Tar77 by The Africa Report

IS Murderous utopia comes to Africa

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CLÉ DE CARTIER

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MANUFACTURE MOVEMENT 1847 MC

ESTABLISHED IN 1847, CARTIER CREATES EXCEPTIONAL WATCHES THAT COMBINE DARING DESIGN AND WATCHMAKING SAVOIR-FAIRE. CLÉ DE CARTIER OWES ITS NAME TO ITS UNIQUE CROWN. CONSIDERABLE MASTERY WAS REQUIRED TO CREATE FLUID LINES AND A HARMONIOUS ENSEMBLE, A TESTAMENT TO ACCURACY AND BALANCE. A NEW SHAPE IS BORN.

IS Murderous utopia comes to Africa

CONTENTS

• Nigeria The Buhari gamble • South Africa Asleep at the wheel • Tanzania 100 days of rectitude

N ° 7 7 • F E B R U A R Y 2 016

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COMPANIES

2016 EDITION

THE AFRICA REPORT # 77 - FEBRUARY 2016

EXCLUSIVE RANKING

How to thrive in 2016 • Market share up for grabs in great shake-out • Oil companies double down on costs • Cash injection into telecoms infrastructure

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 $LD 300 • Morocco 40 DH • Netherlands 4.90 € • Nigeria 600 naira Norway60 NK • Portugal 4.90 € • Sierra Leone LE 12,000 • South Africa 35 rand (tax incl.) • Spain 4.90 € • Switzerland 9.90 FS • Tanzania 9,000 shillings Tunisia 5.4 DT • Uganda 9,000 shillings • UK £ 4.50 • United States US$ 6.95 • Zambia 30 ZMW • Zimbabwe US$ 4 • CFA Countries 3,000 F CFA

4 EDITORIAL Upside in a downturn

54 INTERVIEW KPMG’s Dimeji Salaudeen

6 LETTERS

56 SECURITY A new war against Boko Haram

8 THE QUESTION

58 AGRIBUSINESS Flour sector tests investor appetite

BRIEFING 10 SIGNPOSTS

60 MEDIA Nollywood’s French kiss

14 INTERNATIONAL 16 PEOPLE 20 CALENDAR

BUSINESS

FRONTLINE

62 TOP 500 COMPANIES How to thrive in 2016 Our annual breakdown of the continent’s corporate giants

22 ISLAMIC STATE Grim utopia comes to Africa Top Islamic State fighters are escaping pressure in Syria by setting up camp in a chaotic Libya. Can they federate the disparate Islamist causes on the continent?

66 RANKINGS Top 500 companies

POLITICS 30 SOUTH AFRICA Asleep at the wheel Finance minister Nhlanhla Nene’s sacking underlines the country’s economic challenges and high stakes ahead of May’s local elections

45 UGANDA Museveni marches on 46 ZIMBABWE The long goodbye 46 SOUTH SUDAN Piecemeal peace 47 ANANSI

COUNTRY FOCUS 49 NIGERIA Buhari’s big bet President Buhari’s ambitious plans to reform the economy rely on his talent for horse trading, communication and guile N° 77

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82 MANUFACTURING Kickback from the commodity crunch

86 MINING Slow crawl of the juggernauts

ART & LIFE

38 MOZAMBIQUE After the spending, the reckoning

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80 AGRIBUSINESS Growing pains for some but not for others

84 OIL AND GAS Crude awakening for players large and small

36 OPINION Nana Yaa Ofori-Atta

THE AFRICA REPORT

78 TELECOMS Talk is cheap, but data leads the way

F E B R UA R Y 2 016

COMPANIES

COMPANIES Your definitive guide to the performance of the most influential firms dominating African business. We bring you our annual report on the turnover, profits and losses of Africa’s most powerful companies, plus analysis of key business sectors

88 ANTIQUITIES The long road home Africa seeks to reclaim its lost cultural heritage from the West 92 BRIEFS TV and cinema push beyond the comfort zone 94 LIFESTYLE Queens of the tiny screen and Behind the Scenes with Anita Erskine 98 DAY IN THE LIFE Safari patrolwoman Siphiwe Sithole

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

Upside in a downturn

alking cheerily about Africa’s economic prospects in 2016 may seem akin to cracking a joke at a funeral. Suddenly, the cheerleaders for the ‘Africa rising’ mantra are deleting their multicoloured spreadsheets, having collected their winnings from the past decade. But just as the proselytisers of prosperity ignored many inconvenient truths as legions of bankers sold the continent what seemed to be bargain-price loans, the new gloomsters overlook some happier realities and prospects. Yes, a trio of international pressures will weigh heavily on Africa, but there are qualifications. Firstly, lower commodity prices will hit the export revenue of almost all the continent’s economies. However, over 40 countries will be buying oil at the cheapest price in 15 years. The drop in oil prices – to $28 per barrel in January from $125 in 2013 – will hollow out many treasuries. Yet in most of these economies, oil bonanzas have done as much political and environmental harm as good. Already in Nigeria, a change of government and an oil-fired downturn have prompted a search for billions of dollars of stolen revenue and provided new impetus for reform of the state oil and gas company. Secondly, falling demand from China – it is rebalancing from a export-led to a consumer-led juggernaut with a market of 1.3 billion people – will hit African producers. Yet China, with more than $3trn in foreign-exchange reserves, remains Africa’s largest trading partner. And its pledges made last December for $60bn in loans and investment could be transformative if they go into a new wave of commodity-processing and manufacturing operations.

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

Thirdly, a stronger dollar and higher United States interest rates will push up Africa’s debt servicing costs, stretching budgets – especially for those governments that have used sovereign bonds to finance unproductive spending in local currencies. At least the wake-up call has come early, and it will hopefully call time on irresponsible lending to cash-strapped governments. International financial minds should now concentrate on averting a repeat of the debt crises of the 1980s: creative thinking is Financial needed, and the purveyors of overpriced minds must loans should share concentrate much more of the risk. on how to Elsewhere, regional business leaders are avoid a moving into productrepeat of the ive investments in generating electricity, debt crises vast new rice-growing of the 1980s schemes and plants to process cassava into starch. The strategy is not so complex: consistent and determined government policy, favouring local entrepreneurs and boosting electricity production. That is how Ethiopia grew its manufacturing by an average of 10% per year between 2006 and 2014. Such projects need finance. Despite market panics in the West, there is still cash sluicing around for Africa. But the biggest upside will come from within Africa when it finds ways to use the tens of billions of dollars locked up in pensions and central bank reserves that are currently invested in industrialised countries. Putting that money to work productively on the continent could mitigate many of this year’s grim

edit editorial@theafricareport.com THE AFRICA REPORT

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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 A S S O CI AT E E D I T O R MARSHALL VAN VALEN 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 S PARSELELO KANTAI (EAST AFRICA) CRYSTAL ORDERSON (SOUTHERN AFRICA) TOLU OGUNLESI (NIGERIA) BILLIE ADWOA MCTERNAN (GHANA) S UB - E D I T O R S ALISON CULLIFORD P R O O F R E A D I NG KATHLEEN GRAY A RT DI R E CT O R MARC TRENSON DESIGN VALÉRIE OLIVIER (LEAD DESIGNER) CHRISTOPHE CHAUVIN (INFOGRAPHICS) P RO DUCT I O N PHILIPPE MARTIN CHRISTIAN KASONGO R E S E A R CH SYLVIE FOURNIER P HO T O G R A P HY PIERANGÉLIQUE SCHOULER ON LI NE PRINCE OFORI-ATTA SALES SANDRA DROUET 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 - $60 - £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 WITH JEANNY CHABON R E G I O NA L M A NA G E R S ÉLODIE BOUSSONNIERE IBIJOKE FABORODE PASCALE LALLEMAND PRINTER: SIEP 77 - FRANCE N° DE COMMISSION PARITAIRE : 0720 I 86885 Dépôt légal à parution / ISSN 1950-4810 THE AFRICA REPORT is published by GROUPE JEUNE AFRIQUE

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

QUIZ ANSWERS Thanks to everyone who took part in our end of year quiz in the Dec 2015-Jan 2016 issue. This year’s winner is Jamie Hitchen. He wins a free one year digital subscription to The Africa Reportt. Correct answers: 1 a) Morocco; 2 c) Wales; 3 b) Seven days; 4 a) Akinwumi A. Adesina; 5 a) Ghana; 6 b) Robert Mugabe; 7 c) Petroleum; 8 a) BBC; 9 c) 88%; 10 b) Sierra Leone; 11 a) Tunisia; 5 b) 4. 12 b) 10,000; 13 c) Stonebwoy; 14 c) Facebook; 15

MAN CANNOT LIVE BY MULCHING ALONE

DIVIDE AND RULE IN NIGER

Niger will be holding presidential elections in early 2016 [‘The Issoufou effect’, TAR75 Nov 2015]. These elections will be decisive for both Niger and the Sahel, due to the precarious and constantly evolving security and political context of the region. President Mahamadou Issoufou will be risking his seat and could theoretically lose the elections to one of his rivals. However, that seems very unlikely. Since the day Issoufou took office in April 2011, the Nigerien opposition has considerably weakened. In August 2013, under the banner of “national unity”, Issoufou invited the opposition to join his government in an effort to tackle terrorism. In fact, this manoeuvre divided the opposition, pitting those pro the government of national unity Charles Bevan against those who refused to join. ex FAO/World Bank agronomist, via email With the opposition leader Hama

The juxtaposition in ‘Mulching in Morogoro’ [TAR75 Nov 2015] verges, I fear, on irresponsible journalism as it implies there are better ways to use land in Tanzania than for large-scale sugar planting. I am sure there are genuine reasons for concerns about the proposed Razaba sugarcane project – few large projects are free of controversy. What I do know is that, contrary to the suggestion in the article, agro-ecological methods of growing crops are not the answer to feeding the hungry in Africa. There is no doubt that mulching is beneficial when there is enough organic matter for adequate mulching and labour for incorporation. BUT mulching alone will never replace the nutrients extracted from soil by a crop.

Amadou now in prison, Issoufou can rest assured and prepare to serve his country for a second term. Kamissa Camara Sahel analyst, via email

ACCESS TO BIRTH CONTROL MAKES ECONOMIC SENSE With reference to your recent article ‘Nigeria: After the first century, all eyes on the next’, [TAR76 Dec/Jan 2016], it is important to note that the population growth predictions for Nigeria would vary significantly if women who want access to family planning were able to access it. By allowing women and their families to plan their future, it will also be easier for the government to plan. Our experience over the past 60 years has shown us that education for girls, ending the early and forced marriage of girls and opening up access to family planning, have made a real difference in many countries. In Africa, women and children’s health is one of the most pressing issues we face, yet many women don’t have a choice when it comes to childbearing. Economic modernisation will be a crucial part of Nigeria’s future, but it will be far more effective if it is combined with an investment in reproductive health and women’s rights. Tewodros Melesse Director-General, International Planned Parenthood Federation, via email

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ADVERTISERS’ INDEX CARTIER p 2; FORD p 5; LIQUID TELECOM p 7; MIX TELEMATICS p 9; ECOBANK NIGERIA p 12-13; AFRICA CEO FORUM p 21,81; HARLEY DAVIDSON p 29; ADEXEN p 33; AFRICAN GUARANTEE FUND p 33; CHANNELS INC. p 35; REP. OF NIGER p 41-44; EKO HOTELS p 48; LIEBHERR GROUP p 53; CONTROL RISK WA p 55; GENERAL ELECTRIC p 57; AME TRADE p 59; THE ECONOMIST p 59; ETHIOPIAN AIRLINES p 61; DSTV MEDIA SALES p 73; FANAF p 75 ; SCIENCE PO p 75 ; AFSIC p 83; GMA p 83; AFRICA 2016 EAPD p 87; TAR DIGITAL p 95; TAR SUBSCRIPTION p 97; CNN EMEA p 99; NCT NECOTRANS 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

In November 2015 Franko’s hit single ‘Coller La Petite’ was banned in part of Cameroon for promoting incest, while in May Ugandan singer Jemimah Kansiime spent five weeks in prison for an ‘obscene’ music video

Is today’s African popular music too obscene?

Yes ANGIE BROKS Educator & fashion and beauty blogger

African culture can be quite prudish when it comes to having an open discussion on ‘bedroom matters’ pertaining to intimacy. I love music so it was quite surreal and rather disappointing when it seemed that out of the blue, lyrics to some of the songs by some of our popular artistes took on quite a vulgar and obscene turn in a bid to blend in with Western culture. From our unique rhythms and beats to our catchy lyrics there is so much inspiration that our musical artists can draw from to showcase the beauty of our continent. So when some of the lyrics took on a rather obscene twist, I had to re-evaluate whether I wanted to continue being a connoisseur of this kind of music, which didn’t reflect my values or my morals. It’s refreshing to see the discourse is changing thanks to the brilliance of artistes like M.anifest, Sarkodie (I am currently loving his song ‘Bra’ which is a beautiful celebration of love featuring the legendary Ghanaian music genius Pat Thomas) as well as newbie on the scene Adomaa who announced her presence on the music scene with her ‘Evolution of GH Music’. Alongside a host of many other artists, they are such a breath of fresh air on the music scene and are doing so much to portray the continent’s music in a positive light. ●

No M.ANIFEST Awardwinning Ghanaian rapper and songwriter

I would have to disagree. To describe the popular music scene as obscene is a rather extreme sweeping generalisation, and a diversion from what the real challenges are. Yes, there are many songs with sexual innuendos and music videos that work the ‘sex sells’ angle but there are also myriad songs which have many different angles: love, struggle, aspirations, inspiration, etc. A good number of songs that have dominated and captured the imaginations of Africans in the past two years have been anything but obscene. But sure, you could turn on the radio or television and the same ten songs with clichéd sexual innuendos, often copied and pasted from America, dominate and get more play than Messi would in a division three football match. The second problem is that in a bid to succeed artists are driven to join the fray of clichéd sexual tropes – reaching for low-hanging fruit. In this era of memes and trending topics it’s controversy over art, basic over clever, imitation over originality. Maybe we can ask other questions such as why is our music going in one direction? No pun intended. Do we support and regard music as art on a level that allows the best of our songwriters and musicians to flourish and result in balance? ●

YOUR VIEWS:

It is a tad [obscene] but new artists always appeal more to younger people. So we will debate if it is obscene or not today but in the near future it will be their new norm. But there is no silver lining in arts and their plight will start a revolution for many more. Ahmed Backonit Ahmed It’s no more obscene than a lot of American popular music. There might be more “swear words” than my parents like, or even I like, but that is how young people talk today, and you shouldn’t try to stifle that too much. If you do, you risk stifling creativity. I’d rather fault on the side of too much freedom of expression than too much censorship. William Prendiville African music is definitely obscene today. Sensitive parts of the female body are constantly paraded and the focus is no longer on the lyrics of the song but on the sensual aspect of it. Andrea Dawson No. Music everywhere has to do with lyrics and is always around relationships, love, heartbreaks, and nowadays these would always be sexualised. Besides, they are branding their music not just for an African audience but internationally as well. Audrey Essamuah I don’t think African music is any more obscene than US music, with its explicit lyrics. That is not to say I think it is right, but it is unfair to pick on African music as any different from the rest. Debbie Etheridge

THE AFRICA REPORT

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BRIEFING

SIGNPOSTS

BURKINA FASO Police outside the Splendid Hotel in Ouagadougou where 30 people were killed in an Al Qaeda attack on 15 January. Some attackers remain at large.

Lupita Nyong’o

9% 91%

Kenya

South Africa

urundi’s political crisis, which began in April when President Pierre Nkurunziza launched his bid for a third term in office, continues to boil. Peace talks between the government and anti-regime groups were scheduled for 6 January in Uganda, but the government pulled out. Former defence minister Cyrille Ndayirukiye was sentenced to life in prison on 15 January for his role in a failed coup last year, deepening the divide. Reports of at least nine mass graves in Bujumbura, possibly resulting from clashes on 11 and 12 December, sparked calls for a full investigation. Grenade attacks attributed to both sides continue in Bujumbura. Leaked

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EDUCATION TRIPLING OF THE TEXTBOOK TALLY Textbooks available worldwide

BENIN Participants take part in a national voodoo festival on 10 January in the Atlantic coast town of Ouidah, praying for peace ahead of February elections.

On the brink

Trevor Noah

67%

William Ruto at the International Court in The Hague, Netherlands.

BURUNDI

In conjunction with GeoPoll, The Africa Report asked 100 Kenyans and South Africans: Who is Africa’s brightest star on the US stage? 33%

KENYA Deputy President

UN memos paint a dire portrait: “A complete breakdown of law and order is just around the corner,” warned the UN’s Zeid Ra’ad Al Hussein in an internal report, saying the UN’s peacekeeping force is “limited in its ability to address significant violence against civilians, even violence amounting to genocide, where it lacks a political framework and the strategic consent of the host nation and/or the main parties to the conflict.” The African Union threatened to deploy 5,000 troops to Burundi to protect civilians. Nkurunziza said this would be a violation of sovereignty and that he would “respond” if any troops crossed the border.

867m

243m

In January, the United Nations Educational, Scientific and Cultural Organisation revealed a plan of centralised textbook purchasing that would triple the number of books available in the world and save African governments an estimated $1bn in annual costs.

GRIFF TAPPER/AFP

THE AFRICA REPORT

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BRIEFING

EGYPT Ancient whale bones on display outside the Wati El Hitan Fossils and Climate Change Museum. Tourist numbers have slid due to recent terrorist attacks.

GABON Striker Pierre-Emerick

Aubameyang was named the CAF player of the year on 7 January.

CAMEROON IMF chief Christine Lagarde

boogies with young orphan girls during a visit to the bustling city of Douala on 9 January.

ISSOUF SANOGO/AFP; LEX VAN LIESHOUT/AP/SIPA; AKINTUNDE AKINLEYE / REUTERS; THOMAS HARTWELL/AP/SIPA; NEIL BAYNES/PIXATHLON/SIPA; HANDOUT/REUTERS

“I don’t believe in aid

MALI NAVIGATING THE EDUCATION DIVIDE

in Africa. I don’t believe it works.” Akon Senegalese-American Rapper Akon defends the forprofit nature of Akon Lighting Africa and argues that the private sector should play a greater role than donors.

Infrastructure and transport Water supply Poverty Unemployment Crime and security Food shortages Health

50% Mali

Sudan

45%

35%

Burkina

Nigeria

60%

53% 40%

Angola Guinea-Bissau Chad Botswana Sudan Nigeria Rep. of Congo Gabon Eq. Guinea Sao Tome and Principe

Uganda Liberia

51%

Côte d’Ivoire

Benin

41%

42%

Cameroon

43%

AFRICA PRIORITIES FOR 2016 The Afrobarometer survey asked people in 32 African countries for their opinion on their most important problems. On average, unemployment (37%), health (31%) and education (23%) were the highest among people’s concerns [colour indicates top priority]. THE AFRICA REPORT

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N° 77

African economies dependent on a single commodity – be it oil, cashews or diamonds – or sector are preparing for a rough 2016 due to drops in commodity prices and concerns about global demand.

10 least diversified countries in SSA, according to concentration index in 2013

Kenya

54%

DIVERSIFICATION ECONOMIC TROUBLES AHEAD

Burundi

40% Zambia

41%

SOURCE: MOODY’S

Egypt

CHO OL In January, the United Nations Children’s Fund reported that an estimated 400,000 children in northern Mali remain outside the school system. The country’s troubled peace process is dragging on with few signs of progress while different groups in the north call for more development in the region.

0.2

0.4

0.6

Coping with the commodity crunch will be a key theme discussed by Africa’s leaders at this year’s Africa CEO Forum.

Malawi

52% Madagascar

South Africa

36%

71% SOURCE: AFROBAROMETER •

F E B R UA R Y 2 016

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BRIEFING

INTERNATIONAL 1

5 2

1 8

6 7

4 3

UNITED STATES

$1trn

vanished from Wall Street’s S&P 500 index in the first 12 days of 2016 due to concerns over sliding crude oil prices and China’s economic slowdown.

NORTH KOREA

The H-bomb test

SASCHA SCHUERMANN/GETTY IMAGES

North Korea said it had detonated a hydrogen bomb in a test of its nuclear arsenal on 6 January. While there was no independent confirmation that a bomb did go off, the United States Geological Survey said it had registered a 4.7-magnitude earthquake 10km underground, which is consistent with a nuclear explosion. Britain, the United States, Japan, South Korea and China all condemned the test as a threat to global security. North Korea’s last confirmed nuclear test was in February 2013. Washington threatened new sanctions and other actions if Beijing does not step up in the face of Pyongyang’s provocative actions.

EUROPE

Germany switches track

An epidemic of sexual assaults in Cologne on New Year’s Eve increased the pressure on Chancellor Angela Merkel to backtrack on her liberal migration policy. More than 400 women filed complaints of sexual assault on the night of 31 December, committed by gangs of men of North African appearance. As The Africa Report went to press three Algerian asylum-seekers were in custody. Anti-immigrant protests followed the attacks and 63% of respondents to a survey said there were too many asylum seekers in the country. In response, Merkel proposed changes to the law that will make it easier to deport migrants. She has also tried to send a message to opportunistic asylum-seekers. On 18 January she declared Morocco, Algeria and Tunisia “safe countries” and threatened to cut off aid to governments who do not cooperate in accepting back failed asylum-seekers. Germany has accepted 315,000 asylum-seekers to settle in Germany in the last year alone. Since the outpouring of sympathy in Europe for the victims of the war in Syria the numbers of asylum-seekers from North Africa has increased. 3

TAIWAN

Tsai takes the helm

FRANCE

“No,

not as I understand it” France’s prime minister Manuel Valls replying to a question on whether Gabon’s President Ali Bongo Ondimba had been elected in 2009. Gabon withdrew its ambassador to France in protest.

NICOLAS TAVERNIER/REA

Taiwan elected 59-year-old Tsai Ing-wen as the country’s first female president in a vote held on 17 January. Tsai is leader of the Democratic Progressive Party and is an ardent supporter of independence from China. Voters said the main issues at stake in the poll were Taiwan’s stuttering economy and the country’s relationship with China, which sees Taiwan as a breakaway region. Before Tsai’s historic election, the rival Kuomintang party had been in power for most of the past 70 years. THE AFRICA REPORT

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AFRICAN ANGLES 6

IRAN/SAUDI ARABIA

At daggers drawn Saudi Arabia executed Shia religious leader Nimr al-Nimr and 46 people convicted of terror-related offences on 2 January, sparking outrage in Iran, where Shia Islam is the dominant religion. Protesters in Tehran burned the Saudi embassy, and diplomatic ties between the two countries were frozen. Djibouti, Sudan and Somalia all sided with Saudi Arabia, which practises Sunni Islam, by cutting diplomatic ties with Iran. Meanwhile, the United States lifted sanctions on Iran on 17 January, unfreezing $100bn of assets through a deal on Iran’s nuclear ambitions.

NESTOR BIDADANURE Historian

Tread carefully when you rewrite the past South Korea – where new text books have caused division – and Burundi could both learn from Rwanda’s teaching of its recent history

VENEZUELA

The opposition Mesa de la Unidad Democrática (MUD) became the largest group in the national assembly in the 6 December legislative elections and is making life difficult for President Nicolás Maduro. He does not have the funds that his predecessor, Hugo Chávez, had to win over the population’s poor, and MUD officials are now promising investigations into the state oil company and other sensitive domains.

UNITED STATES

Crude calculations Shale oil production in the United States, the ending of sanctions in Iran and the recent drop in the oil price have contributed to the suspension of nearly $400bn in spending on global oil and gas exploration projects. Energy companies scrapped the development of 68 major projects, equivalent to 27bn barrels of oil, according to Wood Mackenzie, an energy consultancy. The price of oil fell to $28 per barrel on 18 January, the lowest in 12 years. Analysts soon expect a wave of bankruptcies and other problems for shale oil producers. THE AFRICA REPORT

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wenty years ago, while I was in shock, looking at the piles of bones of the victims of the Rwandan genocide, one of those who escaped said to me: “Brother, what those who have departed tell us to do is to dry our tears and devote ourselves to building a rich and happy nation. We cannot bequeath this horror to our children.” I couldn’t reply – I had a lump in my throat. How we deal with the past is important. Uprooting a monstrous ideology, understanding where it came from, for example, in Rwanda was essential for the country to move forward. Over the past few years, a controversy has rumbled through the South Korean public space, eventually ending up in court. Seoul wants to release a new history textbook, written by a group of ‘New Right’ historians, and amend seven other history textbooks, which has sparked an ideological debate in the country. A legal challenge ensued from progressive civil society organisations and some parliamentarians who claim that these changes – which include things like the omission of certain massacres and summits between North and South Korea – represented a right-wing takeover of the past to better

control the present. A South Korean court ruled that the ministry of education is allowed to go ahead with the changes. Getting consensus across society about the writing of history is important. One of the reasons why Rwanda was able to find the necessary national consensus about our own history was because we agreed about the role of the colonial era in legitimating ethnic hatred. Each student at school today needs to be able to explain how the genocide was stopped, how reconciliation was achieved. This national debate has not divided the nation, as it appears to have in South Korea. In part this is because it was achieved through the long traditional justice process of Gacaca – traditional courts where Rwanda put on trial two million citizens. Without wanting to set up a false parallel, having such a sustained national conversation is something that all countries – including South Korea – might benefit from. Meanwhile in Burundi, the extreme violence of the state against its citizens shows that without truth and justice for the victims of mass war crimes, there will be little lasting peace. The continual denial of a nation’s tragic history means that its people are almost certain to repeat it.

BRIEFING

PEOPLE

ZUMA’S EYES ON THE SKIES 1999 Started Skills Dynamics, an education consultancy 2006 Named chairwoman of the Mhlathuze Water Board 2008 Zuma chose her to be chairwoman of the Jacob G Zuma Foundation 2009 Appointed to the board of South African Airways (SAA) FLICKR

SPOTLIGHT

Dudu Myeni A preferred Zuma ally defends herself from charges of benefiting from favouritism and struggles to turn around the ailing national flag carrier that still depends on state handouts to remain afloat THE RAPIDFIRE and surprise changes of finance ministers brought the role of a powerful ally of President Jacob Zuma to the forefront of South African politics. Dudu Myeni, a former teacher and the current chairwoman of South African Airways (SAA) and Zuma’s personal foundation, has an air of being untouchable about her. However, with respected finance minister Pravin Gordhan back at the

helm and overseeing the perennially cash-strapped state-owned airline, there could be more conflict ahead. In November, SAA pilots passed a vote of no-confidence and accused Myeni of mismanaging the airline and of trying to introduce an unnamed third party into a multimillion-dollar deal. Local paper Business Day reported that Myeni wanted to change a leasing agreement for Airbus planes

2012 Became acting chairwoman of SAA

to a deal where a middle man would purchase the planes on behalf of the troubled SAA. Then finance minister Nhlanhla Nene said no to the financing of the proposed deal, and days later he was sacked. Many argued that the SAA deal was the reason Nene was fired, and the sacking caused mayhem on the country’s markets (see page 30). When former finance minister Gordhan was named to his old post to replace Nene in late December, he also opposed the altered lease deal and approved the original deal without the middleman. At the time, the criticism of Zuma’s government – and Zuma’s links to Myeni – was so intense that the president’s office issued a statement saying Myeni’s “relationship with the president is purely professional and is based on the running of the foundation. Rumours about

“Words and sounds have power. We must use them to denounce what disturbs us and to encourage us.”

“If we do not fight the cartels, we become their slaves.”

In launching his album The Traveller, Senegalese singer Baaba Maal argued that artists must engage with the world’s problems.

Chief justice Willy Mutunga railed against the criminality he believes is present throughout all tiers of Kenyan society.

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Good times

JULIET ANAMMAH

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BLAISE COMPAORÉ Burkina Faso’s exiled former president was the subject of an international arrest warrant on 21 December for the assassination of Thomas Sankara, who was president until he was killed in a coup led by Compaoré in 1987.

PROSPER DOUGLAS BANI President John Mahama’s chief of staff, who also previously headed the United Nation’s Bureau for Crisis Prevention and Recovery in Africa, assumed the role of interior minister as part of a cabinet reshuffle in January.

Ethiopia’s Hailemariam Desalegn took a strident stance in support of plans for the expansion of Addis Ababa before making a U-turn.

•

A Paris court ruled on 15 December that the son of Equatorial Guinea’s president was not immune from prosecution by French authorities on charges of embezzling millions of dollars.

The businesswoman became the new chief executive officer of the online marketplace and internet retailer Jumia’s Nigeria division on 12 January, replacing joint-CEOs Jeremy Doutte and Nicolas Martin.

