Tar63 business infrastructure by The Africa Report

COTE D’IVOIRE Economic phoenix rises from the ashes

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

UNITED STATES Soldiers, spies and summiteers

CONSTRUCTION Lafarge and Dangote battle for dominance

Double issue

N ° 6 3 • a u g u s t- s e p t e m b e r 2 014

THE

e Botsalo Ntuan Mehdi Jomâa • Okwi ri Oduor • Sim Shagaya • Jack Nkusi Kayonga l oh P n n -A Jo yele • Moctar El Hacen • Maria Ivone Soares • Sia Tolno Phuti Mahan Igho Sanomi • Ganzeer • Joel Embiid • Omar Victor Diop

Ismaïl

boma iam • Eric M h T ou ad m A Douiri •

nza • Rachel Mwa

Nelson Chamisa • Lupi ta Nyong’o

RISING

STARS

GroUPE jEUNE AFrIqUE INTERNATIONAL EDITION

Alge!ia 550 DA • Ang"la 600 Kwanza • Aust!ia 4.90 € • Belgium 4.90 € • Canada 6.95 CAN$ • Denma!k 60 DK • Ethi"pia 75 Bi!! • F!ance 4.90 € • Ge!many 4.90 € • Ghana 7 GH¢ • Italy 4.90 € • Kenya 410 shillings • Libe!ia $LD 300 • M"!"cc" 50 DH • Nethe!lands 4.90 € • Nige!ia 600 nai!a N"!way 60 NK • P"!tugal 4.90 € • Sie!!a Le"ne LE 9,000 • S"uth Af!ica 30 !and (tax incl.) • Spain 4.90 € • Switze!land 9.90 FS • Tanzania 6,500 shillings • Tunisia 8 DT • Uganda 9,000 shillings • UK £ 4.50 • United States US$ 6.95 • Zimbabwe US$ 4 • CFA C"unt!ies 3,500 F CFA

COTE D’IVOIRE Economic phoenix rises from the ashes

w w w.t heafr icarep or t.com

UNITED STATES Soldiers, spies and summiteers

CONSTRUCTION Lafarge and Dangote battle for dominance

CONTENTS

Double issue

N ° 6 3 • A U G U S T- S E P T E M B E R 2 014

THE

Mehdi Jomâa • Okwiri Phuti Mahanyele

• Jo-Ann Pohl

Oduor • Sim Shagaya •

Botsalo Ntuane Jack Nkusi Kayonga

Moctar El Hacen • Maria Ivone Soares • Sia Tolno

Igho Sanomi • Ganzeer • Joel Embiid • Omar Victor Diop

Ismaïl Douiri

• Amadou Thiam

• Eric Mboma

• Rachel Mwanza

Nelson Chamisa • Lupita

RISING

Nyong’o

STARS

THE AFRICA REPORT # 63 - AUGUST-SEPTEMBER 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

6 EDITORIAL Global wrongs, people’s rights 8 LETTERS 10 THE QUESTION

50 THE

BRIEFING 12 SIGNPOSTS 14 INTERNATIONAL

STARS

20 CALENDAR

76 SINGAPORE-AFRICA An island with continental ambitions

FRONTLINE 23 AFRICAN TALENT The 50 Rising Stars From the explosive power of its athletes to the determination of its business people, we pay tribute to the generation driving change across the continent

POLITICS 36 UNITED STATES Africa goes to Washington Security, trade and development are high on the US-Africa summit agenda, but will the talks boost international cooperation?

70 ISLAMIC FINANCE Searching for sukuk African governments are looking to the sharia-compliant financial markets of the Middle East and Asia for the funding of new projects 74 COSMETICS Beauty brands primped for profit

RISING

18 PEOPLE

BUSINESS

78 INVESTMENT Qalaa backs rail 78 HANNIBAL DOSSIER 80 INFRASTRUCTURE Dangote’s cement rivals With booming growth driving demand for building materials, Dangote is looking to end European players’ longstanding domination of the market

84 INTERVIEW PPC International managing director Pepe Meijer

44 INTERVIEW South Sudan’s Riek Machar

86 UTILITIES Electricity theft on an industrial scale

46 NIGERIA The last line of defence

88 URBANISATION A roof over their heads

48 INTERVIEW SA’s human settlements minister Lindiwe Sisulu 50 GHANA Rein ’em in, Mahama

ART & LIFE 90 THEATRE The Phoenix rises again The historic Nairobi theatre where Hollywood sensation Lupita Nyong’o once trod the boards is bouncing back

51 EGYPT Sisi slashes subsidies 51 ZIMBABWE Endless succession

94 REVIEWS African words, images and grooves

52 ANANSI

COUNTRY FOCUS 55 CÔTE D’IVOIRE Turning point Economic growth is on the rise, but the hard work of building bridges has only just begun THE AFRICA REPORT

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96 TRAVEL Washington DC – Capitol calling 98 DAY IN THE LIFE Babacar Diop, director of a renewable energy cooperative

> Corporate and Investment Banking

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EDITORIAL

THE AFRICA REPORT A Groupe Jeune Afrique publication

BY PATRICK SMITH

57-BIS, RUE D’AUTEUIL – 75016 PARIS – FRANCE TEL: (33) 1 44 30 19 60 – FAX: (33) 1 44 30 19 30 www.theafricareport.com

Global wrongs, people’s rights

he war-makers changed the world, although they didn’t know it, on 4 August 1914. The First World War quickened the break-up of the German and Ottoman empires, and signalled the beginning of the end of the empires in Africa and Asia run by Britain, France, Italy and Portugal. Although an avalanche of political, economic and technological change has enveloped the world in the intervening century, the origins of the First World War and its settlement in Versailles in 1919 still have acute relevance in Africa. The power balance within European empires shifted as the rulers came to the uncomfortable realisation that they needed their colonies to fight their wars. With more than 16 million deaths and the defeat of Germany and Austria-Hungary, the ruling classes of the world moved to Paris in 1919 to argue about a new world order. Four bad things then happened for Africa. Apart from Ethiopia, whose delegation swept in wearing Amharic traditional dress, Africans were kept out of the peace talks. Next, Britain and the US shot down a proposal from Japan, backed by China, for a declaration of global racial equality that would have had monumental legal and political implications. US President Woodrow Wilson drew support from the segregationist south, and he didn’t want international interference in US domestic policy. For Britain, a declaration of racial equality would strike at one of the empire’s organising principles. An historic chance to put the world’s races on an equal footing was lost. The third and fourth bad things flowed inevitably from that. After the allies stripped Germany of its

CHA I R M A N A ND F O UND E R BÉCHIR BEN YAHMED P UB L I S HE R DANIELLE BEN YAHMED publisher@theafricareport.com E X E CUT I VE P UB L I S HE R JÉRÔME MILLAN

colonies – now known as Burundi, Cameroon, Namibia, Rwanda, Tanzania and Togo – the land was not to be handed back to its original owners but given in trust to other European powers. Wilson found a moral justification for the plan. He announced that for the first time in history “the counsels of mankind are to be drawn together” to improve “the conditions of working people […] all over the world”. So these chunks of Africa were “to be administered for the benefit of their inhabitants – the greatest humane arrangement that has ever been attempted – The rule and the rules are laid down that forbid any of experts form of selfish exploitfirst ation of these helpless trumped people,” according to Wilson’s explanation of the cause the League of Nations of equal mandate system. Forget the hypocrisy, rights a and the tautology of century ago “selfish exploitation”. What was established was a new right: that of powerful countries, institutions and their experts to rule over countries for the claimed benefit of the inhabitants. That is also the theme of a radical new book by William Easterly, attacking “the tyranny of experts”. Easterly traces how Versailles established the “technical approach to development” and the “betterment of peoples”. This was eagerly taken up by Whitehall mandarins to stave off the anti-colonial movement. Today, says Easterly, it has its corollary in the prescriptions of the international financial institutions: the rule of the experts that first trumped the cause of equal rights a century ago. ●

M A R K E T I NG & D E VE L O P M E NT ALISON KINGSLEY-HALL E D I T O R I N CHI E F PATRICK SMITH M A NA G I NG E D I T O R NICHOLAS NORBROOK editorial@theafricareport.com A S S I S TA NT E D I T O R CHARLIE HAMILTON E D I T O R I A L A S S I S TA NT OHENEBA AMA NTI OSEI R E G I O NA L E D I T O R PARSELELO KANTAI (East Africa) A RT & L I F E E D I T O R ROSE SKELTON S UB - E D I T O R S ALISON CULLIFORD MARSHALL VAN VALEN P R O O F R E A D I NG KATHLEEN GRAY A RT D I R E CT O R MARC TRENSON DESIGN VALÉRIE OLIVIER CHRISTOPHE CHAUVIN ÉMERIC THÉROND P R O D UCT I O N PHILIPPE MARTIN CHRISTIAN KASONGO R E S E A R CH ANITA CORTHIER P HO T O G R A P HY CLAIRE VATTEBLED O NL I NE JEAN-MARIE MINY PRINCE OFORI-ATTA SALES SANDRA DROUET SOLÈNE DEFRANCQ Tel: (33) 1 44 30 18 07 – Fax: (33) 1 45 20 09 67 sales@theafricareport.com CONTACT FOR SUBSCRIPTION: Webscribe Ltd Unit 8 The Old Silk Mill Brook Street, Tring Hertfordshire HP23 5EF United Kingdom Tel: + 44 (0) 1442 820580 Fax: + 44 (0) 1442 827912 Email: subs@webscribe.co.uk 1 year subscription (10 issues): All destinations: €39 - $59 - £35 TO ORDER ONLINE: www.theafricareportstore.com D I F CO M INTERNATIONAL ADVERTISING AND COMMUNICATION AGENCY 57-BIS, RUE D’AUTEUIL 75016 PARIS - FRANCE Tel: (33) 1 44 30 19-60 – Fax: (33) 1 44 30 18 34 advertising@theafricareport.com A D VE RT I S I NG D I R E CT O R NATHALIE GUILLERY R E G I O NA L M A NA G E R S CAROLINE AH KING FADOUA YAQOBI LILIA BENACEUR ELODIE BOUSSONNIERE US R E P R E S E NTAT I VE AZIZA ALBOU a.albou@groupeja.com

editorial@theafricareport.com THE AFRICA REPORT

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PRINTER: SIEP 77 - FRANCE N° DE COMMISSION PARITAIRE : 0715 I 86885 Dépôt légal à parution / ISSN 1950-4810 THE AFRICA REPORT is published by GROUPE JEUNE AFRIQUE

