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GROUPE JEUNE AFRIQUE INTERNATIONAL EDITION

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Africans investing in Africa

• Lagos Maximum City • African Union Candidate games • Agribiz Tiger Brands loses its stripes

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N ° 7 8 • M A R C H 2 0 16

Africans investing in Africa

• African Union Candidates play games • Ghana/Côte d’Ivoire Growth engines • Agribiz Tiger Brands loses its stripes

Africans investing in Africa

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• Ghana/Côte d’Ivoire Growth engines • Lagos Maximum City • African Union Candidate games

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INFRASTRUCTURE

THE AFRICA REPORT

CONTENTS

OUTLOOK is a supplement to THE AFRICA REPORT N°78

OUTLOOK |

FINANCE

PEOPLE

INVESTMENT

TELECOMS

ENERGY

The CEOs

who bring it home Think global, invest local: backing continental projects

LAGOS

COVER CREDITS: GHANA EDITION: C. PETIT TESSON/MAXPPP; F. KOKOROKO FOR TAR - NIGERIA EDITION: EKO ATLANTIC - INTERNATIONAL EDITION: M. RHODES/GALLO IMAGES/GETTY IMAGES; ATTIJARIWAFA; G. ALANDRY DOCUMENTOGRAPHY FOR JA; N. KHAMIS/REUTERS

Maximum City Old families fight for new property in the battle to control Nigeria’s economic heart

GROUPE JEUNE AFRIQUE

MONTHLY • N° 78 • MARCH 2016

Engines of growth

Cross-border cooperation is the key to energising West Africa’s economy

Kenya

From left to right: Gavin Dalgleish, MD of SA agribusiness ILLOVO Ismaïl Douiri, Co-CEO ATTIJARIWAFA Bank Ade Ayeyemi, Group CEO ECOBANK Tabitha Karanja, Kenyan CEO of Keroche Breweries

GROUPE JEUNE AFRIQUE

GHANA EDITION

NIGERIA EDITION

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 8 GH¢ • Italy 4.90 € • Kenya 410 shillings • Liberia $LD 300 • Morocco 40 DH • Netherlands 4.90 € • Nigeria 600 naira Norway 60 NK •Portugal 4.90 € • Sierra Leone LE 12,000 • South Africa 35 rand (tax incl.) • Spain 4.90 € • Switzerland 9.90 FS • Tanzania 9,000 shillings Tunisia 5.4 DT • Uganda 9,000 shillings • UK £ 4.50 • United States US$ 6.95 • Zambia 30 ZMW • Zimbabwe US$ 4 • CFA Countries 3,000 F CFA

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 8 GH¢ • Italy 4.90 € • Kenya 410 shillings • Liberia $LD 300 • Morocco 40 DH • Netherlands 4.90 € • Nigeria 600 naira Norway 60 NK • Portugal 4.90 € • Sierra Leone LE 12,000 • South Africa 35 rand (tax incl.) • Spain 4.90 € • Switzerland 9.90 FS • Tanzania 9,000 shillings Tunisia 5.4 DT • Uganda 9,000 shillings • UK £ 4.50 • United States US$ 6.95 • Zambia 30 ZMW • Zimbabwe US$ 4 • CFA Countries 3,000 F CFA

Linking Asian investors with African markets

THE AFRICA REPORT # 78 - MARCH 2016

FACUNDO ARRIZABALAGA /MAXPPP

GHANA-CÔTE D’IVOIRE

Not to be sold separately

FREE with this issue: an OUTLOOK supplement on Kenya. Not to be sold separately.

BUSINESS

4 EDITORIAL The price of politics

68 CEO FORUM Africans investing in Africa Amid tough economic realities, The Africa Report talks to the continent’s business champions about strategies for success

6 LETTERS 8 THE QUESTION

BRIEFING 10 SIGNPOSTS

72 TIMBER Guns, bribes and chainsaws

12 INTERNATIONAL 14 PEOPLE 16 OPINION Chester Missing

76 MEDIA Netflix doesn’t hold all the aces

18 CALENDAR

FRONTLINE 20 LAGOS Maximum City Nigeria’s economic capital is expanding at breakneck speed. Is it just benefiting the top tier?

86 BREWING Beer maintains its head start 88 EL NIÑO Farmers warned the worst is yet to come

34 BURKINA FASO Jostled priorities

ART & LIFE

90 URBAN LIVING Streets ahead Africa’s burgeoning cities are driving out community spaces, but the fightback has begun

43 ZAMBIA A time for alliances

94 BRIEFS Artist Michael Soi

43 ETHIOPIA Drought and doubt

96 TRAVEL Surf’s up

44 ANANSI

97 LIFESTYLE Twitter trends and songwriter Nakhane Touré

COUNTRY FOCUS 47 GHANA & CÔTE D’IVOIRE A new wager Regional integration and cooperation define relations between these West African neighbours and economic powerhouses THE AFRICA REPORT

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80 HANNIBAL

82 AGRIBUSINESS Tiger loses its stripes After troubled ventures in Kenya and Nigeria Tiger Brands seeks a new direction

28 AFRICAN UNION All about number one AU chair Nkosazana DlaminiZuma will have to make up her mind on whether to stay or to go

42 NIGERIA Battling insurgents and markets

80 FINANCE Barclays may want out of Africa

DOSSIER

POLITICS

36 INTERVIEW Ghana’s President John Dramani Mahama

78 LEADERS Runa Alam, CEO of DPI

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98 DAY IN THE LIFE Senegalese ornithologist Moussa Ka

This issue carries an insert between pages 34-35 for selected countries

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

C HA I R M A N A ND F O UND E R BÉCHIR BEN YAHMED

The price of politics

nce upon a time, when the price of a country’s exports crashed and its debts soared, a team of earnest-looking suits from the IMF would turn up with money and an offer that the government couldn’t refuse. The deal would go something like this: cut the government payroll, devalue the currency, liberalise trade and sell off a few state assets. At the beginning of the year, when Christine Lagarde, the stylish managing director of the IMF, was asked by a journalist if she was pressing President Muhammadu Buhari’s government to devalue the naira, she demurred. That is an outdated view of how the fund operates, she insisted. True enough, the days of IMF and World Bank diktats are gone. And they ended badly, after an era of pseudo-reforms without structural change. Harsh economic forces persist, and new political systems – with competitive multiparty elections – are desperately trying to adapt. For the ruling parties in Ghana and Zambia, both facing elections this year, all the choices are hard. As growth flags, prices and debts are going up. And the politics is getting nastier, with allegations of skulduggery on all sides. Governing parties fear the ‘Nigeria effect’. A year ago, Buhari powered to victory on a campaign of change as President Goodluck Jonathan struggled with crashing oil prices and out-of-control corruption. Technology – social media and biometric checks on voting – helped too. Now Buhari also has to navigate the new politics. He faces a high-stakes policy battle over the exchange rate. Banks and businesses want a massive

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

devaluation. Buhari insists that that would be hyper-inflationary, making life tougher for the poorest. This time, the spectre haunting the government is not a dawn broadcast by putschists but mounting popular dissatisfaction. The new politics should have its advantages. The big economic decisions are meant to take account of popular sentiment. That is at the heart of Nigeria’s policy arguments today, but it points to a bigger question across Africa. Almost every ruling party relies on farmers for election victory. Opposition parties rarely make much headway Governments beyond their redoubts in the towns and cities. may court Canny politicians in businesses Brazil and India have and banks, mobilised farmers’ unions to win power but they and boost production. forget Now it is in Africa’s countryside where farmers at change could have their peril the greatest positive effect. Farmers still struggle to get finance, irrigation, fertiliser and machinery. That’s why Africa, despite having 60% of the world’s uncultivated land, spends $40bn per year in food imports, according to the Alliance for a Green Revolution in Africa. Those countries doing best with farming are Ethiopia and Rwanda, where state-backed programmes provide expertise and inputs. Both governments argue that their economic performance bolsters their political legitimacy. Although recent protests are showing the limits of authoritarian developmentalism, there is still a big lesson for political activists: forget the farmers at your peril. ●

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 RE G I O NA L E D I T O R S CRYSTAL ORDERSON (SOUTHERN AFRICA) TOLU OGUNLESI (NIGERIA) BILLIE ADWOA MCTERNAN (GHANA) S UB - E D I T O R S ALISON CULLIFORD PERRY LEOPARD 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) SYDONIE GHAYEB CHRISTOPHE CHAUVIN (INFOGRAPHICS) P R O D UCT I O N PHILIPPE MARTIN CHRISTIAN KASONGO RE SE AR C H SYLVIE FOURNIER P HO TO GR AP HY PIERANGÉLIQUE SCHOULER O NL I NE PRINCE OFORI-ATTA SA LE S 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 RE GI 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

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

AFRICAN YOUTH: A TINDERBOX FOR RADICALISATION

IS Murderous utopia comes to Africa

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

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he annexation of Africa to a terror hub [‘Islamic State/Africa: This grim utopia’, TAR77 Feb 2016] offers a clear insight into some of the elements responsible for and COMPANIES encouraging the radicalisation of the continent How to thrive in 2016 by various terror groups.The solution to ending this terror surge is for African leaders to get their acts together – the time to keep playing ping-pong with governance is over. For a continent that warehouses 70% of the under-30 age bracket, there is a huge market for recruits. What African countries need to do is to create a sense of belonging in the youth by ensuring they form an appreciable percentage of any policy formation and government. African youths are angry, feel neglected and are more open to radicalisation than those in the Middle East. Adekoya Boladale Public affairs analyst and political commentator, via email 2016 EDITION

EXCLUSIVE RANKING

• 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 $LD 300 • Morocco 40 DH • Netherlands 4.90 € • Nigeria 600 naira Norway 60 NK • Portugal 4.90 € • Sierra Leone LE 12,000 • South Africa 35 rand (tax incl.) • Spain 4.90 € • Switzerland 9.90 FS • Tanzania 9,000 shillings Tunisia 5.4 DT • Uganda 9,000 shillings • UK £ 4.50 • United States US$ 6.95 • Zambia 30 ZMW • Zimbabwe US$ 4 • CFA Countries 3,000 F CFA

differ across the continent, affecting priorities. The one factor that cannot be overlooked, however, is the continuing importance across Africa of the teacher. The real priority should be teaching teachers digital literacy and enabling them to access information and content. Focusing on teachers is likely to result in more significant benefits in the longer term, as well as much greater value for money, than investing in projects to provide children with expensive and rapidly obsolete hardware. Rebecca Stromeyer Founder, eLearning Africa, via email

AFFORDABLE PHONES IS WHAT MATTERS UNIONS AND GOVERNMENT MUST SHAPE UP Can South Africa survive the commodities downturn? [‘Mining: End of the super-cycle’, TAR76 Dec/Jan 2016]. Only if it really wants to! For nearly 150 years South Africa survived cyclical commodity prices better than any country in the world. Not only did the country possess larger economic deposits of more minerals than the world’s other 200 countries, but SA’s mining industry was experienced and advanced enough to know how to mine its minerals safely and economically. Rising commodity prices deluded the government and unions into believing they knew much better how to

The use of smartphones is increasingly becoming an integral part of the life of the African [‘Smartphones: Your guide to the new low-cost models’, TAR75 Nov 2015]. In purchasing a phone, the African Peter Major consumer generally considers: retail Mining consultant, via email price, brand, camera quality, functionality, aesthetics, physical size, internal memory capacity, durability and user experience. While it remains INVEST IN THE TEACHERS that some consumers would go in for NOT THE TECH the brand name before anything else, The article ‘Joining the digital race’ the consumer market for affordable [TAR75 Nov 2015] asked: ‘What comes high-end feature phones is gradually first for eLearning in Africa? The becoming the primary deciding factor software or the hardware? Local for making purchases. content or accessible and affordable Kwame Adu-Appeah internet?’ Bandwidth and connectivity via email

maintain a sustainable mining industry. Now SA’s mining industry is in a shambles and losing money and manpower daily. Will government and the unions act to save the industry before it’s too late? Only 2016 will tell.

HOW TO GET YOUR COPY OF THE AFRICA REPORT On sale at your usual outlet. If you experience problems obtaining your copy, please contact your local distributor, as shown below. ETHIOPIA: SHAMA PLC, Aisha Mohammed, +251 11 554 5290, aisham@shamaethiopia.com – GHANA: TM HUDU ENTERPRISE, T. M. Hudu, +233 (0)209 007 620, +233 (0)247 584 290, tmhuduenterprise@gmail.com – KENYA: NATION MEDIA GROUP, Antony Mutunga, +254 (0)20 328 8000, amutunga@ke.nationmedia.com – NIGERIA: NEWSSTAND AGENCIES LTD, Solomon Otinwa, +234 (0)709 8123 459, newsstand2008@gmail.com – SIERRA LEONE: RAI GERB ENTERPRISES, Mohammad Gerber, +232 (0)336 72 469, raigerbenterprise@ gmail.com – SOUTHERN AFRICA: RNA DISTRIBUTION, Butch Courtney, +27 (0)11 602 9800, butchc@mad.co.za • SUBSCRIPTIONS: RAMSAY MEDIA, Karin Mulder, +27 860 100 204, subs@ramsaymedia.co.za – TANZANIA: MWANANCHI COMMUNICATIONS, Emmanuel J Lyimo, +255 716 500 500, elyimo@tz.nationmedia.com – UGANDA: MONITOR PUBLICATIONS LTD, Micheal Kazinda, +256 (0)702 178 198, mkazinda@ug.nationmedia.com – UNITED KINGDOM: COMAG, Mark Swan, +44 (0)1895 433791, Mark.Swan@comag. co.uk – UNITED STATES & CANADA: LMPI, Sylvain Fournier, +1 514 355 5610, lmpi@lmpi.com – ZAMBIA: BOOKWORLD LTD, Shivani Patel, +260 (0)211 230 606, bookworld@ For other regions go to www.theafricareport.com realtime.zm – ZIMBABWE: PRINT MEDIA DISTRIBUTION, Ian Munn, +263 778 075 147, ianmunn@mweb.co.zw

ADVERTISERS’ INDEX NESTLE CENTRAL & WEST AFRICA p 2; AROUND THE CLOCK - KPAKPAKPA p 5; IE SINGAPORE ASBF p 7; CFAO p 9; OLAM p 13; ACE THE AFRICA CEO FORUM p 19; DSTV MEDIA SALES p 31; TAR SUBSCRIPTION p 33; REP. OF TOGO p 38-41; CHANNELS TV p 45; GC NET p 46; ACTIVA INTERN. INS. p 50-51; BRVM p 53; ENTERPRISE GROUP p 55; CEMOI p 57; HOMEFOODS PROCES. & CANNERY p 57; ERNST & YOUNG GHANA p 59; INTERPAY p 59; SOCIETE GENERALE GHANA p 61; AVIATION HANDLING SERVICES p 63; WEBB FONTAINE p 65; AGRITEC p 66-67; AMSCO p 75; CCI France GHANA p 75; DDP OUTDOOR p 75; CWC GOG p 81; ADEXEN p 81; GLOBAL MEDIA ALLIANCE p 85; EKO HOTELS p 87; GHANDOUR COSM. SCENT OF AFRICA p 99; ECOBANK CÔTE D’IVOIRE p 100 OUTLOOK ADVERTISERS’ INDEX

SAFARICOM p 2; KENYA REINSURANCE CORP. p 15; AFRICA GUARANTEE FUND p 16 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

Popular African clergymen have been listed on Forbes’ richest list and are known for their lavish lifestyles and private jets. Despite raking in an estimated $18.4bn in 2014, the religious organisations they run are tax exempt

Should African churches pay taxes?

Yes REV. CLIFFORD DZAVO Diocesan Secretary of Harare, Anglican Church of the Province of Central Africa (CPCA)

There are many advantages to churches paying tax to the government. These can be grouped into two categories: helping the government fund its obligations, and compliance with the laws of the land. All governments have obligations to their citizens. These include: provision of social services to the nation such as health facilities, education, security, food, shelter and energy; infrastructure such as road development and maintenance, building and maintaining energy infrastructure; and thirdly the government has to pay its employees. Most of government employees (teachers, police, military etc.) are in social services where there is no generation of revenue but rather provision of a service. The government also has an international duty to help solve challenges happening in the world through bodies such as the United Nations and the World Food Organisation. All the above-mentioned obligations need funding and one way by which the government can raise the required funds is through taxes. Complying with the laws of the country has its advantages which include being a responsible and obedient organisation according to Romans 13:1-7. Above all, taxes belong to the government therefore we must give to Caesar what is Caesar’s and to God the things that are God’s (Luke 20:19-26). ●

No MSGR. GABRIEL OSU Director of Social Communications, Catholic Archdiocese of Lagos

Churches should not be made to pay tax. Religion is a very sensitive issue in Africa. Taxing the various religious institutions may degenerate into further division, not only among the various sects but also against the state. Albeit taxation is very essential for enhanced development, African countries are still bedevilled by so much poverty and poor leadership that they lack sound taxation policies. A majority of the populace find solace in religious bodies. The bulk of its citizens are ordinarily not responsive to their civic responsibilities, owing to distrust, poverty, and/or lack of proper enlightenment. Also, non-accountability and transparency, coupled with political and economic instability have over the years pitched a good number of the citizens against their leaders. Thus, it seems there is an aversion by many to taxes, believing that the bulk of revenue so generated often ends up in private accounts with no developmental project to show for it. I believe strongly that compelling religious bodies to pay taxes would spark off chains of negative consequences. They assist in providing social amenities that ordinarily should be the responsibility of government. They are engaged in providing quality education, health facilities and even empowering the widows and less privileged. Imposing additional taxes on them would be tantamount to an overkill. ●

YOUR VIEWS:

Yes, absolutely. They are thinly disguised corporations, fleecing a gullible populace for private gain. Yes, yes, yes! Paul Boakye They must help the needy and that’s why they are exempt from paying taxes. Manyok Giet Greed is considered one of the deadly sins and if these people really want to demonstrate real Christian values they should be using the church’s money to invest and rebuild communities. That way their charity status would be legitimate. Kyle Miller YES!!! Churches are non-profit organisations which use public funds and, as such, they should make known how much they collect, what they do with those funds, and pay taxes. KB Kafang These pastors are businessmen. They should pay taxes, after all it’s mentioned in the Bible. Samuel Bantar Yes, they should start paying taxes. They live lavish lifestyles at the expense of poor congregations. Leonard Chishimba All religious entities should pay taxes! Not just in Africa, but all over the world!!! Africangeneration

THE AFRICA REPORT

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BRIEFING

SIGNPOSTS

BURUNDI A man arrested after a grenade attack

in Bujumbura, where violence continues in response to President Nkurunziza’s plan to run for a third term.

FINANCE AFRICA’S IPOs IN 2015 2%

hile strongmen are steamrollering over constitutions to cling on to power, South Africa’s institutions showed in February that they will not be cowed by President Jacob Zuma. The long scandal about improper spending on so-called security upgrades to his Nkandla homestead – which included a pool and chicken run – reached Chief Justice Mogoeng Mogoeng at the Constitutional Court in February after a complaint from the Democratic Alliance (DA) and Economic Freedom Fighters (EFF) parties. Zuma has conceded that he would pay back some of the money spent on the upgrades. An investigation by Public Protector Thuli Madonsela found in 2014 that Zuma

17%

14%

16% Financials Oil & gas Consumer goods Industrials

46%

4% Healthcare Consumer services Basic materials Telecommunications

In conjunction with GeoPoll, The Africa Report asked 100 Nigerians across the country the question: Should Africans be able to travel visa-free throughout the continent?

55%

38%

GeoPoll is the world’s largest mobile surveying platform and sample provider in emerging markets, enabling companies and organisations to gather quick, accurate and in-depth insights. To learn more or to sign up to receive surveys visit Research. GeoPoll.com

TREVOR KUNENE/DAILY SUN/GALLO IMAGES/GETTY IMAGES

Yes No Don’t know

World Boxing Council bantamweight champion in a surprise victory over Mexican Yazmin Rivas.

SOUTH AFRICA President Jacob Zuma gave his State of the Nation address to a hostile parliament on 11 February.

Payback time for Zuma

<1%

Initial public offerings by value in 2015

ZAMBIA Catherine Phiri became the first African

SOUTH AFRICA

SOURCE: DEALOGIC

had “unduly benefited” from the public spending on the Nkandla property and that he should pay the money back. The battle is not yet over, and Zuma proposed a settlement to the Nkandla case on 6 February, saying that the auditor general and finance ministry – two institutions run by Zuma appointees – should determine how much of the $23m should be repaid. The DA and the EFF are promising to keep up the pressure as the court contemplates its ruling, but they are saving the celebrations until the money is back in the treasury. Activists and campaigners from across the continent are looking to the South African example for ways that they can help to foster accountability at home.

Chief Justice Mogoeng is hearing the legal wrangle in court

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BRIEFING

CENTRAL AFRICAN REPUBLIC

UN peacekeepers policed polling stations on 14 February for the country’s presidential elections.

MOROCCO The world’s largest solar

power plant, in Ouarzazate, went live on 4 February. It stores energy as molten salt.

ITALY Asylum seekers from Mali and Gambia took to the catwalk as part of the ‘Generation Africa’ event during the ITC Ethical Fashion Initiative in Florence on 14 January.

JEAN PIERRE AIME HARERIMAMA/REUTERS; WBC; NASIEF MANIE/FOTO24/GALLO IMAGES/GETTY; JEROME DELAY/AP/SIPA; FADEL SENNA/AFP; ANDREAS SOLARO/AFP

MINING COUNTDOWN TO BOOM AND BUST Timeline so far 12 to 1 o’clock : Oct 2011-April 2015 • 1 to 2 o’clock : April 2015 - Aug 2015 • 2 to 3 o’clock : Aug 2015 - Sept 2015 • 3 to 4 o’clock : Sept 2015 to ?

1997, 2008, 2011-2015 Governments raise taxes

CRASH

New flotations – large

11 Paper takeovers

Initial shock Cost cutting

1 Company liquidations

sell

k oo

Debt rises

buy

8 7

Rising exploration

Dividend cuts & asset write downs Recap of industry Metal prices stabilise

BOOM

New flotations – small

Cash takeovers Cautious buying – M&A Debt falls

2004 - 2007, 2010 - 2011

SOURCE: INVESTEC

VINCENT FOURNIER/JA

“Islamists don’t like life. For them, it’s it s a waste of time before eternity ”

THE AFRICA REPORT

Algerian author Kamel Daoud writing in French daily newspaper Le Monde on interpretations of Islam. “Life is a product of disobedience and this disobedience the product of a woman,” he added.

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CHINA DRAGON SLIPS

SOURCE: CHINA CUSTOMS

Aggressive selling

Chinese imports of African goods dropped by 38% in 2015 compared to 2014 as the East Asian giant’s expansion slowed. As China moves away from its focus on producing cheap exports, demand for raw material exports has softened, slashing African revenue. This followed news in November of a 40% slump in Chinese direct investment in the continent in the first six months of 2015. Meanwhile, African imports from China rose year on year by 4%, hitting ¥ 670bn ($102.8bn) in 2015.

TRANSPORT SUNCHASER Ugandan firm Kiira Motors has announced the construction a solar powered bus – one of the first such models in East Africa. The prototype 35-seater Kayoola bus cost USh500m ($147,000) to build and can run for around 80km on power stored in its twin rechargable batteries.

BRIEFING

INTERNATIONAL 1

4 5

1 3

IRAN

$100bn

The initial amount that European and United States authorities released from frozen Iranian funds in January. Tehran announced plans to buy 114 Airbus planes at a cost of about $10bn as part of its initial shopping spree.

UNITED KINGDOM

One foot in, one metre out

LIANNE MILTON/PANOS-REA

Britain could hold its in-or-out referendum on its European Union (EU) membership as soon as June of this year if a crucial summit in mid-February produces a series of reforms acceptable to the Conservative government of Prime Minister David Cameron. Hardline Conservatives say that the framework for negotiations – which would mainly allow Britain to curb welfare payments and give parliament more power to stymie EU regulations – does not go far enough in protecting the country’s interests.

BRAZIL

From Ebola to Zika

While Sierra Leone was discharging its last Ebola patient, another rapidly spreading virus had taken its place in global headlines: Zika. The World Health Organisation declared the Zika virus – which is not fatal, is transmitted by mosquitoes and causes a fever and symptoms similar to dengue – an international emergency in February. Health authorities in Latin America are worried about the most recent outbreak, which analysts suggest could lead to three million new infections this year, because there are concerns that the virus can cause neurological problems for children born to infected mothers. The US legislature is debating a bill to devote $1.8bn to the campaign to find a vaccine for the disease. But finding a usable vaccine could take years or more because there has previously been little research into the virus, which has been found in the saliva of infected people long after they no longer present symptoms. The global response to Zika will be a crucial test of whether world leaders have learned any lessons from West Africa’s experiences with Ebola. 3

have been undermined by the continuous lack of sufficient humanitarian access and by a sudden increase of aerial bombing ”

MYANMAR

Developing democracy Change is coming in fits and starts in military-run Myanmar. After Nobel Prize-winner Aung San Suu Kyi and the National League for Democracy (NLD) won a huge victory in November’s polls, in February she and her parliamentarians finally took office in the legislature, in which the constitution guarantees 25% representation for the military. The NLD’s next battle is for the post of the national president. Myanmar’s president will be chosen in March or April, and Suu Kyi is negotiating with the junta to remove a constitutional clause that was created to prohibit her from running because her late husband was a foreigner.

SYRIA

“The talks

GILLES ROLLE/REA

Unitted Nations secretary gen neral Ban Ki-moon told a do onor conference in February that peace negotiations were stalling in Syria. THE AFRICA REPORT

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PEOPLE

SPOTLIGHT

Ibrahim al-Jathran The militia leader is struggling to hold on to control of Libya’s oil terminals while fighting Islamic State and organising illicit oil sales LIBYA GOT A NEW unity government in February, but the struggle for control of the country is being fought along the coastline extending from Islamic State’s (IS) headquarters in the late Muammar Gaddafi’s home town of Sirte eastwards to Benghazi, capital of the province of Cyrenaica. This area is home to Libya’s most important oil terminals and its most prolific hydrocarbons resources. It is also home to the mercenary militia leader Ibrahim al-Jathran, who has played an influential role in bringing Libya to its current crisis.

Jathran is the 36-year-old commander of the central region’s Petroleum Facilities Guard (PFG) – which has control of the Sidra, Ras Lanuf and Zueitina oil terminals. He is on the frontline against IS, which has launched a series of destructive onslaughts on these facilities. Few observers argue that his forces are able to withstand repeated IS attacks. The international military intervention proposed by Italy, France and the United States is needed partly to compensate for Jathran’s weakness.

If bombing raids are successful, the question will be whether to leave Jathran – who is said to be backed by the powerful Magharba tribe – in control or if not, how to expel him. Jathran is notorious not only for using control of the terminals to further his political aims but also for leveraging funds. His allegiances are also deeply questionable. While he has declared his loyalty to the Tobruk-based House of Representatives, he is a self-declared federalist, agitating for greater autonomy for Cyrenaica. He also has a jihadist history of his own. He is believed to have been a junior associate of the Libyan Islamic Fighting Group, the armed opposition group crushed by Gaddafi in the 1990s. On 16 February 2011 – the day before the anti-Gaddafi revolution formally started – he was released from a jail in Benghazi. He then became the field commander of the Hamza Battalion A CAREER IN COMBAT 2011 Led a battalion of the Omar al-Mukhtar Brigade during the campaign against Gaddafi 2013 Became the head of the Political Bureau of Cyrenaica 2014 Shut down eastern Libya’s oil export terminals to extract money from the NOC

JOAN TILOUINE FOR JA

2014 Sold oil to the North Korean-flagged Morning Glory

“There is not a single African country that can guarantee the security of its citizens.”

“They have the right to defend their interests, just like everybody else does.”

Senegal’s former foreign minister Cheikh Tidiane Gadio laments the state of African security speaking after the January attack in Ouagadougou.

Djibouti’s President Ismaïl Omar Guelleh supports China’s building of a naval base at the entrance to the Red Sea.

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Good times

DONALD KABERUKA In February, African Union chair Nkosazana Dlamini-Zuma named the economist and former African Development Bank president as the high representative for the AU’s new peace fund.

The Tanzanian striker became the first East African to be crowned by the CAF as African Inter-Club Player of the Year – Based in Africa. He plays for the Democratic Republic of Congo side TP Mazembe.

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The Kenyan athlete won the Mumbai Marathon in January with a time of 2:08:35. The time was a new record for the course, a full second faster than the previous top time set by Ugandan Jackson Kiprop in 2013.

GENERAL DAVID SEJUSA

GIDEON KIPKETER

Burundi’s foreign minister Alain Nyamitwe opposes African Union peacekeepers being sent to calm tensions in Burundi.

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The Ivorian former president is standing trial at the International Criminal Court, accused of war crimes and crimes against humanity related to the outbreak of violence that followed his 2010 election defeat.

MBWANA ALLY SAMATTA

“When it comes to troops, our position has not changed. It is a no-go ...” THE AFRICA REPORT

LAURENT GBAGBO

of the Omar al-Mukhtar Brigade and was active around his home town of Ajdabiya during 2011. After the revolution, he became the leader of the PFG. In August 2013, he placed himself at the head of a campaign for the autonomy of Cyrenaica and the creation of a federal system. Describing himself as the chairman of the Political Bureau of Cyrenaica, he declared that the PFG would blockade the oil export terminals because the authorities in Tripoli were stealing revenue generated from oil produced in the east. This was the first large-scale attempt by a faction to use resources to extract political benefits. Combined with blockades at other facilities, it has cost Libya approximately $68bn in foregone revenue, according to figures released by Tripoli-based National Oil Corporation (NOC) chairman Mustafa Sanalla. The government’s initial attempts to buy Jathran off failed. He derisively dismissed an offer of about $30m in the first month of the blockade. A year later, in July 2014, he accepted approximately $200m, but the terminals only operated for a few months before attacks by militias from Misrata and then IS shut them again. Meanwhile, Jathran’s associates in eastern Libya were attempting to secure a much larger financial prize by establishing autonomous oil sales. The most notable of several failed attempts was that of the Morning Glory, a tanker that succeeded in lifting a cargo from Sidra in March 2014 but was apprehended by United States Navy Seals offshore Cyprus. The NOC is leading a vociferous anti-Jathran campaign, blaming him for much of the destruction of the oil industry and claiming that people close to Jathran are continuing to John Hamilton negotiate oil sales. ●

The army chief, who has been a vocal critic of Uganda’s President Yoweri Museveni, was detained and charged in a military court in late January with being absent without leave and being involved in politics.

JEAN PING In late January the former AU chairman won an umbrella group’s nomination to run against President Ali Bongo Ondimba in Gabon’s August election, but his nomination triggered a split in the opposition alliance.

