierra Leonean subsidiary, Gibril Bangura, who is leading the lobbying charge. Bangura has remained in place amid a raft of management changes, including the arrival last July of Keith Taylor-Pearce’s audit was Calder as chief executive, as AML’s founder, Frank scathing about the lack Timis, stepped back. With of financial accountability a large shareholding in the parent group, Bangura is a well-known figure in the region and will way for the positions of secretary general play a key part in AML’s push to expand and chair ahead of an August convention. Current chair John Oponjo Benjamin into Guinea and Liberia. is likely to be challenged. Names of posClaudius Bart-Williams, chief execsible contenders include former SLPP utive of consultancy Pennarth Greene, continues to gain influence. Unassuming secretary general Prince Harding and butwellrespected,heisthebrainsbehind deputy chair Chief Somanu Kapen. The Mano Holdings, a company backed by backing of failed presidential contender Julius Maada Bio may prove crucial. ● around 250 Sierra Leoneans who have Gemma Ware and given or pledged money to create more local participation in the economy. UnKimberley S. Johnson in Freetown the africa report

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ADVERTORIAL

National Telecommunications Commission

TRANSFORMINGTHE TELECOMS ENVIRONMENT IN SIERRA LEONE… THE ROLE OF THE REGULATOR

Arc Siray Alpha Timbo, Chairman and Commissioner, NATCOM

Mohamed Bangura, Director General, NATCOM

The National Telecommunications Commission (NATCOM), Sierra Leone’s national telecoms Regulator, was established by an Act of Parliament in 2006, amended in 2009 and currently being reviewed. The Commission started performing its mandate in 2007 enhancing an Information, Communication and Technology (ICT) enabled environment. NATCOM is made up of a Board of seven Commissioners appointed by the President of the Republic of Sierra Leone for a limited tenure of not more than ten years. Chairmanship of the Board/Commission is currently occupied by Arc Siray Alpha Timbo. Under the astute Chairmanship of Arc Alpha Siray Timbo, the Commission has made commendable strides over the last few years in a bid to regulate and aid the wave of unprecedented sector transformation. The sector has witnessed progress towards enhancing greater accessibility, availability and usage of ICT. In February 2013 HE President Ernest Bai Koroma commissioned the Africa Coast to Europe (ACE) fiber optic cable. Another significant sector development is the adoption of the ECOWAS Wide Area Network (ECOWAN), whereby the capital Freetown, will be linked to other ECOWAS cities via 400 plus kilometers ECOWAN fiber network.

13 Regent Road, Hill Station, P.O. Box 121, Freetown, Sierra Leone Tel: (+232 22) 235 121 Fax: (+232 22) 232 791 Email: chairman@natcom.gov.sl

www.natcom.gov.sl

Supported by the International Telecommunications Union (ITU) to ensure Universal Access to telecommunication services in rural communities, the Commission established Multi-purpose Community Tele-centers (MCTs) in selected rural districts of the country providing mainly internet and telephony services to otherwise un-served and under-served populations.

In a related vein, the Commission provided wireless connectivity at the Lungi International Airport and at Fourah Bay College, University of Sierra Leone (USL) campus as part of efforts to bridge the digital divide. The facility was intended to make internet service accessible to travelers passing through the international airport; and to aid learning, teaching and research processes on campus respectively. Cyber Security being a major challenge, the Commission has set up a Cyber Security Task Force working with Electronic Crime Unit of the Criminal Investigations Department (CID) to tackle SIM Box Fraud and enforce SIM Card Registration. Work is ongoing to develop the legal framework that addresses the specific issues related to Cyber Security, as part of the ongoing review process of the Telecommunications Act 2006 as amended, which would also capture regulations on Numbering Plan Management, Collocation, and Interconnection among others. Sierra Leone has also been selected by the ITU to benefit from funding for a School Connectivity project that will benefit ten high schools in the first phase. NATCOM is committed to forging ahead with sector development to include the promotion of fair competition and consumer protection; and to ensure that the ICT sector is one of the most crucial in support of national advancement through the “Agenda for Prosperity”.

By Abdul Kuyateh Public Affairs Manager National Telecommunications Commission (NATCOM)

country focus | sierra leone

interview

that when you receive, you have to report. Now we have developed a system, mechanisms such that we improve on the ongoing reporting and monitoring sector of this EITI. There is 100% political will. That is why in the wisdom of his excellency the President, he disengaged EITI and brought it under his office.

Alhaji Minkailu Mansaray Minister of mines and mineral resources, Sierra Leone

We are in the process of reviewing the contracts Using a five-year renegotiation window, the Freetown government is establishing new mechanisms for transparency TAR: What is the relationship between the newly formed Na tional Mineral Agency (NMA) and your ministry? AlhAji MiNkAilu MANsARAy: The NMA is a creation of the Ministry of Mines and Mineral Resources with special responsibility to handle technical issues: to monitor, to regulate, to implement policies that develop or are created by the ministry itself. They will be solely responsible for technical matters. It will ensure that in the process of them carrying out their activities, the government increases revenue generation. It will also ensure that the communities benefit out of the natural resources and ensure that the investors also benefit as a result of their investment. Are you in the process of re negotiating the contracts origin ally signed with london Mining and African Minerals? For a period of up to five years, contracts are subject to review. We acknowledge that we have to protect and secure the tenure of miningcompanies[…].You’retalk-

geMMa ware

ing about specific companies. We are in the process of reviewing as part of the end of their five-year term. We are through with some [other companies] and we will be monitoring the timeline such that when it is really due, we will engage the companies. in December, sierra leone missed its target for the com pletion point of the Extractive industries Transparency initi ative (EiTi). One of the failures mentioned was a lack of political will. how will you rectify that?

There is 100% political will. That is why the President brought EITI under his office That is not true. The failure is not as a result of lack of political will, I have to correct that. It is just an area of reporting, that was where we did not rise up to the requirement. It is an emerging procedure and we have to go to the hinterland, the rural areas to educate these people and do sensitisation, raise their awareness to realise

in May you signed a $6bn deal withChinakinghoEnergyGroup that included plans to build a port, industrial hub and railway. What does the deal contain? It is a memorandum of understanding [MOU]. Kingho has been with us for quite some time now. Our country is an attractive place for mining and investors, and we brought in their programmes; we examined the programmes very critically. We carried out due diligence and we thought we can develop an MOU to address the investment portfolio package that they brought to us. The monetary issue does not come at this point. It is an understanding between the two parties that we are going to do a,b,c,d,e and we accept you to do a,b,c,d,e. If you say your a,b,c,d,e is quantified to be $100m, so be it, but nothing comes on board or is physically transferred by way of cash. One of kingho’s proposed pro jects is an industrial park with a steel factory. When might this happen? We have an open-door policy. There are other investors that are progressively working on establishing a steel industry, [such as] Samshi. Creating a factory of that nature is highly capital-intensive. They are not producing the iron ore themselves. They will have to go into agreement with the producers of iron ore. That is another issue. For us as a government, we create the enabling environment. We can be called upon to bring the two parties together because we want the country to progress. [Samshi] are negotiating and discussing the issues. By the end of the year, they would have concluded. ● Interview by Gemma Ware

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country focus | sierra leone

Bumbuna Dam, 35 years in the making, has been riddled with problems since opening in 2009

the deal in June 2011, and the company is currently negotiating a power purchase agreement, says Joule Africa chief executive Andrew Cavaghan. Still, Bumbuna Phase II will not be complete until at least 2017, as construction is set to begin in 2014. coherent strategy

Katrina Manson/reuters

energy Private sector rushes to fill the void as dam disappoints Poor management and weak infrastructure mean that the government and companies are relying on independent projects to meet electricity demand

ith an uptick in commercial and residential construction, tourism, agriculture and mining activities, Sierra Leone needs more electricity. The National Power Authority (NPA)hasamaximumcapacityof85MW, but probably generates only a fraction of that. Electricity remains erratic in many residentialareasofFreetown,andadilapidated national grid often fails to deliver. The first phase of the government’s much-heraldedBumbunaDamhasbeen riddled with problems since it opened in 2009. The dam and corresponding plant have a maximum capacity of 50MW, but it is barely producing 25MW. Energy minister Oluniyi Robbin-Coker announced that the government would not renew ItaliancompanySaliniCostruttori’smaintenance contract for Bumbuna, which expired at the end of May. no quick fixes

“We all know the constraints in Sierra Leone,” says Kofie Macauley, chief executive of Sewa Energy Resources, a local company aiming to build a 25MW hydroelectric plant in the southern region. “Right now, if there were 1,000MW, the country would use it,” he

says. Macauley estimates that only 90MW are being generated in total, taking public and private projects together. Various new projects are underway but will take years to come online. Sewa’s goal is to serve the mining industry, particularly Amara Mining. Its $100m hydroelectric plant is expected to go online in 2016 when Amara enters the production phase of its Baomahun gold-mining project. Sewa has agreed to sell power to Amara. “We have pinpointed mining companies in that area who are desperate for energy,” Macauley says. “We’ll ensure that we satisfy the mining company fully and then surrounding villages and then the grid.” While mining companies may turn to the private sector, residents and other businesses look to the NPA. Perhaps the most significant project is the second phase of the Bumbuna hydroelectric dam. Joule Africa, a UK-based company, is developing the $750m project, which is expected to generate an additional 202MW through a new dam and plant. Joule is privately financing Bumbuna Phase II as an independent power project and is seeking to sell power to the government. The government announced

Addax Bioenergy plans to generate steam energy as a by-product of ethanol production from sugarcane. Of the 32MW produced via steam turbines from the burning of sugarcane fibres, Addax intends to sell about 15MW to the national grid, explains general manager John Moult. The plant will not be commissioned until the end of the year. The energy ministry is exploring options, Cavaghan explains. “I think there’s increasing momentum in various parts of the sector. The challenge is coordinating investors so there is a coherent energy strategy.” One issue is cost. If the government is looking for emergency power supplies, this implies emergency spending.Governmentfundsarelow,and investors with short-term solutions may have difficulty collecting payment from a cash-strapped government. Some donors and international financial institutions have focused on electricity infrastructure. The Japan International Cooperation Agency provided the Sierra Leonean government with a $14m grant in late May to install distribution lines in the capital and to rehabilitate existing networks. The African Development Bank is due to discuss a financing deal in September for a high-voltage interconnection project that would link Côte d’Ivoire, Liberia, Sierra Leone and Guinea. ● Kimberly S. Johnson in Freetown

Bumduna dam Maximum capacity in 2013 Capacity after completion of Phase II in 2017

50 MW 252 MW

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country focus | sierra leone

mining

A stutter start for iron miners AML gravely missed its predictions for output in 2012, but the country’s large miners are gearing up for expansion as smaller ones are told to use or lose their licences

tax on high profits

The government is putting the finishing touches to the new Extractive Industries Revenue Bill that would consolidate the fiscal regimes for the resource sector. The bill will also bring in a resource rent tax for “very profitable projects” in both the mining and the petroleum sector, according to finance minister Kaifala Marah. The government is also creating a minerals taxation unit in the National Revenue Authority. Iron-ore prices were at $111/tn in early June, down from around $170/tn two years ago, with analysts predicting they will hover around $120 this year due to unpredictabledemandfromChina.Atthe West African Mining Investment Summit in early June in London, a series of in-

AfricAn MinerAls

s Sierra Leone plans to unleash a new wave of regulators and tax inspectors on mining companies, large-scale iron ore miners are starting to ramp up production and are facing hard work ahead to raise finance for expansion. Sahr Wonday, director general of the newly created regulator, the National MineralsAgency(NMA),says thegovernment is still unsure exactly how much it earns from the mining sector. The numbers he has seen so far put the sector’s contribution to government revenue at just $76m in 2012. “It’s not a clear-cut figure because the revenue is collected by different agencies,” he says. The sector is traditionally led by gold, diamonds and bauxite mining, but two iron-ore projects run by United Kingdom-based African Minerals Ltd. (AML) and London Mining have come on stream in the past two years. Corporate tax breaks mean they are yet to start paying much other than 3% royalty rates.

Estimates vary, but African Minerals says it will contribute 12.5% of GDP in 2013

vestors in mining projects warned of the difficulty iron-ore and gold projects are likely to face raising finance as the market falls out of love with resource stocks. Without naming specific projects, Tom Holl, fund manager for natural resources at BlackRock, said costs “are significantly higher” than those set out in feasibility studies back in 2009 or 2010.

2013 contribution to mining royalties and licences iron ore

54%

rutile

diamond and gold

11%

bauxite

mining licences

28%

In this environment, both Wonday and mines minister Minkailu Mansaray have sought to allay alarm about the renegotiation of contracts. “The existence of the NMA doesn’t automatically trigger renegotiation of mine agreements. That’s not we are here for,” says Wonday. London Mining finalised a lengthy renegotiation of its contract last March, replacing a fixed rate of 6% income tax for 10 years with an increasing scale that will reach 30% by the 11th year of operation.

SOURCE: GOVERNMENT OF SIERRA LEONE

However, AML, founded by the colourful Romanian-Australian businessman Frank Timis, has not had its contract renegotiated after it was ratified in 2011. But there is a provision for the contract to be reviewed if there is a significant change affecting the economic balance of the agreement. “It’s time to start discussions because that obviously takes time,” says Stephan Weber, AML’s chief operating officer. He says the company is in “very open and frank discussions” with government on the issue. AML is having a better 2013 than 2012, when it missed a target to produce 20m tn, only managing 5.1m tn and causing a huge recalibration of questionable government and International Monetary Fund projections on the 2012 economic growth rate – which shot down from 52% to 15.2%, according to the Bank of Sierra Leone. Weber says AML is on track to produce 15-18m tn this year and export between 13-15m tn. tonkolili takes off

Having just finished the first phase of its Tonkolili project, a railway to a rehabilitated port at Pepel with capacity to export 20m tn, AML is talking to banks about the second phase in 2014. AML scrapped its original plan to build another port at Tagrin in favour of increasing the ● ● ● the africa report

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ADVERTORIAL

Ecobank, because the future is Pan African Having had a Sierra Leonean as the first Group Board Chairman, in the person of Dr. Thomas Hope, it was imperative that the bank established a foothold in Sierra Leone. Upon an earlier application by Ecobank Transnational Incorporated (ETI) to establish a bank in Sierra Leone, in November 2006 the group received a license from the Bank of Sierra Leone to commence operations. In six years, managed by a combination of African expatriates and top Sierra Leonean banking professionals, the bank has grown to the admiration of the populace. The bank’s growth has been enhanced by the country’s ever growing economic trends. For instance Sierra Leone has, over the past 2 years been one of the fastest growing economies in the world. In my opinion the main growth areas have been mining (chiefly iron ore), services (especially telecommunications, transportation, and financial sector), and mechanized agriculture, among others. The road transport system has improved massively given the boost in the road construction in both Freetown and the provinces. This has opened up the provinces and created more jobs in major towns like Makeni, Kenema and Kabala, etc. The country has also enjoyed a stable currency against the major world currencies. This is an indication of prudent management of the economy. It is therefore no surprise that the country has qualified for the highly competitive Millenium Challenge Corporation (MCC) Compact Award by the US Government. With improvement in energy it is expected that other sectors like manufacturing, tourism and ICT will pick up to augment the growth enjoyed over the past few years.

