Tar57 top500 by The Africa Report

NIGERIA PDP prays that the opposition fall apart

MOïsE KATuMbI The reluctant politician in Congo’s powerhouse

w w w.t hea f r ic a r ep or t .c om

the africa report

TOP

PAX AFRICANA Fragile peace and hot conflicts face AU

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9th edition exclusive

ranking

African companies

• Corporate boom slows • Firms poised for global recovery • Finance, retail and agribusiness lead rally

monthly • n° 57 • february 2014

groupe jeune afrique INTERNATIONAL EdITION

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

TANK MC

cartier.com

MANUFACTURE MOVEMENT 1904 MC SINCE THE CREATION OF THE FIRST TANK WATCH IN 1917, THE TANK COLLECTION HAS CONTINUED TO BREAK NEW GROUND. THE INCREDIBLY REFINED AESTHETICS OF THE NEW TANK MC WATCH ARE FITTED WITH THE CARTIER MANUFACTURE MOVEMENT 1904 MC. ESTABLISHED IN 1847, CARTIER CREATES EXCEPTIONAL WATCHES THAT COMBINE DARING DESIGN AND WATCHMAKING SAVOIR-FAIRE.

NIGERIA PDP prays that the opposition fall apart

MOÏSE KATUMBI The reluctant politician in Congo’s powerhouse

w w w.t heaf ric arep or t.com

contents

PAX AFRICANA Fragile peace and hot conflicts face AU

N ° 5 7 • F E B R U A R Y 2 014

TOP

9th EDITION EXCLUSIVE

RANKING

African companies

the africa report # 57 - february 2014

• Corporate boom slows • Firms poised for global recovery • Finance, retail and agribusiness lead rally

GROUPE JEUNE AFRIQUE INTERNATIONAL EDITION

4 Editorial africa’s missing companies 6 lEttErs 8 thE QuEstion

Briefing 10 signposts 14 people 16 international

is your politician value for money?

20 opinion

they may be corrupt and vain, but parliamentarians might be the best hope africa has for curbing wayward presidents

22 calendar

frontLine 24 is your politician valuE for monEy?

poLitics 32 38 42 44 46 47 47 48

african union Building the pax africana south sudan a young nation divided nigeria pdp and opposition fall apart moïse Katumbi the reluctant politician in congo’s powerhouse Zimbabwe how much longer? Ghana contracts and cronies saudi arabia/Ethiopia 150,000 repatriated Anansi Big spenders, hedged bets and a cushy job

south sudan a young nation divided

the leadership battle within the ruling party erupted in december, pitting groups loyal to machar and Kiir against one another. the crisis is now a test of regional diplomacy

rwanda will the bargain hold? Kigali is gearing up to showcase the success of its developmental authoritarian model at the afdb annual meetings, but familiar fears over political heavyhandedness remain

country focus 53 rwanda will the bargain hold?

cover credits: fotolia; illustration marc trenson/ja

BUSINESS TOP 500 68 overview the corporate boom weakens 72 mining precious little to celebrate 74 oil & Gas oil companies look to East africa for growth 76 telecoms much more to do to reach the masses 78 retail local market promise 80 manufacturing future may be brighter for african companies 81 rankings top 500 companies

TOP

9th EDITION EXCLUSIVE

RANKING

Art & Life 98 interview south african singer toya delazy 102 Briefs mozambique’s film revival and Kenyan author yvonne adhiambo owuor 104 lifestyle Behind the scenes with drc musician Baloji; trendhunter on pop-up shops; the rise of tunisian boutique hotels 106 Last Word by rita ray the africa report

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African companies turnover for africa’s top 500 firms rose by only 3.5% in 2012 as the number of ipos across the continent also slipped. 21 pages of detailed charts and analysis

editorial By Patrick Smith

Africa’s missing companies

ike so many statistics about Africa’s boom times, the figures about its companies seem at odds with the realities we see and hear. At first glance, our survey of the continent’s Top 500 companies shows that Africa’s corporate giants – their combined turnovers have tripled to around $740bn over the past decade – are racing ahead. But it is equally important to look at the African continent’s gross domestic product – estimated to be about $1.8trn in 2013 – and ask why that is well over double the turnover of Africa’s top 500 companies. The conclusion is that Africa’s companies are missing in action from some of the brightest spots on the economic horizon. Even Africa’s biggest companies are growing more slowly on average than its national economies. That is partly because Africa’s biggest revenues, in oil and mineral exports mainly denominated in US dollars, accrue to multinational, not local companies. Likewise with agricultural production, which is growing rapidly in many countries. Its growth is either measured through rising dollar-earning exports of soft commodities such as coffee, cocoa and tea, through the declining role of state commodity boards or through estimates of the size of the informal economies in the countryside. And going down the corporate rankings to those companies that did not make the Top 500, our research suggests that their turnover is shrinking: as much as 23% between 2011 and 2012. Capital market research shows also that the rate of new companies listing on African stock exchanges has been falling sharply. That generally means less accountability and less access to investor funds. Some regional factors, such as the political turmoil in North Africa, help explain the lacklustre performance of African companies. Equally, local companies in some sectors such as information technology and telecommunications are booming by any standards. Services too are growing, but the dependence on unprocessed exports is, if anything, intensifying. The performance of Africa’s processing and manufacturing companies, which will create the jobs of the future, is lagging behind. The average share of manufacturing in African

economies remains at around 10%, where it has been for the past 40 years. Changing this and championing Africa’s companies will require policy innovation, political will and an information revolution. The latest research from the African Development Bank (AfDB) and the World Bank on the factory floor dismisses the shibboleth that African companies cannot compete in terms of productivity or unit labour costs. But both organisations urge governments to shed their suspicion of local governments, which may be rooted in fears of a political challenge from independently wealthy individuals. Fixing electric power and transport would be a huge Boosting boost to local companies, and in industry and most cases that requires determined state action. championing So, too, does the financial industry. Africa’s Now is the time for governments to companies stipulate that all commodity exporters should repatriate their export will require earnings through domestic banking policy systems. Angola introduced such rules in 2011. Provided the national innovation, banking system is properly regupolitical will lated, this will boost transparency and an and allow for a more accurate measure of real output and export earninformation ings. It will also boost the availabrevolution ility of foreign exchange to the local market and help the development of local money markets. Finally, for Africa’s companies to attract substantially more local and foreign investment, there will have to be a corporate information revolution. Although the AfDB is making headway on improving macro and microeconomic data, there is still a lack of corporate data and independent analysis of companies’ performances of the kind readily available in Asia and South America. That will also allow policymakers to identify more easily the illicit outflows of finance – through tax evasion and deliberate mispricing of contracts – another factor that is limiting the financing prospects for local companies. Serious action is needed now if Africa’s companies are not to miss out on the growth. ●

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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

Quiz

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Thanks to everyone who answered our quiz in The Africa Report’s Dec 2013-Jan 2014 issue. The winners of a free digital subscription to The Africa Report are: Patrick Tusiime Mwebesa, Pieter Roos, Yacine Bio Tchané, Melat Hailemelekot, Stephan Schwarz.

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answers: 1. b – Edris Elba 2. a – The Gambia 3. c - NoViolet Bulawayo 4. c – Mali (Ibrahim Boubacar Keïta) 5. a – David Adjaye 6. c – Ecobank 7. a – Yaya Touré 8. a – Ali Zeidan 9. c – A political party 10. a - Kenya 11. b – Beny Steinmetz 12. c - Nigeria 13. c – Robert Mugabe SIPHIW

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been ping-ponged from one body to the other. When the ball will land on the one who shall take responsibility for all the heinous acts is unknown. However, the culprit may be known to the public, but mark my words, will never face justice. Mohammed Adow’s ‘Not Yet Kenyan’ should tell you those behind it still maintain we Somalis deserved it. This is Kenya, welcome back, son of our land.

Khadija Baxsan, via Facebook

14 Things To waTch in 2014 Thanks for keeping an eye on This issue For months now, the Rivers State governor, Rotimi Amaechi, has been embroiled in a political battle with President Goodluck Jonathan (‘Hail to the chief’, TAR56 Dec 2013-Jan 2014). Amaechi’s joining the opposition All Progressive Congress (APC) recently, has given him a significant edge over Jonathan because it has further weakened Jonathan’s People’s Democratic Party and positioned Amaechi as the APC’s most likely vice-presidential candidate in 2015. Amaechi is experienced and popular,

having served as Speaker of Rivers State’s Assembly for eight years, two terms as Chairman of the Conference of Nigeria’s State Speakers and, currently, as a second-term Governor and a second-term Chairman of the Nigeria Governors’ Forum.

Raymond Eyo, Lagos, Nigeria

kenya – Being and Belonging With reference to ‘Last Word’, Kenya at 50 supplement, these are but part of the atrocities committed against Kenyan Somalis, for which blame has

Let’s hope the 14 things will not set Africa ablaze. Africa is still stuck in the mud – disadvantaged by past events so that most states (50 years later) cannot meet the basic minimums of good governance. Why did we chase the white man? Maybe we should call him back to govern us. For states that have failed to impose order, the United Nations should come in and have a more direct role in the politics of the disadvantaged state. Gone should be the days of “peace keeping” and of the “demilitarised zone”.