Bad times

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OPINION

Chester Missing Puppet political analyst

They have Trump, we got Rhodes

ollywood actor Samuel L. Jackson has declared that if racist real estate mogul Donald Trump wins the United States presidency he’s moving to South Africa. But with the way our exchange rate is going, he could probably just buy us. Of late, our economy has had more ups and downs than Sarah Palin’s speeches, and our currency has been slammed along with the rest of the developing world’s by China’s troubles. Recently, the International Monetary Fund gave a shockingly low economic outlook for South Africa. With just 0.7% predicted economic growth, a South African buying a beer in London has to mortgage their farm – that’s assuming the apartheid state didn’t already steal it. On the bright side, if you are a political puppet like myself then South Africa is the place for you. Opportunities are endless. Whether it’s running our national broadcaster or being minister of finance, it’s Sesame Street all the way. Our national airline has been bailed outmoretimesthanVictoriaBeckham’ssingingcareer,andourpresident has the spending habits of a Kardashian in a shoe store.

than him or that are more complex than merely his inadequacies. How do we reconcile extreme inequality built off a system of racial supremacy? How do political leaders make tough choices that threaten their own political support? How do we create an effective enough power grid without billions being lost to corruption? And how do we get Samuel L. Jackson not to buy us? During 2015, the tone of the political conversation changed with a small incident involving throwing poo at a statue of Rhodes – or, if you are fan of African wildlife, ‘the other Cecil’. Students at the University of Cape Town (UCT) brilliantly raised the issue of lack of transformation on the campus by demanding the now notorious statue be removed. Naysayers argued that Cecil John Rhodes donated the land UCT is on, so leave him be. But as the guy stole 1m square miles of Africa, giving him a statue

In 2015, our president, Jacob Zuma, managed to squeeze his way out of having to pay back any of the R246m ($15m) the government spent accidentally on purpose on his private home in rural KwaZulu-Natal, purportedly on security upgrades. The security upgrades included a chicken run and swimming pool. Apparently, the chickens know kung fu. We are told that the swimming pool is a fire safety measure because the fire services in the Nkandla area are below standard. Ironically, Zuma’s own party, the ruling African National Congress (ANC), also happens to run the Nkandla municipality. So this is like the owner of a Burger King ordering McDonald’s because his own food sucks. Our national leader is kind of compromised. Part of the problem is that our political pundits often unfairly blame him for dynamics that are bigger THE AFRICA REPORT

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is like a car-hijacker stealing your car and then wanting a thank you letter for dropping you off at work. The poo-throwing opened a crack, which started an avalanche called #FeesMustFall – the campaign for an end to increases in university fees, and even to the fees themselves. It involved the police lobbing tear gas at students, who were dangerously armed with textbooks and feminism. You don’t want to get feminism in your eye, I can tell you. The political significance of this is that the distance between the ruling party’s promises and the desires of young South Africans for change have never been more apparent. We even saw higher education minister Blade Nzimande on TV saying “students must fall” jokingly on camera. Laughing at poor people is never a good move, especially for the head of the South African Communist Party – it’s like Ted Cruz being caught in an abortion clinic. White South Africans, like Pop Tarts in an Oreo box, got excited that the Oreos were finally seeing the light. But in truth, those that saw the #FeesMustFall movement as anti-ANC hadn’t gotten it. The decolonisation programme was more firmly on the national agenda than ever before. The question of who teaches what knowledge in what institution and to whom was in question. In South Africa, only 4% of full professors in higher education are black. Yes, we are an African country. It’s like the Oscars out here. The students were making the central point clear: economic change has not happened. Educational accessanddecolonisinglearningaretheirpointsofattack. Then on 4 December 2015 Standard and Poor’s, the ironically named ratings agency, downgraded us from stable to negative. Zuma responded with surprising velocity and replaced respected and competent

finance minister Nhlanhla Nene with completely unknown political backbencher Des van Rooyen. Puppets were back in power! It had all the makings of a Kermit the Frog-Jim Henson relationship. A no-brand-name politician gets a shot at one of the most important cabinet posts just out of the blue? If it were any more dodgy, FIFA would have made it a marketing plan. Word on the street was that Nene hadn’t got with the marionette programme and was blocking deals conducted by people close to Zuma. According to South African law, the president can appoint ministers as he chooses. So, while bringing in Elmo the Economist was his legal prerogative, we still all went nuts. White people filled in Australian visa applications and tried to write off apartheid and global

Zuma and Van Rooyen had the makings of a Kermit-Jim Henson relationship warming as Zuma’s fault: “But laaaik Zuma hey…”. Comedians stopped writing jokes and just read the news. Comrades close to the President in the ANC who were mad enough to agree to interviews stared at journalists like a Trump voter in a mosque. The presidency tried some last-minute spin about the fired Nene having an emergency, surprise placement in the BRICS Bank – because you know how politicians and plumbers work on the same lastminute call-out system. None of it stuck. Zuma was forced to bring back a previous finance minister, Pravin Gordhan, who has the unique position of being politically protected by Zuma’s own folly. I would sell T-shirts saying: “You can’t replace the replacement of a replacement without asking for your own replacement,” but not even our buffet-savvy politicians are wide enough to wear one. This year will bring municipal elections, with serious threats in the major metropoles for the ANC. The unemployment rate is sitting at around 25%, although it’s said to be far higher amongst finance ministers. With our rand too low to benefit from the oil price and a daily slew of racists destroying their real-life careers on digital-life social media, our national grumpiness is in no danger of slowing down. But before you think we are a sunken ship, don’t forget: our stock exchange is rated number one in competitiveness internationally; seven of the top 10 universities in Africa are in South Africa; we manage to give out 15m social grants to old people and children each month; and, finally, we actually got gay marriage before the US, gotablackpresidentbeforetheUS and even got Trevor Noah before the US. What did they get before us? Ebola and Donald Trump. You’re welcome, Samuel L. Jackson. ● As told to Conrad Koch

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CARDS & PAYMENTS AFRICA 1-2 March JOHANNESBURG | SOUTH AFRICA Trade show co-located with the Cash Handling Show, e-Commerce Show, Future Bank Africa and Retail World Africa for those who want to cover all their bases. terrapinn.com

CIBEX EAST AFRICA 1-3 March NAIROBI | KENYA All about East Africa’s construction, infrastructure and energy potential. cibexeastafrica.com

AFRICAN INSURANCE FORUM (FEXTON) 3-4 March JOHANNESBURG | SOUTH AFRICA Speakers include Watson Macharia, CEO of Lloyds Africa Markets, and Lion of Africa CEO Paul Myeza. ins.fextons.com

JACQUES TORREGANO/THE CEO FORUM/JA

AFRICA CEO FORUM 21-22 March

Top African business and political leaders will converge at the Sofitel Abidjan Hotel Ivoire for the fourth edition of the Africa CEO Forum, which is taking place on the African continent for the first time. Presidents Alassane Ouattara of Côte d’Ivoire and Uhuru Kenyatta of Kenya will join more than 800 participants, including some 500 chief executives who are expected to attend the two-day conference. Subjects to be debated include business opportunities in the new energy landscape, using public-private partnerships to tackle social challenges across the continent and bridging the gap between French-speaking and English-speaking Africa. Companies and CEOs who have played an exceptional role in Africa’s growth story will be presented with awards at a gala dinner on 21 March. theafricaceoforum.com

NORTH AFRICAN PETROLEUM EXHIBITION & CONFERENCES 8-11 March ALGIERS | ALGERIA www.napec-dz.com

ASA BAAKO MUSIC FESTIVAL 5-7 March BUSUA | GHANA Music festival coinciding with Ghana’s Independence Day on 6 March. asabaako.com NTH

NIGERIA SUMMIT 7-8 March LAGOS | NIGERIA What progress has the Buhari government made in increasing Nigeria’s attractiveness to investors? economist.com/events

ABIDJAN | CÔTE D’IVOIRE

ICC WORLD TWENTY20 8 March – 3 April INDIA The Zimbabwean women’s team and South African and Zimbabwean men’s teams will represent the continent in Twenty20 cricket, a short form of the game. icc-cricket.com/world-t20

WCA EXECUTIVE INVESTMENT SUMMIT 14-16 March ADDIS ABABA | ETHIOPIA

The Wharton Club of Africa’s CEO gathering. wcaexecsummit2016.com M

POWER & ELECTRICITY WORLD AFRICA 15-16 March

REP. OF CONGO PRESIDENTIAL ELECTIONS 20 March CAPE TOWN INTERNATIONAL JAZZ FESTIVAL 1-2 April

JOHANNESBURG | SOUTH AFRICA With the Solar Show running alongside. terrapinn.com

CAPE VI AFRICAN PETROLEUM CONGRESS 15-17 March

CAPE TOWN | SOUTH AFRICA Artists include Grammynominated songwriter Angie Stone, jazz flautist and composer Eddie Parker and the South African bassist and composer Benjamin Jephta with his quintet. capetownjazzfest.com

ABUJA | NIGERIA This 6th edition is on “Positioning African Petroleum for Global Development and Value Addition”. cape-africa.com THE AFRICA REPORT

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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

DIAMOND

GOLD

GALA DINNER

NETWORK with an unparalleled roster of top African chief executives

MEET the most influential investors on the continent

CHALLENGE your knowledge on the latest business practices in your industry PARTNERS

Ivory Jet services

AWARDS INSTITUTIONAL PARTNERS

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FRONTLINE

LAGOS

Maximum City Though it caters to the powerful and rich, Lagos will rise faster if it takes everyone along for the ride. Will new governor Ambode nudge the city down the right track?

By Leonard Lawal and Eromo Egbejule in Lagos and Nicholas Norbrook

elcome to Lagos, the city that chops superlatives for breakfast. The biggest and fastest-growing city in Africa’s largest economy, with a new arrival every minute according to the UN. The best estimates of today’s population

in Lagos State suggest it has more than 20 million people. The UN predicts that Lagos will be the world’s third-largest city by 2025. The Global Cities Institute predicts a population of 77 million by 2100. Nigeria’s epicentre of power and money is a terrain ripe for all types of fantasy,demographicorotherwise.Some see in Lagos slick playboys and ‘subsidy billionaires’ with private jets and yachts. Others see dystopian visions of environmental apartheid, with the 1% pulling THE AFRICA REPORT

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up the drawbridge to offshore housing developments such as Eko Atlantic City while the majority of Lagosians languish outside in crime-infested suburbs. For Lagos to live up to its huge potential, it will need to foster its social dynamism and improve the lot of the 99% while encouraging entrepreneurs, businesses and traders to invest. The Africa Report offers you a guide to the changing city through the officials and businessmen shaping its development, THE AFRICA REPORT

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the architects and activists worried about infrastructure, and members of gangs going about their daily business on Lagos’s streets. BETTER MUST COME

Lagosians who remember the city in the difficult times of the 1990s and earlier may argue that the improvements are already happening. The reigns of governor Bola Ahmed Tinubu (1999-2007) and governor Babatunde Raji Fashola

(2007-2015) have transformed the city. Roads were rebuilt and cleared, markets moved. Lagos is better lit, better run, cleaner, greener and safer. To do it, the tax base has been overhauled. Tinubu and his successor raised monthly revenue levels from less than $4m in 1999 to more than $100m. This is due to an arrangement whereby a company with links to Tinubu collects tax on behalf of the government, gaining commissions in a system that former US

GEORGE OSODI/BLOOMBERG VIA GETTY IMAGES

Lekki has risen up from the swamps in the past 10 years, perhaps the world’s fastest-growing urban corridor

EKO ATLANTIC

ambassador to Nigeria John Campbell says resembles “tax farming in the New Testament or under Louis XIV”. Not everyone agrees things have got better. Femi, who works at Murtala Muhammed International Airport and lives in Oshodi – regarded as perhaps the most dangerous place in Lagos – says improvements in the area were beautification at best. “Fashola only worked on the 10-lane highway that everyone can see. The inside parts are still as they were, and the crime rates are still high,” he says. MEGACITY REALITY CHECK

Imagine hanging, drone-like, a kilometre above Singapore or Seattle, looking down at the cars moving. Speed up the image so that each 24-hour cycle lasts but a few moments. You will see commuters inhaled and exhaled along well-integrated rail links and highways, in and out of the city. Cut to Lagos. It is choked in traffic. Tempers flare as countless thousands try to push their vehicles onto Lagos Island and Victoria Island. These twin traffic pinch points – accessiblebyjustthreegroaningbridges–house key offices, apartments and, importantly, employment. This pressure keeps Lagos at boiling point: pushing up property prices and driving the city out onto the sea and neighbouring states. But who runs Lagos, and who benefits from the pressure? “We are all winners,”

Rem Koolhaas, the avant-garde Dutch architect, argues that Lagos is pioneering anewformoforganisationwithitsnetwork of functioning ad hoc structures connecting both official political and commercial groupsandtheinformaleconomy. Others are sceptical, About 15% of the population such as Nigerian architect lives off the power or sanitation Giles Omezi. “The Koolhaas approach–celebratingLagos grid, paying $10 a month rent theMegacity–needsareality said newly elected governor Akinwunmi check.We’reheadingfor25millionpeople […]. With the current constraints we’d be Ambode at his inauguration in May 2015. sittingonatimebomb,especiallywithout “We must recognise our strength in dimass transit,” he argues. Omezi has been versity – a common national identity working on several urban planning prowhere everybody counts.” jects in Lagos over the past 15 years and This message has yet to be heard at the bottom. About 15% of the population says “transport is the key. Without fixing lives off the sanitation, power and roads that, the city is jammed. Everything else grids. These Lagosians live in informal – electricity, water and sanitation – can settlements and slums, paying rents of be improvised off the grid to an extent.”

around N2,000 ($10) per month to stay in rooms where six to eight people live. They will not be accessing the much trumpeted Nigerian housing mortgage scheme, where the smallest monthly mortgage repayment is around N40,000. “I normally start out around dawn,” says Abiodun Martins, who works at a hotel on Victoria Island and commutes in from the mainland. “I normally get home around 10pm, 11pm. Traffic! I see the kids on the weekend.” Great countries need great cities, and great cities historically provide quality services. Cities that manage to insulate the poor from larcenous landlords and exhausting commutes create huge upswellings of talent, creativity and wealth. There are worries that progress in Lagos is slowing, even reversing. Since the elections in April 2015, there has been anecdotal evidence of the resurgence of daylight robberies and people being attacked while stuck in traffic, something the Lagos government denies. Police commissioner Fatai Owoseni did report that there were 220 murders in the city in 2015. Residents point an accusing finger at ‘area boys’ – young criminals. Often seen as part of the problem, the 33,000-strong police force in the state, which is under the control of the federal government, is struggling against all manner of lawbreakers. Deputy superintendent Joe Offor, the state police spokesman, says: “We are working THE AFRICA REPORT

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L AGOS: MA XIMUM CIT Y | FRONTLINE

Future transportation networks in Lagos

Red Line (Marina to Agbado) Blue Line (Marina to Ojo) Green Line (Marina to Lekki Airport) Yellow Line (Redeem to Iddo) Brown line (Marina to Mile 12) Orange Line (Marina to Redeem)

Mangrove swamp Heavy forest Lagos-Ogun built-up area Otta

To Ibadan

Proposed Lagos urban rail system

Rail terminus Monorail High-speed rail

Redeem

Agbado

Iju Agege Murtala Muhammed Int Airport (MMIA)

Mile 12

Ikeja

Shogunle Mafoluku

Above: Reclaiming land from the sea, the Chagoury brothers’ Eko Atlantic City development will house 250,000 Lagosians in a high-end financial and commercial hub, with its own water, power and security. The first skyscrapers are now under construction

Oshodi Ajao Estate Jibowu

Lagoon

Yaba Okokomaiko Iganmu Mile 2 Lasu

Trade Fair

National Theatre

Ebute Metta Junction Iddo

Festac

Marina

To Lekki Airport

Apapa

on reducing the high crime rate […]. I can’t tell you the new strategies because then you’ll write it and the robbers will be forewarned.” As in other states, the police in Lagos are poorly paid and under-equipped, which saps morale. LIVING IN PEACE, LIVING IN FEAR

The National Union of Road Transport Workers (NURTW) is meant to lend the police a hand by keeping bus and taxi parks smooth and operational. However, the ‘National’, as it is known, has extended its operations and, once in a while, its members violently tangle with area boys and ‘cult members’ – supporters of secret societies who often vie for supremacy on university campuses. THE AFRICA REPORT

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Some youth gangs have overlapping memberships. Oshodi resident Femi offers an explanation: “The politicians take popular area boys who are their supporters and bring them to be leaders of the NURTW. As those ones blend into the system, they carry their guys along.” NURTW groups are scattered across Nigeria, but their powers are strongest in the south-west, where the aspiration to be an area boy or a ‘National’ member is commonplace these days for children in the slums. In a country where more than half of the population lacks decent jobs, ‘National’ members form a pool of willing mercenaries, recruited by politicians during elections and afterwards to ‘keep the peace’ in their ‘hood’.

Gangs clash intermittently with rivals and police over territory. Hotspots for these conflicts are largely north of the central business district on Lagos Island, in the Bariga, Fadeyi, Oshodi, Mushin, Shomolu, Ajegunle, Onipanu, and Ebute Metta areas of the city. According to a statement from the Lagos State Police Command, cult clashes in the state killed 80 people between January and June 2015. Whenever they fight, business grinds to a halt as shop owners close while the gangsters orchestrate mayhem. IntheusuallybusyIdumotaareawhere some of the largest movie and music distributors have their head offices, NURTW memberssnuffoutthebusinessofpirates. Rasaki, one of those who prowl this ● ● ●

SOURCE: LAGOS METROPOLITAN AREA TRANSPORT AUTHORITY

Mushin

FRONTLINE | L AGOS: MA XIMUM CIT Y

GOD, POWER, MONEY AND POLITICS IN LAGOS GOVERNMENT LEADERS MAJOR LANDOWNING FAMILIES

Oloto Lagos Mainland

Ikate Eti Osa

Coker

Ojora

Surulere, Orile

(Oba Fatai Aremu Aromire) Apapa

Elegushi Eti Osa

Relationship dynamics Influence

Bola Ahmed Tinubu The top political leader in the South-West, Tinubu is at the centre of the Lagos web of influence and money. By becoming an ally of Buhari, he helped win the 2015 election.

Oniru Eti Osa

Babatunde Fashola

Bill Clinton

A Tinubu protegé, Fashola runs a super-ministry in Abuja – a move some believe is meant to drive a wedge between the pair.

The Chagoury brothers contributed $5m to the Clinton Foundation and brought the former US president to launch Eko Atlantic City.

Money Conflict

Hakeem Muri Okunola Prince rince Oniru Onir Commissioner for housing and then waterfront infrastructure development, Oniru has backed the Eko Atlantic project, as well as the Jim Ovia-built Civic Centre.

RELIGIOUS LEADERS

TB Joshua Tunde Bakare

Close to Tinubu, Okunola lost a key role in Lagos government when Ambode came to power. He moved from the housing bureau to the ministry of youth.

Chief Oghene Egboh One of three Igbo candidates to win seats in the House of Representatives last year, Egboh runs the heavily Igbo Amuwo-Odofin Local Government Area.

Governor Akinwunmi Ambode The new governor was supported by key Tinubu allies to win the post but is starting to prove he is his own man. He is racing to create transport networks.

Femi Hamzat Hamzat was the Lagos State commissioner for works and infrastructure under former governor Fashola. He is now close to Tinubu.

Jimi Agbaje Enoch noch Adeboye Adebo Head of the Redeemed Christian Church of God, he holds mega-worship shows in his church, where top politicians and businesspeople are regular guests.

Heads the opposition PDP in Lagos. He ran in two gubernatorial elections, losing both.

Yemi Osinbajo Now vice-president, he worked under Tinubu and helped rebuild the judiciary. He is a pastor in the Redeemed Christian Church of God.

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district, sits in his ‘office’, a road divider stretching along the entire length of Nnamdi Azikiwe Street. He and his crew respond to greetings from passersby as they puff on joints or drink cheap liquor and intermittently play a medley of pop hits from an old smartphone. “It’s Young John The Wicked Producer,” one shouts. They belt out the opening bars belligerently, stopping to dance and backslap each other every now and then. “We collect tickets from these drivers and help secure the area”, says Rasaki in English heavily interlaced with pidgin and Yoruba. “Agbero no dey hungry,” he continues, laughing that his job provides him enough cash. He dropped out from primary school at 10 and lives in a small room where he pays N24,000 annually as rent. Together with five others who work in shifts with him, they act as lords of the streets. So will Lagos confront, co-opt or ignore the problem of these groups? ●●●

TRADITIONAL LEADERS

O Rilwan A Oba Akiolu The Oba of Lagos angrily warned Igbos in Lagos to vote for Ambode or “perish in the water”. Claims to have resolved conflicts between Tinubu and Fashola.

Oba Kabir Adewale Shotobi

Oba Raufu Adeniyi Matemi Amore

Ayangburen of Ikorodu

Olu of Ikeja

THE HEART OF THE MATTER

BUSINESS LEADERS

Jim Ovia The founder of Zenith Bank, he owns the popular Lagos Civic Centre on the Ikoyi waterfront and built the 14-storey Civic Centre Towers.

Tony Elumelu The chairman of Heirs Holdings hoped to rebuild the Falomo Shopping Centre before Ambode cancelled the contract in February.

Chagoury brothers, Ronald and Gilbert They are huge players in Lagos real estate. They own Eko Hotels and Resorts and the ambitious Eko Atlantic City project. Linked to former national leaders such as Sani Abacha.

Tayo Amusan Builds malls across Lagos.

Aliko Dangote Africa’s richest man convinced Fashola that his new $9bn refinery complex should be located along the Lekki peninsula. That should make him a large Lagos State taxpayer.

Prince Dipo Eludoyin The billionaire was Tinubu’s choice to be the Ooni of Ife, but he lost out. Said to have supported Ambode’s campaign.

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Gbolade Osibodu His investments span banking, shipping, oil and gas and power. Jimi Agbaje is a director of one of his companies.

The choices that city fathers make echo downthedecades,andGovernorTinubu, the spider at the centre of the web of patronage politics (see left) that has driven development at breakneck speed since the end of military rule in 1999, must be wondering about his legacy. A Lagos-based oil and gas investor who deals extensively with the state government argues that Tinubu’s record in Lagos is deeply ambiguous: “In some ways you can compare his ambitions to Robert Moses and Fiorello La Guardia in New York,” the investor says. “Tinubu wanted a patronage system that would deliver some results on the ground, such as the big private urban projects. But his main aim was to run a really powerful political organisation, using his Lagos operation to build a regional base in the south-west and then to contest for power at the centre.” AlthoughLagosiansdebatethesources of Tinubu’s massive personal wealth and real estate holdings as well as his record on social policy as Lagos governor, few dispute that he overhauled the state administration and has a knack of picking talented young technocrats. Indeed, many credit Tinubu with laying the foundations for his successors as governor, Fashola and Ambode. At his house on Bourdillon Road in the bourgeois Ikoyi district, Tinubu hosts and feeds successive waves of visitors and supporters from all over the city. He may not yet enjoy the influence he was

FRONTLINE | L AGOS: MA XIMUM CIT Y

seeking at national level, but he remains the quintessential Lagos power broker and dealmaker. Deals are made every day in Lagos, but Andrew Maki of the Lagos-based non-governmental organisation Justice & Empowerment Initiatives worries that property speculation is getting out of control. In an echo of cyclical slum clearance andcreationfromcitiesaroundtheworld, Maki points to a resurgence of a handful of land-owning families that are behind slum evictions: “They are fictionalising history to a certain extent. They are saying: ‘We owned all this land.’ But the way that they work increasingly is very much hand-in-hand with the government”. What, then, of the man who now takes up the reins of Africa’s largest city and the challenges he faces? Certainly, governor Ambode will stick to Tinubu’s script of patronage politics and limited reform to an extent: his campaign was financially supported by close Tinubu associate and billionaire Prince Dipo Eludoyin, as was Fashola’s. A NEW CHAPTER FOR LAGOS

Ambode’s current priority is the ‘Light up Lagos’ campaign, a promise to bring street lights to all federal and state roads by the end of 2016. Beyond that, he may attempt to bring a cleaner style of government. In August 2015, he revoked a contract to revamp the Falomo Shopping Mall on the grounds that the deal with Afriland Properties – owned by Lagos business heavyweight and People’s Democratic Party stalwart Tony Elumelu – included terms that were “grossly detrimental” to Lagos State. He claims to have saved the state N9bn in just three months by restructuring government and is allocating that money to healthcare programmes. And Ambode has managed to push major rail projects forward. In his first few weeks in charge, the new governor is said to have picked up the phone to President Muhammadu Buhari and got an agreement on land use for the Red Line, Lagos’s planned second metropolitan light railway (see page 23). Before, the Nigerian Railway Corporation, a company owned by the federal government, had obstructed the deal as it owned the right of way. Buhari finally approved of the $2.4bn venture, which is no small victory for Lagos. If those tracks are laid, Lagos will take a major step towards strengthening the talent, creativity and wealth that make it a maximum city. ●

OPINION

Tolu T Ogunlesi O

ournalist and Lagos resident Jo

Change – mainly for the better

wo decades ago, Lagos was a byword for urban neglect – not only the longstanding, big-picture brand of neglect that starves a city of roads, bridges and housing in the face of an exploding population but also the everyday, granular form that overwhelms it with undisturbed garbage and human roadkill. A lot has changed for the better since the turn of the 21st century, when democracy returned to Nigeria after a decade and a half of military rule. The soldiers who in 1984 overthrew the elected civilian government wasted little time leaving their mark on Lagos – cancelling a 1982 contract to build the city’s first ‘Metroline’. The 28.5km project would perhaps have changed the face of the city for good and spurred extensions and upgrades had it gone forward. The military struck again in 1990. This time the target was Maroko, a sprawling shanty town set amid marshlands to the east of theupscaleVictoria Islandthatwas home to more than a quarter of a million people. The bulldozers rolled in and levelled the place, with the government unmoved by the backlash that followed. It wasn’t all scorched earth policies, though. The year 1990 was when, as a present from military leader Ibrahim Babangida, the city got the Third Mainland

Bridge, sweeping 12km across the filthy lagoon that sits serenely at the heart of the city. In1938,mygrandmotherarrived here to attend secondary school. The Lagos that welcomed her was a city of fewer than a quarter of a million people spread out across two islands – Lagos and Ikoyi – and the southern fringes of the ‘Mainland’ in Iddo, Ebute Metta and Yaba. Bicycles were a standard means of transport, and Grandma remembers being fined once for riding without a helmet. In the seven decades since she came to Lagos, she’s gotten herself an education, a civil service job, raised four children, retired and bought not only an apartment but also a final resting place for whenever the time comes. Not any time soon, of course, as she’s just about to turn 90. She looms large in my sole childhood memory of Lagos, from the late 1980s, when my brother and cousins and I came to visit. Then in her sixties and without a car, she herded us around town in Danfos and Molues, showing us the city’s sights and sounds. As young as we were – I don’t think I was 10 – I recall the selfconsciousness that assailed us all as we sat in a bus and had to endure this elderly woman loudly introducing us to a city where no one minds their business.

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FRONTLINE

MONDADORI PORTFOLIO VIA GETTY IMAGES

the city’s historical quarter, underwent an astounding revamp that started around 2007. Two years later, the Gentrification Express berthed in Oshodi, one of the city’s main transport nodes. I don’t think anyone ever imagined that Oshodi could ever be sanitised. It was a defining event for the legacy of Babatunde Fashola, the state governor. It was also much criticised as yet another heavy-handed intervention from a city that has never learnt to even pretend that it cares for its bottom millions.

Even though it feels like I’ve lived in this crazy city forever, it’s only been a decade. I moved to Lagos in 2004, for work, as multitudes of young people have done for decades. The Lagos that welcomed me almost 70 years after my grandmother was a city of 15 million people. In the decade since then, I reckon more has changed about it than in the two decades preceding it. Some changes have been almost imperceptible: you don’t exactly realise your city was devoid of street signs until they start showing up as though from an invisible hand. For a while now, the city’s grown like a malignant disease. The Lagos state government estimates that two thousand migrants flood in every day. The Lekki peninsula that stretches eastwards from what THE AFRICA REPORT

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used to be Maroko is the city’s fastest-growing corridor. Twenty years ago, it was a string of swampy villages; today landowning families and chiefs have sold so much prized land they are now some of the wealthiest people in the city. The first decade of the 2000s were landmark years for real estate developers. The Silverbird Cinemas opened in Victoria Island in 2004 – the first functioning cinema in the city in many years. In December 2005, the Palms Shopping Mall opened, offering 21,000m2 of lettable space. And then in 2007 news emerged that the state government was planningaDubai-styledevelopmenton land reclaimed from the Atlantic. Today, the first skyscrapers on Eko Atlantic City are being completed. The Central Business District (CBD) on Lagos Island, adjoining

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In 1965 cyclists shared the pavement with pedestrians and motorists stuck to their traffic lane

In this second decade of the 21st century, the city has grown more confident and more snobbish. It’s welcomed its first Porsche dealership, as well as a slew of luxury fashion stores. There are the things that didn’t exist – or barely did – a decade ago, but are now being taken for granted: laundromats, gyms, smoothie bars, pop-up stores, a suspension bridge and high-rise buildings. Architect David Adjaye has designed his first building in Lagos – a 965m2 ‘concept store’ that opened last year in Victoria Island. Ambulance points have sprang up across the city;theemergencynumberworks; the cops now cruise coolly around town in US-style police cars. New governorAkinAmbode’sobsession is lighting up the city. There are the things now forever gone – Maroko-style – like the public executions that made Bar Beach (now Eko Atlantic City) the preferred family entertainment spot of the 1970s and early 1980s. The days when larger-than-life criminal overlords took turns to hold the city to ransom also appear to be behind us for good. There was Ishola Oyenusi, aka The Doctor, in the 1960s, Shina Rambo in the 1990s and Hammani Tidjani in the early 2000s. Since Tidjani’s empire was brought down in 2003, there hasn’t been, as far as I know, anyone with a similar profile. As some have suggested, politics and the rise of the internet have provided potential criminal overlords with far easier routes to prosperity. ●

POLITICS

AFRICAN UNION

All about

The AU goes into election mode as member states decide who to back for AU Commission chair at the next summit in July. The big question is whether Nkosazana Dlamini-Zuma will stand again or repair to South Africa to join the race for the presidency By Crystal Orderson in Addis Ababa

he succession issue was not on the formal agenda at the African Union (AU) summit in Addis Ababa at the end of January, but it dominated discussions between politicians, power brokers, diplomats and activists. The smart money is on Nkosazana Dlamini-Zuma, chairwoman of the AU Commission, moving back to South Africa in July to take up a senior position in the governing African National THE AFRICA REPORT

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number one Congress (ANC). She remains a front runner to win the party’s nomination to be its presidential candidate in the 2019 elections. But when she spoke of her plans to The Africa Report in Addis Ababa, DlaminiZuma kept her cards tightly against her chest: “No, I’ve not decided yet. I have time to decide,” she said with a laugh. In fact, she has until the end of March to make a formal statement, which is when the AU nominations must be submitted. THE AFRICA REPORT

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Some South African diplomats chuckle knowingly when the subject comes up. They will not betray any confidences but simply allude to ANC procedures. The argument goes that Dlamini-Zuma was deployed to Addis Ababa by the ANC leadership. That leadership was largely controlled by South Africa’s President Jacob Zuma, her ex-husband and one of her strongest supporters. This year, that same ANC leadership, albeit with a growing number of dissent-

ers, will redeploy Dlamini-Zuma to South Africa and its tumultuous politics, or so goes that line of thought. But that logic will be tested at the next step. After quitting the AU, will Dlamini-Zuma be able to face down a widening array of rivals to win the ANC’s presidential nomination? Opinion on the matter is divided in South Africa. Dlamini-Zuma’s links with President Zuma, whose star is falling rapidly after a succession of political errors, are now a mixed blessing, to say

PAN SIWEI/XINHUA-REA

Nkosazana DlaminiZuma, at the centre of the AU summit group shot – and of unofficial speculation

POLITICS

AFRICAN UNION

countries would not compete for the leadership of pan-African organisations. Thathasbeenunceremoniouslydumped. At the heart of the matter is the direction of the continental organisation at a time of growing threats to regional security and a deepening economic downturn. Everyone agrees that African states have to work more closely and effectively with each other. The AU should be central to that, but there has been a weakening of continental leadership since the glory days of the organisation’s foundation in South Africa in 2002. VITAL INJECTION PAN SIWEI/XINHUA-REA

the least. The ANC Women’s League, still proudly loyal to Zuma, is pushing hard for Dlamini-Zuma to be the face of the campaign to have the country’s first female president (TAR75, Nov 2015). But ANC heavyweights such as deputy president Cyril Ramaphosa and secretary general Gwede Mantashe will not lay out the welcome mat for her. They have other women candidates in mind for top ANC posts. A senior South African diplomat explains:“She[Dlamini-Zuma]wouldcommit political suicide if she announces that she has come back and wants to stand.” Officially, the ANC disavows personal ambitions, so she could not return and make a grand announcement, he adds. “The ANC is old fashioned, I really feel sorry for Dlamini-Zuma. Look at what happened to Tokyo Sexwale when he announced his presidential ambitions!” DETERMINED DAME