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

SME FUNDING IS CRUCIAL

NIGERIA The litmus test election in Ekiti

DRC Kabila puts economy on ice

SOUTH AFRICA SAA and Eskom, the vulnerable parastatals

mall and medium-sized enterprises (SMEs) are engines of job creation, economic COMMODITIES growth and innovation [‘Private Equity: Global funds for African farmers’, TAR62 July 2014]. Every $1 invested in an SME generates $10 for the local community, and $1 of SME finance creates three times more jobs. However, sourcing start-up capital is difficult and financing often unaffordable. Private equity and venture capital are key solutions. Among the African Private Equity and Venture Capital Association’s (AVCA) membership, around $1bn was invested in SMEs in West Africa in 2013. A thriving industry will enable SMEs to grow whilst playing an important role in the economic development of Africa. There is scope for SMEs to obtain not only capital but also strategic advice. SMEs require expertise, and private equity needs businesses in which it can invest. Michelle Kathryn Essomé, CEO of AVCA, via email w w w.t hea f r ic a repo r t .c om

N ° 6 2 • J U LY 2 014

The trade challenge With new rules and new markets, African companies fight for a bigger stake in the continent’s resource bonanza

Aliko Dangote, CEO Dangote Group, Eleni Gabre-Madhin, CEO eleni LLC and Ivan Glasenberg, CEO Glencore Xstrata

GROUPE JEUNE AFRIQUE

INTERNATIONAL EDITION

INVESTORS DITCH BANK STOCKS There is increasing investor flight out of Middle Africa’s bank stocks [‘Barometer’, TAR61 June 2014] and it seems investors could be losing faith in the growth prospects of the region’s banks. In the first quarter of 2014, the region’s three key markets by size and liquidity levels, namely Nigeria, Kenya and Ghana, recorded significant decline in bank stock performances on a year-on-year basis. In Kenya, there are continuing concerns regarding non-performing loans and banks overstating their true performance. In fact, foreign investors were net sellers

they do. Most of us start our businesses as a passion and run it as such. Ruka’s coaching has provided myself and other women an avenue to think strategically about our businesses. She has guided and equipped me with best practice tools and approaches, provided me with business direction and support to transform my business – and my life – balancing family and work. More women are engaged in the economic sector, but the vast majority are expected to play a subordinate role in society. For those of us with greater aspirations, demonstrating meticulous diligence is a pastime. Monorvi Asampong, Managing Director, Go Study Abroad, via email

SA WINE SOARS of Kenyan bank stocks in first quarter 2014 to the tune of KSh1.5bn ($17.2m).

For the vast majority of South Africans, wine is not a main part of their drinking repertoire [‘Pressing for change’, TAR60 May 2014]. However, as elsewhere amongst developing countries, with increasing affluence comes a growing WOMEN WORK HARDER interest in wine. Not only in South Africa but in other parts of Africa, there Your profile of Ruka Sanusi/Alldens is a rising sense of pride in being able Lane [TAR61 June 2014], provides an to enjoy wines of this continent. excellent example of what is being done Whereas South Africa’s wine exports to foster sustained entrepreneurial were traditionally focused on the UK growth in the SME sector, with a unique and Europe, our global reach focus on women entrepreneurs. has widened considerably and notably In Ghana’s male-dominated business includes Kenya, Nigeria and Angola. Siobhan Thompson, world, women have to work harder to CEO, Wines of South Africa, via email be accepted and recognised in the work George Bodo, Head of Banking Research, Ecobank, Kenya, via email

HOW TO GET YOUR COPY OF THE AFRICA REPORT 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: RNA DISTRIBUTION, Luisa Rebelo, +27 (0)11 602 9800 • luisar@magcservices.co.za – TANZANIA: MWANANCHI COMMUNICATIONS, Emmanuel J Lyimo, +255 716 500 500, elyimo@ 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 CONTOURGLOBAL p 2; STANDARD BANK p 4; DANGOTE GROUP p 7; NCT NECOTRANS p 9; INTERPLAST p 11; LIQUID TELECOM p 15; ACCOR AFRIQUE p 17; CII - EASYHALLS p 19: AFRICA-AMERICA INSTITUTE p 19; CHEVRON p 21; CNN AFRICAN VOICES p 22; AFRICA 2.0 FOUNDATION p 35; AFEX p 39; ADEXEN p 41; CCA p 41; NIGERIA INFO p 43; AHU-ACEBS p 43; TAR READER SURVEY p 53-54; SIFCA p 59; K’ ORIGINS-ICC p 61 ; SIP p 63; SOLEN p 63; SIETTA-CONSEIL COTON ANACARDE p 66-67; DMG- GLOBAL AFRIC. INV. SUMMIT p 77; EMRC AGRIBUSINESS p 79; FRISOMAT p 79; LIEBHERR p 83; FRISOMAT p 85; SPINTELLIGENT IPAD p 85; WEST AFRICAN POWER POOL p 87; TAR DIGITAL SUBSCRIPTION p 87; INFORMA AFRICA COM p 89; METALGALANTE CARMIX p 89; MERCEDES-BENZ p 99; TOTAL p 100 THE AFRICA REPORT

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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:

In June the first judgement in a test case against Shell at London’s High Court ruled that the company may be liable for oil spills caused by sabotage or theft. The case has been brought by 15,000 villagers in the Niger Delta

Should Egypt’s suspension from the AU be lifted?

Do oil companies care enough about oil spills?

The AU should lift the suspension with immediate effect. It has not done anything apart from being counter-productive and a hindrance to cooperation among African states. Don Diallo Delavegas via Facebook

Yes AUDREY GAUGHRAN Director, Global Thematic Issues, Amnesty International

Most oil companies care about oil spills. Sadly though, most companies are concerned only for commercial and reputational reasons. If oil companies are not under pressure from governments to behave well, then most will not do so. The Niger Delta is one of the world’s greatest environmental disasters because thousands of oil spills have occurred over decades and most have not been properly cleaned up. The main company involved in the Niger Delta is the Anglo-Dutch oil giant Shell. There are hundreds of leaks from Shell’s pipes every year. The company’s defence is that other people – saboteurs and thieves – cause most of the spills but this is widely disputed. Amnesty International has exposed cases in which Shell has wrongly reported the cause of oil spills, the volume of oil spilt, or the extent and adequacy of clean-up measures. In our opinion, Shell behaves badly in the Niger Delta because it can get away with it. Government regulators are notoriously weak, and the government of Nigeria – a partner in the oil industry – has never held the company to account. Companies act better when they are compelled to by firm regulation imposed by governments who are acting in the public interest. ●

I am not sure if a military man is the right person to be president. But, if the people believe so, why not? Tesfaye Desalegn via Facebook I’m totally against lifting the ban until Morsi is set free. Akansake Victor via Facebook Has the suspension had any effect on Egypt? Adams Ato Kwamena via Facebook

No NNIMMO BASSEY Director, Health of Mother Earth Foundation (HOMEF)

The discovery of crude oil in more African countries brings hope and joy to those countries, but a few years into oil production all that joy will turn to gloom and all the hopes will be dashed. While governments and big business in the big cities may continue to smile to the bank, oil trashes the African environment relentlessly. Oil is extremely seductive not because of the easy conversion into energy, but because of the smell of cash that goes with it. Today, many parts of the Niger Delta environment are dead. The waters are dead; the lands dead and their air on life support. These veritable crime scenes remain as totems to the intransigence of rampaging oil companies. Governments and citizens of countries like Uganda, Ghana and Kenya will insist that the sorry story of Nigeria would not be replicated in their lands. We wish they were right. Governments dependent on oil rents cannot demand strict observance of environmental regulations. And the oil companies take advantage of that situation. Oil spills in Africa are nothing but a petty nuisance to the international oil companies operating here. The onus rests on citizens to hold their governments to account and insist on critical accounting to verify if the cash that flows into national treasuries can offset the environmental costs. If not, this sad trend will continue. ● THE AFRICA REPORT

The AU is simply following orders from their masters. Wossengiffow Degu via Facebook Yes […] because Egypt now has a democratically elected president in the person of Abdel Fattah al-Sisi. Eugene Ablakwah via Facebook Yes, because if the country is ready to settle and move on […] then let the AU support them as Egypt continues marching towards peace. Isaac Muhia via Facebook •

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BRIEFING

BRAZIL 25/6 The Nigerians

exited the World Cup in the final 16, but they gave Argentina a scare.

SIGNPOSTS

GUINEA 1/7 A health worker in Guinea helping in

the fight against the Ebola virus removes his protective suit. Over 600 people have been killed in the region.

KENYA 4/7 The Chinese-built new terminal at Jomo

Kenyatta airport in Nairobi opened for a three-week trial. The airport was severely damaged by fire in 2013.

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SAHEL FRENCH TROOPS HEADED FOR CHAD France is sending 3,000 troops to the Chadian capital N’Djamena as part of a new military operation to combat Islamist insurgents throughout the Sahel region. They will be joined by soldiers from Mali, Mauritania, Burkina Faso and Chad, and will be backed by 20 helicopters, six fighter jets and three drones. The announcement came only days after France ended an 18-month counter-terrorism operation in Mali.

Investors rushed to take part in Kenya’s debut Eurobond with more than $8bn worth of bids, an oversubscription of 500% on the target level of $1.5bn. Kenyan treasury officials said the figure set a record for Africa. Analysts had speculated that uptake might be overshadowed by concerns over the country’s stability following a spate of attacks by Somali-linked Islamist militants, but their fears proved unfounded.

“We cannot

SAYYID AZIM/AP/SIPA

Kenyan opposition party senator Otieno Kajwang speaking at an anti-government rally in Nairobi, referring to President Uhuru Kenyatta and vicepresident William Ruto. Kenyatta’s ICC trial restarts in October while Ruto’s is ongoing.

REFUGEES A DEVELOPING WORLD BURDEN Around 25% of the world’s refugees live in sub-Saharan Africa, according to a new report by the UN High Commissioner for Refugees.

ENERGY FUEL PRICES SOAR WITHOUT SUBSIDIES

Egypt 78%

Cameroon 14%

Tunisia 6.3%

Tanzania 0.75%

Fuel rose in price by as much as 78% for some African consumers after a spate of subsidy cuts. Egypt, where fuel subsidies had totalled around a quarter of the annual budget, saw the highest price hike (see page 51).

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BRIEFING

KENYA 7/7 Supporters of the opposition CORD movement rally on ‘Saba Saba day’, which celebrates the pro-democracy protests of 1990.

SOUTH SUDAN 9/7 Though in the throes of a civil

NIGERIA 13/7 Malala Yousafzai, the

war since December 2013, South Sudan nevertheless celebrated its third anniversary as a country.

