The Africa Report, Ghana Focus, November 2013 by The Africa Report

telecoms Gulf groups get serious

south africa Who’s who in the class war?

westgate terror What pushed Kenya into Somalia

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the africa report

Ghana

Tick, tock President Mahama is running a race against time to reboot the economy

monthly • n° 55 • noVemBer 2013

groupe jeune afrique ghana 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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telecoms Gulf groups get serious

south africa Who’s who in the class war?

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Kenya-nigeria The courtship across the continent

TeleCOmS Gulf groups get serious

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WeSTGATe TerrOr What pushed Kenya into Somalia

telecoms Gulf groups get serious

nAmIbIA Geingob: “Keep investors happy, but protect Namibia”

w w w.t heafr icarep or t.com

south africa Who’s who in the class war?

Westgate terror What pushed Kenya into Somalia

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telecoms Gulf groups get serious

south africa Who’s who in the class war?

contents

Westgate terror What pushed Kenya into Somalia

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the africa report

Ghana

Tick, tock

South Africa

What pushed

Who’s who

monthly • n° 55 • noVemBer 2013

Kenya into somalia

in the

President Mahama is running a race against time to reboot the economy

class war?

How poverty, security failures and radical recruiters sowed the seeds of a regional terror crisis groupe jeune afrique

international & eastern africa edition

• Who speaks for the poor? • Who will win the workers’ vote?

Nigeria-Kenya COURTING ACROSS THE CONTINENT

groupe jeune afrique

SOUTHern AFrICA edITIOn

ghana edition

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the africa report # 55 - november 2013

Business seizes East-West opportunities in energy, finance and construction

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groupe jeune afrique nigeria edition

4 Editorial let the people go 6 lEttErs 8 thE QuEstion

cover credits: international & eastern africa edition: stuart price/handout/reuters; ghana edition: rex features/rex/sipa; southern africa edition: damien glez; nigeria edition: emeric therond

Briefing 10 signposts & trends 14 people 18 international

20 calendar

frontLine 22 south africa Who’s who in the class war?

after 20 years in power, the anc no longer speaks for the poor, says a new breed of hard-headed union leaders and political activists. the race is on for the worker vote.

poLitics 34 38 40 42 45 46 46 47

South AfricA Who’S Who in the clASS WAr?

Kenya What pushed Kenya into somalia Kenya Westgate’s unanswered questions interview namibian PM hage Geingob tunisia a revolution deferred sudan debt deal’s high cost Guinea conflict after polls Madagascar Electoral alphabet soup Anansi to build a better opposition

country focus 49 Ghana Mahama’s race against time

KenyA WhAt puShed KenyA into SomAliA a botched security effort at home, and a radicalisation in the north, pushed Kenya into a regional war. terror at Westgate is its legacy.

Business 68 72 74 76 77 78 82

34 nigeriA-KenyA courting AcroSS the continent

nigeria-Kenya courting across the continent Hannibal Much to do in frontier economics senegal dakar anger on water shortages Zimbabwe Past weighs on the economy insurance cameroon’s chanas in new start leaders Phillips oduoza, Md, uBa Group finance false down for african steelmakers

DOSSIER TELECOMS 86 Gulf groups get serious; is the iPhone 5c worth it?; liquid telecoms focus on fibreto-home

Art & Life 96 soap operas small screen rivals 100 in Brief new York’s africa centre, books, senegalese news in rap, exhibitions 104 lifestyle natural hair, cairo’s musicians evade curfew 106 Last Word Kadija sesay the africa report

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ghAnA An economy goeS on triAl

president John mahama has a short window to deliver on election promises in health, education, agriculture and infrastructure This issue carries two inserts between pages 34-35 and 50-51 for selected countries

From Lagos to Nairobi and back, businessmen such as Aliko Dangote scent opportunities to expand their markets

editorial By Patrick Smith

Let the people go

rom fishing boats capsizing near Italy’s island of Lampedusa to the dusty border post near Garissa in Kenya’s North Eastern Province and ‘Amexica’, the bloody borderline between the United States and Mexico, we are all getting obsessed with migration. The first task is to end the human tragedy. That means taking the right of vulnerable people to travel out of the hands of criminal gangs and recognising the cultural and economic virtues of open borders. Let the people go. At the best guess, we are talking about 3% of the world’s people or about 200 million who leave their countries. Less than 20% of those migrants are estimated to be undocumented, and many are in the US working on farms for wages that few locals would consider. In most Western countries, migrants make up about 9% of the population. In the US it is about 13%, still lower than it was 100 years ago when the ‘great migration’ helped to create the most powerful economy in the world. In Africa, migration is even more critical in uplifting people’s lives, and the response of its governments is as myopic as their Western counterparts. Somalis, many of whom are entrepreneurs of a particularly determined genius, struggle to get licences to set up businesses even in neighbouring countries, let alone far-away South Africa. Tens of thousands of Zimbabweans who benefited from the post-independence education boom headed to the Beitbridge border and have spent the last decade or more in middle management jobs in South Africa. Why isn’t the African National Congress government more appreciative of their efforts and thoroughly condemnatory of grassroots xenophobia that attacks them and other migrants? Perhaps it is because many South African politicians are as pusillanimous and opportunist as their European counterparts. Today, migration keeps the US economy dynamic and innovative: 40% of its science and engineering PhDs are immigrants. Countries that welcome immigrants have stronger and more diverse economies than those that keep them out. Yet the führers of Europe’s growing fascist movements are more interested in peddling their prejudices than learning, and they are

alarmingly successful. Establishment politicians compete with each other to mimic the fascists’ xenophobia as they make the case for a ‘Fortress Europe’ to shore up their votes. As the Mediterranean Sea turns into an aquatic cemetery, politicians blithely ignore the human suffering and discuss more efficient ways to turn back the new boat people. This heartlessness and political populism is easier to understand than the outright stupidity of the little Europeans trying to lock out the world as they preside over an ageing continent that every year looks less relevant in the changing international order. It may have the world’s best museums, but After Lampedusa without friends and allies Europe does not have the ticket to the fuwe are obsessed ture. Instead of looking for ways to with migration. reinvigorate relations with a now resurgent Africa, European politiThe first task cians look like grumpy husbands is to end the in a bad marriage as their young attractive wives go on dates with human tragedy. Chinese internet entrepreneurs. That means Trying to win the anti-immigrant recognising the vote, British Prime Minister David Cameron came up with a spiffing cultural and wheeze in June: Whitehall would economic virtues charge all Nigerian, Ghanaian and Indian visa applicants a £3,000 of open borders. ($4,850) bond for the privilege of visiting Britain. Apparently, it would be returned on their departure. For once, corporate lobbyists and leftist internationalists spoke with one voice, condemning the move as an insane piece of nationalist populism. Britain is also making its universities prohibitely expensive to foreigners and making the issuance of student visas ever more Kafkaesque. Yet there must be a meeting of minds, if not at least an honest discussion of what is at stake. A year ago a fleshy faced corporate lawyer was holding forth in a London salon about the threat that migration posed to quintessential English values. His high-volume peroration prompted a dreadlocked Senegalese kora player to reply with a haiku-like history of European colonialism: “My friend, I’m here because you were there!” Happily, that particular confrontation ended in a glimmer of mutual understanding. ●

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Vision accomplished. The new S-Class.

A Daimler Brand

Redefining the limits of the possible is a natural obligation for the inventor of the automobile. The new S-Class exceeds the most stringent demands of comfort, safety and style by blending technology and aesthetics into a mobile masterpiece. www.mercedes-benz.com

letters For all your comments, suggestions and queries, please write to: The Editor, The Africa Report, 57bis Rue d’Auteuil - Paris 75016 - France. or editorial@theafricareport.com

the new order of african governance

mANUFACTURING The ‘Made in Africa’ revolution

zImbAbwE Polls reignite succession struggle

ALIKO dANGOTE The man who fixed Nigeria?

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t is not a secret that the infiltration of foreign cultures in Africa has robbed most African kings of their once highly enviable positions (‘Kings: Adapt or die!’, TAR54, Oct 2013). Africa’s traditional governing system may have suffered significant, if not irreparable, damage – especially from colonialism. But more and more communities seem Adapt or die! to be finding their footing in the current system. In Ghana for instance, one can barely find a newly installed chief or queen today who is not adequately educated or progressive. Some have expressed fear that the new crop of traditional leaders may abandon their cultures altogether, rendering themselves merely stewards in their communities. Maybe this is just the new order. Maybe the African traditional ruling system is just undergoing a transformation. Maybe we ought to give it another century. Antoinette Herrmann-Condobrey, New York, United States Zulu King Goodwill Zwelithini, King Ronald Mwenda Mutebi II of Buganda and Ashanti King Otumfuo Nana Osei Tutu II

Kings

Africa’s traditional leaders fight for a new role in an era of breakneck social change

groupe jeune afrique

SOUTHERN AFRICA, GHANA & UGANdA 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 5 GH¢ • Italy 4.90 € • Kenya 350 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

no aggressive tax plan In the recent article ‘Is Mauritius a tax haven?’ (TAR Finance Special, Sept 2013), Professor Sarah Bracking repeated a number of allegations about SABMiller’s tax practices from a 2010 report by ActionAid. All of these were strongly rejected by SABMiller at the time, and continue to be so. Prof Bracking represented the allegations

our total tax contribution around the world reached $10bn. These are not the figures of a company which engages in aggressive tax planning.

Andy Wales SVP Sustainable Development, SABMiller

justice is at stake Any withdrawal from the International Criminal Court would send the wrong signal about Africa’s commitment to protect and promote human rights and reject impunity - values central to the Act upon which the African Union itself was founded.

Tawanda Hondora Deputy director of Law and Policy, Amnesty International

correction

as facts without subjecting them to the academic analysis or scrutiny that might reasonably be expected. We actively engage with revenue authorities and are transparent with all our tax affairs. In 2010 (the year of the ActionAid report), SABMiller paid over $249m in corporate tax across our directly managed operations in sub-Saharan Africa and India. In the financial year ended 31 March 2013,

In the debate ‘Is Mauritius a tax haven?’, published on page 74 of The Africa Report’s Finance Special edition, the by-line was ommitted from the ‘Yes’ response due to a production error. The piece was written by Professor Sarah Bracking, University of Manchester.

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ADVERTISERS’ INDEX GOVERNMENT OF CHAD .......................... p 2 DAIMLER MERCEDES .............................. p 5 TOTAL ...................................................... p 7 BANK OF AFRICA ..................................... p 9 OLAM ..................................................... p 13 NESTLE CWA ................................... p 16-17 TULLOW OIL .......................................... p 21 MTN GROUP .......................................... p 27

REPUBLIC OF DJIBOUTI ................... p 30-33 ADDAX PETROLEUM .............................. p 39 INTERPLAST ........................................... p 48 AIG HMD FOREWIN ................................ p 53 SOCIETE GENERALE GH ......................... p 55 ADEXEN ................................................. p 57 DELMAS CMA CGM ............................... p 57 ENTERPRISE GROUP .............................. p 59

INFORMA AFRICA COM .......................... p 61 MAERSK LINE GHANA ............................ p 61 TULLOW OIL .......................................... p 63 ACTIVA INT. INSURANCE ........................ p 65 UT BANK ................................................ p 67 THE ROYAL BANK .................................. p 73 HOLIDAY INN .......................................... p 75 AIR FRANCE KLM ................................... p 79

LABADI BEACH HOTEL ........................... p 81 J.H.B.S. OF PUBLIC HEALTH .................. p 83 BRVM ASEA ........................................... p 85 FRANCE TELECOM ORANGE .................. p 89 DDP OUTDOOR ...................................... p 91 GLOBAL MEDIA ALLIANCE ..................... p 91 CARMIX METALGALANTE ....................... p 93 COMP. INDUSTRIELLE INT. ..................... p 93

FRISOMAT .............................................. p 93 CLARION EVENTS .................................. p 95 FIORI GROUP .......................................... p 95 THE AFRICA CEO FORUM .................... p 101 CNN ..................................................... p 103 SKYVISION ........................................... p 107 ECOBANK ............................................. p 108

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the question To respond to this month’s Question, visit www.theafricareport.com. You can also find The Africa Report on Facebook and on Twitter @theafricareport. Comments, suggestions and queries can also be sent to: The Editor, The Africa Report, 57bis Rue d’Auteuil, Paris 75016, France or editorial@theafricareport.com

nigeria plans to train an astronaut by 2015 and now has three functioning satellites in orbit that are used for communications and scientific research. People at home and abroad have questioned the government’s priorities

Should African governments fund space programmes?