Such scenarios, debated in detail in the corridorsoftheAUCommissionaswellas the ANC headquarters at Luthuli House in Johannesburg, raise more than a scintilla of doubt about Dlamini-Zuma’s intentions. Whatever she has decided – or is yet to decide – will be based on clear political calculation, according to a senior ANC official. No one who knows her doubts Dlamini-Zuma’s determination when she makes up mind, argues the official: “When she planned on divorcing President Zuma [in 1998] no black lawyer was willing to take on the case. She

Kwame Nkrumah’s vision of pan-Africanism still seems out of reach for the African Union

Dlamini-Zuma’s supporters in 2012 hoped she would inject new life into the continental body. Dlamini-Zuma had broken the mould: she was a forceful politician willing to take on entrenched male chauvinism; she was the candidate of South Africa, then the biggest economy on the continent; and she was running against Jean Ping, one of the most experienced diplomats in Africa. SomepraiseDlamini-Zumaforlaunching initiatives, like opening up the AU to a wider public and cutting bureaucracy. She used the 50th anniversary of the founding of the AU’s precursor, the Organisation of African Unity, to set out a bold vision for Africa in Agenda 2063 – a blueprintforAfrica’sdevelopmentcrafted together with the Economic Commission for Africa and the African Development Bank. But of the three pan-African organisations, the AU is still seen as the weakest link – under-funded and prone to internecine battles and turf wars.

didn’t feel intimidated and simply found a white lawyer in Johannesburg to deal with the case. That is Ma Dlamini-Zuma!” Should Dlamini-Zuma stand and fight at the AU, she may face a formidable rival for the top job in the form of Ramtane Lamamra, Algeria’s foreign minister. He expertly chaired the AU’s Peace and Security Council from 2008 to 2013. Already, Algiers has been taking some not so discreet soundings about support for its candidate. It is likely to get strong backing from its neighbours because a North African has never headed the continDlamini-Zuma could face a ental organisation. Francoformidable rival for the top phone states, frustrated by their loss of influence in the job in Ramtane Lamamra AU, see veteran diplomat Lamamra as a powerful ally. At the same Although Dlamini-Zuma repeatedly told journalists that she wanted to move time, South Africa and Algeria have been close allies for decades – Nelson Manthe AU away from crisis management to focus on social and economic developdela trained with the Front de Libération Nationale in the early 1960s – so there ment, her tenure has been haunted by might just be scope for a backroom deal. a rising tide of security emergencies: in Almost certainly, Nigeria, whose citMali, Somalia, the DRC, Sudan, South izens currently run the African DevelSudan, Central African Republic and opment Bank and the African Exportnow Burundi. For her critics, DlaminiImport Bank, would surely join any such Zuma’s opening address to the summit in January confirmed her distance from discussions. However, the spectacle of AU realities: she did not refer to any of three of Africa’s biggest states sharing the pressing matters on the summit out the leadership of its organisations agenda, instead she chose to celebrate would likely go down badly with many of the smaller states. For many years, the the positive contribution that artists unwritten rule was that Africa’s biggest have made to Africa’s development. ● THE AFRICA REPORT

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AFRICAN UNION

INTERVIEW

Nkosazana Dlamini-Zuma Chair, African Union Commission

If Burundi’s situation deteriorates, we must do something The AU Commission chair talks to The Africa Report about security hotspots, the need for more African funding for the continental body and her political future

VINCENT FOURNIER/JA

TAR: Could you explain what the AU summit decided on the Burundi crisis? Will the AU be sending in a delegation or even a peacekeeping force? NKOSAZANA DLAMINIZUMA: Theideawasthatahigh-levelpanel should go and sit down with them [President Pierre Nkurunziza’s government] to discuss with them. The end is peace and security and stability in Burundi. So if there is peace and stability […] then it’s fine. But if it doesn’t happen, there should be an opportunity for the AU to go to Burundi to try and persuade them to allow the AU to assist them. At the moment, it’s not on the table […] in terms of going in without [the government’s] permission. But it’s on the table to have a dialogue so that you can keep monitoring the situation. If the situation improves without it, then we are all saved. But if it deteriorates, then we have to do something. You have been vocal about theneedfor the AU to be more

financially independent. What’s the progress on this? It’s coming, because Angola has moved [to pay more]. Other countrieshave been volunteering to pay more: Kenya, Ethiopia, Chad. It’s beginning to dawn on them that if we are not self-reliant in terms of our organisation, then it’s going to be difficult. The discussion about alternate sources of funding is still on the table. There is a decision to have a retreat of heads of state, foreign ministers and finance ministers to discuss [the financing issue] because they really want to see movement in this area. The matter has been debated and discussed for about 14 years without any conclusion. Now there’s even a commitment to say [member states] must gradually increase their payment of programmes to a level of 75% from Africa and 25% from donors. And there’s a commitmenttocontributing 25% [of funds for] the Peace and Security Commission and 100% of [the AU’s] operational costs.

We are going to be working with countries, together with the Economic Commission for Africa, to see what alternate sources of funding we can get. It was interesting during Ebola that the telecoms companies and regulators agreed tohavetheseSMSswhere,bysending SMSs, people made a contribution towards [stopping] Ebola. Are the AU and regional organisations making progress on a political agreement on South Sudan and ending the abuses such as gang rape? There were no strong political and government institutions [in South Sudan]. And disputes that were taking place within the party degenerated. But also, it’s about the control of resources. We are hoping that the Sudan People’s Liberation Movementin-Opposition will come back in. I’m told their advance team has arrived [in Juba]. But the leadership [former vice-president Riek Machar and his allies] must also arrive there because without an inclusive government it will be difficult to deal with all those things. What is the timetable for this year’s leadership elections in the AU Commission? As far as I know, the rules say that the names of the candidates must be with member states three months before the next summit, so you can work it [out for] yourself. Have you decided whether you will stand for another term? No, I’ve not decided yet. I have time to decide. You have time to decide? Why? Why are you asking these questions? Are you one of them that wants to know? [Laughs] AlotofpeopleinSouthAfricaare lobbying for you to come back. It’s the issue of a woman president that we’re discussing this year. Would you make yourself available if the ANC asks? Just wait. We will see. There is time to decide [Laughs]. ● Interview by C.O. N ° 78

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POLITICS

BURKINA FASO

Jostled priorities The country’s new president is promising radical change in the way Burkina Faso is governed, but his previous attempts at revolution did not end so well

n early December, in a tiny bar on the outskirts of Ouagadougou, a man was celebrating the election of Roch Marc Christian Kaboré, now his country’s new president. Evoking the name of Kaboré’s party, the Mouvement du Peuple pour le Progrès, he sang: “MPP! We have won!” From among the spectators, sitting on rickety chairs and watching the man’s victory dance, came a comment: “Hmm. MPP. Mouvement Pilim Pabé. I don’t believe them.” But the dancing man was not to be deterred. Holding on to his beer he shot back: “You just wait and see. We will get this country to work!” All this went on in good spirits. This is, after all, Burkina Faso, where people often reserve their anger for politicians whobreaktheirpromises.Butwhatabout Mouvement Pilim Pabé? The phrase plim pabé in Mooré, the language spoken by the Mossi, means “win by deception” or, more elaborately, “putting a cloth over someone’s head so he does not know who is hitting him.” Herein lies Kaboré’s first challenge. He must show that he and his party are differentfromthe autocratBlaise Compaoré and his Congrès pour la Démocratie et le Progrès (CDP), who were overthrown in an uprising in October 2014. The MPP appears to have inherited the CDP party structure and its methods of vote buying, either directly or through pliable local chiefs. At least that is what a recent

report from the Réseau National de Lutte Anti-Corruption says. And what about Kaboré himself? After all, he was on board with the previous government for 25 years. Chrysogone Zougmoré, a veteran human rights activist and part of the movement that toppled Compaoré, sees a changed man. “During his inauguration, President Kaboré remarked that he had taken the lessons from the October uprising to heart. I had the impression that he was aware of what that meant.” At his swearing-in, Kaboré laid out his ambitious priorities for a new start. High on his agenda is to “reform institutions and modernise the administration to allow for more social justice, democracy and freedom.” He promised more investment in education and the deployment of new technologies, and he laid out his plans to reform the constitution and “bring about a better sharing of the fruits of economic growth through a new social contract.” A NEW START

Truth, justice and reconciliation are other majorthemesthatKaboréhasfocusedon. Oppositionists and civil society members want to know how far the government will go in addressing the corruption of Compaoré’sgovernmentandtheongoing problems with the armed forces. The list of people under investigation for links to

Outside the capital’s Splendid Hotel two days after a jihadist attack by gunmen on 15 January

a recent coup attempt is getting longer, and the latest person to be arrested is formerrulingpartybossEddieConstance Komboïgo, on 22 January. For their part, Kaboré’s supporters are worried that if he spends too much time focused on the past, he will not address structural problems. The percentage of the population under the poverty line was 46.7% in 2009 and the primary school enrolment rate was just 87% in 2013. Activists say they won’t be fooled by Kaboré’s promises. The main lesson of Compaoré’s fall is this: if you manage

Between Roch and a hard place ROCH MARC CHRISTIAN KABORÉ comes from a well-to-do family. His father Charles was a deputy governor of the Banque Centrale des États d’Afrique de l’Ouest in Dakar, where Roch also served and where he picked his prime minister, Paul Kaba Thiéba. He followed a well-trodden educational path through secondary school in Ouagadougou and then on to France, where he obtained a degree in business management. As a young man, Kaboré was of a radical persuasion, but he was also flexible. Part of Thomas Sankara’s revolution in the 1980s, he changed tack when Blaise Compaoré overthrew the revolutionary leader. The move paid off handsomely. Kaboré rose to become executive secretary in Compaoré’s ruling

Congrès pour la Démocratie et le Progrès (CDP), presided over the national assembly and served as prime minister. Kaboré’s political instincts haven’t deserted him. He sensed revolution in the air, just as much as he sensed that as long as his old friend Blaise was around, he would never be president. In January 2014, he took two other CDP bigwigs with him and set up his own party. Compaoré hasn’t forgiven Kaboré for his betrayal and is now seething in exile, but Kaboré has got the job he always wanted. What remains to be seen is whether he can deal with the popular forces who overthrew his predecessor and are demanding the follow-through of their own revolution. ● B.P. THE AFRICA REPORT

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by the terrorist attack on 15 January, are recovering, but the Cappuccino restaurant, where most of the 30 victims were killed, is the same burned-out black hole the killers left behind. Tackling the terrorism threat means beefing up intelligence and getting the securityforcesthekindofequipmentthey need to do their jobs. That is something the French troops stationed here could usefully help with, suggests Zougmoré. “Our security forces are brave,” he says. “We all saw that on 15 January. We also know that the French presence attracts terrorists. Therefore, after they have provided the tools we need, we will kindly ask them to leave. Remember that weneverneededanyforeignassistanceto get rid of Compaoré and his presidential guard. We did that ourselves.”

ISSOUF SANOGO/AFP

THE OLD GUARD

the country badly, the people will chase you out of office. “Kaboré knows a thing or two about the spirit of the Burkinabé,” Zougmoré observes. “He is a warned man.” There is one area where Burkinabé minds are focused: justice. There are cases that are in urgent need of treatment. First is that of Thomas Sankara, the revolutionary president who died in the 1987 coup Compaoré co-organised. Then there is the case of Norbert Zongo, an investigative journalist who asked awkward questions about corruption and was murdered in 1998. There is also the case of Boukary Dabo, a student leader who was killed in 1990 under murky circumstances. All of these are under investigation after years of inaction. One of Burkina Faso’s most prominent rap artists, Smockey, was at the heart of the uprising that chased Compaoré from power. Sitting at the controls of his studio, he says: “There is no choice. I think there will be results from those big cases like Zongo and others. Soon. Those who are in charge of these dossiers know that if the results do not conform to our sense of what constitutes justice, we’ll take to the streets again. That’s the kind of pressure THE AFRICA REPORT

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Compaoré’s presidential guard was known as the Régiment de Sécurité Présidentielle (RSP). Dealing with the remnants of this unit is a job that brings together many strands: faith in institutions, justice, security and even international relations. The RSP staged a failed coup in September 2015, said to have been with the help of top officials from the previous government and some of their friends in neighbouring Côte d’Ivoire. The enigmatic General Gilbert Diendéré, the security linchpin of the Compaoré government, emerged as the coup leader. He currently resides in a military prison awaiting trial. In the wake of the January attack, Ouagadougou was buzzing with conspiracy theories that it was the handiwork of the ex-president’s political and military network, but there is little evidence supporting those claims. The last renegade members of the

that we need to maintain. If the government really wants people to regain faith in the institutions of the republic and recognise state authority, then it must treat these cases well.” The president is indeed a warned man. There is work to be done on the economy. The African Development Bank predicts an impressive 7% growth rate for this year but this is mainly playing catch-up. Prices for gold and cotton, the country’s two main foreign exchange earners, have been weak and show no sign of picking Kaboré must show that he up. Agriculture and services and his party are different – including tourism – could generate the jobs that are so from Compaoré and the CDP badly needed, but developing these sectors will take more time, now-disbanded RSP made a desperate attempt to seize a munitions depot money and effort. Aid money should soon start flowing back in, but very little just outside the capital on 22 January, of it trickles down to the people who but it ended in complete failure. Elmade the October 2014 uprising happen. even attackers, possibly the last of the If all this is not enough for the new once 1,300-strong RSP, were arrested. Kaboré team, led by Prime Minister Paul That may have been the last hurrah for Kaba Thiéba, another challenge is evidCompaoré’s security apparatus, but enced on the capital’s glamorous Avenue it does not yet show how far Kaboré Kwame Nkrumah: maintaining security. will go towards turning a new page in The Splendid Hotel and the Taxi Brousse Burkina Faso. ● Bram Posthumus in Ouagadougou bar across the street, two of the places hit

POLITICS

INTERVIEW

John Dramani Mahama President, Ghana

We must keep working on our negotiation skills Mahama is more popular than his party, but he faces criticism of recent energy deals. Polls already indicate a tight race ahead in the November national elections

light breeze wafts through the royal palms at President John Dramani Mahama’sofficialhome in the Cantonments area of Accra. Inside the expansive villa there is a serene calm as officials pore over transport schedules for a visiting delegation of first ladies. In marches Mahama himself, smiling, dapper and looking remarkably untroubled at the prospect of fighting an election in November in which his chances are reckoned at best to be 50-50, even by some of his supporters. The previous day a strategist from the governing National Democratic Congress had told The Africa Report that his party’s latest polls showed a dead heat of 45% support for Mahama and the same for Nana Akufo-Addo, the presidential candidate of the opposition New Patriotic Party. “That 10% of undecided voters are what this election will be all about,” added the strategist. A year ago, most of the areas along the coastline – including in the three ‘swing regions’ of Accra, Central and Western – were suffering from chronic power cuts. The cedi was falling precipitously, inflation was heading for 20%, the

prices for Ghana’s oil and gold exports were heading south and the International Monetary Fund was demanding harsh budget cuts in return for a cheap loan. Today, that economic backdrop is little changed, with one vital exception: the government has kept the lights on since the beginning of the year. Over the next nine months, Mahama has to persuade voters that this is the start of a longer-term economic turnaround. Even if he succeeds, the political cost could be high for his party. The paradox in the presidency is that Mahama is much more popular than his party. An Accra-based businessman who sells information technology systems to the ministries explains: “He’s an open sort of guy, not bombastic or arrogant, but the party is seen as out of control and greedy. Weirdly, he’s one of the few top politicians who could lose an election and quite happily go off and write books or something […] but you can’t say that for many of the people around him.” TAR: After the Ouagadougou attacks, do you have concerns about security in Ghana? JOHN DRAMANI MAHAMA: I do have concerns. Any president who does not is not living in the real-

MAKING HIS OWN HISTORY 29 November 1958 Born in Damongo, Northern Region 1981 BA in history from the University of Ghana, Legon 1995 International relations officer for NGO Plan International 1997 Elected to parliament to represent Bole 2009 Became vice-president July 2012 Acceded to the presidency on the death of John Atta Mills December 2012 Elected president

ity of our current time. There is a linkage between North Africa and West Africa: we have the Sahara and the Sahel between us and there are various groups operating in that area where security is a bit lax. And that has created the probleminnorthernMaliandthen also the recent attacks in Burkina Faso that were claimed by Al Qaeda in the Islamic Maghreb. We must work together to deal with terrorism, share intelligence, share information and collectively shape our response to groups trying to create mayhem. InvestigativejournalistAnasAremeyaw Anas has exposed appalling dishonesty among some judges. Will this prompt you to launch wholesale reform of the justice system? EvenbeforeAnas’sinvestigation, we had serious reform measures in the judiciary […]. The response to the investigation was prompt. When I received the petition, I referred it to the chief justice, who set up the commission of enquiry. The commission of enquiry has delivered its report, and judges have been dismissed for impropriety. What we have not talked enough about are the judges who walked Anas out of their houses andthreatenedtohandhimoverto the police [when he offered them a bribe]. We do have upright judges who cannot be influenced, and so I think we should celebrate that, and at the same time deal with the impropriety that Anas’s investigation unveiled. Inyourautobiography,youwrote about the horrors of market crashes and structural adjustment programmes. Do you fear history may be repeating itself?

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in a sustainable manner for the long term. And I want to thank Ghanaians for their patience in the difficult times. What we’re trying to do is to sustain enough power to Ghanaians and possibly to becomethepowerhubofWestAfrica.

FRANCIS KOKOROKO FOR TAR

However, the big criticisms being made are that the new projects are not sustainable and there is a dearth of information about these contracts. There’s not a dearth of information because all the documents and agreements are in parliament. There are many factors that go into negotiations, like political risk. Negotiations for a barge in Asia, in Thailand, will not be the same as negotiations for a barge in say Ghana or Nigeria. Secondly, emergency power solutions are always more expensive than ordinary power solutions. We must continue to sharpen our negotiation skills and get the best deal out of everything that we do. What I’ve done as president is to refer the AMERI negotiation [a controversial $510m contract for gas turbines with a Dubai-based company] to PwC to advise us whether we negotiated properly. This report will serve as a guide on what the benchmark should be.

No, Ghana’s economy is much more resilient than it was in the 1980s. Even so, we are putting in place prudent measures: the structural reforms that we are carrying out make the economy better able to withstand such shocks. One of the most critical things is to ensure that we maintain macroeconomic stability, try to get inflation down andbringinterestratesdowntoensurethatwehaveastablecurrency. There have been some benefits from world markets. Even though we’re losing revenue in terms of exports of oil, we’re also gaining THE AFRICA REPORT

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on the import side because we also import petroleum products. That has given us the opportunity to take off some heavy subsidies that we used to have to spend on petroleum products. W h a t ’s h a p p e n i n g w i t h electricity? We have a new infusion of about 470MW into the system: the barges [floating power plants] and then a gas-fired plant at Aboadze […]. All these interventions have helped to reduce the gap between demand and supply. We’re trying to fix this

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So and if they identify a problem, you will cancel it? The point is we cannot cancel the contract because it will lead to a judgment debt [against the government]. The plant has been built, and it’s producing power. What we’re doing is we’re bringing more skills on board. So for instance in the Eni negotiations, we had the World Bank with us. I’ve heard the terms of the Eni deal are terrible. So if there’s a problem, then the World Bank has a case to answer. Yes. The ministry of power has responded, and I will show you what went into the negotiation. You must also take the timing of the negotiation intoaccount.At the time that we were negotiating, the oil market was at a certain price. ● Interview by Patrick Smith in Accra

MARITIME TRANSPORT

TOGO T MARITIME SECURITY AND DEVELOPMENT

Lomé shows the way  The Port of Lomé’s 1,145-metre dock and 16.6-metre draught can accommodate the world’s biggest supercontainer ships.

The October 2016 Lomé Summit must address vital issues for Africa’s future, including piracy, illicit fishing and all kinds of trafficking, which threaten the continent’s economies.

he Autonomous Port of Lomé, Togo’s economic heartbeat, has confirmed its position as an indispensable transshipment hub for the countries of West Africa. To achieve that goal, in the past four years over $600 million have been invested in updating port facilities and their management. The bet has paid off: the number of ships calling at the Port of Lomé rose by 48.7% in the first half of 2015. What’s more, the volume of containers processed soared by 161% and transshipment activity by 444%!

Togo will host an extraordinary African Union summit in October 2016 For this growth to continue within a context of rising piracy and environmental risks, Togo has offered to host an extraordinary summit of African Union Heads of State and Government on maritime security and development in Africa in Lomé in October 2016. The meeting aims to make the sea an engine of the continent’s economic and social development. ■

ADVERTORIAL

The deepwater Port of Lomé at the sub-region’s service Togo has started developing its economy while contributing to regional integration. Transport infrastructure is a vital link in this strategy. Now that the Port of Lomé has been expanded, a 760-kilometre land transport corridor will link it to Cinkassé, on the border with Burkina Faso, strengthening Togo’s position as a goods transit hub serving neighbouring countries.

 A road corridor will link Lomé and Burkina Faso to increase the amount of goods that can transit through West Africa.

An unprecedented development plan for the Port of Lomé

n 2 011, To g o ro l l e d o u t a development plan to quadruple capacity at the Port autonome de Lomé (Autonomous Port of Lomé, PAL) from 400,000 twenty-foot equivalent units (TEU) in 2013 to over two million TEU in the short term. The plan has already boosted the port’s efficiency and accommodation capacity, benefitting not just Togo but also its neighbours, first among them Burkina Faso, Ghana, Niger, Benin and Mali. It includes two major building projects now nearing completion.

More and bigger ships and greater efficiency with the third dock I n O c to b e r 2 014 , P re s i d e n t Faure Essozimna Gnassingbé, with his Beninese and Nigerian counterparts in attendence, inaugurated PAL’s third dock, which Togo Terminal built at a cost of 300 billion FCFA (€457 million). It boasts a 15-metre deep, 450-meter long basin — increasing the total length to 920 metres — that can accommodate

high-capacity ships. Its storage capacity has tripled. The dock boasts two state-ofthe-art gantries and eight mobile cranes, allowing several ships to operate simultaneously. Computer terminals let staff and customers monitor operations in real time. The facility will help to create 500 direct jobs and boost government revenue.

The new container terminal will lower regional shipping costs Global Terminal Limited (GTL) and China Merchants Holdings (CMHI) each own a 50% stake in Lomé Container Terminal (LCT), which began operating in October 2015. Built with €324 million in financing from several lenders, the transshipment facility can handle 2.2 million containers a year. T h e 1,14 5 - m e t r e d o c k a n d 16.6-metre draught can accomm o d a te t h e wo r l d ’ s b i g g e s t super-containers, such as the 300-metre-long DS National Monrovia, which reached Lomé from Shanghai in December 2014.

LCT’s dock currently has six gantries, but that number will eventually rise to 12 in order to achieve economies of scale and cut regional shipping costs. Transshipment accounted for just 5% of PAL’s activity before LCT opened. ■

The One-Stop Foreign Trade Window is open To g o ’ s O n e - Sto p Fo re i g n Trade Window (GUCE, for Guichet unique du commerce extérieur) gradually started entering into service in 2014. The pilot stages began in July 2014 with import and maritime export activities at PAL. GUCE offers round-theclock access to a paperless internet platform. It cuts costs, reduces the amount of time it takes to carry out c o m m e rc i a l t ra n s a c t i o n s and logistical operations, streamlines import, export and transit procedures and improves PAL’s governance.

MARITIME TRANSPORT

TOGO T

 The container scanner’s control post at the Port of Lomé.

The aims of the conference on maritime security and development in Africa

ogo invited the African Union’s Heads of State and Government to Lomé for an extraordinary summit in October 2016 on maritime security and development in Africa. The conference will address several issues vital for the continent’s future .

Improving maritime security cooperation PUTTING AN END TO ACTS OF PIRACY Maritime piracy has been rising for over a decade, first in the Horn of Africa, then in the Gulf of Guinea, where 51 attacks were recorded in 2013. In addition, West Africa has become a transit route for smuggling drugs into Europe. These challenges require comprehensive responses, including a spe-

cial legal framework, means of surveillance and the intervention of sub-regional coordinating bodies. COMBATTING ILLICIT FISHING IN AFRICAN WATERS Illicit fishing depletes stocks, destroys marine habitats, unfairly competes with formal fishermen and undermines coastal communities. It also results in a loss of 170 billion FCFA in revenues in West Africa alone every year. That is why African countries must invest more to acquire advanced surveillance and monitoring equipment. The AU also aims to create a certification scheme for imported and exported catches. CURBING TRAFFICKING OF EVERY KIND Illicit trafficking in manufactured goods or agricultural products,

ADVERTORIAL

The Maersk Lomé honours Togo’s efforts Danish shipbuilder Maersk named a cargo ship after Togo’s capital to acknowledge the country’s efforts to improve shipping and maritime security conditions in the Gulf of Guinea. Completed in March 2015, the 255-metrelong, 37.3-metre-wide vessel boasts a capacity of 5,446 containers. Christened the Maersk Lomé, it docked in Togo’s capital on 21 July.

imported or exported through port facilities, jeopardise African countries’ economic activity and harm their ability to trade with the rest of the world. It is important to set up physical, security and social infrastructure to fight this scourge and create more formal jobs.

The sea, a key to Africa’s development EFFICIENTLY MANAGING RISING TRAFFIC Africa must plan for an unprecedented rise in trade, especially by building modern ports like PAL to accoommodate more and bigger container ships and efficiently manage traffic. PRESERVING THE MARINE ENVIRONMENT The expected rise in maritime traffic means that countries must foresee and limit their ports’ environmental impact and protect the biodiversity of coastal areas. Handling dry bulk, transferring liquid chemicals or emitting vapours can endanger the food security of over 200 million Africans and the livelihoods of more than 10 million of them. ■

Coordinated actions plans T h e 2 0 5 0 A I M St ra t e g y a l s o endeavours to make the seas safer,

in p ar t icu lar by sta n d a rd isin g the terms of prosecuting perpetrators of criminal acts, reducing environmental damage and promoting the ratification and implementation of international legal instruments. It must develop coordinated longterm action plans to spell out the steps required to reach those goals. Another priority of the 2050 AIM

Strategy is the Combined Exclusive Maritime Zone of Africa (CEMZA), which should help to foster intraAfrican trade by eliminating or simplifying maritime transport administrative procedures within t h e A U. C E M Z A w o u l d a l s o generate geostrategic advantages by spurring joint efforts in the fight against transnational and environmental threats. ■

Africa’s voice at the UN in 2012 and 2013 Togo sat on the UN Security Council as a non-permanent member for two years from January 2012 to December 2013. During that time, the country used its power to put the fight against piracy in the Gulf of Guinea at the heart of the international agenda. Togolese diplomacy also emphasized the impact of transnational organised crime (trafficking in drugs, weapons, people, etc.) on West Africa and stressed the need for coordinated actions to respond.

A pan-African strategy for the seas and oceans The sea in Africa and the world ■ 75% of the world’s main fisheries have been overexploited or are already depleted. ■ $2.5 trillion a year in the world come from oceans (fishing, tourism, transport, etc.). ■ 90% of Africa’s imports/exports are by sea. ■ One in five acts of piracy in the world occurs in the Gulf of Guinea. ■ Maritime security causes an annual 4.1% decrease in bulk goods shipping. ■ The estimated annual cost of illicit fishing is put at between $10 billion and $23 billion.

(SOURCE: THE AFRICAN UNION)

LIBERTÉ

PAT RIE

L VAI TRA

To consult the Lomé Summit website: www.african-union-togo2015.com

Port Autonome de Lomé Zone portuaire, Lomé, 1225 - Togo - Tel.: (+228) 22 27 47 42 E-mail : togoport@togoport.tg - www.togo-port.net

“I

n the area of development,” says President Gnassingbé, “the Lomé Summit will focus on Africa’s Integrated Maritime Strategy for 2050 (the 2050 AIM Strategy) to speed up its implementation plan and give it more steady backing.” Experts from universities, international and sub-regional organisations, trade groups, NGOs and economic communities drew up the 2050 AIM Strategy under the aegis of the African Union Commission. The plan seeks to create more wealth from Africa’s seas and oceans by fostering a thriving, sustainable, safe and environmentfriendly blue economy.