Pakistani activist shot by the Taliban, meets mothers of Nigeria’s kidnapped schoolgirls.

STEFANO RELLANDINI/REUTERS; SYLVAIN CHERKAOUI/COSMOS; MENG CHENGUANG/XINHUA-REA; THOMAS MUKOYA REUTERS; ANDREEA CAMPEANU/REUTERS; OLAMIKAN GBEMIKAN/AP/SIPA

HEALTH EBOLA VIRUS SPREADS ITS DEADLY NET GUINEA

Cases 406 Deaths 304

LIBERIA

Cases 172 Deaths 105

SIERRA LEONE Cases 386 Deaths 194 TOTAL

Cases 964 Deaths 603

ALI NGETHI/AFP

SOURCE: WORLD HEALTH ORGANISATION

SOUTH SUDAN

Fighting now, famine soon

he third anniversary of the creation of South Sudan found the world’s newest country still mired in conflict and economic stagnation. Only days ahead of the 9 July anniversary, emergency relief charity UNICEF warned the troubled country faced a “looming” famine, while diplomats manoeuvred to push yet another attempt to broker a truce to end the six-month conflict. Fighting broke out last December after President Salva Kiir accused his former deputy Riek Machar of plotting a coup (see our exclusive interview with Riek on page 44) The conflict has seen massacres and sporadic clashes between the Dinka community, THE AFRICA REPORT

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to which Kiir belongs, and Machar’s Nuer. More than a million people have been forced to flee their homes, and some 10,000 have been killed. The European Union (EU) announced sanctions against two South Sudanese military leaders as Western diplomats sought to bring both sides back to the negotiating table. The EU imposed travel bans and asset freezes on Peter Gadet, a South Sudanese rebel chief who led a three-day assault on an oil town in Unity State in April in which more than 200 civilians were killed, and Santino Deng, a commander of the government’s third Infantry Division, which attacked Bentiu town in April. ●

AU G U S T- S E P T E M B E R 2 014

The outbreak of the killer Ebola virus in West Africa continued to spread, with more than 759 cases now reported across 60 sites. The World Health Organisation and Médecins sans Frontières declared that the situation was now “out of control” and branded the outbreak the deadliest in history.

In conjunction with GeoPoll, The Africa Report asked 100 Ghanaians, across the country, a question:

“Do you trust Ghana’s government with the economy?”

YES 32% NO 68% GeoPoll is a mobile surveying company that uses the mobile phone to connect with Africans and others across the developing world, using text messaging and other modes of communication. To join the global GeoPoll network and answer short surveys like this one, please visit m.geopoll.com

BRIEFING

INTERNATIONAL 1

1 2

4 7

EUROPE

3,000,000 Syrians have fled their country, and nearly all are in Jordan, Lebanon and Turkey, according to the recent tally by the UN High Commissioner for Refugees. The agency has asked European countries to open their doors to take the pressure off Syria’s neighbours.

SNAPSHOT

AFGHANISTAN

Awaiting an audit Claims of fraud in Afghanistan’s 14 June presidential polls overshadowed preliminary results that put Ashraf Ghani, a former finance minister, in the lead to replace Hamid Karzai. Ghani and rival Abdullah Abdullah agreed to an audit of all eight million votes in mid-July and results were expected in early August. ●

UKRAINE

Missile downs airliner SAID KHATIB/AFP

A Malaysia Airlines passenger jet carrying 298 people was shot down outside Donetsk, near the Russian border, with the loss of all on board. Suspicion fell on pro-Russian separatists but also Moscow amid claims it supplied the missile. ●

An Israeli air strike in Rafah, in the Gaza Strip. Simmering tensions between Israel and Hamas militants in Gaza exploded into violence in July as Palestinians fired hundreds of rockets into southern Israel. The Israeli government in turn carried out a series of devastating air strikes and a ground invasion in the Strip.

AMERICA

“We are all

EUROPEAN UNION

Renzi challenges Germany Launching Italy’s six-month presidency of the Council of the European Union (EU) in July, Prime Minister Matteo Renzi stepped up a campaign for the relaxation of European austerity policies. In the process, he accused Germany of blocking efforts to stimulate regional growth and putting the interests of financiers above citizens. Renzi called for more flexibility in interpreting budget rules and less emphasis on debt and deficit targets. The proposal prompted a public dispute with Jens Weidmann, the president of the German central bank, who says Italy must first reform its own economy. Renzi also plans to put pressure on EU countries to take responsibility for rescuing migrants crossing the Mediterranean Sea from Africa. Italy’s navy and coast guard have had difficulty coping with the influx of immigrants, and in late May interior minister Angelino Alfano said: “Europe will not see an Italy banging its fist on the table, but an Italy that overturns the table.” About two thirds of those who are rescued move on quickly to other EU countries, but member states have offered Italy little help. ●

MARK GARTEN/UN

Americans – north and south – in this hemisphere”

THE AFRICA REPORT

Nancy Pelosi, the US House Minority Leader, spoke from a border patrol station in Texas about the influx of unaccompanied children illegally crossing the border from Mexico and Central America. •

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Connectivity without borders Africa’s super-fast fibre network

Liquid Telecom run Africa’s most advanced fibre optic network spanning borders throughout eastern, central and southern Africa. We’ve built where no fixed network existed and now connect people and businesses with super-fast fibre, into Africa and across the world.

Building Africa’s digital future www.liquidtelecom.com

BRIEFING | INTERNATIONAL

AFRICAN ANGLES 6

COLOMBIA

Rebel talks resume Colombia’s government resumed peace talks with leftist Fuerzas Armadas Revolucionarias de Colombia (FARC) rebels on 15 July. The meetings in Havana were the first since the re-election of President Juan Manuel Santos, who vowed during his campaign to bring peace to the country after five decades of civil war. The conflict has killed more than 200,000 people and forced millions more from their homes. Santos started talks with the FARC in late 2012, and in June revealed preliminary talks with a smaller rebel group, the Ejército de Liberación Nacional. ●

IRAQ

Iraqi insurgents stole around 40kg of nuclear research materials in early July, just days after a man claiming to be the leader of the Sunni paramilitary group ISIS, Abu Bakr al-Baghdadi, said the group named him caliph of a new fundamentalist state. Videos posted online purport to show him delivering sermons in the Iraqi city of Mosul.

CHINA

Two systems, one protest Hundreds of thousands of prodemocracy protesters marched in Hong Kong on 1 July, many calling for the city’s leader to step down. Police arrested five organisers of the rally, as well as 511 protesters who camped overnight in Hong Kong’s main business district. A pro-democracy coalition, Occupy Central, called for protesters to paralyse the city’s business centre later this year if voters are not given a means of nominating candidates for the city’s top post. The government has yet to announce how it will implement Beijing’s promises of a citywide vote in 2017. ●

NTARYIKE DIVINE JR

Journalist

No sorrow for Sarko

Schadenfreude sweeps a Cameroonian village as French police question Sarkozy

uly found me in my father’s village, Taku, a far-flung and vastly depopulated locality among the highlands of Cameroon’s English-speaking North West Region, roughly 600km away from the capital, Yaoundé. After returning from covering Cameroon’s disgraceful seventh FIFA World Cup appearance in Brazil, I was keen to escape the frenetic activity of the largest city, Douala, and to visit my father in his tranquil village home. Settling down to watch the France and Germany quarter-final match with my father, I was joined by a few of his pals, sipping palm wine and chewing kola nuts. As the final whistle sounded and France’s World Cup hopes dashed with a 1-0 defeat I was startled by the fanfare around me as my dad and his pals cheered on the Germans. “They [the French] are responsible for each and every one of our woes, my son,” said my father’s eldest brother. “Our colonisation by those egocentric and arrogant tyrants was a severe mistake that will carry on for generations yet to come,” added my father. “I hope that what I’m hearing in the news about [former President Nicolas] Sarkozy is true. And my prayer is that, this time around, he be nailed for good.”

on France and French-speaking compatriots can hit fever-pitch. Anglophones claim they are second-class citizens and are systematically denied key government jobs – including the presidency – a policy endorsed by a series of inhabitants of the Elysée Palace, who continue to prop up a host of dictators, who in turn keep their countries in strangleholds.

To many here, the French former president sticks out as the epitome of French hypocrisy and doubledealing. “Remember Dakar 2007?” asked my father, recalling Sarkozy’s infamous speech in which he depicted Africans as idiotic prisoners of their own culture. Understandably, news of Sarkozy’s 1 July detention and ongoing grilling over influencepeddling and corruption, increasingly referred to here as ‘Sarkogate’, was received as tidings of great joy – at least by the likes of my father and his village peers. Many say it is payback time for a man who allegedly obtained illegal campaign funds from Libya’s Muammar Gaddafi, only to then turn around and label Africans “primitive”. Uncle Elijah thundered: “No matter whether the probe is politically motivated by French judges hoping to foil his planned comeback in 2017 Anti-French sentiment remains or a genuine attempt to punish strong among the majority of wrongdoing, all we’re asking is that Cameroonians from the Englishthey – whether it be it [President speaking northern and southFrançois] Hollande, [Marine] Le Pen western regions. Half a century after or Sarkozy – stop draining our independence and the reunification resources, meddling in our affairs of the former British West and French and dictating the pace of our East Cameroons, hostility heaped existence. Enough is enough!” ● THE AFRICA REPORT

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BRIEFING

PEOPLE

SPOTLIGHT

John Mututho The activities of Kenya’s chief prohibitionist have cast a pall over drinking culture in Kenya, driving the middle classes to underground and devious means of enjoying a friendly beer FIVE YEARS AGO, a fairly innocuoussounding bill aimed at regulating the production and distribution of alcohol arrived in parliament to the sonorous sounds of members drunk on their own self-regard. Just a bill to save the sinners, the moral majority agreed. It was certainly not something for nice middle-class people to worry about. This, as it turned out, was a grave mistake. The Alcohol Drinks Control Act marked the dawn of what many

Kenyans have come to regard as the ‘Age of Prohibition’. Its architect was a teetotaler by the name of John Mututho. Few knew his origins. He won a seat for Naivasha in parliament in 2007. He was soon in trouble on an old corruption charge, perhaps a backlash against his views. The case is ongoing. When Mututho got going, the drinking landscape would never be the same again. The ‘Mututho