Erongot Moses, via theafricareport.com

HOW TO GET YOUR COPY OF On sale at your usual outlet. If you experience problems obtaining your copy, please contact your local distributor, as shown below. ghana: GREENWICH MAGAZINES & BOOKS, Mr Ernest Asare, +233 (0)208 142 374, greenmaghana@gmail.com – kenya: NATION MEDIA GROUP, Josephine Bonareri Abuga, +254 (0)20 32 88507, JAbuga@ke.nationmedia.com – nigeria: NEWSSTAND AGENCIES LTD, Solomon Otinwa, +234 (0)709 8123 459, newsstand2008@gmail.com – sierra leone: RAI GERB ENTERPRISES, Mohammad Gerber, +232 (0)336 72 469, raigerbenterprise@ gmail.com – souThern africa: MCS CAXTON, Luisa Rebelo, +27 (0)11 602 9800 • luisar@magcservices.co.za – Tanzania: MWANANCHI COMMUNICATIONS, Erasto Matasia, +255 (0)713 512 551, ematasia@tz.nationmedia.com – uganda: MONITOR PUBLICATIONS LTD, Stephen Eselu, +256 (0)702 178 198, seselu@ug.nationmedia.com – uniTed kingdoM: COMAG, Mark Swan, +44 (0)1895 433791, Mark.Swan@comag.co.uk – uniTed sTaTes & canada: LMPI, Sylvain Fournier, +1 514 355 5610, lmpi@lmpi.com – ziMBaBwe: MUNN MARKETING (PVT) LTD, Nick Ncube, +263 (0)4 662755, nickncube@munnmarketing.co.zw

For other regions go to www.theafricareport.com

ADVERTISERS’ INDEX CARTIER ............................................. p 2 BOA GROUP ........................................ p 5 HAROPA PORTS .................................. p 7 OCP .................................................... p 9 KONICA MINOLTA .............................. p 13 MANGO ........................................ p 18-19 THE AFRICA CEO FORUM .................. p 23 ASSOCIATION RABAT 2013 ............... p 29

ICNL ................................................. p 37 ECONOMIST - NG SUMMIT ............... p 37 REPUBLIC OF TOGO ..................... p 49-52 SONARWA ........................................ p 55 SERENA KIGALI ................................. p 57 RSSB ........................................... p 58-59 BRD .................................................. p 61 EAX .................................................. p 63

NCAR ................................................ p 64

GMA ................................................. p 85

FRISOMAT ........................................ p 95

AKAGERA AVIATION ........................... p 65

ADEXEN ............................................ p 87 CWC - GHANA SUMMIT ..................... p 87

KINCANNON REED ............................ p 95

AGROTECH ....................................... p 67 FANAF ............................................... p 67

MINING INDABA ................................ p 89

CFAO ................................................ p 73

AME - MMEC .................................... p 91

THE AFRICA HEALTH FORUM ............. p 77

P&E WORLD AFRICA ......................... p 91

CNN ................................................ p 107

DDP OUTDOOR ................................. p 85

TAR SUBSCRIPTION .......................... p 93

TOTAL ............................................. p 108

METALGALANTE ................................ p 95 EKO HOTELS & SUITES ..................... p 97

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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

RESpoNSES to last month’s question:

With fresh allegations and revelations over the extent of governments’ surveillance of their citizens around the world, we ask whether there are instances when the concerns over privacy can be overruled.

Can government regulation and internet spying be justified?

Yes CeCil Burgess Chairperson of the South African Joint Standing Committee on Intelligence

Internet freedom is a controversial topic, particularly in South Africa at the moment. The government has finalised its National Cyber Security Policy and Strategy and this year there will be a public participation process so that we can get input from all interested parties on their concerns before any regulation of the internet is considered. Presently there are concerns about the effects of cybercrime on the economy, child pornography, and the damage that hacking can have on business and government. But we are dealing with something that we haven’t confronted before, making it necessary that we first understand what’s going on – you can’t just say no it’s not a good idea to regulate, nor can you regulate if don’t understand what you are regulating. Regarding spying, the world is run by accessing intelligence. People are always looking for information, which is most often not in the public domain. You can call it spying, but what it is, is protecting a country’s national security interests. Whether you are getting this information from your neighbours or from your citizens, it is something no nation can survive without. Eavesdropping has been in business since the dawn of time. Of course it is possible to go overboard. ●

No Mike silBer Management Committee member of the Internet Service Providers’ Association of South Africa

If what we are talking about is the kind of wholesale extra-judicial interception of communications of the like that was exposed in America, then that is not justified. I do think that lawful and monitored interception of telecommunications for law enforcement purposes is acceptable. There is a huge difference between the interception of telecoms within a legal framework, and governments carrying out broad sweeping data gathering, which is not targeted and which is limited only by technical and financial restrictions. What I am hoping is that the review of the practices in the US will make people around the world aware of how vulnerable they are to cyber attack. It is not just the US government that carries out this kind of internet monitoring. This happens in Africa too. People around the world are woefully unaware of the security risks associated with the internet and this awareness is probably slightly lower in Africa. Many people in Africa are unwilling to rely on African Internet infrastructure, so they use Yahoo and Google, but this means that their highly sensitive information is open to interception while transiting through America. People used to think that there was confidentiality through anonymity – that their information would get lost among the rest – but people need to know that this is questionable protection. ●

Should African governments fund space programmes? African governments should use their meagre resources to solve more urgent problems such as improving health services and education, to mention but a few, instead of funding space programmes. Juliet Komugisa via Facebook Space tech is the latest trend right now. Africa should not be left behind. Delavegas Don Diallo via Facebook No! They should feed their people first, and spend their resources on education, health and basic infrastructure. @GFediel2 via Twitter Yes, because other nations are already prospecting on Mars and on the moon, and it’s only a matter of time before territories are marked and divided amongst the early birds. Shingai Mtezo via Facebook They should develop private-sector health, and build more schools and universities. Mars can wait!! @YEdoumou via Twitter

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briefing

sIgNpOsTs

Optimistic Egyptians wait to vote on the new constitution

KHALED DESOUKI/AFP

NORTH AFRICA

of a patchwork of local militias squabbling over small chunks of territory. This simmering tension resulted in the assassination of deputy industry minister Hassan pushback from unions and other al-Droui by hardline Islamist political parties forced the removal militants on 12 January. A blocade of the Ennahda prime minister, of sorts remains on the oil ports Ali Larayedh, in January this year. in the east, where groups pushing A newly revised constitution for regional autonomy, such as the in Egypt is an improvement over Government of Cyrenaica, have the previous attempt, providing the invited foreign companies to buy oil military with less oversight over from them directly. The southern the judiciary, and giving parliament Fezzan region is also demanding the power to pass a vote of noautonomy, putting pressure on Prime confidence in the president. Military Minister Ali Zeidan. control over large chunks of the However, things are not all gloom. economy has been left The ability of secular parties to outwit – unsurprisingly – untouched, and the their Islamic counterparts and come army chief in charge of the transition, out on top of the centralised political General Abdel Fattah al-Sisi, is likely process may eventually lead to a more to run for president in elections that pluralistic Libya. Oil output – a vital could be held as early as April. component of the government Libya remains the hardest case, revenues that fund the nation’s with the state’s extreme weakness patchy public services – tripled during the Muammar Gaddafi to 650,000 barrels a day in the three era leading to the establishment weeks to 12 January. ●

Change, three years young

t is now three years since the youth of Tunisia, Egypt and Libya catalysed the great upheavals of the North African uprisings. Those who saw an instant solution to the ills of the region were chastened by Islamist forces’ seizure of the political process, and were further dismayed by the ease with which the army then strolled back into power in Egypt in July 2013. Others prefer to see the toppling of Tunisian dictator Zine el Abidine Ben Ali on 14 January 2011 as the beginning of a process of change that will perhaps last for decades. Despite setbacks, only the most curmudgeonly would discard the progress made. Ennahda, the Tunisian Islamists, have been pulled into mainstream positions through the need to fight radical Islamic militants in the south. Vigorous

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GlobAl outlook

Booming middle class brings challenges, too There are now over half a billion people in Asia who can be called middle-class, according to a new report by Ernst & Young. By 2030, the report predicts, “so many people will have escaped poverty that the balance of geopolitical power will have completely changed – global trade patterns will be unrecognisable too.” The effects are being felt throughout Africa already.