Yes Ashish ThAkkAr Founder, Mara Group, Uganda

Of Africa’s major oil exporters, Nigeria has arguably been one of the most successful at achieving a stable, diversified economy. In order to [do this], Nigeria has had to invest – in its infrastructure, its resources and its people. The expansion of its so-called space programme, which is in fact a series of investments in satellite communications technology, plays an important part in its diversification efforts. Data collected from the programme over the past 10 years has already been put to good use. In Lagos, for example, satellite images have helped inform urban planning and tax collection, as well as manage the rapidly growing population of Africa’s second-largest city. This continued investment in science and technology is crucial if countries like Nigeria, and Africa as a whole, want to genuinely compete on a global scale. Having been fortunate enough to secure a place on Virgin Galactic’s first mission to space, I am a huge advocate of all things space related. By making Africa a part of the ‘space race’ rather than an outsider looking in, I hope we can inspire a new generation of African scientists with big, boundless ambitions. ●

No Oluseun Onigbinde Co-founder, BudgIT, Nigeria

A government that could not raise N57bn ($356m) to complete its 2009 allowances agreement with the university teachers, why should it raise funds for a space programme? We have 10.5 million children out of school, and we need Gordon Brown and a United Kingdom charity to help us. We abuse public resources. If you look at the structure of the Nigerian federal government’s actual expenditure of $25bn, the biggest chunk goes to recurrent expenditure, which consists of salaries and running costs of ministries and public utilities. Less than 18% is actually spent on capital expenditure by the federal government. We are one of the three nations with polio incidences in the world; why not commit to quickly end that? What about the power transmission infrastructure that we are raising debt to improve? What happened to capital investments in our refineries to improve them? We have agriculture graduates without access to capital to kickstart their dreams. There are many issues within Nigerian society begging for resources. We choose the luxury and the glossy one. Nigeria is rich in resources, but its people are not rich. There are 16 million unemployed people in Nigeria. Will a space programme lift people out of poverty and provide jobs on a large scale? Funding a space programme is for image laundering. ●

RespONses to last month’s question:

should African political parties publish their list of donors? Yeah right, the donor funding has a lot of bearing on the agenda of the party. Nii C’dore via Twitter They should publish the names if they really believe it is an era of corporate governance. Basically, publishing the names will enable the public to know if there is any influence as regards governance vis-a-vis the individual or company that donated the funds. Femi Osuntubo via Facebook They should be compelled to do so in the interests of transparency and clean governance. Riyaaz Ismail via Twitter Two issues: wealth declaration of individuals should be first, and nations should be wary of tribalism-related backlash. Bingawaho Gakunju via Twitter Transparency is vital they should be compelled to publish lists of donors. We know it’s not gonna happen in reality. @Yo_Mandym via Twitter

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briefing | signposts

of the political leaders in Africa have come out against the ICC, it is unclear whether the majority of African people feel likewise. While waiting for a continent-wide opinion poll on the question – a serious information gap – the anecdotal evidence suggests that plenty of Africans are happy to have an outside check on their own governments. More than 140 human rights and activist groups wrote a letter to the AU to that effect. Kenyatta’s next step is Icc to appeal to the UN Security Council for deferral of the trials, by citing regional security concerns, perhaps In the end, it was a classic Uhuru Kenyatta and Sudan’s in an effort to browbeat the politician’s fudge. Perhaps President Omar al-Bashir. US and UK over anti-terror they were mindful of Kofi “Sitting heads of state and concerns, highlighted by the Annan’s blistering attack government should not attack by Al Shabaab militia (see page 11), calling it be prosecuted while in on the Westgate shopping a “badge of shame” for any office,” said Ethiopia’s foreign mall in September (see page country to pull out of the minister Tedros Adhanom 34). MPs most opposed to International Criminal Court Ghebreyesus, after the AU the ICC, those in the (ICC). Perhaps they just passed a resolution to majority Jubilee Alliance of did not have the votes. In the that effect, suggesting that Kenyatta and Ruto, are trying end, the African Union (AU) Kenyatta should not show to orchestrate a pull-out. member states present at up for the start of his trial Perhaps in an attempt to the 12 October extraordinary on 12 November should head off these challenges, summit announced that they the ICC remain inflexible. the ICC announced on 17 would not abandon the In July, the AU sent a letter October that Kenyatta was Rome Statute that created to The Hague asking that partially excused from the ICC. But they want the Kenyan trials be dealt attending his trial. The a suspension of the cases with by Kenyan courts. But prosecution is expected to against Kenya’s President while the large majority appeal. ●

Pull out? Perhaps not

what the neighbours are saying about...

… raids by the United States government on terrorist suspects in Somalia and Libya “As the Pentagon and the CIA continue [their] interventionist projects in Africa, the people of the continent will resist these murderous operations”

AbAyomi Azikiwe | editor of the Pan-African News Wire, quoted on SpyGhana.com

“When will they learn? It wasn’t quite Black Hawk Down, but America’s latest military intervention in Somalia was another Simon AlliSon | Daily Maverick, South Africa unmitigated failure” “You can’t say no to a strategic ally. All this denouncing by Libyan authorities is just a smokescreen so as not to offend editoriAl, El WAtAN | Algeria public opinion”

fotolia

The summit was held at aU headquarters in abbis ababa

Xinhua/ZuMa/REa

Transparency

Emerging players are catching up

A new breed of emerging market multinational is lagging behind established global companies when it comes to overall transparency, but not by much. A study published in October by Transparency International (TI) of 100 of the world’s fastestgrowing emerging market multinationals found they scored an average of 3.6 out of 10 in anti-corruption programmes, organisational transparency and country-by-country reporting. The established multinationals scored 4.8 in a similar TI report. However, the emerging market players scored higher than their more established counterparts when it came to country-bycountry reporting. Indian firm Tata Communications topped the list, with 7.1 out of 10. Just three South African companies – Bidvest, Sappi and Sasol – and one Egyptian firm – El Sewedy Electric – were included. ●

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briefing

people

Abubakar Kawu Baraje Baraje leads the New PDP, an offshoot of the ruling party that split away in late August, claiming that the PDP has become autocratic and unprincipled The ruling PeoPle’s DemocraTic ParTy PDP was long creaking under the weight of disagreements, but the most recent break nevertheless did not come from the most obvious quarters. abubakar Kawu Baraje, the breakaway faction’s leader, was a popular fixture by the side of President goodluck Jonathan during his pre-election campaign tour in 2011 and considered a party stalwart. however, Baraje’s loyalties lie with his political godfather Bukola saraki, the Kwara central senator. saraki has fallen out with the current government after being investigated by the economic and Financial crimes commission. seven state governors and former vice-president atiku abubakar formed the new PDP in late august as a rival centre of power, making it unclear whether it would form its own political organisation or seek to take over the PDP. The new PDP is now pressuring Jonathan to drop the investigation into saraki and is using its position as a bargaining chip to start jostling for positions in the government likely to be formed after elections in 2015.

1982 Earned a bachelor’s degree from Ahmadu Bello University

2007 Was assistant director for Umaru Musa Yar’Adua’s presidential campaign

The quiet-spoken Baraje rose from being a teacher and educational administrator to permanent secretary of Kwara state, the highest civil service position. That ascent is said to have been meritorious. even his detractors say his service was without blemish. “Kawu was a committed teacher whose passion for his job rode him up to the position,” says Kolade olaoluwa, a former student activist. Few would say the same of his political career. While he also rose

August 2013 Became the chairman of the New PDP splinter group

2008 Elected national secretary of the PDP

to PDP national party secretary in 2008, insiders put this down to political favour from saraki. as one PDP member put it: “he is not a political animal who understands the nigerian field, otherwise he would have used the opportunity to become a minister or something like that. as it is, he was simply left outside.” Danjuma Bello sarki, the secretary general of the national youth council of nigeria in Kaduna state, says: “Kawu is not an astute politician.

Karamba Diaby and Charles M. Huber

Ali Zeidan and Abu Anas al-Liby

Senegal’s former President Leopold Senghor started a legacy for Senegalese in European parliaments. Senegalborn Diaby won a seat for the German Social Democratic Party (SDP) in the country’s late September’s polls. Huber, of Senegalese and German parentage, took a seat for Germany’s Christian Democtratic Union (CDU).

Two night raids in Libya fared very differently. Assailants kidnapped prime minister Ali Zeidan in Tripoli on 10 October and held him for a couple of hours. On 5 October, US security forces seized Abu Anas al-Liby. He is now awaiting trial in the US for involvement in the 1998 bombings of US embassies in Tanzania and Kenya. the africa report

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mwai KibaKi Kenya’s former president, the only leader eligible for the Mo Ibrahim Prize for good governance, was snubbed in mid-October when the Mo Ibrahim Foundation declined to award its prize this year.

E. AHMED/EPA/MAXPPP

aLan Knott-Craig The CEO of South African mobile operator Cell C is positioning himself as the defender of the small guy, taking Vodacom and MTN to the Competition Commission for anti-competitive practices (see page 86).

A spat between Haroon Lorgat of Cricket South Africa and the head of the Board of Control for Cricket in India threatened to curtail India’s cricket tour to South Africa, due to start in December.

M. GArTEN/UN PHOTO

M. NUrELDIN ABDALLAH FOr JA

ramtane Lamamra

Ghanaian poet, literature professor and former permanent representative to the United Nations died on 21 September as one of the 72 victims of the attack on the Westgate shopping centre in Nairobi. The 78-year-old professor was in Nairobi to participate in a literary festival. Figures across the literary world paid him tribute. •

Haroon Lorgat

The African Union’s peace and security commissioner left his post to become Algeria’s foreign minister during a reshuffle of President Abdelaziz Bouteflika’s government in September.

Kofi Awoonor

the africa report

A. rAHI/AP/SIPA

Dennis Kimetto Kenya’s Dennis Kimetto won the Chicago marathon with a new course record time of 02:03:45 on 13 October. Kimetto won the Tokyo marathon in February, but just two years ago was tending fields in Eldoret.

He is just an anointed boy of the Saraki political block, so all the way he has been a player of his godfather’s script.” Although Baraje’s support is thin on the ground, he has backers, ordinary people who see him as an alternative voice forced to work within the system. Shehu Malami, a businessman, says: “The man is just loyal to a kingmaker in the PDP, just like any other politician in Nigeria, but he is a man of integrity who was able to hold the divergent interests within the party.” There is little doubt that PDP chairman Bamaga Tukur lacks the soft touch required to herd Nigeria’s divergent political interests in a unified direction. The party has been scrambling to remain unified, rescheduling two emergency meetings with Jonathan in October. Baraje has also worked the media hard since taking his new role. Very much a behind-the-scenes operator, he has now emerged to hold press conferences and release statements to media outlets on a weekly basis. The New PDP has so far failed to outmanoeuvre its rivals through the courts. The New PDP challenged Tukur’s leadership via the Independent National Electoral Commission (INEC), but the INEC refused to recognise Baraje and his allies as authentic party leaders in October. Lagos State High Court also dismissed a suit the New PDP brought against Tukur, which argued that he was not the real PDP chairman. A senior PDP official says that although Baraje is often dismissed as a lightweight, he should not be underestimated: “Baraje may surprise people. He has been climbing the ranks without making noise. If his godfather is let off the hook, definitely he will automatically have a stake Monica Mark in Lagos in 2015.” ●

FOTOArENA/PANOrAMIC

Good times

moHameD abDi Hassan Pride came before a fall for Somali pirate boss Mohammed Abdi Hassan. Belgian authorities lured the so-called lynchpin of the pirate business to Brussels with the promise of starring in a documentary.

Bad times

Boosting nutrition education and physical activity in Africa with the Nestlé Healthy Kids Global Programme

he Central and West Africa Region has not been left untouched by the increasing burden of under-nutrition, which is affecting developing countries worldwide. To help ameliorate the dire situation, Nestlé, the world’s leading Nutrition, Health and Wellness company, $?(,9022& 208%,;!# 9:< 4!02:;& -9#< Global Programme in 2009, part of concerted efforts to improve children’s dietary habits. The initiative focuses on nutrition education, good nutritional practices, healthy lifestyles, and physical activity among school children, with the help of national and international partnerships. The programme acknowledges the %!=0:96! 9/"0,: :;! #!(,9!%,& 9% essential food nutrients such as vitamin A, Zinc, Iron or Iodine can have on the growth of children. These include stunted growth, a reduced intelligence quotient, and a lower resistance to infection. Statistics show that about one third of children in West Africa are stunted in growth, according to the Food and Agriculture Organization (FAO). The FAO has also highlighted that malnutrition is one of the main causes of high mortality rates in the sub-region. 35$ &!0>< 0?:!> :;! 4!02:;& -9#< Global Programme was first launched, Nestlé extended the initiative to Central and West Africa. As part of the programme, the company is supporting the Ministries

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of Education in Ghana and Nigeria in an effort to put nutrition training and physical activity on the learning agenda of basic schools. Promoting nutrition education and physical activity towards better health: In Nigeria, the programme is already making an impact on more than 15,000 children aged six to 12 in the states of Lagos, Oyo, Ogun and Ondo.

Through the Nestlé/IAAF partnership, over 200,000 primary school pupils in Nigeria are expected to be reached in the next 12 months through athletics coaching organised in schools in 1.0#0%) 12$>9%) *5!>>9) -0%$) +<0.0) and Gombe. 1++7'< 0?(290:! 9% :;0: ,$8%:>&) :;! Athletics Federation of Nigeria (AFN), is collaborating with Nestlé Nigeria to further develop the programme and promote athletics in schools.

Kids manual, food models and sports kits to use in their 45-minute lesson each week, while another manual has been developed for the teachers to improve their pedagogy in nutrition and physical education.

“Our Healthy Kids Programme aims to +'1,$ .,$33! ,$"!(0'4 +$' /'4')+. 3& 1 healthy lifestyle, and give them the chance to develop positive attitudes and behaviours towards food and exercise, and maintain them into adulthood”. Kais Marzouki, Head of Nestlé’s Central & West Africa Region

The Nestlé Healthy Kids Global Programme involves equipping teachers with innovative skills to promote nutrition education in the classroom by engaging and encouraging the pupils to develop good eating habits and getting involved in physical activities that will help enhance their health. In Nigeria, the initiative is supported by the Lagos, Oyo, Ogun and Ondo State governments, and is

facilitated by the Centre for Health Education, Population and Nutrition (CHEPON). It relies on literary methods like poetry and songs to make learning more exciting for the pupils.