POLITICS

ANALYSIS President Buhari’s message for Europe: get behind the Joint Task Force

MANISH SWARUP/AP/SIPA

NIGERIA

Battling insurgents and markets

ages between Boko Haram and the more than 5,000 Islamic State fighters in Libya. On 5 February, Buhari and his advisers had a closed-door meeting with Alex Younger, the director of Britain’s Secret Intelligence Service. Next on Buhari’s itinerary was North Africa and the Middle East, and meetings with the heads of state of Egypt, Qatar and Saudi Arabia. Under Buhari’s tutelage Nigeria has greatly strengthened Buhari faces security and economic its credibility and diplomatic ties, but progress on all fronts is crises a year after the landmark election stymied by the country’s worst economic crisis for two decades. On economic strategy, the Buhari government is far more selective about the advice to which it will listen. A chorus of s President Muhammadu Buhari addressed the economic analysts are calling for a sharp devaluation of the European parliament, currently obsessed with the naira, which has been trading on the parallel market for less tide of refugees sailing across the Mediterranean, he may have been tempted to add: “And you think you’ve got probthan a third of its official rate of N197 to the dollar. For now, Buhari’s government is holding firm in his resistance lems?” Buhari used his stopover in Strasbourg on 2 February to a devaluation, which he fears would drive up prices, further to explain that his country’s battle against the Boko Haram insurgents – now formally affiliated to the Syria-based Islamic hurting his main constituency, the majority of the country’s State rebels – would need stronger international backing. 175 million people who eke out a living on about $2 a day. Specifically, Buhari is looking for $700m to fund the Yet as new capital controls and foreign-exchange restrictions 8,700-strong Multinational Joint Task Force, which groups bite, importers and manufacturers are already raising prices. armies from Cameroon, Chad, Niger and Nigeria. So far, some At the heart of this is an argument about bearing the pain $250m has been raised in contributions from Nigeria, France of the economic meltdown. Government officials say most and Switzerland. An international conference is due in May of the burden should fall on the ‘less than one per cent’ who between the main troop-providing countries, France and benefited from Nigeria’s boom in the past decade when the other European powers to bolster the N’Djamena-based force. price of oil went as high as $135 per barrel. Then foreign exThe multinational force’s results have so far been very limchange was shovelled out of the country: tens of billions of dollars in overpriced contracts and tax evaited, one of Buhari’s security advisers tells sion schemes, as well as more than $50bn The Africa Report: “After losing most of its that was used by crooked politicians and territory, Boko Haram has changed tactics business people to launder their cash. to hit-and-run attacks and suicide bombNow it is payback time, says finance minisings, particularly in Cameroon and Chad Buhari’s government ter Kemi Adeosun.She says thegovernment’s […]. We need more troops on the ground is planning on a large target of N4.9trn ($24.6bn) in tax revenue for and air power to deal with this.” borrowing programme After the Strasbourg meeting, Buhari spoke 2106 – almost 80% of it from corporate tax to finance the budget at a conference in London on the Syrian war and value added tax – is “non-negotiable”. and new investment and its regional effects, pointing out the linkOil companies could owe as much as $10bn

$3.5bn

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in tax from payment shortfalls and wrongly applied tax waiver schemes, according to analysts at the state oil company. And with hefty fines for companies such as South Africa’s MTN and a raft of local banks that have fallen foul of regulations, the government has parked its tanks on the corporate lawn. This test of wills could prove as important for Nigeria’s future as the ground war in the north-east. ● Patrick Smith in Lagos

ZAMBIA

A time for alliances Political parties are scrambling for allies ahead of the August polls

VILLARD/SIPA

ew constitutional provisions signed into law in January could make the August national elections a closer race, as both the governing Patriotic Front (PF) and opposition United Party for National Development (UPND) try their hands at forming alliances. The winning candidate in August will need 50% plus one vote now that the first-pastthe-post system has been scrapped. President Edgar Lungu has openly told PF members that the party alone could not marshal the votes for an outright presidential victory. The race is set to pit him against perennial oppositionist Hakainde Hichilema and his UPND. After cementing his leadership of the PF following the succession struggle after the death of Michael Sata in October 2014, Lungu was expected to win this year’s presidential poll easily. But the PF has failed to deliver on many of its promises that attracted new voters to sweep the party into power in September 2011. Since then, the PF government has front-loaded investment in roads, power and railways but now finds itself haunted by its over-expenditure on infrastructure, coupled with the fall in the price of copper. In February, the state closed the top two public universities after students went on the rampage protesting at non-payment of allowances. Other constitutional reforms are adding to political tensions ahead of the polls. Now candidates must choose a running mate. Top PF members like justice minister Ngosa Simbyakula, information minister Chishimba Kambwili, forWhy the Lungu face, Edgar? THE AFRICA REPORT

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eign affairs minister Harry Kalaba and current vice-president Inonge Wina are some of the frontrunners for Lungu’s ticket, but the selection process is likely to create him some enemies. Party unity is already proving problematic for Lungu. Sata’s nephew Miles Sampa resigned from his post of deputy commerce minister in January and was set to focus on his new party, the Democratic Front. Sampa now says that he will remain in the PF, but many of his colleagues doubt his loyalty and say he was aiming to be Lungu’s running mate. The PF has a Bemba ethnic group majority and with Lungu embracing many former Movement for Multiparty Democracy (MMD) members – led by former president Rupiah Banda – there is growing disenchantment among PF founding members, especially those who were close to Sata. The MMD is now divided, with factions led by former televangelist Nevers Mumba, former commerce minister Felix Mutati and former president Banda. After years of strong growth averaging 6% per annum, the Zambian economy is going through headwinds, with a major drought and massive job losses, especially in the mining sector. The UNPD’s Hichilema, a supporter of free markets, largely campaigns on economic management issues but has not fully used current economic woes to prop up his fortunes. Polls show that voters say the wealthy Hichilema lacks the common touch. If the new constitution forces the opposition to unite to challenge Lungu, the president may have won a populist victory with his reforms but also scored an own goal by risking the PF’s political future to do so. ● Christopher Mwambazi in Lusaka

ETHIOPIA

Drought and doubt Is the government prepared for the worst drought in decades?

hough rains began to fail in early 2015, the alarm bells did not ring in earnest until October. Ethiopia’s government is trying to industrialise this vastly rural country, but the farmers who make up about 80% of the population remain vulnerable to changing weather patterns. Last year, the Pacific Ocean water-warming phenomenon called El Niño led to disappointing rains in many of the country’s eastern areas. By October, widespread crop failure was impossible to ignore. This has been Ethiopia’s worst drought in decades – even worse than the one that catapulted the country into the spotlight as a poster child for aid in 1984. But the Ethiopian government is tired of that story. Its officials prefer to promote the country’s more recent reputation for double-digit economic growth, construction booms and foreign investment. On the other hand, non-governmental organisations and the

POLITICS

government’s development aid partners are sounding more worried about the crisis. John Graham, the country director for Save the Children International, which recently issued an urgent call for $245m in funding to prevent a potentially disastrous break in the food aid pipeline, explains: “Unless we do everything in our power to deal with this very enormous drought, it will result in massive problems and suffering.” The government’s tone has been more measured. Officials point out that this drought is not a famine, in part because of early responses like its allocation of $272m last year and $109m so far in 2016. They also note that resilience has been at the heart of the government’s development plan for years, most notably with the Productive Safety Net Programme (PNSP), which delivers aid to chronically food-insecure communities in exchange for labour. An assessment in December, carried out by the government and international agencies, put the number of people in need of emergency food aid at 10.2 million. The government says that of the $1.4bn requested to address this crisis, 46% has already been allocated. Another

7.9 million people have also been identified as beneficiaries for this year’s round of the PSNP, which is funded separately. Foreign aid workers generally agree that the government has been proactive. But they emphasise that this is a slow-growing crisis. The worst season for food insecurity does not typically begin until mid-year, and it is difficult to attract donors’ attention with crises like Syria competing for funding. Government spokesman Getachew Reda argues that the drought will not seriously threaten economic growth, in part because other sectors have been less affected by the changing weather. “This is our worst drought, but it doesn’t translate into the same kind of disaster that followed 1984 because Ethiopia is now better prepared,” he adds. “We would love to see a situation where people have a clear understanding of the situation on the ground that is not based on sensationalism.” That would mean that the government, which often represses critical voices, would have to provide access to journalists and researchers interested in ensuring that the official narrative is Jacey Fortin in Addis Ababa grounded in truth. ●

ANANSI Family time for securocrats

Personal and presidential THE NATIONAL ELECTIONS on 18 February were the closest race that Uganda’s Yoweri Museveni (aka M7) has run for years. But he looked weirdly energised by the experience, like a gambler preparing to lay one last big bet. At all times he was surrounded by adoring members of the first family, some of whom firmly believe they are in the queue to succeed him. It was also M7’s most personal campaign. Victory in the 18 February polls is his membership card to the ‘three decades’ club, where he will join Teodoro Obiang, Robert Mugabe and José Eduardo dos Santos. M7’s maiden speech at the Organisation of African Unity in 1987, at which he called for sit-tight leaders to step down immediately, seems aeons ago.

AFTER THE RESULTS, the next questions for M7 relate to his family. Will his super-ambitious wife Janet finally persuade him to hand over the reins? Or will their son Brigadier Muhoozi Kainerugaba, commander of Uganda’s special forces, step up again in the succession race? But they cannot ignore the claims of the security men, like police chief General Kale Kayihura and Lieutenant Gen. Henry Tumukunde, who is in charge of the ubiquitous ‘Crime Preventers’, seen by the opposition as M7’s stormtroopers.

Relentless Besigye If marks were awarded for courage and persistence, Kizza Besigye, leader of the opposition Forum for Democratic Change, would have won the 18 February election in a landslide. Formerly Museveni’s personal physician, Besigye has built a serious national organisation despite intimidation and attacks. He nearly lost his sight when government thugs sprayed pepper

in his eyes in 2011. Talking to Anansi on the campaign trail, Besigye said the people had spoken in what he called “massive national rallies for change”. This year, he insisted, “the country is ready to defend its rights and justice.”

Mbabazi, the defector FORMER PREMIER Amama Mbabazi knows the inner sanctums of the ruling National Resistance Movement, which he served for 25 years. That cut both ways in his campaign as presidential candidate for the Go Forward Movement. “We have been singled out for attack by the regime,” he told Anansi, before describing how Christopher Aine, his security chief, had “disappeared after clashing with state security”. As a former insider, Mbabazi said: “I know that Museveni’s genuine support has been falling in election after election, although they have been suppressing the opposition turnout.” He added that the government’s ban on cellphones at polling stations was “an obvious attempt to block accountability and fairness” that would ultimately fail. ● THE AFRICA REPORT

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COUNTRY FOCUS

Ghana & Côte d’Ivoire

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Presidents next door Ouattara and Mahama

A new wager While a previous generation of political leaders bet on which country’s economic model would triumph, a new one is putting its money down in support of regional cooperation and integration By Patrick Smith in Accra and Baudelaire Mieu in Abidjan

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t was an encounter that defined the region’s politics and diplomacy for a generation. A month after Ghana had proclaimed independence from Britishcolonialrule,KwameNkrumah flew toAbidjan toconvince Côted’Ivoire’s leader, Félix Houphouët-Boigny, that he should immediately push for total liberation from the French colonisers. “Your experience is rather impressive,” came the courteous reply at that meeting on 7 April 1957. After wishing ● ● ●

COUNTRY FOCUS | GHANA - CÔTE D’IVOIRE

BURKINA FASO

Kumasi ACCRA Takoradi

150 km

Gulf of Guinea

GHANA POPULATION1

26.79 million

LIFE EXPECTANCY AT BIRTH3

61.4

LAND AREA (sq. km)1

227,540

GDP (current $US)1

$38.62 billion

GDP PER CAPITA (current prices)1

$1,441.6

IMPORTS IN $BILLIONS4

$10 billion (2013)

EXPORTS IN $BILLIONS 4

$15.6 billion (2013)

FOREIGN DIRECT INVESTMENT 2

$3.4 billion

MALI

BURKINA FASO

CÔTE D'IVOIRE

LIBERIA

GHANA

Bouaké YAMOUSSOUKRO Abidjan Gulf of Guinea

200 km

CÔTE D’IVOIRE POPULATION1

22.16 million

LIFE EXPECTANCY AT BIRTH3

51.5

LAND AREA (sq. km)1

318 000

GDP (current $US)1

$34.25 billion

GDP PER CAPITA (current prices)1

$1,545.9

IMPORTS IN $BILLIONS4

$12.5 billion (2013)

EXPORTS IN $BILLIONS 4

$12 billion (2013)

FOREIGN DIRECT INVESTMENT 2

$462 million

SOURCES: 1WORLD BANK 2014 & 2015 STATISTICS; 2UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT (2014, INFLOWS); 3HUMAN DEVELOPMENT INDEX (2015); 4UN COMTRADE 2014; 5THE AFRICA REPORT; HTTPS://WWW.TRANSPARENCY.ORG/CPI2015#RESULTS-TABLE

TOGO

GHANA CÔTE D'IVOIRE

Nkrumah “prompt and complete success” with his project for a United States of Africa, Houphouët ventured: “You are witnessing the start of two experiments. A wager has been made between the two territories, one having chosen independence, the other preferring the difficult road of building with the metropole a community of equal rights and duties. Let each of us undertake his experiment and, in 10 years time, we shall compare the results.” There was no return match. A decade later, Nkrumah had been ousted in a Western-backed coup and exiled to Guinea. And Houphouët was presiding over an independent Côte d’Ivoire, using French state and corporate funds to build up commercial agriculture. Yet the wager has intrigued Ghanaians and Ivorians ever since, partly because there is no agreed measure of success in the contest. Now a new generation is making another bet: can the two countries find ways to build stronger economic and cultural ties across the common border? Véronique Tadjo, an Ivorian poet and novelist, describes the change for The Africa Report: “Perhaps we are getting back into sync and thinking more about our commonalities […]. For so long, it seemed that when Côte d’Ivoire was up and its economy was strong, Ghana was in trouble with coups. Then Côte d’Ivoire had its conflict, and Ghana came up again.” Pushing for greater cooperation between the two states will not be easy, warns Tadjo, but younger citizens will be less hidebound by the historical political differences and what she sees as unnecessary linguistic divides. ●●●

Tamale

GUINEA

CÔTE D’IVOIRE CATCHES UP

Both tougher international economic conditions and recent history could spur onmorebilateralcooperation.AlainKouadio, vice-president of the Confédération Générale des Entreprises de Côte d’Ivoire, explains: “The Ghanaian economy was attractive for several years while Côte d’Ivoire was in crisis. Business start-up procedures have been modernised in Ghana.Duringthisperiod,severalIvorian firms moved to Ghana to get tax benefits as well as to benefit from the stability that allowed them to draw up longer-term development plans.” Over the past five years since Alassane Ouattara was elected to the presidency in Côte d’Ivoire, its crisis-damaged economy has caught up and overtaken Ghana’s on some measures. This year,

Côte d’Ivoire’s economy is forecast to grow at 7.1% and Ghana’s at 4.2%. Like the other countries of the CFA franc zone, Côte d’Ivoire benefits from its currency’s peg to the euro. International pressures on other African currencies are rattling some Ivorian businessmen: “Volatility of the Ghanaian currency against the dollar and the euro is becoming very worrying. [Ghana’s] energy problem also affects profitability,” says Jean-Luc Ruelle, chairman of the Chambre de Commerce Européenne en Côte d’Ivoire. Overall, Ghana still has the bigger economy and population, adds Ruelle: “The Ghanaian economy developed substantially in recent years. Growth was strong between 2006 and 2010, about 6.3%. With 27 million people, Ghana is a potential consumer market.” But alongside the expansion of the market for consumer goods and services in both countries, there is a vast potential for cooperation on oil, gas and energy projects. To make progress on that, the two governments have to resolve the dispute over their maritime boundary (see page 52). Having launched largescale commercial oil production in 2009, THE AFRICA REPORT

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pipeline already goes through Nigeria, Benin, Togo and Ghana. As Côte d’Ivoire and Ghana speed up development of their gas reserves, the plan is to make the pipeline flow two ways so a regional gas market can develop. For Carius, these plans point to the need for both countries to look at economic cooperation and diversification in the wake of the downturn in commodity markets. “Côte d’Ivoire has been diversifying over the past four years, so its economy is proving more resilient than Ghana’s to external market pressures […]. Both countries can do more manufacturing and processing – not necessarily finished products but adding more value to their commodities.”

There is vast potential for cooperation in oil projects once the pair resolve their maritime border dispute

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according to Youssouf Carius, vicepresident of Bloomfield Investment Corporation, an Abidjan-based ratings agency: “There is a great advantage in Côte d’Ivoire and Ghana working together, particularly on gas. There is a big demand for gas in Côte d’Ivoire so the project to extend the West African Gas Pipeline westwards from Ghana makes sense.” Progress has been held up by the complexities of harmonising the two countries’ regulatory frameworks. But this should not be insurmountable, as the

GDP growth comparison (%) 15 12

14 Côte d’Ivoire

9 6

Ghana

SOURCE: WORLD BANK

Ghana has led the way with its Jubilee fields and the Tweneboa, Enyenra and Ntomme development further west, up against the Ivorian border. Côte d’Ivoire has been trying to make upforlosttime.UnderPresidentOuattara and oil minister Adama Toungara, the country has revised its mining code and determinedly pursued investment. Indeed, some companies such as Ireland’s Tullow are investing in both countries, which complicates the border dispute. At one stage, Tullow tried to get a resolution at the heads of state level. Kofi Annan, a former secretary general of the United Nations, was also brought in to try to broker a deal. But Fui Tsikata, an adviser to Ghana’s legal team on the case, which Accra has referred to the International Tribunal for the Law of the Sea, says he doubts that it can be resolved politically, despite the strong commercial pressures for a deal: “This year, both sides are submitting their arguments and responses, with hearings starting in the first quarter of 2017, so a ruling can be expected by the end of next year.” Once that is resolved, there are good opportunities for energy cooperation,

PHOTO COURTESY OF XPD8 SOLUTIONS

SHIFTING TRADE BLOCS

0 -3 -6

-4.4 2010

2011

2012

2013

2014

Much of Côte d’Ivoire’s regional trade is with Burkina Faso and Mali, says Carius: “There’s definitely plenty of scope for reciprocal trade in products and services with Ghana.” Although Côte d’Ivoire’s membership of the CFA franc zone provides some resilience to international pressures, Carius suggests reform will be necessary in the longer term: “The arrangement gives European companies a commercial advantage in the CFA markets, which is not enjoyed by Asian or US businesses […]. It also complicates trade with other non-CFA zone West African economies.” Although a common West African currency is still some years away, bankers in Côte d’Ivoire and Ghana are working on new financial instruments to simplify crossborder trade. For example, the Ghana Stock Exchange is working to facilitate transactions across the eight-member regional bourse based in Abidjan. “Despite economic difficulties and the depreciation of the cedi. the Ghana bourse is very dynamic and innovative, regularly introducing new products,” says Edoh Kossi Amenounve, director general of the Bourse Régionale des Valeurs Mobilières in Abidjan. Last year, the Ghana Stock Exchange launched the Ghana Fixed Income Market, which operates across the regional markets, both Francophone and Anglophone: “Together we will be strong. We have had an agreement with the bourses of Ghana and Nigeria since July 2015,” adds Amenounve. But there are a host of other trading issues yet to be resolved. Because the duty on imported rice is much lower in Côte d’Ivoire, there are lucrative smuggling

COUNTRY FOCUS | GHANA - CÔTE D’IVOIRE

operations into Ghana. It has been costing the government in Accra around 70m cedis ($17.7m) a year in lost duties, according to ace investigative reporter Anas Aremeyaw Anas. Such smuggling operations raise bigger questions of security and diplomatic relations, according to Kwesi Aning, the director of the Kofi Annan International Peacekeeping Training Centre: “There have been mutual suspicions [between Yamoussoukroand Accra], whichhaven’t helped security cooperation, but we now face increasing regional threats after the attacks in Bamako and Ouagadougou […]. The different governments have to do much more together.” DEBATE, 60 YEARS ON

For Aning and other analysts in Accra, many of the dysfunctions in relations today have their roots in decades-old political arguments. Debates over founding leaders’ strategies rumble on. In economic terms, Houphouët’s state backing for cocoa and coffee plantations yielded an average economic growth rate of 7% between 1960 and 1980. Nkrumah’s focus on state-financed industrialisation was accompanied by a fast-growing public service and high export taxes. Nkrumah also introduced free universal primary education in 1961, partly to provide literate workers for industrial projects. Each choice created its own political economy. Houphouët’s bet on commercial agriculture made his country the biggest cocoa producer in the world, but his policies favoured the growing regions in the south and exacerbated inequities in the north. And political cohesion came under pressure after the commodity price crash in the 1980s, and more so a decade later. Political fissures appeared in Ghana much faster. Nkrumah combined his dirigiste industrial schemes with strong ties with the Soviet Union and China, infuriating US and British officials fighting the Cold War. The coup against Nkrumah sparked two decades of instability. Ghana’s economy, snagged by mismanagementandcorruption,hitrock bottom by the early 1980s and the International Monetary Fund was called in. Today, after the years of economic and political convulsions, Côte d’Ivoire and Ghana are seen as two of the most resilient countries in the region. After that legendary wager 60 years ago, their peoples appear drawn more to cooperation than competition. ●

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COUNTRY FOCUS | GHANA - CÔTE D’IVOIRE

PEOPLE TO WATCH

Diplomats, oil men and cross-border business leaders

Top legal minds are working for both governments to find a solution to the border dispute, while the authorities debate economic cooperation, and business executives develop West Africa’s economic fabric

In that conflict, many backers of former President Laurent Gbagbo sought refuge in Ghana. In 2013, Justin Koné Katinan (2), who was once Gbagbo’s spokesperson, won his case in the Ghanaian courts not to be extradited back to Côte d’Ivoire. Blay is seeking to allay fears that Katinan will cause trouble for the current Ivorian administration and stresses that Katinan remains in Ghana on the basis of humanitarian principles. BORDER TALKS

Blay’s Ivorian counterpart, Bernard Ehui Koutoua, was appointed in 2011 after spending 12 years in exile following a coup in 1999. Ehui Koutoua held a number of positions in President Félix Houphouët-Boigny’s government and is now ambassador to both Ghana and Togo. Since taking up the role, he has facilitated the return of Ivorian civilians who fled the country during the fighting in 2010. He has also called for a peace-

ful solution to the countries’ unresolved border issues, noting that Ghana and Côte d’Ivoire must not squabble as was the case between Nigeria and Cameroon over the Bakassi peninsula. He says there is a great deal of room for collaboration and joint management along the border when it comes to both oil and cocoa. The border dispute has been a thorny issue in the countries’ bilateral relations, but high-level dialogues and the involvement of international bodies suggest that the two countries are committed to the peaceful resolution of problems around undemarcated borders. The maritime case, which the Ivorian authorities raised in2010,isnowinfrontoftheInternational Tribunal for the Law of the Sea (ITLOS). Heading Ghana’s legal team is justice ministerMariettaBrewAppiah-Oppong (3). Ahead of the April 2015 ruling that saw the ITLOS throw out Côte d’Ivoire’s petition to stop all activities in the disputed area, Appiah-Oppong ● ● ●

THEOPHILUS FORSON/TRU LENS

CHRIS STEIN/AFP

FH COMMUNICATIONS BUREAU

eighbours and members of the Economic Community of West African States (ECOWAS), Côte d’Ivoire and Ghana have generally good relations and the occasional spat. The countries’ diplomats are in regular contact, and their business leaders are scouting across both sides of the border in the search for profits and new opportunities. The day-to-day relations between Accra and Yamoussoukro are handled by the country’s ambassadors. Ghana’s ambassador to Côte d’Ivoire, Lieutenant General Peter Augustine Blay (1), is very familiar with the politics of his host country. As Ghana’s chief of defence staff between 2009 and 2014, Blay oversaw the sending of Ghanaian United Nations peacekeepers to Côte d’Ivoire following the 2010 post-election crisis.

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COUNTRY FOCUS | GHANA - CÔTE D’IVOIRE

not mean that he sees his country as ● ● ● argued that Ghana has a lot more to lose in this case than Côte d’Ivoire, in conflict with Ghana. The oil specialgiven the investments that have already ist, who graduated from the University been made in oil blocks in the area. She is of Southern California, has a good rejoined by British-French lawyer and prolationship with Emmanuel Buah, his fessoroflawPhilippeSands.OthermemGhanaian counterpart, even though he bers on the Ghana legal team include adrejected Buah’s attempt to have the provisers and specialists from the ministries posed border trace the path of current of energy and finance and the Ghana National PetroThe Ivorian ambassador to leum Corporation. Ghana says there is room for After being sacked from cooperation on oil and cocoa his post as group chief executive of Togo-based Ecooil permit lines. The two negotiating bank in 2014, Thierry Tanoh (4) joined teams will face off once again in front the team working for President Alassane Ouattara. As deputy secretary general of Algerian judge Boualem Bouguetaia of the presidency, Tanoh leads Yamin Hamburg in March. ECOWAS regulations facilitate regional oussoukro’s border negotiations with Ghana alongside oil and energy minister trade, and Ghana and Côte d’Ivoire have Adama Toungara (6). They are backed many similarities in terms of economic by national oil company director general strengths, which include agriculture, Ibrahima Diaby, Ivorian lawyer Adama mining and growing manufacturing secKamara and several France- and United tors. For now, the number of investors States-based advisers. Tanoh, who has pursuingcross-borderdealsfavourscompanies from Côte d’Ivoire. the backing of Ouattara, has made several trips to Ghana to seek a consensual resolution of the border problem in DEALMAKING parallel with the ITLOS case. A trained In his office located in East Cantonment in Accra, Ivorian businessman Charles economist and accountant, Tanoh was previously the vice-president of the InKader Gooré (5) holds meeting after meeting with his employees and partternational Finance Corporation and knows the Ghanaian authorities well, ners whenever he is in the Ghanaian capital. His top priority is jump-starting as he helped the government to attract investment when he occupied that post. the stalled talks on the construction of Toungara wants to protect his couna thermal power plant with the capatry’s interests at ITLOS but that does city to produce 450MW in the region of

Takoradi. Kader Gooré’s CKG Energy has only recently relaunched negotiations with the Ghanaian government. An initial phase of the project that would produce 150MW was due to start construction in 2014 but talks fell apart about the price of electricity that the state would pay. The structure of the proposed deal is a $550m build, operate and transfer contract for a 20-year period. The plant has the backing of Omani investors, and Kader Gooré is the West African representative of Oman’s Public Authority for Investment Promotion and Export Development. If the power-plant deal is successful, Kader Gooré and his partners could develop a fertiliser plant in Ghana. He is also lobbying for Oman Air to make Accra its West African hub. One of Côte d’Ivoire’s leading agribusinesses is also active in Ghana. Groupe SIFCA–whichwasrunbycommerceminister Jean-Louis Billon until he took up his government post and is now chaired by his brother, Pierre Billon – is active in the sugar, rubber and palm-oil sectors at home. Across the border, SIFCA owns Ghana Rubber Estates Limited, the West African leader in the production of granulated rubber, which has been run since 2011 by Lionel Barre, a Frenchman who got his start in the sector in Brazil. ● Baudelaire Mieu in Abidjan and Billie Adwoa McTernan in Accra

VINCENT FOURNIER/JA

THIERRY GOUEGNON/REUTERS

BRUNO LEVY FOR JA

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COUNTRY FOCUS | GHANA - CÔTE D’IVOIRE

AGRICULTURE Peace, love and cocoa With the return to stability in Côte d’Ivoire cocoa smuggling is down, but that’s not the only reason Ghana’s producing less

terms of their production levels. Côte d’Ivoire’s annual cocoa harvest has risen to about 1.8m tonnes since the 2013/2014 season. On the other hand, Ghana’s smaller and smaller harvests are due in part to the ageing of the country’s trees, which have not been regularly replaced. Farmers are getting older too – the United Nations Development Programme estimates that the average cocoa farmer is more than 50 years old – and few young people are getting involved in the sector.

FRANCK AKPOUE FOR JA

n the lead-up to national chocolate day – otherwise known as St. Valentine’s day – the number of traders hawking the Ghana-made Golden Tree chocolate for lovers and hopefuls on the streets of Accra increases. The same cannot be said for the amount of cocoa being produced by farmers, as figures have slid since the 2011/2012 season, when Ghana produced 860,000tn. In 2014/2015 the country produced about 90,000tn less than that, according to data from Ecobank. Analysts attribute the decrease SMALL IS VULNERABLE to a number of factors, including bad Ghana and Côte d’Ivoire weather and smuggling. have almost the same Since the return of stability in Côte amount of cocoad’Ivoire after the 2010 conflict around producing land – roughly 1.7m hectares – and former the presidential election, the governCocobod director Osei atment has done much to fight against tributes Ghana’s generally smuggling of Ivorian cocoa into Ghana, lower production figures Both countries wish to go from exporting which is said to have been responsible to the scales of farming. the raw cocoa to processing it themselves for Ghana’s high production statistics. Ghana’s farmers generPresident Alassane Ouattara’s governstill possible that Ghanaians are coming ally operate smallholder family farms, ment wants to strengthen its finances to sell their harvests in Côte d’Ivoire.” while Côte d’Ivoire has many large-scale by being sure that it can buy all of the Some Ghanaian officials see the smugcommercial plantations. Osei says there cocoa grown by local farmers. gling issue from a different point of view. are few Ghanaian farms in excess of 20 There is no longer the same buzz Isaac Osei, the former head of Ghana’s acres (8ha). The difference in size means of activity during the cocoa season in government-run cocoa body, Cocobod, if a small-scale farm in Ghana is infected the eastern Ivorian border regions of Abengourou, Agnibélékrou and Aboisso. says that smuggling is not really a probwith a crop disease, the farmer is likely Bilé Bilé, the leader of a farmers’ organlem. He explains: “Every farmer or every to lose out on the whole year’s producbuyer is an economic animal. Sometimes tion, whereas on the larger farms in Côte isation who is managing the campaign to reinvigorate production in the region when we look at smuggling, we look at d’Ivoire the infection can be contained. says: “Prices are very good. There is no it as if it is something bad. But it’s really Osei argues, too, that Ghana would benefit greatly from an expansion of colonger a need to cross the border to go a question of relative prices.” He adds: sell in Ghana, thanks to the restructuring “Also there are many farms in no-man’scoa processing if it capitalised more on of the cocoa sector.” land between Ghana and domesticdemand. TheCocoaProcessing Cocoa production Côte d’Ivoire. It is blurred. Company – where Golden Tree products The Ivorian customs 2014-15 season are produced – has been struggling with People will naturally go to authorities estimate that (1,000s of tonnes) where they will find ready the cost of production, as it mainly exbetween 100,000 and cash or more money. I ports its cocoa-derived products, and 150,000tn of cocoa are 1,720 don’t think one should shut down temporarily in late January. smuggled into Ghana With Abidjan attracting investment in the spend resources trying to each year. But a new customs unit now patrols the form of a chocolate factory from French put barrier measures in border to fight against place to stop people from chocolatier Cémoi in May 2015, the comdoing that. They are only petition has started in earnest between these trade flows. A cus810 toms official in the border acting on their own ecothe neighbouring producers to seize a town of Niablé says there nomic instincts.” share of local and regional markets. ● Baudelaire Mieu in Abidjan and is no longer any smugThe two countries also Billie Adwoa McTernan in Accra gling to Ghana, “but it is seem to be diverging in Côte d’Ivoire Ghana SOURCE: STATISTICA

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COUNTRY FOCUS | GHANA - CÔTE D’IVOIRE

Akosombo Dam on Lake Volta, Ghana. Côte d’Ivoire has been exporting power to its neighbour

ALESSANDRO COSTA

ELECTRICITY

Cooperation to fight crises

predicted in the medium term, not least because a number of outstanding procurement contracts have yet to be executed by exploration companies. There is still optimism for the sector, though. Amin says: “Although Ghana has relatively modest levels of oil production, it is well positioned in the region to become the petrochemical hub […]. It can also become the service hub of the region, where oil service companies station in Ghana and move between Ghana and Nigeria, Côte d’Ivoire, Sierra Leone and Liberia […] because of our relative stability but also being in the centre of all of these countries. Ghana can take advantage of that if we are able to build the necessary infrastructure.” GOOD RELATIONS

Côte d’Ivoire’s oil sector is much smaller than Ghana’s, and the government there is also focusing a lot of its attention on Joint projects could help boost regional the need for electricity. The launch of the 139MW Azito 3 power station north interconnectivity and allow Ghana to meet production of Abidjan in June 2015 brought the shortfalls until its new projects come on line country’s electricity production capacity to 1,772MW. Côte d’Ivoire’s politven though Côte d’Ivoire lags fallen since the end of the 2015. Amin ical instability after the troubled 2010 behind its neighbour in elecsays that Ghana’s peak demand can presidential election has led to less intricity production, the Ivorian reach 2,300MW but is currently around vestment in new projects. Ivorian President Alassane Ouattara’s 1,800MW, a reduction that he says comes government is supplying electricity to government plans to boost production blackout-prone Ghana. The energy crisis from a slowdown in industry. overthepastthreeyearsandthedoubling to 4,000MW by 2020 and will continue The International Energy Agency esof Ghana’s utility tariffs in January have timatesthat72%ofGhanaianshadaccess to supply Ghana with power. Oil and raised the cost of doing business, causing to electricity in 2013 while only energy minister Adama Toungara tells The Africa Report: “We somesmallenterprisestocollapse.Others 26% of Ivorians did. NonetheNational have very good relations with have been looking west to Côte d’Ivoire less, Ghana has been importing electrification Ghana.Weexportseveraldozen powerfromCôted’Ivoiretohelp for brighter pastures. rate (2013) megawatts per year to Ghana. meet its shortfalls. In December, The head of the Association of Ghana Côte d’Ivoire Everything is decided between Industries (AGI), James Asare-Adjei, says Ghana imported 250MW from President Ouattara and his the AGI is counting the number of comCôte d’Ivoire. As the country panies that have moved their operations enters an election year, Amin arcounterpart John Mahama.” to Côte d’Ivoire. And it is not just local gues that the move is unlikely to Chronic gas-supply defibe just a short-term remedy and manufacturers that are looking west. cits from the West African Gas Ghana could well continue to Mohammed Adam Amin, the executive Pipeline Company are part director of the Accra-based think tank the turn to its neighbours for relief of Ghana’s energy problems. Africa Centre for Energy Policy (ACEP), as it tries to stabilise the energy Ghana and Côte d’Ivoire are saysthatsmallcompaniesarenottheonly sector with various expansion working together on projects Ghana ones toleave: “Anumber of oil companies projects and new developments to address this issue. One poshave decided to move to Côte d’Ivoire to – fiscal and physical – over the sible deal would lead to the set up their head offices there.” next five years. extension of the West African The electricity situation in Ghana is Ghana’s ability to be more pipeline to the Ivorian city of slowly improving. In November 2015, self-sufficient in electricity Assinie, not far from several the 225MW Turkish Karpower barge production depends on the gas deposits. ● Baudelaire Mieu in Abidjan arrived in the country, seven months activities of its oil and gas secand Billie Adwoa McTernan later than planned. Despite its installtors. Ghana’s prospects for oil SOURCE: IEA in Accra ation, the country’s peak demand has production are not as high as