Laws’, as the act and subsequent laws are known, limited sales of alcohol, bar and nightclub hours and how and where alcohol could be consumed. In a country where so much is honoured in the breach, it is a testament to the dedication of this crusader that the Mututho Laws are perhaps the most effectively implemented ones in the land. It was something of a national drinkers’ day of celebratory rage when news emerged in March 2013 that Mututho had been walloped at the polls. The joy was short lived because President Uhuru Kenyatta appointed him to the helm of the National Authority for the Campaign against Alcohol and Drug Abuse (NACADA). Mututho has not appreciably turned the nation’s palette against drink, but drinking is now mostly underground. This was affirmed most recently when a bad batch of chang’aa – a drink 1957 Mututho (left, wondering what to do with confiscated bottles) is born in Naivasha 2007 Elected to a seat in parliament representing Naivasha 2010 The Alcoholic Drinks Control Act enters into force

BILLY MUTAI/NATION MEDIA GROUP

November 2013 Appointed chairman of the National Authority for the Campaign against Alcohol and Drug Abuse

STEEN JAKOBSEN

“If you lose investment grade, you’re done” The chief economist of Saxo Bank on Standard & Poor’s 13 June ratings downgrade of South Africa to one step above junk status

TEODORO OBIANG NGUEMA

“Africa has for more than 50 years of independence submitted to a neocolonial system which perpetuates the old colonial one” Equatorial Guinea’s president opened the African Union summit in Malabo with a call for change THE AFRICA REPORT

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Parselelo Kantai in Nairobi

ANDRÉ NZAPAYEKÉ

“We negotiate with them for weeks, we understand each other, and two days later another person appears and goes on a foreign radio station to say he does not agree” CAR’s prime minister on peace talks with anti-Balaka forces THE AFRICA REPORT

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During the opening week of the United Nations General Assembly, join The Africa-America Institute for a spectacular evening to celebrate African achievement at its 30th Annual Awards Gala on Monday, September 22 at Gotham Hall in New York City. Hosted by CNN International anchor Isha Sesay, this year’s Awards Gala honorees are General Electric,

AAI 2014 Corporate Responsibility Award; Vivienne Yeda Apopo, Director-General of the East African Development Bank, AAI 2014 Business Leader Award; and Professor Thandika Mkandawire, Chair of African Development at the London School of Economics, AAI 2014 Distinguished Alumnus Award. (Honorees still in formation.) To reserve your tickets, please visit www.aaionline.org.

DIFCOM/FC

whose name means ‘kill me quick’ – killed more than 60 people in May. What he has done at NACADA, however, is further crusade against the middle-class penchant to drink and drive their bright new cars. These days, in Nairobi, Mombasa and other cities, the bogeyman of the late-night drink-driver is a thing called Alcoblow, a machine operated by a battery of multi-agency law enforcers. The unwary tippler will be surrounded by men in luminous jackets leaning into his open car window and politely interrogating the quality of his breath. Satisfied that he has ‘taken something’, they then oblige him to blow into the Alcoblow. If he is lucky, there will be no TV cameras to display his embarrassment before the nation. He will be bundled into a cell – urine-scented and resounding with emergency phone calls to friends, themselves in the bar from whence he came. Then there is a fine. Depending on the mood of the magistrate, it ranges from $250 to $700. Nairobi’s social life has moved into private homes. There is talk of the return of fascism. People shake their heads in anticipation of East African Breweries’ next annual report. Mututho had not banked on the middle classes, their deep sense of entitlement and a strongly held culture of bar-room impunity. Soon after Alcoblow came into being a Twitter collective emerged warning drivers where the checkpoints were. For the less tech-inclined, taxi-drivers will take you past the checkpoint then hand you back your car, taking a bodaboda back to the bar. A story appeared recently that Mututho was abusing his expense accounts. It made front page news. The nation awaits with a sharp intake of (beery) breath. ●

BRIEFING

CALENDAR

AUGUST

WASHINGTON DC | US A week-long programme complementing the White House’s US-Africa Leaders Summit, organised by the the Corporate Council on Africa (CCA). africacncl.org

WOMEN’S RUGBY WORLD CUP 1-17 August PARIS | FRANCE Africa pins its hopes on the 26-member South African squad. rwcwomens.com

US-AFRICA LEADERS SUMMIT 5-6 August WASHINGTON DC | US See page 36. whitehouse.gov

AFRICA MEDIA & DEMOCRACY CONFERENCE 6-9 August ACCRA | GHANA The biennial conference brings together academics, journalists, policy-makers and donors. amdmc.net MONTH

AFRICA FASHION WEEK LONDON 7-9 August LONDON | UK Emerging talents in the fashion galaxy. africafashion weeklondon.com

ESKINDER DEBEBE/UN

LEADING THE WAY IN US-AFRICA INVESTMENT 31 July – 7 August

69TH SESSION OF THE UN GENERAL ASSEMBLY OPENS 16 September NEW YORK | US The 2014-15 session of the UN general assembly (UNGA) will open amid controversy after the election of Uganda’s foreign minister, Sam Kutesa, as its president on 11 June. Kutesa (above right, being congratulated by outgoing president John Ashe) was elected unanimously in the year in which it was Africa’s turn to fill the post, but sparked a 9,000-signature online petition and calls from a US senator to block his appointment on account of his role in enacting Uganda’s harsh new anti-gay law. The law, passed in February, allows for sentences of life imprisonment to punish some homosexual acts. A shadow also hangs over Kutesa after corruption allegations in Uganda. This session will be a crucial one for the UNGA as the Millennium Development Goals expire in 2015.

AFRICAN WORLD FESTIVAL 15-17 August

FORUM BRAZIL-AFRICA 28-29 August

MICHIGAN | US This pan-African arts and food festival in the grounds of the Charles H. Wright Museum of African American History attracted some 150,000 people last year. thewright.org

FORTALEZA | BRAZIL forumbrazilafrica.com

TORONTO AFRICAN FILM & MUSIC FESTIVAL 26-31 August TORONTO | CANADA torontoafricanfilmmusicfest.com MONTH

AFWL

AFRICA-SINGAPORE BUSINESS FORUM 27-28 August SINGAPORE See page 76. www.asbf.sg

IPAD OIL & GAS 10-11 September KINSHASA | DRC The new frontier in DRC’s extractive industries. ipad-oilgas.com

SEPTEMBER

NIGERIA COM 16-17 September LAGOS | NIGERIA nigeria.comworldseries.com

AFRICAN GREEN REVOLUTION FORUM 1-4 September

NAIROBI INTERNATIONAL BOOK FAIR 24-28 September

ADDIS ABABA | ETHIOPIA agrforum.com

NAIROBI | KENYA kenyapublishers.org

EAST AFRICAN POWER INDUSTRY CONVENTION 2-4 September

PRIVATE EQUITY MAURITIUS 25-26 September

NAIROBI | KENYA eapicforum.com

MAURITIUS www.private-equity.mu

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BUSINESS

ISLAMIC FINANCE

Searching African governments are looking to shariacompliant financial markets to attract investment from the Middle East. The trend is just gathering strength, and experts expect more funds to flow into infrastructure and other major projects By Louise Redvers in Dubai

he latest wave of finance to reach African corporationsandgovernments is coming from the Middle East, with an increasingly large sharia-compliant component. The Senegalese government closed on a 100bn CFA franc ($208m) sukuk – an Islam-approved bond that does not pay interest – on 18 July, and South Africa plans to launch

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African countries hope to attract Gulf investment in infrastructure

for sukuk its first sovereign sukuk this year. It could be valued at up to $700m, insiders say. Like with other forms of bonds, sovereign issues – those from central governments – are critical for setting benchmarks for corporate issues and deepening financial markets. Bahrain’s Al Baraka Banking Group announced in May that it plans to issue sukuk through its local operations in THE AFRICA REPORT

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$200 million Value of Senegal’s shariacomplaint sukuk bond; South Africa’s may be $500m

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South Africa once the government takes the first step. Money from the Middle East is also coming in the form of development finance. The Islamic Development Bank said in June that it is devoting $180m to renewable energy projects in Africa and plans to provide $7bn in finance to African countries by 2019. While it is not through strictly Islamic financialchannels,theGulfstatesand

Saudi Arabia had pledged $20bn in aid to Egypt by May of this year. In a world shaken by the fallout fromthecreditcrunchandunscrupulous bankers, Islamic finance holds a new attraction. “People are looking for alternative and safe finance,” says Adnan Halawi, an Islamic finance expert at Zawya, an online Reuters’ news portal dedicated to sharia-compliant finance. “Islamic finance is safer than con-

KARIM SAHIB/AFP

COMPANIES & MARKETS

ventional finance, it’s asset backed and it’s not making unjustifiable levels of interest because that is not Islamic,” he explains. Until recently, Islamic finance in Africa had held more promise than progress, but that is changing. Of the more than 600 Islamic financial institutions operating globally Africa is estimated to have around 45,withsub-SaharanAfricancountries rapidly catching up with their northern counterparts. So say the organisers of the Islamic Banking SummitAfrica,whichmeetsforthe thirdtimeinDjiboutiinNovember. Banks are also targeting their services at individual clients, offering all sorts of Islamic finance services, from savings accounts to takaful insurance (see page 71). Sukuk work by the investor taking a share of a specified asset as well as a share in the risk. For example, if you want to buy a house, a sharia-compliant finance institution would buy it for you based on an agreement that you will purchase it from the bank later at a higher price. This avoids the payment of interest, which is not permitted under Islam.

DEAN HUTTON/BLOOMBERG VIA GETTY IMAGES

BUSINESS | COMPANIES & MARKETS

marketplace for Islamic finance – Mauritania, Morocco, Tunisia and Egypt may follow Dakar’s lead by launching sovereign sukuk before the end of the year. Banking sources also say Kenya could follow suit in 2015. Sudan, where sharia-compliant banking is obligatory, has been using Islamic bonds for years. The Gambian government makes regular but small issues, and last year Nigeria’s Osun State raised $62m with a sukuk. TheMIFCarguesthatsukukcould helpplugAfrica’sinfrastructuredeficit.“Sharia-compliantinstruments can play a major role in connecting sharia-compliant liquidity inflows from the liquidity-abundant, oilrich Muslim economies and other major Islamic international trade economies,” the Malaysian institution noted in a 14 May report about Islamic finance opportunities in Africa.