“We know destructive forces are masterminding the violence from the forefront.” THE AFRICA REPORT

TEODORO NGUEMA OBIANG MANGUE

SI PA

Crystal Orderson in Cape Town

ZINÉDINE ZIDANE The former French international footballer was named on 4 January as the new manager of Spanish Premier League side Real Madrid, the world’s richest football club, following the sacking of Rafael Benítez.

a romance and a child are baseless and are designed to cast aspersions on the president.” Myeni hails from Zuma’s home province of KwaZulu-Natal and has been a longtime friend and ally. In 2011 she reportedly accosted two Durban photographers who tried to sneak pictures of Zuma’s lavish 70th birthday cake and made them delete their photos. Myeni has been active on various boards and served as deputy president of the Zululand Chamber of Commerce and Industry. After her career in teaching, Myeni set up an education consultancy, went into business and became a founding member of the Black Business Council. Her skills as a formidable fundraiser for the Jacob G Zuma Foundation show the closeness of her relationship with Zuma, who helped her to rise to a position of national authority after he became president in 2009. She was also one of 72 people to be part of Gold Fields’ 2010 black economic empowerment deal that the government insisted on in order for the company to get new mining permits. Myeni eschews the spotlight and rarely talks to the media. However, in an interview with News 24 last year, she said she has worked hard to transform SAA, which has led her to be described as “number one’s favourite girl” and “power hungry”. Myeni has her supporters too, especially the powerful South African Transport and Allied Workers Union. Its officials say that Myeni is often attacked in the media because she is taking on the vested interests of SAA’s powerful white pilots. With a new board to be appointed for SAA, which still lacks a permanent CEO, Myeni’s battles are not over. ●

BELLO HALIRU MOHAMMED Nigeria’s ex-defence minister was charged with money laundering on 6 January linked to the theft of $1.5m that was intended to be used to combat the Islamist extremist group Boko Haram.

Bad times

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PROFILE

John Magufuli

President, Tanzania

One hundred days of rectitude The new president of Tanzania is not afraid of getting his hands dirty in reforming a previously unreformable government machinery riven with corruption. However, fear of alienating vested interests within the ruling party may stifle his efforts to clean up the country

“

orry, I don’t date government guys, you are too poor now,” sniffed a girl in a recent political cartoon as she rebuffed a civil servant’s advances. There was a time when dating officials, especially those in the Tanzania Revenue Authority (TRA) and Tanzania Ports Authority (TPA), was worth something in the bars of Dar es Salaam. Since John Magufuli took up the presidency in November, things have changed dramatically in the capital’s romantic dynamics. Certainly, Magufuli has made heads spin. He is keen to stamp out the practice of civil servant absenteeism, where comfortable bureaucrats put a coat on the back of a chair and pop out for the rest of the afternoon. Surprise visits to key public institutions have become the norm. His relentless zeal for reform has taken both Tanzanians and many others outside the countrybysurprise,inspiringsome wags on Kenyan social media to beg for a ‘president swap’ and others to launch the hashtag #whatwouldmagufulido on Twitter. Magufulihasmanagedtotighten his grip in three areas, attempt-

ing to live up to his electioneering motto of ‘hapa kazi tu’ – or ‘nothing but work’. The first area is significant cuts in government expenditure. His cabinet is lean. Independence Day celebrations, his inauguration, the opening of parliament: all had their budgets slashed and the resulting savings diverted to road building and purchasing equipment. Trips abroad for civil servants and ministers are much rarer, and they now cannot bring partners – or girlfriends – with them. These cuts are being applied across government, with even refreshment budgets in universitystaffcommonroomsgetting slashed – to generalised horror. KIKWETE IMPRESSED

Next, Magufuli has boosted revenue collection. He took office and gave notice of his ambition: “I am giving a grace period of seven days startingfrom todayfor all businessmen who have not paid their taxes to do so or face legal action.” The subsequent tax haul for December broke national records, netting some TSh1.4trn ($63.7m) and won plaudits from former presidents like Jakaya Kikwete and Benjamin Mkapa, neither of whom seemed

RISE OF A REFORMER 29 October 1959 Born in Chato 1988 Earned degree in maths and chemistry at the University of Dar es Salaam 1995 Elected as a member of parliament 2006 Became lands minister 2010 Named works minister by President Jakaya Kikwete October 2015 Beat Edward Lowassa to become Tanzania’s president

able to convince companies to hand over what was owed. It is one thing to issue dire warnings toa corrupt bureaucracy – and quite another to get it to play to your tune. Perhaps a willingness to follow through on threats has helped. For the first time since perhaps Julius Nyerere, there appears to be a coordinated campaign to clean up the civil service. Magufuli’s advances in cleaning up government are the third area where he has made his mark. After a scandal emerged over a tax evasion scam at the Dar es Salaam port, with containers releasedwithout their owners paying duty, the axe fell. Three top officials, including TRA commissioner general Rished Bade, were fired, and others suspended awaiting court procedures. Acting TRA boss Alphayo Kidata has been able claw

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like the power company Tanesco and the National Housing Corporation should be turning a profit, not drinking in subsidies, he said. Does Magufuli risk throwing the baby out with the bathwater? He may want to set the tone, but does he risk alienating the very people he needs to enact his reforms? People like trade union boss Nicholas Mgaya point out that often civil servants at the bottom rungs are demoralised and ill-paid – and claim that the large allowances given to a handful of senior civil servants at the top of the tree consume half the government’s salary budget.

DECENT WAGE, FULL TILLS

back TSh11.8bn from the businessmen who had improperly ‘liberated’ their cargoes. An early acolyte of the Magufuli system, Kidata won plaudits in his previous position as permanent secretary at the land ministry, reportedly standing firm against agribusiness industry cartels. Not content with punishing the TRA, heads rolled at the TPA, with director general Awadhi Massawe and chairman

His public streetcleaning campaign in Dar es Salaam is symbolic of Magufuli’s drive to end corruption

The tax haul for December broke national records, netting some TSh1.4trn Joseph Msambichaka sacked, and the board disbanded. Transportation permanent secretary Shaaban Mwinjaka also lost his job. It may be that after 30 years of experience in government Magufuli THE AFRICA REPORT

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knowswherethebodiesareburied. Transport infrastructure seems the locus of much of Tanzania’s corruption of recent years. In March 2015,Tanzaniaannounceda$14bn project to build a new standard gauge railway. Magufuli recently dissolved the boards of two state rail parastatals and sacked the directorgeneralofReliAssetsHolding Company, Benhadard Tito. Perhaps irritated at having to do all the hard work himself, Magufuli then got rid of Edward Hoseah, the head of the Prevention and Combating of Corruption Bureau, Tanzania’s toothless corruption watchdog. Taking his cue from the top, treasuryregistrarLawrenceMafuru announced a package of measures aimed at restoring efficiency in the civil service at a meeting with the heads of state corporations and board chairs. Entities

Certainly, in other parts of the worldwherecorruptbureaucracies have successfully been reformed this issue has been tackled. Tina Tan, a director of Singapore’s Civil Service College, tells The Africa Report: “It’s no secret. […] Paying people a proper wage is key to getting rid of corruption.” Where will that kind of money come from, especially given Magufuli’s other campaign promises about free education? Perhaps from oil and gas windfalls. How the new government handles the nascent energy sector is critical. The Tanganyika Law Society fears that investment will outstrip regulatory ability and legislative frameworks, like in Mozambique. Before the elections, big legislation like the Petroleum Act, the Oil and Gas Revenues Management Act and theTanzanianExtractiveIndustries (TransparencyandAccountability) Act were rushed through without proper scrutiny. For all the reform fireworks, Tanzanians know that the forces that benefit most from corruption are heavy donors to the ruling party. If Magufuli can emancipate himself from this class of opponent, he will be celebrated twice. However, supporting the country’s industrialisation, dealing with the constitutional reform mess of his predecessor and picking up the pieces from the contested election results in Zanzibar are other challenges that will test Magufuli’s mettle. ● Nicholas Norbrook

BRIEFING FEBRUARY

CAIRO INTERNATIONAL BOOK FAIR 27 Jan. – 10 Feb. CAIRO | EGYPT

CCA US-AFRICA BUSINESS SUMMIT 1-4 February ADDIS ABABA | ETHIOPIA Biennial summit organised by the Corporate Council on Africa. summit.africacncl.org

CALENDAR

INVESTING IN AFRICAN MINING INDABA 8-11 February CAPE TOWN | SOUTH AFRICA miningindaba.com NTH

SOLAR POWER NORTH AFRICA 9-11 February CAIRO | EGYPT Egypt, which plans 2.3GW of solar power in the next two years, hosts this regional conference. solarpowernorthafrica.com

AFRICA HEALTHCARE SUMMIT 17-18 February LONDON | UK africahealthcaresummit.com

eCOMMERCE AFRICA CONFEX 17-18 February

AFRICALLIA FORUM 24-26 February OUAGADUGOU | BURKINA FASO West African business development forum. www.africallia.com

FIFA PRESIDENTIAL ELECTIONS 26 February

CAPE TOWN | SOUTH AFRICA ecommerce-africa.com M

WEST AFRICA GRI 17-18 February

CIAN FORUM AFRIQUE 2016 5 February

FANAF 15-18 February

LAGOS | NIGERIA After Nairobi and Jo’burg, the Global Real Estate Institute visits West Africa. globalrealestate.org

PARIS | FRANCE The Conseil Français des Investisseurs en Afrique looks at African cities as dynamic poles of innovation. cian-afrique.org

ABIDJAN | COTE D’IVOIRE The major insurance event returns to its place of birth, Abidjan, for the 40th anniversary celebration. fanaf.com

NIGER PRESIDENTIAL ELECTIONS 21 February

ZURICH | SWITZERLAND It’s almost the final whistle for acting FIFA president Issa Hayatou, who found himself in deep water after signing a support deal between the African and Asian football federations. fifa.com

HBS AFRICA BUSINESS CONFERENCE 26-28 February BOSTON | US World Bank vice-president for Africa Makhtar Diop and publishing mogul Khanyi Dhlomo are among the keynote speakers at Harvard Business School. africabusinessconference.com

BENIN PRESIDENTIAL ELECTIONS 28 February JAMES AKENA/REUTERS

UGANDA PRESIDENTIAL ELECTIONS 18 February Tensions mounted ahead of the poll amid claims of violent state-orchestrated suppression of opposition groups, particularly those backing incumbent Yoweri Museveni’s principal challengers, Kizza Besigye and former prime minister Amama Mbabazi. The US warned of the deteriorating security situation amid reports of police firing tear gas and live ammunition to break up opposition rallies (pictured), and NGO Human Rights Watch claimed officers had intimidated journalists. Although Museveni is likely to retain power, the election is proving closer than previous contests during the leader’s more than 30-year rule, with analysts fearful that this could translate into worsening pre- and post-election clashes between different political factions. Museveni, 71, also failed to appear and take part in the country’s first ever presidential debate on 15 January. For analysis see page 45.

MARCH

CIBEX EAST AFRICA 1-3 March NAIROBI | KENYA The Construction, Infrastructure, Building and Energy trade show. cibexeastafrica.com

AFRICA CEO FORUM 21-22 March ABIDJAN | COTE D’IVOIRE The forum for Africa’s business leaders is held on the continent for the first time. theafricaceoforum.com

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21-22 March 2016, Abidjan

4TH EDITION

THE FOREMOST INTERNATIONAL MEETING FOR AFRICAN CEOS, BANKERS AND INVESTORS 2016 will mark the fourth edition of the AFRICA CEO FORUM. Since its inception in 2012, the AFRICA CEO FORUM has established itself as the foremost event devoted to promoting the African private sector. Each year, the event brings together more than 800 worldclass CEOs, bankers and investors, cementing its reputation as a must-attend event for top African business leaders. A unique platform for thought-provoking discussions, the AFRICA CEO FORUM is an excellent opportunity for you to develop your business, shape your strategy and enhance your companyâ&#x20AC;&#x2122;s competitiveness. theafricaceoforum.com Twitter: @africaceoforum - #ACF2016 CO-HOST

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FRONTLINE

ISLAMIC STATE/AFRICA

This grim

utopia

Islamic State fighters are setting up a base of operations in Libya, as the regional fight against the Nigeria-based Boko Haram takes a new turn. But do African governments have the tools to respond to radicalisation and terrorist attacks?

ars burn a dull orange, billowing smoke outside the Hotel Splendid in the centre of Ouagadougou on 15 January. Special forces creep across balconies before the final assault. Inside is the carnage with which the world has become so familiar: bodies strewn, talk of survivors playing dead. After November 2015’s attacks on the Radisson Hotel in Mali came blasts in northern Nigerian cities of Yola and Kano, and bombings by Lake Chad, offering no respite for the Sahel. There is no let-up in Libya either. As Western and Russian air forces pound Islamic State (IS) positions in Syria and northern Iraq, the country is becoming a

rear base. Around 3,000 IS fighters were in the coastal city of Sirte in December, according to the United Nations. Ever more are arriving by boat. They are now pushing east, waging war on Libya’s oil infrastructure. On 4 January, IS militants attempted to break into the oil port of Sidra. A week later, three ships tried to reach another oil port of Zueitina, before being repelled by air strikes. For John Hamilton of consultancy African Energy, the strategy is not to make money directly from Libya’s crude oil. This would have to be trucked to Chad or elsewhere for refining, which is “logistically difficult and very easy to prevent.” Instead Hamilton suggests IS is looking for control. “Ajdabiya [a city east ● ● ●

AL HAYAT/AFP

By Nicholas Norbrook

FRONTLINE | ISL AMIC STATE/AFRICA: THIS GRIM UTOPIA

MAPPING THE ISLAMIST THREAT Tunisia, sick man of jihadism Tunisia

“Look! We can follow the attacks in real time. It’s like being on the front lines!” says a pro-IS shopkeeper, flicking though his Twitter feed, in Morocco the documentary Salafistes. Unlike Algeria and Morocco, Tunisia has not controlled travel to conflict zones. When Islamist party Ennahda was in power after 2011 it encouraged young people to fight in foreign wars. How did this progressive country of just 11 million people send so many to fight for IS? Some point to the fierce repression of Islamists, others to the high education levels that help plug well-connected youth into the global jihadi movement. There is also high unemployment, and despair at seeing how founding father Habib Bourguiba’s vision was betrayed by corrupt elites. The current government appears unable to get a grip Mauritania on the interior ministry, with incoherent responses to the attacks on Sousse beach and the Bardo museum.

Algeria

Libya

Niger

Mali

Chad

IS picks Libya as fall back Many groups struggle for power in Libya. Scores of militia, some Islamist in inspiration, are battling to control territory. Two rival parliaments compete for power, Côte d’Ivoire one having fled Tripoli for Tobruk, the other around Benghazi. Strongmen from the army have rallied local support. Of the Islamists, some are long-standing and linked to Ansar al-Sharia. Others are more recent, with IS importing battle-hardened fighters from Syria in 2015, sometimes clashing, sometimes making common cause with local Islamist groups. AQIM has bases in the desert in the south and also around Ajdabiya.

Cameroon Boko Haram Al-Shabaab Islamic State (IS)-related groups Al Qaeda in the Islamic Maghreb (AQIM) Mouvement pour l’Unicité et le Jihad en Afrique de l’Ouest

State of desperation in Mali

Deaths

2009-15

500

15,000

E : TH

NOM ECO

IST,

OTH

10,000

0 2009

2010

2011

2012

2013

2014

RCE

5,000

SOU

* Up to 11 July

SOURCE: ARMED CONFLICT LOCATION AND EVENT DATA PROJECT

People killed in conflicts involving jihadists in Africa

ERS

There are many layers to Mali’s crisis. The state has been hollowed out by a decade of drug money in the army and criminals in high places recycling cash into the Bamako property market. In March 2015, gunmen burst into La Terrasse restaurant in Bamako. It was assumed they were from the same groups that seized northern Malian cities in 2013 and temporarily imposed Sharia law. But a high-level security insider at the UN tells The Africa Report there are claims that the La Terrasse attack was a settling of scores between a member of the political elite and a business partner. While they scrap, Islamist groups like Ansar Dine and the Front de Libération du Macina continue to act with impunity in the north and centre of the country.

Central African Republic

Nigeria

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ISL AMIC STATE/AFRICA: THIS GRIM UTOPIA | FRONTLINE

Text by: Rose Skelton, Frida Dahmani, N.N.

● ● ● of Sirte] is the junction where the man-made river pipe reaches the coast. If they take Ajdabiya, they would control the water and gas supplies to Misrata and Benghazi – a major strategic lever.” Could the IS project be to knit together a network that stretches from Aleppo to Abuja, with Libya’s borders the perfect launchpad for regional attacks? The recent arrival of several top-level commanders of IS to Sirte suggests they want tobringtheirgrimutopiatothecontinent.

Somalia pulls Kenya into the quagmire The IS and Al Qaeda rivalry for African hearts can be seen in the Horn, too. Here, Al Qaeda is still strong. “If you belong to another group, go where you belong,” said an Al-Shabaab leader recently. “If you have a different flag, take it with you. It doesn’t work here, and you will be beheaded, even if you have a big beard.” One small faction has declared its support for IS, mostly Kenyans. They have better access to television and internet and are therefore more exposed to the IS communications machine, which by some accounts makes up 2% of the group’s $2bn annual budget.

Egypt

TOOLBOX OF SOLUTIONS

Mokhtar Belmokhtar The one-eyed Algerian fought in Afghanistan and in the Algerian civil war before becoming the link between Al Qaeda and its franchise in the Maghreb, AQIM. In 2012, he split from AQIM after falling out with rival AQIM leader Abou Zeid. His latest group, AlMourabitoun, claimed responsibility for recent attacks on hotels in Burkina Faso and Mali. Making his fortune at the head of a criminal-religious network, with Stratfor estimating that it earns about $3m per hostage taken, Belmokhtar has taken a more violent turn – perhaps reflecting an ongoing struggle for influence with the IS rebels.

Eritrea

Sudan

Somalia Ethiopia

c Uganda

SIPA

Leader, Al-Mourabitoun

Kenya

Middle Eastern blowback The Soufan Group report on the foreign fighters in IS makes tough reading for North Africa. This grisly ‘Internationale’ is made up of around 30,000 fighters, including more than 8,000 from the Maghreb, the second-largest supplier of foreign troops after the Middle East. Some 6,000 of those troops are from Tunisia. The Tunis government admits that there are also 700 women who have made the trip to IS-controlled territory. They are often from coastal hubs neglected by the state – from Benghazi and Derna in Libya, from the small Tunisian town of Ben Gardane and the Tangier region in Morocco. A leader of Al Qaeda in Iraq, Abu Musab Al-Zarqawi, was said to have quipped: “If Ben Gardane had been located next to Fallujah, we would have liberated Iraq.”

Tanzania

African fighters in Islamic State militias Morocco 1,500

SOURCE: THE SOUFAN GROUP, OTHERS

Tunisia 6,000

Egypt 1,000

Libya 800

Total

9,670

Algeria 200

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100

Sudan Somalia

Africa is home to myriad radical Islamist groups, from those supporting the idea of the wider IS caliphate, to the antiimperialists in Somalia’s Al-Shabaab, and Salafist groups in Mali who are more focused on individuals’ beliefs. They all vary in their capacities, strategies, sources of finance and their political aims. Government responses so far have been shaped by the groups’ degree of popular support and the sort of threat that they pose to central government authority. So far, there have been few open negotiations about compromise solutions between state officials and the supporters of radical Islamist groups. Islamist movements are increasingly dragging Africa into the nationalistversus-Islamist clashes of the Middle East. Libya’s General Khalifa Haftar told a reporter that there were just three places for political Islamists, “in the ground, in prison or out of the country”, echoing the repressive stance of Egypt’s President Abdel Fattah al-Sisi, and the earlier rhetoric that ousted a generation of leaders including Tunisia’s Zine El Abidine Ben Ali. Africa is already a battleground for the global fight between Islamism and Western interests, hence the attacks on Western hotels in Bamako and Ouagadougou. In addition, Africa is where older jihadi movements like Al Qaeda play out rivalrieswithnewer,thrustingmovementslike IS. An Al Qaeda in the Maghreb (AQIM) splinter called Al-Mourabitoun, led by Mokhtar Belmokhtar, claimed responsibility for the hotel attacks in Mali and Burkina Faso and led the attacks on the In AmenasgasinstallationinAlgeriain2013. Until recently, the idea of a conveyor belt from conflicts in Syria and Iraq down through the Maghreb and the Sahel into West Africa was deemed fanciful. African leaders now take the threat seriously. Worryingly, fighters from Boko Haram have been spotted in Sirte, having perhaps been pushed out of northern ● ● ●

FRONTLINE | ISL AMIC STATE/AFRICA: THIS GRIM UTOPIA

DEFINITIONS Jihad An oft-misunderstood word claimed by many, jihad in its simplest sense means ‘struggling’ or ‘striving’. It is better understood as the battle to overcome one’s own personal failings rather than a battle to kill unbelievers or defend holy lands, though military meanings are also recognised.

Islamist Someone who backs political action to make government and society run in accordance to Islamic law. Not to be confused with an extremist or violent position, which may or may not be Islamist.

Sharia Literally ‘the way’, sharia is a set of Islamic principles that govern specific realms such as society, crime, marriage and the economy, though there is much debate within Islam as to what it encompasses.

Salafi Literally meaning ‘the predecessors’, Salafis or Salafists venerate early strict interpretations of the Koran. But they come in different varieties, especially with regard to wider political action. Some, known as quietists, prefer not to engage with what they see as corrupt elite power games. At the other extreme, some believe that it is their duty to impose God’s vision of the just society in all lands, by violent means if necessary.

Wahhabi A Sunni Salafist group whose origins go back to Muhammad ibn Abd al-Wahhab, born in 1703 in what was to become Saudi Arabia. His strict interpretation of Islam opposed local customs such as the veneration of saints and tombs, foreshadowing major clashes between Shia and Sunni Islam. These are analogous to 16th-century clashes in Christianity between Protestant fundamentalists, who accused Catholics of corrupting the faith with rituals and reliquaries. Al-Wahhab’s followers made common cause with the House of Saud in 1744, an uneasy if durable alliance that still rules the state of Saudi Arabia today.

Nigeria by better military coordination under President Muhammadu Buhari. Likewise, several Somalis from Al-Shabaab have also been sighted in Libya, as well as Malians and Mauritanians. That could signal the beginnings of a grim ‘Internationale’ of African fighters of all stripes uniting under the IS banner. If they are successful, it will be because the population must constantly choose between an indifferent or collapsed central state and Islamist groups who bring a certain level of order, along with their undoubted repression. When Islamist groups Mouvement pour l’Unicité et le Jihad en Afrique de l’Ouest and Ansar Dine exploited the chaos of a coup in Mali to seize territory in the north of the country in late 2011, the media jumped on images of life under sharia law. But according to Roland Marchal of French university Sciences Po, “the perception in Mali was a little different [...]. People said, yes, it’s bad, but [the rebels] are much less corrupt than the governor. The army is not harassing us because they began to rise. Hardline Islamists used need lunch, and our daughters can cross that leverage to seize critical instituthe city without anyone bothering them.” tions like, for example, the Haut Conseil Lemine Ould Salem, who shot his Islamique du Mali (HCIM; see TAR73, Aug-Sept. 2015), now majority Wahhabi documentary Salafistes in Timbuktu and crypto-supportive of jihadi attacks. and Gao during the occupation, agrees Following the attack on the Radisson in and points to what is happening today. Criminality and violence have exploded Mali, HCIM head Mahmoud Dicko said in northern Mali, and this is exploited by the victims had brought it on themselves the jihadists when recruiting. He adds: with their ‘lifestyle’: “Each time the world “When they come to see villagers or nomad encampFixing the state, and ments, they tell them, ‘You correcting political failures, see, when we were here, remain key to beating IS people were safe. And now that the infidel French have come, anyone can come to attack you.’” falls into excess, God organises the reAfrican governments have neither sponse to show them they are nothing.” the military nor the political and soBut if cash prepared the crisis, the cial response to the threat that Islamist spark has been a huge period of uprebels pose. The race is on to neutralise heaval in the Arab world – a fast jump in literacy and an explosion in commuthe phenomenon before it spreads. To nication technology, followed by a wave “undo these groups”, says Marchal, we of political crisis that began in Tunisia in need to understand them first. 2011 and swept across North Africa and SAUDI CASH PLANTS BITTER SEED the Middle East. For Anouar Boukhars, The transmission belt of the crisis is Saudi a scholar at the Carnegie Endowment cash and state collapse. Since the 1960s, for International Peace, “understanding this deadly interplay of political grievSaudi Arabia has been pumping money into global jihadi groups (see interview, ances, social exclusion and hinterland page 28). There are also preachers from neglect is necessary for tackling the Pakistan who push salafism – a ‘purer’ underlying causes of militancy in the form of Islam that harkens back to more Sahel/Saharan border regions.” traditional times (see ‘Definitions’). This has been compounded by WestAs some states in Africa stumbled after ern missteps and hypocrisy – other useful the1970soilshocksand1980sdebtcrises, recruiting sergeants for Islamist groups. social welfare spending from the Gulf Examples include: French torture in col●●●

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FRONTLINE

where security, health, education and housing have been weak or absent. Securityinstitutionslikethepoliceandarmy are at the heart of the problem. There are strong parallels between stealing in the Iraqi army – estimated by Patrick Cockburn in his book The Rise of Islamic State to be in the order of tens of billions of dollars – and the corruption that hampers Nigeria’s response to Boko Haram.