26%

72%

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COUNTRY FOCUS | GHANA - CÔTE D’IVOIRE

FINANCE Divergent paths Côte d’Ivoire faces the challenge of helping turn around troubled state-owned banks; meanwhile, Ghana’s financial institutions are coping with tougher times

hana’s banks are preparing for trouble as oil prices remain low and the electricity crisis continues, but Côte d’Ivoire’s are set to keep growing on the back of the economy’s post-conflict boom. In Ghana, the level of non-performing loans (NPLs) has been rising since 2014, from 11.2% in December to 14.1% in November 2015. A number of foreign banks, like For their part, Ivorian banks have been Ecobank, have a presence in both attracting international investment, and Ghana and Côte d’Ivoire the sector could receive a boost as the government follows through on its oftgovernment. Analyst John Opoku, who delayed plans for privatisations. specialises in banking in the Economic The Africa Report’s Top 200 banks Community of West African States, tells ranking (TAR Finance Edition, OctThe Africa Report: “I am confident that Dec 2015) shows that Ghana and Côte going forward NPLs will rise [...] in 2016 d’Ivoire’s banking sectors are fairly due to slower gross domestic product growth and a weaker commodity sector, matched. Each had eight banks in particularly in oil and mining.” the Top 200. Ivorian banks, with total assets of $9.3bn, were just The Monetary Policy ahead of Ghanaian banks, Committee of the Bank of with $9.2bn. Although the Ghanarecentlymaintained country’s asset bases are its tight stance in order to Ghana similar, Ivorian banks in help the economy onto a the Top 200 devoted more firmer footing by keeping Côte d money to loans – $5.2bn its policy interest rate at ’Ivoire in 2014, compared with 26%. It cited the slower Ghana’s $3.8bn – and had pace of price changes higher deposit levels – and its desire to steer in$7bn over the same period, flation down towards the compared with $6.1bn. medium target band of Number around 8%. Banks have of people aged 15 or over with a bank UPS AND DOWNS reacted by holding back account The region’s banks are now on lending, with growth SOURCE: WORLD BANK (2014) heading in different direcof credit to the private sector dropping from 26.6% in tions. In Ghana, the cedi’s depreciation, the government’s recourse September 2014 to 3.6% in September to an International Monetary Fund bail2015, according to the Bank of Ghana. out and low prices for oil and gold exAcross the border, the Ivorian government is in the midst of a privatisation ports all create a gloomy picture. The campaign for troubled state-owned global ratings agency Moody’s downgradedleadinglocallyownedGCBBank’s banks. It announced its intentions to sell deposits and gave it a negative outlook its 67% stake in Versus Bank for €47m in 2015 because about half of its assets ($52.8m) in 2015 but has made little are tied up in loans, treasury bills and progress in finding a buyer. The next other instruments linked to the central bank on offer is Banque de l’Habitat OLIVIER FOR JA

40%

34%

de Côte d’Ivoire, which specialises in mortgage lending and is owned 55.9% by the state. With the sale, the government wants the financial institution to become a universal bank. Private sector banks have been better at attracting investment, especially from abroad. In March 2015, Amethis Finance and Canada’s Banque Nationale bought a 21% stake in Groupe NSIA, which in addition to its insurance business also includesNSIABanque,formerlyBIAO-CI. There is little banking cooperation and cross-borderinvestmentbetweenthetwo West African neighbours. None of the top banks majority owned by local interests – GCB Bank and NSIA Banque – have operations in the other country. Most of the banks with operations in both countries are subsidiaries of major African banks or their European competitors. They include Togo-based Ecobank, Nigeria’s United Bank for Africa (UBA), France’s Société Générale and Mali-based Bank of Africa. Over the past several years, Nigerian banks – like Access Bank and UBA – have had more success in Ghana than in Côte d’Ivoire because of management problems and weaker ties between Nigeria and Côte d’Ivoire. There is still huge potential for banking growth in both countries. According to the World Bank’s Financial Development Database, there were just 470 deposit accounts in commercial banks per 1,000 people in Ghana in 2013 and 197 per 1,000 in Côte d’Ivoire. ● Masahudu A. Kunateh in Accra THE AFRICA REPORT

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COUNTRY FOCUS | GHANA - CÔTE D’IVOIRE

OPINION

Franklin Cudjoe

Chief executive officer, IMANI Center for Policy and Education

Ghanivoire could weld together West Africa

s the fireworks explode in clusters over the lagoon in Abidjan, the great grandchildren of independence-era leaders Kwame Nkrumah and Félix Houphouët-Boigny clink champagne flutes and move to the dance floor. Across the other side of the ceremony hall, the ink is drying on a document that dissolves the borders between the two countries. Côte d’Ivoire and Ghana are officially one country. Visiting dignitaries applaud from surrounding tables. This imaginary scenario should make Ghanaians happy. Côte d’Ivoire, our neighbour to the west, recovering from a dreadful war, could this year grow its gross domestic product by almost 9%. Meanwhile we, relatively stable for more than 30 years, will be growing at less than 4%. Côte d’Ivoire, Togo, Benin, Senegal and the Democratic Republic of Congo were included in the World

Bank’s 2015 list of top 10 reforming countries for business competitiveness, but Ghana was missing. Assuming a hypothetical scenario in which people and goods could cross freely between Ghana and Côte d’Ivoire, many revolutionary things would be possible. A domesticated global centre for cocoa would come with the ability to determine prices and control production – creating an OPEC of cocoa, COCOPEC. This could leverage the ability of the two powerhouses to attract investment in processing plants, with significant opportunities for job creation. Whereas both countries dominate what is estimated to be a $9bn-per-year industry, a new joint country could make giant strides into the high-end chocolate industry, which is estimated to be worth $87bn a year. This would lead major players such as Mars, Nestlé and Cadbury to relocate some of their production facilities from North America and Europe. Embarking on this value-addition drive, as opposed to being mere suppliers of both primary and intermediate products of cocoa, would require a larger consumer market. As West Africa’s second- and thirdlargest economies and with burgeoning middle classes, Ghana and Côte d’Ivoire together could exploit their growing consumption of chocolate to attract investment in this segment of the value chain, as well as sell to the Nigerians. Next, we could become a regional powerhouse for energy production, distribution and marketing. Both countries are already making huge public investments in energy infrastructure. And with large deposits of oil and gas, there is an op- ● ● ● THE AFRICA REPORT

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● ● ● portunity for expanding manufacturing and port facilities to handle cargo for landlocked neighbouring countries. Côte d’Ivoire has West Africa’s most reliable energy infrastructure and has set its sights on increasing production to export to countries such as Guinea and Sierra Leone. Ghana has similar ambitions. The net effect of reliable power supply – not only for increasing domestic demand but also for export to other West African countries – is that the duo could be the energy hub for West Africa. This obviously would have an effect on investment and subsequently industrialisation. It promises to place these fused two countries at the epicentre of economic activity within West Africa, just like South Africa is the bedrock of Southern Africa.

We could also create a financial services hub to rival South Africa’s. Côte d’Ivoire is back to becoming the most favoured destination for multinational and supranational financial institutions, with a regional bourse and regional central bank. Meanwhile, Ghana is perfecting the art of providing unique financial services to English-speaking West Africans. The growth of the two markets could mesh with Nigeria’s relatively deeper financial sector, which provides tremendous opportunities for growth and development. The creation of a sub-regional bond market, for instance, could provide governments and businesses with significant funds to undertake infrastructure projects. The success of such a measure would also benefit smaller West African countries that are otherwise not able to participate in international bond markets. A well-integrated financial system between the two countries would boost trade and economic activities. Cultural exchanges through language, music and food would not only provide economic returns through tourism but also serve as the basis for a special relationship that guides the resolution of disputes. Such a cultural exchange already exists to a large degree between Nigeria and Ghana, with Ghana seen as Nigeria’s little brother, and this has had enormous benefits to both countries. As the citizens of Ghana and Côte d’Ivoire become even more integrated, this would guide policymakers in their decisions relating to each other. The benefit would extend to the entire Economic Community of West African States (ECOWAS), as the union between these two countries could help bridge the Anglo-Francophone divide in the sub-region. Acting as a venue where the French-speaking and English-speaking countries of Africa could meet and discover each other, the newly combined Ghana/Côte d’Ivoire could also

finance these matchmaking transactions, a potentially huge new source of growth. In particular, the new country could help the ECOWAS sub-region speak with one voice. It would provide leverage for countries – including the regional powerhouse Nigeria – that have relatively developed political and democratic institutions to press other West African states to adopt additional democratic and good governance principles. The integration of these two countries could also bind Nigeria into ECOWAS more firmly, which is one of the key issues facing West Africa. While it represents 77% of ECOWAS gross domestic product, Nigeria does not trade much with its neighbours – something a new Ghana and Côte d’Ivoire would help to fix. For all this to happen, however, there would be much work to be done. First, a head count. Politicians believe in the numbers game and swear by any means to ensure the right numbers are voting for them. This would mean that only eligible citizens of a country should in fact vote for a leader. So, even if borders as we imagine them here are virtual, identifying legitimate citizens would not be subject to any negotiation. This means that Ghana, for example, would be jolted into making sure the issue of identifying every Ghanaian becomes not just a technology issue but a development one, as public services and foreign direct investment would have to be based on credible statistics. A second area of attention would have to include real attempts at devolution to soften the blow for two sets of national leaders who would necessarily cede power in a new configuration. Ghana and Côte d’Ivoire operate presidential systems of government with a very powerful presidency usually aided by a majoritarian parliament, creating a very centralised state that feeds on patronage and cronyism. Finally, this imagined, new West African state would require a transformed public service. The

The union could help bridge the AngloFrancophone divide in the sub-region disproportionate balance between politics and policy – with the former dominant at almost all levels of government in Ghana and Côte d’Ivoire – means that the current speed of public-sector reform is dramatically and frighteningly slow. This deters our progress towards the objective of becoming upper-middle-income economies. We will need to see growth in overall national capacity, and that national capacity must be anchored on a public sector with a strong attitude in support of reform and without the long, invisible but debilitating arm of politics. ● THE AFRICA REPORT

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D E A L I N G I N P HY TO S A N I TA RY P R O D U C TS, I N I R R I G A

A leader in local sales of phytosanitary products economy, at the National Polytechnic Institute inYamoussoukro, Côte d’Ivoire, in 2003. I have ten years of professional experience in top management positions with a number of organisations in Côte d’Ivoire.

How did the idea to create your own business come to you?

ADVERTORIAL

Mr. Arman Konan, managing director.

AGRITEC, an Ivorian company based in Abidjan, is a dealer of agricultural products, particularly fertilisers, insecticides, fungicides, herbicides, growth regulators, production aids and a wide variety of farming equipment. AGRITEC, a leader of distribution, is active in every major agricultural region of Côte d’Ivoire through its network of 40 sales outlets and is applying for the ISO 9001 certification (2008 version).

“Only those who do nothing make no mistakes.” Fears of failure and of stepping into the unknown are the two main roadblocks for the majority of project leaders.When we launched Agritec, we experienced many worries and many doubts about the survival of the business, especially during periods of financial tension. But we believed in it every step of the way. Anything is possible when you believe in it!

What is your educational and professional background? I am an agronomic engineer. I completed a degree in advances agronomics, specialising in agro-

During my engineering studies, I held a number of management positions within the assoc iation groupi ng Côte d’Ivoire’s top schools. During my final term, I worked with some friends on the executive board to launch two big projects: The first consisted in inviting the African intelligentsia, of which we were part, to build an awareness of our responsibility for our continent’s future. We sought to promote leadership in every sector in which would be working through actions designed to boost the development of our continent. The aim of the second project was to encourage graduates of the country’s top schools to embrace the concept of entrepreneurship. At that stage of our lives, we were convinced that building a strong

TION SYSTEMS AND AGRO-PROCESSING EQUIPMENT

nation meant boosting private initiatives. We also shared the idea that the path to social and financial success was to be found in running our own businesses. Through these ventures, it was clear in my mind that I was going to become a businessman. Going forward, my professional life has been about seeking the best business ideas while also taking care to stick to small budgets. Working with a business partner, I made my first attempt in 2008. Even though it ended in failure, it also did nothing to change my ambitions. Everything fell into place during my last management position, when I was director of a phytosanitary firm. I saw an opportunity and knew I had a good chance in the sector. Without hesitation, I resigned from my position to start Agritec with my current partner.

“Think Africa’s Future” and “SME Initiative” open every step of the way. This is very important for your image.

What advice would you give a younger person looking to get started? I would simply say that anything is possible if you believe in it. You do not need to be born with a silver spoon in hand to succeed in the business world. Never hesitate when the feeling is right. The hardest part is taking the first step, passing from words to action.

What are your plans for the future? Our ambition is to double our activity for the fiscal year 2015 and, above all, to meet our goal of becoming the leading local distributor of phytosanitary products in Côte d’Ivoire. With the help of partners, we are also preparing to build an ultramodern production facility for phytosanitary products. Related to this, we are studying every opportunity to bring new partners into the ownership of the facility.

First of all, one must believe in the enterprise. As the saying goes, “no one will believe in your business more than you.” When you believe in your project, you give yourself the means of reaching your goals. Above all, being a businessman means knowing how to take calculated risks. Keeping your word is key. Of course, for an SME, it is difficult to meet every deadline and every condition 100 percent of the time. But the most important thing is to honour every engagement sooner or later, and to keep the lines of communicationwiththeotherparty

Cocody 2 - Plateaux 7e tranche 28 BP 363 - Abidjan 28, Côte d’Ivoire Phone: (+225) 22 42 14 33 Fax: (+225) 22 42 14 65 info@agritecgroup.com www.agritecgroup.com

DIFCOM/DF - PHOTOS: DR

What qualities are necessary for an SME leader?

BUSINESS

CEO FORUM

Africans

investing in Africa

COMPANIES & MARKETS

This year’s Africa CEO Forum, to be held in Abidjan on 21-22 March, will examine the prospects for a new generation of continental champions. The Africa Report talks to business leaders about obstacles and strategies for success By Emilie Filou

Leading the pack – from left to right: Gavin Dalgleish, ILLOVO Ismaïl Douiri, ATTIJARIWAFA Bank Ade Ayeyemi, ECOBANK Tabitha Karanja, Keroche Breweries

MARTIN RHODES/GALLO IMAGES/GETTY IMAGES; ATTIJARIWAFA; GUILHEM ALANDRY DOCUMENTOGRAPHY FOR JA; NOOR KHAMIS/REUTERS

fter a day and a half of high-level discussions at an Africa investment conference, Arnold Ekpe, non-executive chairman of financial services holding firm Atlas Mara and former chief executive of Ecobank, sounds slightly exasperated. “African countries are not doing enough for themselves,” he says. “I have been going to conferences like this for 20 years. We have to move from talk to action.” An elite band of companies are doing just that – with a toolkit that helps expand their operations across African borders. But Ekpe argues that Africa needs many more champions like Dangote Group, MTN and ShopRite. Aliko Dangote, the founder of the Dangote Group, also regularly bemoans the lack of inter-African business activity. He too told the assembled investors: “We need to develop like China or Japan did. They created wealth themselves.” That is easier said than done. Many of Africa’s 54, often small, countries, lack the skills and resources of sizeable countries such as China. Intra-continental trade also accounts for just 12% of total trade in Africa. This is low by global standards, even acknowledging the fact that it does not account for informal trade. Africa’s statistics hide regional differences too: East African countries do more trade between themselves than their southern or western neighbours. The reality is that for the likes of Dangote, investing in Africa is not easy. Terence McNamee, deputy director of the Brenthurst

Foundation, says there are many stumbling blocks: “There is a facile impression that cultural affinity – the ‘Africanness’ of a company – would count for something across borders, whereas it is not really the case. Very often, it [is] even the opposite.” TRADE BARRIERS

The reasons for the low level of intra-African trade and investment are numerous. They include poor infrastructure, tariff and non-tariff barriers, a lack of financing (see box), currency controls and restrictivevisapolicies.Cementmagnate Dangote points out that as a Nigerian, he would need 38 visas to visit all 54 countries in Africa, substantially more than if he held a United States or British passport. The picture is just as depressing for goods: it takes anywhere from nine to 17 days to move freight just 1,000km from Tema in Ghana to Ouagadougou in Burkina Faso. Studies have also found that a container spends on average about 16 days in African ports, compared with three or four in most other international ports. What is galling, explains Ekpe, is that little has been done over two decades to overcome these barriers. “What we need is free movement of people, a free trade area and free convertibility of currencies,” he says. “It’s nothing new.” The reason it is not happening is fear – of surrendering power, of beingswallowedupbyamorepowerful neighbour and of people being displaced by foreigners. This overrides any notion of pan-African solidarity, says McNamee. “With

BUSINESS | COMPANIES & MARKETS

the exception of the East African Community(EAC),therhetoric[on regional integration] is way ahead of the reality on the ground. I think a mindset change must occur.” Ekpe concurs. His first challenge when he became chief executive of Ecobank in 2005 was to convince the board to embrace the concept of building a pan-African bank. “They liked the idea. They just didn’t think it could be done,” he recalls. But progress is being made. Through improving infrastructure and border processes the EAC has reduced the time it takes to get a container from Mombasa to Kigali from 26 days to just five. PRIVATE SECTOR GROWTH

Governmentsmustalsoencourage private-sector growth if they want to nurture more African champions, argues McNamee. He says they should focus on improving the conditions for doing business rather than trying to get involved in every sector. Andrew Alli, chief executive of the Africa Finance Corporation, agrees: “Governments hold on to projects such as airports, ports and power generation because of national pride and security concerns, but they should push more projects into the private sector. There is so much to do.”

So how have African champions been succeeding? It comes down to understanding the local context. Gavin Dalgleish, managing director of South African agribusiness Illovo, explains: “In Africa, you take a one-continent approach at your peril.” Illovo has developed processing operations in six countries, and Dalgleish says that the key to their success has been immersing themselves in each market. “You try to develop a local flavour to your business rather than continue to be a South African company,” he says. “In Zambia, for instance, no one talks about Illovo. It’s Zambia Sugar.” This commitment to markets involves a range of instruments: minority shareholding, employing local staff, contracting local service providers and following national agendas. “In Malawi, food security is a big issue so we got behind initiatives to grow maize. In Zambia, the key thing was developing local supply chains,” Dalgleish adds. This is especially important to overcome ‘legacy perceptions’ about South Africa. “We’re not always the most popular investors on the continent,” he says. Stereotypes are a recurrent theme in studies: South Africans are perceived as arrogant and

Nigerians as unreliable. And while West Africans tend to associate local goods with poor quality, in EastandSouthAfricaseeing‘made in Kenya’ or ‘made in Zambia’ is a cause for celebration. Being able to navigate, and ultimately confound, stereotypes can mean the difference between making it and failing. Woolworths, for instance, had not anticipated that Nigerians would snub South AfricangoodsforEuropeanbrands. Similarly, neither Score nor ShopRite has managed to crack the Tanzanianmarket,whichisdominated by local and Kenyan players. Anthony Haggar, chief executive of South Sudan’s Haggar Trading, says that understanding cultural differences is paramount: “For the Sudanese, the highest honour you can bestow on someone is to invite them for a meal at your house. If you are aware of this and you accept – you should accept! – to have dinner with the person, it will enhance the trust between you.” Curiously, the cultural differences associated with different language blocs, as well as differences in legal systems and bureaucracy also seem more of an issue than the languages themselves. Getting lost in translation did not seem to faze Ecobank, which invested in language courses and translators.

South African agribusiness Illovo’s successful expansion into six countries involved developing a “local flavour” each time

DUE DILIGENCE

DEAN HUTTON/BLOOMBERG VIA GETTY IMAGES

Both Haggar and Dalgleish stress the importance of due diligence before making investments. Haggar says he spent 18 months making monthly trips to Ethiopia to meet stakeholders and get to know the country. For their part, Illovo executivesspentconsiderabletime and money researching a greenfield sugar project in Mali, only to see it fall through with the 2012 coup. Better due diligence might have prevented the flop of Kenya’s M-Pesa mobile-money platform in South Africa. It came up against strong competition from banks that had already developed services for low-income customers. Despite Illovos’s Mali setback, Dalgleish says that they “remain resolute in their desire to invest in Africa”. As the stellar rise of African

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COMPANIES & MARKETS | BUSINESS

championssuggests,itmakesgood business sense too. Illovo’s African expansion has driven the firm’s growth. The demand for sugar has been “about 2% for decades globally, but it’s about 3.2% across the continent. And in some markets, it’s better than that,” says Dalgleish. Moroccan companies such as national airline Royal Air Maroc, telecomsoperatorMarocTelecomand banks such as Attijariwafa Bank and BMCE Bank of Africa have made major forays across West Africa. The region now generates up to 30% of those banks’ revenue. Importantly, the decision-making process has not been blindly ambitious. As Attijariwafa Bank cochief executive Ismaïl Douiri puts it: “It’s not the matter of growing thefootprintorgrowingtheempire. It’s really a matter of generating additional value for shareholders.” Africa’s potential could convince African companies to invest on their continent, but Ekpe argues that there is more to intra-continental investment than cashflow. “Foreign investment has never developed a country. It has helped, but in the end it comes from domestic investment and domestic saving mobilisation,” he says. “You cannot outsource development.” Haggar likes to call it ‘Africalism’. “The ownership of the means to produce and distribute wealth should be African. We are too exposed to the tail- and headwinds of the rest of the world. We have everything to offer on the continent. We [could] be completely self-sufficient if we traded amongst ourselves and [had] investors.” ●

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

theafricaceoforum.com

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FRANCK AKPOUE FOR JA

INTO NEW REGIONS

Africa needs more bankable infrastructure projects

More bang and more buck Two business leaders offer innovative ideas to unlocking financing for infrastructure projects and businesses

to play a bigger part, especially in the ne argument that is often put forward to explain the scarcity of financing of small companies. Anthony African investments is the lack of Haggar, chief executive of South Sudan’s financing. Many refute this theory as too Haggar Trading, suggests that developsimplistic. Andrew Alli, chief executive of ment finance institutions should lend to the Africa Finance Corporation (AFC), arbanks rather than projects: “They should gues that the obstacle is elsewhere: “The provide risk capital and allow [local] banks problem is the lack of bankable [infrastructo be more open to risk. That way, banks ture] projects. Today, there is more finance would get more involved in doing loans looking for those types of projects than and share risk. They would interact with businesses and expand their contacts and there are projects looking for financing.” knowledge of the market until they can Alli says that infrastructure projects make better quality decisions.” should look into alternatives to project finance, which can be unnecessarily long The issue of local currency comes back and complex. One option would be to time and again. Haggar suggests that this is where governments’ contributions to encourage companies to take projects on their balance sheets and borrowthemoneythemselves, Local banks need to play a shifting from project finance bigger part, especially in the to corporate finance. This is a strategy the AFC is currently financing of small companies deploying in several countries. projects should come in. “They should Another tactic is to look at refinancing models, whereby financing would be split take on [a share] of the project in local curbetween the construction and operating rencythroughpensionfundsorasovereign phases. “Once the infrastructure asset fund,” he argues. “It would demonstrate has been constructed and running for their commitment by having skin in the a couple of years, it’s considerably less game.” Alli says that investments in local currencies would make some regional risky. You can then have the project issue bonds and raise finance. That’s much investors more comfortable too. cheaper,” he explains. Finally, Alli says that Finally, governments should look at governments should build some assets ways to unshackle their investment pothemselves, sell them once completed tential. Alli cites the example of Botand recycle the money into other projects. swana’s pension fund, which is limited Beyond infrastructure, there is widein its international outreach due to government restrictions. ● E.F. spread agreement that local banks need

BUSINESS | COMPANIES & MARKETS

TIMBER

Guns, bribes and chainsaws The lumber trade in the DRC’s Nord-Kivu Province is plagued by rebel kidnappings, while meddling soldiers and government officials add to the disorder

t a busy outdoor lot near the centre of Goma, the ground is covered with sawdust. Planks of wood are stacked in haphazardly placed piles. The space is messy, informal and frenetic, but every businessman there knows his way around the muddy paths, the stacks of timber, the tiny wooden sheds. Across this bustling town, there are plenty of smaller shops selling wood. They get their wares here, at this hub for timber exploiters in the capital of the Democratic Republic of Congo’s (DRC) eastern Nord-Kivu region. A light drizzle turns to heavy rain, sending everyone scrambling for cover amid the sweet smell of dusty planks. E.B.*, 47, settles into his own shed on the edge of the lot and sighs about the sorry state of the timber industry. “I’ve been working with wood since 2002, and business used to be good,” he says. “Today, it’s not. Why? Because when you go to bring your timber in from the forest, you’re going to face lots of harassment.”

estimated that the forestry sector contributed just 1% to the DRC’s GDP in 2007, in contrast to much smaller countries like the Republic of Congo, Cameroon and Gabon, where timber exports accounted for 5.6%, 6% and 4% of GDP, respectively. A more recent report from London-based campaign group Global Witness found that in 2014 total wood exports – more than half of which went to China – amounted to 112,675tn, with a value of $195m. Across the country, nongovernmental organisations and activists accuse large foreign companies that operate massive concessions – and the government officials who work with them – of flagrant profiteering. Today, the companies with the largest concessions include: Cotrefor, a Lebanese-owned company; Siforco, whose parent company, the Blattner Group, is

based in the DRC but is presided over by an American citizen; and Sodefor, also based in the DRC but run by a Portuguese family. In Nord-Kivu, concessions tend to be small. Bursting as they are with biodiversity, these forests could be places where the DRC’s abundant resources are put to good use. Instead, the

Top 10 DRC timber importers

Tonnes of timber imported from the DRC between January 2013 and December 2015

China

France

185,572.28

56,873.92

INFORMAL CONCESSIONS

Though forests cover two-thirds of the DRC’s land, timber contributes relatively little to the country’s gross domestic product (GDP). The true value of timber exploitation is unknown, partly due to the informality of granting concessions – an informality that persists despite 14 years of efforts to regulate the industry – and partly due to a general lack of reliable data. A 2011 report from the Center for International Forestry Research

Portugal

Depublic of Congo

19,130.48

14,908.86

Viet Nam 10,868.39

Namibia Belgium 5,306.17 6,240.74

Taiwan

India

7,917.29 THE AFRICA REPORT

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SOURCE: GLOBAL WITNESS

BUSINESS

MADS NISSEN/PANOS-REA

for several attacks over the past few years, calling the group a terrorist organisation with links to Islamist groups around the world. In January 2014, the national armed forces, the Forces Armées de la République Démocratique du Congo (FARDC), launched the Sukola I operation to fight against the ADF militants. General Marcel Mbangu, who leads the operation, estimates that the ADF now has fewer than 200 members. But, he added, their guerrilla tactics make them difficult enemies. “The ADF is acting on the soil of the DRC, but it must have links outside,” says General Mbangu. “So it needs the cooperation of everyone – all of the international community – to try and eradicate it.”

double threat of instability and corruption continues to choke businesses – and with it, hopes for peace and stability. Militant groups in Nord-Kivu are part of the problem, but so too are the corrupt dealings of government bureaucrats and army officials. E.B. operates a 100ha concession in Walikale territory, about a two-day drive from Goma. His workers, numbering up to ten at a time, fell trees like eucalyptus and white nongo, which he retrieves in a truck and then sells to buyers in Goma. He is unsure of his profit margins because he lives hand to mouth, always working to keep his children schooled and fed. TAXED AND TAXED AGAIN

“When you take wood from the bush, you’ll hit a road crossing and there might be rebels and they’ll charge $5 to pass. You don’t have any choice,” E.B. explains. “Then you reach a place under government control. They charge, too. Sometimes they give you a receipt so that when you arrive home you can show offiTHE AFRICA REPORT

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cials that you’ve paid the tax. But they’ll still make you pay again.” When it comes to natural resources, the DRC is well known for its mineral wealth – and for the corruption and violence that plague extraction operations. Walikale territory, where E.B.’s timber concession is located, is also rich in gold and tin, which have attracted the attention of several armed groups. The militias perpetrating violence over the years have included the Congrès National pour la Défense du Peuple, the Forces Démocratiques de Libération du Rwanda (FDLR), and smaller, community-based groups. Murky connections to army officials seem to have allowed these militants to commit atrocities – including one 2010 attack that resulted in the rape of at least 179 women – without much fear of capture. Today, the most talked-about militant group in Nord-Kivu is the Allied Democratic Forces (ADF), an Islamist outfit with Ugandan roots. Army and government officials say the ADF is responsible

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The softer and poorer quality timber is sold locally, while the best the DRC’s vast forests can yield is shipped off to China and other importers

EXAGGERATED REPORTS

Some accuse the government of overstating the ADF’s reach for political reasons. Insecurity, after all, has often served as a distraction from the governance issues that trouble this vast country. Several government critics and political analysts suggest that other groups – including the FDLR, local Mai-Mai fighters and even individuals settling personal scores – have been behind acts of violence that were blamed on ADF. Even the army has been implicated in foul play. In October 2015, a report from the United Nations Group of Experts – which focused primarily on militants’ activities – devoted a section to the corrupt practices of the FARDC. “During multiple missions in May, June and July 2015, the Group found that FARDC officers deployed for the Sukola I military operations against ADF were involved in the exploitation and sale of timber in Beni territory,” notes the report, referring to an area north of Goma. It adds that at a market on the border with Uganda, multiple buyers said they had purchased the wood directly from FARDC officers. Some soldiers reported that they had been given the option to harvest timber instead of going to battle.

BUSINESS | COMPANIES & MARKETS

Dan Fahey, a former Group of Experts coordinator, explains that the problem is not new: “Illegal trade in timber has been going on for a long time […]. What’s changed in the last two years since Sukola I began is that the FARDC’s role in this trade has become more prominent.” He adds that these activities have hindered military responses to security crises, and that in at least one case, the FARDC captured ADF territory and immediately began cutting down trees. General Mbangu, who took up his post in June last year, claims that there have been no reports of illicit timber exploitation or cooperation with militant groups during his relatively short tenure. “I can’t even confirm whether they existed before or not,” he tells The Africa Report. “Take into consideration the short time I’m commanding this sector.” KIDNAPPING

While the FARDC might be exaggerating about the ADF’s capacities in Nord-Kivu, the Islamist group nonetheless poses a serious threat to civilians in the northern reaches of the region: kidnapping. Timber exploiters are among their targets.

Beni town, about 250km north of Goma, is home to the largest concession-holder in the province: the Enzymes Raffiners Association (ENRA) company. Though most of its profits come from harvesting papain – a papaya extract used to make cosmetics, pharmaceuticals and sometimes beer – the company also harvests and processes timber. About half of it is for export, with pine and cypress making up most of its international sales. Robert Ducarme travelled from Belgium 43 years ago to work as the company’s director general. Once part of a Belgian syndicate, today ENRA is owned by the Bembas, a Congolese family best known for two of its members: businessman and former senator Jeannot Bemba Saolona and his son Jean-Pierre Bemba. Both men served as formal owners of ENRA, but Saolona died in 2009 and his son is now on trial for war crimes at the International Criminal Court. Through times of war and upheaval, the ENRA facility has remained operational, with help from the community. Today, however, times are tough. Seated amid packed bookshelves in his pinewood-scented office,

Ducarme says profit margins are deteriorating, citing insecurity, poor logistics and the high costs of exporting. The army does not make things any easier, he explains: “People cut trees in our concession regularly. Often civilians are cutting the trees, but they are being paid by the military […]. And when we harvest the trees to bring them here, soldiers often come and tell us ‘Hey, these belong to us.’ So we negotiate.”