Also the prospect of crude oil find in commercial quantities enhances the potential further. On the back of the above positive economic trends, Ecobank has played a key role in the various sectors of the economy. As such, in six years, the bank has grown to become the 4th largest bank with total assets of SLL 388 billion as of the December 2012. The bank has remained very profitable over the past years. The customer base of the bank is over 60,000 making it the 4th in terms of customer numbers in the country. Ecobank aims to be the lead bank in Sierra Leone in the next few years by providing its customers more convenient services and greater accessibility. Another milestone in our journey was the acquisition of Procredit Bank Sierra Leone in mid 2010. The take-over was without any labour unrest or agitations. The entity runs as a full deposit taking Microfinance institution and is very profitable, a far departure from it’s hitherto loss making regime. Over the period, Ecobank introduced Saturday banking into the system and also was the first bank to site outlets on university campuses in a bid to provide access increase accessibility to banking. We have the largest network of ATMs which are Visa enabled and was the first bank to send electronic alerts via mobile phones. The customer remains central in our business. Although there is a general challenge nationwide we are making all the efforts to ensure that our customers are treated special. While the bank focuses on individual and SME clients, we also provide services to over 200 international and regional corporate names, public companies and some of the best known International NGOs operating in the country. The strong areas of the bank remains the promotion of Regional Business by facilitating

and providing payments solutions between Sierra Leone and some of its key trading partners in West Africa, such as Guinea, Mali, Senegal Gambia, Nigeria, Ghana and Liberia. Promoting locally owned companies in ﬁnancing their contracts/purchase orders in support of the local content drive by the government. In the ensuing months we will continue our mobile money drive. We also intend to deploy about 50 POS machines and over 15 new ATMs before the year ends.

We have also been very active in corporate social responsibility by giving back something to the society we belong to. Much as we have done a lot of charities, a few monumental ones are worth mentioning. In May 2011, we raised funds from our customers and friends for Mercy Ships as part of our support for their unselﬁsh devotion to the sick in Africa. In 2012 Ecobank rehabilitated the Children’s Ward of the Connaught Hospital in Freetown. Ecobank maintains it on an annual basis. We continue to pay full scholarships for 80 pupils in schools in rural Freetown. This is done annually. We have supported Save the Children in their activities and also the Freetown City Council by providing litter bins for the city on 2012 World Environment Day. We also have erected Bus Shelters for the city of Freetown in 2011 and 2012. We believe we have the best people on the market. This is evidenced in our growth over the short period we have been in existence. We hold our staff in high regard and provide them training programs of international standards. We have a multicultural environment with staff working in unison. You will ﬁnd Sierra Leoneans, Ghanaians, Gambians and Nigerians happily working together. This is an indication of our Pan-African spirit. ….and we believe the future is Pan-African.

Clement Dodoo Managing Director

www.ecobank.com

Ecobank Sierra Leone, 7, Lightfoot Boston Street P. O. Box 1007, Freetown, Sierra Leone

country focus | sierra leone

●●● capacity at Pepel to 35m tn for an estimated cost of around $2bn. The company already has $485m of that in the bank as a result of clinching a longawaited $1.5bn deal last year with China’s Shandong Iron and Steel. Shandong has an off-take agreement for 10m tn of ore per year, as well as a 25% shareholding in the Tonkolili project companies. Production has steadily increased at London Mining throughout the year at its Marampa mine, projected to be 3.33.6m tn this year, up from 1.5m tn in 2012. Meanwhile, Australia- based Cape Lambert Resources is trying to find an investor willing to take an equity stake in its neighbouring Marampa project,

which is yet to go into production. It has a ‘heads of agreement’ with AML to use its railway and Pepel port. There are 180 companies with exploration licences covering more than 70% of the country, but some are doing little in the way of exploration. Wonday says the NMA plans to free up areas for “serious investors” by the end of this year. lost receipts

In February, the Extractive Industries TransparencyInitiative(EITI)suspended Sierra Leone for failure to comply with its reporting conditions. Its 2010 EITI report, published in December 2012, found that while extractive companies

paid government $8.3bn, only $7.6bn of that was recorded to have arrived in government coffers. “The discrepancy is due to the fact that people don’t keep their receipts, the documentation processes are not among the strongest,” says presidential chief of staff Richard Konteh. He says Sierra Leone has already completed four ‘remedial actions’ demanded by the EITI before the suspension can be lifted, including reports from local councils and chiefdoms. He is confident the country will be back on track this year. In May, the government suspended 11 mining companies for non-compliance with the EITI transparency process. ● Gemma Ware in Freetown

Finance

Weaning banks off government finance A halt on state borrowing should force banks to start offering cheaper loans to the struggling private sector

ierra Leone’s banks are being forced to rethink their strategies as a government decision to stop borrowing domestically has had a knockon effect on their profits. Banks have traditionally feasted on treasury bills (T-bills) – short-term government debt returning high rates of interest. These high rates offered them little incentive to give cheap credit to the private sector – crippling small businesses’ ability to borrow. Growth of credit to the private sector slowed to 7.3% in 2012, compared to 22.6% in 2011, according to the Bank of Sierra Leone. The decision to stop feeding the banks with T-bills has had a dramatic effect on rates. By 6 June, rates that used to be more than 20% were at 4.6% for 91-day T-bills, 8.7% for 182-day and 10.2% for 364-day papers. “Since we were not offering any securities for sale […] there was competition to get them. The rates started going down,” explains central bank governor Sheku Sesay. “[Bankers] are reformulating strategies because everybody’s primary income source is treasury bills” says Claudius Bart-Williams, chief executive of financial advisory firm Pennarth Greene

Daniel Wallis1/ReuteRs

Small businesses may be the winners

and newly appointed chair of Standard Chartered in Sierra Leone. He estimates that the country’s banks on average have 50% of their assets in high-earning T-bills. “With the drop in the rates, you’re operating on a third of your previous income, maybe even a quarter of your income level of before,” he says. Bart-Williams predicts it will lead to better customer service from banks, but he worries that some may have to cut back on costly branch networks. He is confident that

19% 4.6%

Rate for 91-day treasury bills, December 2012

Rate for 91-day treasury bills, June 2013

SOURCE: BANK OF SIERRA LEONE

banks will eventually pass on the lower rates to their customers. Sesay says that the banks are already starting to offer more competitive rates to businesses and that there is real competition for customers. “It is a very interesting moment,” he says. But he is aware that the banks are now awash with liquidity and that the central bank needs to find a way of “mopping up that liquidity so that it doesn’t become inflationary.” GladysStrasser-King,presidentofSierra Leone’sChamberofCommerce,says“the private sector should [now] be in a position to go and negotiate with the banks to get very good loans.” But for now, she says, businesses have yet to see cheaper lending. Yet Strasser-King wears two hats and she is also chair of the board of the Sierra Leonean subsidiary of Nigeria’s UBA.Shesaidthebankwould“obviously” have to change its strategy now as a result of the reduction in T-bill rates, though she would not be drawn on how. ● Gemma Ware in Freetown

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www.amao-wama.org 11/13 ECOWAS Street, Freetown

THE WEST AFRICAN MONETARY AGENCY: DRIVING THE REGIONAL MONETARY COOPERATION AGENDA WITH SUPPORT OF THE REPUBLIC OF SIERRA LEONE

ADVERTORIAL

As all countries in West Africa, Sierra Leone remains committed to the scheme of monetary cooperation activities. The involvement of Sierra Leone in regional activities dates back to 1975, since the inception of the Economic Community of West African States (ECOWAS). In furtherance of its commitment to the integration programme, the Government willingly acceded to host the erstwhile West African Clearing House (WACH), which provided a multilateral clearing mechanism with the objective of promoting intra-ECOWAS trade. This body has, since 1992, been strengthened and transformed into the West African Monetary Agency (WAMA), tasked with the responsibility of monitoring, coordinating and implementing aspects of the ECOWAS Monetary Cooperation Programme (EMCP). To give historical overview, the Authority of ECOWAS Heads of State and Government adopted the EMCP in 1987 with the ultimate objective of creating a single currency for Member States. To achieve this objective, the States concerned are required to adopt collective policy measures aimed at achieving a harmonized monetary system and a stable macroeconomic environment by complying with prescribed convergence criteria that emphasizes fiscal prudence, maintenance of price stability and adequate levels of gross external reserves. Other prerequisites relate to harmonization of fiscal, monetary and financial policies as well as establishment of an effective community market through trade liberalization. The model provided for a two-stage approach towards creation of the union. The first stage involves the establishment of a second monetary zone - the West African Monetary Zone (WAMZ) -comprising the Gam-

bia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone by 2015. The second stage, scheduled for 2020, the WAMZ would merge with the existing West African Economic and Monetary Union (WAEMU) comprising Benin, Burkina Faso, Cote d’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo. It is expected that Cape Verde would join the arrangement in due course. It is affirmed that Member States have made considerable progress since the inception of the programme. The quality of macroeconomic management has also improved significantly within the last two decades due to implementation of structural adjustment programmes. The countries have also stepped up efforts aimed at minimizing fiscal dominance, a problem that has been the bane of the convergence programme and a major source of instability in the region. Development of the payments systems infrastructure and policy harmonization programmes (especially in the areas of monetary p.cy, current and capital account, accounting and financial reporting, banking and supervisory framework, balance of payments statistics etc.) are steadily on course. However, there has been some implementation challenges on the way. The major challenges relate to persistence of macroeconomic instability as the countries concerned generally have weak economies, making them vulnerable to external shocks. Coupled with cross-border security concerns, the existence of numerous road blocks, tariff barriers and other administrative controls have hampered effective implementation of the protocol on free movement of persons, goods and services, contributing to the persistence of low intra-ECOWAS trade.

Political disturbances have also been an issue of concern. To address the challenges, the Authorities have instituted a number of measures aimed at accelerating the process. One measure involves the adoption of a Roadmap which outlined the spectrum of activities under the programme and allocates speciﬁc responsibilities to WAMA and other implementing institutions so as to enhance synergy and avoid duplication of efforts. The macroeconomic convergence criteria have also been revised recently to help address lingering policy deﬁciencies. Furthermore, the multilateral surveillance mechanism has been strengthened to ensure effective monitoring, reporting and coordination.

Prof. Mohamed Ben Omar NDIAYE DIRECTOR GENERAL - WAMA As a result, prospects for actualization of an ECOWAS monetary union are bright. While the political Authorities are exhibiting a renewed commitment, Member States are more than ever before determined to accelerate the programme. With the continued support received by WAMA from the Authorities in Sierra Leone, other Member States and stakeholders, speedy realization of the ultimate objective is increasingly becoming evident despite the external challenges.

country focus | sierra leone

tourism

States embassy, the transport ministry arranged a $8.9m grant from the World Bank last year to rehabilitate Lungi International Airport, a project that will include a new terminal building, upgrades to the existing runway and a new runway. The government also signed an agreement with China Railway International in December 2012 for a new airport on the mainland near Freetown. Actors in the sector have decided to focus on ecotourism to attract visitors who are not looking for five-star luxury but an off-the-beaten-path adventure. They will expect less and be willing to pay more, Williams says.

Ecotourism strategy may pay off in the long run

Backpackers – not just from Europe but from West Africa, too – could provide the boost Sierra Leone’s tourism needs, if enough natural beauty remains

wildlife island

gemma ware

nce prized for its pristine beaches, Sierra Leone used to be an attractive destination for tourists from around West Africa and beyond. Today, competition from other countries, poaching, deforestation, sand mining and poor infrastructure hamper the fledgeling sector. Although expatriates and well-off locals tend to frequent the beaches dotting the Western Peninsula, their numbers are not high enough to give the tourism sector the boost it needs, says Cecil James Williams, head of the National Tourist Board. Sand mining is a problem because beaches are disappearing. Deforestation, in favour of large homes and charcoal for cooking, is having an adverse effect on the landscape. A lack of sanitation infrastructure contributes to the polluting of the water along the most popular stretch ofbeachfrontinFreetown,LumleyBeach. “We’re wrestling with our colleagues [at other government agencies],” Williams says. “They forget about the consequences [of these activities].” Abimbola Carrol, the founder of Visit Sierra Leone, a tourism website and corresponding tour

Paradise in peril: fewer silver beaches remain after sand mining was allowed to run riot

operating company, VSL Travel, argues that deforestation and pollution “send a message that the country isn’t serious”. Hotels, however, are improving. West Africa Holdings Limited (SL) plans to open a Radisson in the former Mammy Yoko Hotel, notorious as the location of a tense shootout during the war, in the final quarter of 2013. International Development Enterprise Associates will rehabilitate the Cape Sierra Hotel and develop it under the Hilton brand. It is set to open at the end of 2014. costly destination

Williams admits that Sierra Leone does not have the infrastructure to attract mass tourism. It is a challenge to get people there because airline tickets from Europe often start at $1,500. From Lungi International Airport, the mainland is a boat or helicopter ride away. A hotel room in Freetown can cost more than $150 per night. According to a report on the investment climate compiled by the United

But what is on offer is still quite basic. Guests pay $20 to visit Tiwai Island Wildlife Sanctuary, a 12km² reserve off the Moa River in Southern Province. They sleep in tents, says Tommy Garnett, director of the Environmental Foundation for Africa, the NGO managing the sanctuary in conjunction with Njala University. Of the 400 to 500 visitors that come to Tiwai each year, most are expats living in Freetown, according to Garnett. He is not expecting a big tourism boom, stating that ecotourism efforts across the country typically have to be subsidised. On the beaches of Western Peninsula south of Freetown, redevelopment continues apace. But at one of the most popular spots, River No.2 Beach, Francis Kappia, public relations officer at the River No.2 Development Association, says the community-led organisation which runs the beach has never had help from government. It is now facing new competition from further down the beach. The resort, which has eight rooms – without air conditioning or fans – mainly attracts backpackers and ex-patriates on the weekends, although some groups are now coming from Nigeria and Ghana. ● Kimberly S. Johnson in Freetown

Visitors to Sierra Leone

59.730

(9,464 on holiday)

33.704

(3,000 on holiday)