NORTH AFRICAN UPTAKE

Despite hosting large Muslim populations, North African countries have been slow to develop regulatory frameworks for Islamic banking. However, post-Arab Spring governmentsappearkeenonproving their Islamic credentials. Last year, Tunisia and Egypt implemented new Islamic banking laws. In June, Morocco’s national assembly approved legislation to allow local and foreign banking institutions to set up Islamic banking branches. Zawya’sHalawiadmitsthat“progress has been slow” on expanding Islamic finance in Africa. Nonetheless, he says: “Summits are taking place, mutual agreements are being signed and Islamic finance institutions are playing a key role in encouraging the governments there to regulate and improve where needed, so we will hope we will start to see movement.” According to the Malaysia International Islamic Financial Centre (MIFC) – which was developed 30 years ago as an international

South Africa, where Absa and Barclays offer Islamic banking services, plans to issue its first sovereign sukuk this year

Issuer

Zawya’s Halawi agrees: “The Gulf Cooperation Council (GCC) economies are very strong at the moment, and they want to invest their money. One of the options is Islamic investment. Demand continues to outstrip supply.” This sukuk buzz comes as Islamic banking is enjoying an African growth spurt, as banks tap into the growing needs of the continent’s estimated 500 million Muslims. In March, London-listed Standard Chartered launched its first African sharia-compliant bank offering in Kenya. Barclays Africa Group already operates Islamic banking windows in South Africa, Kenya and Tanzania. It is preparing to set up similar services in Mozambique and Zambia. NOT A NICHE PRODUCT

Sovereign African sukuk in the pipeline as of 30 April 2014

SOURCE: KFH RESEARCH LIMITED

Expected value ($ million)

Currency

Government of Tunisia

Dinar

435

Ministry of Finance, Egypt

US$

2,000

Government of South Africa

US$

750

Government of Morocco

US$

750

Central Bank of Mauritania

US$

300

picto/graph

“Governments and regulators in Africa no longer view Islamic banking as a niche industry but actively seek to encourage its development,” explains Kariuki Ngari, head of Standard Chartered’s retail banking for Africa. “By the end of this decade, it is quite possible that banking complying with sharia law could account for up to 10% of banking assets in five or six sub-Saharan African countries,” he adds. Uwaiz Jassat, head of Islamic banking at Absa, tells The Africa Report that Islamic banking is not justaboutofferingMuslim-friendly

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COMPANIES & MARKETS | BUSINESS

PETRODOLLARS

Jassat says that that South Africa’s sukuk is a way to attract “Middle Eastern petrodollars” to the continent. Middle Eastern investors “are trying to diversify their investments, so Africa is the next big opportunity for them,” he says. Not everyone is so bullish. One major problem faced by all GCC countries investing in Africa, be they sharia-compliant or not, is the problem of transaction size. Tarik Senhaji, director of the Fonds Marocain de Développement Touristique, explains: “They would rather do one $500m deal than 10 [at] $50m. Otherwise, they spend 10 times the money on their due diligence.” Amadou Sy of the Washington DC-based Brookings Institution says that sukuk are well suited for infrastructure projects because they require cash flows to be generated from assets like toll roads or real estate. But, for that reason, they also take time to set up. “For first-time issuers, delays are to be expected in structuring a sukuk,” he explains, referring to the need for new legal documentation and the creation of special-purpose vehicles, the entities used for asset acquisition. “The legal documentation, in particular, can take time to iron out. At the moment there is more traction for issuing eurobonds.” Simon Stevens, a Dubai-based associate at law firm Chadbourne & Parke, warns that the tenures for sukukaregenerallyshorterthanfor conventional bonds. That makes them less well-suited to infrastructure financing now, “but the tenures have been slowly increasing,” he says. Which holds promise for the expansion of Islamic finance activities in Africa. ● THE AFRICA REPORT

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INTERVIEW

Hassan Bashir Founder of Takaful Insurance of Africa

Takaful is not just for Muslims, it can bring possibilities to many TAR: Why did you launch Takaful Insurance of Africa in 2011? There was a need for the service. I have been involved in the insurance industry since 1997, and it was something that I had become aware of. For my MBA I researched customer behaviour across the Kenyan insurance industry, and what came out was evidence of dissatisfaction and a need for honesty and ethics in the insurance products and services. I came across a lot of people who did not have insurance, or if they did they only had the basic statutory amount. They said that they did not feel comfortable with some aspects of insurance – that it did not accommodate their religious beliefs – and some people said they felt conventional insurance was a bit like gambling.

people thought it was only for Muslims, but now around 15% of our client base is non-Muslim and we are growing. Are people put off Islamic finance solutions by negative connotations of Islamism, such as Al-Shabaab in Somalia and Boko Haram in Nigeria? Some people in our community are ill-informed, it is true. I’ve been asked – directly to my face – “If someone defaults on payments, will their hands be chopped off?” People are only like this because they do not know all the information, so it is our job to educate them. There are sensitivities, which I can understand, but I believe economic development will help change minds. Extremism thrives in spaces where there is poverty and a lack of education, and where people are desperate and have nothing to do and no means of earning a livelihood. But I believe that Islamic finance can bring possibilities to many people by helping them get employment and access to finance.

What is the difference between conventional insurance and takaful? The big difference is that conventional insurance is a risk-transfer model, whereas takaful is a risk-sharing model. In the case of takaful, it’s more like a joint fund, where the “Conventional insurance is company and shareholders a risk-transfer model, whereas are paid a portion of the premiums. The risk remains takaful is a risk-sharing model” partly shared and collectively based on all those taking part Look at what we are achieving with in the scheme. At the end of the insurance the index-based livestock takaful. We period there is a payout, not are continuously educating [pastoralists] a ‘no-claims bonus’, more of a dividend. so that they understand that the cover is in line with their religious sensitivities Why did you choose Kenya, which has and this is to cushion them against a relatively small Muslim population? the harsh weather so that they sustain their I started in Kenya because I am Kenyan. livelihoods despite the droughts that This is the market I know – and because may occur from time to time. In the long I saw there was a gap in the market here. run, this will answer the question you I agree there are bigger markets, like asked about the negative perceptions Nigeria or Ethiopia, but that means there about Islamic finance. is potential to grow. Six months ago we opened an office in Somalia. We have made Do you think Kenya will launch expressions of interest in Uganda, Djibouti a sukuk this year? and Tanzania, so we have big plans. I am not sure if it will be this year, but I have no doubt it will happen soon. Kenya Is takaful only for Muslims? wants to become an Islamic finance hub No, not at all. Our products are not in the East and Central Africa region, and exclusively for people of the Muslim faith. it is well placed to do so. ● Interview by Louise Redvers We can serve anyone, and we do. Initially,

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TAKAFUL INSURANCE OF AFRICA

products to economically active populations, but it is also a way to reach out to the unbanked and to drive development. “Most of our customers in Kenya and Tanzania had never banked before, but now they are banking because there is an Islamic option,” he says. “We are seeing a whole new market opening up, so this is definitely an exciting time.”

BUSINESS | COMPANIES & MARKETS

COSMETICS

Beauty brands primped for profit East Africa is one of the fastest-growing markets for beauty products and as tastes get more discerning local and international companies are cashing in

ith East Africa’s middle classes developing a taste for high-quality personal care and beauty products, international cosmetics companies like L’Oréal and homegrown ones like Kenya’s SuzieBeauty are rushing to cash in on this fast-growing market. Lintons Beauty World, a Kenyan retailer, is looking to open its fourth outlet after it started operations seven years ago. “We call ourselves the house of brands. We may all be black, but our skins are different. That is why we decided we are not going to go with one brand. We have

Clarins, Estée Lauder and Clinique, Nimue, Fashion Fair, Black Opal and soon we will be bringing MAC and Essie,” says Joyce Gikunda, the retailer’s director. Trained as a pharmacist, Gikunda began selling cosmetics in 1988 in the pharmacy that was her family business, when the African cosmetics market was dominated by skin-lightening creams. Her idea at the time was to offer safe skincare products. In 2007, the first stand-alone Lintons Beauty World shop opened at the Westgate Mall. In 2013, the family sold the pharmacy business to concentrate on cosmetics.

$231 million Expected size of the East African cosmetics market in 2018

With seven full-time office staff members, 10 sales consultants and a team of six make-up artists, SuzieBeauty sells its products online and in a dozen retail outlets in East Africa and Côte d’Ivoire. They will soon be available in Nigeria. “We are expanding our distribution locally and Africa-wide. We have been to Lagos to look into getting into the market there, and there is lots more to come this year,” she says. ● M. L.

MINERALS Chinese gold miner CNGC seeks deal with Barrick Gold and Newmont

INVESTMENT AfDB to provide $300m for Nigerian fertiliser and fuel supply schemes

SuzieBeauty Cosmetics company

Runway looks for African skin – and no mixing required make-up in East Africa since 2007. In early 2009, she began creating her make-up brand and officially launched it in December 2011. “There was a huge need. The retail cosmetics market is such that everything is imported, and most do not cater to our skin colour or texture. I was constantly mixing and matching products for my work as a make-up artist. I decided to make my own that nobody would have to mix up,” she says.

TICKER TAPE METALS Kenya and India plan Kenyan steel plant project

SOPHISTICATED TASTES

Patricia Ithau, managing director of L’Oréal East Africa, says media and digital platforms promote borderless awareness. According to a recent report by the African Development Bank, East Africa’s middle classes include about 30 million people. This represents 23% of the total population of 140 million. The opportunity has attracted international companies like Revlon, Unilever, PZ Cussons and Beiersdorf. Others are setting up offices in Kenya to serve the greater East African region. In February of this year, India’s Godrej Consumer Products completed the takeover of Kenya-based hair care company the Darling Group. The deal between Godrej and Darling was launched in 2011 and relates to Darling’s operations in 14 African countries. The members of the growing middle classes tend to be more discerning about quality and price, so companies are trying to keep up with this trend. Suzie Wokabi, chief executive of SuzieBeauty, says: “This growing middle class is a clientele that is getting more sophisticated in taste and need for quality products. The access to the world through the internet also helps the African woman raise her

PROFILE

SUZIE WOKABI, founder and chief executive of SuzieBeauty, dreamed of starting her own beauty brand after working six years in New York. Trained by the professional make-up brand MAC Cosmetics and a media make-up certificate holder from Award Studio in California, Suzie has made her name as an accomplished make-up artist whose extensive industry experience runs from print and electronic media to runway and bridal

“We are targeting the middleand upper-class market,” she says. “The Kenyan woman is well educated. She knows the importance of having good-quality beauty products. It is better to spend a little bit more at the beginning than to fix a bigger problem later on in life,” Gikunda explains.

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standards and expect the same from product providers.” SuzieBeauty’s focus has been on cosmetics and make-up products. It plans to launch a skincare line and compete in a wider realm. It has 12 outlets in Kenya and distributors in other East African countries. “We have achieved what we hoped – great product that is affordable – and filled that gap in the market. I have personally created this product for us, the African woman. We have the same needs that SuzieBeauty has and continues to address,” adds Wokabi. “Make-up in general or colour cosmetics are getting more popular each day. Skincare continues to be important with more revolutionary products being necessary.”