Improving dietary and sanitary practices: In Ghana, the programme was launched in 2011 and has, so far, reached more than 4,000 students in the Agona East and Juaboso districts in Central and Western Regions. This also includes about 2,000 children at the University of Ghana Basic Schools, the institution adopted as a model for Nestlé’s Healthy Kids Global Programme in the country. Children receive a Nestlé Healthy

The programme is being extended to the Ashanti, Eastern and Northern Regions, reaching over 9,400 children by the end of 2013 through a partnership with Ghana’s Ministry of Education (Ghana Education Service) and the Nutrition and Food Science Department of the University of Ghana, providing beneficiary teachers with the tools to enable them reach out to the youngsters. This year, Nestlé teamed up with the International Association of Athletics Federations (IAAF) Kids’ Athletics programme in an effort to promote athletics, which is in line with the physical activity component of the Healthy Kids Global Programme, 1534% +$' /'4'),"10# 2*2"!.Meeting the nutritional needs of kids in the sub-region: The Healthy Kids Global Programme is expected to be rolled out in the other CWAR countries, with Cameroon and Côte d’Ivoire due soon. Globally, the programme will reach 80 countries by 2015, up from the 64 running it currently with 5.4 million kids in 2012 alone. You want to stay connected? Contact us on: http://www.nestle-cwa.com http://www.facebook.com/nestlecwar http://www.youtube.com/nestlecwar http://www.twitter.com/nestlecwar corporate.communications@gh.nestle.com csvforum-cwar.com

KEY HIGHLIGHTS Over 15,000 children aged six to (/ 7% +7;!<71 916! .!%!'8!# =<$0 89! "<$;<100!* 39! "<$;<100! 2$$4: :!8 8$ <!1,9 0$<! 891% 9,000 children in Ghana .& 89! !%# $= /)(-* In all, 826 Teachers have been reached in both countries, with 606 trained in Nigeria and 220 7% 591%1*

briefing NOVEMBER

Film AFricA 1-10 Nov London | UK The Royal African Society festival brings African cinema to six London venues, with director Q&As. filmafrica.org.uk

EUrAFric ForUm 4-7 Nov Lyon | FrANcE eurafric.org

icT4Ag 4-8 Nov KigALi | rwANdA ict4ag.org

cAlENdAr

to concerns over members’ human rights abuses. The gathering also comes shortly after gambia withdrew from the bloc, branding the Commonwealth “neocolonial”. chogm2013.lk

AFricA com 12-14 Nov CApe Town | soUTh AFricA See page 86 for a special report on African telecoms. africa.comworldseries.com

powEriNg AFricA: ThE FiNANcE opTioNs 14-15 Nov CApe Town | soUTh AFricA The first of a three-part conference series, moving on to Addis Ababa on 28-29 november and dar es Salaam on 29-31 January. energynet.co.uk

iNTErmodAl AFricA 21-22 Nov

wEsT AFricAN powEr iNdUsTry coNvENTioN 26-27 Nov

poRT eLizAbeTH | soUTh AFricA The conference is the largest in Africa for shipping logistics. transportevents.com

LAgoS | NigEriA wapicforum.com

6th iNTErNATioNAl coNgrEss oF AFricAN womEN 26-30 Nov

gAboN locAl ElEcTioNs 23 Nov

AbidJAn | côTE d’ivoirE femmesperformantes.com

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DECEMBER

gUiNEA bissAU gENErAl ElEcTioNs 24 Nov

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AbidJAn | côTE d’ivoirE aseabrvm.com

20Th AFricA oil wEEK 25-29 Nov

AFricAN high growTh mArKETs sUmmiT 2-3 dec

CApe Town | soUTh AFricA The event will include frontier exploration in Kenya, namibia and Tanzania. petro21.com

AddiS AbAbA | EThiopiA cemea.economistconferences.com

AFricAN mEdiA lEAdErs ForUm 6-8 Nov

LAgoS | NigEriA nigeriafashionweek.com

commoNwEAlTh hEAds oF govErNmENT mEETiNg 10-17 Nov

CoLombo | sri lANKA Commonwealth members will meet amid controversy, with Canadian prime minister Stephen Harper threatening to boycott due

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NigEriA FAshioN wEEK 7-10 Nov

Jon HRUSA/epA/CoRbiS

AddiS AbAbA | EThiopiA africanmedialeadersforum.org

e.SCHneibeR/Un

TriAls bEgiN oF morsi, KENyATTA ANd mAlEmA 4, 12, 18 November Three of the year’s highly anticipated trials hit the courts this month. On 4 November, ousted Egyptian President Mohammed Morsi will face charges of inciting murder, relating to deadly clashes between opposition protesters and Muslim Brotherhood supporters last year. Kenyan President Uhuru Kenyatta is due to take the stand at the International Criminal Court in The Hague on 12 November to answer accusations of crimes against humanity dating back to 2008 post-election violence. He has requested to attend the proceedings via video link rather than in person. Finally comes the turn of populist South African politician and former ANC youth league leader Julius Malema, due to stand trial 18 to 29 November in Polokwane over accusations of corruption. the africa report

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country focus Ghana Mahama is facing criticism for the country’s debt problem

Rex FeAtuRes/Rex/sIPA

An economy goes on trial After the Supreme Court dismissed challenges to President Mahama’s 2012 electoral victory this August, the country’s combative politicians have shifted to a new battlefield. Now it is all about the economy and whether the government’s great industrialisation strategy is reality or rhetoric By Billie Adwoa McTernan in Accra and Patrick Smith

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or the first nine months of this year, Ghana was waiting to exhale. Its two main political parties were locked in mortal combat at the Supreme Court, fighting over the legitimacy of the December 2012 election result. However loudly politicians might protest that it was business as usual, the government seemed to be on hold. President John Dramani Mahama put a determinedly positive spin on the hearings, telling The Africa Report: “Ghana has gained a tremendous amount. The electoral commission has called for

country focus | ghana

memoranda from the political parties expressing their thoughts on reform. Our elections have continued to be reformed since we started this process in 1992. We must continue to learn from our experiences and improve on our performance.” In the short term, economic pressures are mounting. While the nation was riveted by the Supreme Court case, several financial management and administrative problems worsened and held back growth. Visiting Ghana in September, the International Monetary Fund’s (IMF) Christina Daseking sounded some alarms: “The main risks to the economy arise from a large current account deficit – projected to increase to above 13% of GDP [gross domestic product] in response to much weaker gold and cocoa prices and ongoing fiscal pressures.” Due to overruns in the wage bill, the cost of electricity subsidies and high interest payments on public debt, Daseking calculated that the government would not hit the budget deficit target - that is 9% of GDP - for the year announced by finance minister Seth Terkper. This is despite his reimposition of national stabilisation and import levies in the middle of the year. Nevertheless, some more bruising battles between the government and the unions over public-sector pay lie ahead. But most damning was the IMF’s assessment that the government’s debt – at an estimated 50% of GDP – now exceeds the level at which the government under President John Kufuor negotiated debt relief through the Heavily Indebted Poor Countries initiative.

Key targets for the NDC government taRget

Reality

Incomes: “Our economic policies and programmes will aim at the attainment of a per capita income of at least $2,300 by year 2017,” says the 2013-2017 NDC manifesto.

Incomes: Per capita income of $1,550 as of 2012. The most optimistic forecasts suggest it could rise by 10%, marginally ahead of inflation, to around $1,700 by the end of 2013. Budget deficit as a percentage of gross domestic product (January to August 2013): 7.3%.

Budget deficit as a percentage of gross domestic product (January to August 2013): 6.6%. Public sector wage bill: ¢4.9bn ($2.3bn)

Public sector wage bill: ¢5bn and a further ¢674.8m on clearing wage arrears, making total spending of ¢5.7bn

Economy

Tax revenue (2013): ¢9.1bn. This projected rise was based on tax increases in the 2012 budget and higher revenue from oil and mining.

Tax revenue (2013): ¢7.7bn. This adds to pressure on the budget deficit.

Primary Education: Of the first tranche Primary Education: Eliminate the remaining of 1,683 schools to be built in the 2009 2,600 ‘schools under trees’ after the programme, 42% were completed and completion of the 2009 building handed over to communities, 20% programme and provide decent are at advanced stages and 38% facilities for all rural schools. The are at various stages of completion. government says there were 4,300 ‘schools under trees’ in 2009. Secondary Education: Education The government discussed plans for Secondary Education: Build 200 50 new secondary schools in August senior high schools by 2017 Tertiary Education: Build 10 new colleges of further education. National Health Insurance Scheme (NHIS): Implement a one-time premium policy for NHIS applicants and expand the NHIS to cover the whole population, as intended by its architects. The NDC insisted it would ensure that all Ghanaians, regardless of their income, get access to quality health care

Tertiary Education: The construction of new colleges has not begun.

NHIS: The government abandoned the plan for a one-off premium payment in September 2013. Only 8.8 million out of Ghana’s 25 million people are registered. That is just more than 35% of the population. All consumers contribute to the NHIS, but the poor benefit least because Health they cannot afford the premiums

New hospitals: Comprehensive plans to build new hospitals in all of the regions.

New hospitals: Construction work on six regional hospitals is in the preliminary stages.

Youth unemployment: The government Youth unemployment: To establish a ¢10m is discussing plans for the YJEDF. Between Youth Jobs and Enterprise Development 2009 and 2012, it spent ¢950m on Fund (YJEDF) to encourage and what was rebranded the Ghana Youth support young people to become Employment and Entrepreneurial entrepreneurs and create Development Agency (GYEEDA). sustainable job opportunities. It A formal police investigation would do this through a specialised of widespread corruption in GYEEDA’s agency that would sub-contract Job creation contract awards began in October. specialist consultants. Agricultural production: The agriculture sector declined by 3.9% in the second quarter of this year, compared with growth of 1.1% in the first quarter.

Agricultural production: Overall agricultural production should grow by 4.9% in 2013. In 2012, overall agricultural production grew by 2.6%. Cocoa production: The goal is to produce 1m tn per year of Ghana’s leading cash crop.

Agriculture

Cocoa production: Ghana produced 835,410tn during the 2012/2013 cocoa season, down 5% on the previous season.

SOurCES: NDC mANIFESTO, mINISTrIES OF FINANCE, TrADE & INDuSTrY, EDuCATION, HEAlTH

DoMIno EffEct

More than accountability or governance, it seems to have been the IMF’s alarm over rising debt levels and the fiscal and current account deficit that prompted the rating agency Fitch to downgrade Ghana from B+ to B for long-term foreign currency borrowing on 17 October. Terkper acknowledges that there is a serious debt problem, although he disputes the IMF’s figures. Much of the problem dates back to when the government opened up the spending taps in the run-up to the 2012 elections. A particularly egregious example is the massive overspending by the Ghana Youth Employment and Entrepreneurial Development Agency (GYEEDA), which prompted a police investigation. Facing criticismfromanti-corruptioncampaignthe africa report

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The oil sector is at the centre of the government’s strategy

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However, manufacturing and processing still account for less than 10% of the economy after suffering a vertiginous decline under structural adjustment policies in the 1980s. An estimated 80% of jobs are found in the informal sector. SHARING THE WEALTH

SOURCE: Ghanaian aUthORitiES and imf

ersforslowreactionstotheGYEEDAsaga, opment plans will be quickly derailed. There would be political consequences Mahama responds: “We are not stalling. We are actively engaged in considering too, in a society where citizens are inand weighing all the factors so that the creasingly conscious of their rights and the government’s duty to be accountable. decisions that are made will be in the Over the past three decades, Ghana absolute best interest of our nation.” Investorslooking at enticing opportunhas been a regional pacesetter for ecoities in the oil and gas sector and assonomic management and political liberalisation. Two years ago, the World Bank ciated industries are worried about the reclassified Ghana as a lower-middlereliability of power and water supplies. These structural issues are at the forefront income country, and the government of debate because Ghana is Investors worry about at a critical juncture. With the right mix of policy dethe reliability of the country’s cisions, political will and enpower and water supplies trepreneurial flair, it could take the economic high road announced ambitious targets to raise pursued so successfully by its counterthe annual average income per head parts in East Asia, with which it was at to $2,300 by 2013 as a stepping stone to level pegging some 50 years ago. full middle-income status (see page 50). “Now is the time to invest,” trade and industry minister Haruna Iddrisu told a This transition means an unceasing relipacked conference hall at the Corporate ance on the money and capital markets Council on Africa summit in Chicago on for finance and a dwindling reservoir of 9 October. The minister reeled off statsubsidised development loans. istics such as the $20bn of investment Gold, cocoa and now oil dominate due in the oil and gas industry over the Ghana’s exports, but services such as next five years. information technology and the highly visible construction sector now account Iddrisu’s pitch was that the pace of economic improvement was quickening for half the country’s national income. and that those investors coming early High debts at surging rates would benefit most. Few of the hardnosed business people at the meeting (percent Domestic debt of GDP) (percent) could quarrel with the strong points IdForeign debt 60 25 drisu laid out: Ghana’s location, its strong Average nominal domestic rate (right scale) natural resource base, tens of thousands 50 20 of hectares of arable land and highly 40 creative people mean that the country 15 has the basis for the development of a 30 diversified and industrialised economy. 10 20 Yet such an outcome is far from inevitable. If the government loosens its grip 5 10 on financial management, fails to tackle the debt build-up and tolerates rising 0 0 2007 2008 2009 2010 2011 2012 levels of crony capitalism, its bold devel-

Afterrobusteconomicgrowthforadecade – it was 8% last year, and the IMF forecasts 7% this year – extreme poverty has been falling. However, just over a quarter of Ghana’s 25 million people still live below the poverty line. The population growth rate is around 2.2% and this means the economy will have to generate some 6-7 million jobs over the next 20 years to absorb new entrants into the labour market. Although the national growth rates sound impressive, the real test is the distribution of that growth, according to the deputy governor of the Bank of Ghana, Millison Narh: “We are talking about inclusive growth to bring all those eking out a living into the formal economy so that they can benefit from financial services to raise their standard of living.” To achieve that diversification and create more formal-sector jobs, the government wants to use the oil and gas industry as a platform for industrialisation and higher-value agriculture. That means the gas processing plant under construction at Atuabo in the Western Region will become an industrialisation hub, generating electricity for mines, factories and consumers as well as providing feedstock for fertiliser and petrochemicals plants. In this way, Ghana’s economy is set to be rebalanced structurally and geographically. The rapid expansion of the Takoradi-Sekondi area will establish a third metropolis to challenge the dominance of Accra and Kumasi (see page 54). Standing in the way of these grand

Max Milligan/gettyiMages

country focus | ghana

ambitions in the short term, at least, are the unreliability of power and water supplies and the lack of affordable private sector finance. Tackling the energy and water problems means boosting public investment, and that means higher tariffs. At the beginning of October, the Public Utilities Regulatory Commission approvedahikeof79%inelectricitytariffs and 52% for water. Almost immediately, the Trade Union Congress gave the government a 10-day ultimatum to reverse the charges or face a national strike. President Mahama is stuck between increasingly militant unions and the

managers of public utilities who insist they cannot provide reliable services at the current level of state subventions. All three companies in the power chain – electricity generator Volta River Authority, transmission company GRIDCo and transmission company Electricity Company of Ghana – complain of crippling under-investment that makes it impossible to maintain current output, let alone expand it. Rapid development of the oil and gas sector is the government’s main energy strategy. Its progress has been hit badly by the delays and cost overruns at the Atu-

abo plant being built under the direction of George Sipa Yankey, chief executive of the Ghana National Gas Company. The Ghana National Petroleum Corporation (GNPC) has done a better job of managing the oil sector. Despite last year’s technical hitches, production at the 2bn-barrel Jubilee field – jointly managing by GNPC, Ireland’s Tullow and the US’s Kosmos and Anadarko – is back on target at around 125,000 barrels per day (bpd). By 2016, the Tweneboa Enyenra (TEN) Ntomme field should add another 85,000bpd, with the GNPC determined to start on a few more fields by then. ●

The NPP prepares for the 2016 race Ten hopefuls could compete to be the party’s candidate in the upcoming elections as Nana Akufo-Addo contemplates his political future

fter losing the December 2012 elections and a bid to overturn the result in the Supreme Court, the New Patriotic Party (NPP) has its sights set on the 2016 elections. Under its rules, the party must hold its national delegates conference, which elects the party’s national chairman, general secretary and presidential candidate, by December 2014. Thebigquestioniswhethertheveteran campaigner Nana Akufo-Addo will run for the presidential nomination again. That would mean he would be the party’s candidate for the third time running in 2016. There are precedents for this in Ghana. The late John Atta Mills of the governingNationalDemocraticCongress (NDC) lost two elections before winning the presidency in 2008. Akufo-Addo declined to make any quick announcement about his political plans after the Supreme Court dismissed the NPP’s election petition in August. While Akufo-Addo, 69, took a break from the spotlight, nine contenders for the NPP leadership came out of the woodwork. The most prominent is Alan ‘Cash’ Kyerematen, 58, who at one time was an ambassador to Washington, as well as the minister of trade and industry under former President John Kufuor.