Governments have a chance to harness the ever-growing demand for the raw materials with which the continent is blessed, or else be subsumed by them. With a further three billion people predicted to rise out of poverty over the next two decades, this pressure is increasing. For example, the demand for fish in Senegal has soared, driven by middle-class shoppers. This has led to Dakar’s

increasingly assertive stance against fishing fleets that ‘stray’ into its territorial waters. On 4 January, Senegalese police seized the Russian trawler Oleg Naydenov for doing just that. Illicit fishing costs the Senegalese economy $250m a year according to official figures – which would be enough to create a quite a few more Dakarois middleclass families. And much of the benefit of a potential agricultural boom risks being siphoned off by ‘landgrabbers’, unless Africa manages to ramp up its collective efforts to create local agribusiness ventures. They could perhaps start by looking at the examples of South Korea, China and India for inspiration, where agricultural institutes and colleges are vital in spinning out viable companies from their research departments. Companies, too, will have to adapt – winkling out the middle-class consumer is not always the easiest task. Distribution networks rugged enough to cope with Africa’s insufficient infrastructure are key, as is tailoring products to local tastes (see our ranking of Africa’s Top 500 companies, p68). ●

toWN PlANNING

Elite city dreaming Stung by criticism that the country’s oil wealth has failed to trickle down, the Angolan government has embarked on a round of public spending, awarding an urban planning contract to architects Broadway Malyan to design a city plan for Luanda, whose population is set to grow from six million to 13 million by 2030. Not everyone is convinced. A study by Professor Vanessa Watson of the University of Cape Town condemns Western architects for designing African cities that fail to accomodate the real needs of Africans. Her study analyses plans to overhaul cities in countries including Angola, Democratic Republic of Congo (pictured) and Ghana, concluding that they often fail to take account of residents’ low incomes and fail to address the cities’ lack of basic services. “It is difficult to imagine how households with such minimal spending power can afford the luxury apartments portrayed in the fantasy plans,” wrote Watson. the africa report

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Vincent Fournier/JA

briefing

NIGERIA

Going out with a bang, not a whimper After a serious row with President Goodluck Jonathan over a leaked letter, and the failure of the Nigerian National Petroleum Corporation to account for $12bn in missing crude oil revenue, central bank governor Lamido Sanusi is set for battles on multiple fronts as he enters the final five months of his tenure. He is scheduled to depart from the job on 2 June. With his well-earned reputation as the man who straightened out the bank, the question remains whether he will be pushing for a resolution to the Ecobank crisis? The head of Nigeria’s Securities and Exchange Commission Arunma Oteh has raised questions about serious malpractice at the bank, but Togolese-based Ecobank is in no mood to listen. However, given that nearly two-thirds of its balance sheet is in Nigeria, it might prove difficult for management to brush off concerns indefinitely. ●

briefing | signposts

FrançaFrique

Three things to know about France-Africa relations

Number of years Côte d’Ivoire has given itself to boost oil production to 200,000 barrels a day, rivalling Ghana’s Hollande’s intervention was well received in Mali

AFter some hAndwringing, FrAnce is bAck In Africa, at least. In 2011, after a French-initiated blow to Libya’s Gaddafi regime, the French military struck again, playing a crucial role in kicking out Ivorian holdout president Laurent Gbagbo and helping the winner of the election, President Alassane Ouattara, into power. In 2013, France attacked an Islamist convoy heading towards Bamako, and subsequently led an intervention force into Mali: Operation Serval celebrated its first birthday on 10 January, 2014. Then, in late 2013, France initiated yet another intervention, this time in the Central African Republic.

history will not repeAt itselF… probAbly What is behind this renewed flexing of muscles in France’s “private hunting ground”? France’s reputation had been soiled when it was seen to support Hutu-power elements behind the genocide in Rwanda. It is partly a change of personnel. President François Hollande, long before his ‘Scootergate’ domestic troubles, has been charmed by a vocal group of diaspora Africans and academics in Paris, who have convinced him that it was possible to act in Africa without being ‘colonial’.

French compAnies Are expAnding AgAin But perhaps renewed business ties have pushed along the re-engagement, too. Since 2000, French companies have struggled in Africa, with nuclear-energy giant Areva having its wings clipped in Niger for example. However, Renault has recently had great success building new factories in Morocco, and now Algeria. Meanwhile, in 2012, Bouygues won a €232m ($314m) contract to build a third bridge in Abidjan, the Ivorian economic capital, while food giant Danone is rumoured to be in talks to buy a stake in Kenya’s Brookside Dairy, the biggest dairy in East Africa.

Benoit tessier/reuters

what the neighbours are saying about...

… the trial of former Egyptian president Mohamed Morsi “The trial will widen the rift in an Egypt already deeply divided in the middle: for and against Morsi, and for and against his military captors” Dr Larbi SaDiki | Expert in arab democratisation, writing for al Jazeera

“As far as the army is concerned, the outcome of the trial cannot be anything other than a sweeping conviction on the severe offences” Zvi bar’EL | Middle East analyst for Haaretz

“Whatever the rights and wrongs of Morsi’s position, few consider his decision to grant himself unlimited powers a wise one. Mass protests sealed Morsi’s demise, but it appears that moderate Islamic parties such as Ennahda in Tunisia have learned a great deal from Egypt” NabiLa raMDaNi | Journalist writing in South africa’s Mail & Guardian the africa report

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people

south africa

Andrew Chirwa The new NUMSA president has launched an attack on the ruling ANC and President Jacob Zuma, calling for the government to improve the lives of the poor and stop wasteful spending He is young, fearless and believes that unionism is in his blood. andrew Chirwa represents the new face of union leadership in south africa and is one of the youngest people to lead a trade union in the country. Chirwa was elected unopposed as the national deputy president of the powerful national union of Metalworkers of south africa (nuMsa) in 2012 before stepping up in December 2013 to replace

Cedric gina, who resigned due to a conflict with the nuMsa leadership. The metalworkers union has been an outspoken critic of the ruling african national Congress (anC). it has called on President Jacob Zuma to resign and for the scrapping of the national Development Plan and its youth wage programme, the anC’s blueprint to fight the stubbornly high unemployment rate. “The majority of people have not seen the fruits

of our democracy 20 years since the birth of the new south africa. as a union, we have adopted the stance to represent the downtrodden and the poor,” Chirwa tells The Africa Report. Chirwa has declared that Zuma is bad for the country and should go: “We at nuMsa do not have confidence in Jacob Zuma, and he should be replaced. How do you justify the expenditure of Zuma’s homestead at nkandla when people do not have houses or food to eat?” Born in 1980 in Zebediela, Chirwa studied electrical engineering at Mamelodi Technical College in Pretoria, where he became active in the college’s student representative council in 2000. The following year, he began working for ford. in 2003, he was elected as a nuMsa shop steward, and a chairman in 2009. Chirwa is a member of the anC and its youth league, but said he would no 1980 Born in Zebediela, Limpopo Province 2003 Became a NUMSA shop steward at a Ford factory

Daniel Born/The Times/Gallo imaGes/GeTTy imaGes

2012 Elected national deputy president of NUMSA December 2013 Elected unopposed as NUMSA president

olusegun obasanjo

The former president called on President Jonathan to act before it is too late

“Nigeria is bleeding and the haemorrhage must be stopped”

HirosHige seko

“Wherever he goes, Prime Minister Abe is asked if he is there to compete against China, but that’s not our intention at all” Deputy cabinet secretary defends the premier’s African tour the africa report

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evAN SChNeIDer/UN PhoTo

Crystal Orderson in Cape Town

South Africa’s president criticises DA leader Helen Zille over questions around exam pass rates n ° 57

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lUSA vIDeo/yoUTUBe

MArCo UrBAN

AnTonio sukA nTchAMA The scandal about how 74 Syrians were able to board a flight leaving Guinea-Bissau using fake passports claimed its second scalp after GuineaBissau’s interior minister Ntchama resigned.

President Jacob Zuma’s administration has something to cheer about. Basic education minister Motshekga announced the ‘matric’ exam pass rate had risen to 78.2%, the highest score since the end of apartheid.

“I said to myself, this person still has that old mentality that black people are not intelligent.”

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The Gao police chief, who oversaw the administration of brutal sharia justice during the town’s 10-month occupation by Al Qaeda-linked rebels in 2012, was arrested in late December 2013 in central Mali.

ZiTTo kAbwe

JAcob ZuMA

the africa report

Aliou MAhAMAr Touré

The former deputy general of Tanzania’s Chama cha Demokrasia na Maendeleo won a legal reprieve in January in his battle against the party. The central committee has accused him of plotting a coup in November 2013.

Angie MoTshekgA

Ashish ThAkkAr A golden boy in the lists of young entrepreneurs, the Ugandan head of the Mara Group has gone into business with banker Bob Diamond. The two launched the investment fund Atlas Mara in December, raising $325m.