AFOLABI SOTUNDE/REUTERS

LOOK TO THE PEOPLE

HASSAN OUAZZANI FOR JA

While bombs claim the headlines, ‘soft power’ attempts by Morocco to train imams go less noticed

onised Algeria; United States funding of anti-Soviet fighters in the 1970s; Washington’s funding of early iterations of IS to fight the Bashar al-Assad regime in Syria;andrepeatedmilitaryinterventions in Afghanistan, Iraq and Libya. Not a single Western intervention in the Arab world has followed the model of the successful post-Second World War occupation that resulted in the rebuilding of Japan and West Germany. Instead, companies like US oil services firm Halliburton – linked to the then sitting US vice-president Dick Cheney, himself an architect of the Iraq invasion of 2003 – won multibillion-dollar oil contracts, while corrupt officials were THE AFRICA REPORT

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elevated to leadership positions in Iraq and Afghanistan. And Western security budgets and deployments in Africa are tiny compared to Western spending in the Middle East, with diplomatic efforts weaker and more fragmented. So how should Africa fight back? Jon Marks, chairman of the Cross-border Information consultancy, says: “IS has to be defeated militarily first.” That would require Algeria and Egypt’s help in countering IS in the Sahel. “But the mailed fist must be accompanied by the helping hand,” Marks concludes. A principal priority for governments should be rebuilding the state, as these Islamist movements have thrived in areas

This matters, because, as filmmaker Ould Salem says: “If IS wasn’t supported by the population, it couldn’t exist”. For Sciences Po’s Marchal, “We need to look at the counter-insurgency approach in the 1970s that treated the population as an ally,” rather than the ‘war on terror’ approach employed by US President George W. Bush and continued by France’s President François Hollande. Mohamed Nur, a former mayor of Somali capital Mogadishu, says: “When I came in, I started to organise the community and tell the people, ‘Look, our problem is Al-Shabaab. Our problem is insecurity and that insecurity is caused by Al-Shabaab. So don’t let them live within the community.’ […] The lighting of the city, the expectation of the people that comes back [when the government fixes things], the hope, all these contributed to the withdrawal of Al-Shabaab.” This feeds into the battle of ideas: on the streets, in schools and universities and in the press, in mosques and in political parties. As one moderate preacher in Bamako tells The Africa Report, “Imagine if we had been preaching in Bambara 20 years ago. We might not have lost a generation.” Like in Europe, one of the biggest dangers is the rise of the authoritarian right in response to jihadi attacks, thereby reinforcing the Islamist playbook. It is no coincidence that Donald Trump, by berating Muslims, has popped up in AlShabaab recruiting videos. A parallel in Africa is Kenya. There, the media often link Somalis to Al-Shabaab, which has worsened social divisions and undermined intelligence-gathering operations. Despite initial soothing noises from President Uhuru Kenyatta after the Westgate Mall massacre in 2013, things quickly became difficult for Kenyan Somalis. That is a mistake, explains Marchal, not because of some overly liberal squeamishness about supporting authoritarian regimes but because it often misses ● ● ●

FRONTLINE | ISL AMIC STATE/AFRICA: THIS GRIM UTOPIA

INTERVIEW

Madawi Al-Rasheed Saudi Arabian scholar and granddaughter of Mohammed bin Talal al-Rasheed, the last prince of the Arabian Emirate of Ha’il

Afghan invasion was critical TAR: To what extent is our current predicament a tributary of the Wahhabi pact with the House of Saud? First of all, if you want to go as far back as the establishment of the Saudi state from the early 20th century, it was based on a kind of religious nationalism, which means that the raison d’être of the state is to correct people’s religious behaviour and beliefs. It was the first experiment in jihad in modern times, in the 20th century, because the Al-Sauds revived the Wahhabi movement and conquered different parts of Arabia on the basis that those people were actually not good Muslims and therefore they had to ‘Islamise’ them. And so that was the root of the Saudi state.

the underlying political dynamics. For example, the African Union Mission in Somalia had assumed that Al-Shabaab would be targeting Kenyan Somalis for recruitment. “But the main pool for recruitment was actually the Coast,” he explains, as that region of Kenya has its own historical territorial grievances. These political mistakes, so similar to the West’s ‘war on terror’ response, have been repeated endlessly. In Chad, President Idriss Déby has victimised the Kanuri community of traders from northern Nigeria, with the police shaking them down regularly. Déby has also cracked down on the Buduma, a small ethnic group living round Lake Chad – a part of the country that has received almost no state development – who are recruited heavily by Boko Haram. The radicalisation of Boko Haram itself was in part a result of repeated heavy-handed raids by Nigerian police, who killed an early leader of the student movement. Marchal adds: “At one point Al-Shabaab didn’t even have 100 members. […] Thanks to the wonderful Western policy and Ethiopian invasion at the time of Ramadan in 2009/2010 they increased to 15,000.” Notwithstanding these kinds of mistakes, is there an argument to be made for supporting what Jon Marks calls “the bastards” – the leaders of police states like Ben Ali in Tunisia and Muammar Gaddafi in Libya – who knew how to keep a lid on the Islamists while putting thousands in jail? Marks is sceptical but acknowledgesthatifAlgeriaandMorocco appear less troubled by militant Islam today it is because “they know how to have the snitches out in the mosques.” ●●●

would be a good idea. And at that moment the global jihad movement was created, which became problematic after the end of the Soviet occupation and also problematic for Saudi Arabia itself. But Saudi Arabia wanted to flaunt its credentials, especially at a time when the Islamic Republic of Iran was getting established. And the problem started when this occupation of Afghanistan ended and there was no exit strategy for all these groups who had come from different parts of the world – men who had left their countries. Some of them could not go back. Is this analogous to what has happened with Islamic State (IS)? What we are seeing now is yet another phase. IS grew under the nose of the Americans in their occupation of Iraq in 2003. There is some continuity with Al Qaeda in terms of ideology but also discontinuity. It was in the Iraqi

How did the Cold War affect it and spark the flood of money into global jihadi causes? In the 1950s and 1960s – in the context of the Cold War and in the context of the rise of the nationalist The rise of the Shia in Iraq has movement in the Arab given the IS jihad a sectarian world in its Nasserist tinge compared to Al Qaeda and Ba’athist versions, and also in the context context, with the dismantling of of the rise of leftist revolutionary the Sunni supremacy. The rise of the movements across the Arab world – Shia state in Iraq made that jihad both the United States and Saudi more sectarian because it appealed Arabia thought that pan-Islamic to the Sunnis against the rising power ideology could be a good antidote of the Shia. And from that moment, to all these revolutionary, communist we have an additional sort of jihad and atheist movements. offshoot of the original module and So this was the moment of using that is sectarian. petrodollars to establish pan-Islamic And the discontinuity also is the organisations such as the Muslim daring IS move to announce a World League, Islamic banking and caliphate, which Al Qaeda never did. Islamic universities across the world, But I think it’s an act of desperation, including in Africa. an act of recruitment – trying to appeal Then we come to a critical moment to a wider public. And they have again in the 1980s, with the Soviet succeeded by drawing on Europeans invasion of Afghanistan. The US, who would come and join, very much the United Kingdom and Saudi Arabia, like what happened in the 1980s in addition to Pakistan and many other in Bosnia or in Afghanistan. ● countries, thought that mobilising Interview by Nicholas Norbrook Muslims to defeat the Soviet Union

RADICALISATION REDUX

Anthropologist Madawi Al-Rasheed argues that the securocrats are the problem, not the cure. “After 40-50 years of dictatorship, they’ve killed every other alternative” – be it civil society, political opposition or trade unions. That is why the Islamists were the most organised groups and the first out of the gate during the Arab Spring. And Marks warns that Egypt’s government may be repeating the cycle of authoritarian, corrupt governments giving rise to a new generation of grievances that spur a new generation of radical Islamists. Generally, there is more respect for religious belief in Africa than in Europe, thus far less Islamophobia in Africa. But as there is now a growing risk of polarTHE AFRICA REPORT

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isation between Salafists and Christian fundamentalists, the socio-cultural dimension is absolutely key. In Nigeria, for example, the mixed Christian-Muslim marriages in the Middle Belt and south-west provide a great bulwark against intolerance and fragmentation. This is now stretched to its limits in places like Jos in Plateau State. ISLAM’S INTERNAL DEBATES

Al-Rasheed adds: “There is quite a lot of disenchantment with political Islam amongst some groups,” pointing to the emerging moderate Islamist position in places like Saudi Arabia. “They are not willing to abandon Islam altogether, but they want to see a sort of democratic government drawing on the original texts of Islam. So they try to reinterpret these texts in ways that allow, for example, elected government, human rights and the application of sharia in particular ways that do not create conflict with international human rights.” Oud Salem argues that “the debate is very active on social media, in mosques, across the Muslim world. Just to give one

example, in Mauritania there is Abdallah Bin Bayyah, a former minister, who is very active. Then there is the former mufti of Osama bin Laden, who was against the 9/11 attacks and has been critical of IS.” Meanwhile, in the chic Rabat neighbourhood of Hay Ryad, Morocco’s own religious diplomacy is in full swing. An ‘imam academy’ is training 105 Malian imams in moderate Islam, with an additional 400 to be trained in the next few years. Other African countries are sending imams too, from Tunisia to Côte d’Ivoire and Guinea. King Mohammed VI is considered a spiritual leader in West Africa, head of the Malikite Rite, one of the four legal schools of Islam. A good start in the necessary ‘soft power’ approach say some; a drop in the ocean say others because the urgency is palpable, the hurdles legion. Africa’s demographic growth and its failure to capitalise on the recent commodity boom have resulted in an explosion of young people into a flagging job market. Nigeriamayhaveamuchbetterchance with Buhari in charge to counter Boko Haram, but talking about change and

embodying it in a concrete programme of action that stays the course are two different things. But the peace deal in northern Mali, a key part of the puzzle in ensuring IS does not make further inroadsintotheSahel,remainsunenforced. And the international context makes the fightback tough too, as France is repeating the mistakes of the United States after 11 September 2001, with threats of revoking the citizenship of homegrown Islamists. Back in the day, bemoans Marchal, “We [the French] were so sarcastic about the Americans.” Meanwhile, the fragility of several countries to Islamist attacks remains high – with Algeria the first on the list. “[Algeria] explodes when the ruling elite starts to behave really badly amongst themselves and lose track of the central issue, which is keeping themselves in power,” concludes Marks. While in 2011 the Algerians – like the Saudis – threw a lot of money at the youth to buy off revolt, today the squabbles about the succession of President Abdelaziz Bouteflika and rock-bottom oil prices make that less likely. ●

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POLITICS CHRISTOPHER MOAGI/DAILY SUN/GALLO IMAGES/GETTY IMAGES

SOUTH AFRICA

Asleep at the The surprise sacking of finance minister Nhlanhla Nene shocked the markets in late December, underlining the high stakes of the May local elections and the economic difficulties the country faces in 2016 By John Battersby and Patrick Smith

orebodings abound ahead of the opening of parliament on 11 February, when President Jacob Zuma is due to give his state of the nation address against a backdrop of political and financial turmoil. Opposition parties are threatening to disrupt proceedings in protest at Zuma’s political record. Last year, militant members of parliament from the Economic Freedom Fighters (EFF) shouted down President Zuma until speaker Baleka Mbete ordered their removal by force. Even staunch loyalists of the governing African National Congress (ANC)

concede that this year will be the party’s most difficult since the liberation elections of 1994. And some critics argue that the country’s current political and economic problems will continue at least until national elections in 2019. Eight years into Zuma’s presidency, frustration about the pace of economic and social change is building, specifically over the lack of jobs and now a serious slowdown in growth, fuelled by falling trade with the biggest economies in Asia and Europe. The discontent is deepest in the towns and cities, where some 70% of South Africans live. Just how deeply the dissatisfaction runs will be tested in May when South Africans are due to vote in local elecTHE AFRICA REPORT

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Zuma’s ANC birthday announcement (above) that fees would not increase did not calm student protests (left)

wheel tions. The most critical contests will be in municipalities such as Johannesburg and Tshwane/Pretoria in Gauteng Province, and Port Elizabeth and Nelson Mandela Bay in Eastern Cape. If the ANC loses control of those cities, the party’s internal rivalries will worsen. Next year, the party has to choose a successor to Zuma, and several candidates are already quietly campaigning for the job. TRIPLE WHAMMY

Three shocks in late 2015 showed the gap between reality and the quest for effective policy and good governance. And so, expectations are modest over the next five years: stabilisation of the economy; a political succession that THE AFRICA REPORT

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promotes development; and a return to growth above 2% a year. The first shock came in late November when ratings agencies Standard & Poor’s and Fitch downgraded the country’s credit rating to a notch above junk status, sharply raising the cost of capital and hitting big new power and transport projects. Two weeks later came Zuma’s shock sacking of finance minister Nhlanhla Nene, who had made clear his opposition to Zuma’s plans for a 9,600MW nuclear power programme costed at almost $100bn. The announcement of Nene’s replacement, a little-known backbencher named David van Rooyen, triggered panic in the markets: the rand hit an all-time low against the United

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States dollar and several billion dollars were wiped off the bond and equities markets. Calm returned after four days when senior ANC and business figures pressured Zuma to back down and replace Van Rooyen with Pravin Gordhan, a trusted but independent-minded figure who had been finance minister in Zuma’s first government. The third shock a few days later was the decisionofBritish-basedbankBarclaysto sell its 62% share in Absa, South Africa’s largest retail bank. Barclays has not explained the reason for the sale, but the timing – in the middle of a national financial crisis – is an unfortunate signal to other foreign investors. As those triple shocks reverberate in 2016, there are fresh doubts about the country’s direction. An effort by President Zuma to downplay the significance of his sacking of finance minister Nene fell flat at the ANC’s 104th birthday party on 9 January. Zuma told the party faithful that the markets had overreacted, and the rand hit new lows against the dollar two days later.

POLITICS

These swings in market sentiment are hitting the country’s business hierarchy: that is the ANC grandees like Patrice Motsepe, as well as local and foreign mining companies that are already reeling from the fall in demand from China, and a slew of foreign investors who had been attracted to the country because of its effective regulatory institutions and sophisticated banking and financial sector. LOYALTY STILL STRONG

Those business barons had hoped that the push-back against Zuma’s sacking of Nene would strengthen the chances of deputy president and former businessman Cyril Ramaphosa in the race to succeed Zuma. The trade union body Cosatu has also declared its support for Ramaphosa as the next president of the ANC. Yet in the cabinet and the ANC National Executive Committee, President Zuma retains the support of 60-70% of the membership, and Zuma’s preferred candidate for the succession is his former wife, Nkosazana Dlamini-

Zuma. Dlamini-Zuma, who has never really left the political scene in South Africa, is due to step down as chair of the African Union Commission this year at the end of her first term in the job. For now, a majority of the ANC’s top officials seem to favour the ‘after Zuma, another Zuma’ option. But the mood could change quickly if the country’s economic travails continue and the ANC gets poor results in the local elections in May. If the ANC’s share of the vote is closer to 50% than 60%, that would be very bad news for Zuma, according to party insiders. Some suggest it could prompt party leaders to negotiate a ‘retirement and amnesty’ deal with Zuma: that would mean him stepping down in favour of either his ex-wife or Ramaphosa. At the very least, President Zuma’s authority would be much reduced. Yet even with just 50% of the vote, the ANC would remain the country’s leading political organisation and capable of a rapid rejuvenation with a change of leadership and policies. Certainly, the

growing support for opposition parties will reinforce the pressure for change within the ANC. The centre-right Democratic Alliance (DA), with its new black leader Mmusi Maimane, is forecast to get between 25% and 30% of the vote in May. Meanwhile, the radical left EFF, led by the irreverent Julius Malema, could get between 8% and 12% of the vote, according to various opinion polls. To what extent the DA could work with the leftist EFF is an open question: instead, one or other of them might wind up in coalition with the ANC. A strategic thinker, finance minister Gordhan wants to focus policy on building an investment- and manufacturingled economy rather than on public consumption. His team is looking at ways to promote the financing of the small and medium-scale enterprises that could generate the required jobs and make inroads into rising poverty. Yet how fast and how far South Africa can implement such a strategy will depend critically on the country’s febrile political climate. ●

Voices on the winds of change XHANTI PAYI

Economist, Nascence Advisory & Research

Firstly, we need to rebuild confidence in the market. Secondly, the private sector needs to start taking risks and invest in the country. And lastly, government needs to start implementing its major infrastructure projects. Jacob Zuma and the finance ministry changes have given us a basis to reflect on the terms under which our economic system works. Confidence is a major thing. Zuma turned the system upside down. This was a shock to many and eroded confidence. South Africans have been spoilt. Business does depend on the government, but they don’t want to see this fact. Business consults with government; it sells to the government; and government banks with it. The private sector needs to invest in the country to ensure things happen. If it doesn’t, the slow growth and the lack of jobs is set to continue. Business says that labour needs to be more productive, but one needs to invest in training to ensure people are more productive. It is rather twisted, with business always calling on the government to train people. Business needs to come to the party. Labour cannot buy a better machine; it cannot shift the production process if there

is no investment. Business needs to invest in people and start taking risks. If you invest in the people, then we can start competing with China and Brazil. The ANC has a point when they say business is not coming to the table. Government needs to be serious about implementing infrastructure projects and prioritise the main ones. If you say you want to industrialise certain sectors, then identify the key people to help steer that programme. If that is done within three years, one would see progress. There is no such thing as job creation: it’s about people and being productive. Sectors like agriculture and energy are growing, but it’s off the back of a particular need in the economy. In the late 1990s, banks invested heavily in human capital and technology and trained people. The banks invested in new systems and created thousands of skilled jobs. Manufacturers need to do this. If our businesses are in Africa and still importing from China, why don’t they set up factories here? The exclusion of black people in the economy will be to the detriment of the country. We are not going to create jobs if we have the same mindset. We are stuck in the old way of thinking. Economies that have been successful have been innovative and have invested in building capacity. ● ALL RIGHTS RESERVED

Interview by Crystal Orderson

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African Guarantee Fund (AGF) acquires Guarantee Fund for Private Investment in West Africa (GARI Fund) Africa’s growth, is Our Growth

The signing of AGF’s acquisition of GARI Fund in West Africa took place simultaneously on December 18th 2015 in Paris and Lomé. AGF has since acquired 80.56% of GARI Fund’s shares, previously owned by: - The French Development Agency (AFD), - The European Investment Bank (EIB), B), - Deutsche Investitions und Entwicklungsgesellschaft gsgesell llscha haft ft (DEGINVEST), - and State Secretariat for Economic Affairs ffairs (SECO),

According to Mr. Felix BIKPO, Chief Executive Officer of AGF, this acquisition serves two objectives: - Strengthen geographic proximity in order to improve the quality of services, - And increase the operational capacities of the Fund for a better social impact. www.africanguaranteefund.com

DIFCOM/DF - PHOTO : DR

GF h as As part of its development strategy, AGF has ca by strengthened its presence in West Africa acquiring GARI Fund.

Felix Bikpo ; Jean-Pierre Marcelli (AFD) ; Cornelia Berg (DEG) ; Alain Buehlmann (SECO) and Stefano Spada (BEI). >

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KEITH KHOZA Spokesman, African National Congress

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What lies ahead for the ANC is that we want to consolidate the restructuring of the economy, the entrenchment of our democracy and the reaffirmation of local government as a critical sphere of government. We are aware that it will be a challenging year, with student fees and the untransformed

judiciary. They are functioning well. We need institutions – a judiciary that people trust. And it needs to be supported and strengthened.

Our recent Afrobarometer survey showed that six in 10 respondents believe that President Zuma always or often ignores the laws and courts of the country. Civil society has to think carefully of its role, especially in its explicit calls for the President to go. I am wondering whether civil society should be campaigning for this, given that our country is already so polarised and the fault lines might widen. We need a civil society that is constructive and building the country. We need to remain focused so that we can get the country moving together. The local government election will give us a clear indication of where we are as a country. ● C.O. D

We are politically hamstrung on the economy. The flip flop of the presidency on the treasury [the sacking of finance minister Nene] doesn’t help, and this uncertainty is disastrous for the country. We now see the erosion of public institutions and the fear that the revenue services, Independent Electoral Commission and the treasury have now been captured by the presidency. Civil society is important: we have to defend these public institutions that play a role in ensuring accountability, like the public protector, auditor general’s office and the

SERVE

The most immediate threat to our democracy is the economicchallenges we face as an emerging market. The middle classes who earn a salary are anxious about the rising cost of living. The working class, on the other hand, also has anxiety because with the little they have they will have even less to buy now. Withinflationrisingandadevastating drought, we will see another round of increases, and it will impact severely on food prices. We will have to importfoodlikemaize.People will feel it in their stomach, and it will impact on their livelihoods. And this is bringing anxiety in the country.

Programme head, Institute for Justice and Reconciliation

HTS RE

JAN HOFMEYR

economy being major issues. We have to intensify the implementation of the Freedom Charter in all its facets. South Africans want to see progress: it’s 22 years now of our democracy. It is maturing, and we have seen change. The second phase of economic transformation has to become a reality for our people. Many South Africans are excluded from the mainstream economy.

All South Africans – including the private sector – must play a role in buildingtheeconomysothatweproducemore work for our people and that the country remains a strong force on the African continent. Creating decent jobs for millions of unemployed is a centrepiece of our strategy and speaks to the need of creating decent and permanent jobs. Our policies discussed at the recent ANC policy conference include improving the economy’s competitiveness and encouraging local manufacturing, including reducing port and freight subsidies for commodity exporters and improving telecommunications infrastructure. This year, local government will take centrestage.Weareawaretherehavebeen some challenges in service delivery on the local level, but we want to make local government accountable and responsive to the needs of the people. The year started with some incidents of racism, and we want to say that racist views cannot be tolerated. South Africa is a home for all, and racism has no place in the new South Africa. We also want to see progress in parliament and for it to deliver on its mandate. It has to move away from being a playground for people trying to C.O. undermine democracy. ●

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ana Yaa Ofori-Atta Na cal analyst Politic

Ghana’s fiendish equation that does not add up

efore Ghana saw fit to dismantle its education system, children swotted for three critical exams – Common Entrance, ‘O’ Levels and ‘A’ Levels. Facing down long mathematical equations and with precious little time, Ghanaian children knew to apply BODMAS. Solving in this order – Bracket, Orders, Division, Multiplication, Addition and then Subtraction – should get you the right answer. TheGovernmentofGhana(GoG)isinaplacewhere even BODMAS cannot help. Ghanaians woke up to read, through the haze of the seasonal Harmattan, that the GoG has extended our famous ‘akwaaba’ hospitality into new and uncharted waters. Two former detainees of Guantanamo Bay have been transferred to Ghana. Not even their country of origin, Yemen, will have them back. President Mahama has asked citizens – including the Christian Council who have publicly expressed their outrage – to be charitable and, frankly, Christian. The Gitmo 2 will be in residence for two years, after which they ‘may’ choose to stay longer. To survive here, they will need another short code – Well Dodge.

B is for Bracket. In December 2015 it also stood for Branding Buses. The minister of transport, Dzifa Attivor, approved a contract to brand public buses with black-and-white pictures of former presidents. In a master stroke of marketing genius by the National Democratic Congress (NDC), only President Mahama’s picture was provided in living Technicolor. It is an election year in a country flat broke and at least twice a month we are witnessing the extravagant abuse of incumbency. The contract to brand the buses may have been improperly awarded to a friend of President Mahama’s whose husband is a member of the ruling NDC. The cost of the bus poster campaign was inflated. The minister broke cover to resign just hours before the findings of a hastily ordered investigation were delivered. The report ensures a classic triple-sided Well Dodge. The ex-minister faces no disciplinary action for signing off on the Well Dodge, and neither does the company that perpetuated the Well Dodge

– however, by asking the company to return the extra funds to national coffers with no time frame or punitive interests imposed, the presidency can say it took action against corruption. The news about the buses was broken in December by a pointed shot delivered after the very expensive fact, by the minority leadership in parliament. O stands for Orders and Powers. This covers workshy types bunking off work in parliament. Although the 275-member legislature is empowered with a range of standing orders to keep the executive in check, it is genetically wired by both the 1992 constitution and our political culture to serve the whims of the imperial executive – the majority of whose ministers must be chosen from parliament. Cue in the slavish toeing of a shifting line by members eager for a second job. Voting in the House is usually and deliberately by voice, effectively preventing a track and trace of which MP voted for what. Now that it is out of office, the minority complains loudly that the dice in parliament are loaded against them. It is to the rapidly diminishing credit of the New Patriotic Party (NPP) that during the eight years they were in office precious little was done to rebalance parliament’s subjugation to the executive. In the Fourth Republic, both political parties score high on Well Dodge. D is for Division. Can also be applied to Distraction. Fresh from the branding scandal and the signing of the controversial AMERI deal (see A is for Addition), in

As global prices hit an all-time low Ghana has announced 20% fuel price increases the wee hours before parliament retired for Christmas members approved another increase in fuel prices. As global prices hit an all-time low, oil-producing Ghana announced fuel price increases above 20%. The minority belatedly says that it only approved a 5% increase and the addition of a bewildering layer of taxes after the fact is obviously a GoG Well Dodge. M is for Multiplication. When the Electoral Commission are counting, Ghana has a population of 25 million. Fewer than a fifth pay direct taxes. In the new THE AFRICA REPORT

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year, applying the D for Distraction, the ministry of finance announced a raft of new measures designed to deepen the woes of the hapless fifth. Within the dizzying spell of a week, some of the new taxes were withdrawn, leaving Ghanaians confused. With inflation and depreciation of the cedi, only those who took and passed the Common Entrance and maths ‘O’ and ‘A’ levels using BODMAS have been left with a clue. A is for Addition. Or AMERI. Ghanaians signed off the year with Have AMERI Christmas. The GoG signed a Build, Own, Operate and Transfer (BOOT) agreement for a number of turbines that AMERI (Africa Middle East Resources Investment) would operate, to generate 250MW of electricity using fuel purchased at full commercial cost to be borne by the state-owned Volta River Authority (VRA). Parliament, on the advice of the 17-member sub-committee, met a record-breaking three times for a cumulative less than six hours, during which they agreed to waive any form of debate in the House and proceed to a motion to adopt the contract agreement. It took 10 months for the turbines that could have been purchased and delivered directly from GE to arrive in Ghana. A Norwegian newspaper has revealed that the AMERI contract was witnessed by a Pakistaniborn gentleman who wields a Norwegian passport and is currently being hunted by Interpol for fraud. THE AFRICA REPORT

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Both the short-sighted committee and the blinkered full House failed to apply BODMAS. The AMERI deal will actually cost Ghana some $200m more in hidden costs than parliament approved. Fortunately, the president’s brother, awarded a contract by VRA to provide engineering services for the AMERI turbines, will make, at his estimation, only a mere $5 million from this transaction. In keeping with their after-the-fact default position, the minority has now called the AMERI transaction a Well Dodge. S stands for Serwaa, the middle name of Hanna Tetteh, Ghana’s foreign minister and MP for Awutu Senya West. Buried deep in the releases surrounding the importation of the Gitmo 2 to Ghana is the quiet assurance from Ms Tetteh that Syrian refugees with family links to the country will also soon arrive. S also stands for suits – law suits that is. In pursuit of an interpretation of Article 99 of the Constitution, Lolan Sagoe-Moses intends to proceed to court to force the speaker to declare 125 seats vacant. MPs who absent themselves for a minimum of 15 sittings without prior written permission should have been automatically dethroned from their perch. Analytical evidence provides that the sixth parliament of Ghana’s Fourth Republic has seen absentee rates increase by 58%. With a 69.57% absent-without-permission rate, Foreign Minister Tetteh is one of the top five offenders. BODMAS. It is all adding up nicely in Ghana. ●

POLITICS

MOZAMBIQUE

After the spending, the reckoning President Nyusi has inherited a poisoned chalice: he now has to cut spending, deal with the IMF and manage an elite grown fat through patronage politics

n March, Mozambique will have to repay another $100m tranche of an opaque and roundly criticised bond deal. The money could have been used to build four hospitals. Instead, it will repay a wildly overinflated contract for tuna-fishing boats. In the words of the country’s former prime minister Luísa Diogo: “Something has gone wrong.” Back in 2007, Mozambique was feted in ballrooms and boardrooms. Bankers pointed to stellar growth rates and the sound macroeconomic management that had led the fastest turnaround of a post-conflict country since Vietnam. Former president Joaquim Chissano won the inaugural Mo Ibrahim Prize for good governance that year. Today, it seems like a rerun of Africa in the 1980s: rising debt, a pile-up of white elephant projects, murky finances and a balance-of-payments crunch requiring an International Monetary Fund (IMF) bailout. RECKLESS DECADE

mentally. State spending increased in the double digits almost each year, foreign aid declined and the government took on deficit financing. Capital spending rose and was covered by foreign debt. Funding gaps for the recurrent budget were financed on domestic markets, and domestic debt rose 28% per year between 2001 and 2013 to Mt30bn ($1bn). By 2015, sovereign debt had risen more than 200% since Mozambique’s international debt relief in 2000, including a 53% increase in the last two years Guebuza was in office. Debt will continue to rise as projects are implemented and to finance government expenditure, including a budget deficit of $1.1bn in 2015, or about 6.5% of gross domestic product (GDP). By 2020, debt is projected to double again to more than $16bn. Withdebtmarketsdryingup,thisleaves little wriggle room for Mozambique’s financial planners. Various shades of austerityloom.AccordingtoStandardandPoor’s analyst Gardner Rusike, Mozambique’s case is not entirely unusual: “A number of African countries that had fast-paced growth also have expanded fiscal positions and higher debt to GDP ratios – this has not led to greater creditworthiness.” Under Guebuza, Mozambique became a country that could increase

Mozambique is not the only African country experiencing economic turbulence at the end of a commodity and credit boom, but the impact is more painful than in most after a decade of reckless spending and borrowing. Fixing the problem will mean tackling the corruption that underpins some of that recklessness. Most contracts for public That leaves President investment projects were Filipe Nyusi on the horns on untendered and sole-sourced a dilemma. If he fails to act against the shady elements of his predecessor’s regime – that of the state spending, pay higher wages and free-spending Armando Guebuza – his develop prestige projects that appeal credibility will be undermined. Push too to national pride. However, the govhard,andherisksrevoltorworsefromthe ernment also discarded the difficult powerful former single party, the Frente market reforms and macroeconomic de Libertação de Moçambique (Frelimo). stability that were the basis for growth Under Guebuza, president from 2004 in the post-civil-war period. to 2014, and finance minister Manuel The government halted privatisaChang, the way in which Mozambique tions and encouraged poorly performmanaged its finances changed fundaing parastatal companies to assume

ambitious nation-building roles. These companies now run substantial losses and are a growing drain on public finances. This was made possible, according to Fernando Lima, the publisher of independent newspaper Savana, “by the belief that resource riches through gas and coal were imminent and that we should not be afraid to take on debt.” NO BONANZA

But the world-class gas deposits in the Rovuma Basin, discovered by multinationals Anadarko of the United States and Eni of Italy, are not the resource bonanza Frelimo’s leadership was hoping for, especially with the current global slump in gas prices. Analysts forecast that production is unlikely to begin before the first half of the next decade, a longer time horizon than official estimates of 2020. Even then, revenue-sharing terms mean that foreign companies will recoup their investment costs first in the early years of production. The chimera of gas cash also offered the ability to end restrictions on sovereignty that came through oversight in THE AFRICA REPORT

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POLITICS

there are questions about inflated prices. These deals were often taken on as sovereign debt and involved commercial rather than concessional financial terms, contrary to undertakings made for debt relief through the previous international debt-relief programme. There are also suspicions about corruption. Manuel de Araújo of the Movimento Democrático de Moçambique and mayor of Quelimane explains: “These investments could have been done on low interest rates or for lower cost, but he [Guebuza] was not interested in the economic viability of projects or rational planning. Nobody can explain why we needed a bridge to Catembe or a new parliament and why these were priorities. Theywereideasthatcamefromnowhere.”

THOMAS TRUTSCHEL/PHOTOTHEK VIA GETTY IMAGES

BENEFITS TO CRONIES

Western aid relationships. “Guebuza and his group believed that we could do whatever we wanted and didn’t need to listen to anyone. As a result, we got a confrontational relationship with donors. Friendly countries like China, Brazil, India, Vietnam and South Africa were supposed to replace the Western donors,” says Lima. State spending then became politicised and inefficient. The largest projects include the $725m Catembe bridge over Maputo harbour to undeveloped land and a $300m Maputo ring road.