Kyerematen ran for the position of party flag bearer in 2006 and 2010, losing to Akufo-Addo both times. In the 2010 primaries, in which the party greatly expanded the number of voting delegates and reduced the opportunities for vote buying, Kyerematen took just 20% of the vote. There is no doubting Kyerematen’s ambition: although working as a trade adviser to the United Nations in Addis Ababa, he regularly attended the Supreme Court hearings for the NPP’s petition. Kyerematen has the backing of Kufuor and his business friends, together with a more flamboyant style than Akufo-Addo’s, so some calculate that he would give the NDC a tougher challenge in 2016. Others see Kyerematen as a lightweight and argue that his candidacy would strengthen the perception that the

NPP is an Ashanti party. NPP managers have to promote the party’s national credentials if they are to take on the NDC in the north, east and west. Akufo-Addo is likely to announce in November whether he will run again. If he does not, his running mate in the 2012 elections, Mahamudu Bawumia, will aim for the presidency. Bawumia, a technocrat and ex-central banker from the north, has yet to establish himself as a strong national figure. Other contenders include Daniel Botwe, minority chief whip in parliament, and Boakye Agyarko, who was Akufo-Addo’s campaign manager in 2012. ThemomentumisbehindAkufo-Addo running again, trading on his experience, publicprofileandoratoricalstyle.Hissupporters are preparing a strong campaign to carry him over the line once more. ● Bilie Adwoa McTernan in Accra

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country focus | ghAnA

Takoradi harbour has rediscovered its vocation thanks to oil

Chris stein for tar

WesTern region

Go west young men and women! The oil boom has doubled the population of the region’s twin cities while land prices have skyrocketed. But are local people really benefiting from the metamorphosis?

mid the haggling, hawking and suffocating traffic jams around Market Circle in the middle of the oil capital of Takoradi, Ghana’s new energy economy is emerging. There are grandiose plans for a domestic gas industry that will power homes and factories across the country, another oil refinery and a petrochemicals complex, all on top of a great boost to export earnings. There are also plans to develop the six coastal districts in the Western Region, to improve road and railway links, upgrade some of the worst slum areas around the cities and build a new district hospital. Plans for an industrial free zone in Sekondi, Takoradi’s twin city, are moving ahead, with factories to process bauxite and provide employment for the growing population. shopkeepers forced out

But there are doubts about how much peoplearereallybenefitingfromthislocal boom as this formerly sleepy provincial capital expands pell mell. To start with, the shopkeepers at Market Circle fear for their livelihoods. They have been paying rent for between five and 10 years in advance but the bold new plans to redevelop Takoradi’s central business district could price these traders out of the Market Circle area. Local companies are building new shopping facilities on the outskirts of the city and some of the traders in the centre of town are being encouraged to move there, but it will take many years. Russia’s Renaissance Group is building

one of these projects, called King City, some 10km from central Takoradi. Yet this ambitious project, sprawling over 800 hectares and with housing for rich and poor alike, will not be completed for another 10-15 years. As rents go up and old buildings are knocked down, those living in central Takoradi are also facing pressure to move to the suburbs. From there, they have to negotiate the increasingly dense traffic jams. Nana Kobina Nketsia V is the chief of Essikado in Sekondi and one of the most influential and outspoken traditional leaders in the Western Region house of chiefs. He says the chiefs’ demand in the run-up to the 2008 elections, for 10% of national oil revenue to be allocated to the Western Region, is still on the table, even though the 1992 constitution rules out such economic devolution. Nketsia sums up the ambivalence of local people towards the fast-growing oil industry. With the right management the region could avoid the ‘resource curse’ and become a growth pole for GHANA

Kumasi

IVORY COAST

100 km

SekondiTakoradi

ACCRA

Gulf of Guinea

the West African subregion, he insists. Ghana has some way to go before that can happen: its proven oil reserves of a billion barrels are slightly more than 3% of Nigeria’s. “We should have learnt about the oil industry and the harms and benefits,” muses Nketsia, “because with it comes an oil culture and I’m not sure we are prepared.” why no new airport?

He is also a firm advocate of more even regional development. The way to address that, he says, is with a new landuse plan to restructure the city and to improve the Western Region’s road links with the rest of the country. Nketsia is also worried about the lack of economic planning and strategy in the region. “If we can plan a new airport for Accra or Tamale, why can’t we have a new one for Sekondi-Takoradi?” he asks. “You can see how much traffic into and out of the city has increased, especially by air.” The agriculture sector, which is by far the largest employer of labour in the region, is focused on newer cash crops, such as oil palm and more recently rubber, which are gradually replacing traditional crops such as cassava, plantain and cocoa. This, Nketsia says, has led to farming families selling off or leasing their land to cash-crop buyers and plantation companies. Having done so, they risk finding themselves homeless in a city where they could struggle to find a place they can afford to rent. These socio-economic pressures are growing even as many families try to help out their destitute relatives. ● ● ● the africa report

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country focus | ghana

To watch out west Nana Akwasi Ankamah the 30-year-old architect is the realestate developer behind oil village, a 100-acre gated community some 20km away from takoradi. once completed, the development will provide housing, a clubhouse, a golf course and possibly a helipad to cater for wealthy returnees looking to buy and expatriates who can shell out a minimum of $2,500 per month for a studio apartment and $4,500 for a bungalow.

Kakra AsirifuaDuku the only woman working in operations for her company, expro, asirifua-Duku is a rarity in the ghanaian oil and gas industry. the data acquisition field engineer hails from asankrangwa in the Western region. for her, it is important that locals work at different levels in the sector to assist in creating developmental plans in line with what local communities desire.

all picTureS: chriS STein for Tar

Anthony Cudjoe the development of “first-class roads” is a priority for Captain (retired) anthony Cudjoe, chief executive of the sekondi-takoradi metropolis. the government appointed Cudjoe, who is a former soldier and also worked in security, to the position in 2010. in December 2012 he contested and lost the sekondi seat in parliamentary elections on an nDC ticket.

●●● “I am not advocating some sort of simplistic regionalism or irredentism,” says Nketsia. “I am simply a community leader who does not even have a voice in the Sekondi-Takoradi Metropolitan Assembly.” He wants to encourage people to stay in farming and has called on the government to move away from the colonial-era system of giving out 99-year land leases. The Sekondi-Takoradi metropolis has vast stretches of rich green land, much of which has been grabbed by investors as far out as 20km from the centre. Land prices are shooting up as a result. The metropolitan authority for Takoradi and Sekondi has been inundated with requests for land since 2010, when commercial oil production started. In some cases the price of land has increased by 500%. Though this is good news for landowners, it puts heavy pressure on those that do not have access to such holdings.

oilmen live it large

growth areas include warehousing and construction equipment hire. In the past five years the area’s population has mushroomed from 250,000 to 650,000-700,000, according to Captain Anthony Cudjoe, metropolitan chief executive of the Sekondi-Takoradi area. The rapidly expanding population has put some pressure on government to provide the necessary facilities and services. Reliable and clean water supplies, in particular, along with improved sanitation, are much in demand as the conurbation grows. love for sale

“While oil and gas provide opportunities, they also have social consequences,” Cudjoe cautions. For example, the combination of growing unemployment and the arrival of wellpaid expatriate oil industry staff seems to have sparked a boom in sex workers, who gather at popular drinking spots just a 10-minute drive from the airport. But many of the oil workers are not putting down roots in Takoradi-Sekondi or even adding substantially to the local economy. They fly into Takoradi for a month and then go back to Accra – where their head offices are – or even back to their home countries then return to Takoradi a month later. The government is building a railway line to boost public transport and eventually improve freight services for Ghana’s farmers. Initially, the new line will go from Sekondi to Takoradi via Kojokrom – covering about 25-30km – and will be used for both cargo and

As the oil and gas industry takes off in the Western Region, with its associated mega-industrial projects, the early beneficiaries are the international oil companies themselves and the smaller logistics companies run by Ghanaians. The other fast-growing areas are property and hospitality businesses. “The number of hotel rooms in the city has doubled in the past three years, and so have their prices,” says Eugene Ofori-Atta, who runs one of the most successful architectural practices in the city. “Residential accommodation for top oil exAccommodation for top oil ecutives is going for up to $10,000 a month,” he executives is going for adds. House rentals in as much as $10,000 a month some of the city’s most desirable areas such as Beach Road, Airport Ridge and Chapel passengers. That stretch is to be comHill can command as much as $5,000pleted by late 2014, then President John Dramani Mahama’s government wants $10,000 per month, thanks to the influx of high-spending expatriates. the rail link from Takoradi-Sekondi One of the biggest hotel projects is to be extended to Kumasi and Accra. the 132-room Protea Hotel built by In its pre-oil period, Takoradi was Alliance Estates Limited in the exclusknown as a vital export hub, but with ive Beach Road area at a cost of more poor roads and rising joblessness. The new oil boom – which could be relatthan $8m. It is due to be completed ively short – is driving the city to take next year. Ofori-Atta points to the rapid growth on a new economic role and social of services linked to oil and other inshape, leading it to return to its former dustries: “We have seen new businesses role as one of the busiest ports along springing up doing everything from the West African seaboard. ● Billie Adwoa McTernan and banking to quarrying, private transport hire to heavy-duty haulage.” Other Kwabena Mensah in Takoradi-Sekondi the africa report

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country focus | ghana

Infrastructure

Funding gaps, ‘go-slows’ and Chinese hopes

The government needs to spend $1.2bn a year for a decade to fill infrastructure gaps. China plans to provide much of the funding, but talks are slow

he Accra government’s infrastructure financing hopes rest with state-run lenders in Beijing, but so far oil money is not leading to a much-neededconstructionboom.While Chinese companies are building the Bui Dam and the Sunon Asogli power plant to meet rising demand for electricity, major road, railroad and other infrastructure projects sit on the drawing board as the government negotiates the terms of deals first signed in 2010 with the China Development Bank and the Export-Import Bank of China (China Exim Bank). “The problem is that we have very little due diligence,” says Franklin Cudjoe of the IMANI Center for Policy and Education.

Development of the railway lines along the Central and Western corridors, to be financed with a proposed $10.4bn China Exim Bank loan, has been delayed. When he was still vice-president in April 2012, John Dramani Mahama said the government had started negotiations on a $6bn tranche for electricity, water, health and education projects. While rehabilitation of part of the Western Corridor is underway (see page 54), the other works have yet to begin due to financing delays. The governmentsignedacontractworth$6bn with China National Machinery Import and Export Corporation for much of the construction work on the rail lines in November 2010. The Chinese financi-

ers expect the government to repay the loans with receipts from exports of raw materials like cocoa and oil. BRINGING RIVALS TOGETHER

Ghana has been a testing ground for cooperation between geopolitical rivals. The export credit agencies of the United States (US) and China have agreed to work together to fund two projects. In March 2012, the Export-Import Bank of the US agreed to provide a loan of $15m fortheSunyaniwaterproject,whileChina Exim Bank came up with a $93m export credit that would allow China’s MCC8 Group to expand and rehabilitate water infrastructure in Brong-Ahafo ● ● ●

Ghana’s major infrastructure development projects Rehabilitation of Western, Eastern and Central rail lines In 2012 the Ghana Railway Development Authority announced funding for a massive railroad rehabilitation programme: it would use $900m from the Industrial and Commercial Bank of China for the Eastern Line, $1.95bn from China Exim Bank for the Central Line and $500m from the China Development Bank for the Western Line. The Western Line is the only one now operational, and only partly so.

Accra-Cape CoastTakoradi Road The government is currently conducting feasibility studies for the dualisation of the road and studying the prospects of developing the project as a public-private partnership.

In progress

Completed

Bolgatanga

Kpando-WoraworaDambai Road

Wa Tamale Damongo

Bui Dam Sinohydro is building the dam, which is financed with loans from the China Exim Bank. Bui Dam has designed capacity to produce 400MW. The first 133MW unit began production in May 2013 and the other two are set to commence before the end of the year.

Planned

Bawku

The government-financed ¢47.5m ($22m) road linking the Volta Region and northern Ghana was due to be completed in 2012 by South Korea’s Shinsung Engineering & Construction Company, but the government has been slow in paying.

Yendi

Sunon Asogli Independent Power Plant

Techiman

Sunyani

Kumasi

Obuasi

Tarkwa

Asamankese

Cape Coast SekondiTakoradi

Tema ACCRA

Shenzhen Energy Group and the China-Africa Development Fund financed and completed the 200MW plant in 2010. The company plans to expand capacity to 560MW, but the plant has been running at below its official capacity due to problems on the West African Gas Pipeline.

Accra Intelligent Traffic System Launched in March 2013, this project will create an integrated system of 182 intelligent traffic lights at a cost of $135m, which will be sourced from the government’s $3bn loan from the China Development Bank.

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country focus | ghana

Accra is dogged by commuter traffic jams as workers return to their suburbs to sleep

has tentative plans to build an airport in the remaining six of the country’s 10 regions. With $1.5bn in donor funding for the project, the government has split the Eastern Corridor road – from Tema to Kulungugu on the border with Burkina Faso – into seven lots. Chinese contractors are working on several of them.