Z. rAUBACh/CorBIS

longer maintain his membership now that NUMSA has declared it will not support the ANC in the 2014 elections. “We are not going to spend our hard working money on an organisation that stabs you in the back. We cannot continue to feed a snake that bites you every time,” he says. This is the first time in the union’s history that it is withholding its support. “Each and every worker will vote for his or her party of choice,” he explains. Members of the leftist movement have been courting NUMSA to establish common ground for a united front for the working class. NUMSA is the Congress of South African Trade Unions’ (COSATU) biggest affiliate by numbers, with an estimated 328,000 members. It has been the driving force in getting expelled leader Zwelinzima Vavi back in his seat as the secretary of Africa’s largest trade union federation. “There is no leadership in COSATU, and there is a serious paralysis. We want Vavi to be returned to the position he was elected to in 2012 and to complete his mandate,” says Chirwa. Chirwa also says there are far too many COSATU leaders who want to head to parliament or be appointed as a minister in Zuma’s new cabinet. “We hope that those who wish to be elected to parliament must go so that those who are left behind are committed to the workers and can stabilise the organisation,” he explains. He also seeks to dispel rumours that NUMSA is about to leave COSATU: “Some want us to walk away from COSATU so that it becomes a mere labour desk for the ANC. We have chosen to fight in COSATU, and I believe things will get better.” And if Chirwa has his way, COSATU will be barking much more and ensuring that the ANC delivers for the poor. ●

MArA GroUP

Good times

sTellA oduAh Fresh from controversy over ordering bullet-proof luxury sedans, Nigeria’s aviation minister is embroiled in a crisis over her academic credentials. It appears that her doctorate is from a fictional school.

Bad times

ADVERTORIAL

EXPANDS IN AFRICA AFTER ESTABLISHING ITSELF IN EUROPE, LATIN AMERICA, ASIA AND AUSTRALIA, THE BRAND IS STRENGTHENING ITS PRESENCE IN THE AFRICAN MARKET WHERE IT PLANS TO OPEN 100 NEW SHOPS OVER 5 YEARS.

ANGO opened its ﬁrst shop on the Paseo de Gracia in Barcelona in1984 and is currently Spain’s second largest fashion export company with 2,700 points of sale in 107 countries. Its concept is based on linking a quality product - in line with the latest trends - to an affordable price tag. The brand continues its expansion plans and has set up a new megastore concept. This is based on shops which have a ﬂoorspace of between 800 and 3,000 m2 and offer all the group’s lines (MANGO, H.E. by MANGO, MANGO Touch, MANGO Kids, MANGO Sport&Intimates, and from February 2014 the new Violeta by MANGO line, aimed at a young public with sizes from 40 to 52). Aiming to be present in every major city in the world, MANGO plans to expand in Africa where it currently has 81 points of sale. Isak Halfon, Director for Expansion and member of the Board of Directors, talks to us about the reasons for this expansion and MANGO’s future plans in Africa.

and know that what African consumers look for are the same clothes they can ﬁnd in MANGO shops in European, American and Asian cities...

When and where did you open the ﬁrst MANGO shop in Africa? We opened the ﬁrst shop in Africa in 2001, in Casablanca, Morocco. Since then we have opened shops in Algeria, Tunisia, Egypt, Libya, Benin, the Ivory Coast, Namibia, Nigeria, Senegal, Cameroon and South Africa. Why did you decide to open shops on this continent? Because of its potential for growth! It’s the only continent where we don’t yet enjoy a massive presence. How did you adapt to it? Our collection is the same for every market. The only thing we adapt is distribution. Furthermore, we already have experience in this market

Who is in charge of the expansion in Africa for MANGO? Within the expansion team, Nicolas Cavalie (nicolas.cavalie@ mango.com) is in charge of the African market. He has carried out most of the launches for this continent and knows it like the back of his hand.

You are a company that works both with your own shops as well as franchises. Which system are you using in Africa? In Africa we have chosen to use the franchise system because it allows us to work with partners who know local consumers better than we do. What are your future plans in Africa? In 2014 we are going to launch shops in two new countries: Equatorial Guinea and Angola! And over 5 years we hope to open 100 new shops on this continent. In which countries would you like to be present? We would like to be present

DIFCOM/FC - Photos : DR

Isak Halfon, Director of Expansion and member of the Board of Directors

Why go for the megastore concept? Because it allows us to group together our different lines in a single shop. In addition, it allows us to better compete with big brands which are already present.

in Kenya, Tanzania, Uganda, Zambia, Zimbabwe, Botswana, Mozambique and both Congos.

briefing january

cAlEndAr

FEBruary

AfricAn Union SUmmit 21-31 January Addis AbAbA | EthiopiA security will top the agenda at the African Union summit in the Ethiopian capital. au.int

powEring AfricA tAnzAniA 29-31 January dAr Es sAlAAm | tAnzAniA poweringafrica-tanzania.com

invESt cotE d’ivoirE 29 Jan - 1 feb AbidjAn | côtE d’ivoirE ici2014.com

brought to justice in France, almost 20 years after the genocide began in rwanda.

bUild AfricA forUm 5-7 february mining indAbA 3-6 february CApE Town | SoUth AfricA miningindaba.com

pAScAl SimbikAngwA triAl 4 feb - 28 march pAris | frAncE The former leader of rwanda’s intelligence agency will be the first rwandan genocide suspect to be

After president Alassane ouattara’s much-criticised private trip to France in january, the leaders of the two countries will shake hands again on an official visit. MarCH

brAzzAvillE | rEpUblic of congo buildafricaforum.com

thE EconomiSt’S kEnyA SUmmit 26-27 february nAirobi | kEnyA economistinsights.com

frAnçoiS hollAndE viSitS côtE d’ivoirE End february AbidjAn | côtE d’ivoirE

ASA bAAko mUSic fEStivAl 7-9 march bUsUA bEACh | ghAnA African music, dance and arts festival that starts on the beach and ends in the jungle. asabaako.com

powEr & ElEctricity world AfricA 11-12 march

miChAEl KoorEn/rEUTErs

will thEy, won’t thEy? thE triAl of williAm rUto And UhUrU kEnyAttA 16 January ThE hAgUE | nEthErlAndS With the witnesses against President uhuru Kenyatta disappearing, the International Criminal Court prosecutor Fatou Bensouda (pictured) was forced to ask for an adjournment to his case, which had been due to start in February. no new date has been set. The case against the Deputy President William ruto will be heard from january, however, though he will wait to see whether he has to attend the court in person. That case is also struggling: the court has twice had to suspend proceedings because of a failure by the prosecution to produce witnesses in the ruto/Sang case.

johAnnEsbUrg | SoUth AfricA terrapinn.com/exhibition/powerelectricity-world-africa/

AfricA cEo forUm 17-19 march

gEnEvA | SwitzErlAnd The Afdb, groupe jeune Afrique and rainbow Unlimited bring together the continent’s top business leaders for two days of conference and high-level panels. www.theafricaceoforum.com

the africa report

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Geneva, 17-19 March 2014

2ND EDITION

The forum for African business leaders A unique networking platform. A strategic tool to develop your business in Africa and internationally. Information and registration: www.theafricaceoforum.com Taking part in THE AFRICA CEO FORUM

DONALD KABERUKA President, African Development Bank

MARIA LUISA ABRANTES CEO, Angola Investment Agency (ANIP)

MOULAY HAFID ELALAMY Minister of Industry and Commerce (Morocco)

ASHISH THAKKAR CEO, Mara Group (Uganda)

JEAN-PHILIPPE PROSPER Vice-President, IFC

ISSAD REBRAB Chairman, Cevital (Algeria)

EMMANUEL FABER Deputy General Manager, Danone (France)

KOLA KARIM CEO, Shoreline Group (Nigeria)

VALENTINE SENDANYOYE RUGWABIZA CEO, Rwanda Development Board

TEWOLDE GEBREMARIAM CEO, Ethiopian Airlines

CAROLE KARIUKI CEO, Kenya Private Sector Alliance (KEPSA)

LIONEL ZINSOU President, PAI Partners (France)

SAĂ?D IBRAHIMI CEO, Casablanca Finance City (Morocco)

DAPHNE MASHILE-NKOSI Executive Chair, Kalahari Resources (South Africa)