22%

of the DRC’s timber is exported to the European Union

SECRET LOCATION

With about 80 employees and a concession covering 30,000ha, ENRA is one of the largest businesses in Beni. But the ADF has presented a new kind of challenge: the group has kidnapped workers and forced ENRA to negotiate for their release via telephone. Ducarme recalls an intense back and forth to reach a ransom agreement, followed by a complicated retrieval process designed to keep the abductors’ location secret. In line with government descriptions of the ADF, the victims recalled that their kidnappers conducted Islamic prayers daily and spoke languages including Luganda, Kiswahili and English. “They were not amateurs,” adds Ducarme. “It’s become a business, and that’s a terrible thing.” Good business for militants and corrupt officials means bad business for companies. For the moment, there is little that civilians can do. E.B. acknowledges this as he stares out into the rain-soaked wood-lot where his latest harvest is sheltered under a tarp. Force of habit, he says, is all that keeps him in the timber business. “This is just normal in Congo,” he concludes. “All I can do is tell the truth.” ●

SOURCE: GLOBAL WITNESS

In Nord-Kivu concessions tend to be small and locally owned, but are still being squeezed by corrupt officials

Jacey Fortin in Goma

GRAEME WILLIAMS/AMO-REA

Reporting for this story was supported by the International Women’s Media Foundation. * E.B. is referred to by his initials to protect him from any repercussions from participating in this reporting.

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Netflix doesn’t hold all the aces The video-streaming behemoth launched its services in every African country in January. Are local providers running scared? Not in the least

nited States-based video on demand (VoD) giant Netflix announced its surprise launch across Africa’s 54 countries on 6 January, heating up the competition for the favour of the continent’s movie and TV watchers. Reed Hastings, co-founder and chief executive officer of Netflix, shocked many of Africa’s media players – who had argued the company would expand elsewhere before targeting Africa – when he announced that Netflix was now available in 130 countries, including every African one. “Globally, we are now in over 70 million homes, and people watch Netflix all over the world on

virtually any internet-connected device. Tune-in has been replaced by personal choice. We live in an on-demand world, and there is no going back,” Hastings proclaimed to journalists. Netflix was a prime mover in VoD, and its users currently watch in excess of 125m hours of content per day. VoD is becoming increasingly popular worldwide as viewers opt to watch what they want, when they want and as much as they want. African start-ups were the first to spot the opportunity on the continent, with the likes of Nigeria’s iROKOtv launching in 2011 and Kenya’s Buni.tv in 2012. With localised knowledge and

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the capacity to adapt quickly to market demand, they had a head start in the African VoD market. Multinationalcorporationswere keen to follow suit. South Africa’s Times Media Group launched VIDI in 2014 and internet giant Naspers started its own VoD platforms,AfricaMagicGOin2014and ShowMax in 2015. Ericsson joined the party in November 2015 with its mobile-focused service NuVu. SLOW STREAMING

With Netflix now live in Africa, could this spell trouble for local VoD providers? Definitely not, according to founder and chief executive of iROKOtv, Jason Njoku,

TELECOMS Maroc Telecom wins 50bn CFA franc licence to operate in Côte d’Ivoire THE AFRICA REPORT

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COMPANIES & MARKETS | BUSINESS

HOME OF NOLLYWOOD

NETFLIX

The real battlefield will involve content. iROKOtv is, in its own words, known as “the home of Nollywood”. With an audience numbering in the hundreds of thousands and some watching up to five hours of Nollywood content a day, Njoku says iROKOtv remains the only place audiences worldwide can access a large volume of quality Nollywood content. Njoku sees the company as a global player, as approximately 55% of iROKOtv’s users are based in the United States and Britain. Buni.tv’s Lora-Mungai agrees that knowledge of what consumers like watching will dif-

which just announced a major partnership with France’s Canal+ (TAR 77, February 2016). He says that internet constraints – and in particular costs – mean that Africa is still a long way off from adopting video streaming. Njoku argues: “Mobile TV, rather than VoD, is the immediate future of content consumption in Africa. I say this as, for the foreseeable future, unreliable and superexpensive internet access will not allow for consistent, quality streaming for some time.” Njoku says Android-based mobile video services that rely on downloading will dominate the video content market in Africa in the coming years, but he adds that traditional TV will also continue to be popular. While agreeing that internet availability and costs currently prevent video streaming in Africa, Marie Lora-Mungai, founder and chief executive of Buni.tv, says

Projected e-commerce growth Online spending in billion dollars Africa

0.550

FINANCE Clearing banks named for Nairobi Securities Exchange’s derivatives market THE AFRICA REPORT

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Nigeria

2014

Projected 2025

SOUTH AFRICA Miner Lonmin announces plans for fresh job cuts

ferentiate Africa’s homegrown providers: “Smaller players like Buni.tv can compete through their deeper knowledge of the local market, by being more nimble and adapting better to a shifting situation. However, I believe that the only true way to compete is through original content creation.” She adds: “Even though technology is a crucial component of VoD services, in the end it’s all about the content […]. Our strategy is to create more original content that people love.” In 2015, Buni.tv partnered with production company Ten10 Films to combine all elements of the content pipeline under one umbrella: Restless Global. Through this company, the partners are identifying and developing local talent, and supporting it to create original content, which is then sold and distributed, including on Buni.tv. “Ultimately [the winner of Africa’s audiences] will be, just like everywhere else, the player that is able to offer the best quality, most relevant content,” she says. Netflix executives seem to know that local content is its weak point, conceding that the service carries “limited” African content in “some” countries. They are quick to add that Netflix will add more local content as its popularity grows and the company begins to understand regional markets. According to Anesu Charamba, head of information and communication technology at research company Frost & Sullivan Africa, the battle between Netflix and Africa’s existing providers will ultimately be beneficial. “Netflix’s arrival on the continent will bring about a bit of a shake-up in the digital media space, with farreaching implications. Ultimately, the consumer is best served by the development as a result of greater competition in the market,” Charamba says. ● Gabriella Mulligan

INVESTMENT Cameroon’s Douala Stock Exchange to list three new firms

SOURCE: MCKINSEY GLOBAL INSTITUTE, NIGERIA MINISTRY OF COMMUNICATIONS, FROST & SULLIVAN 2014

VoD is nonetheless the future of video viewing in Africa. “The cost of data and internet speeds are still a major challenge to the growth of VoD in Africa, so at the moment the only people able to access this type of services are the middle class in countries where broadband internet has started to spread, like Kenya or the diaspora,” Lora-Mungai says. She adds: “I do believe that VoD is the way forward for video in Africa, even though the market is still at an extremely early stage today in 2016. First of all, VoD is simply a global trend, with consumers worldwide demanding to view premium content anywhere and at anytime. We’re not going to come back from that.”

Thousands of films and series are available at the click of a remote control – to the lucky few who can get and afford broadband internet

BUSINESS | LEADERS

INTERVIEW

Runa Alam Co-founder and chief executive, Development Partners International

We don’t invest in start-ups Africa’s mid-cap and large-cap companies have 10 to 20 years of pure growth ahead, says Alam, and pension funds are starting to respond to that potential TAR: Have you seen interest from international pension funds wanting to invest in African private equity? RUNA ALAM: We have pension funds in our latest fund, which closed in March [2015]. The biggest group of investors are indeed pension funds. And the largest among those are the American pension funds, the second largest are European and then we had our first African pension funds. You may know that African pension funds have been getting up to speed over the past several years. This is in part because for the first time the regulators are allowing them to invest in private equity – in a limited way and over time. For us, it has been interesting talking to the pension funds, and some of them have been quite interested in Africa. Of the ones that came in, I would say that we are the first private-equity fund in Africa they have invested in. Is private-equity investment preferable as a means to building corporate capacity than, say, portfolio flows?

KALPESH LATHIGRA FOR JA

In Africa, that is particularly so because we have very little or no debts. So what is called private equity in Africa is really growth capital. For us, it’s not venture capital. We don’t invest in startups. We invest in the main in mid-capital companies, and partly in the large caps. In Europe and the United States these would be classed as mid- and small-cap, but in Africa they are considered the larger companies. But even though that’s the case, these are by no means mature companies. They are companies that have between 10 and 20 years of pure growth ahead. In our portfolio, companies are growing anywhere from 15% to 100% a year. How might returns be affected by depreciating African currencies?

AN EYE FOR OPPORTUNITY 1985 Earned an MBA from Harvard 1995 Named chief executive of Union Capital of Bangladesh 2007 Co-launched Development Partners International 2015 DPI’s second fund closes $225m over its target at $725m

In local currency terms, they haven’t seen a change yet. In hard currency terms, of course, it depends on the country and whether the currency in that country is going down relative to the euro or the dollar. Our first fund is a euro fund; our second fund is a dollar fund, so we can track both. Having said that, in the past couple of quarters our valuations have not come down – they’ve actually been flat. What’s happened is the growth in the companies has basically been the same as the decline in the currencies. In Africa, currencies generally don’t move together. This time they’ve moved together more than historically but still [have] not all [been] the same. North Africa and other parts of Africa have currencies that either have not declined or in some cases have gone up slightly.

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LEADERS | BUSINESS

How have you seen the ‘exit ecosystem’ for private equity in Africa develop and where do you expect it to go in the next five to 10 years? Exits are very much dependent on the company itself. It depends on whether the private-equity fund has bought the company at the right price so it doesn’t have to rely on ever-increasing growth to come up with the equity returns they want. You find that so-called blue chip companies, those that we call best in class, will find a buyer regardless, primarily amongst the funds who are increasingly seeking to enter Africa. And you also find it depends on the country and the sector, so it’s all of these things. The best would be a growth company within a growing sector [...] and then a best-of-class company within that. Last year we exited Mansard Insurance, which is in Nigeria – Nigeria has been growing at a good clip. We were invested in Mansard, which was the third-largest but the fastTHE AFRICA REPORT

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est-growing [company] in the sector. We had quite a bit of interest and in the end sold the company to AXA. It was AXA’s first entry into [sub-Saharan] Africa and they chose Mansard because of the quality of the company but also because of the quality of the management, whom they expect eventually to take them to other parts of Africa and really be their growth. So it depends on all of those things, and I wouldn’t make any generalisations. We also exited a company last year to a financial investor, and we did a partial exit of a stock exchange to listed funds.

“Exits to local investors are increasing as more companies want to grow across borders” What about exits to local investors? There is a trend of African companies growing across borders and becoming regional and panAfrican companies – so, really, multinational companies – and increasingly they are buyers of any of our portfolio companies. There are also buyers within the country, and that is more developed in the larger countries like South Africa, Egypt, Nigeria and Morocco. But, yes, that has definitely always been there and is increasing as more and more companies want to grow across borders. As they get bigger, the trend in Africa has been not to go into a new product but rather to go to a neighbouring country with your same product sets. It was made easier quite a while ago in the late 1990s by the New Partnership for Africa’s Development, which is a government-to-government initiative to take down not just trade barriers [but] all sorts of different things [...]. In our portfolio, a company called Letshego is based in Botswana – a very small country by population. It’s now in 10 other countries and therefore it’s been able to grow to a market capitalisation of $700m, which in Africa is a significant rise. ● Interview by Nicholas Norbrook

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APPOINTMENTS

Thabang Ramogase Media agency Mindshare South Africa’s brand and marketing manager Thabang Ramogase became the company’s chief executive in January. He has previously worked for Nando’s, Coca-Cola and MTN.

Halla Sakr In January, banker Halla Sakr left her post as deputy chief executive of HSBC Bank Egypt to become managing director of Barclays Bank Egypt. At her previous post, she helped to expand HSBC’s retail and personal finance a ce businesses. bus esses

Romuald Wadagni Wadagni has built his career at auditing firm Deloitte and was recently promoted to head of auditing for Francophone Africa. Prior to being a managing partner at Deloitte, the accountant, who trained in France and the US, was chief executive of the firm’s operations in the Democratic Republic of Congo.

What percentage of your portfolio is exposed to the end of the commodities supercycle? That is almost impossible to determine because we are investors in consumer-facing companies: banks, insurance, fast-moving consumer goods, pharmaceuticals, that sort of entity. The impact would really come on a very macro level. In Africa, you have three sorts of countries. You have those where they are exposed to commodities, oil and gas in particular, like Angola. Secondly, you have countries that have exports of commodities but that are much more diversified today than they were a few years ago, such as Nigeria. And then you have countries that in the future may be exposed to commodities because there’s lots of exploration going on […] and that would be countries like Kenya or Ethiopia. So it’s a mixed bag, and it depends on the country. Our portfolio goes across the whole continent, and it is primarily consumer-facing.

HANNIBAL FINANCE

Dropped calls HANNIBAL HEARS NIGERIAN officials are less than happy that South African telecoms provider MTN hired former US attorney general Eric Holder to negotiate its out-of-court settlement with the government. They say MTN had already rebuffed Nigerian attempts to find a compromise and that the South African company was likely to get a deal with the previous legal team. With a fine of up to $3.9bn on the line for not having disconnected unregistered SIM cards, MTN would seem to be better served by understanding the mood in Abuja. It is not as if Washington has a special relationship with MTN either, as the company has invested in Iran since 2004.

Currency conundrums WITH THE PRICE of commodities dropping and the strengthening US dollar, governments are left with stark choices. Egypt is propping up its currency, which is hurting businesses by limiting the amount of foreign exchange. US-based auto manufacturer GM announced in February that it had momentarily suspended production due to difficulties in importing parts. South Sudan’s currency has been in free fall due to the low oil price and its long-burning conflict, leaving East African Breweries to close down its Juba operations.

The ants and the grasshoppers THE ROUT IN COMMODITY PRICES is creating plenty of winners and losers. Mining giants Anglo American, Glencore and Vale have been selling off assets to stave off financial difficulties. Some small companies, like South Africa’s Sibanye Gold, are growing bigger and diversifying on the backs of their larger rivals thanks to their sounder financial footing. Sibanye bought a platinum mine from Amplats in September 2015 in a deal that allows the gold miner to defer its payments and receive money if the assets purchased have negative cash flows. Chief executive Neal Froneman said in February that Sibanye is in the market for cheap coal and platinum assets. Anglo American is promising a more aggressive shake-up, meaning that there are many more deals to come before the commodity cycle changes track.

Zambian two-step PRESIDENT EDGAR LUNGU’S GOVERNMENT is upholding a fine tradition of proposing radical changes to the business environment and then backtracking once the moves prove unpopular in the business community. In February, the state power company ZESCO flip-flopped on a measure to increase electricity prices to commercial users by 73%. This indecision echoes the government’s previous attempts to reform mining taxation. The Patriotic Front-led administration twice reversed course in 2015 on raising royalties after mining executives spoke out vociferously. With urgent needs to invest in new-generation capacity and dams at record low levels due to drought, the government is faced with stark choices to bridge ZESCO’s funding gaps. ●

Barclays may want out of Africa A new leadership and the weakening rand could lead the bank off the continent after more than 100 years

he recently appointed chief executive of Barclays bank, Jes Staley, could sell the company’s African operation – the third largest by turnover on the continent – amid concerns that the South African economy will continue to perform poorly. Since Staley, 59, took the helm of the bank on 1 December last year, a chorus of analysts and former executives have urged him to offload Barclays Africa Group (BAG), in which the British bank owns a 62% stake. BAG has a market value of about $6.7bn and total assets of $85.4bn. “Barclays has historically been in a very good position there, but is suffering in South Africa economically,” Michael Rake, the bank’s former deputy chairman told reporters. Both Staley and chairman John McFarlane say they seek to refocus the bank’s operations on US and British operations. Media reports suggest Staley is leaning towards selling BAG. He has questioned how the African operation fits in with the rest of the group’s activities, says the Financial Times. In an open letter to Staley, Chirantan Barua, an analyst at Sanford C. Bernstein, said: “With just about 10% of your earnings from Africa, you never get a bid up when the continent’s in a bull market; but when the rand is in free fall, investors are prompt to knock it out of your valuation. So, simply put, you should let the franchise go.” Barclays is expected to give a strategic update on 1 March when it delivers its full-year earnings report. ● Mark Anderson THE AFRICA REPORT

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SOUTH AFRICA

Tiger loses Tiger Brands caught executives fudging sales figures in Kenya, and now it has written off $120m from its Nigerian business. What is next for one of the continent’s largest agribusiness firms? By Mark Anderson

apturingnewAfrican markets has not been easy for Tiger Brands. In May last year, South Africa’s largest food producer sacked the managing director of its Kenyan business, Haco Tiger Brands, after he ordered subordinates to stash cereal, energy drinks, rice and pasta in a third-party warehouse to give the impression that sales targets had been met. “They were key executives right at the top. It was difficult to pick this up,” Peter Matlare, Tiger Brands’ chief executive officer at the time, told reporters.

Nigeria has provided further headaches. In December, after three years battling stiff local competition, government bureaucracy and currency devaluation, Tiger Brands sold 65% of its stake in its Nigerian business, Tiger Branded Consumer Goods (TBCG), back to the Dangote Group for $1 and an immediate cash injection of $46.1m. Tiger Brands paid $200m for its stake in the firm in 2012 as part of an ambitious strategy to expand its presence across the continent. It wrote off $120m from the operation in late 2015. Before he tendered his resignation in September, Matlare had

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its stripes fought hard to boost the company’s presence in Nigeria. He paused production at some of its mills and tried to introduce flour and pasta products with higher profit margins. However, an abundance of competition, including from heavyweight Nestlé Nigeria, stifled these efforts. “We got a lot of [the initial purchase of TBCG] wrong, and for that there are consequences, and those consequences are playing out,” Matlare said in an earnings call with investors ahead of the sale. He added that the Nigerian fiasco that happened under his watch “will be my Waterloo”. At the time of THE AFRICA REPORT

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$120m written off from Tiger Branded Consumer Goods in late 2015, resulting in a 2% drop in Tiger Brands’ profits

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his resignation, Matlare warned, however, that Tiger Brands will not grow strongly if it focuses on the South African market alone. Tiger Brands reported an unexpected 2% drop in its full-year profits due to the Nigerian writeoff. When Matlare announced that he would step down at the end of 2015, saying it was “the right time for new leadership”, the firm’s share price rose to a four-month high. GOVERNANCE DEFICIT

Tiger Brands’ chief operating officer and acting chief executive Noel Doyle dismissed suggestions that Dangote might

have deceived Tiger Brands about the profitability of its Nigerian business. He blamed Tiger Brands’ management for the failure of its Nigerian venture. This assessment is shared by Aly-Khan Satchu, a Kenya-based analyst: “You’ve got to ask, internally what’s happened? I don’t think [Tiger Brands] have been able to transfer their skills out of South Africa and when it comes to acquisition I don’t think their due diligence stacked up. The problem is a corporate governance deficit in a lot of these [South African] corporations and therefore what might look wonderful

THE NEW YORK TIMES/REA

From sacks of flour to sackings, Tiger Brands has had a disastrous year

DOSSIER | AGRIBUSINESS

on paper in fact has not transpired to be the exact reality.” Satchu adds: “[Tiger Brands] got caught up in the ‘Africa rising’ narrative and decided they had to move really quickly and they basically came off the wrong side of both those transactions, in Nigeria and in Kenya.” But other analysts point to external factors in the breakdown of Tiger Brands’ foray into Nigeria. “Tiger management faced the perfect storm of events just when they entered, including higher wheat tariffs, deteriorating growth with consequent price competition, a depreciating currency and of course Boko Haram’s impact in northern Nigeria, where Tiger had material exposure,” says Jiten Bechoo, an equities research analyst at Avior Capital Markets. In the quarter ending 31 December 2015, TBCG reported a pre-tax loss of N975.3m on stagnant revenue of N10.57bn as compared to the same period in 2014. Tiger Brands’ board is due to name Matlare’s permanent successor at the end of March. The company declined requests for comment from The Africa Report about its recent problems and its plans to turn its African activities around. CANCELLED DEALS

The troubles in Kenya and Nigeria call into question Tiger Brands’ strategy of growth through the creation of joint ventures and buying majority stakes in other African companies. Tiger Brands had also run into difficulties in previous Kenyan deals. In February 2014, it announced it had bought Rafiki Millers and Magic Oven Bakeries – a flour milling and bakery com-

pany, respectively – before cancelling the deals in March. The vision for the agribusiness giant’s expansion is certain to be a key factor in the appointment of its next leader. Chief executive Matlare had been in his post since 2008, so the change in leadership is likely to lead to a shift in strategy. Acting chief executive Doyle said that Tiger Brands must expand its presence in new and existing African markets if the company is to offset its losses at home. It already has manufacturing centres in Cameroon, Ethiopia, Kenya, Nigeria and Zimbabwe, and it sells its products in 20 African countries. Kenya is likely to be a priority country in the expansion strategy. A growing population, rising incomes and growing financial inclusion spurred by the country’s mobile boom have helped Kenya’s economy to create solid growth. Analysts at research firm Business Monitor International have forecast that Kenyan households will increase their spending by 4.8% this year. But last year’s dismissal of Geoffrey Kiarie, who had been in charge of Tiger Brands’ Kenyan business, leaves the company in search of strong leadership in East Africa’s biggest market. Another possibility is that Tiger BrandswillgoaftersomeofAfrica’s fastest-growing cities, like Dar es Salaam and Kinshasa, which are becoming lucrative markets in their own right. But Tiger Brands’ plans for expansion will face a series of challenges, including spikes in the price of maize and wheat, and a weak South African rand, which will lead to higher

production costs and lower consumer purchasing power. “Tiger’s grain margins will decline in the year ahead, and this division is a material contributor to group profits. Lest we forget, that competition is likely to intensify in these tough times,” Avior Capital’s Bechoo explains. SALVATION IN CHOCOLATE

The price Dangote paid to buy back Dangote Flour Mills from Tiger Brands in December 2015 SOURCE: DANGOTE

With higher food prices in drought-stricken areas, Tiger Brands is looking to cut costs rather than pass on the rising prices to consumers. At home in South Africa, Tiger Brands has been raising its historically low spending on marketing in order to defend its market share from rivals like Pioneer Food. Another area of focus in its home market is investing more in developing new product lines. However, there are some positive signs that Tiger can boost its business around the continent. Chococam, the company’s Cameroonian snacks business, showspromise.TheCameroonian subisidiary, which makes chocolate, chocolate spread, candy, gum and powdered beverages, posted 12% growth in operating income and volume growth of 9% last year. “Although discretionary in nature, it appears as though the business has the right formula going,” Bechoo argues. Analysts agree that Tiger Brands is right to prioritise expansion across the continent, but the debate is on how to do it well. Satchu concludes: “The Africa-wide strategy is the correct one – you’ve got much faster growth, admittedly from a lower base.” But Tiger Brands, he adds, “has to recalibrate its strategy.” ●

Tiger Brands’ African expansion

2008

2011

2012

2015

Buys 51% stake in Haco Industries in Kenya.

Buys interests in the East African Group of Ethiopia, Deli Foods of Nigeria and Davita, a South African producer of powdered seasoning (Benny) and beverages (Jolly Jus).

Acquires a controlling interest in Dangote Flour Mills in Nigeria (now Tiger Branded Consumer Goods) and the Mrs Ball’s trademark.

Dismisses Geoffrey Kiarie, managing director of Haco Tiger Kenya, after discovering fraudulent accounting. Sells 65% stake in Tiger Branded Consumer Goods in Nigeria, writing off $120m in losses.

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DOSSIER | AGRIBUSINESS

The figures are simple: more working-age people equals beer industry growth

BRENT STIRTON/GETTY IMAGES

BREWING

Beer maintains its head start Africa is thought to be the world’s fastest-growing beer market and the major producers are competing for regional expansion across the continent

eer sales in Africa will grow faster than in any other region between 2015 and 2020, registering a volume increase of 37,000 hectolitres per year, according to projections by Canadean, a UK-based research outfit. Sales in Zambia, Kenya and Ethiopia will be particularly strong in the coming years, the firm says. “This notable growth will be fostered by the flourishing economic parameters such as increasing gross domestic product growth rates, fast-growing urbanisation and above all the rising population with a working-age demographic set to surpass that of China and India,” Piyumika Jayasena, an analyst at Canadean, told reporters. Africa’s young population has lured some of the world’s largest brewers to the continent. SABMiller, Heineken, Castel Group and Diageo all have African

operations. Beer producers across the continent are also braced for the merger of two industry behemoths, SABMiller and AB InBev, which is underway. MORE GUINNESS THAN IRELAND

SABMiller, the world’s secondlargest beer producer by revenue, posted 18% growth among its African subsidiaries in the third quarter of 2015. “Africa performed well across the board,” said Alan Clark, chief executive of SABMiller, who noted the particularly strong performance of South Africa. But economic woes, brought on by record-low oil prices, caused SABMiller to slash its growth forecast in Nigeria from 8% to 3%. Diageo, the largest producer of spirits in the world, has made massive inroads in some of the continent’s most lucrative markets thanks to its signature Guinness

beer, which sells more in Africa than in Ireland, where it was invented. The brewer wants to build on this success by targeting East Africa with its subsidiary, East African Breweries. East African’s chief executive, Charles Ireland, said: “We have ambitions to grow our reach across the region and have more significant business in Rwanda, Burundi and eastern DRC. We are seeing very healthy growth in Rwanda – I think over 30% revenue growth from a very small base. We want to have a meaningful presence in everyEastAfrican country.” The Ugandan and Tanzanian markets are particularly attractive, he added. “We see market share growth in Uganda, where we are well positioned to capture a good proportion of the market. We are seeing volume growth in Tanzania and market share growth in Tanzania. We are looking at Tanzania delivering a good second half for us.” Heineken’s chief executive, Jean-François van Boxmeer, is pushing for investments in Côte d’Ivoire and South Africa. But the firm cautioned in its 2015 annual report that it has seen an annual 2% drop in sales in Africa, the Middle East and Eastern Europe. The El Niño-linked drought could disrupt production this year andhurtcompanies’performance. East African Breweries’ Ireland explained: “The farmers in Kenya particularly have been impacted. Barley crops are being affected. We are working with the team to mitigate some of the impact of late harvesting of the sorghum crop, which is happening as a result of the rains continuing.” ● Honoré Banda

Predicted growth in beer sales, 2015–2020 5%

Africa

Asia

Europe

North America

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EL NIÑO

Farmers warned the worst is yet to come Shifts in the warm waters in the Pacific Ocean – known as El Niño – are increasing food insecurity and causing droughts and floods across Eastern and Southern Africa

frican grain output is forecast to plummet this year. A prolonged drought brought on by the El Niño weather phenomenon is wreaking havoc on maize, rice and wheat production across the continent, aid agencies, business analysts and governments warn. Poor crop yields in last year’s harvest have put at least 52 million people in Eastern and Southern Africa in desperate need of food aid, according to the World Health Organisation. Food security is predicted to worsen this year as grain harvests continue to slide. South Africa, a powerhouse of maize processing, has slashed its projected output by 25% for the coming year. Meanwhile, in Ethiopia, memories of the 1983 famine have resurfaced as foreign governments rush in with food assistance to help more than 10 million people who are thought to be facing desperate food shortages. ● Mark Anderson

Cereal production by region (million tonnes)

North Africa 2014 estimate 2015 forecast

34.7

East Africa 57.6

56.5

43.5

West Africa Central Africa 4.9 4.7 Southern Africa

(exclud. South Africa)

36.1

South Africa

27.9 SOURCE: FAO

DAN KIYI/AP/SIPA

El Niño brings the Horn’s worst food shortages in years AID AGENCIES ARE SOUNDING the alarm about the worst food shortages in the Horn of Africa for decades. As many as 22 million people could face food insecurity and malnutrition this year. Ethiopia’s main cereal crop, known as the meher harvest, yielded 75% less than usual in some of the worst-affected areas of the country. The Ethiopian government and aid agencies estimate that $1.4bn is needed for the country to address the crisis. Flash flooding could make the situation much worse for up to 3.5 million people in Ethiopia, Somalia, South Sudan, Kenya and Uganda.

18.8 15.1

Southern Africa’s bitter harvests THE DROUGHT HAS FORCED South Africa to forecast a 25% drop in its maize harvest this year. Emergency food security conditions have been declared in five of the country’s nine provinces and experts say that South Africa might have to import 3.8m tonnes of maize to make up the shortfall. The region’s biggest maize producers are expecting big losses in this year’s harvest. Officials in Namibia said production will drop by 44%. Zimbabwe announced in January that it would borrow $200m from Afreximbank to import maize and declared a state of emergency in many drought-stricken areas. Meanwhile, maize prices soared by 66% between last year and this January, making the staple unaffordable for many. More than five million people are expected to face food insecurity this year in central Mozambique, southern Malawi, southern Madagascar, south-eastern Zambia, Zimbabwe, Swaziland, Botswana, Lesotho and South Africa. THE AFRICA REPORT

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INTERVIEW

Drought returns to Africa

Assessment of soil moisture. Low figures denote little rain. Data as of January 30, 2016 ?

Agnes Kalibata Head, Alliance for a Green Revolution in Africa

El Niño is going to be terrible TAR: How will the El Niño affect smallholder farmers across the content? In one word, it’s going to be terrible. Last year, I was in Zambia and I was told that 14 districts in the country had not had a single drop of rain. South Africa, for the first time in 10 years, has imported food because they have had such terrible production of maize. Many other countries, including Rwanda, have much less food than they expected. Ethiopia is in a food crisis. So when you look at a map of the areas that are optimum for food production, they have been affected the most. This is going to affect a lot of people in African countries.

SOURCE: PRINCETON UNIVERSITY

JOAO SILVA/THE NEW YORK TIMES-REDUX-REA

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Which agribusiness companies are working well with African smallholders? In Kenya, East African Breweries is now purchasing sorghum from farmers. In Malawi, there is Universal Industries that is purchasing from farmers. In Rwanda, we are seeing cassava factories. These kind of emerging industries are more mediumsized industries that are beginning to see the money coming out of smallholder farmers. The companies that are doing the most are working with some of the easier-to-deal-with commodities like maize and beans. These can be aggregated and supplied to demand areas near schools and to other countries that don’t have as much. What we see as really significant is when companies that have a lot of market influence become interested in smallholder produce.

What should Africa’s political leaders be doing to connect smallholder farmers with value chains? Farmers in Africa are, in a number How can Africa’s private of places, quite isolated from markets. sector work more closely with Prioritising infrastructure is one thing smallholder farmers? leaders can do. From an agricultural perspective, Smallholders need access there is also agricultural to markets that encourage infrastructure that is lacking in terms of helping them to produce surplus food farmers improve their yields to reach levels that create This is beginning to happen surpluses, which can then feed in a number of places, and African businesses are beginning to into value chains. understand the value of selling fertilisers and seeds to African farmers. What are the financial benefits of They’re also beginning to understand unlocking the potential of Africa’s the value of purchasing [produce] smallholder farmers? from farmers. But there are lots The African food market is going of challenges. Companies need to to be worth about $1trn by 2030. be able to move produce from one So the question then becomes: place to another – that is beginning Are Africans going to be importing to happen. They need to understand most of that food? Right now, we are the complexities of agriculture and how importing about $30bn worth of food. to get the most out of it and how to This is money that these smallholder add value to it. Right now, this is limited farmers could tap into and grow by lack of access to finance. Financing themselves out of poverty. But for this remains one of the biggest areas to happen, African farmers must have for companies to expand. ● access to markets that encourage Interview by Mark Anderson them to produce surplus food.