CHRIS STEIN/AFP

rush-hour gridlock

● ● ● Region. The two also agreed to a similar financing structure for a road in the Western Corridor. Meanwhile, the government has problems with projects that it plans to finance itself. In August, roads and highways minister Amin Amidu Sulemani put a hold on the awarding of new road construction contracts so the government can pay those that have already begun works. The government expects to make progress on projects such as the Buipe– Tamale road and the Ayamfuri-Asawinso road this year. In early 2013, the Association of Road Contractors reported that the government owed its members ¢400m ($184m).

bonds to finance

When finance minister Seth Terkper announced the 2013 budget in February, he made it clear that infrastructure development was high on the government’s agenda. In 2011, the World Bank said that Ghana would need to spend $400m annually to fill its infrastructure funding gap. Two years later, in August 2013, the government predicted that in fact it will need to spend $1.2bn per year over at least the next 10 years to close the infrastructure deficit. In August, Terkper disclosed that government has plans to issue 15- to 20-year bonds to finance infrastructure projects. A report by the National Development Planning Commission in 2010 revealed thatGhanahada66,220kmroadnetwork, 41% of which is in good condition, 27% in fair and 32% in poor. The 14.1km George BushHighwayinAccra–morecommonly

known as the N1 – was completed in 2012 at a cost of $173.2m using funds from the US government’s Millennium Challenge Corporation. The highway is part of the ambitiousLagos-Abidjanhighwayproject initiated by the Economic Community of West African States. The plan is to expand the road network from Abidjan, Accra, Lomé and Cotonou to Lagos to a six-lane motorway.

source: Department of urban roaDs

Road space usage

Trotro 25% Car 33%

Bus 7% LDV 8% Taxi 22%

Bicycle 0% Motorcycle 1% Med Truck 3% Heavy Truck 1%

Other 0%

To the east of the country some improvements are also on course. The 70km Kpando-Worawora-Dambaihighwayhas been 10 years in the making. Now in its third phase, the road is to serve as a link from the Volta Region and the north. Outside of the southernmost regions, it becomesapparentthatmuchofthecountry’s road networks are underdeveloped. A drive from Accra to Wa, 710km away in the Upper West Region, can take 12 hours, not accounting for traffic. “The difficulty is getting from Tamale to Wa,” says a road contractor living in Accra. “And we don’t have an airport there [Wa], so you have to take the road.” The government

Traffic congestion still haunts the capital. When drivers attempt to navigate through Accra at rush hour – 8am or 4pm on a weekday – then they are sure to face the dreaded ‘go-slow’ in any direction. Streams of traffic clog the roads as commuters make their way from nearby districts into the city for work in the morning. It is not uncommon to see traffic wardens directing traffic at major junctions in the city throughout the day in a bid to ease traffic flow. The 2010 housing census revealed that Accra is home to some 1.7 million people, with a further 1 million entering the city daily for a variety of socioeconomic reasons. There is a road network of 1,800km, according to the Accra Metropolitan Assembly, on which some 605,739 registered cars ride while nearby Tema has 256,956, according to figures from the ministry of transport. With rising incomes in Ghana’s middle classes, the department of urban roads predicts that the number of cars in Ghana will increase fivefold over the next 20 years. A five-year $95m urban transport project financed by the World Bank, Agence Française de Développement and the Global Environment Facility is due to be completed in December 2014, two years past the original December 2012 deadline. The project is supposed to improve road transport to ease movement in urban areas and also to implement bus rapid transit systems in Accra and Kumasi. In March, the department of urban roads commenced the $135m Accra Intelligent Traffic Management System to coordinate 182 new intelligent traffic lights in the city. The funds were due to come from the government’s $3bn China Development Bank loan, but a source at the department said they are still waiting for the ministry of finance to finalise the loan so work can begin. ● Billie Adwoa McTernan in Accra and Marshall Van Valen

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country focus | ghana

interview

Seth Dei

Co-owner and founding board member, Blue Skies Ghana

Growing markets in and around Ghana the fruit processing business set up as a free-zone company for exports to europe. now, it sells locally, and has its eye on regional expansion TAR: Is Ghana experiencing renewed efforts to promote local goods? SeTh DeI: From businesses, yes, I see that. The Ghana market is not very large, so businesses find that to continue to grow they have to export and many of them target the Economic Community of West African States. You can see that trend. You go to neighbouring countries, and you see a lot of Ghanaian products. I think there is a maturing consciousness among business executives in Ghana to look for a bigger market outside of Ghana. In Ghana we have a free-zone system. Government intended for it to attract investment and create employment. A free-zone company has a lot of advantages such as [being] tax-free for the first 10 years, and duty free. But to protect those companies that produce and sell locally, free-zone companies are not allowed to sell more than 30% of their output in the local market. how is your product received on the local market?

BIllIe AdwoA MCTernAn

Initially, we thought the local market would find our product expensive. But we started to get complaints from Ghanaians who travelled to Europe and came back and saw our products there. They would say: “Why don’t we get your products at home?” So we started to put some juice on the market. We’d not really put a big effort in and the market has grown by itself. At the moment we are only selling juice in Ghana.

We started to get complaints from Ghanaians who went to Europe and saw our products We export to the United Kingdom, France, Switzerland and South Africa. I think we have become fairly important to the Ghanaian economy as a whole because our production is 1% of total exports. We have 1,950 employees and 125 pineapple farmers under our supervision. Strawberries are grown in neighbouring Burkina Faso and are also being processed

there to make jam. Can Ghana attain a similar kind of agricultural development? When it comes to agriculture, I am not very happy with the performance of successive Ghanaian governments. There are several agriculture research institutions which have existed since colonial days, but it’s difficult to see their output. In Ghana, we can produce mangoes for seven months of the year. I know it is possible to develop varieties that could be produced throughout the year, but that is the work of universities and research institutions. Quite apart from the weaknesses in research, I think there are weaknesses in the government’s reaction to our agriculture. If you go to the Central and Western regions, coconut trees are dying. The same thing happened in [Côte d’Ivoire], but they found a solution and we haven’t done anything. What are you future plans for expansion? We have been thinking about getting into vegetables. We recently started to grow pineapples. We also are trying to grow passion fruit. We have acquired a bit of land around our factory in Nsawam so we feel that we have to do something with it over the next five to 10 years or so. We are considering [growing] flowers there. We are thinking of listing Blue Skies Ghana on the Ghana Stock Exchange. As for Blue Skies Holdings [the parent company], we’re thinking of listing in London. Right now we are selling more than $100m annually and growing at 30% each year since we started, so it would be a pretty good investment. We are building a factory in Senegal and discussing how to tackle the Nigerian market, whether we should produce from here and ship every day or whether we should build a factory there. We are also trying to get into the United States market and supply that from our Brazilian Interview by factory. ●

the africa report

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country focus | ghana

Film

Ghana’s silver-screen revolution

With demand for locallanguage movies, partnerships with Nigerian directors and actors and a new international film festival, Ghana’s movie-making industry is growing fast

n a packed trotro winding its way through central Accra, a Ghanaian film showing on the video screen of the minibus triggers regularbursts of laughter from the passengers. The film is one of many Twi-language movies produced in Ghana, where demand is growing for local-language films. “People see themselves and their own people telling their own stories, and it’s easier for them to understand than English[films],” saysAsareHackman,founder of the production company Hacky Films and head of the Film Producers Association of Ghana (FIPAG). “If they can do it in Bollywood, then we can do it here.”

STePhAN ellerINGMANN/lAIF-reA

Afterdecadesinthedoldrums,Ghana’s film industry is on the rise. In March, GhanaiandirectorAkosuaAdomaOwusu premiered her short film Kwaku Ananse at the Berlinale film festival (see review). Then in June, the country hosted the inaugural Accra International Film Festival, welcoming a mix of regional and international actors and directors to the capital for a series of talks and screenings. Accra is also becoming a hotbed for guerrilla filming. Music videos and short clips are circulated on blogs and social networks from people with no formal training in film. “The young ones are doing it. They are doing music videos

in the past there have been few cinemas showing local films, but box offices are popping up

whether they know what they’re doing or not ... they are still trying,” says cinematographer and film lecturer Yahaya Alpha Suberu. The opening of the Silverbird Cinema at Accra Mall in 2008 brought hope to filmmakers like Suberu. In the past, they would have had to rent a pick-up truck, put speakers on it and sell their films on the street. Although Silverbird shows some local productions, its programme is mainly filled with Hollywood and Bollywood films. SUPPORTING CAST

film releases

Kwaku Ananse

Directed by Akosua Adoma Owusu This 25-minute short film is a contemporary retelling of the Ghanaian folk story of Kwaku Ananse, who stored his wisdom in a gourd and hung it on a tall tree where no one could reach it. Akosua Adoma Owusu’s MexicanGhanaian co-production stars Koo Nimo, a palm wine guitarist, and actress Grace Omaboe. It premiered at the Berlinale film festival in March. ●

Praising the Lord Plus One

Directed by Kwaw Ansah

Acclaimed director Kwaw Ansah returned to the silver screen in September with his new feature film. The story follows a pastor, Prophet Apostle Gabriel, who takes advantage of his position as the head of a church. Sex, money and lies fill this tale of debauchery as Ansah tackles a topic that is part of the fabric of Ghanaian society, the power of the church. ●

The state support for arts and culture that flowed during the euphoric heyday of a newly independent Ghana fell by the wayside after the overthrow of President Kwame Nkrumah in a coup in 1966. The state-owned Ghana Film Industry Corporation (GFIC) - set up under Nkrumah with the mandate to educate, entertain and provide equipment and support to filmmakers - managed to hold on and helped produce films such as Kwaw Ansah’s 1980 Love Brewed in the African Pot and the 1984 film Kukurantumi by King Ampaw. Ghana has its own film school, thestate-runNationalFilmandTelevision Institute, which was founded in 1978 and welcomed a cohort of 60 new students in November 2012. It plans to offer courses in acting, as well as in sound and music recording, in the 2014 academic year. As Ghanaian film production slowed because of a lack of financing, in Nigeria filmmakers thrived, based on a ● ● ● the africa report

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Tel: + 233 302 685 118-120

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

country focus | ghana

Profile

combination of oil money and the transition from expensive and laborious celluloid to cheap and easy video cassettes. The first Nollywood film was made in 1992. Meanwhile, in Ghana, the government sold the GIFCtoaMalaysiancompanyin1997 following the advice of the International Monetary Fund to privatise it. It became TV3, a free channel, which was then sold to a private Ghanaian company in 2011.

●●●

Oforiatta-Ayim and Ghana’s map of cultural thinkers

The returnee artist is looking to strengthen the country’s creative networks and preserve past contributions

riter, cultural historian, curator and filmmaker Nana Oforiatta-Ayim has been busy since 2012, when she returned to Ghana after a decade living in London. Under an organisation she founded in 2002 called ANO, 35-year-old Oforiatta-Ayim has begun to facilitate international residencies for young Ghanaian artists. “The idea is to help the artist at the early stage of their career to find a foothold within the art world here [in Ghana] and also internationally so they don’t feel like they have to go and live in London or Paris or New York in order to be artists.” She says the situation is not easy for Ghanaian artists. The country’s only degree-level art programme is at Kwame Nkrumah University of Science and Technology (KNUST). “What’s coming out of the faculty of KNUST is an amazing generation of talented artists,” says Oforiatta-Ayim. But she laments that “they open up their talent and don’t have anywhere to put it after they leave.” She has worked with a recent KNUST graduate, Ibrahim Mahama – whose work has attracted the attention of galleries and collectors in Africa and Europe – who began his residency at Gasworks in London in October. She is also working to set up her own residential space for artists in the mountains of Ghana’s Eastern Region. The idea, she says, would be

NOLLYWOOD tO GOLLYWOOD

In the past decade, as the distribution of Nigerian films has crossed over into Ghana, producers in both countries saw an opportunity to join forces. “People started watching a lot of Nigerian films here, so the producers here started to think, ‘let me get a Nollywood star’,” says Suberu. Ghanaian and Nigerian films have gone from including one actor from theothercountrytohavingcrewsand writers from both countries collaborating, he says. “As filmmakers we need to position ourselves to let government know of the importance and contribution we can make to the country’s GDP growth,” Hackman points out. Some estimates from FIPAG put the number of people working in film in Ghana’s Northern Region alone at 8,000. “Imagine if you combine that with the middle belt and the south, how many people could we create jobs for?” he asks. There are moves to start promoting Ghana as a location for international film sets, particularly due to its more than 40 forts and castles along the coast. Until now, filmmakers have gone elsewhere. There were hopes that the 1997 Steven Spielberg film Amistad, about a slaveship mutiny, might be filmed in Ghana but in the end it was filmed in Senegal. “There are more and more people like myself who go abroad and study and work with the top-notch people in the industry, in the best of places, and you see what they do and realise what they do is not too different,” says Suberu, who studied in Singapore. “They cook with the same water. So you come home and that confidence is there and you see the potential.” ● Billie Adwoa McTernan in Accra

MAntse AryeequAye

to create fellowships, hold workshops and create a “pan-African network of cultural thinkers”. After working on the book Visionary Africa: Art at Work, which took its lead from an exhibition by Ghanaian architect David Adjaye, Oforiatta-Ayim decided she wanted to map cultural trajectories and institutions from past to present in Africa. Starting in Ghana, she is creating a continental cultural encyclopaedia and will look for collaborators from across Africa. She has also started an archiving and preservation project of the work of older Ghanaian artists with the worldrenowned photographer James Barnor. She is working to digitise some of his work and to put together a monograph about it. Ghana’s first professional female photographer, Felicia Abban, is next. As a filmmaker, Oforiatta-Ayim often deals with social issues. She does so in a new film called Jubilee, which was released in September and compares the oil industries in Ghana and Norway. She is also working on a film project called Mobile CineLab, which has the goal of bringing weekly screenings of independent films from across the world to Accra. “My projects and ideas have a long incubation,” she says. And now is the time for them to come to fruition. ● Billie Adwoa McTernan in Accra

Nana oforiatta-Ayim is planning a Ghanaian art space the africa report

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business nigeria-kenya

Courting across the continent Nigerian companies are setting up operations in Kenya, spurred by a visit of high-ranking officials and business leaders to Nairobi in September, while new deals are flowing more slowly in the other direction

