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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

N ° 7 7 • f e b r u a r y 2 0 16

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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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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

KNOWLEDGE PARTNERS

PLATINUM OFFICIAL CARRIER

MEDIA PARTNERS

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

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

COUNTRY FOCUS

Ghana & Côte d’Ivoire

ISSOUF SANOGO/AFP

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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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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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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2,641.78

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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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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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AGRIBUSINESS | DOSSIER

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.

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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