Beira port remains a headache with its need for constant dredging, causing bottlenecks

There is a new Chinese-built international airport in Maputo, new ministerial buildings and, soon, a new parliament in Catembe. Brazil financed a $144m international airport with capacity for half a million passengers in Nacala, an isolated northern city, a project that was costly and ill-conceived. Most contracts were untendered and sole-sourced. The government often did not disclose its terms, and in some cases

Mozambique’s external debt stock 10

(US$bn)

Metical exchange rates

Actual, 2006-13; projected 2014-16

US$ SA rand

40 6

30 20 *Spot rate, Dec 8th 2015

4 10 2 2006 07 08 09 10 11 12 13 14 15 16 THE AFRICA REPORT

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Jan Feb Mar Apr May Jun Jul Aug Sep Oct NovDec*

SOURCE: BANK OF MOZAMBIQUE

SOURCE: WORLD BANK 1994-2013; IMF/AFRICA REPORT 2014-21

(2015)

De Araújo argues that Guebuza was more interested in the political symbolism of projects and careless about their costs. “The interests of the ruling party were elevated over the state, and so the party was strengthened and the state weakened. Public investment projects had to be useful to the party elite. We have so many big projects now because these are the easiest way to distribute benefits,” he says. The largest and most expensive sovereign liability is the Empresa MoçambicanadeAtum(Ematum)statefishingcompany and related naval contract backed by a $850m commercial bond that was Mozambique’s debut on international capital markets in 2013. Questions over a lack of transparency and alleged irregularities include that it was negotiated in secret outside of normal government channels – neither parliament or cabinet were informed – and with the involvement of close associates and family of former president Guebuza. The bond has had disastrous consequences. Ematum is unviable as a company and cannot service its debts, which have been taken on as a public liability. With that move, Mozambique’s annual debt-service bill doubled overnight to $400m. Some donors ended budget support entirely or cut aid over concerns about corruption and fiscal irresponsibility. The government is in talks on restructuring the loan, something Standard and Poor’s Rusike says would “mean a commercial default”. The ratings agency downgraded Mozambique in July and assigned a negative outlook, with an

POLITICS

Ematum default being a possible catalyst for a further downgrade. The consequences of a credit binge and years of ignoring macroeconomic advice came together in the last quarter of 2015 in an economic crisis that has still to reach its peak. In October, the authorities were forced to turn to the IMF for a $284m bailout package. Balance of payments problems were worsened by a first, $100m, payment to Ematum bondholders in September and another is due in March. Falling foreign reserves and foreign exchange scarcity have led to a currency crash, including a 21% fall for the metical against the US dollar in one week in late November when the central bank was said to have temporarily run out of dollars. DOWNHILL ALL THE WAY

budget involving fiscal consolidation estimated at 2% of GDP. The government has also acted to patch up relations with donors and halt the decline in foreign aid. The efforts have been well received, and early budget support commitments for 2016 at $312m are already up on the $273m of 2015. According to one Westerndonorwithmuchexperience in Mozambique, the present reset with Nyusi is a final opportunity: “The country now has a window of about five years to put in place the systems and financial controls to account for resource wealth.” Thequestionis,shouldNyusibeinterested, could the slump in revenue be used as political cover for an anticorruption drive? It is a vulnerable period for those in Guebuza’s camp. However, it is unclear that Nyusi has control over the military, let alone the police and judiciary. Some members of his Makonde ethnicity – with a group led by Alberto Chipande –

The metical depreciated 64% in nominal terms against the dollar in 2015 – one of the worst records of any developing-market curThe defence minister’s public rency. Even against dressing down shows Nyusi the South African preparing to assert himself rand, the currency of Mozambique’s believe they are owed something dominant trade partner and also for their electoral support and are one of the weakest global currenpushing for spoils. For those lookcies, the decline was 32%. ing for positive signals, the public Savana publisher Lima adds: “There were voices in Frelimo quesdressing down of defence ministioning these policies, but they were ter General Atanásio Mtumuke, ansilenced. [Guebuza’s] party leaderother Makonde, shows that Nyusi is ship style created a chorus of appreparing to assert himself. He will proval around his decisions, which need to control Frelimo’s top body – the political commission, which were celebrated, not questioned.” Nyusi’s government, now facing is currently packed with Guebuza mounting debt and a funding gap, loyalists – before he can unpick the web of state corruption dragging the is pursuing economic stabilisation with the IMF. Negotiations are under country down. ● way over tough targets in the 2016 Douglas Mason in Maputo

Public investment loans Project

Source

Maputo airport China Maputo ring road China Catembe bridge China Maputo power supply India Nacala airport Brazil Maputo public transport Brazil Nacala industrial free zone Brazil Moamba dam Brazil Ematum fishing BNP Paribas/ company Credit Suisse Cahora Bassa dam, Crédit Agricole nationalisation

Amount, US$m

67 300 725 250 144 135 40

Total 3,686

475 850 700 SOURCE: IMF/AFRICA REPORT

OPINION

Jose Ivo Correia Researcher, Centro de Estudos Moçambicanos e Internacionais

Credit Suisse’s fishy deal

cquiring debt is not necessarily a bad policy. Most of Mozambique’s recently acquired debt was supposed to help set up a productive base, to diversify the economy and to promote economic linkages in the country, rather than promoting private interests, financial speculation and real-estate rent seeking. The loans have hurt the government but have benefited players inside and outside of Mozambique. Three-quarters of Mozambique’s debt has been allocated to the $850m bondforatuna-fishingcompanyanddefence equipment, $725m for the Maputo-Catembe bridge leading to a remote area and a $300m contract for digital migration awarded to StarTimes, a company headed by the former president’s daughter, Valentina Guebuza. But what about the role of Credit Suisse in the fishy deal that will cost hundreds of millions of Mozambican tax revenue to repay? Credit Suisse raised a $500m bond for a month-old state-owned tuna-fishing company with no declared board of directors or established premises at the time. Despite concerns about transparency, the Swiss bank went ahead with the deal, as a state guarantee made the bond without strings attractive. The bond was oversubscribed, and Russian bank VTB raised a further $350m. Credit Suisse told Bloomberg in 2014 that “there are no weapons or combat systems of any kind” in the deal. Today, revelations suggest that most of the tuna money went for defence equipment instead of the promised fishing vessels. As the tuna company looks likely to default, finance minister Adriano Maleiane has come forward proposing a restructuring of the interest rates and repayment dates, but other questions are being asked such as where did the money go, who should be prosecuted and what role Credit Suisse and the backers of the tuna bond played. ● THE AFRICA REPORT

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NIGER RENAISSANCE PROJECTS

> Niamey, the capital of Niger.

ADVERTORIAL

early five years have gone by since the launch of the Niger Renaissance Programme, the social project that led to the election of Mahamadou Issoufou as President of the Republic in 2011. Under his leadership, the Government of National Unity, which brings together the will of all parties, has made major progress. The country has also succeeded in maintaining security and stability across its vast territory and acquiring a positive image in the eyes of the world. Having embarked on a policy of structured economic development, the country continues to consolidate its efforts to improve the quality of life of its 17.8 million people. Better governance and the fight against corruption, as well as a profound change in mentality, the work ethic and the attitude towards public funds are the new challenges Niger faces.

ÂŠ SIA KAMBOU

NEW

NIGER NEW RENAISSANCE PROJECTS

> The Kandadji hydroelectric dam will come into operation by 2017 at the latest.

Niger Renaissance Programme review

Roads and power plants

Health, education, infrastructure, agriculture, personal safety and food security and Niger’s return to the international arena with a greatly improved image, bolstered by the headway it has made in counter terrorism: this admirable progress can be attributed to the Niger Renaissance Programme, a social project launched by President Mahamadou Issoufou when he took office on 7 April 2011. He reports annually to the nation, on the anniversary date of 7 April, detailing the progress made and the projects for each of the Programme’s eight priority areas (see box).

By maintaining the peace across its immense territory, Niger plays a fundamental role in fighting the spread of terrorism.

Niger’s progress in terms of security for people and goods throughout the territory has been hailed by the international community (point 2 of the Programme commitments). Niger is the third largest country in sub-Saharan Africa and, on the ground, securing 5,700 km of border and nearly 2.3 million km2, of which more than half is desert, is a real achievement. Despite the situation in Mali and Libya and the Boko Haram terrorist attacks, the country is at peace. Niger is an island of stability in the middle of a vast zone of war and anarchy. “We have taken steps to ensure that our defence and security forces are equipped to fulfil their missions. Today we have the best army in West Africa and Francophone Africa,” says President Issoufou. As the first civilian head of state since 1996, he did not hesitate to allocate significant resources to the country’s defence and security forces to improve their living conditions, their equipment and their effectiveness.

Mahamadou Issoufou President of the Republic of Niger. © VINCENT FOURNIER / J.A.

ADVERTORIAL

The “security bolt of the Sahel”

The country has also notched up significant results in infrastructure (point 6). The State implemented a policy of public works, with structural investments to encourage the advent of new activities. In the energy sector, major power generation projects have been completed or are nearing completion, including the Gorou Banda power station (100 MW), about 20 km from Niamey, and the Kandadji Dam (130 MW), on the river 180 km northwest of Niamey, which will be operational by 2017. Kandadji will have a positive impact on agriculture too and will promote the growing of food crops over 222,000 hectares. The country has also invested heavily in transport infrastructure. Over 3,000 km of roads and rural roads have been built or renovated. Work on the railway line connecting Niamey to Cotonou, in Benin, was launched in April 2014. Once operational, this link will enable the transport of freight and Niger’s minerals to the port of Cotonou, 1,000 km from Niamey.

Improving living conditions for Nigeriens Here, too, the progress is palpable, even though there is still much to do in this country that remains one of the poorest in the world. The economic momentum generated by the Niger Renaissance Programme, combined with well-controlled inflation (2.55% in 2014, below the criteria defined by WAEMU), allowed for a doubling of wages between 2011 and 2015 (point 3). The social aspects of the Programme, particularly in the areas of education and health (point 7), are committed to the construction of over 10,000 classrooms, of which two-thirds are already in use. The goal is to recruit 2,500 teachers and to

train as many each year, so that young people can study up to the age of 16. In addition, sustained efforts have led to the installation of modern water facilities to supply safe drinking water to nearly 4 million people, two-thirds of whom are in rural areas. Finally, the combined effects of economic recovery and public works have helped create 780,000 jobs for young people over four years (point 8), against the target of 250,000 per year set in 2011.

Economy and agriculture in good shape Niger has been an oil-producing country since 2012, which offset the downturn in the uranium market after the Fukushima disaster. Oil provides a reasonable source of income, with the country producing 20,000 barrels per day, of which 13,000 barrels are exported. Alongside the extractive industries, agriculture remains a strong economic base and is one of the priority areas in the Niger Renaissance

The economic momentum, driven by the Niger Renaissance Programme, enabled the doubling of salaries between 2011 and 2015.

Programme (point 4). As part of the “Nigeriens Nourish Nigeriens” initiative (3N), the sector benefited from significant investments to improve grain production, develop new farmland through re-cultivation or irrigation, distribute seeds to increase food and vegetable crops and modernise farms by distributing new equipment (vehicles, motorised pumps and tractors, etc.). The results speak for themselves. The era of recurrent famines that forced the country to access emergency aid is over. Niger’s agriculture can enter a new phase of development, with the aim of exporting its agricultural products and livestock and developing agro-food processing plants.

Strengthened institutions for the Republic “Niger is not a poor country, far from it. But it is a poorly managed country.” This was said by President Mahamadou Issoufou in March 2011. His consequent action is in keeping with the spirit of the Constitution of the 7th Republic, adopted by 90% of Nigeriens in November 2010, and is aimed fully at achieving the fundamentals: good governance, food security, international openness, economic development and respect for basic freedoms. Those who are familiar with Niger can only be struck by the quality of the planning documents and > Sustained efforts have resulted in the supply of drinking water to around 4 million people, of whom two-thirds are in rural areas.

COMMITMENTS OF THE NIGER RENAISSANCE PROGRAMME LAUNCHED IN 2011 n 1. Build strong, credible and sustainable

n 5. Guarantee access to drinking water for

democratic institutions.

all through the rehabilitation and building of

n 2. Guarantee the safety of people

urban, rural and pastoral water supply facilities.

and goods across the entire country.

n 6. Develop infrastructure and the energy

n 3. Restart the economy and

sector through investing in roads, rural

promote social development through

roads, electricity and railroads.

public investment.

n 7. Significantly improve social indicators

n 4. Guarantee food security through the

(education and health).

3N Initiative (Nigeriens Nourish Nigeriens).

n 8. Create jobs, especially for young people.

NEW RENAISSANCE

NIGER

PROJECTS

ADVERTORIAL

New impetus for the “Renaissance” For President Issoufou, Niger still has a long way to go before achieving a level of economic development that will enable it to meet more than the just the basic needs of its population. The new goal set for the coming years is the continued improvement of the economy and the increased buying power of Nigeriens to enable them to be part of the modern world. This obviously involves new challenges, which he fully intends to meet. This is reflected in all his speeches to the nation. During his inauguration in 2011 he said “We will focus on governance and the fight against corruption.” In his speech at the 56th anniversary of the Republic, a year ago, he confirmed that “The Government must develop an awareness and mass education programme to teach our citizens how to make the most of their time and instil in them a culture of development, productivity and, thereby, progress.” Mahamadou Issoufou is now determined to achieve a profound change in the national mentality. To build a cultural base capable of supporting the development ambitions of an entire nation. Niger’s Renaissance is being taken to a new dimension.

> Over 3,000 km of roads and rural roads have been built or renovated.

WELL RANKED IN THE MO IBRAHIM INDEX Niger scored well in the seventh edition of the Mo Ibrahim Index of African Governance (IIAG). The IIAG evaluates all 54 African countries according to 93 criteria in four categories: safety and rule of law, participation and human rights, sustainable economic opportunity and human development. These scores are used to reach an overall assessment, a true ranking of the quality of governance, in which Niger is ranked 33rd out of 54 states, ahead of Côte d’Ivoire, Cameroon, Burundi and Nigeria. In detail, while

Teach citizens how to make the most of their time and instil a culture of development, productivity and, thereby, progress.

the country dropped a few points in terms of national security due to terrorist attacks in the Southeast, it scored well in the areas of personal safety (20th out of 54), participation and human rights (20th), business environment (19th) and the conditions for sustainable economic development (29th).

balance sheets produced by the administration. The same balance sheets confirm the establishment of all institutions of the Republic, with all the means necessary for their operation: the Economic, Social and Cultural Council (CESOC), the Court of Auditors, the Constitutional Court, the State Court, the High Council on Communication (CSC), and the National Council for Political Dialogue (CNDP). The status of the opposition is well defined and implemented. Niger is also one of the few African countries to have created a substantial Fund for the Aid of the Press. These developments, which take pride of place in the Niger Renaissance Programme, have contributed to enhancing the visibility of the country on an international scale which, in turn, has led to Nigerien officials taking up responsible positions within regional and international institutions such as NEPAD, the CEN-SAD and the G5 Sahel. The recognition of the African Union resulted in Niger being selected to host the 2019 AU Summit.

POLITICS

ANALYSIS

UGANDA

Museveni marches on o State intimidation was high ahead of February’s presidential elections

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DANIEL HAYDUK/AFP

his has not been your usual political brawl. If anything, hi the preparations for Uganda’s 18 February national elections – a battle mainly between three former comrades – were a narrative of a revolution that has nearly come full circle. Friends, family and foes switched sides in a stiff contest for power, with some claiming the country was slipping back to the dark days of impunity and misrule. After three decades in power, President Yoweri Museveni, 71, was set to face his former doctor, Warren Kizza Besigye of the Forum for Democratic Change, at the ballot for the fourth time. But it was a new challenger in form of the witty and calculative John Patrick Amama Mbabazi, Museveni’s close confidant since the early struggles against the Idi Amin regime of the 1970s, who threw the ruling National Resistance Movement (NRM) out of its its comfort zone. Originally intending to run against Museveni for the party’s presidential nomination, Mbabazi ended up standing as an independent. It would be a game changer if the former prime minister came out with more than 20% of the vote. That would mean that he enjoys quite some support within the NRM. In the end, the elections saw the emergence of supporters who thrust the different presidential candidates in the limelight while they themselves wrote their own scripts. Businessmen such as Patrick Bitature of the Simba Group, who, in the previous elections, preferred to stay in the shadows, came out in favour of Museveni as the stakes grew. Butnoonebecameabiggerdefiningfactor years and four elections of the electoral period than Kale Kayihura, have passed the inspector general of police. Mbabazi since accused the police chief of overstepping his Museveni mandate when he warned the challenger became against holding meetings before a party had President endorsed him as its flag bearer. of Uganda Supporters of Besigye and Mbabazi also faced running battles with police. Mbabazi penned a letter to the Electoral Commission in January saying many had been arrested and some killed. One name that featured prominently was Christopher Aine, his head of security, who went missing in December. Aine, a son of one of Museveni’s former guerilla fighters and a former official of the Special Forces Command, became a poster child of suspected state brutality when a graphic picture of a corpse that looked like him made the rounds on social media. Where Kayihura delivered bare-knuckle punches to the opposition, Lieutenant General (retired) Henry Tumukunde – a former spy chief who spent more than seven years under court martial on charges of spreading harmful propaganda –

Yoweri Museveni knows how to lose friends and influence people

used soft barbs to defuse the opposition’s campaigns. Opposition officials, especially in Mbabazi’s camp, complained that Tumukunde offered cash handouts to dissuade potential supporters from attending Mbabazi’s rallies. In one incident, Tumukunde’s helicopter landed at a rally where Mbabazi was expected, ramping up passions. When the elections are over, the biggest test will be how strong the NRM will turn out to be as the courts prepare to deal with all kinds of lawsuits surrounding the outcome of the elections. The evidence and possibly the court rulings in the weeks ahead will help shed more light on some of the underhand strategies that politicians used to win the vote. And yet, nothing will concern the NRM more than the issue of loyalty within the party. The party will have to find a solution on how to deal with some of its members who lost at the primaries but went ahead to stand as independents and won

POLITICS

a seat in parliament. Winning over this bloc of independent legislators will be crucial as the opposition politicians get to the next stage of what could be the most defining period of Uganda – avoiding the scenario of a life presidency. A debate surrounding the post-Museveni era, especially as the constitution places a 75-year age limit on a candidate, is now likely to emerge as a critical issue for the party and the country. ● Jeff Mbanga in Kampala

Division in the forces is worrying Mugabe

ZIMBABWE

The long goodbye Veterans enter the fray as the succession battle heats up

resident Robert Mugabe turns 92 years old in a month’s time and still his ruling Zimbabwe African National Union-Patriotic Front has no clear succession plan. Now the battle for influence is spilling over into the armed forces and influential war veterans’ associations. The aged leader has been at the helm of the party since 1977, and of the country since independence in 1980. His wife, Grace, who is seen as a possible heir-in-waiting, explains: “Mugabe shall continue ruling this country even if we place him in a wheelchair.” Gripped by uncertainty, Mugabe’s followers have intensified their fight to gain influence, with various names, such as General Constantine Chiwenga, vice-president Emmerson Mnangagwa and his rivals in the group known as Generation 40 (G40), thrown in the boiling pot. The President’s divide-and-rule tactics have long worked in his favour, but this time a worried Mugabe admitted during the December ZANU-PF conference that the infighting had divided the uniformed forces. The main battle is essentially between Mnangagwa, touted as the incumbent’s heir apparent, and the G40 faction that thrives on smoke and mirror tactics. The G40 counts among its backers Mugabe’s nephews – flamboyant Phillip Chiyangwa and indigenisation minister Patrick Zhuwao – and outsiders like Saviour Kasukuwere and Jonathan Moyo, who are trying to propel first lady Grace to the helm of the country in the event that Mugabe dies in office or resigns.

TSVANGIRAYI MUKWAZHI/AP/SIPA

The G40 left the December party conference confident because ZANU-PF adopted the gender quota system it was fighting for to consolidate Grace’s power in the party hierarchy. To strengthen her ascent, she would need the support of the uniformed forces, most of whom in the top leadership are the former freedom fighters known as ‘war veterans’. War veterans see themselves as the party’s kingmakers. As Grace does not have any independence struggle credentials, the G40 has sought to change the leadership of the Zimbabwe National Liberation War Veterans Association (ZNLWVA). War veterans who spoke on condition of anonymity hinted that the G40 was behind the ousting of war veterans minister Christopher Mutsvangwa from the party a few days after the December conference for resisting Grace’s sudden political rise. A source at the ZNLWVA who requested anonymity explained: “There is talk of a formation of a splinter war veterans association called the Zimbabwe War Veterans Heritage Trust. Mutsvangwa, a close ally of Mnangagwa, is likely going to resist beingoutmanoeuvred,effectivelysplittingtheuniformedforces.” Mnangagwa commands a lot of respect in the armed forces, though less among ordinary party supporters and Zimbabweans at large. The fight for hearts and minds in the security forces will not be so easy though, says political analyst Pride Mukono: “One sector of the military is sympathetic with ousted former vice-president Joice Mujuru, now interim leader of a new ZANU-PF splinter group calling itself People First. The support continued to grow over the years following the mysterious death of her late husband, retired general Solomon Mujuru, again in what some believe was [an incident] linked to the succession battle in 2010.” ● John Cassim in Harare

SOUTH SUDAN

Piecemeal peace Salva and Riek are slowly working towards resolving their differences

hen a team of South Sudanese rebels returned to Juba in December after two years in exile, their flight arrived so much later than scheduled that staff at the unlit airfield had to haul out emergency lighting to guide the plane to a safe landing. The delayed arrival was a fitting metaphor for a peace process that seems to drag itself to the point of collapse before making tentative steps forward. President Salva Kiir, an ethnic Dinka, and his former vicepresident Riek Machar, a Nuer, signed a peace deal in August last year aimed at ending two years of civil war that killed tens of thousands of people, with both sides accused of war crimes. Months of violence followed the signing, at least the seventh agreement the two men signed and broke throughout the war, but the August deal may finally be taking hold. Since the new year, fighting has noticeably reduced in the main theatre of the oil-producing Greater Upper Nile region. And, in a key development, Salva and Riek split up the country’s ministries in January ahead of the formation of a proposed power-sharing government. The transitional government is meant to last three years before fresh elections. THE AFRICA REPORT

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POLITICS

There are still many obstacles. For starters, trust between the parties is low after years of bloodshed. “Everybody is pledging that they intend to abide by the peace agreement,” says Festus Mogae, a former president of Botswana and head of the Joint Monitoring and Evaluation Commission (JMEC), a body meant to oversee implementation of the peace accord. “The problem is what often happens on the ground is maybe inconsistent with what they have said,” Mogae tells The Africa Report. He also bemoans the sluggish pace, noting almost every deadline set by the August deal has been missed. That has left room for mischief from many possible spoilers. There are more than two dozen armed groups in the country and already a new military front has emerged in the country’s west. There are significant political stumbling blocks as well, including uncertainty over the future of the factioned ruling party, the Sudan People’s Liberation Movement, to which both Salva and Riek belong. On both sides, there are tensions between camps who want the party reunited and those who prefer to see it permanently split.

Meanwhile, an order by Salva to create 28 new states and appoint his loyalists as their governors has rankled the rebels, who signed for peace with a guarantee they would get power in some of South Sudan’s original ten states. Mogae says the order is a violation of the peace deal, and hardliners on Riek’s side are threatening to renege on peace if Salva does not rescind it. There are also longer-term economic worries. Both sides need to pay their generals and put tens of thousands of soldiers into civilian jobs, but the country is almost broke thanks to plummeting oil prices and South Sudanese oil output being reduced by half due to fighting. “The big challenge to implementation of this agreement is the issue of resources,” says Dhieu Mathok, secretary general of Riek’s faction. “That is why things are not moving.” The JMEC is short on funds, too, as well as hardware like helicopters needed to send its monitoring missions to hotspots of violence. Weak monitoring hurt the previous failed peace deals, something Mogae is keen to change, but he will not be able to do so without donor help. ● Jason Patinkin in Juba

ANANSI Friends and neighbours

Town and country ACTIVISTS REGULARLY QUESTION Ethiopia’s democratic credentials, pointing at large population displacements to make way for agriculture projects or the Addis government’s intolerance of opposition. In December and January, the government tried to quash angry protests in Oromia, home to Ethiopia’s largest ethnic group, against plans to expand Addis Ababa’s territory. The government finally made a U-turn, but not before labelling the protesters violent destabilisers and myopics content on fomenting inter-ethnic clashes. How Prime Minister Hailemariam Desalegn’s government finds a balance between the capital’s growth and the wishes of the people who live around it should give an idea of whether governance in the fast-growing authoritarian state is undergoing a quick fix or a more fundamental rethink. THE AFRICA REPORT

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RELATIONS BETWEEN Côte d’Ivoire’s President Alassane Ouattara and the new government in Burkina Faso have started badly. Around the time that Ouattara posed for photos with deposed Burkinabe president Blaise Compaoré (subject of a Burkinabe arrest warrant), Ivorian national assembly president Guillaume Soro received word of an international arrest warrant out for him. In leaked recordings between two men said to be Soro and Burkina Faso’s former foreign minister Djibril Bassolé (now in prison), there is talk of organising a September 2015 coup attempt in Burkina Faso. President Roch Marc Christian Kaboré would like to investigate further.

Provoked by Paris A SERIES OF EVENTS IN PARIS have riled Gabon’s President Ali Bongo Ondimba’s government, which is up for re-election in August. The latest was French prime minister Manuel Valls’s suggestion in January that Bongo was not fairly elected in August

2009. Prior to this, in August 2015, the French authorities arrested Bongo’s cabinet director Maixent Accrombessi in a corruption investigation involving French uniform-maker Marck. Accrombessi ally and businessman Seydou Kane was the next to be arrested and released. Libreville recalled its ambassador in January, and the frosty relations are set to continue.