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country focus | sierra leone Mangoes at the Africa Felix Juice factory

gemma ware

agriculture Squeeze to get more juice

The country is making its first steps into processing its abundant produce, but young farmers still need more training to move up the value chain

hen the first containers of mango concentrate from Africa Felix Juice (AFJ) arrived in Rotterdam, customs officials sent the documents straight to the fraud office. They had never seen manufactured exports from Sierra Leone before. Set up by Italian businessman Claudio Scotto, the juice factory opened in 2011 at the First Step Economic Opportunity Zone, near Newton, 30km east of Freetown. First Step is a free-trade zone that is backed by United States-based World Hope International. AFJ has exported 800tn of concentrate to Europe, Turkey and Ghana. Using a network of extension agents to source its product, AFJ has had a difficult start because farmers prefer to sell fruit in local markets and get higher prices than the global average. “It’s still an uphill struggle,” Scotto says. Sierra Leone has huge potential, although very little of what is produced is processed before making it to market. Agriculture is the largest contributor to gross domestic product, though its share fell from 55.6% in 2011 to 53.9% in 2012 as revenue grew from the mining sector. Production of key crops is rising: rice and oil palm production increased threefold between 2001 and 2011, and cassava increased eightfold (see graph). Yields per hectare are also gradually rising for other export-driven crops such as coffee and

Production trend for major crops from 2001-2011 (million tn) 4

3.5 3 2.5

Oil palm Cassava Rice

2 1.5 1 0.5 0

2001 02 03 04 05 06 07 08 09 10 11

cocoa. The government’s Smallholder Commercialisation Programme has set up more than 500 agribusiness centres (ABCs) across the country to provide equipment to farmers. There has been little in the way of training and many farming communities do nothavethecapacitytousethemachines. “It’s not attractive to be a farmer,” says Francis Foray Koroma, the chairperson of the youth council in Koinadugu District in northern Sierra Leone. He says there is a lack of support for young people to engage in mechanised farming, such as tractors, improved seeds and chemicals. “We need technical training,” he says. In a 500-acre site down the road from the juice factory, the Sierra Leone AgriBusiness Initiative (SABI) is working to plug some of the skills gaps. A large warehouse houses the machinery found

source: ministry of agriculture

in the ABCs, including a cassava grating machine and a rice de-stoner. The site also houses a chicken coop and piggery. “We are training trainers for the ABCs,” says Francis Kuyembeh, processing coordinator at SABI, which is modelled on a similar centre in Benin and has support from the United Nations Development Programme, the Food and Agriculture Organisation and the government. Groups of young farmers also come to work on the land, which is farmed organically, to learn to use the machinery. foreign farms cause tension

In the meantime, a series of largescale foreign investments should soon bear fruit. The most high-profile is the Addax sugar-to-ethanol project near Makeni, while Goldtree, founded by Mauritius-based investment fund PanAfrican Agribusiness, is gearing up for production at its palm-oil plantation in theeasterndistrictofKailahun.InJanuary 2012, the China Hainan Rubber Industry Group announced a $1.2bn investment in rubber and rice plantations, though there has been little sign of progress. Tension is mounting over these investments, as land tenure is controlled by paramount chiefs. Claims of inadequate compensation and corruption surrounding a 6,500ha palm-oil plantation in Pujehun District, managed by Luxembourg-registeredSOCFINAgricultural Company, led to a defamation suit against civil society group Green Scenery in early June. Joseph Rahall from Green Scenery says SOCFIN has not revealed its claims in the case, a strategy, he says “is calculated as a subtle threat to censor critical voices in a democratic system”. ● Gemma Ware in Newton

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Ulrich Doering/AlAmy/photo 12

country focus Ghana

Ghana’s growing import bill for fresh produce should spur local production

Home-grown solutions Business leaders insist that the government must use the current economic woes as an opportunity to revive local industries. Companies want new policies to benefit manufacturers, but public resources are limited, especially given the twin budget and current account deficits By Patrick Smith and Billie Adwoa McTernan in Accra

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he superstars of Ghana’s business scene are in a bind. Just as they are getting the ear of government and looking for dividends as the oil and gas industry starts up, the country is faced with its worst financial problems in more than a decade. Everybody’s favourite economy two years ago with world-beating growth rates, Ghana is now the the target of the rating agencies. Citing worries about the budget deficit remaining stubbornly above 10% of gross domestic product, Fitch downgraded Ghana’s local foreign debt to B from

country focus | ghana

its former B+ ranking in October 2013. This year, Standard & Poor’s listed Ghana among the top three emerging markets most vulnerable to changing capital flows as the United States (US) tightened its monetary policy: the other two countries were Turkey and Ukraine, both immersed in political crises. For now, Ghana’s woes are far more economic than political. The cedi has lost about a quarter of its value against the US dollar over the past year, making it Africa’s worst-performing currency after the South Sudan pound. In Ghana’s import-heavy economy, that in turn pushed inflation up to 13.8% in January, prompting serious rethinking in government about backing local production.

●●●

profit from a crisis

So in February, President John Dramani Mahama invited about 50 business leaders to a retreat at Peduase Lodge, the state guest house in the Aburi hills just north of Accra. Gazing down from the escarpment on the capital and its rapidly spreading suburbs, entrepreneurs and financiers explained how the combination of high interest rates, late payments from government agencies and intermittent power supplies is holding back their operations. Not all the conversations were apocalyptic. Do not let a crisis go to waste was themessagefromKwesiAmoafo-Yeboah, the chairman of Venture Capital Fund who was also at Peduase Lodge: “You buy a dilapidated building and instead of trying to renovate it, you tear down everything and rebuild it. I think that’s where we are.” The major part of the rebuilding is to redirect the economy towards production and export, away from consumption and imports. That means substantial public and private investment in the real economy, for example in manufacturing and processing, if the government’s Made in Ghana campaign is to become reality. Amoafo-Yeboah, a veteran of California’s information technology and oil services industries who was once an independent presidential candidate in Ghana, says the policy change is real: “We are finally heading in the right direction, which is why I’m so excited now.” The government is determined to cut Ghana’s import dependence and to double exports to $5bn within three years, according to Haruna Iddrisu, the trade and industry minister. Iddrisu ● ● ●

inTerview

John Dramani Mahama President, Ghana

We are listening to business The list of the government’s priorities for reform is long, from improving the business environment to cutting deficits and expanding the provision of free secondary education TAR: You spoke of the country’s serious economic problems in your state of the nation address. What is your strategy and when is Ghana going to get out of these financial difficulties? JOHN DRAMANI MAHAMA: The major problems – the twin [budget and trade] deficits – are due to several factors: the implementation of the single spine salary system which saw a ballooning of wages and salaries, and the delay in reducing subsidies on petroleum products and utilities. From the 2013 budget we’ve been implementing adjustments. But 2014 is the first full year of adjustment measures: reducing subsidies on petroleum prices and utilities; increasing value-added tax by 2.5%; introducing the national stabilisation levy and the special import levies; and also putting the brakes on wages. We’ve been in discussion with labour organisations to moderate the demands for wage increases. So the end of 2014 will be a better time to judge what progress we have made. Many people are saying your new foreign exchange rules

might exacerbate the problem by creating panic. We went from one extreme in a command and control environment, where foreign exchange was strictly controlled and the Bank of Ghana set the exchange rates, to the other extreme where our foreign exchange rules were so lax that speculators took advantage of them. In line with best practice around the world, we’re putting in the necessary regulations to ensure people play by the rules. The initial reaction was panic but clarifications have gone out. All existing agreements on investments still hold. The free zone’s guidelines and regulations still hold, so I think the investor community is reassured. Some of the government’s toughest critics are in business. When you convened meetings with the executives of these companies at Peduase Lodge, what did they want? We held one meeting with the big companies such as the telecoms giants, then we had the small and medium-sized enterprises. Different issues were raised, but we had a very lively dialogue. They

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ghana | country focus

Steve AbAbIo for tAr

You are also promising free and universal secondary education. That was the policy of your opponents in the last election. Your party said it was impractical. What has changed? We’re all on the same side and I think that it’s just the pettiness of our politics that makes us look like we were singing from different hymn sheets. The basic vision for secondary education is in our constitution, which says that we shall make it available to all children and that we shall make it progressively free. It’s just how it should be achieved that was the difference [between the parties]. Our intention is between now and 2016 to build 200 community-based schools across the country. Ours is a package that had to do with affordability but also with access and quality.

said we need strong public-sector reform to make the public service more client-friendly in terms of the private sector. A lot of complaints came about the revenue authorities and the speed with which they process tax refunds and duty exemptions. I think we have a major challenge there and that ran through all the three categories of companies that I met with. There were complaints about slowness of business registration, the Investment Promotion Centre and how we could make its services better. There was a major complaint about the length of time it takes to clear things from the port, the congestion in the port and illegal fees collected by various agencies the africa report

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in the port. It was a very, very comprehensive discussion.

mahama’s first year

You have launched the Made in Ghana campaign. Do you have a time frame for Ghana-made products to replace imports? I cannot produce enough rice with a click of a finger to make Ghana self-sufficient. There is no reason why we have hectares of arable land good for rice growing and yet we have to import $400m worth of rice every year. We have land for sugarcane, yet import nearly $200m worth of sugar a year. We’re going to target seven crops and if we put in the right investment we should reduce drastically the billions we spend importing these items.

DeC 2012 Elected President of Ghana

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aUG 2013 Supreme Court rejects the opposition complaint about the 2012 election feB 2014 The Bank of Ghana raises interest rates to 18% to fight the cedi’s slide

As public finances tighten, people are getting more concerned about losses to the state treasury. What are you doing to stop corruption and mismanagement? The national anti-corruption action plan was spearheaded by the Commission on Human Rights and Administrative Justice. The thrust of the plan is to make us look at corruption in a more systemic manner, not in the ad hoc and anecdotal manner we have done in the past. That plan is currently with parliament. The anti-corruption institutions will be be more independent and track corruption in a more aggressive manner. [The plan] also promotes transparency in government procurement. It also has accompanying legislation, like the right-to-information bill and an amendment to the whistleblowers bill. Do you know how much these losses to public finances cost each year? If you take the auditor general’s report alone then it appears that government losses – if you include misappropriations and lack of due diligence – are about ¢1.5bn ($580m) a year. ● Interview by Patrick Smith in Accra

country focus | ghana

was speaking to The Africa Report just hours after returning to Accra from Mauritius where he was negotiating for Omnicane to invest in a sugar plantation and refinery. “Plans are far advanced to relaunch Ghana as a sugar-producing country,” says Iddrisu. “We will be cutting the sod in June for a major sugar factory in Komenda in Central Region. It will be executed by Seftech of India. I have the no-objection clearance from the Eximbank of India to proceed.” Then he reels off a list of sugar projects targeted for his home region of northern Ghana, where he says the huge potential for commercial agriculture is largely untapped.

BURKINA FASO

●●●

Tamale TOGO

GHANA Kumasi

CÔTE D'IVOIRE

ACCRA Takoradi

150 km

Gulf of Guinea

Ghana by numbers PoPulation

25.37 million

GDP

$40.71bn

GDP Growth

7.9%

inflation

9.2%

life exPectancy

61 (2011)

literacy rate (% of people aged 15 and above)

71 (2010)

Public sPenDinG on eDucation (% of GDP)

8.1 (2011)

access to electricity (% of population)

60.5 (2010)

total reserves (includes gold, current US$)

5.8bn

education

ED C A Tteaching I O N Astaff L LEVEL Proportion of U full-time 80%

PhD Master’s

70%

Bachelor’s Others

60% 50% 40% 30% 20% 10% 0%

Public universities

PolyPublic technics colleges of education

Private tertiary

export/import levels EXPORT/IMPORT LEVELS 25,000 20,000

($m)

Exports Imports

15,000 10,000 5,000 0

2005

2006

2007

Dreams anD constraints

2008

2009

2010

Source: worLD bANK 2013, GhANA eDucAtioN Sector PerformANce rePort 2013, worLD bANK 2012

other $283m of fish, $226m of wheat and $169m of poultry last year. Yet cheap imports from the giant rice plantations of Thailand and Vietnam, which attract a 20% tariff, are easily outpacing local production. Rice imports in 2011 were 485.6m kg, that was a 65.5% increase in imports over 2010. Perhaps surprisingly, given that it was an election year, when rice imports often rise exponentially, Ghana rice imports grew by just 5.3% to 511.2m kg in 2012 and a further 12.8% to 576.9m kg in 2013. The $467m of rice imports last year may be a future business opportunity for rice growers, but it is a current opportunity for Ghana’s formidable import lobby. With their powerful tentacles in both the major political parties, the ruling National Democratic Congress and the opposition New Patriotic Party, the import lobbyists have had the resources and the personal connections to scupper any attempt to reduce their cut of the national economy. For the past two decades, imports of foodstuffs that Ghana produces locally have risen inexorably.