By James Mbugua in Nairobi and Monica Mark in Lagos

or years, Nigerian businessmen have mainly just passed through Nairobi on their way to foreign capitals. Kenya’s national carrier, Kenya Airways, is a popular link between West Africa and Asian destinations and also one of the principal reasons why Kenya has a favourable balance of trade with Nigeria. Now, a diplomatic and business offensive is seeking to get trade and commercial ties between the two countries moving in earnest. In early September, led by President Goodluck Jonathan, 500 Nigerian government officialsand business-

men visited Kenya in the first tour of the country by a Nigerian president in 26 years. The visit was in reciprocation of the trip made by Kenya’s President Uhuru Kenyatta to Abuja in July, but there was a big difference in the scale and stature of the Nigerian delegation, which arrived in seven private jets with business magnates Aliko Dangote, Tony Elumelu and Femi Otedola. Jonathan’s visit to Kenya came just a few weeks before the deadly attack on Nairobi’s Westgate shopping mall. Since then, real concern has arisen in the business community about the stability of Kenya’s economy and whether

companies & markets

multinationals, many of which have bases in Nairobi, may start reassessing their security risks. If any country is an example of how to keep an economy afloat despite a growing terror threat, it is Nigeria. The International Monetary Fund projects that its economy will grow by 7.4% in 2014 despite an intractable security threat from Boko Haram militants in the north of the country. Partners in Kenya hope this bullishness in the face of crisis will help pick up the slack. new territory

illustration by EmEric thErond

From energy, tourism, finance to construction, two big beast African economies are finding common cause

Despite Nigeria’s size and economic dynamism, the Kenyan business community has always seen it as a jungle. For Nigerians, East Africa has a reputation for being sleepy, conservative and slow paced. “[Kenyans] have been too scared to go to Nigeria because it is far away and the competition is high,” says Bharat Thakrah, chief executive of Kenyan firm Scangroup, which has had a troubled start in Nigeria (see box page 70). “Nigerians are tough business people to compete against and are also very aggressive. East Africans, we are a little passive.” Figures from the Kenya Investment Authority (KIA) show that trade between the two countries is low and fell from a peak of KSh3.2bn worth of exports from Kenya to Nigeria in 2008, to KSh2.9bn ($34.2m) in 2012 (see graph). The KIA says it has registered six Nigerian projects in Kenya, including three in the restaurant business and one in media. “We are currently following up to facilitate a mining investment proposal of $400m in addition to other investments,” a KIA spokesperson says. Goodluck and Kenyatta signed a deal for the creation of the Joint Commission Cooperation in September, with work due to begin on eliminating tariff and non-tariff barriers. The governments took their first steps towards the implementation of a double taxation avoidance agreement that will stop investors from being taxed in both countries. With Nigeria’s gross domestic product more than seven times larger than Kenya’s in 2012, ● ● ●

business | companies & markets

profile

Scangroup

Marketing services company

Nairobi firm dips its toes into the Nigerian market once more Scangroup could be burnt for a second time in the fiery world of nigerian advertising. the nairobi-based marketing services firm, which has a presence in 15 african countries, first attempted to enter the West african market through nigeria in 2007, but the partnership it formed later collapsed. the firm returned in 2012, opening a fully fledged agency and making a shrewd hire in rufai ladipo, the immediate former president of the association of advertising agencies of nigeria, as Scanad nigeria’s managing director.

However, it has had a tumultuous first year. Scanad ran into legal problems with prima garnet communications. prima garnet had a partnership with ogilvy africa, a company in which Scangroup holds a 51% stake. ogilvy africa in turn holds a 12.6% stake in prima garnet, giving Scangroup an indirect 6% stake in the company. upon entry into nigeria in october last year, Scangroup chief executive bharat thakrar did not explain what would happen to the prima garnet relationship. ogilvy africa terminated its exclusive partnership

with prima garnet in december, drawing protest from the company for breach of contract. Scangroup has denied the claims, saying it was not party to the agreement. In its 2013 half-year results, Scangroup recorded a $1.1m loss for its nigerian subsidiary and said it would scale back operations in nigeria as it awaited the outcome. thakrar says he is determined to stay the course: “every market has its challenges. competition is obviously very strong there.” ● James Mbugua

profile

Agusto & Co.

credit rating agency

Ratings agency spots openings under Kenya’s new constitution WHen nIgerIan credIt ratIng agency agusto & co sought to build up its african footprint, it made sense to start in Kenya. “Kenya is a regional power in east africa. We see it as a source of growth for the entire region, which is why we’ve gone there first,” says edward olajide, who is leading business development for agusto in Kenya. the agency received its licence from the Kenyan regulators in March and is in the process of

is the Kenyan business community afraid of the new competition? “Not at all,” says Kiprono Kittony, chairman of the Kenya Chamber of Commerce and Industry. “They are very welcome. Kenyan businessmen also need to takeseriouslytheinterestofNigeria in investing in Kenya and set up JVs [joint ventures].” Kittony expects to see businesses in the two countries capitalising on their competitive advantage to enter each other’s market. “Nigeria is strong in oil and gas, and Kenya in agriculture and manufacturing,” he explains.

●●●

setting up an office in nairobi. Having built its nigerian client book by rating state governments and financial institutions looking to tap the money markets, agusto sees a big opportunity in a new system of counties created under the new Kenyan constitution in 2010. “a lot of them need to come to the debt market at some point to raise capital, and obviously we’d look to go in on that,” explains olajide. agusto’s target is to have

a couple of ratings before the end of the year and to have started bidding for some of the county ratings business by mid-2014. olajide says the challenges in the Kenyan market are similar to those augusto faced when it started in nigeria in 1992. “the need for ratings is there, the opportunities to do ratings are there but the acceptance [and] understanding of ratings isn’t there,” he says. ● Gemma Ware

CEMENTiNg DEALs

But on the ground, the mood is different. After Dangote announced during his trip that he would invest $400m in a cement plant in Kenya’s Kitui County, local cement makers were roused to action. The state-backed East African Portland Cement and other firms including Bamburi Cement and Athi River Mining rushed to Kitui to seal deals with the local government to take control of resources in the area, according to a note from financial services firm Imara Africa Securities. Kitui is not only rich in the limestone required to make cement, but it is also endowed with coal reserves that offer a convenient source of energy. Currently, Kenyan cement makers import coal from South Africa. “[Dangote] told us he needs 1,000MW of energy, which we don’t have. So we are looking to put up a 960MW coal plant in Kitui,” explains Kenya’s cabinet secretary for energy Davis Chirchir, adding that Kenya’s government will soon ask for expressions of interest from investors to build it. However, Dangote is not the first Nigerian interested in Kenya’s cement industry. In March 2012, the Nigeria-based Africa Finance Corporation (AFC) provided a $50m convertible loan to Athi River Mining and said it planned to invest an additional $100m. Until now, much of the Nigerian business activity in Kenyahas been in financial services. United Bank for Africa opened its operations in Kenya in 2009. Meanwhile, the newest entrant is Guaranty Trust Bank (GTB), which agreed in

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Salaton njau/nation Media Group

CROSS-FERTILISATION

“We are encouraging Kenyan banks to open in Nigeria so that there will be cross-fertilisation in the area of banking and finance,” said Akin Oyateru, the Nigerian high commissioner in Nairobi, as he hosted the Nigerian delegation in September. Oyateru argues that this could provide more Africabased fundraising opportunities for large infrastructure deals such as road and rail projects. Much fanfare has been made about Nigeria helping Kenya build up expertise in its nascent oil industry. Commercial oil was discovered in Kenya’s South Lokichar basin this year by Irish firm Tullow Oil and its partners, with estimates the africa report

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Nigerian business magnate Aliko Dangote has expressed an interest in Kenya’s cement industry

that exports could begin as early as 2016. But in Nigerian business circles, many are doubtful about what assistance Nigeria – which still has not passed its own longawaited Petroleum Industry Bill – can offer. “The thing that comes to mind when I hear that is, first remove the log from your eye,” comments one commodity-focused investor. The countries signed a memorandum of understanding (MOU) on the oil industry in September, but details remain hazy. There is no evidence so far that a claim by Nigeria’s petroleum resource minister Diezani Alison-Madueke, that the Kenyan government wants Nigerian companies to get involved in 46 oil blocks, was anything more than a diplomatic nicety. Agricultural cooperation is already underway. Some for-

Kenya-Nigeria trade flows

n o v e m b e r 2 013

Value of Exports from Kenya to Nigeria ($) 37.3 m

2008 2009 2010 2011 2012

21.9 m 18.8 m 21.2 m 34.4 m

Value of Imports from Nigeria to Kenya ($) 2008 2009 2010 2011 2012

2m 2.1 m 1.5 m 1.9 m 0.6 m

Source: economic Survey 2013

July to buy a 70% stake in Kenya’s Fina Bank for around $100m. The deal, which received regulatory approval in Nigeria, is expected to go through in the first quarter of 2014 pending approval from regulators in Kenya, Uganda and Rwanda, where Fina Bank has subsidiaries. “GTB aims to be one of the three largest banks in Africa. There’s no way GTB could achieve that without entering Kenya,” says a senior official at the bank who asked not to be named. “This is a bank that is very conservative when it comes to acquisitions, so this a signal of how important Kenya is,” he explains.

eign investors are taking experience built in Kenya to Nigeria. Dominion Farms, part of an Oklahoma-based group that runs a rice farm in western Kenya on more than 6,000ha, moved into Nigeria in February 2012 with a $40m long-grain rice project in Taraba State that includes the country’s largest rice mill. It is developing a 30,000ha plantation in a joint project with Nigeria’s Danjuma Group, owned by businessman General (retired) Theophilus Danjuma. As part of Nigeria’s Agricultural Transformation Agenda, the government has sent 50 graduates from Taraba State to Kenya for training in commercial rice farming. Kenya is also exporting its expertise in mobile phone applications to Nigeria. In 2011, mobile financial services company Cellulant won a $8.5m four-year government contract in Nigeria to run a registration and validation system for a subsidised fertiliser programme. “The attraction of the Nigerian market is simply its sheer size and energy. You cannot be successful in Africa without a strong footprint in Nigeria,” says Ken Njoroge, chief executive of Cellulant, who set up the firm in partnership with Nigerian friend Bolaji Akinboro. “There was nothing particularly difficult in getting into Nigeria. Today we operate

business | companies & markets

in 10 [countries],” says Njoroge, though he admitted the market structure of the mobile commerce sector was very different toKenya’s. “The country is large and with differentflavours.Thisisacontinuous journey,” he explains. Kittony says Kenyan business people need a level playing field as well as investment incentives. The KIA also cites complaints from Kenyan business people of protectionist government policies, particularly over restrictions on Kenyan manufactured products entering Nigeria. Another key im-

pediment for trade is cumbersome visa requirements. The two governments are drafting an MOU to loosen immigration requirements and to make it easier for Kenyans to get Nigerian visas. But a lot must be done beyond government-to-government agreements in order to facilitate trade. “Both communities need to get past the negative stereotypes that have dominated the past,” Kittony says. Nigerian businessmen in Kenya have complained of discrimination and profiling for suspected drug dealers. Just before

$400m

Cost of the cement plant planned by Nigerian businessman Aliko Dangote in Kitui, Kenya

Kenyatta’s visit to Nigeria in July, Anthony Chinedu, a Nigerian who has been in and out of Kenyan courts on various charges, was deported along with three others, which caused a minor standoff with the Nigerian authorities. Government officials and business people on both sides hope to avoid similar incidents, focusing instead on more legitimate business ties. “In the end, the best will survive – we have a lot to learn from each other’s success and failures in different industries,” concludes Njoroge. ●

hannibal Much to do in frontier economies

well in the last decade because of the exceptionally benign environment of low interest rates and high commodity prices. That hides structural vulnerabilities, nternational investors swoon for the nomenclatura she says: “Take government finances – what would of bravery – the proud pioneers who boldly invest money they look like with commodity prices at 2000 levels?” As external markets sour, bank debts may become where no money has been invested before. So beyond the now maturing emerging markets, lie the frontier exposed – a phenomenon Nigeria is well acquainted economies – fast-growing and relatively stable coun- with. And with tapering, interest rates in the US will tries that might just graduate into the next generation rise, making frontier markets less attractive. To what extent can they withstand this? of emerging markets. Henry Rotich, cabinet secretary Africa holds a few such candidates. to the Treasury in Kenya, is more Kenya, Nigeria, Ghana, Tanzania, Morocco As external sanguine. Kenya’s banking sector, and several others are on the cusp of a for example, is not as vulnerable as sustained rise in gross domestic product markets sour, other countries to tapering “because (GDP) per capita, a key metric for investors. bank debts credit expansion has not come from Clouds are on the horizon, however, from may become international flows but from increasthe United States (US) Federal Reserve’s ing domestic saving. We have done a tapering of quantitative easing, to the hard exposed, lot on inclusion, with the level of the domestic reforms needed to kick economies while US unbanked falling from 60% to 20%, into the next gear, to a potential drop in by using new technology,” Rotich commodity demand from China, which tapering of explains. Another way to insulate a powers some of these countries. quantitative country from the vagaries of interDeputy managing director of the International investors is “regular comnational Monetary Fund Zhu Min, while easing will munication with the market”, says bullish on the frontier case in general, make frontier Maryam Khosrowshahi, a managing warns that a 1% drop in Chinese internal markets less director at Deutsche Bank. “Of course investment could lead to a 0.5% drop in if interest rates rise in the US, that will GDP growth for key trading partners. attractive mean more expensive money for the Celebrity pessimist Carmen Reinhart of to investors rest of the world, but don’t think that Harvard University warns that frontier and the market will shut the doors.” ● emerging markets have done extremely the africa report

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business | companies & markets

engineers took two weeks to find even a temporary fix to the faulty pipeline

PR/EAHOUNOU

WATer

Dakar wants answers about why the taps ran dry

enOuGh is enOuGh

A fortnight of interrupted water supply has left questions over who was responsible, weeks before a private water company contract comes up for renewal

“

ater is life, and without water we have nothing,” says Mamadou Diouf-Mignane, general coordinator of Panafricaine Pour l’Education au Développement Durable in Dakar. But for a fortnight in mid-September the taps ran dry for one million residents in the Senegalese capital. They were forced to snake through long queues to fetch water at taps that were still running and from makeshift wells. Mamadou Dia, director-general of water company Sénégalaise des Eaux (SDE), told The Africa Report that “in my entire 36-year career, I have never lived through something like this.” The SDE hired trucks to provide water to the hardest-hit areas, with a committee deciding where they were needed most. Dia insisted the problem was “not a question of maintenance”, but related to a defective steel part in a key pipeline. The part had been signalled as defective back in 2009, and it was due to be fixed in 2014.