CO-HOST

DIAMOND

PLATINUM

GOLD

PARTNERS

OFFICIAL CARRIER

AWARDS

GALA DINNER Islamic Corporation for the Development of the Private Sector

rainbow

unlimited

MEDIA PARTNERS

KNOWLEDGE PARTNER

business top

african companies The corporate boom weakens By Gemma Ware

ho has been benefiting most from Africa’s high rate of gross domestic product (GDP) growth? It is a questionthathassparkeddebateamong economists and activists in recent months. Corporate giants based both in Africa and abroad have been profiting from the continent’s sustained high growth over the past decade, with few of the spoils trickling down to Africa’s populations (see TAR 56, Dec-Jan, ‘You can’t eat GDP growth’). Our annual analysis of Africa’s Top 500 companies shows that the growth of most of the continent’s largest businesses has slowed considerably since 2010. The combined turnover of Africa’s Top 500 companies, based on annual reports for the 2012 financial year, was $736.8bn, up 3.5% on 2011. The growth in revenue of Africa’s corporate giants over the past decade has been re-

markable – it is now nearly three times the $257.2bn it was in 2002. While revenue grew 18% in 2010, growth has slowed down in recent years. At 3.5%, Africa’s corporate giants are lagging behind the continent’s overall GDP growth rate in 2012, which was 6.2%, according to the International Monetary Fund. “We’re going through a slightly interesting phenomenon around the world where emerging market economies [...] have actually decelerated and the earnings haven’t been quite what we expected,” says Yvonne Ike, West Africa chief executive of Renaissance Capital. But she is optimistic: “I definitely see therecoverycontinuing.” InNigeria, Ike says the most interesting companies to watch are in agriculture, power and oil and gas production. African corporates may also have to navigate some choppy waters in the coming year. There will be elections in the continent’s four largest economies: South Africa, Nigeria, Egypt and Algeria. ● ● ●

illustration: rafael ricoy for tar

Turnover for Africa’s top 500 companies rose by only 3.5% in 2012. Many companies have been looking to issue corporate bonds before the global financial headwinds turn against emerging markets. The number of IPOs is also in decline

business top 500 african companies

Transport $34.5bn

-9.4%

Diversiﬁed $60.2bn +9.7%

Financial services $34bn +25.5%

-3.6%

Telecoms $78.2bn +2.9% Mining $62bn

4.7% 4.6% 10.5% 8.4%

Total 2012 turnover

Agribusiness** $51.8bn+10.2%

Oil & Gas $171bn

5.1%

% change

3.5%

Retail

$55.9bn Utilities

$30.6bn

Other***

$35.6bn

* Includes paper, steelmaking, electrical equipment, textiles, automobile, chemicals & plastics

Construction -13.9% $37.7bn

7.6% 4.2% 4.8%

+1.2%

Manufacturing* $85.4bn +5%

11.6%

$736.8bn 8.2%

23.2%

+8.1%

+8,9%

+20.7%

** Includes food & drink *** Includes media, healthcare, services, tourism

Top climbers

% turnover change

Company

Country

RMI Holdings (#165) ________________________

South Africa, ﬁnancial services _____________ 242%

Eterna Oil & Gas (#251) ____________________ Al Ezz Flat Steel (#292)_____________________ Steinhoff Int. Holdings (#10) ______________ Total Côte d’Ivoire (#271) __________________

129% 111.9% South Africa, wood & paper ________________ 79.3% Côte d’Ivoire, oil & gas _________________________ 78% Nigeria, oil & gas

_____________________________

Egypt, steel & metals

______________________

Biggest fallers Company

% turnover change

Country

Egyptian Iron & Steel Co. (#448) _________

Egypt, steel & metals ____________________ -47.5%

Press Corporation (#470) __________________

Malawi, diversiﬁed ______________________ -43.5%

Rogers & Co (#494) _________________________

Mauritius, diversiﬁed____________________ -39.9%

Times Media Group (#287) ________________

South Africa, media _____________________ -36.5%

DRDGold (#490)______________________________

South Africa, mining _______________________ -34% SOURCE: JEUNE AFRIQUE TOP 500 COMPANIES

By region

Northern Africa

2012 total turnover

$214.4bn 0.8%

$11.8bn

public and private

turnover change since 2008 2012 total proﬁts East Africa

West Africa

$53.3bn

30.6%

$3.8bn

15%

$14.4bn

54.8%

$0.7bn

Southern Africa

Central Africa

$14.6bn

Key reforms such as Nigeria’s long-delayed Petroleum Industry Bill are unlikely to make progress before elections, meaning investors may be unwilling to take long-term views on the country’s equity and bond markets. In addition, security crises in South Sudan, the Sahel and the Central African Republic show few signs of abating. Growing optimism about a recovery in the United States (US) and less doomsaying about the eurozone could help to boost the global economy. But at the same time, the tapering of the US Federal Reserve’s quantitative easing policy is set to put pressure on emerging markets, as US investors will have less incentive to seek out riskier investments. Managing currency risks could be an important factor next year for both African and multinational companies.Meanwhile,thecontinent’s commodity exporters will be watching the Chinese economy closely to see whether it will go headlong into a credit crisis or towards robust consumption-led growth. Lack of access to finance has been a key constraint on African corporate growth, but new avenues could start opening up for some larger firms. The rush by African governments to issue sovereign bonds could provide a good benchmark for firms seeking to launch their own corporate bonds. The Nigerian corporate bond market has come of age, with the country’s Securities and Exchange Commission reporting that the amount raised by corporates between 2010 and 2013 was more than two and a half times the bonds issued between 1960 and 2009. Some firms hurried to the market in 2013 before the Federal Reserve tapering began, including Nigerian lenders Guaranty Trust Bank and Access Bank. In East Africa, Kenya Power has indicated its intention to launch a corporate bond. ●●●

Sector by sector

$0.5bn

$440.1bn 50.5%

$34.7bn

Some sectors fared better than others. Financial services companies increased their turnover by 25.5%, but total turnover for the mining sector in 2012 dropped 9.4% to $62bn (see graph). The vast majority of the companies in our list – 394 – are privately owned. Of the rest, 60 – including the top two energy giants, Algeria’s Sonatrach (#1) and Angola’s Sonangol (#2) – are publicly owned, with the the africa report

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top 500 african companies business

remaining 46 under private-public ownership. Just under half – 233 – are listed on African stock exchanges, and the same number publish annual reports and have audited accounts. This means that data for half of Africa’s largest companies are difficult to find. Corporategovernanceandtransparency is improving, but it remains a continental challenge. According to analysts at Enko Capital, there have been 183 listings on African stock exchanges since 2007. Listings have slowed down dramatically: in 2007, there were 62 initial public offerings (IPOs), with the majority in South Africa. In 2013, there were just 13 IPOs. mid-sized firms struggle

Perhaps even more worrying for African economies are the figures for the companies that did not make it into the Top 500. Of the 1,037 companies that responded to our questionnaire, the companies ranked 501 to 1,037 had a total turnover of $39.96bn. This was a 23% drop from $51.96bn in 2011. It shows that medium-sized African companies, with high overheads and restricted access to finance, are struggling to maintain their revenue levels. The growth of small companies is difficult to measure. In Nigeria, Ike says the information technology sector is growing at around 23%. “The companies there currently are much smaller, so it will take a while for them to be in the Top 500, but some of these companies are growing at a rate of more than 100% a year.” Telecoms groups such as MTN (#4) and Vodacom (#11) are starting to target some of these smaller companies, a sign of potential growth to come (see page 76). When it comes to foreign ownership, 62 of the Top 500 companies are subsidiaries of multinationals. But as our list only deals with locally registered subsidiaries and those listed on stock exchanges, it does little to show the results of the vast array of multinational companies operating in Africa. Many multinationals do not publish a country-by-country breakdown of their profits and revenue, making them difficult to assess. New legislation in the US and Europe may help with this. If African GDP growth rates continue to rise as predicted, the calls for multinationals to be more transparent and to list on African stock exchanges are likely to get ever louder. ● the africa report

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opInIon

Amadou Sy

Senior fellow, Africa Growth Initiative, Brookings Institution

Paving the way for private sector growth

n order to achieve its transformational agenda, Africa will need to rely heavily on its private sector. As recently noted by economist Dani Rodrik, sub-Saharan Africa is less industrialised today than it was in the 1980s. In addition, private investment in Africa’s modern industries remains too low to sustain structural transformation. One reason private investment has remained low is that African companies face serious financing challenges. For example, compared to other regions, bank credit remains low and capital markets remain shallow. Good corporate governance can help remove some of these financing challenges. As Arthur Levitt, the former chairman of the United States Securities and Exchange Commission, once noted, “If a country does not have a reputation for strong corporate governance practices, capital will flow elsewhere […] All enterprises in that country – regardless of how steadfast a particular company’s practice may be – suffer the consequences.” A number of sub-Saharan African countries have recently developed corporate governance codes. In October 2013, the Africa Governance Network was launched with the aim of encouraging best practices and building capacity in corporate governance in Africa. Building deep capital markets takes time. As a result, standards for good corporate governance in Africa should go beyond the traditional focus on publicly listed domestic companies to include privately held firms, the public sector and foreign firms. There are at least three issues that African policymakers and standard-setters could address:

Strengthening public governance will benefit corporate governance. In most countries, the government is not just a regulator but also a customer or a business partner. According to a PricewaterhouseCoopers survey, 73% of African managers are concerned about over-regulation and 63% said that bribery and corruption were threats to their companies’ growth prospects. This points to the role of governments in supporting the credibility of corporate governance practices.

Good corporate governance should be a standard for foreign firms too. Foreign direct investment often results in large financial outflows from tax evasion, the underpricing of concessions and trade mispricing. African policymakers should work with developed countries and require full public disclosure of the beneficial ownership of companies as well as strengthen multilateral rules on taxation.