Out for the count KENYAN PRESIDENT Uhuru Kenyatta has so far failed to squeeze any political mileage out of the 15 January Al-Shabaab rebel attack on a Kenyan army base. As The Africa Report went to press, Nairobi had issued no casualty numbers, while Al-Shabaab said more than 100 troops were killed. Kenyans looking to globe-trotting Kenyatta heard nothing but an open-ended commitment to fight terror. However, this comes at a time when the African Union is in disarray and Al-Shabaab risks splitting over rival allegiances to Al Qaeda and IS. The Kenyan and other forces in Somalia will have to come up with more detailed plans to address a worsening situation. ●

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COUNTRY FOCUS Nigeria

REUTERS

Smiles soon faded after the 2016 budget was presented

Buhari’s big bet In the face of lower oil revenue and a feisty national assembly, President Buhari has ambitious plans to reform the economy and the oil sector in particular. His success will depend on his talent for horse trading, political communication and day-to-day politics across Nigeria’s government systems By Patrick Smith in Abuja

THE AFRICA REPORT

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lisaMetuh,hishandsmanacled together, stepped downgingerlyfromthepolice lorry outside the Federal High Court in Abuja into the full glare of a phalanx of photographers. At first, he seemed uncertain whether to play the persecuted victim or shield himself from a band of determined reporters throwing questions at him. Looking dazed as he stared at the crowd, Metuh was hurriedly steered towards the court entrance by his police escorts. Metuh, the national publicity secretary of the former ruling People’s ● ● ●

COUNTRY FOCUS | NIGERIA

NIGER

CHAD

Kano ABUJA

NIGERIA Lagos Port Harcourt

CAMEROON

Gulf of Guinea NIGERIA IN NUMBERS POPULATION

47%1

LIFE EXPECTANCY AT BIRTH

52.92

INFANT MORTALITY (per 1,000 births)

72.72

FDI, INFLOWS (current US$)

$4.7 billion3

GDP (current US$)

$568.5 billion1

GDP GROWTH (annual %)

6.3%1

INDUSTRY, VALUE ADDED (% of GDP)

24.2%

INFLATION, CONSUMER PRICES (annual %) 8.1%1 MOBILE CELLULAR SUBSCRIPTIONS (per 100 people)

781

SOURCE: WORLD BANK 20141, AFDB 20142, UNCTAD 20143

177.5 million1

URBAN POPULATION (% of total)

PROFITABILIT Y (%) 3.5

Return on assets

3.0

2.5

2.0

1.5 1.0

RIGHTEOUS INDIGNATION

Return on equity (Right-hand scale)

0.5

0.0

2013 2013 2014 2014 2012 Q1 Q3 Q1 Q3 Q3 Note based on the reported financial statements of the seven largest banks in Nigeria

EXPORTS (% of GDP) 40 30

To China and India To the US

To rest of world To the EU

1995

2005

2010

2013

SOURCE: IMF

Democratic Party (PDP), is facing charges of fraudulently diverting N400m ($2m) of state funds. After being detained for three weeks by the Economic and Financial Crimes Commission (EFCC), Metuh was escorted to court for a first hearing on 19 January and he secured bail with sureties of N400m. But two days later he was back in custody, accused of destroying his own confession statement. This is part of a torrent of fraud cases being pursued by the EFCC under its new head, Ibrahim Magu. Top PDP officials say this is a witch hunt, but popular anger at these revelations is growing, with little sympathy for the accused. For now, such gripes have little resonance with the tens of millions of people who are struggling in Nigeria’s worst recession in a decade and a half. In the short term, revelations of grand corruption by the former government of Goodluck Jonathan and its business allies are giving President Buhari’s team some breathing space. A senior official in the presidency explains: “The figures are staggering [...]. You now have Colonel Sambo Dasuki, the former national security adviser, accused of diverting $2bn intended for arms purchases into a political slush fund to help Jonathan’s PDP election campaign last year.” On top of this, he added, there is another arms procurement scandal that cost the state a further $2bn and involved 10 generals and a colonel. “This is fraud of the worst kind,” the official continues, “hobbling the efforts of the military to fight Boko Haram and protect people caught up in the insurgency in the north-east.” ●●●

300 km

BENIN

Another set of political scandals under investigation,announcedalmostgleefully by information minister Lai Mohammed, involves the illicit diversion of N1.34trn by 15 former state governors, four former ministers, eight bankers, 11 businessmen and 12 former civil servants. Added to these are another set of deals that are specifically linked to the oil and gas industry: some $20bn of oil revenue not transferred to the federation account at the central bank from 2013 to 2014 and an additional $10bn in overpayments on service charges to international oil companies and the illicit granting of tax waivers to these companies. Righteous indignation is running high as investigators plough through accounts and testimony from witnesses, but the

Olisa Metuh, publicity secretary of the PDP, appeared in court in January charged with embezzling N400m – just one of a dazzling array of corruption cases

chieftains of the former ruling PDP are not sitting on their hands. As the succession of arrests and court appearances of top PDP officials played out in Abuja in mid-January, the PDP organised its own diversion and accused the Buhari government of mismanaging the announcement of the 2016 budget and breaching the constitution in the process. It seems that, under pressure to meet the end-of-year deadline for the budget speech to the national assembly, some departmental estimates were featured in Buhari’s presentation on 22 December without thorough checking. Somewhat embarrassingly, these included generous expenditure on cars for the presidency. Once Buhari saw these, he called for an immediate revision and struck them out. The revised copies were not immediately available to the assembly, at which point Buhari’s foes there, who include most of the PDP caucus and a group of governing All Progressives Congress (APC) senators who back Senate president Bukola Saraki, plotted to gain an advantage from the bureaucratic foul-up. Within days, newspapers and TV stations were running investigations into the “missing budget”, with the PDP calling for Buhari’s impeachment. After days of confected drama, the crisis was defused by a letter of explanation from THE AFRICA REPORT

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NIGERIA | COUNTRY FOCUS

prices, now at a 15-year low, which have plunged the economy into recession. He added that the government’s resistance to a further devaluation of the naira was based mainly on the inflationary consequences of such a move. He strongly endorsed the central bank’s restrictions onaccesstoforeignexchange,whichhave frustrated foreign businesses and some of Nigeria’s elite. “The foreign-currency restrictions cannot be lifted because the money is not there,” he said. But Buhari insisted foreign exchange would be allocated to buy “essential materials” for “productive industries” but not to “those who want to import rice and toothpicks.” SCHOOL FEES

SAHARA REPORTERS

By mid-January, the government had clamped down further on foreignexchange allocations by ending the supply of dollars and euros at the official rate of exchange to the networks of bureaux de change across the country. A horrified official explained that the country had been spending as much as $280m per quarter on school fees overseas. Buhari argued that the country’s oilare well acquainted with the legislature dependent economy has been failing to and its denizens, but are not close to serve the majority of its people. He said his government would pursue and fund Buhari. However tricky it may prove, social welfare policies that will protect shoring up relations between Buhari the poorest from the recession while reand his party will be essential to build structuring the economy and ending the support for the government’s more chronic dependence on crude oil exports radical legislation. for some 60% of state revenue. Within Political insiders in Abuja suggest days of Buhari’s 1 January media briefthat some of the posturing by national ing, international oil prices assembly members may be had dropped below $30. The an attempt to get the Buhari budget for 2016, based on esgovernment to slow down timatesproducedlastNovemits anti-corruption drive. ber, was premised on an oil Certainly, retrieving much price of $38 per barrel. of the stolen money is likely Whether or not oil prices to be a tortuous process, inbounce back, the N6trn volving lengthy cases, often The Nigerian stock budget – a 15% increase on in foreign jurisdictions. Solid minerals minister Kayode the previous year’s – is a bold market has Fayemi explains: “I don’t see bet on boosting economic dropped by more much scope for any kind of growth by investment and than a fifth since plea bargain deal to cut short countering the recession. the start of 2016 that kind of process […]. The SOURCE: NIGERIA STOCK An earlier version had proEXCHANGE/QUARTZ important point is that the posed still more spending, investigations and any proof the order of N7-8trn, unsecutions must be scrupulously fair and til the bad news about the oil market independent, but these are matters for forced a rethink. the police and the judiciary. The govThe budget’s Keynesian strategy inernment is concentrating on implecludes an emphatic shift from recurrent to capital spending, mainly on gas, menting the policies in its manifesto.” electric power and transport projects. As President Buhari explained in a Part of the finance for these expansionNew Year’s Day media briefing on teleary programmes will come from the vision, the first order priority is for the governmenttorespondtoplummetingoil $25bn energy fund announced ● ● ●

Buhari to Saraki to be read out on the Senate floor on 19 January. The incident put Buhari’s team on notice about the constitutional obstacles that the national assembly can create. If it had refused to accept the budget, it could have blocked the government’s spending plans for months. Indeed, one explanation for the crisis was that Buhari’s office had refused to pay the customary – and exorbitant – facilitation fee to the Senate to print the budget. Without some better working arrangement between the presidency and the assembly, there will be more run-ins. After the January exchange of words, the government’s plan to push through its bill to reform the state-owned Nigerian National Petroleum Corporation (NNPC) within the first quarter of this year now looks over-optimistic. Under presidents Jonathan and Umaru Yar’Adua, the assembly delayed a bill to reform the NNPC for six years. TECHNOCRATS

One of the problems is that Buhari and his immediate circle have little time for politicking. His advisers and ministers are predominantly technocrats with little appetite for slugging it out with parliament. The cannier APC politicians – such as former Lagos governor Bola Tinubu and former vice-president Atiku Abubakar – THE AFRICA REPORT

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21%

by vice-president Yemi Osinbajo last December. Osinbajo, who has a coordinating role on economic strategy, also announced a N500bn social protection scheme for the poorest 20% of the population. However, the new budget assumes about N2trn of fresh borrowing, half of which will come from the local market and the rest will be raised internationally. That will partly be through floating a sovereign bond and the rest will come from Asian and Middle Eastern lenders. There are important plans to expand taxation and strengthen cost-cutting measures, but the government’s urgent priority is to boost revenue to support its expansionary budget. A higher oil price would help hugely. Emmanuel Ibe Kachikwu, deputy oil minister and managing director of the NNPC, is pushing for an extraordinary summit of the Organisation of the Petroleum Exporting Countries in February. But although a more stable market and higher prices – Kachikwu optimistically reckons that prices could be back around $50 per barrel by mid-year – would provide some respite for economic managers in Abuja, it will not fix the oil industry crisis. The mathematics are undeniable. Since March 2014, the Nigerian government’s revenue from oil has fallen by a third: to $4.3bn from $6.6bn per quarter. Crude oil production has also fallen: to 2.05m barrels per day by the end of 2015 from 2.21m in mid-2014.

After a violent, disrupted election Dickson prevailed

Bayelsa – the bellwether state The January victory for the PDP shows that the former ruling party can still be a potent force

t was the first big test of Nigeria’s It was a high-stakes game. The democratic health after the draelection was marred by fighting, ballot snatching and allegations of malmatic national election in March practice from both sides. Such was 2015. The Independent National the violence and disruptions to the Electoral Commission (INEC) was distribution of ballot papers in the under a new chairman, Mahmood Yakubu, and the election for the govSouthernIjawareathatINECofficials suspended voting there until a supernorship of Bayelsa State, the home state of defeated President Goodluck plementary election could be held Jonathan, was due on 5 December. on 9 January. Although Dickson had wonintheothersixlocalgovernment In the new political landscape, areas, Sylva tried to galvanise voters Jonathan’s People’s Democratic Party has become a regional groupin his stronghold of Southern Ijaw ing, controlling states mainly in the to overturn his opponent’s victory. oil-producing Niger Delta and southTwelve people died in the state on east. Bayelsa’s incumbent governor, the 9 January polling day and many Henry Seriake Dickson, was seeking more were injured. Initially, both a second term on the PDP ticket. sides applauded the impartiality of Dickson’s opponent was Timipre the electoral commission, but after Sylva, a former PDP member who INEC announced Dickson the winhad also had a stint as Bayelsa ner, Sylva and the APC vowed to go governor but had fallen out with to the electoral tribunal. Jonathan and defected to the All Progressives Some PDP loyalists saw Congress (APC). A bareBayelsa as the beginning knuckle political bruiser, of a national comeback Sylva was convinced he could use the APC’s new power at the centre to bluster his For the PDP, the Bayelsa result way back to the governor’s mansion. was the first good news for many It did not work. Dickson tells The months. Some party loyalists saw AfricaReportthatafterSylvaemerged it as the first stage in the party’s naas the APC candidate, “we witnessed tional comeback. It may prove a disa massive movement of former PDP incentive to would-be PDP defect[members]scrambling to join the ors, especially those based in the party [APC] because of the opporparty’s strongholds. For Dickson, tunities they felt they would gain it reinforces the country’s political from the centre. But despite of all pluralism: “My victory is an indicathat and the use of so-called federal tion that Nigeria can never be a one power in the election, the people of party state.” ● Lindsay Barrett in Yenagoa and Patrick Smith in Abuja Bayelsa stuck to the PDP.”

GOV DICKSON OFFICIAL BLOG

●●●

WEAKENING DEMAND

That points to another oil industry blockage: the chronic lack of new investmentin exploration and production. Accordingto a new report from the Washington-based Atlantic Council, there is a weakening demand for Nigerian oil. This is shown partly by the slump and near cessation of United States purchases of Nigerian oil due to the rise of shale oil and a glut of light, sweet crude available to US refineries at highly competitive prices. Although Europe and Asia are mopping up much of the surplus Nigerian oil, the market is much more volatile as refiners look for deals on crude that give them the highest profits. The NNPC’s failure to run its own marketing strategy – it is the only major oil producer selling almost all its output to middlemen – has deprived the country of billions of lost revenue through poorly structured and corrupt supply deals. THE AFRICA REPORT

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NIGERIA | COUNTRY FOCUS

Gettingthehighestreturnsfromoiland allocation for the sector but says this gas exports in what could be a lengthy falls short of what is required to map Nigeria’s mining potential. “My prioritperiod of low prices would require both structural reforms and far greater NNPC ies are to clean up the licensing system accountability, according to Aaron Sayne and organise a road show to bring new and Aubrey Hruby, the US-based experts investors into the sector,” says Fayemi. who wrote the Atlantic Council report. “There have been some quiet successes: Nigeria is now self-sufficient in limeLike most advisory reports, it calls for stone and thanks to Dangote Inc., we the commercialisation of the NNPC’s are now a net exporter of cement.” operations but not the sale of its equity in oil fields. However, it does suggest the government sell Kachikwu thinks oil could much of its poorly managed go back up to $50 per barrel, downstream operations. Rebut that will not fix the crisis cent progress on business magnate Aliko Dangote’s A tougher nut to crack in Fayemi’s 450,000-barrel-per-day oil refinery and petrochemicals plant promises at last an portfolio will be the management and end to the costly, and sometimes highly restructuring of the Ajaokuta Steel Comcorrupt, refined fuel import deals. pany, with India’s Mittal trying to take But if the Buhari government is serover the plant. After billions of dollars ious about economic restructuring, it of investment in the steel mill dating will have to go beyond reforming the oil back three decades, it never produced sector to making a massive productive competitively. With the right plan, it push in two potentially lucrative seccould produce viable inputs for a wider industrialisation programme. tors: mining and agriculture. Much less problematic is agriculture, Solid minerals minister Fayemi has where increased production could save already secured a record budgetary

Experience the Progress.

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the country much of the money it spends on food imports. Audu Ogbeh, a veteran politician appointed agriculture minister, has launched a programme toplant more than two million cocoa trees. Buhari’s $4bn programme to rebuild the war-ravaged economy of north-east Nigeria is based on a massive revival of grain, nut and tomato production. This, like much else the government does, is taken seriously despite the revenue crunch. The north-east project is being managed under the auspices of former defence minister Theophilus Danjuma, nowabillionairebusinessmanwhochairs his own development foundation. Six months after Buhari was sworn in, there is still much goodwill for his government and its efforts against corruption and terrorism. But there is still far too little explanation about the government’s wider ambitions and what it might take to achieve them. Already, that communication gap has caused some ructions on the political scene. Failing to deal with such details could undermine the grander plan to remake Nigeria’s economy. ●

COUNTRY FOCUS | NIGERIA

INTERVIEW

Dimeji Salaudeen Head, Africa oil and gas sector, KPMG

The dance of the cost cutters The crash in the oil price is causing damage across the sector, but on the up-side it gives cash-rich companies a chance to take advantage of cheaper services, grab market share and rejig their business models for greater efficiency TAR: How will Africa be hit by cheap oil? DIMEJI SALAUDEEN: Virtually all of the players have had to find or are having to find creative ways for cutting costs right across the supply chain, including with service providers. At the same time, it’s a great opportunity to take a second look at your operating model, to take out inefficiencies. For companies that have a healthy balance sheet, service is cheap. You can get a significant discount to hire a rig compared to two years ago. So, for companies with the cash, this is a great time to pursue high-impact, high-value projects. Cash-rich companies can seize market share – is that what you’re saying? Absolutely. But Nigeria may not be a good example because of the other issues affecting the sector at this time. There has been a transition to a new government, and that government is yet to articulate its economic direction. The Petroleum Industry Bill has dragged through parliament for close to a decade. So there’s quite a lot of uncertainty. Because of those reasons, generally we’re not seeing activity at all in Nigeria. What about smaller indigenous operators that bought a lot of the downstream assets from international oil companies (IOCs)?

KPMG

It’s going to be tough for them. Before the end of 2016, you may begin toseesome shake-out in that sector. Shell sold high and made a lot of money because they sold when the oil price was at its peak two years ago. And then the business plans and the financial models that the buyers of those assets had did not envisage that the oil price would be at the level that it is today, so that’s one dimension. The other dimension is that the bulk of the financing of the acquisition of the assets actually came from the bank, including a sizeable chunk of it from the local banks. So basically the acquirers of those assets, we know that most of them

The indigenous operators that bought assets are struggling with working capital now are actually struggling with working capital right now. We know that most of them are struggling with meeting their obligations to the banks. And virtually all of them have had to actually go back to the banks and restructure their facilities on a longer-term basis. Of course, what that means is that their ability to mobilise the kind of capital expenditure that you need – working capital to optimise those assets and raise production levels – is significantly hampered. So there is a view in

the industry that perhaps one or two of them may have to find people to buy them or do some kind of consolidation. Any idea who looks the most likely to crumble? If you take a company like Aiteo, they bought OML 29, the Shell asset, which at peak can actually do in excess of 200,000 barrels per day[…].Therehavebeenreportsin the press regarding the true ownership of that asset. Nobody has the facts, but there are a number of political risks that may add to the normal challenge that all players face at this point. So it is difficult to predict who wins and who loses. What about the indigenous oil services companies like Ladol and Jagal Group? They are challenged because of the reduced activity. They are challenged because the IOCs are basically asking for better rates. So it is really tough for them as well. In the sector, they have to do some rationalisations. They have to ensure that they keep the costs within control. And that is something that has had the effect of rolling back some of the gains in terms of growth that had been experienced with the indigenous service segments in the past few years on the back of the local content regulation. ● Interview by Nicholas Norbrook

THE AFRICA REPORT

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SECURITY A new war against Boko Haram Buhari and his military chiefs have announced a new army division in the north to protect the former rebel-held areas, but the regional fight is not yet won

n January, the people of Baga, a city once home to 300,000 people in Borno State in the north-east tip of Nigeria, quietly commemorated a grim anniversary. It was a year since their city was sacked by Boko Haram’s fighters, who massacred some 2,000 people and almost levelled the place. Today, the city remains almost empty, with a few hundred former residents trying to re-establish their lives there. Kashim Shettima, governor of Borno State and a close political ally of President MuhammaduBuhari,sayshistoppriority is to rehabilitate the areas devastated by Boko Haram. He set up a special ministry for the purpose, which will get funding from the federal government. “Shettima is very focused on reconstruction and rehabilitation of the towns and villages in Borno,” says solid minerals minister Kayode Fayemi, “and that means reviving the economy and consolidating security.” The Baga massacre was the Islamist militia’s heaviest attack to date. It was one of a string of military successes that enabled Boko Haram to claim they controlled more than 20 local government areas – a region bigger than Belgium. Then, in a counter-offensive launched in January 2015– but shrouded in secrecy

and political intrigue – the army and air Buratai – had to shore up morale quickly force started to push back hard against in the armed forces after many years of Boko Haram, forcing the Islamists out of neglect and poor leadership. almost all the territory they had occuNow their strategy is to expand both pied. It took less than three months of the size and the skills base of the army. determined fighting against the militIn mid-January, Buratai announced ants, who built up their bases the formation of two new in the north-east over the divisions: the 6th division, previous five years. It was a which is to be based in the Niger Delta, and the 8th lightning victory that raised division, which will be many questions of its own. The number based in Borno State. of Nigerian former ARMS PROBE Much of the work of military chiefs Reforming the military has the new division in Borno and officers will be to consolidate conbeen one of the new governBuhari ordered trol over those areas that ment’s top priorities. One of to be investigated were previously held by President Buhari’s first acts for arms in government, on 24 August Boko Haram but are now procurement fraud last year, was to announce sporadically guarded by SOURCE: BBC a sweeping investigation of vigilante groups. Outside militaryprocurementoverthe the north-eastern state past five years, which had been running capitals of Maiduguri, Yola and Damat an average of $6bn per year. Buhari’s aturu there are continuing worries about security, ambushes and kidnappings. investigators have now identified what Buratai, who regularly makes surprise they claim to be fraudulent arms deals visits to troops in the field and leads them costing more than $4bn. Weeding out the corruption is only half on training sessions, is trusted and popthe story. Buhari, together with his new ular. Buratai and Monguno, who both team – national security adviser Major hail from Borno State, say they are well General Babagana Monguno and chief aware of the damage done to the army of army staff Lieutenant General Tukur by its poor human rights image. In a pioneering move, Buratai has asked the Nigerian Bar Association, which has a record of independent criticism of government, to examine complaints about the army’s human rights abuses. Although Boko Haram no longer controls vast swathes of territory, it launches sporadic attacks, usually against soft targets such as crowded markets and often using young suicide bombers. More than 50 people were killed in Borno and Adamawa states in a spate of such attacks in December and January. It is Nigeria’s neighbours Cameroon, Chad and Niger that now face the brunt of Boko Haram’s attacks. The next phase of the regional war against Boko Haram could prove the most difficult, given continuing problems in coordinating the region’s armies under the auspices of In Baga today a few hundred the Multinational Joint Task Force based former residents have returned in N’Djamena, the Chadian capital. ●

to try to rebuild their lives

STR/AFP

THE AFRICA REPORT

Patrick Smith in Abuja •

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COUNTRY FOCUS | NIGERIA

A bag of flour costs 21% more than it did a year ago

AKINTUNDE AKINLEYE/REUTERS

AGRIBUSINESS

Flour sector tests investor appetite Foreign firms are attracted by Nigeria’s sizeable middle classes, but companies in the flour sector are having a hard time of it as the competition heats up

he consistently long queues at the bakery of the ShopRite store at the Ikeja City Mall in Lagos says it all. Nigeria’s increasingly urban citizens want their food fast. And make it baked goods, please! Bread, cakes and pastries are hot right now. According to the United States department of agriculture, Nigeria imported 4.7m tonnes of wheat in 2014, mostly from the US and Canada – compared with 200,000tn in 1987. Only Egypt, the world’s largest importer of wheat, eats more wheat-based food than Nigeria on the continent. For a country that spent more than $5bn to import foodstuffs in 2015, food accounts for more than half of private consumption expenditure, which represents about 70% of Nigeria’s gross domestic product. That does not mean that the sector is shielded from difficulties. The current problems of the agribusiness sector are partly fuelled by the central bank’s withdrawal of foreign exchange approval for many imported items last year, which has depressed corporate and consumer spending. But that is not all. Robert Omotunde, consumer sector analyst at Afrinvest Securities tells The Africa Report: “Demand for flour is weak right now due to a plethora of issues […]. Margins in the flour business are thin and the industry is laden with

cost. Not too long ago, flour millers were investing heavily in capacity expansion, and the recent devaluation of the naira has brought more woes.” Investments by millers over the past two years have also meant that milling capacity for flour now exceeds demand. Even with uncertainty over near-term sales prospects and high operating expenses, Nigeria’s fast-moving consumer goods sector remains attractive to some foreign and local brands with a longer-term view. Singapore-based agribusiness company Olam estimates that the Nigerian flour market is worth more than $2bn per year and is growing at 3.5% per annum. PRICE OF FLOUR

Four companies – Flour Mills of Nigeria, Honeywell Flour Mills, Dangote Flour Mills and, until recently, BUA Group – control 80% of the flour market. Their recent financial results, corporate realignments and the skyrocketing price of bread inputs showcase the shifting realities of the market. Flour Mills of Nigeria, the oldest and most diversified of the quartet, recorded a 5% drop in revenue to $1.5bn last year. In January, the street price for a 50kg bag of the firm’s Golden Penny Flour rose 21% to N8,700 ($43). The same

bag retailed for around $33 for most of 2015. Joval Adeyinka, co-founder of BakeRite Confectioneries in Lagos says: “We bakers are at the receiving end of the strangulated economy. And you know there is a limit to how high we can jerk up the price of bread.” The heat is too much for some. For BUA Group, a total exit from the tumultuous flour operations is part of its plans to focus on its core cement and sugar business. Singapore’s Olam acquired the wheat-milling and pasta-manufacturing assets of BUA Group in Nigeria for $275m in January. Ade Adefeko, Olam’s corporate and government relations director in Nigeria, says:“This strategicacquisition will transform the local flour and pasta value chain and take our milling capacity in Nigeria from 2,380tn per day [TPD] to 6,140TPD.” The firm is also building a wheat mill and pasta plant in Port Harcourt. At the same time, other investors are pulling out of the market. South Africa’s Tiger Brands had spent $200m to acquire a 65.7% stake in Dangote Flour Mills in 2012. A buyback deal will see Dangote Industries getting back control of the flour and pasta firm for $1. An analyst who is close to the transaction tells The Africa Report: “A lot of things were wrong ab initio with that deal, and the South Africans clearly misread the operating environment. Poor due diligence, wrong valuations and possibly the imposition of a South African strategy on the Nigerian market did not help matters.” ● Muyiwa Moyela in Lagos THE AFRICA REPORT

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COUNTRY FOCUS | NIGERIA

MEDIA Nollywood’s French kiss Romance has blossomed between Nigeria’s iROKO and France’s Canal+, who have signed a multimillion-euro deal to distribute Nollywood hits in French via an app

ine people sit around the dining table. A deep silence holds the room, the only sound is cutlery scraping against plates. But when Tamara breaks the silence to announce her upcoming nuptials to her half-siblings, her sister Nina suddenly starts coughing and choking, apparently mocking her. You’ve iROKO is re-encoding its library guessed it: it’s a scene from the hit 2013 of Nollywood films to minimise data Ghanaian-Nigerian comedy House of costs for watching via the app Gold, in which the siblings, who have just learnt of their father’s terminal illness, try tohonourtheirdad’sdyingwishofstaying But the opportunities in French-speaking under the same roof for one week. Until Africa cannot be overlooked, says the iROKO team. Founder Jason Njoku says now, though, only Anglophone Africa couldgetthisonthemove.Butanewpartthat Francophones love Nollywood connership is due to change that, extending tent, and “you can take a Nollywood Nollywood’s finest to a French-speaking movie, dub it and it becomes one of the audience via a phone app. top movies on the big pay-TV networks Nigeria’s film- and TV-streaming comin French-speaking Africa.” pany iROKO and leading French pay-TV provider Canal+ will launch a subscripFILMS ON PHONES tionvideo-on-demand (SVoD)service for For its partner Canal+, the realisation Francophone Africa this year. Jacques du of Francophone Africa’s potential came Puy, president of Canal+ Overseas, the 20 years earlier, and it currently boasts foreigndistribution arm of Canal+ Group, nearly 2 million subscribers in several explains to The Africa Report: Central and Western African “The idea is to offer a very popcountries. But despite its relular SVoD service that will give ative lack of experience compriority to English-language pared to the French pay-TV African content from Nollyfirm, iROKO still holds sway. wood.” The service will be ac“Canal+ is a strong partner, cessibleviaanAndroidappand but it also respects that there users will download Frenchare some areas where a new emerging player can definitely dubbed Nollywood content The number bring some value to the table,” for a monthly fee. iROKO and of smartphones Canal+ announced the deal in across the entire says the British-born Nigerian entrepreneur. December last year. continent is set The duo are pinning their The launch into Franco- to soar by 2017 hopes on the current smartphone Africa, with its 250 SOURCE: DELOITTE phone boom in Africa for million people spread across the success of the iROKO and Canal+ 23 countries, is a big deal for the emerging Nigeria-based firm. Started in 2010, branded app, but they realise that it will take a while to make a profit. Du Puy says: iROKO – today the world’s largest online distributor of African content and Africa’s “It’s a medium-term investment which largest internet TV operator – has previI hope will become profitable fairly rapously only provided content in English. idly. We’re convinced that it will become

350m

PIUS UTOMI EKPEI/AFP

something very significant because the number of smartphones alone will explode […] and I believe our timing is right.” However, Africa’s VoD market is still in its infancy, and the pair will have to tackle a number of challenges. Russell Southwood, chief executive of London-based consultancy and research company Balancing Act, points out that 4G networks that provide better video streaming are not yet well established across the continent. “It’s a fundamental problem […]. The networks were never designed for data in the first place, and it has created significant constraints upon what is possible,” says Southwood. To sidestep this problem, iROKO has turned off streaming to focus only on optimised downloads for the app. Njoku says the company is currently re-encoding its library to reduce the size of a movie to between 50 and 100MB to help minimise data consumption costs. WiththearrivalofnewEnglish-speaking playersintheAfricanVoDmarket,iROKO’s entry into Francophone Africa keeps it a step ahead of its competitors. And as to whether it is time that other Nigerian companies stop sitting on the sidelines andjumpintoFrancophoneAfrica,Njoku says the big barrier is the language but companies will get there gradually. “On a company level, I think that it will just come with time. As Nigerian companies mature in their own markets, they’ll look fornewmarketsandtheobviousoneswill be those surrounding them.” ● Oheneba Ama Nti Osei THE AFRICA REPORT

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COMPANIES

How to thrive

BUSINESS The retail and utility sectors were the best performers in The Africa Report’s Top 500 companies this year – based on 2014 company results – while oil and mining showed weaknesses that will continue to influence their results in 2015 and 2016 By Martin Yeboah

S in 2016

tormy weather is on us. It may not be time to hit the lifeboats, but business leaders are certainly battening down the hatches. The International Monetary Fund now sees African growth at 3.8% in 2016 – well below the growth levels required for an African transformation. The companies in our Top 500 recorded a more than 4% drop in their turnover in 2014 – from $728.7bn in 2013 to $698.2bn in 2014. The trend is likely to continue due to the 2015 drop in commodities prices, which hurt the oil and mining sectors in particular. Likewise, slower growth undermines the ‘Africa rising’ story in which Africa’s demographic dividend and expanding middle classes power private economic growth across the continent. Former Ecobank chief executive Arnold Ekpe tells The Africa Report that “infrastructure should be seen as an emergency” and that both private banks and central banks need to support its development. He adds that Africa needs the double-digit growth that China once achieved for ‘Africa rising’ to be a reality. In the meantime, food and drink companies bemoan below-

expected 2015 revenues in major markets like Nigeria, driven largely by adverse economic conditions and the impact on local spending power and proclivity. The plight of our top company Sonatrach (#1), Algeria’s national oil producer, is well understood by chief executive Amine Mazouzi, who is desperately trying to rein in costs and boost production to offset the collapse in the oil price. TOO TIGHT TO MENTION

Even Africa’s richest man, Aliko Dangote, is concerned that global conditions and Nigeria’s fiscal crunch will limit the ability of his new $14bn Dangote Cement (#69) project to access the necessary foreign exchange, despite assurances from the Nigerian central bank. So how can corporates attract investment in the downturn? Improved governance would help. While Ekpe, drawing on his decades of banking and private sector experience, emphasises that in the main Africa’s companies should not be held to the same “over-flogged” corporate governance standards as their European or United States counterparts, the past year has seen more examples of scandal and missteps at major companies

BUSINESS TOP 500 COMPANIES

– and banks not in our Top 500 – that have prompted leadership changes, investigations, fines or undermined the confidence of lenders and shareholders. These include MTN Nigeria (#27)’s multibillion-dollar fines for non-compliance with local telecoms regulations and the 2015 travails of Morocco’s Samir (#24) refinery. However, in the perception of investors such malfeasance and error (and even Ecobank’s own management scandal back in 2014 under Ekpe’s successor Thierry Tanoh) continue to be overshadowed by corruption and unreliability at the broader government and state agency level. The need for a shake-up at the Nigerian National Petroleum Corporation (NNPC), beset by mass corruption investigations and uncertainty over Nigeria’s petroleum industry bill, is but one example, though this perhaps concerns the international oil companies more than it does home-grown companies seeking to benefit from a push towards local content.