In September, French experts took measurements for a replacement to be custom-made in France. The part, which will cost around 130m CFA ($268,000) was due to arrive on 17 October, and Dia said the resulting repair work should take 48 hours. Senegalese experts found a temporary way to fix the pipeline on 2 October. But there were still certain areas of the city, such as Mermoz and Grand Yoff, that were struggling to get a drop. In an effort to calm tensions, Senegal’s President Macky Sall said the government would pay the month’s water bills for those affected. administrative shake-up

Senegal enjoys some of the best water access rates in the subregion with almost 100% access in urban areas. This has been the culmination of a series of World Bank-supported reforms since 1995, when the state-run Société

Nationale d’Exploitation des Eaux du Sénégal was dissolved and a new asset-holding company Société Nationale des Eaux du Sénégal (SONES) established to take charge of the infrastructure. The government then created SDE in 1996 to manage water production and distribution. In 2012, SDE won a one-year extension of its contract, which comes up for tender on 31 December. Despite the crisis, Dia remains confident SDE and its 1,150 staff will continue to run the show. “No operator could operate in Senegal without the personnel of SDE,” he said.

estimated number of people without water in Dakar in September

Questions remain over responsibility for the stoppage. Under a performance contract signed between SDE and SONES, SDE is responsible for the maintenance and repair of all infrastructure at its own cost. SDE is also mandated to respond within one hour should there be a rupture in its mains and and has a further 12 hours for repairs to bring service back to normal. But Dia says the responsibility for the faulty piece lay with SONES. Some business owners have been sanguine about the shortages. “Accidents happen,” said Jorgen Jorgensen, general manager of the Radisson Blu Hotel in the Corniche areaofDakar,whichwas largely unaffected by the crisis. But not everybody has been so forgiving. “It’s the fault of whoever is in power. It’s not normal,” says Mbess Seck, a founding member of the Y’en a Marre (Enough is Enough) political movement. SDE is pursuing desalination as an option to supply Dakar, and is considering proposals from Germany,Spain,theUnitedKingdom, Japan and China. Dia said a desalination project should be up and running by the end of 2016. ● Kissy Agyeman-Togobo in Dakar

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business | leaders

Profile

Phillips Oduoza

Managing director, United Bank for Africa Group

New capacity to finance bigticket projects After the crisis in the Nigerian banking sector in 2008 and 2009, UBA’s capital base has grown sufficiently to fund projects in areas such as electricity and oil and gas

hillips Oduoza took over the reins of United Bank for Africa (UBA) in August 2010, a turbulent time in Nigeria’s banking sector. A year earlier, Nigeria’s central bank governor Lamido Sanusi had sacked eight bank managers for their role in the toxic-asset crisis. Sanusi then created a new directive that forbade the top executive of any bank to stay more than 10 years in office, meaning that Tony Elumelu, then UBA Group managing director, had to step down. At that time Oduoza was group deputy managing director and in charge of the southern Nigeria business unit for UBA, its largest. “We were one of the first banks to undergo the new stress test at the time of the crisis, and we came out fine. But the levels of non-performing loans (NPLs) across the sector were very high,” recalls the softspoken Oduoza. “We took a huge hit on the Zenon deal, a N20bn ($125m) write-off.” The manage-

UBA

ment steadied the ship at UBA. NPLs dropped to less than 5% in 2011, then 2% the year after. During that period, from 2010 to 2012, the Nigerian money market was very attractive, with rates higher than 20% for government paper. This meant easy and safe money for banks, which was welcome given the consolidation of balance sheets after the ruinous toxic-asset crisis of 2009. While this was good for the banks, it meant a halt in lending to the real economy and a real throttle on corporate growth. “But yields are now dropping,” says Oduoza. “Treasury bills are now at around 7%, while lending to certain sectors can yield up to 15%.” OvercautiOus strateGY?

This situation should help lead Nigerian banks into a less cautious and more entrepreneurial mode. The problem, says Oduoza, is that banks are “all chasing after the same top-tier clients, leading to depressed interest rates in that segment”.

A cAreer iN bANkiNg 1987 Became a credit officer at International Merchant Bank 2002 Named executive director of Diamond Bank 2005 Became deputy managing director of UBA Nigeria South 1 August 2010 Appointed managing director of UBA Group

The bank’s share price has yet to reach pre-crisis heights but has grown more than 68% since January 2013. UBA announced its halfyear results for 2013 in July, with a 9.2% rise in profits to N33.2bn. Oduoza says that this is due to a strategy to strengthen other revenue streams because the Central Bank of Nigeria is implementing reductions in certain bank charges. The results included a rise of 16.7% to N125.98bn for the group’s earnings. Nigeria’s unbanked population is slowly dropping, and UBA reported year-on-year growth in deposits of 13.5%. That did not lead to corresponding growth in loans, as the loan-to-deposit ratio remained below 40%. One area that suffers a lack of finance is manufacturing. Despite governments across the region hoping to stimulate labourintensive manufacturing to meet the growing demographic bulge, “banks don’t exist in a vacuum. With the state of our roads and power infrastructure, man- ● ● ●

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business | leaders

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7.50

5.00

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Nov Dec 2013 Feb Mar Apr May Jun Jul Aug Sep Oct

ufacturing is not yet viable,” according to Oduoza. “As for SMEs [small and medium-sized enterprises], which would provide a lot of jobs too, it is a no-go area. Credit bureaus are only now being set up properly. Identity systems are still very basic. That’s why Nigerian banks are getting together to pioneer the use of biometric ID systems in the country.” Another sector which has historically lacked credit is agriculture, but things are changing. Thanks to the Nigeria Incentive-Based Risk-Sharing System for Agricultural Lending pioneered by the central bank, UBA has thrown itself into the sector. “We actually account for around N7bn of the total N25bn that has been made available under the scheme. And agriculture represents 7% of our total loan book, above the industry average of 4%.” ●●●

POWERHOUSE

But for Oduoza, the most exciting prospect lies in the ability for UBA to get involved in the financing of big-ticket items, such as the power sector or the upstream oil and gas sectors. The bank has one of the lowest loan-to-deposit ratios in the industry, “and this gives us the liquidity that we wanted to put into large projects,” he says. “We are putting $700m into the acquisition phase in the Nigerian power sector, and we will also contribute more in the operational phase. It is an important new phase, and is only possible now that Nigerian banks have reached a certain size – this exposure is less than 10% of our loan portfolio. Things like the new Dangote refinery project are now doable for Nigerian

banks, whereas we couldn’t get involved before.” The power sector investment would not have been possible without the World Bank’s Multilateral Investment Guarantee Agency (MIGA), which provides safeguards in case of default from the distribution and generation companies that are spearheading Nigeria’s power revolution. “When MIGA came, it certainly gave us comfort, and the government has also played its part,” says Oduoza. “And the fact that we have long-term lines in place with the DFI [development finance institutions] means we are covered should we need it.” COOL ON REAL ESTATE

There is perhaps scope for a similar scheme in the housing sector, which would involve the government providing guarantees to banks for mortgage lending. But while acknowledging the huge amount of money circulating in the Nigerian property market in terms of rent paid and fast-growing property prices, Oduoza says the mortgage finance sector is

“This phase is only possible now that Nigerian banks have reached a certain size” hamstrung by the lack of longterm funding. “We don’t have the ability to lend over 15-20 years and there is no secondary mortgage market, so everyone is shying away from the sector,” he explains. That could change if Nigerian banks manage to absorb all the liquidity in the country, often still stored as cash under the mattress. “There has been an attempt in Lagos to shift people away from cash, limiting the transaction size that you can complete in cash,” says Oduoza. “This will be generalised across the country, and eventually will pull the money into the banks. When we have those deposits, they will over time be considered part of the core capital of the banks, allowing us to start mortgage lending.” ● Nicholas Norbrook in Washington DC

appointments

Amr Seif In October, Cairo-based bank EFG Hermes announced that it had appointed Amr Seif as the head of its asset management division. He left Citadel Capital’s Finance Unlimited for the post. He has also worked at Investec Asset Management.

Willem Hondius In September, Hondius took up the position of chief executive for Jambo Jet, Kenya Airways’s soon-to-be launched low-cost carrier. Before his appointment, he was general manager for KLM Royal Dutch Airlines in charge of East Africa and based in Nairobi.

Ade Ayeyemi Ayeyemi started at his new post as chief executive officer for Citigroup in sub-Saharan Africa in mid-September. He has spent more than two decades at the bank and previously served as head of transaction services for the continent.

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UBA on the Lagos stock exchange

SOURCE : BLOOMBERG

dossier telecoms

Gulf groups get serious Etisalatâ&#x20AC;&#x2122;s bid for Maroc Telecom is a sign of renewed commitment to African telecoms, but some players with smaller stakes are continuing to withdraw By Gemma Ware

hen French group Vivendi decided to sell its 53% stake in Maroc Telecom last year, two Gulf-based mobile operators – Etisalat and Ooredoo – emerged as frontrunners. Middle Eastern telecoms groups are no strangers to the African continent. After a decade of mixed fortunes, including some faltering first steps and a cluster of disparate investments, they are re-engaging in earnest to boost international revenue. “Middle Eastern markets are getting more competitive, particularly in the GCC [Gulf Cooperation Council], so that’s created a push factor for Middle Eastern operators to look elsewhere for continued growth, to adjacent less-advanced markets,” says Matthew Reed, principal analyst for the Middle East and Africa at Informa Telecoms & Media in Dubai. In the end, it was United Arab Emirates-based Etisalat that came out top of the Maroc Telecom bidding war, entering into exclusive talks in July with Vivendi to pay $5.7bn for the stake. In late September,thetalkswereextended untiltheendofOctober,withnegotiations centring around how Moroccan investors would be able to come into the deal. “We call Maroc Telecomacashmachinebecauseit is a very profitable company, thus

$5.7 bn

Etisalat’s bid for Vivendi’s 53% stake in Maroc Telecom. The talks have been extended until late October.

Sunday alamba/aP/SIPa

Source: Informa TelecomS & medIa (Q2 2013)

Gulf footprints in Africa

many bidders were interested,” explains Jawad Kerdoudi, director of the Institut Marocain des Relations Internationales. “But I think Morocco would be happy to see a UAE companybuyingVivendi’sshareas it will reinforce our relations with the Gulf region,” he says. Etisalat did not respond to requests for an interview about the negotiations. STATE BAcKIng EASES wAy

The deal comes off the back of a string of high-profile failed deals for Etisalat. It walked away from its initial $12bn offer to buy a 46% stake in Kuwait’s Zain in 2011 and closed its operations in India in 2012 after a Supreme Court judgment cancelled telecom licences. The Gulf groups, most of which have some kind of state backing, are quickly able to pull together resources for big deals. “If they do find the opportunities, it’s relatively easy for them to make the move,” explains Abhinav Purohit, a senior consultant with Chinese telecoms manufacturer Huawei in the Middle East. Some Gulf groups are on a consolidation drive. The Qatari group Ooredoo, with operations in Tunisia and Algeria, is in the midst of a global rebranding campaign after changing its name from Qtel in February 2013. After abandoning its bid for Maroc Telecom, Ooredoo secured a highly sought-after licence in ● ● ●

*Subscriber numbers are proportional to companies’ shareholdings of subsidiaries

ETISALAT

OOrEdOO

ZAIn

Based in the United Arab Emirates, Etisalat had 31.8m proportional African subscribers* in June 2013

Based in Qatar, Ooredoo – formerly Qtel – had 13.3m proportional African subscribers* in June 2013

Headquartered in Kuwait, Zain had 14.9m proportional African subscribers* in June 2013

dossier | telecoms

Myanmar. Group chief executive Nasser Marafih says subSaharan Africa is not a priority at present (see box). By buying a controlling stake in Maroc Telecom, Etisalat – which already has the biggest footprint in Africa among the Gulf operators – could become the fourth largest African operator by proportionate subscriptions, according to Informa. Analysts have called the deal a good fit for the company. “Maybe Etisalat will use Maroc Telecom as a management vehicle for its other businesses in subSaharan Africa,” suggests Reed. Maroc Telecom has operations in Mauritania,BurkinaFasoandMali. It also owns a controlling stake in

●●●

Gabon Telecom, the only market where Etisalat is already present, through Moov Gabon, owned by its subsidiary Atlantique Telecom. The deal could make a continental rebranding of all its holdings a distinct possibility. Etisalat has been struggling in Africa so far this year, reporting a 1% year-onyear contraction in revenue for Africa, excluding Nigeria, and a 9% contraction in Egypt for the three months to June 2013. Overcrowded mobile markets, fierce competition on prices, low-revenue subscribers and high infrastructure costs make a challenging set of ingredients for investors in Africa’s telecoms. India’s Bharti Airtel, which has launched

35%

Size of the stake in Tunisie Telecom that Dubai-based EIT is looking to sell

pulling back

interview

Nasser Marafih Group chief executive, Ooredoo

Sub-Saharan Africa is not a key priority for us at the moment TAR: Why did Ooredoo withdraw its offer for Maroc Telecom? Ooredoo made an indicative offer in December 2012 and submitted a fully financed binding offer on 22 April 2013, which met all the requirements of the process. The process was taking too long, and we had a responsibility to our shareholders to release the capital so that it could be used for alternative value-creating opportunities across our global footprint. In June, you won a licence in Myanmar. Is your future more in Asia than Africa? We look for opportunities to create value for our shareholders across our core regions of the Middle East, North Africa and Asia – it is not a case of favouring one region over another. The Myanmar

licence is an incredible opportunity for both Ooredoo and the people of Myanmar as we will be bringing 3G technology to the country, built on what will become one of the world’s most advanced telecom networks. Do you think there are still opportunities for you in sub-Saharan Africa? Our strategy is focused on markets across the Middle East, North Africa and Asia. These are the regions in which we are comfortable. We are focused on maximising returns from our current assets through a number of different strategic initiatives. If opportunities such as Maroc Telecom arise, which would have brought a number of sub-Saharan assets into our portfolio, and we think

an aggressive war on prices, has struggled to make returns on its African network. Some of the biggest challenges for the Gulf operators have been in dealingwithmarketswithloweraverage revenue per user. Algeria and Tunisia are some of the least profitable of Ooredoo’s operations, with earnings before interest, taxes, depreciationandamortisationof8.5% for Tunisia and 10.4% for Algeria. Gulf operators are wary of pitfalls. After buying the African operations of Celtel in 2005, Kuwait’s Zain sold them to Bharti Airtel for $9bn in 2001. “Other Middle Eastern operators look to Zain’s experience as a benchmark,” says Reed.

they make sense, then we will of course consider our options, but subSaharan Africa is not a key priority for us at the moment. Do you plan to roll out Long Term Evolution technology in any of your African markets? We have already invested in 3G-ready technology and network enhancements that position us to deliver the best coverage, performance and range of services for our customers in Algeria. We are supportive of the speed and professionalism with which the Algerian authorities launched the 3G licensing process. In Tunisia, we plan to cover almost the entire population with 3G by the end of 2013. We will be ready to upgrade to 4G when we get the necessary approvals. ● Interview by G.W.