Middle-class East African women are increasingly sophisticated and demand quality cosmetic products to suit their lifestyles

60 50

According to Euromonitor International, the colour cosmetics market in Kenya, Tanzania and Uganda is worth $152m and is projected to grow to $231m by 2018. South Africa and Nigeria remain the largest markets for personal care and cosmetics in Africa, estimated at €3bn ($4bn) and €1.6bn each, according to consultants at Roland Berger. “The other area I would call out is the entry of men into the beauty market. East African men are becoming more beauty conscious and looking for products

Value in US dollars of cosmetics sales in Africa

Kenya Uganda

Tanzania

REGIONAL GROWTH

L’Oréal’s Ithau concurs. She says beauty products are moving from the basic to the more sophisticated, including hair colour, hair extensions and cosmetics.

20 Ethiopia Congo

10 0

2004 05

BANKING Indian Bank ICICI unveils plans to open branches in South Africa and Mauritius THE AFRICA REPORT

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BUSINESS Africa’s Single Customs Territory trade corridor delayed

designed for men. You see this in the number of lotions for men, deodorants for men, even shower gels for men. This has extended to hair and beauty salons, especially in the upper-middle class, where the clientele has become a very even mix of women and men,” says Ithau. In order to expand in the East African market, the regional L’Oréal subsidiary acquired local brand Nice & Lovely in April 2013. Some of the brands have trained Lintons employees to deliver services in their stores, such as facials, massages, nail therapies and consultations on beauty and nutrition. “It is quality service delivery and educating the consumer. I believe ladies think being lighter is beautiful. We need to change our mindset. Use skincare products and makeup to enhance what you have, not to change,” says Gikunda. The biggest concern for the market players are the unsafe skin lightening and counterfeit products. ● Mwikali Lati in Nairobi

PETROCHEMICALS US energy giant ERHC to invest $100m in Sao Tome oil block

BUSINESS | COMPANIES & MARKETS

Singapore-listed Olam has planted 3,600ha of rice in Nigeria’s Nasarawa State

SINGAPORE-AFRICA

An island with continental ambitions

ent on desalination for its water supplies,Hyfluxhasbecomeaninternationally competitive firm. In April, it signed an agreement with South Africa’s Murray & Roberts to scout for joint projects in Africa. Temasek, a state-owned investment company, has committed to two major investments in Africa. In April, it acquired a $150m stake in Nigerian firm Seven Energy following an announcement in November 2013 that it had invested $1.3bn in three gas blocks in offshore Tanzania through its subsidiary Pavilion Energy.

Singapore will host its third biennial African trade summit in August, building on an already thriving business ecosystem

ENTRY POINT TO ASIA OLAM

rom the rice fields of Nigeria’s Nasarawa State to water treatment plants in Algeria, Singapore’s companies have been quick to spot the potential of Africa’s economies. Indeed, the tiny country’s economic survival depends on it. “Trade has been, is and continues to be the lifeblood of Singapore,” says G. Jayakrishnan, group director for the Middle East and Africa at International Enterprise (IE) Singapore, organisers of the Africa Singapore Business Forum taking place on the island on 27 and 28 August. In 2013, Singapore’s trade with Africa hit $11.1bn, an 11.7% compoundannualgrowthrateincrease since 2009, according to the staterun agency. It was the largest investor in Africa of the members of the Association of Southeast Asian Nations, with investments totalling $15.9bn, in 2012. LOCAL IMPLANTATION

There are more than 50 Singaporean companies operating in Africa, spanning sectors such as electronic government, oil, transport and construction. To help companies find the potential in Africa, IE Singapore opened its first sub-Saharan African centre in South Africa in January 2013,

closely followed by a second one in Ghana in July of the same year. The Singaporean government has been accompanying investors to Africa. Foreign minister Masagos Zulkifli travelled with a business delegation to Kenya in early June. Meanwhile the private sector has been organising its own activities. Officials from the Singapore Business Federation and a dozen companies were in Gabon and Equatorial Guinea in early July to prospect for deals. Singapore-listed Olam has a 30-year presence on the African continent. The agricultural trading giant has ventured into large-scale rice farming in Nasarawa State in central Nigeria. “The state government was ready to provide us with therequestedland,about10,000ha, and we started our project in late 2011/2012,” says Venkatramani Srivathsan, Olam’s managing directorforAfricaandtheMiddleEast. “We have now done about 4,000ha of levelling and almost 3,600ha of planting. By next year we feel that we will be able to achieve the full scale of 6,000ha,” he adds. Business activity concentrates on areas of strength for Singaporeanfirms.WithSingaporedepend-

$11.1 billion Singapore’s trade with Africa in 2013, an 11.7% compound annual increase since 2009

The Southeast Asian country has also capitalised on its strategic location at the “transport and logistics nerve centre for the Asia-Pacific,” IE Singapore’s Jayakrishnan adds. AfricancompaniesareusingSingapore as an entry point in the Asian region. “Getting into […] Singapore opens other opportunities in Asia,” says Ghana’s Derrydean Dadzie, chief executive of tech company DreamOval, which has partnered with Singaporean companies. “The structures are well laid down, the foundations are well done and[…]Singaporeoffersthe platform to learn the ropes and easily move about in the Asian region,” he says. Other major African companies operating in Singapore include South Africa’s Grindrod, Sahara Energy from Nigeria, Angola’s Sonangol and Algeria’s Sonatrach. The picture is not all bright however. Singapore’s trade with Africa still faces steep hurdles. Counter-party risk, underdeveloped transport and logistics, payment and visa delays are challenges hampering trade growth. Jayakrishnan remains optimistic nonetheless: “If we spend enough time on the ground in Africa getting to know our partners – getting a good sense of the market, talking tomorepeopleintheindustry–we should be able to fill the gaps.” ● Oheneba Ama Nti Osei

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BUSINESS | FINANCE

HANNIBAL

INVESTMENT

Qalaa backs rail The investment company formerly known as Citadel is putting more cash in Rift Valley Railways

alaa Holdings, the Egyptian investment fund previously known as Citadel Capital, may have a new name, but it has not lost its appetite despite some tough moments after the 2011 uprising. In September 2013, Citadel – which has almost $10bn under management – announced it was getting out of the private equity business. It said that it was transforming itself into an investment company, focusing its major acquisitions in energy, cement, agribusiness, logistics and mines. Atthattime,chairmanandfounder AhmedHeikalannouncedanewcapital increase and said the company would be exiting non-core investments to focus on what it knows best, like the refinery under construction that will process about 50% of the diesel that Egypt currently imports. The “economic fallout from the Arab Spring has generally depressed asset valuesandputliquidityatapremium, making this an opportune moment to increase our holding in core investments,” Heikal explained. One of those investments that requires more liquidity is Rift Valley Railways (RVR), the East African railway line. Qalaa injected $24m of new capital on 12 July. The lifeline arrived just a few days after RVR drew down the final $70m of a $164m financing package that Citadel Capital helped to put together in 2011. RVR is not pulling through the amount of freight it had initially planned for, but new demand is perhaps why Qalaa is confident about the upside. The group is also extending its equitystakeinEgyptianmicrofinance bank Tanmeyeh. Perhaps inspired by a co-investor in RVR, Kenya’s Equity Bank, Qalaa decided to increase its stake in Tanmeyeh from 51% to 70% in July. ● Nicholas Norbrook

Inflation tamed in Africa? HANNIBAL NOTES WITH JOY IN HIS HEART the tamping down of inflation across the continent – that silent killer “as deadly as a hit-man”, as famous American actor Ronald Reagan would have it. Inflation dropped to 6.4% in June in Tanzania, and it has been on a downward trend in Angola over the past eight months. There has been a similar trend in Malawi. Inflation is down slightly in Mauritius, steady in Kenya and steady in Nigeria, with strong long-term targets. This must mean that Ghanaians are looking over their shoulders in fear: inflation there hit a four-year high of 15% in June.

The ANC’s mining mess up IT IS PROBABLY TIME FOR SOUTH AFRICA’S RULING PARTY to find a new way to broker discussions between management and unions at the big mining companies. The recent rise of the radical Association of Mineworkers and Construction Union, which has ties to the Economic Freedom Fighters opposition party, has rattled the African National Congress (ANC)-linked National Union of Mineworkers (NUM). Speculation now abounds that the ANC was more worried about the fate of the NUM – which funds a great deal of party activity – than about the swift and constructive ending of one of the largest mining strikes in recent history.

Ethiopian oil proves hard to find for Tullow TULLOW MAY HAVE HAD GOOD TIMES IN EAST AFRICA, with first oil expected from its Kenyan discoveries in 2017, fresh finds off the coast and a bumper profit from its sale of a portion of its Ugandan block. But in Ethiopia things are just not happening for this usually most lucky of drillers. After having to write off $415m in exploration costs from Mauritania, Norway and Ethiopia, the latest blow is a dry well in the Chew Bahir Basin in South Omo region. It is the fourth such reversal in the country, which has many locals worried the Irish oil company will shut up shop and concentrate on its other priorities.

African Development suffers final-term syndrome IT IS A TIME-HONOURED PHENOMENON – when a strong leader comes into the final stretch of his term in office, valued lieutenants start to look for fresh projects to work on, given the predilection for the incoming boss to bring in his own people. So it is with the African Development Bank under Donald Kaberuka, who leaves in May 2015. Mouhamadou Niang, who had successfully run the private sector operation within the bank, has joined Meridiam, an investment company specialised in infrastructure. ● THE AFRICA REPORT

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DOSSIER INFRASTRUCTURE

Dangote’s

cement rivals Africa’s economic growth is driving demand for building materials. Nigeria’s Dangote Cement and Europe’s Lafarge and Holcim are the top players fighting for dominance in Africa’s cement trade By Gemma Ware

ementgiantsLafarge of France and Dangote of Nigeria have skirmished before, but they are now crossing swords in earnest as Swiss group Holcim prepares to merge with Lafarge to form the world’s largest cement-producing group. Indigenous companies and foreign firms are setting up new plants all over the continent. But while Africa certainly needs more building materials to feed its infrastructure drive, will the fight lead to oversupply?

25% International Finance Corporation prediction of Dangote’s share of the market in sub-Saharan Africa

In April, Holcim announced its plans to merge with Lafarge to form LafargeHolcim, but the deal faces some obstacles from anti-trust authorities, especially in Europe, and could be settled in the second half of the year. If it is approved, the company will provide intense competition for Nigeria’s Dangote Cement, which is ramping up production. The cement magnate Aliko Dangote’s expansionist policy in Africa over the past couple of years includes the rolling out of new capacity in 13 countries across the continent.

