Outcomes from Copenhagen - No legally binding deal but a Copenhagen Accord of vague commitments

Climate change talks at Copenhagen ended last Friday, 18 December, without a legally binding protocol.

An agreement was brokered by the US and China, backing scientists' call to limit global warming to within 2 degrees centigrade against pre-industrial levels. But it contains no improved targets on greenhouse gas emissions from rich nations, does not commit anyone to a legally binding cuts and is not endorsed by the United Nations which needs a consensus from all countries to be enforced.

While it was endorsed by other big players such as the European Union, India and South Africa, the so-called Copenhagen Accord was rejected by smaller UN members such as Sudan, which during the conference acted as the chair of the G77 group of developing nations.

As part of the accord, rich nations agreed to quantify the amount of aid they were willing to give to poor nations to help them reduce their emissions and cope with the consequences of climate change.

Immediate, 'fast-start' aid was quantified at $30 billion over the next three years, with the EU and Japan pledging around $11 billion each, and the US offering $3.6 billion. Rich nations also set themselves the goal of 'mobilizing $100 billion a year by 2020 to address the needs of developing nations'.

One of the most controversial issues standing in the way of a legally binding deal between the US and China - which together account for about 40 percent of global emissions - hinged on the question of how much right third countries should have to inspect each other's greenhouse-gas emission claims.

While Obama had called for 'transparency' in the way emission targets should be monitored and reported, China strongly opposed any international exercise that would infringe on its national sovereignty.

The full significance of the deal will not be known until well into next year. Countries are supposed to fill in details of planned cuts in greenhouse gas emissions, left blank in the accord, by the end of next month. The UN is to follow with more talks towards a legally binding global treaty.

The show has begun after an unprecedented series of preparatory meetings and fading optimism, the 15th Conference of Parties to the Kyoto Protocol has kicked-off its two-week marathon to forge a future climate agreement. The stakes are high – scientists and climate change advocates give us only a few more years for decisive action to avoid catastrophic effects that could trigger mass migration and the loss of cures of some major diseases through the loss of biodiversity and its treasures, just to mention two of the myriad of possible consequences. And a few years is a very short period of time in the world of global agreements and their ratification.
Despite all its complexities, it is commonly agreed that a breakthrough will rest on four main pillars: (1) a binding mid-term commitment by developing countries to reduce the their emission dramatically, (2) appropriate domestic action beyond existing commitment by industrialised countries, (3) equitable and predictable finance for adaptation to climate change paired with the transfer of clean technology to developing countries and (4) revised governance structure that will allow increased participation of developing countries.
Accordingly, the focus in Copenhagen will be on the two main bodies established in 2007 under the Bali Roadmap, the Ad Hoc Working Group on Long-term Cooperative Action under the Convention (AWG-LCA) and the Ad Hoc Working Group on Further Commitments for Annex I Parties under the Kyoto Protocol (AWG-KP) with Annex I Parties being most mainly industrialised countries.
Recent pronouncements by world leaders given momentum. China announced to reduce its emission intensity by 40 to 45 percent by 2020 compared to 2005 and the US promised to cut emissions by a less ambitious but still progressive 17% by 2020 based on 2005 levels. The recent meeting of Commonwealth leaders made a possibly breakthrough on finance by announcing a Copenhagen Launch Fund that would start in 2010 and building to a level of resources of $10 billion annually by 2012. Last but not least, Obama’s decision to participate in the high-level segment next week instead of just stopping by after picking up the Nobel Peace Prize.
Africa probably has the most at stake as the continent predicted to be most affected by climate change. This has lead African leaders to push vocally for up to $64 billion in adaption finance for Africa alone, combined with decisive actions on emission reductions without binding commitments for African countries. But while Africa might have only contributed about 3% to global greenhouse emission that caused climate change, it can be more than a recipient of compensation for historic climate change by others; it can be part of the solution. The continent has the potential to exploit another important natural resource and become one of the biggest carbon sinks to mitigate climate changes through its forests and agriculture, which should form an essential part of any new agreement. South Africa has taken a first step in showing how African countries can contribute with its surprising announcement to “undertake mitigation actions which will result in a deviation below the current emissions baseline of around 34% by 2020 and by around 42% by 2025”. Let’s hope for many more productive steps like this one.

Foresight 2010

What do you think South Africa needs to do in 2010? (Aside from winning the World Cup).

That was the question that Judge Dennis Davis put to the panel at the GIBS annual “Foresight 2010” forum. A quick survey of the members of his jury presented a variety of bullish and bearish responses – as well as one too many “Pass” cards, and talk of creating rather than predicting the future. The optimists got cross-examined for being unrealistic, while the pessimists were lambasted for being vague.

To be fair, the Judge was right. For all the talk of needing values, accountability, active citizenship, public-private dialogue – what does that actually mean? When push came to shove, to state some concrete action that the government should do in 2010 nobody wanted to put their neck on the line. Which was – ironically – stated as part of the problem and why business avoided engaging in debate with government, by Brian Bruce, CEO, Murray & Roberts among others.

What we might agree on is that there needs to be a vision for South Africa. What I don’t agree with is that business and government should share one same vision. By their very natures they will diverge completely – their interests lie in different corners. Yes, there needs to be co-operation, whereby government facilitates business to reach its goal, but the friction between the two – and the role that citizens play across both – is what drives change, and hopefully progress.

Michael Jordaan, CEO, First National Bank, was one of the panellists who came back to the human resources that South Africa has – training and keeping talent. Without going into the debate around school and university education that they embarked upon, it is also a key theme emerging in the survey that africapractice is conducting of African businesses, opportunities and challenges for the year ahead.