Iddrisu is similarly enthusiastic about expanding rice production and irrigation, again in northern Ghana, near Savelugu and also in Brong Ahafo. The government is talking to local and foreign investors about these projects, he says. Both Amit Agrawal of Olam and Nabil Moukarzel of Finatrade – currently a maFor two decades, imports of jor rice importer – went to foodstuffs that Ghana produces Mahama’s Peduase Lodge session and talked about locally have risen inexorably expanding rice production. Plenty of state support for rice and horThere are already some success storticulture as well as dam building is also ies, such as sugar. Imports of sugar fell being promised, at least for what Iddrisu to 215.8m kg in 2013 from 283m kg in defines as “bankable projects”. But with 2010. That trend could be reinforced huge constraints on state finances, the with the revival of the sugar project commercial commitment of those comin Komenda. But imports of fish and pany bosses invited to Peduase Lodge poultry have also gone up by over 25% from 2010 to 2013. That is probably due is going to be critical to the success of to the growth of the protein-hungry the Made in Ghana campaign. middle classes. Another initiative likely to concenSimilarly, edible oil imports have risen trate minds is the government’s new International Trade Commission, which by a third in the same period, most of it will review tariffs and import duties to palm oil from Southeast Asia, from counboost incentives for local producers and tries such as Indonesia and Malaysia, make importing less lucrative. Iddrisu which studied Ghana’s oil palm industry in the 1960s. Turning around local prowill be running the commission. It will have the power “to consider anti-dumpduction will take several years, which is ing measures and even a future ban on beyond the electoral schedule. some major imports into Ghana so long as we can guarantee their domestic procommoDities cruncheD duction,” he explains. But the toughest and most time-bound tasks will fall to finance minister Seth Just how steep is the climb to selfTerkper, whose repeated promises to resufficiency, even just in staple foods, is clear from these statistics from the Bank duce the budget and trade deficits have of Ghana and trade ministry. In last year’s been confounded by falls in the prices import bill, Ghana spent $467m on rice, of Ghana’s main exports – gold fell by $217m on sugar and $234m on edible 28% last year but has risen a little this oil – all commodities that the country year on the back of political instability produces already. Ghana imported anin Eastern Europe – together with ● ● ● the africa report

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● ● ● the country’s import bill and the implementation of a new public sector wage structure, which was not properly costed. Terkper insists that the systems are now in place to cut back sharply on waste and corruption in government, with a state contracts database and close monitoring of all state-sector procurement. At the same time the government will be raising more revenue from a 2% increase in value-added tax and a temporary fiscal stabilisation levy. But Terkper’s toughest negotiations will be with state employees. “The Economic Community of West African States

convergence guidelines stipulate that governments spend 35% of tax revenue on wages and salaries. We were at 4243%, but we went up as far as 55% and we are now trying to get it down.” Cutting that figure, even if he can substantially raise tax revenue when economic growth is slowing, means that Terkper will have to continue with a wage and hiring freeze on the public payroll. Indeed, ministers speak delicately about adjusting the size of the state payroll: the last time a government made substantial cuts to that was under the military regime of President Jerry John Rawlings and the cuts were

at the International Monetary Fund’s and World Bank’s insistence. This time the tough choices are all with President Mahama and his ministers when they meet at Flagstaff House. As Terkper will tell them, if the government does not get the deficits under control, it will be the markets not the economists in Washington that will be giving their verdicts and the cost of servicing Ghana’s foreign debt could spiral. As the government tries to fight off a financial crisis, it is broadcasting its determination to restructure the economy: this year may prove a decisive chapter in Ghana’s economic future. ●

Put the best foot forward Though government is now starting to talk the talk on helping business, it has yet to put local manufacturers in its procurement policies

t was about the best endorsement Tonyi Senayah, the founder of HorsemanShoes,couldhavehopedfor.Midway through his 90-minute state of the nation address toparliament in February, President John Dramani Mahama started talking about Senayah’s shoes. Starting his company in 2009 by importing shoes from La Paz, Bolivia, Senayah went on to design his own shoes and to train young people in his home town of Kumasi to make shoes. “And, Mr Speaker,” Mahama continued, “they are very nice, very comfortable shoes. In fact, I am wearing a pair right now.” Since then Senayah’s shoes have become a flagship for the government’s Made in Ghana campaign. In April, 30-year-old Senayah will open his first shop in Accra and is setting his sights on contributing to the local and export market: “It is imperative for us as manufacturers to up our game in terms of improving the quality of our products and services,” he says. “We need to meet world standards.” Despite the presidential publicity, Senayah has been openly critical of the government’s failures on power and public services. Most of all, he wants the government to get serious about buying from

Steve AbAbio for tAr

Tonyi Senayah (left) and Kate Quartey-Papafio want the government to use the huge leverage of its procurement spending to support local manufacturing

Ghanaian manufacturers. If government insists that the hundreds of thousands of shoes that state agencies buy must be made in Ghana, it would transform the economics of local manufacturing, says Senayah. It’s the same message from Kate Quartey-Papafio, chief executive of Reroy Cables, the main supplier of locally made cables to the Electricity Company of Ghana (ECG), GRIDCo and the Volta River Authority, the three main electricity companies in the country. Reroy started inthelate1980sby importingfromBritish Insulated Callender’s Cables and then went into semi-finished products and set up its own manufacturing plant in 2007. Quartey-Papafio is gearing up for higher demand as the economy bounces back: “We’re looking at making other

components and accessories. Now is the time to build our capacity.” But, like Senayah, she wants government to prioritise the buying of locally made products: “ECG should put us in their planning [...] tell us what they need for the next five years.” Both Senayah and Quartey-Papafio attended a special meeting of local companies convened by President Mahama at Peduase Lodge and made clear what needs to be fixed. “Interest rates and the cost of borrowing, late payments [by state agencies] and access to foreign exchange,” Quartey-Papafio reels off a list of the priorities. Reroy already exports to Togo, Benin, Burkina Faso and Nigeria. Quartey-Papafio plans to expand the company’s product range and sell P.S. and B.McT. to other regions. ● the africa report

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country focus | ghana

increase in utility prices in October 2013. The completion of the country’s gas processing plant was expected to ease power problems, but it has been delayed. Tullow Oil,oneofthemainpartnersattheJubilee oil field, has resorted to flaring gas. Ghana National Gas Company chief executive George Sipa-Adjah Yankey (2) said in January that gas should come online by May. In the same month, however, energy minister Emmanuel Armah-Kofi Buah said it was unlikely the oft-shifted deadline would be met.

PeoPle To WATch

Economists waver; technology stars are on the rise While ministers struggle to prop up the cedi, a new wave of industrialists and tech entrepreneurs are providing an economic jumpstart of their own

data centre delays

omgghAnA

o stabilise the cedi and reduce the current“excessivedependencyon imports” is the order of the day, President John Dramani Mahama told journalists at a meeting on 11 February. Following the cedi’s rapid depreciation over the past year, the government has been under pressure to rescue the currency. In January, some members of parliament called for the sacking of Bank of Ghanagovernor HenryKofiWampah (1) who, together with finance minister Seth Terkper, then took to issuing new measures to get the cedi back on track. Also part of the government’s economy-boosting agenda is a renewed effort to encourage locally made goods. Crucial to this move is the Association of Ghana Industries (AGI). One member of the association is Comfort Aniagyei, founder and managing director of promotion and marketing company GhanaMade. In December 2013, GhanaMade receivedaspecialrecognitionawardfrom the AGI for its efforts in championing the cause of local production. Alongside running her own company, Aniagyei is also director of finance for the Ghana National Petroleum Corporation. Asthegovernmentmovestooffermore considered support to manufacturers, as explained by trade and industry minister Haruna Iddrisu, it will have to consider the country’s erratic power supply. In February, Ghana Grid Company embarked on a load-shedding programme after system failures occurred at the Volta River Authority’s thermal plant. The exercisecameayearafterthecountrysuffered chronic power outages over a period of six months. In January, the government gave assurances that there would be no load-shedding this year. The use of generators will also prove pricey following the government’s removal of fuel subsidies in June and an

Chris stein for tAr

Elsewhere in the cabinet, communications minister Edward Omane Boamah has settled into the position he took up in January 2013 when he replaced Idrissu. Omane Boamah has been overseeing the completion of the $30m national data centre, which will handle all of the government’s data and eventually also house the communications ministry. Political insiders tell The Africa Report that the minister is fighting delays to finishing the centre, which is now expected to reach completion in the first quarter of 2014. It marks an important move to centralise digital information. The ministry is also working on the second phase of establishing community information centres across the country, with a particular emphasis in providing educational resources to communities in the northern regions. Capitalising on the technology revolution is young entrepreneur Derrydean Dadzie (3). Dadzie is the 31-year-old founder of DreamOval, a consultancy and software solutions company whose clients include Ghana Commercial Bank. Having founded the company at just 24, Dadzie is also working on establishing Dreamville, a proposed research and training site for budding technologists. He is just one of a growing number of young people working with technology in Ghana. In January, BloggingGhana – a group of 100 or so bloggers – launched a crowd-sourcing campaign to fund the country’s first physical social media hub. During the 2012 elections, the organisation led the Ghana Decides project to inform the electorate before and after the vote. The group’s newest project is Inform Ghana, a platform that enables the sharing of information on health, education, governance and education to encourageinteractionbetweenmembers of the public and civil society groups. ● Billie Adwoa McTernan in Accra

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Tel: + 233 302 685 118-120

Tel: + 233 302 686 352 Fax: +233 302 672 145

Photo12/AlAmy

country focus | ghana

Kumasi

Traders and factories look to the future

An investment programme and the revival of shoe manufacturing are two ways the capital of the Ashanti Region plans to boost the local economy

f any more proof were needed of Kumasi’s importance as a regional trading centre, the arrival in Ghana of 15 Malian traders on camels in February made the point. The police stopped the traders at Mampong, but they were en route to Kumasi, where they hoped to sell herbal medicine. Kumasi’s role as a commercial centre dates back to the heyday of the transSaharan trade routes. Today, Kumasi is ringed by new highways, the railway line to the coast is being rehabilitated and there are daily flights to Accra, Takoradi and Ouagadougou. According to trade minister Haruna Iddrisu, Ghana is emerging again as a major trading hub. “We are making a paradigm shift in the structure of the economy. The government is backing new projects to produce sugar, rice and vegetable oil across the country,” says Iddrisu as he lists several new projects in Brong Ahafo and Northern, Central and Western regions.

At the crossroads of the country, Kumasi will play a key role in this wave of expansion. Kumasi is also the capital of the Ashanti Region, and the region is rich in mineral resources, particularly gold. The farms of Ashanti grow yam, plantain and the high-quality cocoa that has been the lifeblood of Ghana’s export economy. In Asokwa and Kaase, the industrial areas of Kumasi, there are timber-processing factories. The vibrant central market in Kumasi is recovering from a fire that gutted

about 100 shops at the end of February. The fire was the second at the market in the past nine months. Traders blame unprotected electrical cables for the conflagrations. Despite calls from the Ghana Fire Service last June for the market to be rewired, there has been little progress. Traders, who pay taxes to the Kumasi Metropolitan Assembly (KMA), complain that little has been done to improve facilities. Private companies are putting up most of the new buildings. The city authorities did complete a new footbridge in the Central Business District last August, which has relieved some of the worst congestion for traders. towards millennium goals

Kojo Bonsu, the chief executive of the KMA, says he is committed to boosting the city’s profile. In 2006, Kumasi joined the Millennium Cities Initiative, a Columbia University programme that helps cities draw up sustainable development strategies to achieve the Millennium Development Goals. Under that programme, the city launched the Kumasi City Investment Promotion Unit in 2012. The number of trees the Kumasi Metropolitan Assembly Kumasi’s reputation as the has pledged to plant over the next four years ‘Garden City’ has declined as forests have been cut down and gardens neglected. Bonsu plans to plant a million trees over the next four years. The programme will begin in May. “If the last tree dies, the last man dies,” he says.

1 million

fotoliA

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ghana | country focus

The mêlée at Kumasi’s central market recalls its position at the centre of historical trade routes

“The vision to transform the KMA and lives of people in Kumasi is to deepen the education of youth to have an educated and better informed populace,” says Bonsu. But there are worries about a brain drain. When graduates from the Kwame Nkrumah University of Science and Technology in Kumasi – one of the country’s best tertiary institutions – complete their studies, they regularly flock to Accra in search of work. More productive investment could reverse this trend, and some important new and rehabilitated projects suggest economic changes ahead. A good example is the Kumasi shoe factory. The government built it in 1960 under founding president Kwame Nkrumah with help from Czechoslovakia. After Nkrumah’s overthrow in 1966, the stateowned factory fell into disuse and was sold off by President John Kufuor’s government in 2002.

The factory now belongs to Defence Industries Holding Company (DIHOC), jointly owned by the Ghana Armed Forces and Knight Ghana, a subsidiary of a Czech company. At the factory, an assembly line churns out boots for soldiers and police. About 50 workers are employed there, but the factory is not at full capacity. A further three assembly lines are due to be installed by the end of July. seeking hides

also buy shoes for students, and the government could subsidise the cost of locally made footwear. “This is Ghana. When we buy from here, we are opening up opportunities for the youth to be employed,” says Koranteng. “We also pay taxes to develop this economy. Why are we opening tenders, importing from all these other countries and then helping build someone else’s economy?”

Kumasi has the potential

The factory imports leather to become a manufacturing but that could change, according to Kingsley Asiedu hub for the whole region Koranteng, the acting genThe company has raised the issue eral manager of DIHOC’s footwear with the authorities. As the remaining division. “We need to have the hide in Ghana, but at the moment we don’t 60% of holdings of the factory belong even have the farms for the cattle,” to a Czech company, the Czech ambassador to Ghana, Miloslav Machálek, he explains. There is a defunct hide has also played his part in calling on the processing factory on the compound. government to encourage local produAlthough the Ghana Armed Forces cers. “If we can build Kumasi as a manhave a 40% stake in DIHOC, there is no contractual obligation for the minufacturing hub, then Ghana would be istries to buy its products. Koranteng doing better.” ● Billie Adwoa McTernan in Kumasi says the ministry of education could

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the Tweneboa-Enyenra-Ntomme fields to the west of Jubilee should add another 80,000bpd. Companies have had technical problems too. Last year maintenance at the Jubilee field and some unexpected engineering issues meant they had to cut production. They have now asked the governmenttowaiveitsbanongasflaring for a limited period. This follows a failed attempt to drill another gas re-injection well and continued delays in the commissioning of the gas processing plant at Atuabo in Western Region. Gas policy is politically contentious. Flaring means wasting a vital energy resource. Opposition parties and civic groups have lambasted the management of the Ghana National Gas Company (GNGC) under chief executive George Sipa-Adjah Yankey. Critics claim China’s Sinopec was not the best choice to build the plant because the company’s strengths are in oil production and the price of $690.6m is uncompetitive.