Sector by sector Financial services $34.2bn -2.23%

Transport $31bn Telecoms $70.6bn

-7.47%

-3.71%

Mining -14.65% $49.6bn

4.89% 10.75% 4.45%

10.12% 7.11%

9.85%

Oil & Gas -9.41% $160.6bn

Agribusiness** -11.28% $58.6bn

8.40%

Total 2014 turnover

$698.2bn % change

Diversified -0.55% $68.8bn

Manufacturing* -7.16% $75.1bn

-4.19%

Other***

5.05%

$35.3 bn

4.54%

Construction $31.7bn

7.42% 4.42%

23%

Retail

1.02%

+16.4%

$51.8bn Utilities $30.9bn +17.67%

* Includes paper, steelmaking, electrical equipment, textiles, auto industry, chemicals & plastics

**Includes food & drink, agro-food industry *** Includes media, healthcare, services, tourism

Top climbers Company

6.11%

% turnover change

Country

Compagnie Minière de l’Ogooué (#82) _____________________

Gabon, mining ___________111.59%

Copperbelt Energy Corp. (#244) _____________________________

Zambia, utilities

Lafarge Africa* (#133) ________________________________________

POWER UP OR FADE AWAY

Innscor Africa (#141) __________________________________________

Africa’s power shortages remained a crucial drag on companies, including the manufacturing sector that continues to suffer in major and smaller economies. Africa Finance Corporation chief executive Andrew Alli – who last year commended Côte d’Ivoire’s infrastructure efforts and currently argues governments need to “break a few eggs” and install “cost-reflective” power prices to bolster power production – points to Africa’s pension funds and insurance companies as relatively untapped sources of infrastructure funding. Others, such as lawyer Olivier Chambord of United Statesheadquartered international law firm Morgan Lewis, emphasise the need for African governments to increase the relative attractiveness to investors of much-needed infrastructure projects to prevail in the “global competition for finance”. From an African perspective, this global competition continues to depend partly on reasons outside governments’

Holding Marocaine Comm. et Financière (#174) _________

89.55% Nigeria, construction _____ 83.96% Zimbabwe, tourism ______ 56.03% Morocco, diversified _____ 41.99% __________

Biggest fallers Company

% turnover change

Country

Egypt Kuwait Holding Co. (#200) ____________________________

Egypt, diversified ________ -63.50%

Botswana Insurance Holdings (#413) _____________________

Botswana, insurance ___ -45.25%

Poulina Group Holding (#176)_______________________________

Tunisia, diversified ______ -41.32%

Groupe CFAO Algérie (#317)__________________________________

Algeria, diversified ______ -41.01%

Compagnie Générale Immobilière (#450)_________________

Morocco, real estate ____ -40.77% SOURCE: JEUNE AFRIQUE TOP 500 COMPANIES

By region

North Africa

2014 turnover

$211.3bn

Net profit change since 2009

-22.81%

$11.2bn

2014 net profits East Africa

West Africa

$57.4bn

72.61%

$3.8bn

Central Africa

$15bn

-126.23%

$-0.08bn

$16.3bn

-10.86%

$0.9bn

Southern Africa

$398.2bn

THE AFRICA REPORT

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F E B R UA R Y 2 016

TOP 500 COMPANIES BUSINESS

respective control, such as United States Federal Reserve action on interest rates, although long-term confidence in a specific country and its government is key for long-term infrastructure projects. Among those sectors dependent on infrastructure are manufacturing and agriculture, both key opportunities for economic diversification in economies overly dependent on hydrocarbons and metals production. Amidst an uncertain outlook for a number of soft commodities like maize, wheat and cocoa – in part due to reduced rainfall and even drought in affected regions – agribusiness executives like Frank Braeken, investment officer of Berlinheadquartered Amatheon Agri Holding, or Monica Musonda, chief executive of Zambia-based food-processing company Java Foods, point to the need for scale. Musonda, who is leading a small operation rather than one of Africa’s Top 500, sees agriculture and agribusiness as a “big opportunity” at a time of low commodity prices and devalued currencies – which increase the cost of imports. She touts the need for “African champions”. Amatheon’s Braeken says there is value in “big business” transferring knowledge to local farmers. He supports import substitution in Zambia, where a subsidiary of his company operates. While talk of champions may imply protectionism, of which Nigeria’s central bank governor Godwin Emefiele was accused last year when he restricted foreign exchange for rice and other key imports, the decimation in past years of local textiles companies in a number of countries by foreign competition appears a

drop in turnover experienced by the companies in our Top 500 ranking SOURCE: JA RESEARCH

The utilities sector bucked the trend, recording an increase in revenues SOURCE: JA RESEARCH

potential justification for strategic government intervention. For the three textiles companies in our Top 500, there was an annual drop in turnover of approximately 18%. However, in recent years, the harshest blows have been borne by companies no longer in operation or falling outside the Top 500. The textile sector’s negative growth is also echoed in the other four components of manufacturing in our survey – paper, steelmaking, electrical equipment, the auto industry, and chemicals and plastics – each of which declined by more than 5% in 2014. VOLATILITY BITES

The picture within agriculture and related sectors is equally disappointing. Agribusiness turnover in the Top 500 companies, excluding food and drink companies like SABMiller South Africa (#30), declined by 15%. Including food and drink the figure was 11%. This was a major reversal from the 30% rise of the previous year. Volatility in sectoral performance is also illustrated by tourism. Its turnover rose by 24% in 2013 and shrank to a modest 4% in 2014. Moving into 2015, major reported declines in visitors to tourism hub Kenya do not bode well for a sector extremely sensitive to terrorist violence. The international reaction to the Ebola crisis in West Africa has also hurt the sector. More significant to the economic growth of key economies are the contractions in the oil and mining sectors – more than 9% and 14% respectively among the group of companies included in our survey. Recent events in the mining and oil sectors promise

a continuation of this trend in 2015’s company results, with the path of commodity prices remaining crucial for 2016 regardless of cost-cutting, asset sales and the effect of currency fluctuations. During a year in which overall Top 500 turnover declined more than 4%, two statistically bright peaks appear to be retail and utilities (water, electricity and gas), which rose by more than 16% and 17% respectively. The retail sector is dominated by South African players such as ShopRite (#8). Their forays outside of South Africa have upped the ante for African retailers, and they stand to benefit not just from growing African middle classes and changes in consumer demands. The utility sector is dominated by much-criticised Eskom (#5) of South Africa, which not only recorded a drop in turnover in 2014 but during 2015 inflicted load-shedding and unreliability on households, manufacturers and mining companies alike. So who is going take the bull by the horns, and thrive in 2016, in spite of the heavy weather? Gathering in the Ivorian economic capital of Abidjan from 21 March for the Africa CEO Forum, business leaders and politicians will try to thrash out new responses to today’s global economic context. The African opportunities of tomorrow – in finance, in clean energy and consumer goods – will be different to the commodity story of yesterday. African CEOs will need to be agile: more selective in their risk-taking, more creative in sourcing finance. And African governments must find new partners to drive growth, and to access the untapped wealth already present in the continent. ●

Methodology Of 12,083 African companies in our database, 9,918 received a detailed questionnaire. After cross-checks and verification, we established a ranking of Africa’s top 1,995 companies. The first 500 are published. To allow for comparison, we apply the same rules to all our data: 1) All financial data must have a clearly THE AFRICA REPORT

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defined source, generally communicated to us by the companies themselves, and must refer to the year 2014 (in some cases 2014/2015); 2) If presented in the local currency, we convert the data into US dollar amounts according to the rate prevailing on 31 December 2014; 3) We include all companies that fall under

legal jurisdiction of at least one of the 54 countries in Africa, which is why a holding company and a subsidiary can both feature in the list; and 4) Where we cannot obtain up-to-date figures, we use those of the previous year (marked with an asterisk and italics). After two years of silence, a company is struck off the rankings. ●

BUSINESS TOP 500 AFRICAN COMPANIES

Diff.

Rank ’13

RANKINGS 1-50 Rank ’14

“

Company

Even in southern Africa, where mining is constrained, we’ve have good results out of Mozambique and Namibia” Clive Thomson CEO of Barloworld (#20)

Sector

Country

Turnover (2014)

Turnover change

Net profits

- Sonatrach*

Petroleum

Algeria

67 827 760

5 236 140

- Sonangol

Petroleum

Angola

33 975 259

-15.21%

1 351 265

- Sasol

Chemicals

South Africa

17 448 979

1.11%

2 618 600

- The Bidvest Group

Diversified

South Africa

15 810 013

8.26%

416 388

- Eskom

Utilities

South Africa

12 714 718

-4.26%

311 474

- MTN Group

ICT/Telecoms

South Africa

12 649 204

-2.66%

3 245 765

- Steinhoff International Holdings

Wood and paper

South Africa

10 103 867

-8.10%

849 106

+1 ShopRite Holdings

Retail

South Africa

9 787 916

10.85%

355 896

+1 Imperial Holdings

Transport

South Africa

8 916 083

1.38%

312 248

+1 Bidvest Foods

Agribusiness

South Africa

8 803 661

11.82%

272 685

-3 Sanlam

Insurance

South Africa

7 925 445

-18.38%

843 252

+2 The Bidvest Group South Africa

Diversified

South Africa

6 900 253

4.59%

424 595

Retail

South Africa

6 742 483

-2.33%

97 919

ICT/Telecoms

South Africa

6 657 598

-7.63%

1 076 986

13.28%

88 628

- Massmart Holdings -2 Vodacom Group

+8 Datatec

Media

South Africa

6 443 536

+3 Naspers

Media

South Africa

6 292 490

+4 Sappi

Wood and paper

South Africa

6 061 000

2.30%

135 000

Retail

South Africa

5 819 951

-3.97%

74 184

5.37% 12 073 262

+8 Suez Canal Authority

Ports

Egypt

5 456 000

2.94%

-4 Barloworld

Diversified

South Africa

5 346 275

-13.74%

201 278

- Pick n Pay Stores Holdings

+1 Vodacom South Africa

ICT/Telecoms

South Africa

5 340 765

-9.23%

1 523 707

+4 Transnet

Transport

South Africa

5 264 576

-2.31%

456 449

+2 AngloGold Ashanti

Mining

South Africa

5 218 000

-5.08%

-39 000

-4 Samir

Refining

Morocco

4 863 449

-18.17%

-378 078

+5 Anglo American Platinum Corp.

Mining

South Africa

4 788 842

-4.01%

46 919

+7 SPAR Group

Retail

South Africa

4 736 319

4.09%

11 579

+5 MTN Nigeria

ICT/Telecoms

Nigeria

4 648 430

1.39%

-4 Office Chérifien des Phosphates

Mining

Morocco

4 575 363

-19.39%

560 161

Diversified

South Africa

4 559 240

-9.57%

-32 370

+1 SABMiller South Africa

Food and drink

South Africa

4 352 000

-12.10%

-3 Kumba Iron Ore

Mining

South Africa

4 097 626

-20.97%

1 218 001

- Aveng

+3 Naftal

Petroleum services

Algeria

3 769 491

-9.33%

-18 Société Nationale d’Investissement

Diversified

Morocco

3 741 030

393 095 364 677

+6 Liberty Group

Insurance

South Africa

3 627 747

6.50%

+2 Middle East Oil Refineries

Petroleum services

Egypt

3 479 420

-2.56%

6 140

+5 Woolworths Holdings

Retail

South Africa

3 438 779

2.04%

257 409

-1 MTN South Africa

ICT/Telecoms

South Africa

3 350 795

-11.36%

- Office Nat. de l’Eléctricité et de l’Eau Potable

Utilities

Morocco

3 263 155

-205 987

- Global Telecom Holding

ICT/Telecoms

Egypt

3 243 142

-5.91%

-459 102

Rail transport

South Africa

3 220 627

-1.69%

ICT/Telecoms

Morocco

3 218 080

-6.83%

645 957 120 526

+3 Transnet Freight Rail

-3 Groupe Maroc Telecom +3 Murray & Roberts Holdings

Construction

South Africa

3 102 598

-4.73%

Healthcare

South Africa

3 033 639

4.50%

390 418

-2 Old Mutual Life Assurance Co.

Insurance

South Africa

3 013 236

-8.51%

1 142 931

+4 ArcelorMittal South Africa

Metals

South Africa

3 000 409

-2.79%

-13 602

-2 Cevital

Agribusiness

Algeria

2 899 891

-11.06%

347 140 -469 571

45 46

+10 Mediclinic Corp.

+7 Sonelgaz*

Utilities

Algeria

2 880 425

+4 Gold Fields

Mining

South Africa

2 868 600

-1.62%

20 400

-1 Telkom

ICT/Telecoms

South Africa

2 789 316

-11.38%

280 309

+8 Network Healthcare Holdings

Healthcare

South Africa

2 736 198

3.38%

180 445

2014 results in thousands of US dollars; *in italics 2013 results; NA: not available

THE AFRICA REPORT

•

N° 77

•

F E B R UA R Y 2 016

TOP 500 AFRICAN COMPANIES BUSINESS

Diff.

Rank ’13

Rank ’14

RANKINGS 51-100

Safaricom’s (#80) profit after tax increased by 22% to KSh18bn ($176m) for the first half of its 2015-16 financial year, thanks to increased mobile data and M-Pesa revenues.

Company

Sector

Country

- Ezz Steel Co.

Turnover (2014)

Turnover change

Net profits

Metals

Egypt

2 705 224

-11.16%

-97 142

-6 Société Ivoirienne de Raffinage

Refining

Côte d’Ivoire

2 660 639

-203 923

-3 JD Group

Retail

South Africa

2 632 804

-14.14%

-165 551

+6 Tiger Brands

Agribusiness

South Africa

2 593 547

0.66%

163 984

+24 Aspen Pharmacare Holdings

Pharmaceuticals

South Africa

2 540 955

38.24%

430 924

+1 Edgars Consolidated Stores

Retail

South Africa

2 532 337

-7.59%

-170 716 46 489

-2 Impala Platinum Holdings

Mining

South Africa

2 499 021

-12.59%

Petroleum services

Morocco

2 447 373

+7 MMI Holdings

Insurance

South Africa

2 420 679

9.11%

284 097

+1 Masscash

Retail

South Africa

2 396 780

-4.14%

-2 Allied Electronics Corp.

Electrical equipment

South Africa

2 378 064

-10.05%

-5 165

+5 Elsewedy Cables

Electrical equipment

Egypt

2 372 886

9.89%

62 075

Diversified

Egypt

2 340 415

-392 886

Petroleum

Cameroon

2 332 010

31 639

Petroleum services

Nigeria

2 306 000

-16.65%

-97 350

+10 Afriquia SMDC

60 61 62

- EgyptAir Holdings +18 Société Nationale des Hydrocarbures

-9 Oando

+5 Ethiopian Airlines

Air Transport

Ethiopia

2 278 522

14.61%

153 969

-5 Maroc Telecom

ICT/Telecoms

Morocco

2 258 862

-9.56%

665 281

-3 Wilson Bayly Holmes - Ovcon

Construction

South Africa

2 219 134

-1.95%

21 371

+6 Dangote Cement

Construction

Nigeria

2 126 600

866 090 589 803

+31 Remgro

Diversified

South Africa

2 119 622

35.22%

+18 Société Tunisienne de l’Électricité et du Gaz

Utilities

Tunisia

1 999 694

-910

+18 Discovery Health

Insurance

South Africa

1 987 818

16.70%

285 302

Metals

Egypt

1 974 682

Insurance

South Africa

1 955 104

-0.46%

143 512

ICT/Telecoms

South Africa

1 897 787

2.75%

50 035

Mining

South Africa

1 875 083

129 729

70 101

-1 Al Ezz Dekheila Steel Co.* - Santam +3 Blue Label Telecoms - Sibanye Gold - Masswarehouse +6 Total Kenya +6 EgyptAir Airlines

Retail

South Africa

1 855 653

-0.93%

Petroleum services

Kenya

1 850 665

5.08%

15 437

Air Transport

Egypt

1 832 472

-407 734

+15 Safaricom

ICT/Telecoms

Kenya

1 770 867

7.47%

345 485

+12 Clicks Group

Retail

South Africa

1 739 302

4.62%

73 437

Mining

Gabon

1 733 450

111.59%

Packaging

South Africa

1 719 260

106 381

Auto industry

Egypt

1 718 437

31.66%

32 869

Food and drink

South Africa

1 697 692

-23 845

ICT/Telecoms

Egypt

1 695 489

6.48%

283 617

Mining

Zambia

1 677 500

-8.45%

512 400

Agribusiness

Nigeria

1 676 548

-17.92%

48 165

ICT/Telecoms

Algeria

1 672 251

197 573 163 330

82 182 +100 Compagnie Minière de l’Ogooué 83

121

90 102 91 100 92 120

+4 Nampak +37 Ghabbour Auto - RCL Foods +13 Telecom Egypt -7 Kansanshi Mining -19 Flour Mills of Nigeria - Algérie Télécom +12 Foschini +9 The Arab Contractors* +28 Mr Price Group

Retail

South Africa

1 596 453

2.48%

Construction

Egypt

1 576 971

Retail

South Africa

1 558 143

19.29%

196 716 -1 234 137

-23 PetroSA

Petroleum

South Africa

1 553 807

-23.01%

+37 Marjane Holding

Retail

Morocco

1 545 880

Retail

South Africa

1 545 763

-3.01%

ICT/Telecoms

Algeria

1 543 085

-14.10%

418 161

Petroleum

Gabon

1 538 477

-15.13%

87 965

Air transport

Morocco

1 533 844

-5.21%

20 317

Food and drink

South Africa

1 527 203

131 224

Egypt

1 523 756

-32.81%

-55 750

131

-13 Optimum Telecom Algeria

-16 Total Gabon

-10 Royal Air Maroc

100

+3 Massdiscounters

-7 Distell Group -36 Mobinil

ICT/Telecoms

2014 results in thousands of US dollars; *in italics 2013 results; NA: not available

THE AFRICA REPORT

•

N° 77

•

F E B R UA R Y 2 016

BUSINESS TOP 500 AFRICAN COMPANIES

101

102

110

103

104 105 105 103 106

107 122 108 108 109

116

110 106 111

117

112

113

114 139 115

116

179

117

Diff.

Rank ’13

RANKINGS 101-150 Rank ’14

388

The restaurants arm of Innscor Africa (#141) had 388 restaurants operating in 11 African countries as of October 2015.

Company

Sector

Country

Turnover (2014)

Turnover change

Net profits

-4 Pioneer Foods Group

Agribusiness

South Africa

1 523 672

-5.81%

83 189

+8 Sonatel

ICT/Telecoms

Senegal

1 509 635

1.73%

403 698

Refining

Cameroon

1 497 438

Chemicals

South Africa

1 455 179

-4.12%

94 613

-27 Société Nationale de Raffinage +1 AECI -2 Omnia Holdings -12 Nigerian Breweries +15 Exxaro Resources - Tongaat Hulett Group +7 Assore*

Chemicals

South Africa

1 449 325

-6.37%

80 408

Food and drink

Nigeria

1 446 403

-12.44%

230 885 -76 104

Mining

South Africa

1 411 962

9.31%

Agribusiness

South Africa

1 390 784

-7.04%

90 136

Mining

South Africa

1 349 477

326 381 -390 504

-4 Harmony Gold Mining Co.

Mining

South Africa

1 328 799

-12.23%

+6 Vivo Energy Maroc

Petroleum services

Morocco

1 325 040

Petroleum services

Nigeria

1 306 556

-10.80%

24 017

- Total Nigeria - Group Five Holdings +25 Cosider

Construction

South Africa

1 294 267

-11.37%

37 673

Construction

Algeria

1 287 088

17.41%

269 088 -

-19 Société Marocaine des Tabacs

Agribusiness

Morocco

1 280 642

+63 Mohammed Enterprises Tanzania

Diversified

Tanzania

1 278 163

Diversified

South Africa

1 273 686

99 767

- Mota-Engil Africa

118

124

+6 Konkola Copper Mines*

Mining

Zambia

1 271 400

-89 000

119

111

-8 Kap International Holdings

Diversified

South Africa

1 269 655

-13.34%

-5 940

120

157

Algeria

1 256 678

121

128

Mauritania

1 231 655

574 940

122

137

+37 Ooredoo Algeria (Ex-Wataniya Telecom Algérie) ICT/Telecoms +7 Société Nationale Industrielle et Minière*

Mining

+15 Super Group

Auto industry

South Africa

1 230 809

10.33%

80 726

123 144

+21 Total Maroc

Petroleum services

Morocco

1 210 341

35 222

124 109

-15 Grindrod

Sea transport

South Africa

1 197 726

-19.67%

92 631

125 130

+5 Kenya Airways

Air transport

Kenya

1 194 145

-1.10%

-279 054 -163 207

126

115

127

128

-11 Airtel Nigeria - Groupe Elloumi -37 Entreprise Tunisienne d’Activités Pétrolières

ICT/Telecoms

Nigeria

1 178 920

-15.11%

Diversified

Tunisia

1 177 550

Petroleum

Tunisia

1 152 393

266 019

129 136

+7 Adcorp Holdings

Services

South Africa

1 146 925

2.08%

21 023

130 126

-4 Illovo Sugar

Agribusiness

South Africa

1 142 113

-9.05%

81 252

131 134

+3 Saham Holding*

Diversified

Morocco

1 140 000

132 135

+3 Life Healthcare Group

Healthcare

South Africa

1 123 130

-0.38%

266 707 186 712

133 240 +107 Lafarge Africa (Ex-Lafarge Cement WAPCO) 134

118

135 169 136 143 137

119

138

125

139

187

140 148 141 223 142

151

143 138

Construction

Nigeria

1 117 737

83.96%

-16 Novignis*

Financial services

Nigeria

1 097 093

19 717

+34 Orascom Construction Industries

Construction

Egypt

1 094 273

23.16%

564 116

+7 Mutual & Federal Insurance*

Insurance

South Africa

1 077 188

-18 Julius Berger Nigeria

Construction

Nigeria

1 068 671

-18.32%

44 743

-13 Transnet Rail Engineering

Rail transport

South Africa

1 064 933

-16.23%

Diversified

South Africa

1 047 023

31.20%

387 321

Tourism

South Africa

1 030 540

71 305

Tourism

Zimbabwe

1 024 050

56.03%

60 465

+9 Saham Finances

Insurance

Morocco

1 011 000

-1.05%

78 000

-5 Truworths International

Retail

South Africa

1 002 260

-9.57%

207 133 284 872

+48 Hosken Consolidated Investments +8 Sun International* +82 Innscor Africa

144

178

+34 RMI Holdings

Insurance

South Africa

990 724

16.60%

145

127

-18 KenolKobil

Petroleum

Kenya

989 862

-20.77%

11 830

+19 Société Nationale Burkinabé d’Hydrocarbures

Petroleum services

Burkina Faso

985 656

13 857

Tourism

South Africa

976 519

-4.73%

143 942

ICT/Telecoms

Algeria

975 128

140 689

146 165 147 150 148 201 149

150 104

+3 Tsogo Sun Holdings +53 ATM Mobilis - Saham Group -46 Lonmin

Diversified

Morocco

973 794

64 154

Mining

South Africa

965 000

-36.51%

-203 000

2014 results in thousands of US dollars; *in italics 2013 results; NA: not available

THE AFRICA REPORT

•

N° 77

•

F E B R UA R Y 2 016

TOP 500 AFRICAN COMPANIES BUSINESS

Rank ’13

151

161

152

Diff.

Rank ’14

RANKINGS 151-200

South African utility Rand Water (#169) gained 33 positions over its rivals in this year’s Top 500 Companies ranking, climbing from #202 to #169.

Company

+10 GML - PSG Group

Turnover change

Net profits

Country

Diversified

Mauritius

960 956

3.81%

88 189

Diversified

South Africa

945 354

188 623 305 103

Mining

South Africa

935 196

-1.80%

154 166

+12 Massbuild

Construction

South Africa

931 735

2.12%

155 140

-15 Société Africaine de Raffinage

Refining

Senegal

929 263

-8 059

Auto industry

South Africa

924 423

-10.35%

13 133

Petroleum

Nigeria

923 795

17.33%

24 199 -

153 158

156

147

157 192

+5 African Rainbow Minerals

Turnover (2014)

Sector

-9 CMH Group +35 Forte Oil

158 162

+4 Aurecon Heritage Companies

Construction

South Africa

920 100

0.00%

159 163

+4 Al Ezz Rolling Mills*

Metals

Egypt

917 266

160 167

+7 Stefanutti Stocks Holdings

Construction

South Africa

916 719

1.38%

17 490

-9 Invicta Holdings

Auto industry

South Africa

900 464

-9.61%

62 412

Petroleum

Egypt

896 565

47 452

161 152 107

-55 Alexandria Minerals Oils Co.

163

174

+11 Soc. Nat. de Distribution des Pétroles AGIL

164

173

165

181

166

162

+9 Anglovaal Industries +16 Air Algérie - Namdeb Diamond Corporation*

Petroleum services

Tunisia

884 125

14 086

Agribusiness

South Africa

883 920

0.72%

113 269

Air Transport

Algeria

873 543

Mining

Namibia

860 322

859 006

-9.57%

21 609

167 159

-8 Eqstra Holdings

Auto industry

South Africa

168 206

+38 Suez Cement Co.

Construction

Egypt

857 958

18.81%

68 754

169 202

+33 Rand Water

Utilities

South Africa

843 901

14.36%

123 636 126 686

+5 Eastern Co.

Agribusiness

Egypt

843 474

-3.60%

171 160

-11 Transnet National Ports Authority

Transport

South Africa

836 623

-11.38%

172 185

+13 Transnet Port Terminals

Transport

South Africa

836 106

2.90%

-31 Groupe SIFCA

Agribusiness

11 063

170

175

Côte d’Ivoire

830 561

174 254

+80 Holding Marocaine Commerciale et Financière Diversified

Morocco

830 303

41.99%

175 186

+11 Astral Foods

Food and drink

South Africa

826 669

1.87%

29 362

-62 Poulina Group Holding

Diversified

Tunisia

815 581

-41.32%

38 765

Utilities

Morocco

809 634

-1.70%

31 237

Diversified

Morocco

798 557

31 359

Electrical equipment

South Africa

797 681

Textiles

Egypt

789 948

0.04%

51 193

Petroleum services

Senegal

782 526

14.39%

9 067

Agribusiness

Nigeria

778 276

-4.91%

120 740 72 316

173

176

142

114

177 180 178

179 188

+3 Lyonnaise des Eaux de Casablanca - Anouar Invest +9 Powertech*

180

191

+11 Oriental Weavers for Carpets

181

213

+32 Total Sénégal

182 183

+1 Nestlé Nigeria

Construction

South Africa

778 168

-1.71%

184 156

-28 Centrale Danone (Ex-Centrale Laitière)

Food and drink

Morocco

777 700

-18.68%

4 548

185 132

-53 Douja Promotion

Real estate

Morocco

776 946

-32.02%

118 583

172

-14 Seplat Petroleum Development Co.

Petroleum

Nigeria

775 019

-11.95%

252 253

187 198

+11 Compagnie Ivoirienne d’Électricité

Utilities

Côte d’Ivoire

774 040

3.35%

15 355

Air Transport

Tunisia

762 069

-135 492

Petroleum

Gabon

757 056

Agribusiness

South Africa

751 818

-3.02%

53 548

Agribusiness

South Africa

748 292

24 428

ICT/Telecoms

Zimbabwe

746 183

-0.86%

70 208

183 189

186

188 190 189 236 190 195 191

192

197

+6 Pretoria Portland Cement Co.

+2 Société Tunisienne de l’Air* +47 Maurel & Prom Gabon* +5 Rainbow Chicken - Zeder Investments +5 Econet Wireless

193 204

+11 Mondi Packaging South Africa

Packaging

South Africa

741 855

1.23%

38 594

194 212

+18 Egyptian Aluminium Products Co.

Metals

Egypt

738 646

7.44%

25 666 94 106

195

210

+15 Talaat Moustafa Group

Real Estate

Egypt

735 069

5.80%

196

170

-26 Tunisie Telecom

ICT/Telecoms

Tunisia

726 941

-17.65%

197

Construction

Morocco

725 640

59 744 -

198

177

199

200

- CDG Développement* -21 Mondi Group South Africa - Société Nationale des Tabacs et Allumettes* -127 Egypt Kuwait Holding Co.

Wood and paper

South Africa

724 303

-15.68%

Agribusiness

Algeria

721 084

Diversified

Egypt

717 742

-63.50%

57 935

2014 results in thousands of US dollars; *in italics 2013 results; NA: not available

THE AFRICA REPORT

•

N° 77

•

F E B R UA R Y 2 016

BUSINESS TOP 500 AFRICAN COMPANIES

201

219

202 231 203 208 204 154 205 209

Diff.