The role of accountants and auditors as gatekeepers should be encouraged but monitored. In a context where boards of directors are often the only institution able to reduce conflicts of interest between shareholders and managers it is crucial for directors to be able to count on reliable information provided by external accountants and auditors. It is therefore important to uphold high standards of quality on these gatekeepers and provide the proper incentives for their independence. ●

business top 500 african companies

mining

top 10 mining companies Rank in top 500

Precious little to celebrate Mining turnover dropped by 9.4% in 2012, and companies are now dealing with the threats of industrial action and utility tariff increases

CoUntRY

angloGold ashanti

South Africa

De Beers Consolidated Mines

South Africa

6.1

office Chérifien des phosphates

Morocco

5.8

Gold Fields

South Africa

5.4

kumba iron ore

South Africa

5.4

anglo american platinum Corp.

South Africa

5.1

impala platinum Holdings

South Africa

3.3

african Rainbow Minerals

South Africa

2.1

kansanshi Mining

Zambia

Harmony Gold Mining Co.

South Africa

$62bn

he year 2013 heralded getting back to basics as mining companies responded to shareholders’ vigorous demands to focus on controlling costs and generating returns. Investors are now extremely cautious about funding projects and, in the case of larger companies, have been calling for money to be returned to shareholders. Consulting firm EY says the “twin capital dilemmas” – access to capital and capital allocation – are the biggest risks mining companies will face in the year ahead. The total turnover for mining companies in our ranking, based on year-end 2012 figures, was $62bn, a drop of 9.4% since 2011 and the lowest since 2009. These figures show only the start of the turmoil in the South African industry brought on by the Marikana massacre in August 2012.

Total turnover of 41 mining companies in the Top 500, based on 2012 results, down 9.4%

4.7

In the meantime, chief executives of the world’s largest mining companies have been replaced and reshuffled. In the case of South Africa’s Lonmin (#100), Ian Farmer stepped down with health issues and was replaced by Ben Magara in July 2013. While tensions between platinum producers and organised labour have dissipated somewhat, industrialactionhasnot.Northam Platinum’s (#296) Zondereinde mine has become the focal point for the stand-off about wage demands. At the time of writing,

NationalUnionofMineworkers (NUM) members had been on strike for two months. In a sign that attitudes are hardening, the company has not strayed materially from its original offer and has delayed mediation on the matter. NUM’s rival, the Association of Mineworkers and Construction Union, received permission in late 2013 to strike at Anglo American Platinum(#31)andImpalaPlatinum Holdings (#48), indicating that strikes will persist well into 2014. A slump in gold prices – hovering at around $1,240/oz in early 2014 – is not all that is worrying gold producers. In an ominous sign for AngloGold Ashanti (#16), Gold Fields (#26) and Harmony Gold Mining (#87), Brian Dames, the outgoing chief executive of South Africa’s state-owned electricity utility Eskom (#6), has sig-

3.4 3.4

changing faces

3.3

3.1

While the past few years have seen sustained turnover for copper producers, diamond miners have experienced a slump. Revenue for gold producers also picked up after the doldrums of the post-2008 financial crisis, but their turnover and profits are now under strain after a 28% drop in the price of gold in 2013.

2.2

2.4

0.9

Copper 2009 2010 2011 2012

0.6 Gold

2009 2010 2011 2012

2 1.8

Warren Dick in Johannesburg

($bn)

0.6

6.6

nalled its intention to re-open tariff negotiations with regulators to plug its R225bn ($20.8bn) funding gap. This may lead electricity costs to rise further than the agreedupon 8% per annum until 2018. It has not been all bad news. In Morocco, the Office Chérifien des Phosphates (#23) secured a $271m loan from German developmentbankKfWinOctober2013. It will primarily use the money for the construction of wastewater treatment stations as part of its programme to increase production to 50m tn per year by 2020. As part of Canadian firm First Quantum’s plans to become one of the largest copper producers in the world, its Zambian subsidiary Kansanshi Mining (#74) is building a new smelter with the capacity to process 1.2m tn of copper concentrate per year. ●

Turnover by mineral

0.7

tURnoveR in $bn

CoMpanY

Diamonds 2009 2010 2011 2012 the africa report

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Getty Images •

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business top 500 african companies

oil & gas

top 10 oil & gas companies rank in top 500

Oil companies look to the East for growth International energy producers are shifting their focus to East Africa as local companies in established markets expand their activities

s companies develop new oil and gas fields in East Africa – from Mozambique in the south up to Tanzania, Kenya and Somalia – governments will be working hard to get the most they can out of the resources. Analysts suggest that the licensing environment is becoming more difficult in Africa, with governments establishing ever more onerous requirements for international companies and, in some part, discouraging independent operators. But, with the United States getting closer to energy self-sufficiency, the global energy landscape is also changing – and the new producers will be looking East to get the most out of their reserves. There are 65 oil and gas companies in our Top 500 ranking,

$1.7bn

Cost of Oando’s takeover of the ConocoPhillips assets in Nigeria

Oando is moving into the upstream sector

tUrnover in $bn

CoMpanY

CoUntrY

Sonatrach

Algeria

69.5

Sonangol

Angola

33.7

Samir

Morocco

6.5

oando

Nigeria

4.3

total South africa

South Africa

3.9

naftal

Algeria

3.8

Middle East Oil Refineries*

Egypt

3.8

Sonelgaz

Algeria

2.4

petroSa

South Africa

2.3

kenolkobil

Kenya

2.2

*IN ITALICS 2011 RESULTS

however, will apparently require unconventional methods, which will be expensive. At Africa Oil Week in Cape Town in November 2013 Lúmen Sebastião, from Angolan oil giant Sonangol’s (#2) exploration division, told The Africa Report the state-owned company was busy re-evaluating its ultra-deep regions and the Kwanza onshore and offshore fields using new 3-D technology. He said it had already revealed “lots of new prospects”.

with a total turnover based on year-end 2012 results of $171bn. This represents 23.2% of the total turnover, making it the largest sector by quite a margin. Yet oil and gas revenue has stagnated, only increasing 1.2% on the previous year. There has been stability in the oil price – which averaged $110 per barrel during the past three years – but some analysts are predicting a gradual downward movement in prices in 2014. Nevertheless, 2013 was a very good year for Algeria’s Sonatrach (#1), Africa’s largest company, which in late October announced that it had made its largest discovery in 20 years. The field is in Tamguid Messaoud, 112km from the Hassi Messaoud field, Algeria’s largest, and is estimated to hold 1.3bn barrels. Recovering them,

world-class gas

SUNDAY ALAMBA/Ap/SipA

Sebastião said Sonangol planned a great deal more offshore drilling, particularly in blocks that had been neglected by the majors. He said the government’s plan is to boost production from today’s 1.8m barrels per day (bpd) to 2m bpd and to sustain that level “for at least 10 years”. In December 2013, Sonangol, Cobalt and BP announced that they had discovered world-class gas reserves in the Lontra deepwater well. In Nigeria, local oil companies are set to take advantage as multinational oil companies shed some of their onshore oil blocks. Nigeria’s Oando (#35) aims to complete its $1.7bn acquisition of US company ConocoPhillips’ Nigerian assets by the end of January 2014. The deal will boost Oando’s oil output from just 4,000bpd currently to more than 43,000bpd. Oando chief executive Adewale Tinubu told the Africa Oil Week in Cape Town that ongoing disinvestment from

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Nigeria by major international companies was creating “valuable new opportunities” for Nigerian companies and would ultimately boost national oil production. Oando has until now been predominantly a downstream company, but Tinubu said that after the acquisition three-quarters of the company’s assets would be in the upstream sector. total eclipse

Total (#37) is set to become not only South Africa’s largest fuel company but also one of its main producers of solar energy. In November 2013, South Africa’s Department of Energy selected US photovoltaic manufacturer Sun-

1.3bn

Barrels of reserves discovered at Tamguid Messaoud by Algeria’s Sonatrach

Power, which is majority-owned by Total, as the preferred bidder for a $200m project to build an 86MW solar farm in Prieska in Northern Cape Province. Egypt’s ministry of petroleum announced in November 2013 that it is considering selling a 20% stake in Middle East Oil Refineries (#40), known as MIDOR. He said the government expects to make “$1-1.5bn” from the sale. Egypt owes at least $6.2bn to foreign creditors in the petroleum sector, and revenue from the sale of the MIDOR stake will go towards settling these debts. Anothercompanywithcashflow problems is South Africa’s stateowned PetroSA (#63), which is

at an advanced stage in talks to buy Engen’s petrol stations in the country for R11-18bn ($1-1.7bn). If PetroSA cannot find the money by then, it expects to ask the governmenttomakeupthedifference. PetroSA urgently needs to find new sources of gas for its Mossel Bay gas-to-liquidrefinery,asthenearby offshore well it has used is nearly exhausted. It is feverishly drilling at the nearby F-O field in the hope of a major find but has had in the meantime to import liquefied natural gas from the Middle East to keep the refinery ticking, which has put additional strains on its cash reserves. ● Gregory Mthembu-Salter in Cape Town