Chief Rabbi Warren Goldstein took it one step further, talking about the importance of the human spirit, the need to have faith in people and their ability to deliver. However, he was also the one who addressed my question of what South Africa needs to do to improve the perception of the country abroad and attract foreign investment with a very swift and succinct response: “Crime”. How much faith does he have in the people committing the crime to stop, or the people set to stop it succeeding?

Wendy Luhabe, chancellor of the University of Johannesburg, had been the only one to reference the outside world (aside from mention of that old Global Economic Crisis, of course). What must foreign investors think of the lack of discourse and progress being made by the Government and Business Community in South Africa?
When push came to shove, and Judge Dennis insisted they give him an answer to what single step was needed, Bonang Mohale, chairman and VP, sales and operations, Shell, SA, said leadership, and repeated the old adage, "People get the leadership they deserve". I didn’t know that South Africa spends more per capita on education and healthcare than most countries in the world, but the results still point to failed leadership. Without government representation present, the panel represents some of the best business leadership the country has. If they can’t step up and take account for engaging government and civil society in the debate they talk about, then who can?

A thought provoking discussion, but one that brought up more questions than answers. Who will start the discourse? I can’t help thinking it will fall back to the media once again....

African Innovation Comes to London

In the past month or so I have been spoilt for choice when it comes to Africa-focused events here in London. I am always pleasantly surprised by just how many Africa-enthusiasts are based on this little island – there are of course the 2 million-odd diasporans with family links to the continent and many others who have taken a keen interest in the continent for other reasons. I have found both types of people at Africa Gathering and BarCamp Africa UK recently and both events have been buzzing with ideas, entrepreneurialism and enthusiasm for positive change and innovation in Africa.

Africa Gathering in October brought together thinkers and do-ers ranging from philanthropist Bill Liao to the founder of FrontlineSMS, Ken Banks and the eccentric Kevin “Banana Man” Alan. The inspiring rapper Emmanuel Jal gave a moving account of his experience as a child soldier in Sudan and how he is only eating one meal a day until he has raised enough money for his charity Gua Africa to build a school in his hometown to educate young people affected by war.

I was at the first Africa BarCamp in the UK at the weekend along with a hundred or so other tech enthusiasts sharing some really exciting ideas. Miquel Hudin shared his website, Maneno (meaning ‘words’ in Kiswahili) which is a communication and blogging application built to serve the specific needs of Sub-Saharan Africa. Frederick Wamala from the LSE shared his thoughts on how we must secure Africa’s newly acquired fast internet from cyber crime in order for it to be an effective medium for Africa's development.

I’ve had some fascinating conversations at these events and have been really happy to see just how many people are as excited about opportunity in Africa as I am. Growth and opportunity have been key themes that have come out of both events as well as the African philosophy of Ubuntu (we are who we are because of others) which I see as fitting for the take-up in interactive and social media across the continent.

Things you might not know about Africa

The africapractice team had emails flying round in response to the question: What do people not know about Africa?

There are plenty of preconceptions and misconceptions about the continent, but here are a few of the facts and figures that came up last week:

• Seven countries in Africa account for more than fifty per cent of the population (Nigeria, Ethiopia, DRC, SA, Tanzania, Kenya, Sudan)
• Africa holds about 10% of the world's proven oil reserves
• There are up to 100 million members of the African Diaspora
• The longest cable car in the world is in Nigeria
• South Africa sold $1.8 billion worth of cars to the US last year, putting us ahead of Sweden and Italy as suppliers to the US market
• Africa is most affected by climate change but only produces 3% of global emissions
• Approximately half the population of Africa is under the age of 18
• Kenya is one of only five countries in the world that generates more than 15% of their electricity from geothermal sources
• Africa is the fastest growing telecoms market in the world
• Nigeria has a population the sum of the thirty one smallest countries in Africa
• Only 4% of Africa's hydropower potential is utilised currently
• Rwanda is ranked first by the Inter-Parliamentary Union in terms of the percentage of female politicians in its lower chamber, with 56.3 percent.
• The largest cement plant in the world is being built in Nigeria
• South Africa is the first, and to date only, country to build nuclear weapons and then voluntarily dismantle its entire nuclear weapons programme
• Almost 50% of all African immigrants in the United States hold a college diploma
• In the mid 1990s, there were more phones in New York City than the whole of Africa. But if the growth curve in mobile devices in Africa continues, it is likely to surpass the United States in number of mobile consumers
• The city of Pretoria, in South Africa, has the second largest number of embassies in the world after Washington, D.C.

A list of facts won't change people's image of Africa in one go, but it's all part of a far richer picture then a lot of people realise exists.

Silicon Sahara

Silicon Valley, Silicon Fen – where to next for the hot bed of technology development?

In South Africa you can debate Cape Town vs Johannesburg vs Durban. Not much to debate this week, however, as the Silicon Cape Initiative kicks off. One sign of the interest in this is the fact that #siliconcape wa trending in second place on Twitter (globally), which is quite substantial attention.

But there are still hurdles, which events like this will hopefully address. And looking outside of South Africa is one of them. 10,768 patents were registered in South Africa in 2008, with over 7,000 registered by foreigners. Driving home grown talent and innovation is going to be the challenge, and the opportunity, open to innovation hubs, VCs, universities, corporate and entrepreneurs.

Focusing on domestic investment in technology should not be at the expense of international investment, however. As Duncan MacLeod points out in this week’s Financial Mail the country needs to open up to investors, not scare them away. If the collapse of the talks between MTN and India’s Bharti Airtel points to protectionism by the government, we have reason to worry. Regulatory, commercial and operational hurdles will need to be addressed to invite more international investment.