Rank ’13

RANKINGS 201-250 Rank ’14

Assets owned by Nigeria’s Conoil (#204) increased from N86bn ($431.6m) in 2014 to N96bn ($481.8m) in 2015, despite tough times in the oil industry.

Company

Sector

Country

Turnover (2014)

Turnover change

Net profits

+18 African Reinsurance Corp.

Insurance

Nigeria

717 525

7.02%

118 504

+29 Société Nigérienne de Produits Pétroliers

Petroleum services

Niger

715 785

11 427

Auto industry

Morocco

714 313

Petroleum services

Nigeria

696 955

-28.97%

4 531

Retail

Morocco

696 750

-0.47%

8 834

Sea transport

South Africa

693 455

10.53%

176 226

+5 Renault Maroc* -50 Conoil +4 Label’ Vie

206 234

+28 Trencor

207 164

-43 Volta River Authority

208 207

-1 Hulamin

Utilities

Ghana

693 445

248 666

Metals

South Africa

692 157

-3.83%

33 138

209 225

+16 Orange Côte d’Ivoire

ICT/Telecoms

Côte d’Ivoire

684 258

4.82%

63 316

210 271

+61 Kenya Power and Lighting

Utilities

Kenya

678 552

24.33%

69 986

- Driefontein Gold Mine

Mining

South Africa

674 033

80 744

Insurance

Morocco

671 188

-3.28%

92 642

Electrical equipment

South Africa

669 246

-38.07%

169 959

Air transport

South Africa

668 144

137 314

Algeria

662 799

Egypt

660 447

80 179 74 347

211

212

211

213

141

214

- Airports Company South Africa

215

- Soc. de Distr. d’Électricité et du Gaz du Centre* Utilities

216 221 217

216

218 249 219

241

220 220 221

222

171

223

215

224

217

-1 Wafa Assurance -72 Reunert

+5 Petrojet* -1 East African Breweries Group

Energy Food and drink

Kenya

658 518

-2.11%

+31 Libya Oil Maroc

Petroleum services

Morocco

654 458

+22 Winxo (Ex-Cie Marocaine des Hydrocarbures)

Petroleum services

Morocco

651 478

- SA des Brasseries du Cameroun

Food and drink

Cameroon

650 673

-1.64%

4 573

- Kloof Gold Mining Co.

Mining

South Africa

645 916

72 204

-51 Grinaker-LTA

Construction

South Africa

645 675

-8 South African Broadcasting Corp.

Media

South Africa

644 556

-4.23%

-34 006

-7 Guinness Nigeria

42 326

Food and drink

Nigeria

643 433

-4.19%

225 199

-26 INWI

ICT/Telecoms

Morocco

629 394

226 287

+61 Metair Investments

Auto industry

South Africa

626 633

25.92%

54 435

227 203

-24 Ooredoo Tunisia (Ex-Tunisiana)

ICT/Telecoms

Tunisia

624 369

228 244

+16 Raubex

Construction

South Africa

623 744

3.59%

36 853

229 294

+65 EOH Holdings

ICT/Telecoms

South Africa

621 602

28.38%

42 370

-16 Aveng Trident Steel

Metals

South Africa

619 848

231 196

-35 Clover Holdings

Agribusiness

South Africa

619 215

-18.66%

16 269

232 193

-39 MTN Ghana

230

214

233 233 234

316

235 222 236 243 237

247

238

239 184

ICT/Telecoms

Ghana

615 457

-21.82%

Electrical equipment

South Africa

611 500

-2.62%

20 697

+82 Biopharm

Pharmaceuticals

Algeria

607 535

47 845

-13 Médi Télécom

ICT/Telecoms

Morocco

607 310

Mining

Angola

603 000

0.09%

38 000 121 271

- Pinnacle Technology Holdings

+7 Catoca Sociedade Mineira +10 Tanzania Breweries - Somagec GE -55 Tarkwa Mines

Food and drink

Tanzania

600 949

0.56%

Construction

Equatorial Guinea

596 042

Mining

Ghana

590 394

-27.67%

-3 152

240 252

+12 Petroleos de Moçambique*

Petroleum services

Mozambique

589 209

241 288

+47 Pétrole du Maghreb

Petroleum services

Morocco

585 226

- Total Cameroun*

Petroleum services

Cameroon

584 836

242

243 227

-16 Cashbuild

244 406 +162 Copperbelt Energy Corp.

Construction

South Africa

583 800

-9.57%

23 197

Utilities

Zambia

580 991

89.55%

-69 108

245 292

+47 Entreprise Nationale de Travaux aux Puits*

Petroleum

Algeria

580 167

97 143

246 258

+12 Bytes Technology Group*

Electrical equipment

South Africa

576 626

25 990

-12 Delta Corp.

Food and drink

Zimbabwe

576 552

-7.83%

92 800

Mining

Zimbabwe

575 978

22.12%

97 133

247 235 248 302

+54 Zimplats Holdings

249 255

+6 RMA Watanya

Insurance

Morocco

572 947

-1.85%

250 245

-5 Bell Equipment

Auto industry

South Africa

568 930

-5.43%

5 718

2014 results in thousands of US dollars; *in italics 2013 results; NA: not available

THE AFRICA REPORT

•

N° 77

•

F E B R UA R Y 2 016

TOP 500 AFRICAN COMPANIES BUSINESS

Diff.

Rank ’13

Rank ’14

RANKINGS 251-300

“

Company

Our O investment in this country reflects our commitment to this market for t long term.” Sidy Bane Managing Director of PUMA Energy Zambia (#285) the

Sector

Country

Turnover (2014)

Turnover change

Net profits

251 268

+17 Growthpoint Properties

Real estate

South Africa

568 624

3.30%

252 297

+45 Raya Holding

Electrical equipment

Egypt

567 498

17.67%

6 653

253 228

-25 Salam Gaz

Petroleum services

Morocco

567 117

-11.76%

17 888

254 194

-60 Aveng Mining

Mining

South Africa

566 644

255 230

-25 Air Mauritius

Air transport

Mauritius

565 995

-10.93%

-27 828

Diversified

Egypt

562 582

-27 474

Media

South Africa

560 642

-4.60%

25 917

-6.73%

-70 669

256

257 253

- Qalaa Holdings -4 Business Connexion Group

514 560

258 246

-12 Basil Read Holdings

Construction

South Africa

559 792

259 238

-21 RMB Holdings

Financial services

South Africa

556 400

-9.57%

545 552

Utilities

South Africa

554 051

-0.89%

46 082

+16 MTN Côte d’Ivoire

ICT/Telecoms

Côte d’Ivoire

552 526

5.91%

-44 South African Post Office*

Services

South Africa

550 107

-34 387

Construction

Morocco

545 311

-82 298

Construction

Morocco

544 917

-10.78%

145 270

260 262 261 277 262

218

+2 Johannesburg Water Co.

263 462 +199 Société Nationale des Autoroutes du Maroc 264 239

-25 Lafarge Ciments

Petroleum

Egypt

539 900

65 900

266 248

-18 Taqa Morocco (Ex-Jorf Lasfar Energy Co.)

Utilities

Morocco

538 619

-9.78%

56 103

267 276

+9 SDTM-CI

Agribusiness

Côte d’Ivoire

535 320

ICT/Telecoms

Cameroon

533 241

7.63%

Electrical equipment

Algeria

532 510

-3.00%

25 662

265

268 289 269 269

- Egyptian Drilling Company*

+21 MTN Cameroun - Condor Electronics

270 327

+57 Northam Platinum

Mining

South Africa

531 487

23.78%

-89 398

271 257

-14 Sonatel Mobiles

ICT/Telecoms

Senegal

530 669

14 241

272 256

-16 Holding d’Aménagement Al Omrane

Real estate

Morocco

530 016

273 299

+26 Orange Mali

ICT/Telecoms

Mali

529 148

10.36%

142 624

274 226

-48 Société Maroc. de Construction Automobile

Auto industry

Morocco

522 468

275

- East African Breweries Kenya

Food and drink

Kenya

521 115

276

- Eneo Cameroon

Utilities

Cameroon

517 843

4 225

277

310

18 295

278

+33 Choppies Enterprises - Middle & West Delta Flour Mills

Retail

Botswana

517 632

14.07%

Agribusiness

Egypt

517 302

8 771

515 356

-7.91%

10 215 63 182

279 261

-18 Total Petroleum Ghana

Petroleum services

Ghana

280 232

-48 Dangote Sugar Refinery

Agribusiness

Nigeria

515 064

-18.81%

Diversified

South Africa

514 848

11 190

Food and drink

Egypt

513 779

9.07%

23 721

281 281 282 303 283

311

284 282

- Mvelaserve* +21 Juhayna Food Industries +28 Ghana Oil Co. -2 Comair

Petroleum services

Ghana

508 231

12.26%

6 605

Air transport

South Africa

508 208

-0.90%

22 801 8 369

285 272

-13 Puma Energy Zambia

Petroleum

Zambia

502 520

-7.06%

286 263

-23 African Oxygen

Chemicals

South Africa

502 249

-9.43%

8 265

Petroleum services

Nigeria

501 327

4 053 197 213

287 284

-3 MRS Oil

288 273

-15 Abu Qir Fertilizers & Chemical Industries

Chemicals

Egypt

500 206

-7.04%

289 205

-84 Compagnie Sucrière Marocaine de Raffinage

Agribusiness

Morocco

499 548

-30.87%

47 872

Metals

South Africa

494 278

-36 081

290 290

- Evraz Highveld Steel & Vanadium Corp.*

Retail

South Africa

490 997

-2.35%

72 264

292 345

+53 Tradex

Petroleum services

Cameroon

489 597

16 162

293 331

+38 Total Burkina

Petroleum services

Burkina Faso

488 537

9 265

294 349

+55 Société Burkinabé des Fibres Textiles

Agribusiness

Burkina Faso

482 965

202

295 326

+31 Vivo Energy Côte d’Ivoire

Petroleum

Côte d’Ivoire

479 805

11.36%

5 480

291 285

-6 Lewis Group

296 267

-29 Total Côte d’Ivoire

Petroleum services

Côte d’Ivoire

478 804

-13.35%

2 671

297 264

-33 Adcock Ingram Holdings

Pharmaceuticals

South Africa

478 568

-7.69%

17 115 38 285

298 229

-69 Ireland Blyth

Diversified

Mauritius

468 042

-26.36%

299 324

+25 Orascom Telecom Media and Technologies

ICT/Telecoms

Egypt

467 349

7.61%

-8 639

300 275

-25 Soc. de Fabrication des Boissons de Tunisie

Food and drink

Tunisia

466 131

-11.23%

72 138

2014 results in thousands of US dollars; *in italics 2013 results; NA: not available

THE AFRICA REPORT

•

N° 77

•

F E B R UA R Y 2 016

BUSINESS TOP 500 AFRICAN COMPANIES

Diff.

Rank ’13

RANKINGS 301-350 Rank ’14

South Africa’s Oceana Group (#321) acquired the entire share capital of US-based Daybrook Fisheries for $382.3m in May 2015.

Company

Country

Turnover (2014)

Turnover change

Net profits

Diversified

Nigeria

465 103

-3.92%

59 409

302 259

-43 CTP Holdings

Media

South Africa

464 003

-18.55%

37 523

303 296

-7 OK Zimbabwe

Retail

Zimbabwe

462 707

-4.33%

7 531

Real estate

South Africa

462 488

34.04%

334 579

Retail

Tunisia

458 346

-1.59%

-2 156

Diversified

Mauritius

457 377

12.16%

-1 609

301 295

304 368 305 306

-6 UAC of Nigeria

Sector

+64 Redefine Properties +1 Société Magasin Général

306 336

+30 Ciel Group

307 341

+34 Mustek

Media

South Africa

457 147

14.25%

11 545

-57 Sudanese Telecom Co.

ICT/Telecoms

Sudan

456 933

50 098

309 329

+20 MTN Uganda

ICT/Telecoms

Uganda

455 330

7.07%

310 260

-50 Société Nationale de Sidérurgie

Metals

Morocco

455 262

-18.69%

17 667

308

251

311 278

-33 Société Africaine de Cacao (SACO)

Food and drink

Côte d’Ivoire

454 303

312 266

-46 Sania Cie

Agribusiness

Côte d’Ivoire

451 585

4 015

313

- Société Nationale d’Électricité du Sénégal

314 300

-14 Seven-Up Bottling Co.

315 242

-73 Eterna Oil & Gas

316

315

317 200 318 322 319

274

320 328

Utilities

Senegal

451 541

Food and drink

Nigeria

447 706

-6.54%

38 693

Chemicals

Nigeria

444 948

-26.40%

7 002

-1 Saham Assurances*

Insurance

Côte d’Ivoire

443 641

18 542

-117 Groupe CFAO Algérie

Diversified

Algeria

437 761

-41.01%

Mining

Mali

436 950

194 190

Petroleum

Côte d’Ivoire

436 397

-18.38%

15 777

Retail

Gabon

435 675

15 555

+4 Société des Mines de Loulo* -45 Société Nationale d’Opérations Pétrolières +8 Ceca Gadis

321 301

-20 Oceana Group

Agribusiness

South Africa

433 819

-8.81%

52 422

322 293

-29 Mobil Oil Nigeria

Petroleum

Nigeria

432 140

-10.77%

34 713

323 283

-40 Total Tunisie

Petroleum services

Tunisia

427 442

324 308

-16 Groupe Managem

Mining

Morocco

423 991

-7.11%

24 922

325 286

-39 Lesieur Cristal

Agribusiness

Morocco

421 694

-15.31%

21 532

Mining

Burkina Faso

417 226

49 926 138 982

326

327

318

328 321 329

330 347 331

- Essakane Gold Mine -9 Sidi Kerir Petrochemicals Co.

Petroleum

Egypt

415 591

-5.68%

-7 Food and Allied Group of Companies

Agribusiness

Mauritius

415 066

-5.33%

Petroleum services

Senegal

414 457

495

Diversified

Zimbabwe

413 349

7.56%

-34 486

Agribusiness

Côte d’Ivoire

412 267

3 371

- International Trading Oil & Commodities Corp. +17 Meikles Africa - SAF-Cacao

332 337

+5 Groupe CFAO Congo

Diversified

Rep. of Congo

411 990

1.38%

333 335

+2 Unimer

Food and drink

Morocco

411 499

0.41%

2 700 35 445

-20 Saham Assurance Maroc

Insurance

Morocco

406 346

-9.63%

335 397

+62 Copragri SA

Agribusiness

Morocco

405 610

336 338

+2 Engen DRC*

Petroleum services

DRC

405 287

9 615

334

314

337 361

+24 Vivo Energy Senegal

Petroleum services

Senegal

404 911

1 723

338 250

-88 Zalagh Holding

Agribusiness

Morocco

404 625

-6 017 -

-22 Axa Assurance Maroc

Insurance

Morocco

402 912

-8.66%

340 307

-33 Office National des Chemins de Fer du Maroc

Rail transport

Morocco

399 510

-12.49%

341 325

-16 Afriquia Gaz

Gas

Morocco

397 315

-7.94%

44 695

342 309

-33 PZ Cussons Nigeria

24 819

339

317

Cosmetics industry

Nigeria

397 075

343

- Beatrix Gold Mine

Mining

South Africa

393 113

74 872

344

- Groupe ETRHB Haddad*

Construction

Algeria

392 207

12 388 42 309

345 346

+1 Bamburi Cement

Construction

Kenya

390 554

1.06%

346 353

+7 Coopérative Copag Taroudant

Food and drink

Morocco

390 227

347 342

-5 South Deep Gold Mine*

Mining

South Africa

389 073

-19 697

348 333

-15 Vivo Energy Mauritius

Petroleum services

Mauritius

388 761

-7.37%

4 692

349 352

+3 Hudaco Industries

Auto industry

South Africa

385 665

2.76%

1 534

South Africa

382 412

10.51%

155 823

350 367

+17 Coronation Fund Managers

Financial services

2014 results in thousands of US dollars; *in italics 2013 results; NA: not available

THE AFRICA REPORT

•

N° 77

•

F E B R UA R Y 2 016

BUSINESS TOP 500 AFRICAN COMPANIES

351

312

Diff.

Rank ’13

RANKINGS 351-400 Rank ’14

Bidvest Namibia (#380) increased its total investment in employee training from N$2.7m ($179,518) in 2014 to N$3.8m ($252,630) in 2015.

Company

Sector

Country

Turnover (2014)

Turnover change

Net profits

-39 Fertial

Agribusiness

Algeria

382 206

-15.36%

51 665

352 320

-32 Ciments du Maroc

Construction

Morocco

381 429

-13.17%

89 759

353 298

-55 CMDT

Agribusiness

Mali

381 158

26 194

354 330

-24 Iliad Africa

Construction

South Africa

375 821

-11.57%

8 499

Food and drink

Morocco

375 368

Auto industry

Morocco

375 078

-10.25%

24 276

355 362 356 334

+7 North Africa Bottling Co.* -22 Auto Hall

Petroleum

Algeria

373 267

75 594

358 402

+44 Petromin Oils

Petroleum services

Morocco

373 261

9 696

359 456

+97 Outspan Ivoire

Agribusiness

Côte d’Ivoire

371 951

Mining

Mali

371 361

200 444

357

360 354

- Entreprise Nationale de Forage

-6 Société des Mines de Gounkoto*

Insurance

Ghana

371 250

362 392

+30 Industrial Promotion Services West Africa*

Diversified

Côte d’Ivoire

368 636

363 291

-72 Groupe Loukil

Diversified

Tunisia

365 576

-13.98%

25 157

Mining

Tanzania

365 393

Petroleum services

Morocco

362 619

Utilities

Gabon

360 010

-1.59%

11 470 15 746

361 355

364 358

-6 Databank Agrifund Manager*

-6 North Mara Gold Mine*

365 378

+13 Société Marocaine de Carburants – ZIZ

366 357

-9 Société d’Énergie et d’Eau du Gabon

367 441 368

369 363

+74 Sefalana Holding Co. - Holdipharma* -6 Office National des Aéroports

Food and drink

Botswana

357 723

34.10%

Pharmaceuticals

Egypt

357 525

Air transport

Morocco

355 483

-0.90%

75 057

370 304

-66 Produce Buying Co.

Agribusiness

Ghana

353 955

-24.65%

-7 906

371 350

-21 Umeme

Utilities

Uganda

351 952

-6.56%

25 377

372 339

-33 Orange Cameroun*

ICT/Telecoms

Cameroon

351 405

57 796

ICT/Telecoms

Tanzania

351 000

Diversified

Côte d’Ivoire

348 570

18 870

373

- Tigo Tanzania*

374 365

-9 Nsia Participations SA*

375 366

-9 Somague Angola*

376

- Masumali Meghji Insurance Brokers

Construction

Angola

346 691

Insurance

Kenya

344 453

325 657

377 351

-26 Holcim

Construction

Morocco

344 186

-8.57%

65 711

378 359

-19 Times Media Group

Media

South Africa

343 930

-5.70%

34 178

379 369

-10 National Foods Holdings

Food and drink

Zimbabwe

343 518

0.00%

16 783

380 389

+9 Bidvest Namibia

Diversified

Namibia

342 714

7.30%

42 475

Utilities

Namibia

341 591

8.55%

53 064

381 395 382

383 305

+14 Namibian Power Corp. - Cargill Cocoa -78 Golden Star Resources

Agribusiness

Côte d’Ivoire

331 131

Mining

Ghana

328 915

-29.69%

-83 441

384 383

-1 Cervejas de Moçambique*

Food and drink

Mozambique

326 790

47 270

385 384

-1 Soares da Costa Angola*

Construction

Angola

326 592

16 899

386 364

-22 Airtel DRC

ICT/Telecoms

DRC

324 845

-9.04%

-321 079

387 401

+14 Royal Bafokeng Platinum

Mining

South Africa

324 344

4.79%

51 551

ICT/Telecoms

Mali

323 899

0.76%

Real estate

Morocco

323 790

-37.25%

126 954

388 388 389 280 390

417

391

- Société des Télécommunications du Mali -109 Alliances Développement Immobilier

+27 Soc. Ivoirienne de Promotion de Supermarchés Retail - Energies Nouvelles Congo

Côte d’Ivoire

321 680

1 334

Energy

Rep. of Congo

321 550

70 690

392 420

+28 Groupe Benamor

Food and drink

Algeria

319 521

13.17%

393 343

-50 Zurich Insurance Co. South Africa

Insurance

South Africa

318 350

-18.13%

3 575

394 393

-1 Groupe Industriel des Productions Laitières

Agribusiness

Algeria

317 172

0.45%

19 023

Food and drink

Egypt

315 986

-4.70%

23 492

Insurance

Egypt

314 672

17.46%

20 188

Agribusiness

Morocco

314 119

Burkina Faso

312 920

106 714

395 379

-16 Cairo Poultry

396 439

+43 Misr Life Insurance Co.

397 360

-37 Alf Sahel

Mining

398

- Bissa Gold

399 376

-23 Maghrébail

Financial services

Morocco

311 628

-7.02%

7 992

400 372

-28 Côte d’Ivoire Telecom

ICT/Telecoms

Côte d’Ivoire

311 499

-7.57%

20 122

2014 results in thousands of US dollars; *in italics 2013 results; NA: not available

THE AFRICA REPORT

•

N° 77

•

F E B R UA R Y 2 016

40th ANNUAL GENERAL MEETING OF THE FANAF ABIDJAN (Côte d’Ivoire), from 15 to 17 February 2016 LOCATION: SOFITEL Hotel Ivoire GENERAL THEME

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Information : www.fanaf.com/prix-de-la-fanaf.html

www.asaci.net

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in partnership with

LEAD CAMPUS 4 leading academic institutions 3 cities : Cape Town, Dakar, Paris 2 languages

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BUSINESS TOP 500 AFRICAN COMPANIES

Diff.

Rank ’13

RANKINGS 401-450 Rank ’14

“

Company

Wee want to create a one-stop shop in insurance.”

Ga affar Hassam CEO of Botswana Insurance Holdings (#413)

Sector

Country

Turnover (2014)

Turnover change

Net profits

401 436

+35 Egyptian International Tourism Co.

Tourism

Egypt

311 377

15.51%

28 950

402 323

-79 Distribution & Warehousing Network

Retail

South Africa

311 357

-28.72%

41 805

403 377

-26 Merafe Resources

Mining

South Africa

310 704

-6.67%

18 432

Food and drink

Morocco

310 024

2 800

404 400

-4 Société Centrale de Boissons Gazeuses*

405 425

+20 Maridive and Oil Services

Petroleum services

Egypt

309 775

11.04%

5 381

406 370

-36 Country Bird Holdings

Agribusiness

South Africa

308 751

-9.57%

-12 309

407

- ArcelorMittal Annaba*

Metals

Algeria

308 121

-154 665

408

- Quantum Foods Holdings

Food and drink

South Africa

306 562

-731

409

- CNR International – Côte d’Ivoire

Petroleum

Côte d’Ivoire

304 363

410

- Elsecom*

Auto industry

Algeria

303 331

1 784

411 356

-55 Unilever Nigeria

Chemicals

Nigeria

302 746

-17.96%

13 099

412 381

-31 Société Nationale d’Assurances

Insurance

Algeria

301 220

-8.21%

36 581 52 218

Insurance

Botswana

298 789

-45.25%

414 404

-10 Groupe CFAO Cameroun

Diversified

Cameroon

298 313

-3.43%

415 426

+11 Amendis

Utilities

Morocco

298 134

413 270

-143 Botswana Insurance Holdings

416 405

-11 Santova Logistics

Transport

South Africa

298 112

-2.80%

3 020

417 399

-18 Zambia Sugar

Agribusiness

Zambia

296 622

-4.60%

22 673

418 375

-43 Générale des Carrières et des Mines

Mining

DRC

295 585

-12.08%

-82 866

Tourism

South Africa

293 083

Construction

South Africa

292 706

Textiles

Mauritius

290 872

16 756

419

413

420 332 421 428 422

410

423 440 424

425

418

426

427 437 428

429 421 430

414

431 390 432

411

433 424 434

-6 Peermont Global* -88 Aveng Manufacturing +7 Ciel Textile -12 Sopriam*

Auto industry

Morocco

284 536

+17 Press Corporation

Diversified

Malawi

284 517

6.47%

46 039

Utilities

Mozambique

284 300

11 700

Mining

Tanzania

284 190

Retail

Côte d’Ivoire

283 811

198

- Companhia de Transmissao de Moçambique -7 Buzwagi Gold Mine* - Callivoire* +10 Famous Brands

Tourism

South Africa

282 663

5.07%

41 729

Mining

Namibia

282 649

3 046

Retail

Tunisia

281 781

1 301

Diversified

Mauritius

281 277

-3.98%

38 589

-41 BSI Steel

Metals

South Africa

279 624

-12.24%

193 703

-21 Transnet Pipelines

Petroleum

South Africa

279 448

-5.74%

Mining

Tanzania

279 421

Petroleum

Algeria

278 227

14 321

- Rössing Uranium Mine* -8 SNMVT – Monoprix -16 ENL Group

-9 Bulyanhulu Gold Mine* - Entr. Nationale de Grands Travaux Pétroliers

435 438

+3 Société des Brasseries du Gabon

Food and drink

Gabon

277 746

436 433

-3 Mauritius Telecom

ICT/Telecoms

Mauritius

276 847

2.10%

30 143

Utilities

Morocco

276 050

Mining

Tunisia

275 654

23 016

437 373 438 265 439 429 440

441

374

-64 Redal -173 Compagnie des Phosphates de Gafsa -10 Al Ezz Flat Steel* - SEMAFO Burkina Faso

Metals

Egypt

272 577

Mining

Burkina Faso

272 512

-3 485

-67 Centrale Automobile Chérifienne

Auto industry

Morocco

271 369

442 432

-10 Groupe Metidji*

Food and drink

Algeria

271 311

21 276

443 434

-9 Airtel Tanzania

-83 023

ICT/Telecoms

Tanzania

270 328

-0.16%

444

- Office du Commerce de la Tunisie

Retail

Tunisia

269 491

-2 264

445

- Kia Motors Algérie*

Auto industry

Algeria

268 850

18 816

446 453

+7 Indianoil Mauritius

Petroleum services

Mauritius

268 824

7.12%

4 680

Insurance

Kenya

268 637

33 644

Petroleum services

Botswana

267 584

-9.38%

6 734

Tourism

Mauritius

267 406

7.14%

13 943

Morocco

267 217

-40.77%

447

- Jubilee Holdings

448

412

-36 Engen Botswana

449 454 450

313

+5 New Mauritius Hotels -137 Compagnie Générale Immobilière

Real estate

2014 results in thousands of US dollars; *in italics 2013 results; NA: not available

THE AFRICA REPORT

•

N° 77

•

F E B R UA R Y 2 016

TOP 500 AFRICAN COMPANIES BUSINESS

451 409 452

371

453 449

Diff.

Rank ’13

Rank ’14

RANKINGS 451-500

-16.2%

Company

PALMCI’s (#478) stock lost 16.2% of its value between October 2014 and September 2015, due to a significant drop in the price of palm oil.