profile

Seplat

Oil producer, Nigeria

Seizing the moment as internationals retreat

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SEPLAT

f the future of Africa’s largest oil and Well-connected and able deftly gas industry is tied in with the to manoeuvre local politics, 25 homeemergence of independents, Seplat grown companies operate around 10% Petroleum Development Company of Nigeria’s 2.5 million barrels of oil per is a good beacon of how the new market day. That figure could double in the next is shaping up. five years, while nearly half of the The country’s 2010 Nigerian Content growing domestic gas market could Act – which specifies independent, local be controlled by indigenous companies, operators be given priority in acreage Seplat officials believe. awards – has seen a host of companies Seplat has positioned itself to take spring up, some literally overnight, advantage. Augustine Avuru, the even as international oil companies have gregarious managing director and winner backed out of the troubled Niger Delta. of Ernst & Young’s Entrepreneur of the Backed by fiscal incentives, Seplat Year award in 2013, last year confirmed leads the ranks of bold newcomers who plans to launch a dual listing on the have turned on the taps in marginal fields London and Lagos stock exchanges. long left fallow. Formed by a merger between two local Seplat leads the ranks of bold companies in 2009, the group newcomers who have turned snapped up three large Shell on the taps in fields left fallow oilfields the following year. Under a 45-55% joint venture with Nigerian Petroleum Development Regulatory approval is yet to come, Company, output has soared from 18,000 but the Nigerian Stock Exchange All Share barrels per day (bpd) to 60,000 bpd. Index expects at least five new companies Exploration also continues apace. to begin trading by the year-end. FTSE-listed Afren, which operates a joint Oil theft and bunkering have gathered venture with First Hydrocarbon Nigeria pace as the 2016 elections draw closer. and Shoreline Natural Resources, saw Some analysts say this could weigh its share price jump 9% in November heavily on the valuation of companies. on the discovery of a “giant” new oilfield. In 2013, Oando (#35) finished 11% down

on the year in Johannesburg and London. But the shift in the playing field could reveal Nigerian companies can manage operating risks better. Avuru says theft in one 35km stretch of pipeline Seplat acquired from Shell has been cut to 1%. Nevertheless, the path to high returns remains rugged. Critics say local smallholders provide another potential avenue for corruption – providing indigenous cover while acting as shell companies. And a lack of policy clarity remains a drag. With the Petroleum Industry Bill unlikely to materialise ahead of polls, several prospective sales have snagged on drawn-out court cases. Nevertheless, the outlook remains bright for those willing to take the risks. Not yet in the Top 500, these local companies may well appear in future rankings. ● Monica Mark in Lagos

business top 500 african companies

telecoms

top 10 telecom companies rank in top 500

Much more to do to reach the masses High-speed internet for corporate clients is the big opportunity this year, but to extend mobile penetration to first-timers, prices will have to fall

s merger momentum has grown in the global telecom sector, Africa has not been left out. In 2013, France’s Vivendi finalised a deal to sell its 53%shareofMarocTelecom(#46) to the United Arab Emirates group Etisalat for $5.7bn. It remains to be seen how Etisalat will position the newlyacquiredoperations,manyof them in Francophone West Africa, alongside its operations in Nigeria. Other deals could be on the cards soon. French group Orange con-

MTN and Bharti Airtel subsidiaries in the Top 500 rankings

CoMpanY

CoUntrY

Mtn Group

South Africa

15.9

vodacom Group

South Africa

8.2

vodacom South africa

South Africa

6.9

Mtn South africa

South Africa

4.9

Mtn nigeria

Nigeria

4.6

telkom

South Africa

3.9

Global Telecom Holding*

Egypt

3.6

Groupe Maroc telecom

Morocco

3.5

Maroc telecom

Morocco

2.6

Blue Label telecoms

South Africa

2.2

*IN ITALICS 2011 RESULTS

firmed toour sistermagazine Jeune Afrique that it is re-evaluating its operations in Africa. The turnover of the 34 telecoms companies on our Top 500 list stood at $77.6bn, contributing 10.5% of the total. Turnover grew by 2.1% between 2011 and 2012. Africa still has a long way to go with mobile penetration. A 2013 report from the GSMA found the continent had 253 million unique subscribers. That means the mobile penetration rate is just 31%.

profile

Vodacom telecoms group

Busy year ahead for the South African comms giant In September 2013, Vodacom Group (#11) announced it was in exclusive talks to buy fixed-line operator neotel. Chief executive Shameel Joosub said the fibre it would acquire would allow it to “develop entirely new services such as fibre to the home and business”. Vodafone is cash rich after it sold its 45% stake in United States (US) operator Verizon Wireless

for $130bn in September 2013 – $10bn of which it put into an investment pot for ‘project Spring’, which could include South Africa and tanzania. but speculation mounted in late 2013 that US firm At&t was eyeing a takeover of Vodafone, which owns 65% of Vodacom. Some analysts said this could lead At&t eventually to sell Vodafone’s African assets, with Orange mooted a potential buyer.

tUrnover in $bn

nAdIne HUttOn/blOOmberg VIA getty ImAgeS

A spokesman for Vodacom said this speculation was “totally unfounded”. With mtn, Vodacom faces new regulations in South Africa that will drop the mobile termination rate (the money one operator pays another for terminating a call on its network) from r 0.40 ($0.04) to r 0.20 by march 2014, and r 0.10 in 2016. the move favours smaller operators such as Cell C and 8ta. ● G.W.

PeterLyonsoftheGSMAsaysprices will have to drop in order to attract new customers. “Now it’s $13.6 averagerevenueperuser[permonth]. The next 200 million to 300 million customers are going to be significantly below that,” he says. speed means business

Helped bythe arrivalof high-speed broadband, big firms will target corporate clients. In August 2013, South Africa’s MTN Group (#4) rolled out its MTN Cloud Services to target smaller companies in Nigeria, Ghana, Zambia, Uganda and Côte d’Ivoire. Vodacom Group (#11) also has its sights on corporate clients (see box). Telkom (#38) is gearing up for a battle in February, when public hearings are due onlocalloopunbundling,aprocess whereby the South African stateowned incumbent will be forced to allow other operators to use its fixed-line infrastructure. Governments are trying new ways to tax the telecoms sector. In Kenya, Safaricom (#110) complained about a 10% levy on mobile-moneytransfersintroduced inlate2012.Safaricomofficialssaid the move caused it to absorb costs of $4.6m in 2012 and 2013. Still struggling to make its investment profitable, Indian firm Bharti Airtel is looking to sell its African infrastructure. The sale of approximately 15,000 towers could help reduce its debt burden. Airtel now has seven of its African subsidiaries on the Top 500 company list, the same number as MTN. ●

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Gemma Ware

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THE FIRST PUBLIC-PRIVATE FORUM ON HEALTH ECONOMICS IN AFRICA

GENEVA, 16-17 MAY 2014

A STRATEGIC MEETING BETWEEN AFRICAN AND INTERNATIONAL DECISION MAKERS

w w w. a f r i c a h e a l t h fo r u m . co m

business top 500 african companies

retail

top 10 retail companies rank in top 500

Local market promise Many of the continent’s largest retailers are dialling back their expansion plans and looking to make smaller advances closer to home

CoMpanY

CoUntrY

tUrnover in $bn

Shoprite Holdings

South Africa

9.7

Massmart Holdings

South Africa

7.2

pick n pay Stores

South Africa

Spar Group

South Africa

5.1

Woolworths Holdings

South Africa

3.4

edgars Consolidated Stores

South Africa

3.1

JD Group

South Africa

Masscash

South Africa

2.7

Foschini

South Africa

1.9

Clicks Group

South Africa

1.9

n a year that saw many African retailers pushing ahead with plans to expand on the back of growing consumer demand, 2013 was tempered by tougher conditions for consumers in the continent’s biggest market, South Africa. While the honeymoon is not yet over, a degree of reality has certainly appeared in the valuations of retailers listed on the Johannesburg Stock Exchange. As ever, there has been a wide degree of variation in the fortunes of some of the continent’s largest retailers. The total turnover of retailers in the Top 500 companies – based on year-end 2012 results – was $55.9bn, up 8.1% from $51.8bn in the previous year. This represents 7.6% of the total turnover of the Top 500 companies. The large majority of Africa’s major retailers are headquartered in South Africa: 16 of the 27 retailers in the ranking are based in South Africa, representing 94% of turnover. outsider chances

For South Africa’s Pick n Pay (#13), managers are trying to regain the supermarket’s lustre as the family-controlled company fights to win back lost market share and improve its weak margins. The company took the dramatic step of recruiting an outsider as CEO in February 2013 – it has traditionally appointed leaders from within its own ranks – in the form of Richard Brasher (see profile), who ran Tesco in