Beyond South Africa, there are definitely contenders for Silicon Safari winners. Rwanda seems to be making huge strides, in a large part because of President Kagame’s appetite and agenda.

One example is the ICT Bus Project that launched last week as part of the Rwanda Development Board’s eRwanda Project. Two large buses, equipped with a server, 20 laptops, printers, photocopiers, scanners and other multi-media facilities – a kind of mobile Internet cafe - takes access to previously denied p especially in rural areas. Delivering training for children and teachers, providing access to ICT for SMEs, farmers and entrepreneurs, is where we will see the digital divide start to narrow.

While the private sector is a major driver for advancements of this kind and socio-economic development, when it comes to communications, the government needs to be behind the industry – facilitating competition, new entrants, fair regulation etc. Where South Africa has entrepreneurs, investors, business and technology minds, they need to meet in the middle.

But a last word from Cyril Ramaphosa, executive chairman of investment company Shanduka Group, who yesterday put the onus back on businesses to help SA to produce the skilled people it needed to grow economically. “The South African corporate sector often says that the skills shortage bedevils them, but to my mind that is a lazy excuse. It is a failure to grasp the nettle, take bold moves and embark on sharp and pointed (strategies) to produce skilled people in any discipline.”

Sounds like a challenge to me.

Climate change: a long time coming?

No one needs to be told that climate change is topical at the moment. It's in the papers and the twitter feeds every day and if it's not an item on Nigeria being urged to declare Yobe State a desert area, then it's the Maldivian Cabinet planning to meet underwater to demonstrate the risk to its country from the expected global warming induced rising water levels The plain truth is that we are writing ecological cheques we just can't cash and if we are prioritising, it's this debt we should worry about, not the financial debt that has caused our ongoing global recession.

“The financial crisis is a result of our living beyond our financial means. The climate crisis is a result of our living beyond our planet’s means.” Yvo de Boer, Executive Secretary of the United Nations Climate Convention.

We have to stop living beyond our planet's means if we want to go on living at all. It's our long-term survival that climate change is impacting. And this is not news. In fact if you look at the climate change timeline in WWF's pocket guide to 'The New Climate Deal', the first time there was awareness that a crisis might be looming was 1896! What have we been doing with our heads buried in the sand for over a century? Below, with thanks to WWF, is the timeline:

• 1865: John Tyndall postulated that gases such as water vapour and CO2 in the “atmospheric envelope” retain the heat.
• 1896: Svante Arrhenius predicted that increases of atmospheric CO2 from burning fossil fuels would lead to global warming; a doubling of atmospheric CO2 could cause global average temperature to rise by 5ºC. The predictions of this Nobel Prize laureate (1903) went unnoticed for more than half a century.
• 1958: First continuous monitoring reveals rapidly rising CO2 levels in the atmosphere.
• 1970s: Beginning of period of atmospheric warming known as “global warming”.
• 1988: UN establishes the Intergovernmental Panel on Climate Change (IPCC) to assess the science of climate change.
• 1990: IPCC’s First Assessment is published. The year is subsequently established as the baseline year for future emissions targets.
• 1992: Earth Summit meets in Rio de Janeiro. Governments agree on the UN Framework Convention on Climate Change (UNFCCC), which commits them to preventing “dangerous climate change”.
• 1995: After a fierce debate, in particular with OPEC nations, the IPCC Second Assessment establishes the strong link between human-induced greenhouse gases and climate change, saying that “the balance of evidence suggests….” that global warming is caused by mankind.
• 1997: Kyoto Protocol is agreed under UNFCCC. It includes the first emissions reduction targets for industrialized countries, covering 2008-2012; all major nations sign up.
• 1998: Warmest year in warmest decade in warmest century for at least a thousand years.
• 2001: Nations agree on methodological and other details of the Kyoto Protocol in Marrakech. The USA and Australia refuse to ratify the protocol.
• 2003: European heat wave, which kills more than 30,000 people. Scientists later conclude it is the first extreme weather event definitely attributable to human-induced climate change. Scientists report a third of the world afflicted by droughts, double the figure for the 1970s.
• 2005: Drought temporarily turns Amazon rainforest from a carbon sink to a carbon source.
• 2007: Massive summer ice loss in the Arctic brings fears of an ice-free north; IPCC Fourth Assessment warns of faster and irreversible climate change; Bali Climate Conference lays out timetable for agreeing successor to Kyoto Protocol.
• 2008: Poznan Climate Conference in Poland; slow progress on negotiations as many wait for the new Obama administration in the USA to declare its hand.
• 2009: Make or break year for the climate, with negotiations continuing for a Copenhagen Protocol set to conclude in December.

What's also interesting is that while countries and governments acknowledge that we have to get started, they are reluctant to be held to account. Right here in South Africa, our government recently released a statement stating, "While South Africa acknowledges that it is a contributor to the overall global green house gases largely due to its reliance on coal powered electricity, we are committed to taking responsible action to reduce our emissions but we are not ready to agree to any targets that would undermine our growth trajectory. Like other developing nations-, we still face the major challenge of growing our economy to enable us to meet the Millennium Development Goals."

Reading between the lines: yes we are part of the problem and we promise to get around to fixing it, just not right now and we won't say when either. And while there may be mitigating circumstances, if one of the most sophisticated players on the African continent won't commit how can others be held to account? And all the while time keeps marching irrefutably on.....

‘Post-Crisis Africa: Old Challenges, New Opportunities', a talk by Dr Ngozi Okonjo-Iweala, MD of the World Bank

The charismatic Dr Ngozi Okonjo-Iweala gave a presentation at my alumni university, the London School of Economics, last Tuesday, 13th September 2009. Her presentation was on ‘Looking beyond the Crisis: Challenges and Opportunities for Africa’ - a rather typical presentation title, but quite refreshing ideas from her side.