ART & LIFE URBAN LIVING

Streets ahead

As Africaâ&#x20AC;&#x2122;s proudly burgeoning cities spawn skyscrapers and shopping malls, community spaces are being squeezed out. The Africa Report meets activists and artists who are reclaiming the streets and pumping life into the metropolis

Addis Ababaâ&#x20AC;&#x2122;s skyline shows a city on the up, but down below its citizens yearn for greenery

t’s a sunny Sunday afternoon in Addis Ababa, and a newlywed couple strolls hand-in-hand down Menelik II Avenue, posing for photographs. Their blue-themed wedding party is behind, admiring and waiting patiently, sometimes taking their own selfies. Their backdrop:AddisAbabaPark,abeautifully manicured green space that is encircled by the avenue. It’s a picturesque location, save for the fact that the park is fenced off and closed that day, like most days. It’s a typical Sunday afternoon scene, explains Mahder, an architect who points out that the wedding parties’ parked cars take up avenue lanes, block traffic and cause a commotion. But what other options do they have? “We don’t have real parks here, so this is how people use public space now,” he says. Ethiopia’s economy is growing and diversifying. Addis Ababa has become the fourth largest diplomatic centre in the world, with more than 90 embassies

and consulates. The government-led infrastructure expansion has seen an increase in roads, a new light rail system and construction works on every skyline. Future offices, hotels and condominiums are rapidly transforming the city’s streets, filling in vacant plots and replacing older homes and buildings. PARADISE LOST

“The city is shining, but who is this development for?” asks Hailemelekot Agizew, born and raised in the city and a senior expert in heritage management at the Authority for Research and Conservation of Cultural Heritage. “When I was a child, Addis was beautiful. There were wild animals, rivers were clean, indigenous trees, green fields… It’s like it was a dream.Howcouldwelosesuchscenery?” His sentiment is common. But, while parks are diminishing, people in cities like Accra, Lagos and Cape Town are using everyday public spaces like

streets and pavements – even walls – in new ways. Preparing for its sixth edition later this year, Chale Wote Street Art Festival in Accra takes place in the historic but economically deprived Ga Mashie neighbourhood. For two days in AugustorSeptember,artistsandresidents take over High Street, and it becomes a teeming, energetic, connected space for murals, graffiti, music, art installations, bike stunts, performances and people. The festival attracted hundreds of visitors in its first year in 2011 and thousands in 2015, ushering in a new art-inspired economy that thrives in the public space. “I was sceptical before I first went in 2013,” says Kwesi, an IT specialist from nearby Tema. “The roads are always for cars, trotros, taxis – never for people. Maybe we can’t build new parks, but this festival shows me what’s possible with what we have already.” InLagos,theprivatesector-ledvisionof urban modernity is Eko Atlantic, Nigeria’s

ZACHARIAS ABUBEKER

By Victoria Okoye in Accra, Lagos and Addis Ababa

ART & LIFE

most expensive and exclusive district. Just off Victoria Island, the high-profile, 10-square-kilometre land reclamation and development project will include lifestyle locations, malls, a cinema and a Miami-inspired landscaped promenade. The intent is for “private” public spaces tailored to Eko Atlantic’s affluent market and consumers, and that’s a key selling point, explains Haleema, a sales agent. When asked about plans for “public” public space at Eko Atlantic, Haleema adds that plot owners are welcome to construct parks or plazas within their purchaseddevelopments.Theonlycatch: plots are selling at a minimum of $200 per square metre. Despite this trend of exclusivity, local initiatives are tapping into what draws people to Lagos’s public spaces to make them more inclusive. “The space where I see things happening is leisure,” says Olamide Udoma, urban practitioner and director of Future Lagos. “People say Nigerians don’t want parks. I think Nigerians do enjoy open space and they do want it and need it.” Simple and spontaneous ideas are effective in reclaiming the city. Olamide points to Picnickers Anonymous of Lagos, an open group that organises picnics in public spaces around the metropolis, and a cycling group on the Island that organises rides on the last Saturday of each month, taking advantage of city-mandated environmental cleaning, which keeps cars off the roads.

Clockwise from right: energy and colour at Dakar’s Festigraff festival in April; the future Eko Atlantic in Lagos, where public space is “private”; green for ‘Go’ at Cape Town’s Open Streets Days

PARTY ON DOWNTOWN

Architect Papa Omotayo and his team at A Whitespace Creative Agency organise block parties in Lagos. In November 2015 they took their party to the two-block stretch of Broad Street on Lagos Island (from the historic Printing Press building to Freedom Park). The Sunday event brought together artists doing live work, street performers, music, local vendors and food purveyors. “It’s all about providingplatforms,” Omotayosays.“Theprivate space can feel elitist, so we take things out to the public and give them platforms where they can engage and see art and be immersed in the collective.” In South Africa, the Open Streets concept has come to Cape Town, in which streets are closed to traffic for an entire day, allowing for full community recreational, social, art and entertainment activities to fill the space. Marcela Guerrero-Casas, co-founder and director of Open Streets Cape Town, says what

NIC MANSHON

made her organisation’s work creating open streets possible was “long-term engagement” and existing city government interest in inclusivity and commitment to non-motorised transport. “[We fit] into a series of different objectives that are aligned with city policies,” she explains. Some interventions are vertical. In Dakar, graffiti artists engage walls as art canvases for public commentary. Using their spray cans as speak-pieces, and with waves of colour and imagery, artists like Ati Diallo transform what would be segregating, bare walls into platforms for community dialogue. “The aesthetic is our strategy,” Diallo says, explaining how he uses techniques otherwise employed

in advertising to the public good. “Imagine a wide wall. If it’s empty, it doesn’t interest anyone. When we add colours to the wall, it forces people to look. […] If we put a message against violence at one side and the face of a beautiful girl on the other, when someone passes by they’ll first notice the beautiful girl, then automatically they’ll read what’s there. That’s how we speak our message.” Streets are public spaces and drivers of prosperity for cities, a 2013 UN-Habitat study concludes, and they play a key role not only in infrastructure and urban productivity, but also equity, social inclusion and citizens’ quality of life. In a gauge of how much city space is given THE AFRICA REPORT

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ART & LIFE

IN NAIROBI’S CENTRAL BUSINESS DISTRICT high-rise office blocks and government buildings tower above the lush greenery and space of Uhuru Park. On any day the park is filled with picnickers, nappers, joggers and boat paddlers, an oasis amidst grey concrete. That this is here is largely thanks to the late activist and environmentalist Wangari Maathai and the Green Belt Movement. In 1989 they campaigned relentlessly to save the park from a multi-use business and shopping complex. Though the government tried to discredit her, Maathai’s protest led the international investors to back out. “Green spaces act as the lungs of a city,” says Eric Kigada a Nairobi-based architect with B & A Studios. Kigada says it took some Kenyans time to understand Maathai’s work, feeling that green space is a waste of land. Outdated urban plans have meant that the fast-growing city has not kept up with itself. Though much of the development is needed in economically under-privileged areas these places tend to be overlooked. A master-plan produced in 1973 ended in 2000. More recently the Japanese International Cooperation Agency (JICA) launched an infrastructure-heavy plan in 2015. In the face of selective development a growing number of organisations are still running with the baton handed to them by activists like Maathai to create and sustain accessible public space. Most recently the wildlife conservation organisation WildlifeDirect is campaigning against plans to use part of the Nairobi National Park – the only wildlife park in the world that is in a capital city – for the construction of a railway line. ● Billie Adwoa McTernan

EKO ATLANTIC

LESLIE RABINE

Keep Nairobi Green

over to streets Accra ranked among the lowest with 11.1%, while Addis Ababa and Lagos were marginally higher, at 13.4% and 14% respectively. Cape Town streets made up 25.2% of city space. The study’s ‘Composite Street Connectivity Index’ assessed how connected cities’ street networks are. Again Accra was on the lower side of this spectrum at 0.287 on the index, Addis and Lagos THE AFRICA REPORT

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approached middle ground at 0.428 and 0.449, while Cape Town’s score of 0.832 ranked highest in Africa. The presence and connectedness of streets is just the first step. Securing streets for festivals and other community actions means getting through the red tape required to pedestrianise the street and opposition of those who are wed to their vehicles. In Cape Town, Guerrero-

Casas says the process of getting the permits is still cumbersome, expensive and not always clear, making it daunting for other neighbourhoods or organisations who would like to open up their streets for more public uses. In Lagos, block party organiser Omotayo says securing the permit took months, and approval didn’t come through until three days before the event. Security is also a concern, and in both Accra and Lagos festival organisers must pay for police personnel or government officials to monitor their events. A common thread running through the experience of all these activists is that volunteerism and partnerships across community and government stakeholders have been key to transforming regular streets into vibrant public spaces. “Open Streets Days would simply not be possible without the committed volunteers who have joined our organisation,” Guerrero-Casas says. “Furthermore, we get in-kind contributions to the organisation as a whole because people believe in what we are trying to achieve.” Attheheart of theseefforts are ordinary citizens who want better public spaces they can enjoy, in whatever form, like Hailemelekot in Addis Ababa. “In Lagos, at least they can see the Atlantic Ocean. So can they see the beach in Accra. But in Addis, where should you go? You cannot see a beach where you can take your children, you cannot see a field where they can go and play.” ●

ART & LIFE

Art Complex simplicity Nairobi artist Michael Soi’s paintings disarm with their pop-art style but pack a satirical punch. Now his beach boys, strippers, sex tourists and Chinese businessmen are icons in their own right

nights. So what I am doing right now, reat silver silos stand among I am basically documenting Thursday, factories and warehouses in Nairobi’s industrial area. Amidst Friday and Saturday,” he explains wryly. the retailers, workshops and traders is The bars, nightclubs and strip clubs of Nairobi form the backdrop to these overthe GoDown Arts Centre, aptly located in the city’s main area of production belooked weekend habits in Soi’s work. cause it is here that one of Kenya’s most He points to a painting on the wall. prolific artists has his studio. Occupying Two men are sitting on a bench ogling one unit in the warehouse-turned-artsthewomeninfrontofthem.Aswithmany of the other female protagonists in his space, Michael Soi has no guilt about works, the women’s voluptuous curves crossing the boundary between art and “merchandising”. The place is filled with spill out of their short shorts and mini large canvases of his work, half-filled skirts. “If you go to Nairobi, especially paint pots and bumper stickers with his where they have the benches, you will trademark images. Soi’s images may be “If you want beautiful art go children’s-book colourful to the next people. I will address and look great on the tote issues that affect people locally” bag actres Lupita Nyong’o Instagrammed herself wearing, but they are also laced with satirical always see their [men’s] heads moving in social commentary. Focusing on themes that direction [of the women],” he notes. like gay relationships, interracial relationSome observers have been irritated by ships and commercial sex, Soi’s pictures these images, reading the female characgive an insight into aspects of Kenyan soters as props created to satisfy the male ciety that are often swept under the cargaze. But Soi argues otherwise. His picpet. “We are a [mainly] Christian country, tures tells stories, he says, such as that we love God, we go to church on Sunday, of a woman he knows, a dancer, who we sing very loudly but nobody tells you left her job at the bank where she was what they do on Friday and Saturday stressed out by her boss and decided to

work at a strip club. “She basically wants to do her own thing and have her own joys and her own failures,” he says. “For her it’s about power.” Soi is quick to point out, though, that with no laws to protect them strippers are often vulnerable to abuse and exploitation. His work also extends to the ‘beachboys’ in many of Kenya’s coastal towns and their mutually beneficial relationships with older European women. “We are talking about adults who’ve never stepped into a class but can speak French, German, Italian, Portuguese and Spanish,” he says. Soi began practising as an artist over 20 years ago. “I made a decision that I am not going to make beautiful art for you,” he says. “If you want beautiful art go to the next people. I will address issues that affect people locally, issues that people would rather bury their heads in the sand about and pretend they do not exist.” FAT CATS

He also defends his pop art style. “There are people who believe that for you to be a good artist, you need to go abstract, you need to create something so complex that you need someone to come and THE AFRICA REPORT

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ART & LIFE

White Christmas Soi portrays the “basic economics” that oil the relationships between tourists and ‘beach boys’

SARAH WAISWA FOR TAR

Untitled Complex dynamics of freedom and exploitation hide behind a simple, illustrative nightclub scene

COURTESY OF THE ARTIST

As well as his political canvases (right), Soi has his “merchandise” – cute pop paintings (above) and the tote bags loved by Lupita Nyong’o

explain it to you,” he says. “[The] complexity in the work is in the simplicity.” His 2009-10 Fat Cat series on greedy officials stirred the art community but it was his 2012-13 China Loves Africa series that saw him gain global attention. The African Union’s new headquarters in Addis Ababa – a gift from the China State Construction Engineering Corporation – was inaugurated in 2012 and China’s involvement in Africa was a topic of heated debate.Soi,however,approacheditwitha cartoonist’s humour. One painting shows a group of black women peeking into the underpants of a Chinese man along a newspaper cutting with the headline: “How China wins hearts and minds.” All of the paintings in the 40-piece series were sold, including four that were THE AFRICA REPORT

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bought by an amused Chinese collector who spent 30 minutes laughing at the artwork in Soi’s studio. Kenya is not new to foreign migration. A quick tour through any of the many shopping malls and uptown restaurants reflects the diversity of any multicultural city with blacks, whites, Arabs and Asians, locals, expats and tourists mingling. But China’s increasing presence began to change the status quo. “Towards the end of [former president Daniel arap] Moi’s rule, China realised there were a lot of changes taking place in South America, where they had invested heavily. You can only be in a situation for a certain period of time before you start to look for new frontiers to further your investment needs,” Soi asserts. “At

China loves Africa 38 This series took a tongue-incheek look at Africa-Asia relations that had one Chinese collector in stitches

that particular time every infrastructure programme in Africa was either funded by the World Bank, the IMF or some foreign mission in that particular country.” He points out that unlike some of the continent’s Western partners and donors, when it comes to providing finance the Chinesemakenodemandsonacountry’s governance. This makes the proposed economic partnerships attractive to a number of African countries. But Soi thinks the solution to the continent’s development is in the hands of neither the West nor China: “The problems that we face in Africa right now can basically be resolved in Africa itself if people get up one morning and decide to get their act together.” ● Billie Adwoa McTernan in Nairobi

LIFESTYLE

TRAVEL SURF RESORTS S

BOBBILE BA PHOTOGRAPHY 2014

Breaking the waves The Tastemakers hit the shores looking for snappers and swells at some of the continent’s best surfing spots

urfers looking for breaking thrills can have their pick with surfing schools and resorts popping up coast to coast, on the Atlantic and Indian Oceans. With a range of activities and water sports laid on for them, boardlovers will find quality waves and well-equipped beaches across the continent, not to mention some much needed after-surfing downtime in little-known locales.

Kwepunha Surf Retreat, Liberia Head 50km north of the Liberian capital, Monrovia, to Robertsport, home of the Kwepunha Surf Retreat. Kwepunha is not just a haven for surfers looking for five-point breaks, it also promotes community development through job creation, swim and surf lessons, youth mentorship and small-business workshops. April through October are the best times to surf Robertsport. At the retreat also enjoy yoga brunches, jungle treks, spear-fishing (yes, you read that right!) and canoe-building. kwepunha.com

N’Gor Island Surf Camp, Senegal Just a five-minute pirogue boat ride from Dakar is N’Gor Island, which was popularised by surfing cult classic film The Endless Summer. It is replete with beautiful beaches, surfboard shops and quaint restaurants. With its best surfing happening between November and February what keeps surfers coming back to N’Gor is the famous N’Gor Rights

break. Stay at N’Gor Island Surf Camp founded by Danish entrepreneur Jesper Mouritzen, where he and his crew of local guides offer surf lessons and share how to catch N’Gor’s best breaks. gosurf.dk/en

Coco Rico Resort, Mozambique Scuba diving, dolphin watching, snorkelling and surfing against the picturesque backdrop of the Indian Ocean’s turquoise waters and white sand beaches? Sign us up! With endless activities and opportunities to soak up the sun, Ponta de Ouro is a beach enthusiast’s dream come true. In fact, stay at Coco Rico Resort and you’ll be signing up for one of 25 different activities. Ponta de Ouro is a great pick for groups as it caters to both beginner and expert surfers. Visit from June through August. cocorico.co.mz

Carpe Diem Resort, Angola Adventure-seekers needn’t look elsewhere: Cabo Ledo in Angola is home to some of the longest and least-surfed point breaks in the world. The most epic waves occur May through October. Each October, Social Team Angola hosts Social Surf Weekend – a competition and gathering of surf aficionados. Unwind in the evening in a bungalow at Carpe Diem Resort where you can choose to enjoy fresh seafood either beach-side or poolside. resortcarpediem@gmail.com Tameshia Rudd-Ridge THE AFRICA REPORT

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BEHIND THE SCENES

TWITTER TRENDS #MISSINGBUDGET When Nigeria’s national budget went missing in January, social media had plenty to say... IG: 60sec9janews @60sec9janews

wariso salt @SaltWariso

Nollywood where @ thou hit us wit #missingbudget pt1&2 stolen budget pt1&2 Seeking 4 missing budget 1&2, d chronicles of the budget pt1&2 Bar Baric @Bar_Baric

#MissingBudget new single from the “National Distraction Album” GMB featuring MC Saraki.

TARRYN HATCHET

Everything is missing in #Nigeria. #MissingShip #MissingFunds #MissingPeople #MissingGirls NOW #MissingBudget. I dey go U.K b4 I miss

Nakhane Touré The Johannesburg-based songwriter and smooth-as-silk vocalist recently penned his first novel, Piggy Boy’s Blues What are you listening to right now?

Adekoya Boladale @Adekoyabee

Just when we thought Nollywood was sleeping, this came up. #MissingBudget

Homogenic by Björk. It’s always been a favourite of mine. Her voice is frighteningly beautiful. I also listen to Busi Mhlongo’s Urbanzulu.

Favourite city? Paris. I know, it’s a cliché, but I fell in love with the place! Still, nowhere compares to home. The vast beauty of South Africa… it’s mind-blowing.

What has been your most extravagant purchase? I recently bought a MacBook and Dr. Martens shoes. I knew I should get the shoes whenever I could. They’ve been making me happy ever since.

What are you and your friends discussing around the dinner table? Race relations, Wolfgang Tillmans’ photography, Zakes Mda, queerness, heteronormativity, patriarchy, music, Wong Kar-wai films, curtains.

Which famous deceased people would you invite to your birthday party?

Emmanuel Jongelo @Djjongelo

It’s easier to answer biblical questions like “Where did Cain get his wife” than answering questions in Nigeria politics #missingbudget THE AFRICA REPORT

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Busi Mhlongo, genius. David Bowie, genius. K. Sello Duiker who is a fascinating figure and changed my life. Samuel Beckett for saying: “I don’t want you to tell me who/what Godot was.” Marvin Gaye, genius. James Baldwin, genius, and so important in shaping who I’ve become. And, of course, my great-grandfather.

Where are you hanging out? I don’t hang out much. But when I do, I prefer to go to friends’ houses, Interview by Kim Garner coffee shops or bookstores. ●

DAY IN THE LIFE EXTRAORDINARY STORIES OF ORDINARY PEOPLE

ROSE SKELTON

TAKING FLIGHT Entranced by the beauty and mysteries of birds, Moussa Ka is determined to become one of Senegal’s first ornithologists

started working as a tour guide in Saint-Louis when I was 30 years old. If you want to work as a guide here, you have to know a bit about birds because we have the third-largest bird park in the world. After the first day of my training, I thought it was impossible to recognise all of these birds. But I was working at that time as a volunteer teacher in a primary school and I said, I need this job to feed myself and my family. So I took this difficulty on as a challenge and said, I must succeed. It became something like a passion. I am applying to do a master’s course in ornithology at the university in Saint-Louis, and I will be one of the first ornithologists in Senegal. It is the only course in all of West Africa. European scientists have been to Africa and done many studies, but there is still more to learn about African birds, like how and where they live during the different periods. We have a shortage of quality teachers and materials in Senegal, and we need to travel to other parts of the world. Birding is not only theoretical, you have to see the species for yourself. The book helps you to distinguish between two very close species, but the real work is on the ground. I love everything about birds. I have never seen such beautiful colours anywhere else, those beaks which curve

down and up, those beautiful songs. In particular, I love the fact that birds travel a long way from Europe to Senegal every year with no break. As long as the natural environment remains intact, these birds will keep making this long journey. Can you imagine a person walking every year to Senegal and back? Sometimes birds can do things that people cannot do, and that is wonderful. There are three different families living in my house. We are a big traditional Senegalese family. I was married but we separated in 2002 and my two children live with me. Sometimes the mothers here cannot take care of the children, and they do not always go to school. As someone who went to school, I could not have my children not having an education and that is why I took them with me. She and I are not friends, but we are neighbours so she sees them every day if she wants. I show my kids and my nieces and nephews the bird book to try to get them interested. Every time they see a bird they call me: “Moussa, Moussa, come and see the bird,” and I tell them what it is, what they eat, and if it is migratory or not. My friends in the neighbourhood wonder, how can I be interested in birds? They say: “This guy is somehow crazy.” They think that birds are only there to be eaten, or else there is no use for them. There was never a boy in my family who sang for freedom like I did. I was the first person to say no to my parents and some in my family do not appreciate that. In life I value peace. If there is peace, everything works well. But you have to be free to have peace, free to do what you want to do, to live your life as you wish. Maybe that’s why I like birds. Without really knowing it, yes, maybe it Interview by Rose Skelton is linked to that. ● THE AFRICA REPORT

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OUTLOOK is a supplement to THE AFRICA REPORT NÂ°78

OUTLOOK INFRASTRUCTURE

FINANCE

PEOPLE

INVESTMENT

TELECOMS

ENERGY

Linking Asian investors with African markets

Not to be sold separately

FACUNDO ARRIZABALAGA/MAXPPP

Kenya

editorial CONTENTS BY N NICHOLAS NORBROOK 3 EDITORIAL Balancing powers

B Balancing p powers

4 POLITICS Economics and the elections

he Africa CEO Forum, held in the Ivorian economic capital on 21-22 March, heralds a new chapter in Africa’s economic integration. The first official visit by Kenya’s President Uhuru Kenyatta to Côte d’Ivoire is an opportunity for African leaders to move beyond the stale linguistic confines that are so much a part of the post-colonial era on the continent. As President Alassane Outtara of Côte d’Ivoire told The Africa Report in 2012, the relationship across the language divide needs to improve. “There are lots of obstacles, of course. But also there was previously no willingness in Côte d’Ivoire to develop those relationships, no determination to say: ‘We must build up our relationship with [Anglophone Africa], not just for diplomatic but for economic reasons’. We believe there is a lot we can do to grow together. We believe more in external trade than in received aid. We believe in foreign investment.” That determination to work together is now here. The two countries have similarities. Kenya and Côte d’Ivoire are regional champions – renascent Abidjan is regaining its diplomatic heft in West Africa while Nairobi is the venue for much of the dealmaking in the East African Community. Both have growing electricity networks and strong agricultural and manufacturing sectors. Tested by security challenges and rocked by corruption scandals, Kenya’s economy recalls the motto

8 INTERVIEW Phyllis Jepkosgei Kandie, former tourism secretary 9 INVESTMENT Connecting future generations 10 PEOPLE TO WATCH Nairobi moneymakers, old and new 11 TELECOMS

COVER CREDITS: EPA/FACUNDO ARRIZABALAGA /MAXPPP

A mobile-money obsession

12 ELECTRICITY Bringing power to the people 13 OIL AND GAS The waiting game 14 RANKINGS Top 20 companies and banks

of the city of Paris, fluctuat nec murgitur (‘She is tossed by the waves but does not sink’). The unsinkable and ever-optimistic Kenyan business class has been an exemplar of this ability to rise to the occasion and seize new opportunities – the latest being the discovery of sizeable oil deposits. They offer a way of balancing the country’s trade deficit, despite today’s lower oil prices. The country’s leadership is also showing the ruthlessness that characterises successful rising economies. Not impressed by Western threats of isolation before the 2013 presidential elections, the administration made overtures to Asian powers, with President Kenyatta embarking on an eight-day visit to Russia and China to discuss energy-sector investment immediately after his victory. China is building a new standard-gauge railway between Mombasa and Nairobi, with China’s Export-Import Bank providing 90% of the financing for the $3.8bn project. Not satisfied by this balancing of powers, Kenya has also balanced Asian powers amongst themselves. Japanese and Chinese investors are both keen to win the contract to build a second terminal at the Mombasa port. The final price may well turn out to be advantageous to Kenya as a result – evidence, if true, that African governments are finally playing hardball with global investors who want a slice of the ‘Africa rising’ story. Kenyan business folk and politicians at the Africa CEO Forum will no doubt trade stories and tactics with their Ivorian colleagues. Watch out, world. ●

A GROUPE JEUNE AFRIQUE PUBLICATION - 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 ● CHAIRMAN AND FOUNDER BÉCHIR BEN YAHMED PUBLISHER DANIELLE BEN YAHMED EXECUTIVE PUBLISHER JÉRÔME MILLAN PUBLISHER@THEAFRICAREPORT.COM MARKETING AND DEVELOPMENT ALISON KINGSLEY-HALL ● EDITOR IN CHIEF PATRICK SMITH MANAGING EDITOR NICHOLAS NORBROOK EDITORIAL@THEAFRICAREPORT.COM ASSISTANT EDITOR CHARLIE HAMILTON ASSOCIATE EDITOR MARSHALL VAN VALEN EDITORIAL ASSISTANT OHENEBA AMA NTI OSEI SUB-EDITORS ALISON CULLIFORD, PERRY LEOPARD PROOFREADING KATHLEEN GRAY ● ART DIRECTOR MARC TRENSON DESIGN VALÉRIE OLIVIER, SYDONIE GHAYEB, CHRISTOPHE CHAUVIN PRODUCTION PHILIPPE MARTIN, CHRISTIAN KASONGO PHOTOGRAPHY PIERANGELIQUE SCHOULER ● SALES SANDRA DROUET TEL: (33) 1 44 30 18 07 – FAX: (33) 1 45 20 09 67 SALES@THEAFRICAREPORT.COM ● ADVERTISING DIFCOM INTERNATIONAL ADVERTISING AND COMMUNICATION AGENCY ADVERTISING@THEAFRICAREPORT.COM ● ADVERTISING DIRECTOR NATHALIE GUILLERY • PRINTER SIEP 77 – FRANCE S U P P L E M E N T TO T H E A F R I C A R E P O R T

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POLITICS

Economics and the elections

KENYA | OUTLOOK

A country with entrepreneurship to show to the world, but one where corruption weighs heavily

Despite the international headwinds, Kenya’s economic growth is continuing at a strong pace. But with the population complaining more about corruption, the race for the 2017 national polls could be a hot one By Ilya Gridneff in Nairobi

STUART PRICE/MEACCT/HANDOUT/MAXPPP

ntheonehand,theKenyan economy in 2016 is thriving and among Africa’s biggest success stories. It is growing faster than Nigeria’s or South Africa’s and its government is spending billions of dollars on new infrastructure. Nairobi also recently played host to two of the best-known world leaders: United States President Barack Obama and Pope Francis, both of whom heaped praise on the government for its development progress. However, a closer look shows that Kenya is still facing the same problems that have held it back for decades. A $1bn scandal relating to a eurobond and involving top politicians caused uproar at the end of last year. Kenya’s chief justice Willy Mutunga also recently said the country has “a bandit economy” run by cartels that “collect millions every day”. The debate over Kenya’s future is beginning to take centre stage as an intense political campaign begins ahead of the country’s next presidential election, which is scheduled for August 2017. Economic success is likely to be a key feature of the ruling Jubilee coalition’s election campaign, which will seek to get President Uhuru Kenyatta re-elected to a second four-year term. The global oil price crash has helped Kenya and other East African countries to tackle a perennial problem: gaping current-account deficits. Analysts have projected that Kenya’s spending on energy imports will fall to $1.1bn this year, down from an average of $3.4bn a year between 2011 and 2015, as the price of oil plunges to its lowest for more than a decade. As campaigning heats up before the next election, Kenya’s ruling Jubilee Alliance will seek to capitalise on the healthy economy, says Macharia Munene, a professor at the United States

International University in Nairobi. “The government really is in a good position to win the elections.” Kenyatta’s government is pushing major new infrastructure projects, from the construction of the Lamu transport corridor to a new railway line to link Nairobi to Mombasa and Kenya’s landlocked neighbours. With electricity production capacity of 1,708MW in 2013, Kenyatta’s government set an ambitious target of adding 5,000MW to the national grid by the end of 2016 – a target that is likely to be missed even with a steady stream of renewable energy projects on the agenda. POPULARITY TACTICS

Economic growth was 5.6% in 2015, even with low tourist arrival numbers (see page 8), but there are risks that the economy could take a wrong turn. In preparation for the upcoming national vote, the government could be tempted to ignore debt sustainability and spend to increase its popularity. A public sector pay rise is now under discussion. Ahmed Salim, a risk analyst at Teneo Intelligence, says: “It’s clear that the ruling government coalition is firmly only thinking about the 2017 elections […]. It’s just unclear how they will pay for these marquee infrastructure projects and also pay for public servants.” The International Monetary Fund, while generally upbeat, raised concerns in September 2015 about fiscal performance due to “shortfalls in revenue collections and additional expenditure pressures.” Still, it is expected to renew a $750m precautionary loan facility to Kenya for the next two years, seen by analysts as a critical insurance policy against any shocks the economy might face. The debates around the presidential election are likely to revolve around Kenya’s military intervention in Somalia,

OUTLOOK | KENYA

SOUTH SUDAN

200 km

ETHIOPIA

SOMALIA

UGANDA

K E N YA Lake Victoria

Kisumu NAIROBI

TANZANIA

Mombasa

Indian Ocean

KENYA IN NUMBERS POPULATION URBAN POPULATION (% of total)

25%1

LIFE EXPECTANCY AT BIRTH

62.22

INFANT MORTALITY (per 1,000 births)

49.82

FDI, INFLOWS (current US$) GDP (current US$)

$989 million3 $60.94 billion1

GDP GROWTH (annual %)

5.3%1

INDUSTRY, VALUE ADDED (% of GDP)

19.4%1

INFLATION, CONSUMER PRICES (annual %) 6.9%1 INTERNET USERS (per 100 people)

43.41

SPENDING AND SAVING

SOURCES: IMF COUNTRY REPORT, SEPTEMBER 2015

18 16 14 12 10 8 6 4 2 0

Trends in private credit and deposits (annual real growth, %)

Private credit Deposit Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul 13 13 13 13 14 14 14 14 15 15 15

MONEY COMING IN 1,700 1,500 1,300

Capital and remittances Inflows (millions of US$)

1,600

Direct investment (right) Remittances (left)

1,400 1,200 1,000

1,100

800 600

900

400

700 500

1,800

200 0 2009 2010 2011 2012 2013 2014 2015

SOURCE: WORLD BANK 20141, AFDB 20142, UNCTAD 20143

44.86 million1

domestic security, the economy and corruption. Despite a deadly attack on a base manned by Kenyan soldiers in Somalia in January, President Kenyatta says that Nairobi is committed to peace in Somalia and fighting Islamist radicals there. “We will continue in Somalia to fulfil our mission,” Kenyatta told reporters. The opposition has largely avoided debatingwhetherKenyansoldiersshould be fighting rebels in Somalia. Opposition leader Raila Odinga, who heads the Coalition for Reforms and Democracy (CORD), is focusing his attacks on government corruption scandals. The latest claim is that $1bn is missing from the sale of government bonds. “This is grand robbery through a thread of lies, an elaborate conspiracy with money laundering experts,” Odinga told The Africa Report in January without providing evidence of treasury’s mishandling of public finances. Odinga, 71, lost the past two consecutive elections, saying they were rigged. The 2017 poll will be decisive for his political future. And despite a string of scandals involving low-level government graft – such as procuring $1,000 wheelbarrows and $85 pens for a National Youth Service scheme – the opposition has not been able to land many punches. CORRUPTION HURDLE

William Ruto. The ICC is trying Ruto, who faces pressure from within his own party and the Kalenjin community, for his role in attacks after the contested 2007 national elections. This looming court case “continues to cloud” what appears to be a cohesive government coalition, but the alliance between Ruto and Kenyatta, – who faced similar ICC charges that have now been dropped – appears solid, says Teneo’s Salim. Facing internal pressures from his own coalition, Odinga told journalists in January that the opposition was united and will remain together going into the elections. “Our focus will be on registering supporters to vote […]. A big portion of the people who were eligible to vote were denied a vote last time,” he explains. President Kenyatta spent nearly a month earlier this year canvassing on the coast, which is traditionally opposition territory. He also promoted the country’s strugglingbillion-dollartourismindustry. Over the past several years tourism has suffered after a series of terrorist attacks by Somalia-based Al-Shabaab Islamist militants. Foreign governments issued travel advisories that last year resulted in a 20% drop in tourist arrivals, a big blow to the economy. The country’s security problems have been linked to unemployed coastal young people who have become radicalised. Some of them have joined Somali Islamist rebel group Al-Shabaab, often after promises of generous salaries to fight in Somalia or the KenyanSomali border region.