Turnover (2014)

Turnover change

Net profits

Sector

Country

-42 Delta Holding

Diversified

Morocco

266 748

-11.76%

-81 Honeywell Flour Mills

Agribusiness

Nigeria

266 382

-21.37%

6 083

Textiles

Egypt

266 001

3.07%

10 389 50 804

-4 Al Arafa for Invmt. in Garments Manufacturing

Construction

Morocco

264 790

455 380

-75 Société des Mines de Tongon

Mining

Côte d’Ivoire

263 557

-20.00%

456 408

-48 Solibra

Food and drink

Côte d’Ivoire

262 629

-13.68%

21 273

457 490

+33 Société Multinationale de Bitumes

454

- Ciments de l’Atlas

20 036

Construction

Côte d’Ivoire

261 053

20.48%

-11 Compagnie Centrale de Réassurance*

Insurance

Algeria

258 813

33 672

459 448

-11 Royal Swaziland Sugar Corp.*

Agribusiness

Swaziland

258 567

34 307

460 382

-78 Alexandria Portland Cement

Construction

Egypt

258 063

-21.11%

5 667

461 450

-11 Groupe CFAO Côte d’Ivoire*

Diversified

Côte d’Ivoire

257 465

Agribusiness

Morocco

257 286

458 447

462

- Yellowrock

463 391

-72 Maghreb Steel

Metals

Morocco

254 308

464 403

-61 Total Mauritius

Petroleum services

Mauritius

253 771

-17.91%

5 535

465

- TAQA Arabia

Petroleum services

Egypt

250 481

15 005

466

- Skorpion Zinc*

Mining

Namibia

250 376

24 533

467

- Energie du Mali

Utilities

Mali

249 901

9 267

Food and drink

Morocco

249 251

-11.07%

27 804

468 423

-45 Brasseries du Maroc

469

- CFAO Group Nigeria

Diversified

Nigeria

248 611

470

- Tradoma

Transport

Cameroon

246 495

9 067

471 442

-29 Sococim Industries

Construction

Senegal

244 677

18 178

472 459

-13 Sonabel

Utilities

Burkina Faso

244 114

-0.51%

-20 700

473 461

-12 Village Main Reef*

Mining

South Africa

242 778

-84 691

474 458

-16 Office National des Télécommunications

ICT/Telecoms

Burkina Faso

242 213

-1.79%

36 380

475 463

-12 Golden Pyramids Plaza Co.*

Tourism

Egypt

241 396

95 554

476 443

-33 One Tech Holding

Electrical equipment

Tunisia

238 593

-10.26%

13 478

477 467

-10 BAI Co.*

Insurance

Mauritius

238 187

9 863

478 386

-92 PALMCI

Agribusiness

Côte d’Ivoire

237 882

18 509

479 451

-28 Cooper Maroc Pharmaceuticals

Pharmaceuticals

Morocco

237 624

-7.63%

Services

Côte d’Ivoire

235 190

265 077

Financial services

Egypt

234 708

22 852

Transport

Zimbabwe

233 682

-574

480

481

471

482

- Athena Conseil* -10 Pioneers Holding* - Unifreight Africa*

483 464

-19 Groupe Ingelec

Electrical equipment

Morocco

233 119

484 468

-16 MTN Sudan

ICT/Telecoms

Sudan

232 529

-2.14%

485

486 446 487

488 473 489

490 394 491

492

474

493

494 477 495

496 479 497

- Cabinet Yzas Baker Tilly* -40 Compagnie de Distribution de Côte d’Ivoire - Ercinn -15 Groupe Acima* - Airtel Uganda -96 Mauritanian Copper Mines - EgyptAir Maintenance & Engineering -18 Compagnie Algérienne des Assurances - Société Ivoirienne des Tabacs -17 Moov Côte d’Ivoire* - Dimab -17 Brasseries du Burkina* - Vivo Energy Burkina Faso

Services

Côte d’Ivoire

231 731

1 188

Retail

Côte d’Ivoire

231 379

-12 596 138 748

Construction

Côte d’Ivoire

231 127

Retail

Morocco

230 812

ICT/Telecoms

Uganda

229 974

-19 646 33 900

Mining

Mauritania

229 800

-27.00%

Air transport

Egypt

228 869

2 763

Insurance

Algeria

228 779

-0.86%

17 835 12 095

Agribusiness

Côte d’Ivoire

227 563

ICT/Telecoms

Côte d’Ivoire

227 321

Construction

Guinea

226 590

41 153

Food and drink

Burkina Faso

224 346

Petroleum services

Burkina Faso

223 477

3 712

Agribusiness

Kenya

223 460

42 416

Morocco

223 269

Algeria

223 076

7 863

498 481

-17 British American Tobacco Kenya*

499 469

-30 Société d’Exploitation des Ports – Marsa Maroc Transport

500

- PMA Trading

Auto industry

2014 results in thousands of US dollars; *in italics 2013 results; NA: not available

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BUSINESS TOP 500 AFRICAN COMPANIES

TELECOMS Talk is cheap, but data leads the way In the face of falling revenue, companies are rolling out infrastructure to encourage internet use and greater smartphone take-up

Company

6 MTN Group

Country

Turnover in $bn

Top 10 telecom companies Rank in Top 500

South Africa

12.6

14 Vodacom Group

South Africa

6.7

21 Vodacom South Africa

South Africa

5.3

27 MTN Nigeria

Nigeria

4.6

37 MTN South Africa

South Africa

3.4

39 Global Telecom Holding

Egypt

3.2

41 Groupe Maroc Telecom

Morocco

3.2

49 Telkom

South Africa

2.8

67 Maroc Telecom

Morocco

2.3

75 Blue Label Telecoms

South Africa

1.9 2014 results

$196m for licences in Côte d’Ivoire and Ghana in December and concluded a deal to acquire Visafone Communications this January. The purchase of Visafone and its rights on the 800MHz spectrum will not only help accelerate MTN’s launch of 4G LTE services but also increase its subscriber base by two million subscribers. SURFING BY PHONE

AFP

he past few years have been tough for the telecoms sector due to fierce competition on price. Turnover for the 45 telecoms and information and communications companies included in this year’s Top 500 fell by 3.71% from $73.4bn in 2013 to $70.6bn in 2014. Eight of the top 10 companies recorded a drop in turnover over the same period, with South African firms in particular hit by falling revenue after the government mandated lower mobile interconnection rates. If2015wasgrim,executivesfrom Africa’s largest telecoms company, MTN Group (#6), hope this year to seemorebluesky.InOctober2015, the Nigerian government fined

Submarine cables linking the continents revolutionise broadband speeds

MTN Nigeria (#27), the group’s largest unit, a record $5.2bn – later reduced to $3.9bn – for failure to deactivate 5.2m unregistered SIM cards from its network. The operator lost almost 20% off its market capitalisation in less than a week following the announcement. MTN missed the 31 December 2015 deadline to pay the fine, and the case is currently in the courts. The group is also facing more troubles in Uganda, where MTN Uganda (#309) is appealing a $660,000 fine imposed by a Ugandancommercialcourtinrelation to its partnership with mobilemoney business EzeeMoney. Undeterred by its troubles elsewhere, the group paid a total of

Mobile internet remains the key platform for internet access and video streaming across the region, with about a fifth of sub-Saharan Africa’s population using a mobile internet connection by the end of 2014, according to the industry body the GSM Association. This has translated into a surge in data revenue for mobile operators, and the association expects it to rise from $40bn in 2015 to $51bn in 2020. Interim results for Vodacom South Africa (#21) for the six months ending 30 September 2015 showed annual 33.4% growth in data revenue, and Telkom (#49) announced in November that it had increased mobile data revenue by 68.5% to R711m ($47m) over the same period. Vodacom is in talks with South Africa-based Naspers (#16) – Africa’s largest pay-TV provider – to deliver video content to mobile phones across Africa. The smartphone market is increasing in volume due to falling device prices and more than 540m devices are expected to be in use by 2020, up from 160m in 2015. Econet Wireless Global, parent

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TOP 500 AFRICAN COMPANIES BUSINESS

company of Zimbabwe’s Econet Wireless (#192), also plans to launch a pay-TV service this year for Anglophone Africa. NEW INFRASTRUCTURE

Twenty-four African countries had 4G LTE services by mid-2015, and 103 operators announced new 4G projects in 35 countries, according to a report from London-based consultancy Balancing Act. In North Africa, 4G deployment has been slower. None of Egypt’s three mobile operators – MobiNil (#100), Vodafone and Etisalat – are yet to offerthe service.Moroccois a stepahead,withallthreemajoroperators including Maroc Telecom (#67), offering 4G as of July 2015.

Companies are continuing to roll out new infrastructure. UKbased Liquid Telecom, a broadband group controlled by Econet Wireless, issued a request for tenders late last year for a 10,000km submarine cable that will link South Africa to the Middle East and Europe. The cable will be connected to Liquid Telecom’s existing 20,000km terrestrial fibre network – the largest in the region – to extend international connectivity to landlocked and coastal countries in Eastern, Central and Southern Africa. Indian company Bharti Airtel signed a deal with Liquid Telecom in September to use its fibre infrastructure to provide faster broadband services

MTN’s e share price n lost 20% in a week after the firm was fined by the Nigerian government SOURCE: REUTERS

to its customers in Africa. The telecoms giant has four of its African subsidiaries in our top 500 list: Airtel Nigeria (#126), Airtel DRC (#386), Airtel Tanzania (#443) and Airtel Uganda (#489). In October Etisalat, a United Arab Emirates-based telecom operator, completed the sale of its 85% stake in Zanzibar Telecom to Sweden-based Millicom after acquiring a 53% majority stake in Maroc Telecom in May. The deal made Millicom, which owns Tigo Tanzania (#373), the number-two mobile operator in the East African country, with control of more than a third of the country’s mobile customers (see box). ● Oheneba Ama Nti Osei

INTERVIEW

Cynthia Gordon Executive vice-president and chief executive of the Africa division, Millicom

The first opportunity I see is to get everyone connected TAR: What is your strategy for Africa? Our strategy revolves around enabling digital lifestyles. What we’re doing practically is making a significant improvement in our network. We’ve modernised our network, and we’ve rolled out 3G and 4G services. We’ve just recently launched 4G in Rwanda and Tanzania, and in both of those countries we’re the only operator that is able to bring 4G. So that demonstrates that we’ve really taken the lead in terms of innovation. We also have 4G in Chad as well. So, in all of our countries, we’ve got 3G. I’m pleased to say in three out of the six countries we’ve now got 4G too. Fundamental to that, in terms of connection and experience, what we really believe in is network sharing and infrastructure sharing. We’re working very hard with our peers and competitors to enable us to extend the network on a very economical basis and to maybe push network sharing to the next level. How important is business-tobusiness (B2B) in all of this? We’ve given a strong priority to B2B, and currently B2B customers represent THE AFRICA REPORT

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about 3% of our Africa region services. We think there’s an opportunity to grow that very significantly, so we’re launching the Tigo Business brand in all of our markets. How is Millicom driving more data adoption in Africa? We want to get everyone using data, and you don’t need a smartphone to use it. Typically in each of our markets, we’ve got about 60% of our users using data-capable handsets, which are much cheaper than the smartphones. The first opportunity I see is to get everyone connected. And if you’ve got a datacapable handset, you can be connected. That’s a very big message we’re giving to our customers. The other thing that I would pick up on is access, and that’s about making the prices very affordable. What are your growth prospects? We think that there is a very strong opportunity in our market for improved organic growth. We were in fact the fastest-growing mobile business in the first six months of 2015, and we think there’s the opportunity to go further.

Voice and SMS are growing by nearly 5% in the recent quarter, and we think that there is an opportunity to grow more because there’s more usage, there’s increased network availability and there’s an increase in mobile penetration. You recently acquired a major stake in Zanzibar Telecom. Do you see Tigo continuing to invest heavily in the Tanzania market? Yes, we definitely see lots of potential in that market. We’ve grown our customer base by about 509,000 in the third quarter, so that’s over half a million. What we’re seeing very strongly is firstly voice and SMS revenue grew by 44%. Mobile data and mobile financial services grew by 45% and 30% respectively. This growth is very much being driven by the activities we’re doing in the market to make customers more aware of the services and by really focusing our services against the customer experiences that they want. Zanzibar has a very strong, healthy and vibrant B2B community, and we believe that they need to be served better in terms of 2G, 3G and 4G opportunities. ● Interview by Oheneba Ama Nti Osei

BUSINESS TOP 500 AFRICAN COMPANIES

AGRIBUSINESS Growing pains for some but not for others

Bidvest Foods’ international foods division grew by 25% in the financial year ending 2015 SOURCE: BIDVEST FOODS

Dangote Noodles Deli Foods

Deciduous Fruit Exports

1.7

South Africa

1.5

108 Tongaat Hulett Group

South Africa

1.4

115 Société Marocaine des Tabacs

Morocco

1.3

130 Illovo Sugar

South Africa

1.1

164 Anglovaal Industries

South Africa

0.9

170 Eastern Co.

Egypt

0.8

55%

15%

Consumer Brands

Groceries Snacks & Treats Beverages Out of Home

Value Added Meat Products Home, Personal Care & Baby

16% 4%

40%

14% 28%

Rice Jungle Pasta

38%

2.6

18%

Nigeria 10% Exports & International

East Africa Cameroon

South Africa Nigeria

37%

54 Tiger Brands 88 Flour Mills of Nigeria

Maize Mill Bake King Food

Grains

2.9

5%3 10%

11%

8.8

Algeria

in terms of turnover, generating $8.8bn – 11% more than in 2013. However, in terms of profits Algeria’s Cevital (#46), took the number one slot, netting $347.1m, compared to Bidvest’s $272.7m. Bidvest bucked the African agricultural trend by expanding thanks to its exports to key markets in Asia andEurope,whichbuyaroundhalf of its output. Growth in the firm’s international food services business expanded by 25%, masking the more modest 4% growth in its South African divisions. Meanwhile, foreign companies are creating demand in African agribusiness supply chains. “One of our concerns is how we source our materials”, says David Cutter, president of global supply and procurement for drinks giant

(% of Tiger Brands 2014 turnover)

12%

South Africa

46 Cevital

2014 results

How the Tiger tallies up Dangote Flour Dangote Pasta

35%

10% SOURCE: TIGER BRANDS ANNUAL REPORT 2014

Country

10 Bidvest Foods

101 Pioneer Foods Group

Bidvest remains the giant of the sector, expanding its exports to Asia and Europe, while the competition bites into the sugar pie eather extremes played havoc with Africa’s agricultural output in 2014, with revenue earned by the agribusiness firms in our Top 500 companies dropping by 11.2% year on year. The 44 agribusiness companies that feature in this year’s ranking brought in revenue worth $37.7bn and profits worth $2.2bn in 2014. Combined with the food and drink sector, this revenue rises to $58.6bn, totalling 8.4% of revenue gathered by our Top 500 companies. Similar results could be expected for companies’ 2015 results due to droughts in places such as South Africa and Ethiopia. South Africa’s Bidvest Foods (#10) crept up one place in our rankings and continues to stand head and shoulders above its rivals

Company

Turnover in $bn

Top 10 agribusiness companies Rank in Top 500

18%

Diageo. “This is essential to stay competitive and avoid the fluctuations in African currencies. Today, 70% of our materials are sourced within our markets and our goal is to go up to 80%.” MONOPOLY DOWN

Despite having the highest profits in the sector, Cevital dropped two places in our ranking. The firm also lost its monopoly over sugar refining in Algeria, with news in December 2015 that a new refinery run by France’s Cristal Union and Algerian company La Belle had begun operations in Ouled Moussa. The new competitor aims to hit output of some 700,000tn in the coming months, which will seriously threaten Cevital’s market share in a country that consumes around 1.2m tonnes per annum. South Africa’s largest food producer, Tiger Brands (#54), climbed six places. The news is sure to delight shareholders nearly as much as the December announcement that it would sell its 67% stake in loss-making Tiger Branded Consumer Goods –formerlyknownasDangoteFlour Mills –to Nigeria’s Dangote Industries. Investors were shaken by the announcement in September that chief executive Peter Matlare was to quit at the end of 2015. His successor has yet to be named. Elsewhere, South Africa-based Pioneer Foods (#101) has bought a majority share in Nigeria’s Food Concepts in early 2015 and plans a wider African expansion. ● Charlie Hamilton

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BUSINESS TOP 500 AFRICAN COMPANIES

Kickback from the commodity crunch Many manufacturers are grappling with a downturn in commodity prices and a drop in demand for the products they produce

Top 10 manufacturing companies

Company

Country

3 Sasol

South Africa

17.4

7 Steinhoff International Holdings

South Africa

10.1

17 Sappi

South Africa

6.1

43 Mediclinic Corp.

South Africa

3.0

45 ArcelorMittal South Africa

South Africa

3.0

50 Network Healthcare Holdings

South Africa

2.7

51 Ezz Steel Co.

Egypt

2.7

55 Aspen Pharmacare Holdings

South Africa

2.5

61 Allied Electronics Corp.

South Africa

2.4

62 Elsewedy Cables

Egypt

2.4 2014 results

ported steel. Ezz Steel reported a E£319m ($40.7m) loss for the first three quarters of 2015. The company does not export its production and is having difficulty competing with low-cost imports. IMPORT TARIFFS

AMR DALSH/REUTERS

herecentcommodityboom in Africa did not lead to the transformation of its economies into ones focused on manufacturing, and the sector continues to weaken. Transportation, electricity and other infrastructure deficits are some of the obstacles holding back industrial firms from Egypt to Kenya, Nigeria and South Africa. As a result of these challenges, the manufacturing sector’s turnover in our Top 500 ranking – based on 2014 company reports – dropped by 7.2% to $75.1bn. The World Bank’s lead economist for Africa, Punam Chuhan-Pole, tells The Africa Report: “You’ll find that the share of manufacturing [in exports] has actually declined. In 2001-2004, it averaged about 27% of exports and now it’s about 16%.” The drop in oil and gas prices in late 2015 had knock-on impacts on manufacturers. Chemical producer and energy company Sasol (#3) has been slashing costs and sacked 1,500 members of staff in 2015 with the aim of saving about $300m per year. Nonetheless, it is going through with plans to build a $8.9bn ethylene plant in the United States as a means of product and geographical diversification. Despite the difficult environment, Sasol reported a 2% rise in profits up to R46.5bn ($2.8bn) in the year ending June 2015 due to the strength of its activities outside of oil and gas exploration and production. Iron ore prices have been low but so has demand for steel, due

Turnover in $bn

MANUFACTURING

Rank in Top 500

Egypt’s Ezz Steel is struggling to compete with cheap imports

in part to the slowdown of the Chinese economy (see TAR75, November 2015). A senior official in the former ruling party and Egyptian steel magnate, Ahmed Ezz, has had legal problems since the overthrow of President Hosni Mubarak in 2011. Ezz Steel (#51), of which Ezz owns a 51% stake, has been performing badly even though the government has implemented higher tariffs on im-

TheSouthAfricangovernmentalso raised tariffs on imported steel in 2015, but it has come too late for ArcelorMittal South Africa (#45). In late 2015, the company was in the process of shutting down two plants, with the prospect of another closure and possibly 1,600 job losses in total. The company has been losing money every year since 2011. ArcelorMittal South Africa is now leading a local campaign for the imposition of antidumping tariffs on Chinese steel, and is reviewing its plants with an eye to cutting more costs. The difficult headwinds offer some companies the opportunity to reorganise and restructure to make profits another day. South Africa’s Allied Electronics (#61, Altron) is undergoing a major shake-up as it transforms from a family-run business into an independentlymanagedcompany.The Venter family announced in May 2015 that they are giving up control of the company so that it can strip off its non-core assets and focus on its profitable businesses. In the year ending February 2015, Altron reported a R60m ($3.6m) loss due to several unsuccessful product launches and a costly and troubled expansion into East Africa. ●

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BUSINESS TOP 500 COMPANIES

OIL & GAS

Algeria

67.8

2 Sonangol

Angola

Morocco

4.9

32 Naftal

Algeria

3.8

35 Middle East Oil Refineries

Egypt

3.5

he era of low oil prices not only spells trouble for the economies and spending plans of major oil-producing economieslikeNigeriaandAngola, but also for the continent’s oil companies. With $100 per barrel a distant memory, Africa and the world market face divergent price scenarios – a 2016 recovery to $60 or above, or a doomsday scenario in which oil descends to as low as $20 per barrel. The latter could happen if the Saudi Arabia-led Organisation of the Petroleum Exporting Countries doesn’t act to stem supply while demand remains low and sanction-free Iran pumps billions of barrels. The oil and gas sector had already begun to feel the pain in 2014. The sector’s turnover in our

Company

24 Samir

With the oil price plummeting, lawyers caught up with the big boys while smaller players realised they’d been taken for a ride

52 Société Ivoirienne de Raffinage Côte d’Ivoire

2.7

58 Afriquia SMDC

Morocco

2.4

64 Soc. Nat. des Hydrocarbures

Cameroon

2.3

65 Oando

Nigeria

2.3

78 Total Kenya

Kenya

1.9

2014 results; *in italics 2013 results

The near-term outlook for major refineries is subdued. Morocco’s Samir(#24)shut down operations at its 200,000-barrel-per-day plant in August 2015 due to severe financial difficulties. It has large debts to major oil trading companies like Vitol and Glencore, and lost on its unhedged crude oil inventories built when oil prices were higher.

Top 500 companies dropped to $160.6bn, a fall of by 9.4% compared to 2013 results. Africa’soilrefineriesshouldhave benefited significantly from lower oil prices that began in 2015, but theydidnot.Côted’Ivoire’sSociété Ivoirienne de Raffinage (SIR, #52) is “trapped in a cycle of government debt”, explains Ecobank head of energy research Dolapo Oni. It neglected to carry out requiredmaintenanceandupgrades, and has not taken advantage of cheap oil to build its reserves. As Lagos-based FBN Capital’s energy and natural resources expert Rolake Akinkugbe observes, the window of profit opportunity provided by cheaper oil feedstock will diminish in the longer term, so time is of the essence.

Soaring Sonatrach (US$bn)

1 Sonatrach*

Rank in Top 500

Crude awakening for players large and small

Country

Turnover in $bn

Top 10 oil & gas companies

RAPPED KNUCKLES

Oil prices (US$) 160

Turnover Net profits

150 140 130

120 110

100 90

80 30

20 10 0 2004 05

2013

60 50 40

32.79

30 20 2006

2008

2010

2012

2014

SOURCE: NASDAQ

SOURCE: JA RESEARCH

2016

In 2015, Samir also faced the wrath of Morocco’s tax authorities, legal action against it, and the suspensionof itsshareson the Casablanca exchange. It is reliant on Saudi/ Ethiopian billionaire Mohammed Al Amoudi, who is behind Samir’s majority shareholder, to assist with a major financial restructuring and raising of at least $1bn in additional capital. Meanwhile, officials at Egypt’s government-owned Middle East Oil Refineries (#35), which seeks major investment to upgrade its operations, hope lenders are not discouraged by the subdued refining environment in North Africa. Algerian refiner and distributor Naftal (#32) is going through its own difficult changes. It got a new chief executive in May and plans approximately $1.9bn in infrastructure investment for its distribution network. Naftal’s parent company, Sonatrach (#1), faces major restructuring of its own. It is planning for a 5% increase in oil production this year while counting on an oil price recovery and courting foreign investors for oil and gas exploration.

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TOP 500 COMPANIES BUSINESS

In 2015, Sonatrach was wracked by major management changes at the very top and at its subsidiaries, partly to drive forward its renewed emphasis on increasing production and against the backdrop of a corruption scandal and trial engulfing the former company leadership. It has also been engaged in negotiations with western European countries over gas supplies, where EU tensions with Russia could work to Algeria’s advantage. TENTACLES

Another upstream behemoth, Angola’s Sonangol (#2), has problems of its own. In May, its chairman criticised – in a supposedly confidential memorandum – Sonangol’s expensive and inefficient agreements with contractors for raising its costs to “unsustainable” levels. Sonangol remains the octopus-like hub of Angola’s oil industry, having recently presided over the award of exploration licences to local companies, entered into discussion on potential gas-to-power projects with Italy’s ENI, and agreed to the purchase of Cobalt Energy’s Angolan oil block interests. Thesuccessofoilblockpurchases by local companies will depend on oil prices and access to capital, among other factors. Renaissance Capital Nigeria head of research AdesojiSolankearguesthatoilprices of $30 or below could cause “real problems”notjustforoilcompanies but also for Nigeria’s banking sector. FBN Capital’s Akinkugbe also sees the $30 level as worrying and says access to capital is a key issue affecting smaller companies, especially “those still developing assets”. ● Martin Yeboah

ABIDJAN, 21-22 MARCH Diversification and thriving amid the commodity crunch are key themes at the AFRICACEOFORUM 2016

theafricaceoforum.com

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PROFILE

Oando Nigerian oil and gas company

Diversification and hedging help to surf the downturn

he financial pressure on Oando have “faced a major revenue companies in Africa’s largest crunch” and are each increasing their oil producer, Nigeria, has focus on gas, partly in response implications on attempts to low oil prices. Oando has also used to increase the local content component oil price hedging contracts to reduce of its oil and gas industry. It also its oil price exposure, although illustrates difficulties that may be faced Renaissance Capital’s Adesoji Solanke elsewhere on the continent. Although emphasises that these hedges “are Nigeria is unusual among African not infinite” and only cover a portion countries for the high exposure of Oando’s oil production. of its banking sector to oil and gas, local oil companies – apart from a few Other Oando measures, such top-10 behemoths – typically lack the as its June 2015 agreement to sell a controlling interest in its downstream deep pockets of the international oil operations to Vitol and Nigerian companies (IOCs) that have perennially private-equity firm Helios, reflect the dominated Nigerian oil production ability of diversified oil and gas players through joint ventures and productionto sell assets to bolster their cash sharing contracts with the Nigerian levels and pay down hefty acquisition National Petroleum Corporation (NNPC). debt. This is over and above Oando’s Many of these companies, including strategic shift away from the Oando (#65), have acquired assets from the IOCs at high prices in the downstream to midstream and past few years. These reflected oil prices Seplat and Oando are increasing at times in excess their focus on gas, partly of $100 and optimistic in response to low oil prices price expectations. Oando, for example, upstream businesses in a country paid approximately $1.5bn for most plagued by fuel market chaos. of ConocoPhillips’ Nigeria oil and A planned $400m-or-so rights offering gas assets in 2014. to shareholders could further assist in the reduction of Oando’s debt, Although its closest domestic as did a partial cashing out of its oil price competitor, Seplat Petroleum hedge during the first quarter, which Development Company (#186), supported a significant pre-payment has seen its attempts to purchase of the ConocoPhillips acquisition loan. Chevron’s stakes in major Niger In the first nine months of 2015, Delta assets restrained by the Nigeria Oando reported a $63.5m loss due Supreme Court action of a disgruntled largely to asset impairments. That was bidder, it has – like Oando – seen an improvement on the $88m lost over a major decline in its stock price since the same period in 2014. the heady days of its April 2014 Future announcements of further $500m initial public offering on the losses and asset write-downs, mirroring Nigeria and London stock exchanges. the disclosures of chief executive Wale Under new president and now Tinubu back in October, will not only petroleum minister Muhammadu Buhari bode poorly for ambitious Oando but and NNPC managing director/ also illustrate adverse industry conditions petroleum minister of state Emmanuel that should more severely affect smaller, Kachikwu, both Seplat and Oando less diversified, local players for whom continue their efforts to adjust to the accessing capital and disposing of new reality of low oil prices. Ecobank’s non-core assets is more difficult. ● M.Y. Dolapo Oni notes that Seplat and

F E B R UA R Y 2 016

BUSINESS TOP 500 AFRICAN COMPANIES

MINING Slow crawl of the juggernauts

Company

Turnover in $bn

Top 10 mining companies Rank in Top 500

Country

23 AngloGold Ashanti

South Africa

5.2

25 Anglo American Platinum Corp.

South Africa

4.8

28 Office Chérifien des Phosphates Morocco

After a difficult year of cost-cutting, mining companies are now under pressure to reduce their workforces and close unprofitable mines

4.6

31 Kumba Iron Ore

South Africa

4.1

48 Gold Fields

South Africa

2.9

57 Impala Platinum Holdings

South Africa

2.5

76 Sibanye Gold

South Africa

1.9

82 Compagnie Minière de l’Ogooué Gabon 87 Kansanshi Mining 107 Exxaro Resources

1.7

Zambia

1.7

South Africa

1.4

2014 results

in late 2015. South Africa’s Impala, also planning a major rights issue and projecting increased 2016 production, still bears the scars from major 2014 strikes that drove significant operating losses. IRON ORE LANGUISHES

NADINE HUTTON/BLOOMBERG VIA GETTY IMAGES

gainst a backdrop of depressed prices and reduced demand from China, Africa’s miners look set for another fraught year. The major players – mostly headquartered in a South Africa beset by political disputes, labour protests and tepid economic growth – will continue to face pressure to reduce their workforces and close unprofitable operations. Reduced investment in new production and the shutting down of operations creates a potential silver lining of modest price recoveries, albeit accompanied by risks to the survival of the least efficient and most indebted miners. In the year ahead, the top gold producers – AngloGold Ashanti (#23), Gold Fields (#48) and Sibanye Gold

50%

Mining firm Anglo American is to halve its 72,000-strong global workforce

(#76) – will benefit from a weaker rand but suffer from fluctuating gold prices that are not likely to be far in excess of $1,000-$1,100/oz. Both Amplats and Impala Platinum (#57) have had to operate in the face not only of low platinum prices, which show little prospect of near-term recovery, but also of labour market troubles. Confronting the need for further South Africa workforce reductions, reduced 2015 profits and an almost $1bn in potential asset write-downs, Anglo American (#25) is considering the divestment of unprofitable commodity lines. Meanwhile, South Africaheadquartered platinum producer Lonmin (#150) was unable to convince its shareholders fully to subscribe to a $400m rights issue

Anglo American’s current stance is that its nickel, coal and iron ore operations need to prove their worth to avoid the chop. With average 2015 per-tonne prices for iron ore less than half of those in 2012 and 2013, 2014’s troubles have continued for Kumba Iron Ore (#31), which is majority owned by Anglo American.Analystssaythataverage prices are unlikely to recover substantially, if at all, this year. Due to the downturn, Kumba has beenrestructuringitsSishenmine,hashad unfavourable price negotiations with major buyer ArcelorMittal South Africa and has predicted a major cut in 2016 output. South Africa-headquartered coal miner Exxaro Resources (#107) likewise recorded reduced 2015 earnings and plans workforce cuts and reduced capital expenditures. Adding insult to injury are recent contract disputes with South Africa power supplier Eskom, reflecting yet another challenge facing South Africa’s miners. Gold Fields, for example, has explored the use of non-Eskom renewable energy at one major gold project, while Sibanye Gold is seeking coal and solar power supplies as alternatives to Eskom’s costly and unreliable electricity. ●

THE AFRICA REPORT

Martin Yeboah •

N° 77

•

F E B R UA R Y 2 016

Africa 2016

Business for Africa, Egypt and the World 20-21 February 2016 Sharm el Sheikh, Egypt

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