The Kwame Nkrumah FSPO unit reflects high hopes at Jubilee

energy

The gas processing plant at the end of the rainbow After a series of delays and technical problems affecting the whole value chain, the state-owned petroleum company’s new chief executive promises lift-off in July

il and gas – the great game changers – have taken Ghana’s economyonarollercoasterride. Trailing great expectations for revenue and industrial development, the start of oil exports in 2012 made Ghana one of the fastest-growing economies in the world that year. After a chapter of accidents, the International Monetary Fund (IMF)forecastsGhana’seconomicgrowth could shrink this year to 5.5%, around a third of its level two years ago. Finance minister Seth Terkper told The Africa Report that delays and shortfalls in the oil and gas industry were two of the reasons for the current foreign exchange crisis and for the government missing its targets to cut the budget deficit. “On the revenue side, one of the biggest problems was the shortfall in petroleum receipts last year. We lost around ¢800m [$315m]. Another problem was the breach in Nigeria’s gas supplies,” Terkper explains. This lack of gas – because of the breakdown of the West African Gas Pipeline

leveraging oil assets

Tullow

Terkpersays thedecisiontouseaChinese contractor, which would allow the government to draw on a $3bn credit it negotiated with the China Development Bank, was based on financial realities. “We spoke to several private-sector contractors, and they all demanded a sovereign guarantee for the finance,” he says. Such a guarantee would have breached the debt ceiling imposed by the IMF after Ghana was reclassified as a lower middle-income country. Instead, Sinopec is being paid indirectly out of Ghana’s oil exports through a complex system that Terkper insists is far more accountable than conventional countertrade deals: “We are leveraging the value of our oil assets, not collateralising them.” On 10 March, the GNPC’s Mould announced the main engineering and mechanical work on the gas plant would be finished by the end of the month, and that the full commissioning of the system would take another three months. If he’s right and the gas starts to fuel the power stations, this could be the beginning of a muchneeded turnaround in Ghana’s energy industry. ●

from Nigeria and from Ghana’s own offshore Jubilee field – cost the country about $1bn in oil imports last year, a former senior official at the state oil company says. These are the headaches inherited by Alexander Mould, who took over as chief executive of the state-owned Ghana National Petroleum Corporation(GNPC)inOctober2013. Although officials forecast that oil production could morethandoubleto250,000 barrels per day (bpd) by the beginning of the next decade, production now stands at just over 100,000bpd. This is all from the Jubilee field, which has the capacity to produce at least The Ghana National Petroleum Corporation 120,000bpd. forecasts oil output to increase by the beginning of 2020 In two years,

250,000

Martin Yeboah and Patrick Smith in Accra

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finance

A smaller fistful of dollars The government has restricted forex transactions and raised interest rates to protect the value of the cedi, which has been in decline for several years

ou know you are in trouble when pastors are seeking divine intervention for your currency. On the Sunday that followed the Bank of Ghana’s attempt to halt the flow of dollars out of the country, Ghanian preacher Archbishop Duncan-Williams commanded the cedi to rise in the name of Jesus, and asked his congregation to pray for the currency’s health. On 4 March, exactly a month after the imposition of restrictions on foreign exchange (forex) activities, in part to stem the downward spiral of the exchange rate, the regulator took out a full-page advert in the dailies. Offering “clarification to notices” on forex trading, it aimed to calm the nervesofparticipantsintheforex market and reassure the business community of the good intentions of the directives, which sought to reinforce the provisions of the various financial laws already in place, for example the Foreign Exchange Act of 2006. parallel currency

The restrictions in forex trading are part of a series of problems currently challenging the Ghanaian economy. They include the behaviour of the currency, high interest rates, inflation, increasing levels of national debt and reduced commodity prices. The sharp decline in the exchange rate appears to have triggered a second look at parallel currency usage in Ghana. The government had given some service providers, such as hotels, exemptions to allow them to quote their rates in United States dollars. Others jumped on the bandwagon with dollar quotations for rent,schoolfeesandevencabletelevision services. The regulator cancelled all such exemptions and directed all businesses to state their fees in cedi.

At an exchange rate of ¢0.90 to the dollar in 2007, the cedi depreciated to ¢2.56 in February. The drop was so marked that the regulator imposed restrictions on operations of foreign exchange accounts and foreign accounts as well as the repatriation of export proceeds. In line with other emerging markets experiencingsimilarrunsontheircurrencies, the central bank increased interest rates by adding 2% to the policy rate, peg-

The cedi’s exchange rate with the dollar slipped from ¢0.90 in 2007 to ¢2.56 in February 2014

ging it at 18%. The effect of the high interest rate has, among other things, made the cost of doing business expensive. “The issues confronting Ghana are not unique”, says finance minister Seth Terkper. “We have an exposure in terms of our bonds, we have exposure in terms of seasonality, we have a direct exposure

[...] when the dollar changes, it affects gold. Part of the problems we are facing are global in character.” The pressure of inflation, currently at 13.8%, is also adding to the economic challenges as the central bank’s latest outlook on inflation predicts that the “government is likely to miss [its] inflation target for 2014 [of 9.5%]”, just as it missed last year’s target of 9%. Acknowledging the government’s relatively high debt stock, President John Mahama, in his February state of the nation address, said: “Our domestic debt and the current high interest rates are a major challenge to the economy.” commodities to blame

Speaking at the American Chambers of Commerce Summit in Accra in February, vice-president Kwesi Amissah-Arthur attributed the depreciation of the cedi to a decrease in commodity prices, with gold and cocoa both dropping 20% in value since 2011. “In 2013, Ghana lost $1.3bn [in] potential export revenue due to price declines on these two products,” he said. The forex trading restrictions have dampened economic activity. According to one bank chief executive: “It is not business as usual.” Bankers hope this will lead to only short-term problems. In its latest assessment of the Ghanaian economy, the International Monetary Fund urged the government to “address the short-term vulnerabilities, contain rising public debt levels and reduce interest rates” in order to stabilise the economy and support private-sector development, growth and employment creation over the medium term. ● Nana Otuo Acheampong in Accra

Luc GnAGo/ReuteRs

The government’s restrictions address a currency that has been in freefall since 2008 the africa report

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country focus | ghana

interview

James Asare-Agyei President, Association of Ghana Industries (AGI)

We need local content and local participation the agi is lobbying for ghanaian companies to play a larger role in the economy through the creation of new financial institutions and legislative measures TAR: To what extent do the recent Bank of Ghana foreign exchange (forex) reforms affect businesses? JAmes AsAReAGyei: With the new measures, it makes it quite difficult for businesses. We are asked that all foreign exchange proceeds are repatriated within 60 days of export. [But] what if the trade agreement goes beyond 60 days? Are there going to be any sort of sanctions for the exporter? Once these export proceeds come in, within five days of their recourse to the account holder you have the foreign currency or the proceeds converted to the Ghanaian cedi. Once it is converted and you also need to import your materials, what do you do? Do you go back and then buy at a higher rate? What are the other challenges facing local manufacturers and producers? There [are] challenges like the cost and availability of credit. At the moment, commercial banks are giving credit facilities [at] between 27% and 30% [interest], which is highcomparedtosomeeconomies where you can get 2%. So how are

ChrIs steIn for tAr

you going to be competitive? How do you get credit at more than 30%, beabletopayalltheoverheadsand make a profit? The second thing has to do with the availability of power. The cost of utilities keeps rising, and there are companies that rely heavily on power, like the steel companies. The increases definitely affect them and mean they are not competitive. inhisFebruarystateofthenation address President John Dramani mahama announced plans to boost locally made goods. Have you seen a concerted effort towards this? We at AGI are encouraged by some of the initiatives that were mentioned, however we want to see it become a reality. We want to see imports of raw ma-

“We are encouraged by some of the initiatives, but we want to see it become a reality” terials and finished products reduced and make the economy an export-driven economy. The issue has to do with making efforts to [encourage] people to accept products made here. There are a lot of high-quality products [but] sometimes their prices are quite deterring. You have to be able to build the capacity to take advantage of the economies of scale. Building capacity involves building financial capacity, human resource capacity and other forms. We need to

grow our businesses so that we [can] build the quality products and also bring down prices. These things are medium- to long-term measures so we need to make the effort and take deliberate steps. We have launched the Made in Ghana products process. We need to eat what we produce, and we should produce what we eat. Do you think a local content bill could be extended to other sectors? We need to go beyond the oil industry and ensure that other sectorsarealsocovered.We’relooking at the mining sector, energy sector and other areas to be brought on board. We’re not only looking at local content but also local participation. Local participation goes beyond local content in the sense that it brings about ownership of some multinational companies. When you were elected you announced plans to set up a bank for small and medium-sized enterprises. is this still on your agenda? We are working seriously on that. There is a huge gap in the medium- to long-term financing. Almost all the banks operate on a commercial basis in that they give short-term loans that cannot be used for capital expenditure. We at AGI feel there is a need for us to get an industrial bank that will serve the needs in terms of medium- to long-term financing. ● Interview by Billie Adwoa McTernan in Accra

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Olivier fOr JA

country focus Côte d’Ivoire

Infrastructure is one way to build a bridge over troubled water

Turning point The figures for economic growth are putting some swagger in Côte d’Ivoire’s stride, but business leaders and oppositionists say the hard work has not even begun. Big infrastructure projects are underway all over the country, although local companies are struggling to access credit By Olivier Monnier in Abidjan

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t appears like an mirage: on the way outofYamoussoukro,anewlymarked and asphalted road dives into the valleys of Côte d’Ivoire’s country side, which the season’s rains have covered with a shimmering green. For a few months now, the longawaited high way linking the Ivorian capital to Abidjan, the country’s biggest city and economic powerhouse, delivers the same message to its visitors: Côte d’Ivoire is back. Three years after President Alassane Ouattara was sworn into office following adisputed2010electionthatturned ● ● ●

country focus | côte d’IvoIre

MALI

GUINEA LIBERIA

● ● ● into five months of violence, Côte d’Ivoire’s economy is humming. After contracting about 5% in 2011 because of the post-election crisis, the Ivorian economy grew 9.8% in 2012 and 8.7% in 2013. The government says it expects 10% growth in 2014 and 2015. International rating agencies say the potential for political instability ahead of the 2015 elections, coupled with weak institutions, could present a threat to growth. Aside from the highway – the West African country’s first toll road – infrastructure projects have been multiplying. A third bridge spanning Abidjan’s Ebrié Lagoon is to be completed by the end of the year. A large number of roads have been rehabilitated in Abidjan and in the rest of the country, for instance in Bouaké, the country’s second-largest city (see page 58), and on the Abidjan-San Pédro coastal route.

BURKINA FASO

CÔTE D'IVOIRE Bouaké GHANA

YAMOUSSOUKRO Abidjan Gulf of Guinea

200 km

côte d’ivoire in numbers PoPulation

19.84 million

life exPectancy at birth adult literacy

50 57% (2011) $24.68bn

GdP Growth (annual %) inflation, consumer Prices (annual %) total reserves (includes gold, current US$) access to electricity (% of population)

9.5%

2.6% (2013)

$3.93bn

59.3% (2011)

internet users (per 100 people)

2.4

mobile Phone subscriPtions (per 100 people)

Total imports, exports and trade balance trade balance Imports Exports Trade balance

1997 1999 2001 2003 2005 2007 2009 2011

energy Côte d’Ivoire primary energy consumption (2012) Oil

40%

16%

44%

Electricity (renewable)

Natural gas

source: un coMTraDe

12 10 8 6 4 2 0 -2 -4 -6 -8

Sweet smell of success: Nestlé Côte d’Ivoire is back in profit after investing more than 10bn CFA francs to get its chocolate and coffee plants running again

the bank is back

source: WorLD bank 2012

GdP (current US$)

source: fao; irsg; ecobank research

The return to Abidjan later this year of the African Development Bank, which relocated to Tunis in 2003 after a failed coup split Côte d’Ivoire into a rebel-held north and a government-controlled south, also boosted investments in infrastructure. The Ivorian authorities spent 33bn CFA francs ($68m) to renovate a 28-floor building in Le Plateau, Abidjan’s central business district. Raising money is crucial to the government’s plans. It issued a $750m eurobond in July, and Moody’s awarded the government a rating of B1 – the same as Senegal and Kenya – in preparation for the bond’s launch. This will be the first time Côte d’Ivoire goes to the international market since it defaulted on a $2.3bn eurobond in 2010 amid the political stand-off. Local fundraising conditions have weakened since the beginning of the year. After most of its issues were oversubscribed on the West African regional market, the government sold bonds of just 61bn CFA francs after seeking 120bn CFA francs in May. The benefits of economic growth are not widely shared. Christoph Wille, Africa analyst at risk analysis group Control Risks, tells The Africa Report: “The challenge for the government will be to make this growth more inclusive and pro-poor. Unemploymentrates,particularlyamong the low-income segments of the population, remain extremely high.” Some improvements have been made though. The minimum guaranteed price

forcocoasetbythegovernmenttwoyears ago as part of a vast reform of the industry isrespectedonthegroundandroseto750 CFA francs per kilo this season, up from an average of 670 CFA francs before the reform. The government expects record production of 1.6m tonnes this year. Although the growth is still mostly driven by public investment, the share of foreign investment is growing. Annual private investment in the Ivorian economy doubled in 2013 to 513bn CFA francs, the government says. According to Maja Bovcon, a West Africa analyst at risk consultancy Maplecroft: “The adoption of the new investment code in 2012 has attracted private investment by providing several incentives, including tax reductions and targeted exemptions from value-added taxes, for private investors.” Companies are also getting more confident in the stability of the country. For example, chocolate and coffee maker Nestlé’s unit in Côte d’Ivoire has invested more than 10bn CFA francs over the past two years to recover from the war. Like many businesses, Nestlé closed its production sites and sales offices during the post-election violence. Aftertwo years of losses, Nestlé Côte d’Ivoire returned to profit in 2013. “We are recovering from this chapter of Côte d’Ivoire’s history,” country director

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côte d’IvoIre | country focus

the ruling coalition. The PDCI has not said if it will present a candidate or support Ouattara in 2015. After three years of electoral boycotts, the Front Populaire Ivoirien (FPI) is back inthegame.TheIvorianauthoritiesmade it clear they want to see the FPI participate so as to appear more democratic. The governmenthasauthorisedFPImeetings, and since August 2013 the justice system has released more than 150 allies of ex-President Laurent Gbagbo, including FPI president Pascal Affi N’Guessan. Despite these measures, the FPI has called for a boycott of the long-overdue population census, reviving identity issues and suggesting that reconciliation still has a long way to go.