Her presentation gave a brief overview of the economic developments taking place across the continent since 1995, citing remarkable growth rates, reductions in armed conflicts, increased regulatory reforms and more transparent elections.

However, over the last three to four years, the continent has been struck with what Dr Ngozi referred to as the crises of the four ‘F’s’ – Fuel, Food, Financial which has led to a new crisis - the Fertiliser crisis.

During the presentation, she kept stressing the importance of stimulating growth by creating jobs. The World Bank are predicting a rise in average real GDP growth rates to 4.5% across the continent in 2010, however, jobs will lag behind.

Dr Ngozi then proceeded to talk through what she saw as the eight main challenges facing the continent in the years ahead, many of which have been cited before. These are:

· The role of government and its accountability

· The sustainability of public debt

· Economic volatility

· Corruption

· Political stability

· Climate change

· Augmenting Energy resources

· Accelerating ‘job-creating’ growth

The opportunities that she laid out however, were more unique. These included:

1. Promoting labour intensive manufacturing to spark technological innovation and competition. China will be driving this manufacturing growth and Africa should be looking to partner with China and India to service their industries rather than be undercut by Chinese and Indian goods.

2. Investing in the full agricultural value chain, from raw products to processed goods. Only 40% of Africa’s productive land is currently being cultivated. She cited the need to bring more female entrepreneurs into this sector as women largely comprise the agricultural workforce.

3. Climate change is a challenge, but also an opportunity. Currently, Africa uses only 8% of its renewable energy resources compared to 30% in Latin America. Investing in sustainable agriculture and clean technology can supply Africa with a new revenue source. The World Bank has just launched the World Development Report 2010 on Tuesday (22 September), which focuses on Development and Climate Change.

4. Repatriate embezzled resources and stem the outflow of financial and natural resources from Africa. This opportunity is off the back of the G20 financial summit pledging to put an end of tax havens and the OECD anti-corruption programme and convention.

The question and answer session raised a few interesting ideas as well, such as the need to implement strong tax reforms so that a government’s revenue doesn’t rely solely on exploiting natural resources. However, the main obstacles to this, and obstacles that Dr Ngozi faced when she was the Nigerian Minister of Finance, was the difficulty of tax administration and the narrow tax base, with many people still in the informal sector. She recommended that government should incentivise the set up of small and medium sized enterprises by placing a 0% or subsidised tax regime on these businesses for the first few years, and then slowly introducing a taxation system which provides them with resources and assistance.

The issue of regional integration also cropped up. Dr Ngozi was an advocate of regional bodies like COMESA and SADC but stressed that they could still do more. She was supportive of common currencies but stated that national currencies and economies need to have the correct systems to manage exogenous shocks first.

She summed up by stating that to prevent another financial crisis like the one we have just experienced, the world must establish multiple poles of growth. America was once the main growth centre and China and India are emerging. But more are needed. Dr Ngozi is confident that Africa can be the source of successful and strong growth centres.

Meeting for Africa in New York

Near the end of September, New York will be a flush with Heads of state, CEOs and executives. They will be flocking to the city not just for the annual UN General Assembly, but also the annual Clinton Global Initiative, a CEO’s working lunch on the Millennium Development Goals (MDGs), the African-American Institute Awards Gala Dinner and the Africa Investor Index Awards.

Increasingly, businesses are being welcomed to governmental and multilateral events. It is a sign that all parties are recognising the need for collaboration and mutual understanding. And the growth of Africa-focused events is also a promising sign given the impact of the financial crisis on aid flows to the continent.

At the CEO’s working lunch on the MDGs, the main topic of discussion will be how Africa can make substantial headway to attaining at least some of the MDGs. The theme of this year’s African-American Institute Awards Gala Dinner is “Nurturing Democracy and Hope for Development in Africa.”. Interestingly, most of the sponsors are from the corporate world, including Constant Capital Partners, Chevron, DeBeers and Exxon Mobil. Corporates are being recognised for their contribution to Africa’s development and many businesses are doing a good job of it at that, as highlighted by Africa Investor’s Index Awards, which awards and recognises Africa’s institutional investors, stock exchanges, best performing listed companies, stockbrokers and capital market regulators. These awards demonstrate the burgeoning financial industry in Africa which is driving economic growth.

As for the Clinton Global Initiative Annual Meeting which brings together business, government, and civil-sector leaders to plan and launch specific projects, ‘Commitments to Action’, to address global economic, environmental, and social challenges, it probably comes as no surprise that most of these 391 commitments are projects based in Africa. Many of these commitments are from large corporations such as Diageo, Standard Chartered, Coca-Cola, Nestle, Guaranty Trust Bank, Equity Bank Ltd, and Philips. Again, it is a demonstration of the private sector driving social, environmental and economic development in Africa.

More obviously can be done - we are still along way away from attaining all the MDGs in all African countries. As it stands, corporate contributions to Africa’s social and environmental development mostly takes the form of philanthropic giving. However, there are signs that companies are beginning to view their role in Africa’s sustainable development slightly differently.

Over the next five to ten years, I believe we will see a shift from ‘Corporate Social Responsibility (CSR)’ thinking and a philanthropic giving mentality, to a more strategic approach to sustainability. I believe we will see the following trends:

· Business management strategies and the ways of doing business will increasingly start to embed ecological, social and ethical viewpoints and measurement tools and standards. Many MBA courses in the US and the UK are looking at the development of strategies which create business as well as social and environmental value.