The Holcim-Lafarge deal has also sparked merger and acquisition speculation across the globe as both companies look to divest operations in order to avoid problems with competition commissions. In the meantime, a number of other companies are also planning to extend their footprints on the continent in the shadows of Dangote and Lafarge. The International Finance Corporation (IFC), the World Bank’s private-sector arm that has a $1.1bn global cement portfolio, estimates that Africa needs

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Lucky Cement. According to Exotix, two thirds of sub-Saharan African countries rely on imports to meet half of their demand, with imports worth $5bn in 2012. The new capacity should help boost interregional trade in cement, which was only at 13% of consumption in 2012. Across the continent, demand and supply remain unevenly spread. Demand is not strong in countries such as Côte d’Ivoire, while in Ethiopia there is a large amount of supply due to come online. In 2012, EthiopianSaudi businessman Mohammed Al Amoudi’s MIDROC opened a cement plant at Derba, adding 2.5mtpa of capacity. Rising supply in Ethiopia pushed down prices, which plummeted from $250/tn in 2011 to $150/tn in 2012. They are now hovering at around $120$130/tn, according to Exotix.

FEISAL OMAR/REUTERS

DANGOTE CATCHES UP

to add capacity of 10-15m tonnes per annum (mtpa) for each of the next 10 years to meet the market’s growing demand. Production in Africa rose by 33mtpa over the previous four years to reach 88mtpa in 2013. Consumption of cement per capita is around 100kg in Africa, compared with around 570kg globally or 285kg if China’s consumption is excluded. Although many African countries have a large unmet demand for cement, some analysts suggest there might be too much new capacity. “Given all the projects THE AFRICA REPORT

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that are in the pipeline today, it’s very difficult to think that Africa will absorb all this capacity projected to come on stream in the next three to five years,” says Andy Gboka, equity research analyst at London-based Exotix. Prices in sub-Saharan Africa have averaged around $180/tn in recent years, compared with around $100/tn worldwide. New capacity is likely to push prices down further. The companies that are set to be affected adversely are those that export to Africa – companies such as Pakistan’s

For now, Lafarge remains the largest cement manufacturer in Africa, and it also operates in 64 countries around the world. Lafarge has the capacity to produce 44mtpa in Africa, much of it in North Africa, where it has large operations in Egypt, Algeria and Morocco. “Lafarge has not invested anything over the past three to four years in Africa,” says Michel Folliet, industry analyst for the building materials sector at the IFC. “They were concentrating on reducing their debt,” he explains. “Lafarge will not be caught [up] by Dangote over the next five to 10 years,” Folliet says, because of Lafarge’s large base in North Africa.Insub-SaharanAfrica,however, Folliet predicts Dangote will take over as the largest manufacturer this year. “I can see [Dangote] with 25% of the total sub-Saharan market,” he says. Dangote currently has 20.3mtpa of capacity in Nigeria, 1.5mpta in South Africa and a 1mpta import terminal in Ghana. The company plans to commission another 7mtpa in the rest of the continent this year, including another 2.5mtpa in South Africa. Strengthening its rivalry with Dangote, in July Lafarge ● ● ●

DOSSIER | INFRASTRUCTURE

In Kenya, the government is concerned over Lafarge’s share of the East African Portland Cement Company

South African firm PPC is on a drive to expand its business into the rest of the continent. It is already expanding into Ethiopia, Rwanda, the Democratic Republic of Congo and Algeria (see page 84) and recorded first-half profit growth of 52% in 2014. Its model is to build integrated plants, where it controls both clinker production and grinding. MOROCCAN CONTENDER

Another company aiming to increase its footprint is Ciments de l’Afrique, owned by Morocco’s Groupe Addoha. It is adding capacity in eight countries and plans to send clinker from Morocco to West Africa, where it will build grinding capacity. “They are going much faster than Dangote,” says Gboka. However, few see Ciments de l’Afrique as a rival to Dangote. “Nobody is interested [in the company’s expansion],” says Gboka. Addoha’s cement strategy is tightly linked with that of its real estate arm, which is working on low-income housing projects in countries such as Ghana. Not put off by competition, players such as China’s Jidong Development Group are moving into the continent. In May, Jidong and its partners announced plans to build a R1.8bn ($167m) greenfield plant with more than 1mpta of capacity in South Africa’s Limpopo Province through a vehicle called Mamba Cement. Although the expansion priority of China’s huge cement French firm Lafarge companies – including Anhui Conch and China National Buildis the largest cement ing Material Company – is still manufacturer with Southeast Asia, Jidong’s entry operations in shows that they are beginning to 64 countries look at the African market. Dangote and LafargeHolcim look set to dominate the continent’s cement market for the foreseeable future. But their efforts are opening up the way for newcomers with an eye on the continent’s long-term demand. ● NOOR KHAMIS/REUTERS

shareholders approved a merger of its Nigerian and South African operations to create an entity called Lafarge Africa. The company will have 12mpta of capacity and will be listed on the Lagos Stock Exchange. The merger between Holcim and Lafarge could also bring some consolidation in countries where the two companies operate as separate entities. Lafarge’s operations in sub-Saharan Africa are considerably larger than Holcim’s, although the Swiss firm has plants in Côte d’Ivoire, Guinea and a few other countries. ●●●

NIGERIAN CONSOLIDATION

The proposed merger raises some interesting questions in Nigeria, where the two companies already have a joint venture, Nigerian Cement Holding, that owns a controlling 72% stake in United Cement Company of Nigeria (UniCem). “The big question mark is will they buy out the minorities,” says Exotix’s Gboka. The other 28% of UniCem is owned by Flour Mills of Nigeria, which did not respond to our request for comment. Both Holcim and Lafarge have paid fines for anti-competitive behaviour, mainly in Europe, and are likely to be keen to avoid pay-

ing out again. In Morocco, the question of competition comes into sharper focus. Combined, the two companies’ operations – Holcim Morocco and Lafarge Morocco, which Lafarge runs as a joint venture with the state-owned Société Nationale d’Investissement – control more than 50% of the cement market. The country does not have strong anti-trust authorities, but Holcim and Lafarge may still come under some pressure to reduce its dominance. While Dangote Cement has emerged as the most highprofile local player on the continent, there are other pretenders to its crown. The winners going forward will be those companies that can keep down their production costs. One model for companies to do this is to control the supply of clinker – a mixture of limestone and aluminosilicates that is used to make cement. In Ghana, for example, companies have to import clinker because of the very limited local limestone reserves. Ghana consumed 5.25m tonnes of cement in 2013, according to the IFC, and three quarters of it arrived in the country as clinker that was then ground into cement.

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Experience the Progress.

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INTERVIEW

Pepe Meijer Managing director, PPC International

International expansion has been a steep learning curve South Africa’s PPC has launched a major investment programme that should be completed by 2017 and enable it to compete more with the continental cement giants TAR: PPC has a target to boost foreign revenue outside of South Africa by 40% by 2017. How will you achieve this? PEPE MEIJER: Currently, 26% of our revenue comes from outside South Africa, mainly from Zimbabwe. Of the new projects that are currently on the go, one is in Harare, which is a 100tn/hour mill that we are about to start. That will boost Zimbabwe’s [current] output of about a 1m tonnes by another 400,000tn because we’re partly going to use the additional capacity to replace old mill capacity in Bulawayo. In Rwanda, we have an operation called CIMERWA very close to the DRC and Burundi borders. There’s a current operation doing 100,000tn per annum. We’re building a new plant, and we will complete it in this calendar year. We will start producing in the first quarter of 2015. That operation will then produce 600,000tn per annum. In the DRC, we have started a new plant in a town called Kimpese. The plant will produce PPC

1m tonnes per annum [mtpa]. We’ll start producing in June 2016. In Ethiopia, just outside Addis Ababa, we’re building a 1.4mtpa plant that will be operational in late 2015 or early 2016. In Algeria, 300km southeast of Algiers [we’re planning] a 2mtpa plant. We’re quite advanced in terms of the feasibility study. Foreign investors can retain a maximum of 49% of the shareholdings. We envisage that we’ll start construction towards the end of 2014, and it will be commissioned by the end of 2016 or early 2017. Ifyoulook[at ourshareholdings in these investments], you get 3.3m tonnes of capacity. If you take that as part oftheoverallcapacity of PPC, we believe that we’re going to be close to 40%. In Ethiopia, there is quite a big oversupply of cement, and the cost has gone down in the past couple of years. How will you stay profitable there? We did our calculations on the basis that you’re going to get a scenario that the actual

production numbers, in terms of efficiency, will lead to demand. The effective production is about 8m tonnes. Habesha, which is our plant, will add about 1.4m. Dangote will add about 1.9m. We believe that the total market in terms of actual production is going to be about 11m eventually. If you look at the cement consumption per capita, it’s 120kg. In South Africa, it’s more than double that number. There’s still a lot of room for growth from that perspective. Algeria is often seen by foreign companies as a difficult country to enter. How has it been for you entering that market? All these markets are new. It has been a steep learning [curve]. It’s a market that is short of cement. The current overall capacity is about 18m tonnes. The demand is about 22m, so there’s a shortage of about 4mtpa. The majority of the capacity is state owned, so again,opportunitiesforefficiencies are there. There’s a lot of focus on the infrastructure bill and a lot of investment being channelled in that direction. What other regions or countries are you interested in entering? We’ve clearly indicated our appetite for North Africa. Certainly, in terms of our drive, we are still focused on West Africa and East Africa. Rwanda is well aligned to the eastern side of DRC and obviously to the Burundi area. Uganda, KenyaandTanzania–that’sanarea that we are seriously considering. However, it’s becoming very competitive, particularly Kenya. West Africa is the area where we haven’t really set our flag down yet. Ghana is still a country to look at. Nigeria is not to be excluded. And then the surrounding countries – Niger is also getting to the front in terms of opportunities and so is Mali. If you look at our balance sheet, in terms of the alignment, we’re looking at most probably another one or two projects within the next 12 months before we have to stabilise and consolidate for the next two or three years. ●

THE AFRICA REPORT

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UTILITIES

Electricity theft on an industrial scale In South Africa, Uganda and Tanzania power providers have been stunned to discover that big businesses are the worst offenders in energy theft

t a utility trade show in Cape Town in May, two global meter manufacturers unveiled smart prepayment solutions designed to clamp down on an errant segment of electrical utilities’ customer bases who are notpayingforpower–commercial and industrial users. Illegal connectionsandtamperingcontribute to energy companies’ ‘non-technical losses’, a euphemism for stealing. The Southern Africa Revenue Protection Association estimates those losses at 20% of revenue due to utility companies across sub-Saharan Africa. Utilities are realising that it is non-payment by some highvolume customers that is hurting their bottom lines the most, justifying investment in smart metering technology. In 2006, when South Africa’s national utility Eskom looked into its total losses (standing at 7.13% in Q1 of 2014), of which 40% was non-technical, the utility soon realised that commercial and industrial customers were responsible for the bulk of energy theft. THE TRUE CULPRITS