Nestle

tRUSt SLow to bUILd

Patricio Astolfi told The Africa Report. “We are putting the company back on track. I’m extremely confident.” Larger multinationals are having an easier time than smaller local companies. “Weareseeingabigshortcomingincredit in the Ivorian market. Banks rarely loan to companies. Interest rates – which vary from 7 to 12% – are not encouraging for business,” says Kader Toure, the director of a small telecoms business. Governance issues are dissuading manyinvestors,sayanalystsandeconomists. “Huge operational hurdles persist, presenting major barriers to business,” says Control Risks’ Wille, citing “a burdensome bureaucracy, institutional deficiencies and high levels of corruption”. FISCAL PRESSURE

The authorities say they are working to improve the business climate. The government has set up commercial courts, and trade minister Jean-Louis Billon has revived the competition commission. Wille says, nonetheless, that “discussions with government officials are highly personalised, and political interference continues to be regularly reported.” Lakoun Ouattara, an Abidjan-based businessman, explains: “There is a lot that remains to be done about the heavy fiscalpressurethatcompaniesface.There the africa report

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The Commission Dialogue Vérité et Réconciliation, which has been renewed for one year, started hearings for victims of the nearly decade-long political crisis in March, two years after being set up. The body has not convinced Ivorians that it will bring about reconciliation in society. A military source who requested anonymity explains: “Ouattara still does not trust the former members of the defence and security forces who are pro-Gbagbo. He prefers to rely on the former commandants de zone [comzones, or ‘zone commanders’] of the rebellion that were all integrated into the new army. The protection of Ouattara’s regime depends on the comzones and the men who surround them. They hold strategic positions in the army and in the administration to

are high customs costs and delays in importing goods. The government’s acceptance of ad hoc bidding leads to unfair competition and causes corruption.” The government says it has reduced ad hoc contracts and waiting time. The security situation has improved, especially in Abidjan and Bouaké, but the west of the country remains unstable amid land disputes, ethnic tension and attacksneartheLiberianborder. Since January, at least Ouattara relies on the former two raids killing about 20 comzones of the rebellion people were reported. “The security situation to protect his regime in Côte d’Ivoire is primarily better protect the regime. The former undermined by the incomplete disarmament, demobilisation and reintegration combatants around the comzones are still programme and the delayed implementarmed. Ouattara has the same problem ation of the security sector reform,” notes in the RDR, where the absence of leadMaplecroft’s Bovcon. ers and a replacement stop him from The political challenges are also nustepping down.” With growth roaring into 2015, Presidmerous. A year ahead of the next present Ouattara’s skills will be tested by the idential election scheduled for October demands of an economy that requires 2015, 72-year-old Ouattara, leader of the deeper reforms. On the political front, he Rassemblement des Républicains (RDR), has said he will seek re-election despite will try to control the political forces that brought him to power and deal with the the illness that kept him away from international summits in April. Ouattara’s oppositionists wary of a political system supporters in the RDR could try to win that does not encourage reconciliation or the impartial application of justice. ● without the Parti Démocratique de Côte d’Ivoire (PDCI), which supported OuatWith additional reporting from tara in the run-off in 2010 and is part of Baudelaire Mieu in Abidjan

au g u s t- s e p t e m b e r 2 014

country focus | côte D’IvoIre

Côte d’Ivoire’s cotton production has doubled since 2009/10 and prices have risen

Bouaké

Awaiting the great revival

Devastated by 10 years of rebellion in which 60% of jobs were lost, the former industrial hub is restoring its infrastructure and trying to attract investment

ouaké, Côte d’Ivoire’s secondlargest city, is getting back on its feet after almost a decade of rule by the Forces Nouvelles rebels. Security has improved and rehabilitation works have begun. But economic recovery has been slower in this former industrial hub in the centre of the country. In Bouaké, Jacques N’Goran is a happy taxman. Over the past three years, the tax revenues his department has collected have grown sixfold. “We’ve been raising a lot of public awareness,” says N’Goran, regional director for Bouaké’s tax administration. “We’re trying to make people pay taxes again.” In Bouaké, a city ruled by rebels for nearly a decade after the attempted coup of 2002, this means a lot. “Things are getting back to normal,” N’Goran says, recalling the change since 2007, when government officials started to move back to Bouaké following the Ouagadougou Agreement between the Forces Nouvelles and the government of President Laurent Gbagbo. “At that time, we had no revenue target. People had many other concerns to deal with,” he explains. In 2013, Bouaké’s regional tax office collected about 4bn CFA francs

($8.2m), a recovery rate of only 40%. “For the large taxpayers like big companies, there is no problem. It is more complicated for individuals and small companies,” N’Goran says. When the political crisis divided the country, formal employment dropped and informal opportunities grew. “We keep raising awareness, but this year we’re also starting to threaten people who are still not paying.” N’Goran targets a recovery rate of 80% in two years. Upon his inauguration in April 2013, the mayor, Nicolas Djibo – who ran as an independent against President Alassane Ouattara’s ally Ibrahima Fanny – said Bouaké's regional tax ofﬁce aims to increase its tax take from 40% in 2013 to 80% in 2015

40%

80%

the city’s treasury was empty and his administration would focus on rehabilitating the city, which had a population of one and a half million people before the crisis. The municipal authorities are now struggling to raise revenue. Djibo says that Bouaké’s municipal budget has been 2bn CFA francs ($4.1m) over the past few years, down from 3.5bn CFA francs during the period of 1995 to 2000. rising from the ashes

The city is not the only source of finance; the central government is financing projects too. The newly asphalted roads in Bouaké suggest the city is in full revival. “Bouaké is rising from the ashes,” says a source based there who requested anonymity. “Under the rebels, there has been no development progress, there was no administration and the roads had completely deteriorated.” The state only took control of Bouaké after the 2010-2011 post-election crisis. In 2010, President Gbagbo’s refusal to acknowledge defeat in a presidential vote sparked five months of turmoil that killed at least 3,000 people. The Forces Nouvelles, who had made Bouaké their base, stood by Ouattara and descended to Abidjan, the economic capital. The authorities arrested Gbagbo in April 2011 after 10 days of fighting and he is now detained at the International Criminal Court in The Hague. ● ● ●

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Émilie RÉGNieR foR ja

country focus | côte d’IvoIre

Rehabilitation projects in Bouaké started late last year, ahead of the first official visit of President Ouattara in November. Roads have been renovated in the city centre, and works are still ongoing on some other key routes in the city. The next major infrastructure project that will affect it is the highway being studied by the government to link the capital, Yamoussoukro, to Bouaké. It should facilitate trade between Côte d’Ivoire and Burkina Faso. Some buildings are also being rehabilitated. Nouho Djande, sub-prefect of Bouaké, says: “Bouaké is returning to its state prior to the war.” All the government services are now back and operational in Bouaké, ensures Djande. The World Bank has backed projects to improve electricity and water provision in the city. The Banque Centrale des Etats de l’Afrique de l’Ouest plans to set up an office there. ●●●

silence of the looms

Companies have been slower to return. Before the conflict, Bouaké was Côte d’Ivoire’s second-largest industrial hub and was the home to textile companies and agribusinesses. Nearly 10 years of rebellion dealt a serious blow to Bouaké’s economy. Many companies shut down or relocated to Abidjan, which resulted in the loss of 60% of employment in the formal sector, according to documents from the local chamber of commerce. Founded in the 1920s, Etablissements Robert Gonfreville is one of Bouaké’s troubled textile firms, its 2002 workforce of 1,500 full-time employees reduced

to 550,000tn, up from from 480,000tn in 2013. The government’s new policy of guaranteeing minimum prices seems to be encouraging more growth. There have been similar results in the cotton sector. The CCA announced in July that cotton production reached 404,000tn in the 2013/2014 season, doubling that of the 2009/2010 season. Higher international cotton prices have also attracted more activity to the sector.

to only 300. Officials point to outdated equipment and logistical problems in getting raw materials. On the other hand, Singapore-based Olam opened a cashew-processing factory in Bouaké in 2012, some banks have opened new branches, and supermarkets have restarted their operations. Olam says its plant can treat 30,000tn of cashews per year and accounts for 2,400 jobs. “The industrial sector is totally devastated,” says a local businessman, who suggests “the government should set up a specific fund to help Bouaké restore its industries.” Sub-prefect Djande says he agrees and is optimistic: “More and more investors are coming to Bouaké.” Bouaké is a crossroads between the country’s north and south. Cotton and cashews are the major cash crops in the north, and new reforms are helping improve production levels. The government’s Conseil du Coton et de l’Anacarde (CCA), set up about a year ago, announced in June that cashew production had broken records this year rising

demobilisation problems

Security has largely improved during the past two years, inhabitants say. In the aftermath of the 2010-2011 crisis, banditry surged as many former fighters and militia members – armed and jobless – returned to the city. Melissa, a 30-year-old midwifery student, says: “The situation is quite a lot better now, things have really improved in the past two years. The police and the gendarmerie are back in the streets.” The security forces have been deployed and given the means to fight insecurity, affirms Djande. The fate of the ex-fighters remains a major problem. Côte d’Ivoire has an estimated 70,000 ex-fighters from all sides of the crisis, and many of them live in Bouaké. According to Ibrahima Diarrassouba, president of an association of demobilised fighters, more than half of them have not been reintegrated yet. “Morale is low” among the former combatants, Diarrassouba reckons. In April 2013, hundreds of fighters took to the streets of Bouaké to protest about the slow pace of the demobilisation and reintegration process. In June of this year, the Autorité pour le Désarmement, la Démobilisation et la Réintégration reported that more than 300 former combatants were undergoing training in Bouaké to help them to find jobs. The government integrated a few thousand combatants into its administration, including the customs, forestry and fire services. Still others received money to set up their own businesses, but they say they did not receive enough. “The reintegration programme has failed,” says a former fighter who asked for anonymity. “The system is slow and corrupt. Many ex-fighters feel abandoned by the authorities.” ●

Formal sector employment in Bouaké tumbled 60% during the rebellion

60%

Émilie RÉGNieR foR ja

Olivier Monnier in Bouaké

Textile production at Etablissements Gonfreville has dropped drastically since 2002

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INTERNATIONAL CERTIFICATION C O N F E R E N C E

country focus | côte d’IvoIre

PeOPle tO Watch

Boycotters, bankers and footballers Politicians are getting ready for elections in 2015, while businessmen, financiers and sportsmen plot out their futures

AbidjAn.net

ident Macky Sall. She joined the African lender last year. About 1,400 AfDB staff members will return to Abidjan before the end of the year. Another person who’s returning to a area he knows well is Georges Angama, who has imposed himself as a key figure in Côte d’Ivoire’s hotel sector. A former director of Yamoussoukro’s Hôtel Président,hefoundedhisowncompany,Heden Hôtels & Resorts. In May, the government awarded his company the management of Abidjan’s four-star Golf Hôtel. Angama is said to be very close to the ruling elite. He was director of the Golf Hotel when Ouattara was stuck there for a few months during the 2010-2011 post-election crisis. Despite the pressure from former President Laurent Gbagbo’s government, he refused to kick Ouattara out. Heden manages five other hotels in Côte d’Ivoire and plans to acquire about 30 others in the next five years. golden balls

iththeFrontPopulaireIvoirien (FPI) back in the political game, Pascal Affi N’Guessan is the main face of the former ruling party. Jailed in 2011 in the aftermath of the post-election crisis, N’Guessan was released in August 2013 and returned to his position as FPI president. A moderate, N’Guessan would like to be a presidential candidate in the next elections planned for 2015 and for the party to drop its electoral boycott. “We cannot eternally subscribe to the boycott. The party needs to move on, with or without Gbagbo,” N’Guessan said recently. The head of the FPI has to deal with the extreme wing of the party – the Gbagbo-or-nobody camp – and does not have much room for manoeuvre to impose his vision for the party. President Alassane Ouattara has already said he will seek re-election next year. It is still unclear whether Henri Konan Bédié’s Parti Démocratique de Côte d’Ivoire, a party currently in an alliance with Ouattara and the Rassemblement des Républicains, will present a candidate or support the president in the first round of the 2015 polls. The youngest member of Ouattara’s cabinet is 32-year-old budget minister Abdourahmane Cissé (1). A former Goldman Sachs trader educated at France’s Ecole Polytechnique, he returned toCôted’Ivoirein2012asapublicfinance adviser to President Ouattara. He joined the finance ministry as cabinet director for minister Nialé Kaba at the beginning of 2013 and was named budget minister in November. Cissé is known for his skills and his seriousness, but he is said to lack experience in the political game. TheAfricanDevelopmentBank(AfDB) returns to Abidjan this year after a decade in Tunis, where it was relocated following 2002’s failed coup. In charge of the move is Aminata Niane (2), 57, a former special adviser to Senegal’s Pres-

kAlpesh lAthigrA for jA

It is unclear where Didier Drogba (3) will play next season, but the Ivorian football superstar has already prepared his retirement. The former Chelsea striker has invested in the gold mining industry and earlier this year bought a 5% stake in the Société des Mines d’Ity, a company with a gold mine located in the west of the country. This year, Drogba launched his own brand of underwear, Drogba & Co. by HOM, in partnership with Marseille-based Hom. His foundation also announced last year that it will invest as much as $3.8m to build five health centres in the country. Jean Kacou Diagou, head of the insurance company NSIA, will end his term as president of the Conféderation Générale des Entreprises de Côte d’Ivoire later this year. His first vice-president Alain Kouadio, who is director of real estate company Kaydan, and Désiré Bilé are set to run against each other to succeed Diagou at the Ivorian employers’ association. Bilé is the president of the Fédération Nationale des Industries et Services and lost his post at the CGECI in October 2013 after opposing the prolongation of Diagou’s mandate. The winner of the election will aim to improve the management of the association after Diagou’s controversial tenure. ●

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Olivier Monnier in Abidjan

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country focus | côte d’IvoIre

total’s discovery at saphir-1xB raises hopes of other lucrative deposits in the area

ExtrActivE iNdustriEs

Production drops as expectations rise A new discovery in the country’s western waters could be key to the government’s plans to raise oil production rapidly by 2019

midst precipitous drops in oil production, the Ivorian government is promising a revolution in activity to raise the sector’s output almost tenfold over the next five years. In May, the government announced that production for 2013 had dropped to 9.1m barrels, a rate of about 25,000 barrels per day (bpd). However, in January, Prime Minister Daniel Kablan Duncan spoke of Côte d’Ivoire’s plans to raise oil output to 200,000 bpd by 2019. That lofty goal, if attained, could provide the country with significant new foreign exchange receipts, government revenue and boost the domestic supply of energy with associated gas. The country’s diminishing output comes from the Espoir and Baobab fields, located eastward, but Total made a discovery in April at its CI-514 Saphir-1XB well, the first such discovery in Côte d’Ivoire’s San Pedro Basin to the west. Together with discoveries in Sierra Leone and Liberia since 2009, Saphir1XB suggests that there could be large exploitable reserves elsewhere in Ivorian waters. Public officials tend to be cautious when discussing oil exploration prospects. Speaking soon after the CI-514 discovery, cabinet director at the petroleum and energy ministry Ndry Koffi said it “seems

an important discovery, but we must wait for the [full] evaluation before we can say whether it will have a significant impact.” natural depletion

In the months sinceDuncan’s announcement, the news has been mixed. The oil sector’s long-term potential seems to be sound, but the short term continues to disappoint. Figures from the petroleum and energy ministry put oil production in the first quarter of 2014 at around 40.85% lower than the same period last year. According to an official from the non-governmental organisation Publish What You Pay who requested anonymity: “This is not a new phenomenon. We had the same problems in 2007 and 2009, [however] at that time management was less transparent, so figures were doubted.