· More companies will begin to tie their marketing strategies with green initiatives, as we have seen with electric and hybrid cars.

· Larger companies, through their public affairs department, will increasingly engage governments on environmental and social policies to deepen their understanding of public opinion and public policies especially in the themes of climate change, energy and water.

· Companies will move away from providing grants to non-governmental organisations to investing in stimulating small to medium sized social enterprises such as ‘clinical social enterprises’.

· All companies, large and small, will begin to use social media and online tools more frequently to improve their stakeholder engagement methods and transparency.

My hope is that businesses who are beginning to implement some of these initiatives are showcased at events like those taking place in New York, so that they can be replicated and adapted into other business models.

Doing Business 2010

The International Finance Corporation (IFC), a World Bank institution, released its annual “Doing Business 2010” report yesterday. The audit looks at how countries around the world have improved the environment for small to medium businesses (including sole traders and entrepreneurs) to set up and do business.

Singapore remains at the top for overall “ease of doing business” but some interesting results for Africa – and opportunities for sharing best practices.

287 reforms were recorded in 131 economies (June 2008 to May 2009) – a record – but more significant was the fact that low- and lower-middle-income economies accounted for two-thirds of reforms in 2008/09. Is the economic crisis hitting developing nations harder than we thought, kick-starting reformers into action to attract more inward investment?

Rwanda – the top reformer - introduced reforms in 7 out of the 10 categories (such as registering property, enforcing contracts, getting credit, protecting investors), rising from 143rd to 67th place on the ease of doing business rankings – and the first time a Sub-Saharan African country has led the world in reforms. Liberia entered the top ten, while Mauritius and Sierra Leone were also recognised for leading in certain areas.

So post-conflict countries have a reason to reform as well it seems – again with the driver of attracting Foreign Direct Investment. While business reforms are only one part of economic development / recovery, it is one area that the government can manage, monitor and measure. The question is how much the private sector can influence the government – but big business has to realise the advantages of a thriving SME sector in that case.

Rankings are one thing – the World Economic Forum also released its 2009 / 10 global competitiveness index yesterday, to give countries even more numbers to compete on, but surely what counts is the experience in each country. As Penelope Brook, Acting Vice President for Financial and Private Sector Development for the World Bank Group said – absolute scores are what matter. A women trying to set up a retail business in South Africa is not going to care what others are going through in Ghana or Guinea; what matters is the speed and ease of processes for her. All the top rankings in the world count for nothing if people on the ground don’t experience change.

So where to from here? Is it the case, as Thierry Tanoh, IFC Vice President for Sub Saharan Africa, states, that we are seeing a sea change in the way Africa views investment, or is it a short-term shift in rankings due to circumstance? There are remarkable signs of progress in Africa, with the likes of Rwanda providing a roadmap for others, but the ability to maintain that momentum, and weather the storms of political, economic or social changes is crucial – for domestic and international audiences and investors.

African Approval of Obama

In the week that Hillary Clinton arrives for her seven-country tour of Africa, how is Obama seen throughout the continent since taking office?

Much has been made of Obama’s Kenyan heritage in his popularity rankings, but the reality is that he is following a path set by his predecessor in the White House. For all the criticism and complaints about the Bush administration (which we won’t get in to here), George W did set a strong US policy for Africa, including the Millennium Challenge Corporation and the U.S. President's Emergency Plan for AIDS Relief, the largest commitment by any country to combat HIV/AIDS in history.

While Obama’s trip to Ghana, followed so quickly by Hillary’s tour, make for a very public show of the US prioritisation of Africa, the US already enjoyed 73% approval from 33 Sub-Saharan African nations in 2008 – compared to just 34% across the world on average (Gallup).

Gallup has released further stats from March / April of this year that show that six of the seven countries surveyed (Kenya, Cameroon, South Africa, Uganda, Senegal and Mauritania) have seen an increase in approval of the US leadership since 2008. From an increase of 25% in Cameroon to an 11% drop in the final country – Djibouti – media approval across the seven went from 80% in 2008 to 87% in 2009. Substantial – but I’m not sure it points to more than any global media frenzy around the first Black American President would produce.

More interesting would be to compare approval of the US with sentiment towards the Chinese across Africa, for example. Why do we continue to hold the US up as the most important benchmark? However, despite the increasing influence and involvement of the BRIC countries in Africa, the suggestion that the US is trying to counter China’s rise in Africa with Clinton’s tour is “is a Cold War paradigm, not a reflection of where we are”, as the assistant secretary of State for African Affairs told Bloomberg.

While we read, write and blog about the impact of the Obama administration on Africa, are we obsessing about the topic by force of habit, by virtue of the media profile the topic enjoys, or because it actually counts?

Indeed, what difference will the trip make to the average African questioned by Gallup? To the major oil and mineral exporters in the countries that Mrs. Clinton is visiting – a few tax breaks or trade agreements, perhaps. But looking back to the statistics, Gallup states that at least 3/10 respondents in each country in their survey said the U.S. president makes a difference to their country. Even given the variation from country to country, that still leaves an awful lot of people in Africa that feel the US president makes little or no difference to their country – a far more pertinent statistic in my opinion.

East Africa wired!

East Africa suddenly finds itself inundated with optical fibre cable: the SEACOM cable went live just last week and hot on its heels is the Kenya Government sponsored TEAMS cable which is expected to be switched on in August – both cables battling to claim first-mover advantage and sell as much capacity as possible, as quickly as possible. The next attractions will be the EASSy cable and the France Telecom-owned Lion cable, which should both be connected within the next 8-12 months.