“When we started the Energy Losses Management Programme at Eskom, there was a view that electricity theft is a residential, informal-settlement-type problem. But when we started to analyse the numbers and looked at the volumes of energy that we were losing compared to volumes of sales in the residential market, the two just could not compute. So we

LUCKY MAIBI/FOTO24/GALLO IMAGES/GETTY IMAGES

Informal settlements were blamed for the R4bn per annum in lost revenue, until Eskom analysed its data

60%

Eskom’s nontechnical losses attributed to users outside of the residential sector

said there is a problem elsewhere,” says Maboe Maphaka, thenational project sponsor at the programme, which was launched in 2006. “We then started to look deeper into all our customer categories, and unfortunately we found that more than 60% of losses, both in rand terms and kWH terms, was sitting outside the residential market.” Maphaka also heads up Operation Khanyisa – a campaign involving South Africa’s government, Eskom, the media and businesses, aimed at mobilising users to consume power legally. Since its launch in 2010, audits have confirmed that two thirds of total energy theft in Eskom’s supply areas take place in the business, industrial, commercial and agricultural sectors. High rates of non-technical losses – caused by the four main factors of non-payment, meter tampering,fraudatthemeterreading level and faulty equipment – are also a concern in Uganda. In 2011, state utility Umeme lost around 40% of its revenue to technicallosses(lossesduringdistribution) and energy theft. The biggest culprits in terms of non-technical losses were large users, which accounted for 3.75% of Umeme’s

customer base and 65% of sales and revenue. The electricity company recently put out a tender for smart meter technology to “tighten the noose” around its top customers, says Robert Mubiru, a project manager at Umeme. “In Uganda, legal battles to recoup lost revenue take a long time, so we must disincentivise large power users from the outset by showing them that if they touch the meter their name will be tarnished and there will be no benefit to them.” SMART METERING

He adds: “With smart metering technology, which allows Umeme to constantly monitor usage data, we will take away industrial users’ access to the meter and give them visibility instead through online meter reading software. We are looking at using a tighter box with our own access control system and alarms that will send a text message to the nearest field team if the meter is damaged.” The Tanzania Electricity Supply Company (TANESCO) is using prepayment technology to ensure it collects revenue from commercial and industrial customers. Prepayment meters, where a code is punched into a keypad using ● ● ●

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RECRUITMENT OF PUBLIC PRIVATE PARTNERSHIP ADVISOR The objective of the West African Power Pool (WAPP) is to establish a regional electricity market in West Africa through the appropriate development and implementation of key infrastructure so that all ECOWAS member states are given access to economic energy resources. The successful attainment of a fully functional power pool in West Africa that would permit the trading and exchange of electricity is contingent on among others, the timely preparation and realization of key power generation projects through Special Purpose Companies under the framework of Public-Private Partnerships (PPP). As such, the WAPP Secretariat, with the support of USAID and within the framework of President Obama’s Power Africa Initiative, intends to recruit a Public-Private Partnerships Resident Technical Advisor to reinforce WAPP’s capacity in this endeavor. Interested candidates shall hold a Master’s Degree or Postgraduate diploma in a relevant field, preferably an MBA (Economic Financial Analysis), Electrical or Mechanical or Civil Engineering or equivalent. Having Postgraduate legal qualification in addition to the above shall be considered an advantage. He/She should have a minimum of 10 years of professional experience in the power sector, out of which 5 years should relate to the development and/or implementation of power generation projects, including at least two power plants with installed capacity of 300 MW. In particular, the candidate should have adequate understanding and ability to apply technical, financial and economic analyses on projects to establish their bankability and viability, especially combined cycle power plants. Having been involved in the preparation of legal and institutional documentation for setting up of Special Purpose Companies as well as the negotiation of commercial (Power Purchase, Transmission Service) and other Agreements of private sector-involved power projects shall also be considered an advantage. The PPP Advisor shall be based in Cotonou (Benin) but shall be expected to travel extensively.The candidate must be fluent in English or French with good working knowledge of the other language. The detailed Terms of Reference for the assignment can be accessed at the WAPP website via the following link www.ecowapp.org. The contract position is for a period of three (03) years with a probationary period of six (06) months. The remuneration package is very attractive and comparable to those in International Organizations. Women are strongly encouraged to apply for this position. Application letters marked as "Application/WAPP PPP Advisor" should be sent by email to: consultants@ecowapp.org. Or by post to: Secretary General West African Power Pool Zone des Ambassades, PK 6 06 BP 2907 Cotonou, Benin Deadline for applications: September 19th, 2014 by 5 pm Cotonou time All enquiries related to this recruitment should be sent to massylla@ecowapp.org not later September 12, 2014.

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URBANISATION

A roof over their heads

Eskom is now tackling industrial theft via smart metering technology

standard transfer specification (STS), a secure way to communicate between point-of-sale and meter units, have long been used in the residential sector to ensure upfront revenue collection. TANESCO is now applying this method to its highvolume customers. Singaporean meter manufacturer EDMI developed a smart prepayment meter using STS tokens for TANESCO. The EDMI unit has a customer keypad for the companypremisesandameasurement meter off the premises to reduce the chance of tampering. The system alerts customers by text message when they are running low on power. The price of the units can range from $1,000 to $2,500, compared with $200 for a residential prepaid meter, explains Chandra Prakash, EDMI’s vice-president of sales in Africa and the Middle East. ●●●

CUSTOMER RESISTANCE

Tech giant Siemens has also entered the smart prepaid market with a product that provides commercial and industrial users with a web portal that acts as an energy management system, offering analytics to help users adjust usage patterns and manage top-ups. It also allows utilities to manage smart prepayment meters and standard smart meters from the same back-end system, says

kwh

Cost of EDMI’s smart prepaid meters for industry, compared to $200 for prepaid residential meters

Andy Turner, head of smart grid application solutions at Siemens. However, customer resistance is an obstacle to implementing a prepayment solution for commercial and industrial users, Turner says. Mubiru also expects a backlash in Uganda. “When we installed automated meter reading units, it wasn’t a real game-changing experience for our industrial customers. They still had access to the meters, which is what they expect. In this second phase, using smart meters, there will be a paradigm shift. I expect to see a response from them.” South Africa-based management expert Jodie Sherwin Hill, who has worked on electricity payment projects around Africa, argues that utilities should follow the same education process with commercial users as they would with residential customers. “Utilities are realising the importance of educating the market and their own organisations on the changes required to ensure energy consumption is measured accurately and revenue collected,” says Sherwin Hill. “You could have the best smart devices, systems, efficient data and banking platforms in the world, but if you do not consider the stakeholders and education, you will not get the appropriate buy-in you need to deliver on your outcomes and overall vision.” ●

NADINE HUTTON/BLOOMBERG VIA GETTY IMAGES

Companies are rolling out new options to meet the demand for affordable housing

overnments are under increasing pressure to provide low-cost housing and reduce the problems that come from rapid ubanisation. So what are the options? One, which has proved successful in Morocco, is providing contractors with tax breaks and subsidies on land in return for fixed low prices on the properties (see TAR 51, June 2013). Simplifyingtheconstructionprocess can cut costs and respond quickly to the housing need. Moladi in South Africa has designed a plastic mould that is then filled with cement. Casts dry in a single day and moulds can be re-used 50 times. The company is exporting the model for single-storey houses to Botswana and Tanzania. Prefabricated houses are also in vogue. In Kenya, Malaysian company Koto claims to be able to provide a three-bedroom house for KSh1.8m ($20,000). Turkish firm Elsek is also targeting Kenya’s affordable housing market with a special blend of fibre and cement to keep costs down. Pursuing a different route, Affordable Homes Ghana is developing homes in partnership with two lending institutions to provide an all-in-one package of home and mortgage. ● Honoré Banda

Rose Bundock in Cape Town THE AFRICA REPORT

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DAY IN THE LIFE EXTRAORDINARY STORIES OF ORDINARY PEOPLE

TOM PULLEN/CARTEL PHOTOS FOR THE AFRICA REPORT

under the sun Babacar Diop left Senegal for Cornwall, UK, in 2008 with his Cornish wife. He has since set up a renewable energy cooperative, of which he is the director

t was not easy to leave Dakar. I had started doing electrical work, but I had to interrupt all of that because my wife fell pregnant. She needed to be near her parents, that was the first thing – family first. When we arrived in Cornwall, I was worried about being able to sustain my family. It was hard at first. Cornwall is different to Dakar, just countryside and farms. I couldn’t convert my electrical qualifications to the British system, so I had to study again. I worked as a kitchen porter. I spent two days picking daffodils because I wanted to know exactly how it feels. That was hard labour. But in all that stuff, I couldn’t show my skills. The first opportunity I had was in the hotel where I worked when some of the machines broke down. I told them: “I can repair all of them, and I can make sure all of the outside lights function well.” They didn’t believe it because I was an African guy, and they can’t even understand me. So I carried on what I was doing. A week later, the lights outside went out, so they said, “What can you do?” I fixed the lights. Since then, I am still doing their lights, and no one will touch the electrics except me. It felt great. Then, 12 of us who worked in a solar energy company decided to leave and form a cooperative. On our first job,

we didn’t even have the money to buy our own tools. We told the customer, “You put your money in, and we are going to install the panels.” He was happy, and from there we had recommendations. Now we have offices in Truro, Oxford and Bristol. You have to work nights, and in the day time you go and do your own job. We did that for two years solid – day in, day out – without proper wages. It was hard with two small kids. My wife wanted to get me out of that co-op, but she knew she couldn’t, so she came to join us as a manager. When we had to lay off some people just to save the company, that was hard and I didn’t feel good. With that pressure, she decided to leave the company and carry on teaching.

struggle to be heard There were moments when I thought I can’t do this, I want to go back. I would go to high-profile meetings, and I would be the last person they would give a chance to speak. They would think, “There’s a black guy here, he is just here to accompany these guys.” They wouldn’t even bother to remember my name. Once they realised that without me nothing’s going to get done, they started making an effort. They’re not doing it to be mean, they’re doing it because they don’t know how to approach me. Some of my friends had the mentality to stay in Africa. They have the right attitude. Some of them think: “If I don’t get out of Senegal, I am doomed,” which is not the case. I would have loved to have gone back to Senegal, that’s my natural habitat. I will call my business successful when I take it back to Senegal, where I can help more Interview by Rose Skelton people and expand. ● THE AFRICA REPORT

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