OntheirvisitstoKenyalastyear,President Obama and Pope Francis raised corruption as a major hurdle to the country’s development. “Every shilling that’s paid as a bribe could be put into the pocket of somebody who’s actually doing an honest day’s In a November poll 62% work,” Obama told a cheering crowd in Nairobi’s Saof Kenyans said the country faricom Kasarani Stadium. is headed in the wrong direction A poll taken in November showed that 62% of Kenyans think the country is headed in the wrong Aly-Kahn Satchu, chief executive ofdirection. “The key issue of concern for ficer of Nairobi-based Rich Management, many Kenyans has shifted from the ecosays that despite the continent’s worries nomy to corruption. Kenyans are emabout a commodity-driven downturn, pathetic that public officials mentioned Kenya is well positioned, with large inin corrupt dealing must either be prosecfrastructure projects and government uted immediately, step aside forthwith plans to spend at least $1bn on roads. or resign,” explained polling company “Kenya’s GDP [growth] at 6% is going to Infotrak’s managing director Angela Amlook really high versus a probably zero bitho about the results of the poll. per cent in Nigeria and South Africa,” he argues. “I remain optimistic.” In the meantime, the relationships Satchu said that while Kenya’s manbetween Kenya’s three main ethnic groups – the Kikuyu, Kalenjin and Luo – ufacturing sector is far behind that in are being tested by the uncertainty countries like Ethiopia, there are indicators it can capture business moving out over the International Criminal Court of China. “There is good human capital (ICC) case against deputy president S U P P L E M E N T TO T H E A F R I C A R E P O R T

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KENYA | OUTLOOK

here; tremendous connectivity; you’ve got geothermal [power]; and then the route to the sea. You are seeing gains in pocketslikeexpansionintextiles,” hesays. Kenya’s exports have been helped by a tumbling shilling, which fell 14% against the US dollar last year. The loss of value against the greenback is also a lot smaller than that of other major African currencies like South Africa’s rand.

PHILIPPE LISSAC/GODONG

Monetary union would mean lending scope for Kenyan banks

SHILLING NOT THRILLING

Peter Ng’eno, managing director of Kenya Unit Trusts at UAP-Old Mutual Group, says despite clawing back lost ground at the end of last year, high single-digit inflation is expected to put pressure on the currency. “The shilling is not out of the woods yet, as continued infrastructure and real-estate investments will lead to increased importation of capital goods puttingpressureonthecurrency,” hesays. Kenya’s most ambitious infrastructure project, the Lamu Port Southern Sudan-Ethiopia Transport Corridor (LAPSSET), which involves the construction of a port, power plant, railway and other infrastructure, is estimated to cost $26bn. The government cancelled a long-planned investor conference on LAPSSET in October, indicating a slowdowninactivityaroundthemega-project. Part of LAPSSET includes an oil pipeline to pump oil from northern Kenya. Crude was discovered in Uganda in 2006 and four years later in Kenya, but both countries are still far from first oil. Another sector that has been trumpeted as highly hopeful for the Kenyan economy is technology. Investor, adviser and author of Success in Africa, Jonathan Berman is investing in African tech companies. Even so, references to Kenya’s ‘Silicon Savannah’ make him wary. “It’s a pitch, and not a very convincing one, because it suggests a deep ecosystem that doesn’t exist yet,” he explains. “But there are opportunities to build companies that are very useful to large numbers of people and therefore enjoy rapid growth.” With the United Nations Children’s Fund estimating that Kenya’s poverty rate is 42%, Kenya’s economic performance is not just a subject of political debate. The country’s population is largely young and the working-age cohort is predicted to grow from about 18 million people now to 48 million in 2050. And so, today’s choices will help to determine if there are more marginalised youths on the coast or tech and service workers in Kenya’s major urban areas. ● S U P P L E M E N T TO T H E A F R I C A R E P O R T

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To the region and beyond As Kenya is a gateway to East Africa, local companies stand to benefit from regional integration

t has been touted as East Africa’s answer to the European Union. Made up of Burundi, Kenya, Rwanda, Tanzania and Uganda, the East African Community (EAC) envisions a regional political union, with free movement of people and a shared currency by 2024. Combined, the five member states have a population of about 140 million people and a gross domestic product totalling more than $100bn. Kenya’s banks are the most active lenders in East Africa, and they are poised to reap more of the rewards offered by a monetary union than the financial institutions of other EAC members. Kenya has 43 commercial banks, significantly more than any other country in the bloc, as well as two mortgage finance institutions. KCB Group leads the region with assets totalling $5.1bn and branches in every member state. Another Kenyan lender, Equity Bank Group, has total assets worth $3.7bn and is also wellplaced to capture regional markets. The region’s biggest companies are Kenyan, and they already hold a strong foothold across the five EAC countries. East Africa’s largest consumer goods retailer, Nakumatt, is expanding aggressively in Uganda and Tanzania. Kenyan brewer East African Breweries is also looking to strengthen its operations in the EAC. While there is much hope for a single currency, massive challenges remain, including the harmonisation

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of monetary and exchange-rate policy frameworks, which the EAC admits could take some time. However, the bloc heralds its greatest achievement – a tax-free trade zone – as a sign that bodes well for future harmonisation. CORRIDOR WIDENS REACH

Infrastructure projects are also a key component of the EAC. Phyllis Jepkosgei Kandie, cabinet secretary for labour and the EAC, tells The Africa Report: “We’ve been having twomonthly summits between Kenya, Uganda and Rwanda on the Northern Corridor infrastructure. Very interestingly, our neighbouring countries are beginning to see the benefits of this and they’re showing interest in actually joining that corridor – the Democratic Republic of Congo being one of those countries. We will be hearing very soon about new developments in that area. Ethiopia is an observer in that corridor. South Sudan is also very interested.” But the failure to include Ethiopia, South Sudan and Somalia in the EAC so far highlights inconsistencies amid the fanfare of unity. The EAC does not include a key driver of growth, and Ethiopia is set to surpass Kenya as East Africa’s largest economy this year. Developments in Ethiopia may get the leaders of the EAC thinking about broadening their horizons. ● Ilya Gridneff in Nairobi and Mark Anderson

OUTLOOK | KENYA

INTERVIEW

Phyllis Jepkosgei Kandie Former cabinet secretary, Ministry of East African Affairs, Commerce and Tourism

We’ve launched initiatives to attract more tourists Before moving to a new post in the Ministry of Labour and East African Community, Kandie told The Africa Report why she thinks 2016 will see Kenya’s tourism sector bounce back TAR: How important is tourism for the Kenyan economy? PHYLLIS JEPKOSGEI KANDIE: It’s very important. It contributes 12% to Kenya’s gross domestic product, so for us it’s huge. It’s a sector that quickly gains traction, as we are seeing right now. It employs quite a number of Kenyans either directly or indirectly – directly 250,000 and indirectly a lot. And so it’s a very important sector to our economy and a major focus for the government. Tourist arrivals fell dramatically after two high-profile terrorist attacks. What is Kenya doing about it? We have invested a lot in security. In our last budget, we invested close to 20% of our national spending on security. That’s how important this is. We also realise that we need to involve communities in security matters, and Kenyans are really coming together to fight this challenge. Our international partners are working with us. The world has come to an understanding that we must rally together. In Kenya, we’ve realised that we had to rebrand and we’ve just launched a new brand campaign called ‘Make it Kenya’ to tell our narrative, to tell our story. I think, oftentimes, other people told our story and the difference this time round is that we are confident that we know what we’re talking about.

There are a lot of emerging stories about East Africa and Kenya that we need to tell. When do you expect Kenya’s tourism sector to recover? After looking at forward bookings, I think 2016 will be the year Kenya’s tourism sector recovers. Airlines are coming back. Lufthansa came back after 18 years. China Southern Airlines is flying direct from Guangzhou to Nairobi. Delta is coming in soon. That tells you that we’re on the right track. Airlines don’t come in unless they’ve done their research. Negative travel advisories affected us hugely, especially in the

We invested close to 20% of our last budget on security. That’s how important this is. initial days following the attacks when there was a blanket ban on the country. We tried to make our case that terrorists are not all over the country. I think there’s a general understanding now that the terrorist threat is area-specific rather than country-specific, and that is helping the sector recover. How many tourists are you expecting to arrive this year? It’s a bit early to predict, but we’re hoping that we can at least

recover the 30% that we lost since the attacks. The Coast region has been really affected. All along Mombasa and Malindi it’s a really rich area in terms of what it holds for tourism. We’ve launched three new initiatives to attract more tourists: charters landing in Mombasa airport will not pay landing fees for the next two years; the government will subsidise $30 for each person the charters bring in; and any child under 16 will come into Kenya without paying a visa. These initiatives should really help the sector. Which countries are your main competitors for tourists? We realise that our tourism sector has to compete with everybody else. A lot of destinations are coming up, providing almost the same product: the beach, the safari. We need to differentiate ourselves. Tanzania, South Africa, Seychelles, Zimbabwe and other long-haul destinations are our major competitors. We’ve got to work a little bit harder and know what our competitive advantage is and know how to position ourselves. Business tourism is booming because there’s a huge interest in investment, not only into Kenya but into Africa in general. We are positioning Kenya as the entry point into East and Central Africa, and Kenya Airways is a huge part of that. ● Interview by Mark Anderson

S U P P L E M E N T TO T H E A F R I C A R E P O R T

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KENYA | OUTLOOK

Investment Connecting future generations Plans for major investments in railways, electricity and other infrastructure aim to make Kenya a stronger hub for the East African region

he government has put infrastructure development at the top of its priority list, ringfencing tens of billions of dollars to upgrade the country’s transportation and energy sectors through the Kenya Vision 2030 plan. President Kenyatta is determined to defend Kenya’s position as the gateway to East Africa and satisfy the country’s thirst for electricty. ● Mark Anderson

Under construction Future road Future rail Future port Power station Power lines Wind farm

Wolayta Sodo

ddis

Aba

ETHIOPIA

to A

SOUTH SUDAN

Kakuma

Lake Turkana

UGANDA

Eastern Africa Interconnector

Lake Turkana Wind Power Project Africa’s largest wind farm is

Marsabit

projected to generate 300MW, which could cover 15% of Kenya’s current electricity consumption. Google owns a 12.5% stake in the project, which is due to become operational next year.

Kenya’s chronic power shortages are set to get a boost from this 1,045km power line that will pump electricity into Kenya from hydroelectric power stations in Ethiopia. The line is set Wajir to be finished by the middle of 2018.

KENYA SOMALIA

Eldoret

Dabaab

Kisumu

Lake Victoria

Nakuru

Olkaria Geothermal Power Plant Geothermal power is now

Nyeri

Garissa

200 km

Suswa NAIROBI

Kenya’s number one source of energy according to KenGen. The 140MW Olkaria V project is underway and a 280MW extension to the Olkaria complex came online in December. Kenya now accounts for 5% of total global geothermal production.

Lamu TANZANIA

Malindi

Indian Ocean

Mombasa

Jomo Kenyatta International Airport Nairobi’s airport will get

Mombasa-Nairobi Standard Gauge Railway The country’s

a new terminal and runway through a $770m investment that will boost the number of passengers it can handle every year from seven million to 20 million. Kenya has borrowed about $425m from the African Development Bank to fund the upgrade.

most expensive single infrastructure project since independence will see Kenya splash out $3.8bn on a railway between Nairobi and the port of Mombasa. 90% funded by China’s Export-Import Bank, it is scheduled to be finished by the end of 2017.

S U P P L E M E N T TO T H E A F R I C A R E P O R T

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Lamu Port Southern SudanEthiopia Transport Corridor At an estimated $26bn, LAPSSET is the region’s most ambitious infrastructure project. It includes a port, roads and a 1,700km pipeline that will allow South Sudan to export oil via Kenya’s Lamu port.

OUTLOOK | KENYA

is one of a new generation of executives. She left her job as a librarian in 1997 to found Keroche Breweries. Since then, Karanja has taken on regional beer giant East African Breweries and Keroche captured a 5% share of Kenya’s beer market. Karanja puts her firm’s success down to strong sales of Keroche’s signature Summit beer to low-income Kenyans. Last year Keroche opened a $29m expansion project at its brewery, enabling it to increase its annual production 10-fold to 110m litres.

Some of the biggest names in Kenya’s business world are fighting for their careers, while others are just getting started

People to Watch Nairobi moneymakers, old and new

BOBBY PALL

ne of the toughest jobs in the Kenyan business world has to be that of Kenya Airways chief executive Mbuvi Ngunze (1). The troubled East African airline reported Kenya’s largest-ever corporate loss – $252m – in July of last year. Ngunze has been running Kenya Airways since 2014 and previously served as chief operating officer. He predicts that it will take at least a year and a half to put the company on a firmer footing. The carrier, which is partially owned by the Kenyan government, plans to shed jobs, sell aircraft and borrow $200m to improve its books. Competitors around the continent are paying close attention to the expansion plans announced by Atul Shah (2), supermarket chain Nakumatt’s managing director. Nakumatt has been buying up rivals in an aggressive regional expansion, and the management of Uchumi – a competitor that has been in turmoil since the board sacked former chief executive Jonathan Ciano last year – will be scrutinising Shah’s every move. Kenya’s retail giant continues to push into the East African region, and Shah says Nakumatt will open new outlets in Tanzania, Uganda and Rwanda in the first half of this year. The company currently operates 63 supermarkets. Shah started his career as a shelf-stacker in his father’s shop and opened his first store in Nakuru in 1978. The past few decades in Kenya have seen industry outsiders morph into business leaders. Tabitha Karanja (3)

START-UP SUCCESS

Kenya’s tech sector continues to be among the continent’s most vibrant. Kenyan entrepreneurs took in $47m of the estimated $186m that African tech start-ups raised last year, according to data compiled by Disrupt Africa, a media outlet. One tech start-up to watch in Kenya this year is Soko, which allows customers to buy jewellery and accessories from artisanal producers. Founded by Catherine Mahugu, Gwendolyn Floyd and Ella Peinovich, Soko is an online marketplace for products from more than 1,000 small-scale businesses across the continent. The platform aims to empower entrepreneurs who would otherwise be hamstrung by poor infrastructure and a lack of access and information relating to global markets. The Kenyan government has also taken notice of the potential its tech sector holds for the wider development of the country. In January, the government’s Information Communication Technology Authority signed a memorandum of understanding with Gilbert Saggia, Oracle Technology Systems’ Kenya country director, to improve technical skills as part of the country’s national plan for development. The government says the project is an important step towards its vision for a digital economy. Some companies have a head start in the technology field. Michael Macharia founded SevenSeas Technologies in 1999 and has since turned the company into one of Kenya’s largest private tech firms. SevenSeas rolls out information and communications technology infrastructure services in health, security and social sectors. It is now in the process of opening offices in 10 African countries. The company is planning to issue an initial public stock offering in 2017. ● By Idil Abshir in Nairobi

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KENYA | OUTLOOK

Telecoms A mobile-money obsession

TREVOR SNAPP/BLOOMBERG VIA GETTY IMAGES

Banks and start-ups want in on the future of Kenya’s mobile-money transfers business, which has so far been led by the telecom giant Safaricom

n a country as diverse as Kenya, unifying factors can be limited. But for nearly a decade, lime green kiosks have proliferated – from the farthest-flung corners of the countryside to Nairobi’s teeming slums and upscale malls. Laurence Wanjogu is a driver working in Turkana, Kenya’s remote northeastern corner. He drives humanitarian workers, sometimes a week at a time, on in the mobile financial space is through dusty rural villages without that the tables have turned – now finpetrol stations or grocery stores. “When ancial service providers are finding we go to the bush, I don’t want to have ways to compete and push products money in cash because it’s not safe to consumers.” so I load everything into my M-Pesa,” Ninety per cent of Kenyan househe says of Kenya’s revolutionary holds now use mobile money, and it mobile-money service. is a huge driver of access to financial services. Without M-Pesa, financial inM-Pesa’s ubiquitous green stalls clusion numbers would drop from 70% house more than 80,000 agents who to 26%. M-Pesa was revolutionary in its dispense and receive money through simplicity but it offered only the most mobile phones to some 23 million basic of person-to-person active customers. Wanjogu also uses it to buy fuel, to pay his electransfers. Equity Bank is tricity bill and to send money challenging Safaricom’s to his parents when they need dominance in the init. When his car breaks down, dustry by moving beyond person-to-person mobile he uses M-Pesa to pay for spare Some parts in Nairobi, which is 700km transfers to offer loan and away, and gets them sent with investment services, transthe next car driving up. He is also fers from financial instituof Kenyan tions to mobile phones and proud of it: “M-Pesa has solved a households lot of problems in this country,” even international transfers. use mobile he says. “And my friend just told money me they don’t even have M-Pesa GAME CHANGER payment in America!” And while Equity might schemes It has been almost a decnot yet be competing SOURCE: BROOKINGS ade since telecoms provider with M-Pesa, it is making Safaricom introduced the service. The Safaricom squirm. An ex-executive at mobile-money sector is still changing Equity Bank who spoke on the conrapidly, and Safaricom is no longer dition of anonymity argues that the game is changing: “I think what Equity the only game in town. In July 2015, Equity Bank entered the fray and began has done is put a crack in the door. offering mobile-phone transfer services Before there was only one flavour in through Equitel. Dylan Higgins, the town, one set of fees […]. Safaricom co-founder of Kopo Kopo, a mobile itself has to start to take notice that technology company based in Nairobi, there is competition, that you have to explains: “The beauty of what is going improve your services.” Equity now

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Equity Bank’s mobile-money service has attracted 1.3 million customers since its 2015 launch

has 1.3 million mobile banking customers, and the average number of transactions has increased from two per customer per month to 21, according to the bank. With Equity offering a broader range of services to customers, Safaricom has been upping its game. In 2012, Safaricom and Commercial Bank of Africa launched M-Shwari, a mobile banking service that allows Kenyans to save and earn interest through M-Pesa accounts. One in five Kenyan adults are now active M-Shwari users. Launched in 2013, Lipa na M-Pesa enables Kenyans to pay everything from bar tabs to electricity bills on their phones. While the Equity-Safaricom battle grabbed the majority of the headlines in recent months, the future of mobile money is not exclusively in the hands of these major companies. Smaller firms from Nairobi’s technology scene are experimenting with more complex forms of mobile money, some with a great deal of success. More than 10,000 merchants use the services of Nairobi-based Kopo Kopo to accept mobile payments. In 2014, the company launched Grow, which offers loans to small enterprises using a credit history based on mobile transactions – a sign that the mobile-money universe continues to expand. ● By Abigail Higgins in Nairobi

OUTLOOK | KENYA

Electricity Bringing power to the people Solar power could hold the answer to Kenya’s electricity woes, but officials warn that costs are still not competitive on large-scale projects

fering tools to low-income consumers, who make up the bulk of Kenyans that do not have access to power. SunnyMoney, a solar lantern distributor, provides accessories made up of a solar panel, an LED lamp, a battery and a phone charger. The units cost between $10 and $100 and clients can pay for them in instalments using mobilemoney platforms. In 2014, SunnyMoney sold about 660,00 units across five African countries. Kenya is one of its core markets, and SunnyMoney has sold just under 500,000 units there since 2013.

he race is on to connect Kenyans to sources of electricity, and scores of nimble companies are pedalling individual panels, solar roofs for companies and micro-grids for villages, many using new financing tools. While the price of solar energy is not as low as hydro or geothermal power, more Kenyans have the option of using solar power as an alternative to the national grid, which has just 2.7 million domestic power connections MICRO-GRID SOLUTIONS for a population of about 44 million, according to Kenya Power, the state-run SunnyMoney still relies power distribution company. on donor funding, says its The quality of electricity on the global marketing director national grid can be poor too. Every Cindy Kerr. The company month, Kenyans experience an average estimates that it would of more than six power outages, accordneed to sell 500,000 to Rather than waiting for national grids to catch ing to estimates from the World Bank. 600,000 units every year up, communities are opting for micro-grids and A typical disruption lasts about five to wean itself off outside other decentralised energy solutions hours, bringing business to a standstill help. “We’re not there yet, and costing Kenyan firms an average but we’re close,” says Kerr. ive than the grid. KenGen managing of 5.6% in lost sales. Powerhive, a United States-based director Albert Mugo says the main Vimal Shah, the chief executive of provider of micro-electricity units, is consumer goods company Bidco Group, obstacle to investments in utility-scale targeting larger groups of people. It has explains his worries: “Energy has always completed two years of field testing at its solar power is the cost. “Kenyans need been a concern […] not only the price of cheaper power, not expensive power,” pilot project in Kisii in western Kenya. energy, but the quality of enhe says. “Even though solar poPowerhive’s technology, which relies ergy.” After a fall in the price of tential is [plentiful] in Kenya, we on solar-powered micro-grids, should photovoltaic panels, Shah says enable the firm to “cost-effectively reach need to get to that point where he gave up on the grid and tens of millions of people in rural vilthe price is [cheap] so that we turned to solar power. “All our are not supplying Kenyans with lages unserved by grids while offering roofs [at our headquarters], expensive power.” strong risk-weighted returns to investors,” within the next two years, will Powerhive chief executive Christopher But expensive power is betall be solar roofs,” he says. Hornor told media in April last year. ter than no power at all, and The company raised $20m in January, companies are reaching out to of Kenyans building on an $11m equity investment RAY OF LIGHT communities that have few ophave access The Kenyan government is in the company’s flagship project, which tions for their power supplies. to electricity, will serve approximately 90,000 people. looking to supply more reNairobi-based M-Kopa offers according Solar power projects are also being newable energy to the nacustomers a highly subsidised to 2012 data SOURCE: WORLD BANK launched in tandem with development tional electricity network. power system, including solar initiatives. Counties in the Rift Valley are panels and a rechargeable radio. The most ambitious deal it is pursuing is a $4.4bn investment from They spend a year paying it off in small, drilling wells in arid areas that will be Canada’s SkyPower, which could propowered by solar units, reducing conflict daily increments using mobile-money payment systems. The company aims to and competition over water supplies. ● duce upwards of 2GW. But regulators argue that solar power By Ramah Nyang reach one million homes in East Africa is no panacea and is more expensand Abigail Higgins in Nairobi by 2017. Meanwhile, companies are ofAKE WARGA/CORBIS

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KENYA | OUTLOOK

TULLOW

The Ngamia rig site in the South Lokichar Basin, where Tullow’s oil discovery made headlines in 2012

Oil and gas The waiting game Energy companies and commercial banks that are active in Kenya are positioning themselves to get rich from oil when times get better

ig questions loom over the external relations for Africa Oil. “Kenya development of East Africa’s oil and the upstream companies who have and gas sector, which has yet to discovered oil are well placed to lay a move beyond the exploration phase. The solid foundation for future production ambitiousregionalinfrastructureprojects to take advantage of the inevitable that are needed to export the oil have future price rises,” Budden says. stalled for years, with few signs Denmark’s Maersk Oil anthat they will get off the ground. nounced in November that it To make matters worse, the would buy half of Africa Oil’s lowest oil prices for more than shares in three exploration a decade are predicted to scare licences in Kenya and two Reserves off investors. Kenya’s reserves in Ethiopia for up to $845m, totalling are also small in comparison to with the ultimate price dethose found in Uganda. Ireland’s termined by how much oil Tullow estimates that there are is found. Luke Patey, a re600m barrels of recoverable oil searcher at Oxford Institute barrels of oil are thought in Kenya’s South Lokichar Basin, for Energy Studies at Oxford to have been where it acquired a 50% interest University, explains: “The discovered in five licences in 2010. In the entry of Maersk Oil and in Kenyan Lake Albert Rift Basin in Uganda, Gas injects new life into the exploration where it has been exploring since Africa Oil project, but the blocks 2006, Tullow estimates there are question remains whether controlled 1.7bn barrels. The Kenyan govthere are enough proven oil by Tullow Oil ernment, however, is keen for the reserves to go ahead in the SOURCE: DELOITTE country to play a major role as an new price environment.” oil and gas hub for the region. Africa Oil’s leadership is optimistic about Kenya and says it will LAYING FOUNDATIONS make a final investment decision by This year will be “a pivotal year” for 2017. Chief executive Keith Hill says East Africa, and especially Kenya, in he hopes decisions about regional oil managing the emerging oil industry at transportation infrastructure will have a time of low and uncertain oil prices, been made by then. East Africa’s most says Alex Budden, vice-president of ambitious infrastructure project, the

600m

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Lamu Port Southern Sudan-Ethiopia Transport Corridor (LAPSSET), includes the construction of a port, power plant, railway and infrastructure with an estimated cost of $26bn. But the project’s high price tag and dependence on oil projects have caused some analysts to doubt its viability. There is much to be gained if LAPSSET comes to life. Should Kenya and Uganda cooperate on a joint pipeline both countries may have “a fighting chance” to see their oil industries come to life by the end of the decade, Patey argues. BANKS EYE THE PRIZE

Kenya’s banks have been mulling investments in regional oil and gas projects since oil was discovered in Uganda in 2006. Kenya Commercial Bank (KCB) says it has invested millions of dollars in upstream and midstream activities, though the bank has not disclosed details about the projects and companies it finances. KCB’s chief executive, Joshua Oigara, tells The Africa Report that his bank is prepared to put more money into the oil and gas sector: “The bank’s corporate financing portfolio has been a multi-pronged one where we identify sustainable projects and finance them. We believe that, through this, we shall be contributing to the economic well-being of our country as well as placing it at a strategic point to attract investors.” He adds: “The same applies to the oil and gas sector, where we have been able to finance various investors with working capital to enable them to carry out exploration works as well as invest in other initiatives.” Aly-Khan Satchu, a Kenya-based analyst, adds that he is optimistic about the attractiveness of the region’s hydrocarbons sector: “In the long-term, East African oil and gas is going to play a very big role, particularly for Asia. From a geo-strategic point of view, Japan, China and India are all going to have to take a position.” He concludes: “I think if I was sitting in their [KCB’s] shoes, I’d be looking to pick up positions right now because in the scheme of things you are going to get it at a good price.” ● By Ilya Gridneff and Idil Abshir in Nairobi

OUTLOOK | KENYA

Rankings Kenya’s corporate elite Noted in the region for their tough dealing and international connections, Kenyan banks and companies have largely weathered the political storms of recent years

Top 20 banks (in $’000s) Total assets

Kenya Commercial Banking Group

5 315 267

Kenya Commercial Bank

4 096 068

Equity Bank Group

3 735 157

Net interest income

Loans

Deposits

Net profits

628 176

3 075 657

4 089 627

349 184

2 697 249

2 150 332

173 344

516 512

2 321 607

2 665 756

185 921 86 883

182 642

Co-operative Bank of Kenya

3 093 693

347 810

1 945 632

2 394 098

Equity Bank Kenya*

2 713 030

269 829

Barclays Bank of Kenya

2 448 149

212 507

1 359 585

1 786 204

90 915 113 128

Standard Chartered Bank Kenya

2 411 855

187 537

1 330 602

1 670 086

Diamond Trust Bank Kenya

2 293 087

179 608

1 492 175

1 744 759

61 879

Commercial Bank of Africa

2 140 507

76 189

1 080 471

1 501 960

36 685

CFC Stanbic Bank

1 962 029

91 727

957 686

1 038 893

61 643

Investment & Mortgages Bank

1 671 132

98 588

1 101 458

1 075 455

56 743

NIC Bank

1 580 261

86 700

1 090 237

1 088 715

44 625

National Bank of Kenya

1 334 317

73 684

711 554

1 135 313

9 438

Chase Bank Kenya

1 183 279

78 133

620 439

865 616

26 260

CitiBank N.A. Kenya

860 672

49 037

260 291

554 465

25 885

Bank of Africa – Kenya

674 378

34 623

416 950

451 714

1 561

Bank of Baroda Kenya

671 480

39 371

307 735

527 726

26 847 19 618

Family Bank

670 285

58 247

411 112

510 959

Prime Bank

563 360

28 443

304 700

462 002

20 211

Housing Finance Co. of Kenya

539 765

29 083

301 917

11 335

SOURCE: JEUNE AFRIQUE RESEARCH

Rank Company

2014 RESULTS IN THOUSANDS OF US DOLLARS; *IN ITALICS 2013 RESULTS

Top 20 companies (in $’000s) Rank Company

Sector

Turnover

Turnover change (since 2014 rankings)

Net profits

Total Kenya

Petroleum Services

1 850 665

5.08%

15 437

Safaricom

ICT/Telecoms

1 770 867

7.47%

345 485

Kenya Airways

Air Transport

1 194 145

-1.10%

(279 054)

Kenolkobil

Petroleum Services

989 862

-20.77%

11 830

Kenya Power and Lighting

Utilities

678 552

24.33%

69 986 74 347

East African Breweries Group

Food and Drink

658 518

-2.11%

East African Breweries Kenya

Food and Drink

521 115

Bamburi Cement

Construction

390 554

1.06%

42 309

Masumali Meghji Insurance Brokers

Insurance

344 453

325 657

Jubilee Holdings

Insurance

268 637

118.92%

33 644

British American Tobacco Kenya

Agribusiness

227 987

2.03%

46 124

Kenya Electricity Generating Co.

Utilities

188 874

0.80%

30 637

Unga Group

Agribusiness

184 305

6.86%

5 144

Jubilee Insurance Kenya

Insurance

173 671

40.74%

18 301

Airtel Kenya

ICT/Telecoms

162 532

-6.01%

(75 413)

Scangroup*

Media

161 374

9 879

Uchumi Supermarket

Retail

155 715

-4.85%

4 166

British American Investments Co. Kenya

Financial Services

152 256

51.09%

27 077

Athi River Mining - Kenya

Construction

148 976

-7.76%

16 183

Nation Media Group

Media

144 728

-4.99%

26 714

2014 RESULTS IN THOUSANDS OF US DOLLARS; *IN ITALICS 2013 RESULTS; NA: NOT AVAILABLE

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SOURCE: JEUNE AFRIQUE RESEARCH

www.kenyare.co.ke

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For more than forty years, Kenya Re has relied on the wisdom of its African roots to provide the strength that reinsures insurance companies across the globe. Today, our new future begins with a pledge of our promise to continue growing our knowledge and our expertise so that we can get even better at making the world a more secure place. By reinsuring insurance companies across the globe.

10000000 2012

African Guarantee Fund established amongst the Economic Development Stakeholders.

2014

Supported 1000 SMEs. 24,000 jobs created.

2017 Plan

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2019 Plan

Support 8,000 SMEs. Help create 253,000 jobs.

AfricaĘźs growth is our growth. Africa stands as the worldĘźs fastest growing economy and for us to be part of this growth, we work with financial institutions across the continent to support the remarkable efforts of Small and Medium-Sized Enterprises.