And so the region which has been inhibited by poor telecommunications infrastructure will literally have cable coming out of its ears by the end of 2010!

The first (and most anticipated) area of positive impact is cost. Even though the SEACOM consortium was quick to warn the public that they will have to wait a little longer for cheaper internet as industry players first want to recoup their investments, for countries which have largely been dependent on exorbitantly priced satellite connectivity, the region should still enjoy a noticeable drop in costs. This is because where satellite communication providers were charging as high as USD 7000 per megabyte, the SEACOM consortium will offer wholesale prices in the range of USD 100 per megabyte, with even more subsidised costs of between USD 10-25 to schools, research and health institutions. This is great news for businesses, learning institutions and individuals whose operating expenses will experience some relief in the medium to long term.

In addition to cost benefits, the region’s residents will finally be plugged into the world through reliable telecommunications infrastructure. What a dearth of opportunities this offers east Africa! The increased capacity via broadband internet will enable us to get more done faster - including, for instance, the ability to work collaboratively and securely across great distances, reliable video conferencing, even live streaming of audio visual content in a heartbeat and crystal clear VoIP calls. ‘Regular’ voice calls, international calls in particular, will also now be cheaper and more stable.

Governments in the region should quickly realise progress towards their anticipated socio-economic transformations as universal internet access draws even closer to becoming a reality. They have spent the last few years trying to understand and prepare for post-fibre East Africa - putting in place boards to manage and implement their ICT strategies and building policy and regulatory capacity in preparation for the changes that fibre will bring to their countries that cover critical areas such as identity theft, online transactions, the legality of e-communication and so on. They also expect to see business booming in the Business Process Outsourcing & Offshoring sector and countries like Kenya have already invested in marketing themselves as BPO destinations in Europe and North America.

This level of commitment is great for the region. It should inspire the confidence to stimulate the investments required to get more people and businesses online, moving transactions to cyber space in a region that has been reluctant to do so primarily for internet security reasons.

The push for the 24 hour economy just got a boost with fibre being able to support the communication requirements of companies that would seek to eliminate the traditional working environment altogether, enabling employees to work flexibly in terms of time and location.

The real value of optical fibre is in what the mwananchi (a.k.a. the guy on the street) does with it... the innovative African spirit has been waiting for infrastructure that is robust enough to support its ingenuity and now it’s finally here.

I can hardly wait to see what we do with it!

Barrack Obama in Ghana

When it was announced that Barrack Obama was going to be in here in Ghana for an overnight visit the first reaction from journalists was to confirm the news from the US State Department website. Alas! the confirmation was given by the US president’s itinery that showed clearly that from the G8 meeting in Europe, he would make the journey to Ghana.

So the preparations began, as usual the effort to make things look better than they actually are for the visitor’s sake, at least for 2 days, 10th and 11th July 2009.

The US embassy staff were not particularly amused as this kind of visit means a lot of work for them, they had not completely rested from the 3 day long visit of President Bush jr, just 7 months earlier. That was closely followed by an election that they had to monitor until that last ballot was counted, so they were tired, very tired and now Obama was coming in, the gigantic plane had to find landing space and on top of that the famous President and his gorgeous wife wanted a visit to the slave castle, at least a two hour drive from the capital. The embassy staff had to worry about the “monster” (his car) traveling for two hours, passing through 17 Ghanaian villages, 4 major towns, and 2 major roundabouts, all the time along the ocean.

When the advance team arrived, they decided that the torture of preparation maybe too much to bear and so the helicopter might be useful, that way, the president gets to the slave castle in 15 minutes instead of 2 hours, and can stay for as long as he likes.

After the advance team departed to the US, the information about where and what the president would be doing was still very scanty, no one knew, several calls to the embassy received the same answer, “we don’t know yet, can you call in a couple of days please”.

The local information ministry did not know either until a week before the arrival when the schedule gradually began to form like a baby in the mothers’ womb.

Then the tussle over where to make that policy statement began. Ghanaians were feeling the nostalgia of the Clinton visit in 1998, he had spoken to 10,000 enthusiastic hosts at Independence Square in the company of his wife Hilary, and president JJ Rawlings the former “strongman” president of Ghana. That event was a performance to behold and many Ghanaians relished a repetition of such pomp, pageantry and ecstasy with a dose of Obamamania and the grace of Michelle to complete the menu. Well, it appeared the Americans were not similarly enthused nor so inclined, they wanted the address to be delivered before the legislative assembly, the body of lawmakers where the Harvard graduate come super-star President could intellectualize about stuff, audacity, dreams… and anything else.

As the discussion came down to the wire, compromise was the winner, yes the address would happen, yes it would happen before parliament, no it would not happened at the Independence Square but it would also not happen in parliament!

What then was the compromise, the address happened at the international conference centre, built in 1991 for the hosting of the summit of the non-aligned movement in Accra? It is a very modern building standing directly opposite the parliament house in Accra.

I got in late that morning but was treated very nicely by security, of course, I could not drive within 300 meters of the venue, security was all over, in this event you had the US president, the Ghanaian president, his vice president, 2 former presidents, one former vice president, (of course the political musical chairs would have it that the other former vice president was now president ) 230 members of parliament,78 ministers of state and representatives from important organization such as africapractice.

And, the speech was intellectual indeed, he called for strong institutions instead of strong men, the parliament cheered, then he called for new structures for aid delivery and the cheers continued, he said Africans owe their destiny to themselves, not many cheered, then he talked about Zimbabwe and nobody cheered.

He praised Ghana for sound constitutional practice and said the minority must be allowed to take as much credit as the majority and the now opposition NPP shouted hear hear, (after the Westminster tradition of cheering the PM whether he is making sense or not). He said minority voices must be heard in a democracy.