SomesmallerDubai-basedplayers are pulling back from the continent. WaridGroup sold its Ugandan operations in April to Bharti Airtel. EIT, a subsidiary of Dubai Holding, is also selling its 35% stake in mobile operator Tunisie Telecom. Other Middle Eastern operators, such as Saudi Telecom Company (STC), have had difficult entries into the Africa market. Through a complicated share ownership structureviaOgerTelecom,itholds a 75% stake in South African operator Cell C. After blaming a 79% drop in profits for the last quarterof 2012 on mounting costs at Cell C, STC reported that revenue for the first half of 2013 had risen 4% compared to the same period in 2012. Wassim Mansour, chief executive of Zain South Sudan and an adviser on operations to the group’s board, says the group is still on a learning curve after its previous experience but is now better tuned into the difference between the Middle East and Africa. “The strategy of Zain today is to consolidate our presence and the operations that we have,” he says. He adds that the group is still open to new opportunities. In September, Zain expressed an interest in a Tunisie Telecom stake and in increasing its 15.5% stake in Moroccan operator Wana Telecom. The next battleground for Gulf operators will be Libya, where a third licence is expected to go on sale in 2014. ●

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dossier | telecoms

Handsets

Is Apple’s iPhone 5c worth it? With a clutch of top-end smartphone manufacturers targeting Africa, Apple has a lot of catching up to do

ith Apple lagging behind competitors like Samsung in the Chinese, Indian and other emerging markets, analysts expected that the California-based company would launch a phone with these emerging economies in mind. So far they have been wrong. Apple unveiled its new range of iPhones in September, and alongside the new flagship iPhone 5s was the iPhone 5c. The 5c retails at around $100 less than the 5s, but at $549 for the 16GB version and $649 for the 32GB variant, it remains an aspirational

5c and 5s iPhones sold worldwide in the three days following their launch

SAmSung gAlAxy S4 (Android) 16GB model retails contract-free for $579

60.95m

smartphones in Africa by end 2013, according to Informa, making up 51% of continent’s phones

product and one that is out of reach for the average consumer in Africa. Although the exact retail prices in Africa are still to be released, the pre-paid mobile market dominates in most African countries outside South Africa, meaning customers will have to front most of the money for their handsets. If the price is within your reach, is it worth ditching your current handset for the ‘fun’ version of the iPhone? Besides coming in a choice of four juicy colours or white, the touchscreen-based smartphone makes use of a dual-core 1.3GHz Swift central processing unit (CPU) and triplecore graphics processing unit with Apple’s Apple Iphone 5c new iOS7 (iOS 7) 16GB opermodel costs $549 ating

system. However, this is held together by an Apple A6 chipset as opposed to the A7 from the iPhone 5. In the 5c, Apple also left out the fingerprint-recognition system and the Burst iSight camera and slow-motion video recording mode that come with the 5s. This leaves the possibility that when Apple introduces new features to future operating systems the 5c’s hardware might not be powerful enough. And remember, the 32GB 5c is the same price as the 16GB iPhone5s. sHoP AroUNd

Despitearangeofsub-$100smartphones currently flooding Africa (see TAR 50, May 2013), Apple’s are not the only phones targeting the more affluent end of the market. But a number of alternatives to the iPhone might be better suited to African conditions. Nokia’s latest flagship model, the Lumia 1020, will retail for around $600 and makes use of Windows Phone 8. It also has a dual-core 1.5 GHz Krait CPU and features a massive 41MP camera. While Nokia has not made significant inroads with its new Windows Phone 8 operating system, it has been moving up the aspiration ladder and its products have been good sellers in Africa. Samsung’s Android flagship Galaxy S4 retails contract-free for $579 – $30 more than the 16GB iPhone 5c – but Samsung has not skimped on its functionality. In terms of market share, Samsung has squarely cornered the African continent, bringing with it a solid support structure and customer service. According nokIA lumIA to recent data from market 1020 (Windows researchers GfK, Samsung Phone 8) 32GB products make up 52% of only, costs around the continent’s devices. $600 The South Korean manufacturer is one of the few electronics companies that has an active Africa-focused strategy in terms of products built for African conditions and help centres where members of staff speak BlAckBerry Z10 a number of African (BlackBerry 10) 16GB ●●● model costs around $600 languages. the africa report

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Outdoor

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dossier | telecoms

“As a continent, Africa ●●● requires a very significant commitment in terms of local offices and resources in order to build out a presence and logistical capabilities across so many countries,” explains Simon Baker, programme manager for mobile handsets at market intelligence firm International Data Corporation (IDC). In his analysis, “Samsung, with its broad range of consumer electronics products and unwavering ambition, has been able to achieve just that, in the same vein as Nokia did before it.” By contrast, Apple has largely steered clear of the African market. Its online Apple store is available in only 20 countries on the continent, mainly those where its partner France Telecom’s Orange is an operator. THe sMArT MoNeY

As smartphone shipments to Africa increased by 21.5% yearon-year for the second quarter of 2013, according to data from IDC, several other manufacturers have also been gaining ground. IDC says that Sony has been putting extra effort into marketing its midrange and high-end devices – such as the Xperia models– andas aresult it managed to increase its market share from 0.3% to 3.4% yearon-year for the second quarter. Financial trouble at Canadian handset manufacturer BlackBerry has left its future in doubt. In late September, the manufacturer reported a net loss of $965m for the second quarter of 2013 and accepted a takeover bid from its largest shareholder. BlackBerry had seen Africa, particularly Nigeria, as one of its biggest growth markets, but a regulatory filing published in October showed that handsets running Google’s Android operating system were winning its market share in emerging markets. The BlackBerry Z10, launched in January 2013, runs on the long-delayed BlackBerry 10 operating system and is retailing for N100,000 ($620) with MTN in Nigeria. It is unclear yet where and when the BlackBerry Z30, launched in September, will be available in Africa. ● Charlie Fripp in Johannesburg

opinion

Time to rethink USFs Aligning wider economic policies with the digital growth agenda will deliver better outcomes

Ben PhilliPs

Mani Manimohan Director for public policy, GSMA

he mobile sector in Africa has witnessed unprecedented growth in recent years. Investments by mobile operators will have connected more than 400 million consumers by the end of the year. Nonetheless, significant segments of the population remain unconnected, and internet penetration is lower than in other emerging economies. User penetration, which discounts the use of multiple subscriptions, lags behind at 35%. Low incomes, weak infrastructure (e.g. electricity and roads), dispersed population clusters and a lack of regulatory certainty are impediments to further growth. Phones are a necessity and not a luxury. Their increased adoption benefits societies and economies. All of us should work towards achieving widened access to mobile services. It is a noble goal. But, have universal service funds (USFs) made a remarkable difference and are they the right tool? Several African countries have established USFs, borne out of a desire to connect the unconnected. These funds are intended to offer incentives for operators to provide connectivity in hard-to-reach areas. Irrespective of the well-intended objectives, several questions have been raised about the effectiveness and efficiency of such funds. Lack of transparency, accountability and proportionality are some of these issues. USFs are typically funded through levies on operators. These levies continue to be collected at arbitrarily set rates that appear to be in excess of actual needs. This is despite the accumulation of large amounts of money and growth in mobile connections. An April 2013 study by the GSMA, an association of mobile operators, surveyed 64 USFs and found $11bn waiting to be disbursed between them. Out of 21 funds in Africa with an estimated $727m available in 2010-2011, only $182m had been distributed. Affordability, skills shortages and a lack of relevant content also hinder mobile adoption, yet they are ignored by policymakers. High taxation on mobile telephony is an example of this inconsistency. High taxes have the most stifling impact on low-income consumers, who represent the greatest opportunity. Universal access will not be achieved by redirecting private sector funds into unsustainable infrastructure projects. A more effective approach shifts away from large network building projects to making mobile relevant and affordable. Stimulating demand for mobile services and creating a climate conducive to investments is the best way forward. While infrastructure is important, by itself it will not lead to increased mobile usage. Enabling services such as mobile money and mobile agriculture services that are directly relevant to rural consumers might help to overcome the adoption barrier. While rural penetration lags behind, it is nevertheless increasing. Public and private sectors working together can accelerate this growth. It is not proper to place the burden of universal service on operators alone by taxing them. Governments should re-think the relevance of USFs and prioritise alignment of wider economic policies with the digital growth agenda. ● the africa report

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In line with the goals of our shareholder, the Sinopec Group, we have an ambitious growth strategy focused on reinvestment in core assets and strategic acquisitions – – and aim to produce 500,000 bopd by 2015, up from 168,645 bopd in 2012.

“Vision 500”

We pursue a combination of internal and external growth to achieve this major milestone. The Gulf of Guinea remains our (06& ;?$;<0!86%01 0<?0 $= =$%5:+ <?3?%76&; $5< 1$&;*:70&"6&; commitment to our traditional countries of operation. Achieving “Vision 500” also takes us to new horizons, with the ambition to expand in other production regions offering growth potential. Representing over 30 different nationalities, the Addax Petroleum group has over 1’100 employees from diverse cultures and backgrounds that contribute to giving our Company its 5&6>5? 6"?&767' # 0 %$(/6&?" .=<6%0&+ ,86&?:?+ -6""1?* Eastern and Western culture based on three core values: Integrity through Action ; Harmony through Diversity ; and Value Creation through Excellence. Addax Petroleum’s mission is to create value through successful exploration, development, and production of oil and gas, whilst contributing, through the 26&$!?% .""0)*9?7<$1?5( 4$5&"076$& 0&" 78? Company’s CSR and community relations activities, to social and environmental development within its areas of operation and beyond. www.addaxpetroleum.com www.addhopefoundation.org

2013 8:0$; 8!;%2%7' )+;9";;%' -* 2012 3&!,%62#% 2% 45; -* (#945 /;, 2012 8:0$; 8!;%2%7' .#164#%' -/) 2011 Acquisition of Shell’s upstream assets, offshore Cameroon 2009 Acquisition by Sinopec 1998 – 2005 Expansion in Nigeria, Cameroon, Gabon and Kurdistan Region of Iraq 1994 Creation of Addax Petroleum

Each step makes a difference and difference is our strength

dossier | telecoms

Mobile broadband

the nairobi data centre is the largest in east africa

Ghana on top

all pictures: Jonathan cole photography ltd

acquisitions

infrastructure

Vodacom moves to buy Tata’s Neotel

Liquid Telecom goes local

The builder of fibreoptic networks is turning its attention to the data demands of households and businesses

iquid Telecom, a Mauritiusbased group, has built Africa’s largest fibreoptic network stretching 15,000km across Southern, Eastern and Central Africa, and is now shifting its strategy towards linking homes and businesses to broadband networks. Nic Rudnick, chief executive of Liquid Telecom, says the company’s main focus will be on access networks, such as fibre rings, that mobile operators can use to support the rollout of high-speed LTE broadband, and fibre links to homes and businesses. Liquid Telecom plans to spend at least $250m in the next five years on this fibre rollout. InEurope,Rudnicksaysthebulk of data is accessed using fixed-line internet connections, and “we don’t believe Africa is any different.” While he admits internet usage will be driven by wireless devices, Rudnick says segments of the market that are particularly data hungry “need and want services with a greater throughput than you can experience using most wireless technology”. How-

Ghana has been named as the african country with the best mobile broadband penetration, with 33.3 out of 100 people able to access the internet via their phones. an October 2013 report from the International Telecommunications Union placed Ghana at 49th in the world, well ahead of China at 75th, with 17.2 in 100 connected. Zimbabwe came second in africa with 29.7 out of 100 able to access mobile broadband, and namibia third, with 28.8.

2,000

m2 of carrierneutral rack space in Liquid Telecom’s Nairobi data centre

ever, Rudnick says Liquid Telecom is still looking to expand its fibre network and is assessing greenfield projects and acquisitions in four African countries. In September, Liquid Telecom integrated Kenya Data Networks into the group after buying a 61% stake in the loss-making companyfromSouthAfrica’sAltech Group. Altech in turn took an 8.6% shareholding in Liquid Telecom. The largest shareholder remains Zimbabwean telecoms entrepreneur Strive Masiyiwa, through his South Africa-based group Econet Wireless. In September, the group launched East Africa’s largest data centre, with 2,000m² of carrierneutral rack space in Nairobi. “As we are rolling out our fibre connectivity solutions, the amount of data that has been carried across the region is obviously increasing exponentially,” says Rudnick. “We want to have as much of that data and processing capability as we can locally.” Plans are already underway to build smaller data centres elsewhere in the region. ●

FlUsh wITh Cash after the sale of its stake in Us operator Verizon for $130bn in september, UK-based Vodafone made a move to buy south africa’s neotel via its local subsidiary Vodacom. The fixedline company is majority owned by Indian group Tata Communications. The deal is estimated to be worth around $500m. south africa’s wireless access Providers’ association opposed the sale, saying it would stifle competition.

interconnection

Respite for the little guys

sOUTh aFrICan mObIle OPeraTOrs met with mixed fortunes after the telecoms regulator announced plans to slash by 75% the fees they could charge for connecting cross-network calls. while mTn and Vodafone criticised the cuts as too steep, the share price of Telkom, a smaller competitor, rose. alongside Cell C, it will now have to pay less to mTn and Vodafone whenever its customers call those networks.

Gemma Ware

the africa report

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