Akintunde Akinleye/ReuteRs

The tills are still ringing in Nigeria for ShopRite and Mr Price Group

50%

Rise in the share price of Pick n Pay between July and December 2013

the United Kingdom. Investors seem to like what they have seen and heard from Brasher, and the company’s share price rose 50% between July and December 2013. For other retailers, like Edgars Consolidated Stores (Edcon) (#52) it has been a fight for survival. Private equity company Bain Capital bought out the company in 2007, leaving it saddled with R20bn ($1.9bn) in debt. Despite selling off its debtors book to Absa (now Barclays Africa Group) for R8bn in 2012, the company has paid off very little of the original amount, leaving it in an extremely precarious position. Edcon’s fortunes can be seen in the spiralling cost of rolling over

its debt. It issued six-year eurobonds with a 13.4% coupon in November 2013. Moody’s Investor Services rated them Caa2, eight levels below investment grade. Edcon chief executive Jürgen Schreiber has the task of trying to resuscitate the core brand while at the same time attempting to reduce the massive debt burden. While a public listing could provide a solution, going to market when South African consumers are in dire straits is not a foregone conclusion. The year 2014 could be decisive for the beleaguered company. Yet for others, like Durbanbased Mr Price Group (#99), 2013 yielded only good news:

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top 500 african companies business

expansion plans

Upper-end retailer Woolworths (#47) has reassessed its expansion into the rest of Africa after the decision to close its three stores in Nigeria in November 2013. The announcement cited logistical difficulties as the main reason for withdrawing, and it caught many by surprise. Chief executive Ian Moir says Woolworths will continue to expand into countries bordering South Africa, where the company knows there is a demand for its products and where import duties and the cost of moving goods are lower than in Nigeria. In East Africa, Kenya-based Nakumatt Holdings (#350) continues to pursue its ambitious growth strategy despite the Westgate Mall tragedy in Nairobi in September 2013 that destroyed its flagship store. The company intends to add an additional 2530 stores by mid-2015. It currently operates 40 stores and plans to open a refurbished Westgate branch. Besides organic growth needed to reach this target, the company is in negotiations to purchase three stores in Tanzania from South Africa’s ShopRite (#8) for TSh4bn ($2.5m). The acquisition will complement the company’s existing branch in Moshi. For ShopRite, the possible divestiture comes on the heels of a warning from the Tanzanian government that it was importing too much of its merchandise from South Africa. ● Warren Dick in Johannesburg

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profile

Richard Brasher Chief executive, Pick n Pay

Quick off the starting block

fter the failure of his short where Brasher’s ‘Big Price Drop’ tenure heading Tesco in became known as the ‘Big Price Flop’. the United Kingdom – where Pick n Pay’s customer loyalty he was under pressure programme, called Smart Shopper, also to reverse a rapidly declining market required urgent attention. Some 60% of share – Richard Brasher needed a the company’s R70bn ($6.4bn) in revenue second chance to prove himself. Indeed, goes through the Smart Shopper card, he has made a stellar start in his role which rewards customers with points as chief executive of South Africa’s that can be redeemed for goods. It had second-largest food retailer, Pick n Pay. become too costly for the retailer and The Englishman took over in February had contributed to the razor-thin margins 2013 and immediately set about of recent years. Under Brasher, Pick n addressing a long list of problems that Pay has revised its rewards system. had led the iconic company to slip in the Customers can now check their points eyes of customers and investors alike. In in stores or through a new smartphone April 2013 the company announced application. They can also access a yearly drop in earnings of 31%, a sure rewards immediately. sign of the need for a turnaround. Top of the to-do list was the need Regarded as an aggressive to complete the company’s move to cost-cutter during his tenure at Tesco, a centralised distribution system that Brasher also instituted a retrenchment would drive down costs and improve the programme that reduced staff numbers availability of inventory. Pick n Pay had by more than 400. These factors have all missed out on this trend and had been contributed to vastly improving results trying to play catch-up with the and a surging share price. The competition. In the rush to correct this, company’s interim results saw Pick n Pay the company failed to grow as quickly grow revenue that indicates it may as its competitors, especially in terms be beginning to win back market share, of establishing new store space, and this led to Interim results indicate that a declining market share.

the company may be beginning to win back market share

Brasher has moved quickly to correct this. The company noted in its interim results in October 2013 – the first since his appointment – that it had opened 44 new stores in the 26-week period up to August 2013. The company now has more than 1,000 stores, roughly split 60/40 between company-owned and franchised stores. More than 100 of these are outside South Africa, with many more planned. “Our capital focus is now on new stores and refurbishment, which will drive sales and, in time, profitability,” said Brasher in a June 2013 interview with South Africa’s The Financial Mail. Critics of his vigorous price-cutting policy, aimed at winning back market share, say that this was exactly the strategy that had backfired at Tesco,

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whilst improvements to the cost base saw its trading profits leap by 15.2% in response to better margins. But perhaps the biggest endorsement of what Brasher has accomplished so far has come from the man who built up the Pick n Pay empire from four small stores bought in 1967. Raymond Ackerman said: “I am terribly encouraged by what Richard Brasher has produced with his team in the past six months. There is such a lot that we have to do to catch up and be the leading retailer, but I feel strongly that we can.” For Brasher, it has been a case of coming out of the blocks smoothly. Investors hope that he can stay the course. ● W.D.

MIKE ABRAhAMS/PICK n PAy

growing revenue, profits and dividends. The company has managed a measured expansion into the continent and added additional stores in Nigeria and Ghana following on from positive results from trial stores in those countries. The company has also taken a leaf out of the experience of international retailers by making a substantial investment in its online offering through its website. While still small in the context of its current operations, the company sees this developing into a major source of revenue.

business top 500 african companies

manufacturing

top 10 manufacturing companies rank in top 500

Future may be brighter for African companies All the factors are in place for a manufacturing revolution in Africa, but for the moment it is global companies that are profiting the most

ptimists point to global factors that should contribute to the re-emergence of Africa’s manufacturing sector: rising Asian wages, the growth of consumer classes on the continent and the ever-increasing global demand for manufactured goods. While there is certainly an uptick in textiles and automobile manufacturing across Africa, the winners in that particular story are foreign companies seeking competitive advantage in the form of cheap labour. But the success of Renault Maroc’s (#201) facility and the Chinese shoe company Huajian’s factory outside Addis Ababa may signal that Africa is ripe for a manufacturing revolution. The total turnover for manufacturers in our Top 500 – including the paper, steelmaking, electrical equipment, textiles, cars and plasticssectors–was$85.4bnbased on year-end 2012 results, up 5% on

$21bn Maximum amount Sasol will invest in its Southwest Louisiana GTL plant in the US

CoMpanY

CoUntrY

tUrnover in $bn

Sasol

South Africa

Steinhoff international Holdings

South Africa

9.5

Sappi

South Africa

6.3

arcelorMittal South africa

South Africa

3.8

ezz Steel Co.

Egypt

3.2

allied electronics Corp.

South Africa

elsewedy Cables

Egypt

2.3 2.1

nampak

South Africa

al ezz Dekheila Steel Co.

Egypt

1.9

aeCi

South Africa

1.8

2011.Thisrepresented11.6%of the Top 500’s total turnover. South Africa remains the strongest manufacturer today, and the governmentistryingtohelp strong local companies to develop. Employing 36,000 people and representing 7.3% of gross domestic product, the car sector is at the heart of the South African manufacturingindustry.TheAutomotive Production and Development Programme requires that a larger proportion of automobile components are manufactured in South Africa. A similar local content act in Nigeria has helped companies such as Nigerdock take on large manufacturing jobs on behalf of oil majors. tough year for steel

Meanwhile, steel manufacturers have been not been so lucky. While Morocco’s Société Nationale de Sidérurgie (#256) has managed to regain stability after

a difficult period, Maghreb Steel (#372) has not been so lucky. In August it fired 350 workers and threatened to close its Casablanca plant if the government did not impose anti-dumping measures on its Mediterranean competitors. These were duly accorded in November. In Algeria, ArcelorMittal’s El Hadjar steel facility is set to be renationalised after troubles finding a solution to industrial disputes. And 2013 was also a tough year for ArcelorMittal South Africa (AMSA) (#41). To resolve an ongoing dispute with Kumba Iron Ore (#27) over the rights to the Sishen mine, AMSA concluded a new agreement with Kumba in November 2013 that will see AMSA pay costs plus 20% for its iron ore. The previous agreement was for costs plus 3%. AMSA also declared force majeure at its Vanderbijlpark plant in February 2013 after a fire. In December, chief executive Nonkululeko Nyembezi-Heita resigned. ● Nicholas Norbrook

methodology Of 8,473 cOmpanies in our database, 8,170 received a detailed questionnaire. after cross-checks and verification, we established a ranking of africa’s top 1,035 companies. The first 500 are published. To allow

for comparison, we apply the same rules to all our data: 1) all financial data must have a clearly defined source, generally communicated to us by the companies themselves, and must refer to the year 2012 (in some cases 2012/2013); 2) if presented in the local

currency, we convert the data into United states dollar amounts according to the rate prevailing on 31 December 2012; 3) We include all companies that fall under legal jurisdiction of at least one of the 54 countries in africa, which is why

a holding company and a subsidiary can both feature on the list; and 4) Where we cannot obtain up-to-date figures, we use those of the previous year (marked with an asterisk and italics). after two years of silence, a company is struck off the rankings. ●

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