Earlier, he had had breakfast with the president and some invited guest at the castle. The invite list for both events was about the same.

One significant bystander’s observation about this visit is that the photographs never ceased to be taken and this time the photographs were the state officials themselves. That was discussed on radio, time and again. People felt that it was embarrassing; some people felt that it was ok to photograph the famous President even when he was standing in front of the photographer and waiting for the welcoming or goodbye handshake.

Any way, the visitor then left to Cape Coast where he spent a bit of time going through the slave castle and through the door of no return (after going through slaves were shipped off to the new world)

After the Cape Coast trip the president prepared and departed the shores of Ghana.

So, he came, he spoke well, he stayed at the Holiday Inn, he saw the hospital at Labadie and he went to Cape Coast castle.

That was a big stuff, now Ghana is on the map once again, what we do with it, is our challenge, let’s start the conversation.

Seacom has landed

The much vaunted Seacom undersea cable, linking Africa to Europe, landed this week and many of us waited expectantly for our internet speeds to move into the 21st century. If you have been following developments on Twitter, you will know already that for some people the dream is reality and for others like “MwendaRiungu: The #Seacom undersea fibre optic cable has landed in Kenyan coast, 5 ISPs hooked up, then......nothing! Still waiting....... “ it has completely failed to deliver.

If truth be told, most criticism does seem to be coming from the East African community, both in terms of bandwidth speeds, non-disclosure of which ISPs have signed with Seacom and with the fact that pricing remains largely unchanged. Perhaps the very effective Seacom PR machine should have added an element of expectation management to its strategy?

The reality is that many of Kenya’s ISPs are still tied into satellite contracts and will need to wait until these conclude before investing capital in buying space on Seacom. Also, less Kenyans have internet access than South Africans - which means that less people are sharing the bandwidth and infrastructure costs. Over time, as more people ‘go online’ this should hopefully help to drive down costs.

In South Africa, the promised massive reduction in bandwidth costs (up to 40%) making Internet access much cheaper for South African users is also not likely to be felt any time soon. In fact, analysts reckon that only corporations are likely to see a drastic drop in their Internet bill and consumers will continue to pay high tariffs for voice and data services. The launch of the Seacom cable does, however, mean that there is now some competition in a market that has been monopolistic for years.

At the launch yesterday, Cyril Ramaphosa said that Seacom would serve as “a catalyst for the east and south of Africa to speed up its economic development”. In South Africa, rumour has it that Telkom is buying space on Seacom and in Kenya it is unofficially official that Safaricom is one of the ISPs hooking up. Students in South Africa will be among the first people to directly benefit as TENET, the university network, was connected to Seacom yesterday.

While the Seacom landing is going to continue to fuel debate over the next few weeks, some positive, some cynical and much disillusioned, the one sure thing is that it is a significant step forward for bandwidth creation in East and southern Africa. Seacom will soon be joined by two further cables. The East African Marine System (Teams), scheduled for completion later in 2009, will link Kenya and the United Arab Emirates, and the Eastern African Submarine Cable System (Eassy), which lands in many of the same countries as Seacom, is expected to start service in mid-2010.

Cadbury’s Dairy Milk goes Fairtrade… is this enough?

Socially aware chocaholics are cheering Cadbury’s switch to Fairtrade this week. Cadbury’s Dairy Milk, which sells 300 million bars a year in the UK and Ireland, will now source its cocoa from Fairtrade farmers in Ghana, the biggest brand of its kind to make the move.

This development has the potential to introduce Fairtrade to a wider consumer audience and may have a positive impact on the lives of small-scale cocoa and sugar farmers.

However, Whilst Fairtrade guarantees farmers get a reasonable deal for their produce, the process of accreditation is a long and expensive one. Representation, knowledge and money are needed to get the Fairtrade stamp of approval and critics of the label assert that this inherently pushes many farmers out of the market. Cadbury’s Cocoa Partnership launched last year in partnership with the United National Development Programme (UNDP) is investing £45 million over 10 years in social and environmental initiatives in cocoa-growing communities. This pot of money is ensuring many Ghanaian farmers are getting the chance to become accredited suppliers of Fairtrade produce. Whilst this is a great step, it is unfortunately an unusual situation.

It’s becoming increasingly clear that agricultural productivity alone is not always able to provide a reliable livelihood for the growing populations in African countries. Hannah Kiarie, a Nairobi based food Technologist recently made the point that agro processing - turning primary agricultural products into other commodities for market - has the potential to provide additional income generating opportunities. There are of course, some prerequisites for agro-processing to be feasible (good infrastructure, water and electricity to name but a few) and with cocoa processing, there are even more hurdles; the fact that chocolate melts is just one of them!

I will be happily munching on Dairy Milk from now on but there is still a lot to be done to ensure farmers in developing countries not only have access to lucrative markets both locally and globally but also that their businesses are sustainable financially, socially and environmentally.

Superbrands - where to next?

The annual Superbands survey always makes interesting reading – who has pushed who from the top spot, new entrants in the top 500... It gives a bit of an insight into what people care about and how brands are moving into the consumer consciousness.

This year, expanding on a trend we’ve seen in recent years, tech takes precedence. While Microsoft took number one, bumping Google to number three (after Rolex) the order isn’t of so much importance as the volume of IT brands.

The Telegraph quotes Shar VanBoskirk, analyst at Forester: "You may drink a Coca-Cola or Starbucks drink once or twice a day, but most of us interact with Microsoft and Google every hour of our lives. These technology companies have entered into our homes, our offices - even our friendships."

So the question is who or what is next?