40 %

First quarter oil production in 2014 in Côte d’Ivoire was 40% down compared to the same period last year

Now civil society is involved, and public statements can be fact-checked.” There was a lack of transparency about the industry in 2006 when production reached a height of 60,000bpd. The ministry has attributed this unwelcome reduction to the natural depletion of Côte d’Ivoire’s main productive oil fields. In response, it has mapped out plans to invest in the Espoir and Baobab oil fields by 2017, as well as seeking to draw in more exploration activity from independent oil companies. Production is also expected to get underway at the CI-27 (Marlin, Manta), CI-202 (Gazelle) and CI-525 (Kudu) oil blocks in the near future, and additional drilling at the CI-24 and CI-26 oil fields is also on the agenda. Production could also rise after companies evaluate their recent discoveries on the CI-100, CI-401, CI-103 and CI-514 oil blocks. Rather than putting all of its hope in the hydrocarbon market, the government is seeking to draw investment into mining. To that effect, it has been awarding exploration permits apace since 2011 and the national assembly approved a new mining code in February 2014. The aim has been to provide regulatory clarity and stability, thereby improving governance while incentivising exploration and production activity. Among the new mining code’s innovations is the requirement for companies to create a rehabilitation fund to reduce the sector’s environmental impact and the imposition of an eight-year limit on exploration licences. ● Nana Ampofo

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Olivier fOr ja

côte d’IvoIre | country focus

BANKING

A cautious year leaves SGBCI struggling Côte d’Ivoire’s largest bank has attributed its fall in revenue to prudence over sub-prime loans, but it must square up to the advancing competition

n 21 May, the lobby at the headquartersofSociété Générale de Banques en Côte d’Ivoire (SGBCI) was transformed into an entertainment arena to celebrate the 150th anniversary of its French parent company, Société Générale. The festivities were somewhat dulled, however, by SGBCI’s decline in net income in 2013. Alexandre Maymat, head of the Africa/ Asia/Mediterranean Basin & Overseas region, had arrived from Paris to give a boost to morale. The annual general meeting held five days later approved the balance sheet for the previous year. SGBCI, Côte d’Ivoire’s largest bank (with 40% of the country’s civil servants on its books), saw revenue plummet by 44% in 2013, to stand at 13bn CFA francs ($27m). Around the same time, Banque Internationale pour le Commerce et l’Industrie de la Côte d’Ivoire (BICICI), the subsidiary of another French group, BNP Paribas, saw its net profits skyrocket by 77% to 9bn CFA francs.

Monetary Union regulator advised the banktocoveritsoperationalrisks,relating in particular to potentially unproductive business loans. SGBCI has therefore made provision for 11.4bn CFA francs in the books of the Banque Centrale des Etats de l’Afrique de l’Ouest, compared to only 18m CFA francs in 2012. Even if SGBCI attributes the decline in profits to operational risks, it has lost ground to competitors such as Ecobank. In personal and commerical loans, which SGBCI had dominated up to that point, it was overtaken last year by the local subsidiary of the panAfrican group. Ecobank granted loans worth 436bn CFA francs, almost 10bn more than SGBCI. SGBCI also suffered some social upheavals in the second half of 2013, SGBCI saw its revenues plunge 44 % in 2013

blip on the bourse

The drop in SGBCI’s net profits even sent a wave of panic through the Bourse Régionale des Valeurs Mobilières (BRVM) in Abidjan, causing share prices to fall between the end of May and early June. However, the market quickly recovered, with shares reaching 73,000 CFA francs on 18 June. “This loss is not of major concern to us, considering the stable growth in net banking income from 59.9bn to 60.7bn CFA francs between 2012 and 2013,” said a source close to the bank’s management. Total assets have also progressed – from a little over 8% to 865.4bn CFA francs in 2013. “The decline in earnings is a result of the prudent approach we adopted to fully fund potential risks identified by the banking commission,” said an internal source. After an audit in the second half of 2013, the West African Economic and

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branch roll-out

Caught up in conflict resolution and management restructuring, the group’s developmentprogrammeinCôted’Ivoire stalled. In 2013, only 3.7bn CFA francs of the 7.6bn budgeted were allocated to it. The bank has said that the opening of new branches will resume, taking the number from the current 67 to 80 by the end of 2015, and that business and personal loans will recommence. The bank is putting together a 75bn CFA franc loan for the Société Ivoirien de Raffinage to enable the state-owned company to secure its supply of crude oil. But in a market as competitive as Côte d’Ivoire these good intentions are not necessarily a guarantee for success. And Ecobank and BNP Paribas, as well as Bank of Africa, Banque Atlantique and Attijariwafa Bank, are among the challengers who don’t intend to lag behind. ● Baudelaire Mieu in Abidjan First published in Jeune Afrique

nAbil zorkot

SGBCI plans to ramp up its development programme to recover lost ground in 2014

which disrupted its operations. Hubert de Saint-Jean, who was appointed to head the bank in September, had to put in place a new management team to help it regain momentum. He recruited two deputy general managers: Harold Coffi, formerly of BIAO Côte d’Ivoire, and Bassirou Diagne, of Société Générale de Banques au Sénégal. To appease employees, management approved some salary increases, bringing the bank’s operating ratio to 61% against 54% previously (the average for the sector is around 70%).

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nut producer, accounting for 26% of global production, and Africa’s biggest producer with 48%.

Malamine SANOGO

Only 25,000 of the more than 500,000 tonnes Côte d’Ivoire produced in 2013 were processed: that’s just 5% of the total. The lack of industrial facilities deprives Côte d’Ivoire of added value and reduces job creation opportunities.

Managing Director, Conseil du Coton et de l’Anacarde

This situation is due to several factors, especially the fact that economic operators, despite their desire to invest in this potentially proﬁtable sector, are insufﬁciently aware of cashew processing technologies and equipment.

■ What does SIETTA mean to you? Malamine Sanogo: SIETTA is the French acronym for “Salon International des Equipements et des Technologies de Transformations de l’Anacarde” (International Exhibition of Cashew Processing Equipment and Technologies). Its goal is twofold: to promote cashew processing equipment and technologies with national and international investors, and to encourage local consumption of cashew-based products. SIETTA provides a priceless opportunity to spur the sector’s growth through local processing activities. The exhibition will help boost the productivity of companies in Côte d’Ivoire; make it easier to put together ﬁnancial deals and acquire processing equipment and technologies; encourage equipment manufacturers to

set up operations in Côte d’Ivoire; offer foreign decision-makers investment possibilities; promote Ivorian cashews’ assets and qualities; popularise cashew consumption; and give companies the conditions they need for their processing units to be proﬁtable.

■ You mentioned promoting cashew processing equipment and boosting the productivity of companies in Côte d’Ivoire. Could you be a little more speciﬁc? Malamine Sanogo: Côte d’Ivoire is the world’s second-leading cashew

To overcome that obstacle and boost the proﬁtability of processing units in Côte d’Ivoire, the Cotton and Cashew Council, under the presidency of the Ministry of Industry and Mining and the aegis of the Ministry of Agriculture, decided to hold the ﬁrst International Exhibition of Cashew Processing Equipment and Technologies (SIETTA) in Abidjan in November 2014. I would like to point out that the immediate goal is not to process all of Côte d’Ivoire’s output, but to ensure the sector’s sustainability by guaranteeing all the players, especially growers, a

■ What are the conditions for participating in the exhibition? Malamine Sanogo: SIETTA is an innovation and a real challenge for West Africa’s cashew sector. The exhibition aims to give West Africa a major role in the world’s cashew industry. Stakeholders from various backgrounds and players in every part of the cashew and cashew-based product trade and industry are expected to attend. Attractive packages have been put together to encourage them to come. The SIETTA site gives the details.

■ Have you got anything else to say or an appeal to make? Malamine Sanogo: In conclusion, I’m inviting all the equipment manufacturers in the world to come and promote

their inventions and know-how by participating in this exhibition organised by Côte d’ivoire. They’ll ﬁnd that Côte d’Ivoire offers them many breaks and real business opportunities. I’m inviting African cashew-producing countries. This event is an occasion full of opportunities to launch the cashew processing industry in our respective countries. You don’t have to go to India or Vietnam, but just across the border to make deals and participate in B-to-B meetings with local and international ﬁnancial institutions ready to support the cashew industry’s growth.

Lastly, I’d like to reassure everybody about the reality of this event, in which Côte d’Ivoire’s highest ofﬁcials are involved. SIETTA is co-organised by the Ministry of Agriculture and the Cotton and Cashew Council and has the full backing of the entire government. The President of the National Assembly of Côte d’Ivoire is the sponsor and the Minister of Industry and Mining the President. ■

International Cashew Processing Equipment

I’m inviting economic operators to come invest in cashew processing for added value to their sales and the harmonious development of our regions I’m inviting support structures to thank them for their help and urge them to continue backing us in developing the cashew industry.

2014

& Technology Show

For more information, please visit

www.conseilcotonanacarde.ci, the site of the Cotton and Cashew Council. To register online, please visit

www.sietta2014.com, SIETTA’s ofﬁcial site.

DIFCOM/FC - Photos : DR

decent proﬁt and by creating jobs in the countryside. Raising the processing rate from less than 5% today to 35% will go far towards achieving those goals.

country focus | côte d’IvoIre

opinion

Véronique Tadjo

Author

Ivorian artists and intellectuals in turmoil

he situation in Côte d’Ivoire has certainly improved, especially in Abidjan, the greedy economic capital. Things are on the move: heavy construction, newly repaired roads, buildings sprouting up, property developments everywhere. The city is expanding at a rapid pace to the point where the streets have difficulty withstanding the demographic pressure. And yet, little more than three years ago ‘the Battle of Abidjan’ was raging and people were holed up in their homes, sick with fear. Today, life looks brighter. Since President Alassane Ouattara came to power in 2011, the economy has posted a strong growth rate. Culturally speaking, things seem to be taking off too. This can be seen in the increasing number of art galleries in the city, one of the most recent being the Cécile Fakhoury Galerie. Located in the Cocody residential area, it is a magnificent spot and generously proportioned space where internationally acclaimed artists exhibit their work – at international prices.

industry. There is no well-developed market for books, and textbook sales are linked to regular state contracts. Nevertheless, several private groups have established literary awards. The organisers have also relaunched the Salon International du Livre d’Abidjan after a long period of inactivity. These initiatives have come as a breath of fresh air. Alas, here also, there are no guarantees about the sustainability of these advances. Due to a lack of government funding, many writers feel left to

In an interview with Jeune Afrique last year, Cécile Fakhoury, the owner and stepdaughter of Ivorian-Lebanese architect Pierre Fakhoury, stated that she wanted to open “Africa’s first contemporary art gallery in Abidjan”, while specifying that she did not mean a “contemporary African art gallery”. She explained: “Given the crisis the country went through, I believe we will have to wait at least five years for a real interest in contemporary art to work its way into the general public, professionals and buyers – Ivorians and foreigners – and for the market to really take off.” Nearby, the Fondation Charles Donwahi, along with other renowned galleries, backs many artistic projects. There is strong competition in the cultural environment, as artists seek to gain or regain their places in a shifting landscape. From a literary point of view, the publishing scene has been producing a diversified range, from novels to comic books. However, school textbooks remain crucial to the health of the the africa report

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their own devices. Indeed, only 1% of the national budget is allocated to culture. To make matters worse, higher education minister Gnamien Konan took aim at the Ivorian intellectual elite in May. “Literature cannot be used to build an emerging country. I, for one, was never taught that literature could help a nation increase its GDP or create value added,” he said. He also pointed to a deficit of more than 2,500 lecturers in Côte d’Ivoire’s five public universities. Three academics from Université Félix Houphouët-Boigny replied to the minister in an open letter. They characterised his statement as a “sustained attack” on the arts and humanities: “Intellectuals, writers, academics, artists, creators, literary figures and philosophers are not responsible for the state of our university, let alone our mental misery,” they said. They challenged the authorities: “We have a bright university, freshly painted, with water fountains to embellish the place, but no library, no classrooms and lecturers without offices.” Their frustration did not end there. Directly addressing the minister, the academics also denounced a mentality that prioritises economic growth: “How many books do you read on average per year? What types of paintings are displayed in your living room? Who are your favourite actors?

What kind of music do you listen to? Do you often attend gallery openings? Do you often feel like dancing? What are your criteria for choosing something ‘beautiful’? All the answers to these questions are related to your ability to ‘dream of progress’. However, dreaming of progress requires the will to grant culture a special place.” It is a hot topic, clearly. Either intellectuals are made to bear the blame for the crisis or they are criticised for not having voiced their thoughts. Professor Séry Bailly, a member of the Commission Dialogue Vérité et Réconciliation and a high-ranking member of the former president Laurent Gbagbo’s Front Populaire Ivoirien (FPI), says he finds all these criticisms unfair. “I think that intellectuals wrote extensively on the Ivorian crisis. The problem is that their viewpoints exist in parallel. People don’t come together to exchange ideas so that constructive dialogue can take place and we can move forward. Today, the politicians are out in front because what appears to be predominant is the struggle for power. The intellectual doesn’t belong in a place where politicians are at each other’s throats. Not only does he not want to be crushed, but he also knows his voice won’t be heard.” In almost all sectors of society, reconciliation is the central question in debates. In a country where the wounds of the violent politico-military crisis are still felt, the identity divide has not yet disappeared. However, Philippe Lacôte, whose film Run premiered at this year’s Cannes Film Festival (see page 95), says he wants to distance himself from this impasse. Speaking to the website Africultures, he said: “As a filmmaker, it is not my job to work for reconciliation because I don’t have the expertise. It’s a huge task to reconcile Ivorians, and if President Alassane Ouattara is making no headway, I’m not the one who will do so with my film.” He also brought up the difficulties he encountered during filming. “We were accused of many things: of making a pro-Gbagbo or a pro-Alassane film and having received millions! I’ve grown used to this. For Chroniques de Guerre en Côte d’Ivoire, when I filmed the FPI guys, they told me: ‘You are pro-Gbagbo’. And when I filmed Alassane’s camp, they told me I was pro-FRCI [Forces Républicaines de Côte d’Ivoire]. In the end, I told both camps: I will keep my images, you are on your own!” It looks like musicians are the ones making the most of the situation. Besides organising concerts for peace – with varying degrees of success – their voices are much more powerful, they renew them faster and get closer to the public. Yet even for them, there is no shortage of strife. Ouattara had to personally intervene in 2011 so that two reggae stars, Alpha Blondy and Tiken Jah Fakoly, would reconcile and put an end to their political differences. ● Véronique Tadjo is a writer, academic, novelist and author of books for young people. Her most recent novel is Loin de Mon Père (Actes Sud 2010).

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business | companies & markets

Retail

Bigger is better for Ghana’s malls New shopping centres are sweeping the continent, and they are bigger, shinier and busier. In West Africa, Ghana is taking the lead with the largest in the region

Chris stein for JA

30-minute drive from central Accra along the Accra-Cape Coast motorway takes you to Weija, a rapidly developing neighbourhood soon to be home to West Africa’s largest shopping mall. A grand site and a new road bypass are currently being constructed as part of the West Hills Mall development. The $100m complex will be the second built by the Atterbury Group after the Accra Mall built in 2007, and the South African property developers are upbeat. “We want to create a ‘Little Dubai’ in Ghana,” enthuses Johan Venter, Ghana retail manager for the group. Oncethefirstphaseiscompleted attheendofOctober,theWestHills Mall will cover 27,700m². After the second phase, the mall will cover 39,000m², which is 12,000m² more than the largest shopping mall in the region, Polo Park Mall in Enugu, Nigeria. Ghana’s Social Security and National Insurance Trust (SSNIT) owns 40% of West Hills Mall Limited with Delico Investments owning 60%. Delico is 75% owned by Att Africa (Atterbury)and25%ownedbyGhanaian businessmen. For Atterbury, Ghana is the ideal location in West Africa. Political stability, lower costs and the ease of doing business have meant that retail investors can plan for the long term and

use the country as a growth hub, attracting customers from across the region. Malls, however, have a long way to go to attract more consumer spending. “Currently, the formal retail sector in Ghana is very limited. Yes, retail is huge, but the biggest component of that industryisinformaltrade,” explains Moses Luri, head of retail leasing at property manager Broll Ghana.

the shiny new malls are aimed at middle-class Ghanaians, but also attract big spenders from Nigeria

GHANAIAN SHOPPING HABITS IN EVOLUTION According to a recent academic study, most Ghanaians still do their weekly shop at street markets (69%) or from street vendors (26%), while 17% now shop in supermarkets SOURCE: MENG ET AL (2014)

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17%

26%

69%

oil Lukoil announces a potential new oil and gas find at its Ghana block

“People still go to the markets to shop. People still prefer to buy their essentials from a corner shop next to their homes.” Though the formal retail market in Ghana is visibly and rapidly expanding, statistics for the sector remain anecdotal. Household consumption levels have jumped hugely in the past 10 years. They reached $28.4bn last year, compared with $6.2bn in 2003. The World Bank put the country’s per capita gross domestic product for 2013 at $1,850, compared with $426 in 2004. Investors take long vIew

The usual suspects – the growing middle classes – have been instrumental in the growth of the formal retail market. The one-stop-shop malls provide an easy alternative to the often difficult-to-manoeuvre open markets in Accra.

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companies & markets | business

Ghana as other markets across the continent, Venter is confident that the country’s population is large enough to support the industry. “We have Fifth Avenue, where you can go in and buy a Mont Blanc pen for 10,000 cedi [$2,600],” says Venter.

RAfAelyAGhoBZADeh/hAnslucAs.com

Photo12/AlAmy

big malls, big spending

Ghana’s government sought the intervention of the International Monetary Fund in August to help it fight large budget deficits and a depreciating currency, but its current economic crisis has not deterred investors. West Hills Mall has signed up 65 shops, not including restaurants and the two anchor supermarkets, ShopRite andPalace.Withthemall’stenancy mix, Venter says the group hopes to cater for the aspirational and high-middle-income customers with shops like Mr Price, Mango, Woolworths and Edgars. Atterbury also has its eyes set on the upmarket shopper. Though income levels are not as high in

$65 Average price per square metre for retail space in Accra, according to Broll

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Despite the optimism, a recent study by market intelligence company Sagaci Research shows that Senegal and Nigeria are more desirable locations for international brands. Ghana does not feature in Sagaci’s top five target markets in sub-Saharan Africa, excluding South Africa. The study places Sea Plaza in Dakar second, with the Ikeja City Mall in Lagos and Polo Park third and fourth, respectively. South African companies are leading the way in retail development in Ghana regardless. Atterbury is from South Africa and Broll Ghana is a joint venture between Sandton-based Broll, the State Insurance Company and the SSNIT. Atterbury is developing other new sites in Ghana, including the $55m Achimota Mall and one in Kumasi costing $110m. The group will also spend $130m on the second phase of the Accra Mall, and all three sites will be complete by 2017. RMB Westport, an affiliate of Rand Merchant Bank, is financing the construction of the Junction Shopping Centre in Nungua, greater Accra. Interest is also coming in from the US, with real estate group BGI working on malls and other retail and leisure developments in Accra and Kumasi. Joe Ofori-Atta, director of Woolworths Ghana, says that now is the time for Ghana to capitalise on the investment in retail and create a sector to rival that of oil and gas. “Retail could also bring in a big scale of GDP contributions. You’re bringing in big malls, big players and big spending,” says Ofori-Atta. He explains that a growing retail sector could also open the way to

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a more competitive local manufacturing industry and could help Ghana to become a regional distribution centre. Retailers, particularly from Togo and Nigeria, regularly visit the country. “People use Accra Mall as a shopping hub, where they come and shop in huge quantities to go and stock their shops in Lomé or LamaKara or wherever,” says Olympio Agbodza, the Accra Mall centre manager for Broll Ghana. OforiAtta also points to several occasions where Nigerian shoppers have gone into Woolworths and spent tens of thousands of dollars in one visit. need for speed

Not wanting to miss out on the opportunity such spending presents, Ofori-Atta calls on the government to keep ahead of the game by providing a conducive environment for those in the retail industry. It can take up to 42 days to get imports through Ghana’s ports, according to the World Bank’s Doing Business report. “Policy-makers should acknowledge and understand the benefit of retail into our market. We’re going to have sustainable careers and a big expansion in the services industry,” says Ofori-Atta. West Africa still has some way to go if it is going to catch up with other regions across the continent. Itaccountsforjust12%ofshopping centres in Africa excluding South Africa according to the Sagaci report. But with at least 100,000m² of shopping centre space to be constructed within the next year, according to Broll, Ghana is making headway. Venter explains: “We are longterm investors, we do not try and squeeze the last drop of blood out of a deal. We always leave something on the table for everybody to share, so it’s a worthwhile investment for us and the retailers that come with us.” ● Billie Adwoa McTernan in Accra

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dossier sustainable development

Fairtrade is no Fairtrade is not having a major impact on poverty levels in Ghana, but it is helping cocoa workers to send their children to school. Meanwhile, producers of other crops are calling for the expansion of Fairtrade markets for the regular income and social benefits they can deliver By Joan Nimarkoh in Accra

rosper Tamakloe has worked as a farmer on a Fairtrade banana plantation in the Volta Region for 18 years and admits that he can get higher wages working for a non-Fairtrade company. “I am happy to work on a Fairtrade plantation since my children have had the chance to further their education. My eldest son has already received his fees to go to senior secondary school,” he tells The Africa Report. Prosper earns around $45 a month, $10 less than some producers on the neighbouring private farm. Prosper says that non-Fairtrade

firms can have lower running costs that allow them to channel more into wages. Fairtrade plantations can have higher costs because they have to spend to maintain their certification. Fairtrade certification works like this: in addition to the minimum guaranteed price that Fairtrade offers, it provides a premium that is used for projects chosen by the community of farmers, be it drinking water wells, building schools or investment in production. The Fairtrade label – managed by the United Kingdom-based Fairtrade Foundation – has long been part of the trade justice debate for

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Through Fairtrade, Kuapa Kokoo cooperative aims to empower women farmers

poor farmers across the globe but has lately been attracting more criticism. From cotton to cocoa, Africa’s farmers and rural labourers have actively engaged in various Fairtrade schemes with promises of significantly higher returns than trading on the open market. However, research from London’s School of Oriental and African Studies published in May found evidence that Fairtrade labourers were often worse off that those working elsewhere and that social welfare services paid for by Fairtrade premiums were not universally accessible to the beneficiary communities. the africa report

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¢4

Fairtrade premium paid for each 64kg sack of cocoa sold

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Ghana’s Kuapa Kokoo (KK) - a cocoa farmers’ cooperative – has been engaged in the Fairtrade market since 1995. A 2013 report on the Fairtrade cocoa trade in Ghana that covered the period 2009 to 2013 and was financed by Britain’s Department for International Development found “the impacts are limited, and it does not seem that KK cocoa farming households are escaping poverty or moving up a wealth ladder as a result of Fairtrade certification.” It blamed structural problems in the cocoa industry, the fact that the Fairtrade-guaranteed minimum price was lower than the

wages remain low

Aubrey WAde/PANOS-reA

silver bullet

government’s minimum price and problems of transparency and accountability for the lack of benefit to individual farmers. When the market offers a price higher than the Fairtrade minimum, Fairtrade producers earn the market price. KK was established in 1993 as a response to market liberalisation and represents more than 85,000 farmers. The cooperative currently supplies about 40% of its members’ produce onto the Fairtrade market via the Ghana Cocoa Board (Cocobod). The Fairtrade premium, in contrast to its guaranteed price, now stands at ¢4 ($1.11) a bag above what farmers would otherwise receive from Cocobod, which is ¢212 per 64kg bag. KK points to the schools being built in Fairtrade areas as one of the benefits of the Fairtrade premium, and the educational investments are restricted to members of producer organisations that represent farmers on Fairtrade farms. In general, Ghana’s agricultural workers face difficult conditions marked by low wages and few opportunities for social protection or insurance provision. When Fairtrade pays more than the traditional market for other crops, the increase is usually modest, says Edward Kareweh, deputy general secretary of the Ghana Agricultural Workers’ Union (GAWU), the leading trade union for agriculture. He says that Fairtrade typically offers farmers an income only marginally above the minimum wage. Ghana is a leading supplier to Fairtrade cocoa markets – KK represented more than a quarter of the global Fairtrade cocoa market in the 2008/2009 season – and is one of the largest overall cocoa producers in the world. From 2009 to 2013 the Ghanaian cooperative sold an average of just 7% of its production on the Fairtrade market, according to the DfID-financed report. After the 2008/2009 ● ● ●

dossier | sustainable development

ThorsTen FUTh/LAIF-reA

season, KK’s Fairtrade production rose rapidly, increasing from 6,750tn in that season to 29,175tn in the 2011/2012 harvest – but Fairtrade still accounted for just 3.3% of Ghana’s 878,524tn production. The UK’s Cadbury company made a commitment in 2009 to purchase from Fairtrade sources, significantly increasing KK’s market share. Fairtrade also signed a new deal in January 2014 with German, Japanese and Swiss companies to expand its international reach. KK cites competition from other African markets as one of the reasons for its small share of the Fairtrade market prior to 2013. Despite Fairtrade’s limited contribution to fighting poverty, KK’s managersremainoptimisticabout ●●●

the future of Fairtrade cocoa. “As long as Fairtrade can continue to pay above the government price, we are happy continue working with them. The issue is whether we get an adequate share of the market,” says Francis Frimpong, the cooperative’s communications officer. Frimpong says that KK is considering opportunities with other international companies outside of Fairtrade as part of its long-term business strategy.

Kuapa Kokoo’s managers say Fairtrade brings benefits but getting a fair share of the global market is problematic

negotiation hurdles

The potential for Fairtrade to make a difference to farmers is evident in the Northern and Brong Ahafo regions, where the shea nut sector is experiencing high demand. Small-scale labourers,

the majority of whom are women, earn a meagre income on the free market. One kilo of unprocessed shea nut is sold for only ¢2 in local markets. Less than 5% of shea nut workers have the opportunity to sell their produce to companies that purchase Fairtrade goods such as The Body Shop. Oxfam Ghana says that more needs to be done to build the capacity of women labourers to negotiate collectively a fairer market price and take advantage of potentially lucrative export markets. Prospects for equitable trade measures lie in the capacity of producers to negotiate better conditions and wider access to markets. Strengthening producer organisations can provide a buffer against the vagaries of the global market, although low rural literacy and organisational capacity, limited experience in market negotiation and policy preference towards big agribusiness mean that Fairtrade producers face many obstacles. GAWU’s Kareweh says there has been some disappointment in the lack of impact Fairtrade has had on working conditions, which remain similar to those on private farms. He says there is a lack of partnership between Fairtrade outfits and agricultural labour unions at a policy and strategic level. Their interaction has been ad hoc, he adds. This can have an impact on Fairtrade producers’ ability to influence regulation around working conditions, which would be difficult to enact without policy support. ●

Fairtrade Focuses on aFrican Farmers For Fairtrade to make a major difference, its involvement in strengthening grassroots rural organisations is key, alongside a concerted effort to raise agricultural wages. africa plays a central role in Fairtrade’s success. in 2013, 61% of all farmers and labourers working under Fairtrade provisions lived in africa according to a Fairtrade report.

roughly 30% of global Fairtrade premiums are provided to african producers, but the prominence of the cocoa sector means that two thirds of those premiums are channelled to Ghana and kenya alone. Within africa, Fairtrade products are marketed in only two countries – South africa and kenya. Fairtrade africa was established in

2005 as the african Fairtrade Network (aFN), an affiliate of the Fairtrade Foundation based in the Uk. there were 164 african certified producer organisations in 2006, which has grown to 300 today. the entire Fairtrade enterprise covers an estimated 700,000 african farmers and workers. kenya is the leader in terms of workers in the Fairtrade domain, with 256,8000 in

2013, followed by tanzania with 157,400. in 2012, there were 82 certified labour and producer organisations in kenya, 38 in South africa and 55 in Côte d’ivoire. Fairtrade-certified products include bananas, cocoa, coffee, cotton, cut flowers, pineapples and tea. african producer organisations received $25.5m from Fairtrade premiums in 2013. ● J. N.

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day in the life

Extraordinary storiEs of ordinary pEoplE

ClementIne Calvé

194

money spinner As a child in his village, Sampson Akligoh set his sights on the city lights he’d never seen. He is now managing director of an investment banking firm in Accra

grew up in the countryside, where you don’t have an idea of what’s happening in the real world. I come from a very humble background. There was no electricity, and I didn’t have the privilege of playing computer games or watching movies. What helped me was reading history books. That’s how I learned that a lot of influential people went to Achimota secondary school in Accra. So I told myself I must go to that school to see what happens there. I quite remember my teachers telling me I wouldn’t be able to enter if I didn’t have connections. I used to spend a lot of time outdoors running around with other kids, but my mother advised me to stop playing football when I wrote my basic examination. I did well in the exams, I had a distinction, and without knowing anyone I was able to get admitted. The first time I lived in an environment that was fully lit, that was Achimota school. It was there that I realised I needed to develop my language skills and critical thinking. The school revolutionised the way I think and do things. I’m the first of five children. My mother had a huge influence on me. She sold salt and onions in the local market to look after us, and we all went to school. She sacrificed a lot:

she didn’t spend anything on herself for funerals and other social events. One of the key things I learned from her is to have an open mind and respect people across cultures. It’s not about where a person comes from, it’s who you are. At 17, I developed a strong passion for economics. That was the beginning, the shaping of my career. After university, where I studied economics and law, I had the opportunity to do my national service at Databank. I was 24 when I took over their economic desk.

opposites attract

In 2011 I left to do a Masters in Maastricht, and when I returned I became head of research at Databank. At around that time I decided to set up an investment banking firm with two friends from Achimota school. We opened our office this year. My wife and I were working together when we met. We’re total opposites, and that’s what attracted me to her. I am a very serious person; she takes life easy. She can say: let’s go to the movies, or: hey, let’s go grab a pizza. That’s something I just wouldn’t think of. I get a lot of satisfaction from creating wealth for people. Another exciting aspect is finding solutions for small and medium-sized enterprises, because it means you’re keeping people employed. We want to invest in unusual things, for example, a mechanic’s workshop. In Ghana, investment bankers are less well paid than commercial bankers. It’s not about greed; I want to contribute to the development of my country and build an institution that will deliver some of the values we need as a nation. ● Interview by Clementine Calvé the africa report

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