The FT raised this question earlier in the week, covering a research report by Wolff Olins, that tipped five food and drink brands from emerging markets to become global brands. As it stands now, there are no African brands in the list (Columbian coffee, Saudi fruit juice, Lebanese chocolate, Chinese wine and Indian liquor). So no tech here then?

Their focus on the East comes from market size – if you are to become a dominant brand you need dominant position in sales and customers – hence India and China. But Africa represents an enormous opportunity of almost 1 billion consumers, with increasing buying power. Not only that, but the “what works in Africa works anywhere” position makes for a hotbed of innovation and new ideas. MXit, the IM platform for mobile, developed in South Africa, is already looking at 17 million registered users across the world.

It will be interesting to see the ensuing battle between established western brands and new names from emerging markets. While everyone seems to be looking East, I’ll have my eyes peeled for the Starbucks of Sub-Saharan Africa or the Rolex of Rwanda.

Kicking the tyres - slow but steady trickle of investment into Zimbabwe

“I am really getting sick and tired of these endless investment conferences, seminars, delegations.
All these gatherings have yielded nothing except talks, official addresses and some politically correct statements from the foreign delegates of what a promising country Zimbabwe is, and that’s it. When these people leave, you will never hear of them again,” ranted a Mr Chinenhamo in a Zimbabwean weekly newspaper.

My initial reaction was to chuckle at Mr Chinenhamo’s comments but after exercising my mind more on his contribution, his frustration seemed justified and encapsulates the frustrations of capital starved Zimbabwean companies - the unity government has come into being, the economy has stabilised, the country is no longer top of the inflation charts, successful Zimbabwean business has little debt, the country’s infrastructure is relatively intact, the workforce is highly skilled ....... the list of positives goes on. So what more could an investor need? The real money should be flowing by now! On the other hand, Mr Chinenhamo’s sentiments reveal the expectations of some local businesses and some in the general population that investment into Zimbabwe should happen immediately because on the private sector side, they have ticked all the boxes they feel they need to have ticked– the reality is often very different - it is a process and not an event to attract the calibre of investment Zimbabwe needs.

Investors have been well aware of the country’s potential but because of the previous 10 year economic crisis in Zimbabwe, that potential could not be converted to reality. Zimbabwe was one of those countries which geologists would speak about the vast mineral resources, and the financially astute would fawn over their returns from the local stock market. Bar the odd mining multinational and a few tyre kickers looking to build a relationship ‘for when things turn,’ the level of new FDI into the country was extremely low. In 2007, inward FDI flows into the country were about 14% less than that of Swaziland. Now things have changed. For those multinationals that kept their operations functioning, they are seeking to recapitalise their Zimbabwean assets, for those that left, they are now looking at re-entering the country. Slowly investment is beginning to trickle into the country. There is widespread acknowledgment that the political changes are permanent and the economy has responded positively.

One of our clients, African Sun has interests in the Zimbabwean hospitality sector and their Chief Executive, Shingi Munyeza, commented that their city hotels in Harare were almost at 70% occupancy in the first half of the year driven by international business-people. He also gave an interesting anecdote about the number of Gulfstreams at Harare International Airport – which got me thinking about creating a GulfStream Index as a proxy for international investment activity...........that discussion will be reserved for another blog though!

It would be very naive not to consider the history, political environment and perceptions surrounding any sort of large scale capital investment in the country – these topics have been covered in detail in many other forums, but three stick out; i) concerns over policy consistency ii) property rights and iii)indigenisation (Zimbabwe’s version of BEE). The government does have a clear position on these matters and a call to the Ministry of Industry and Commerce could provide one with the clarity they need. The ministry has set up the Zimbabwe Investment Authority, a one-stop shop providing investment advice on the country. The challenge now is to communicate that vision clearly.

Then again, perhaps I’m being unfair to Mr Chinenhamo, and his statement was merely a call for action. Any takers?

"Make investing easy, Africa told"

That’s the headline on the front page of Business Day’s Companies & Markets section today. That’s an issue we talk about a lot, often in the context of the role of media in developing a healthy investment climate. It also came up at the World Economic Forum (WEF), as we outlined in a post below.

But it seems it takes a bold statement by Standard Chartered at a conference in Sandton to make the news. At the Banking Outlook conference, Steve Brice, head of global markets Southern Africa, talked about the need to counter the impact of the financial crisis, the impact of which was not yet fully understood on the continent.

Plenty of reasons why African countries are suffering in the downturn, but his advice to “stick to their knitting” and be internally focused, seems to go against his over-arching call to be more externally-focused to attract foreign investors. No wonder we’re not making this easy on ourselves..

US President Barack Obama takes a different approach in an interview with AllAfrica.com today, stating African nations must clean up corruption and end political instability in order to attract the investment needed to prosper. ‘Speaking in advance of a visit this week to Ghana, Obama said there was a direct correlation between governance and prosperity and urged African leaders to do better.’

In terms of ease of doing business, the average ranking of sub-Saharan countries is 138 out of 181 countries globally. So there are worse places. Remember, this is not a comment on the attractiveness of doing business, but in terms of how to lift Africa up the rankings to a place that is easy to do business, there doesn’t seem to be a simple solution. The measures that Brice puts forward, developing long-term interest rate and forward foreign exchange markets are – on his own admission - “easy to say and difficult to do”. Obama’s solution of ending corruption and political instability is a pretty tall order too..

Raila Odinga, Prime Minister of Kenya told WEF that Africa has to knock down the hurdles to doing business, such as lengthy legal and operational processes - but this has to be permanent, not temporary measures. Omari Issa, CEO, Investment Climate Facility, commented that African media needs to be part of changing the perception of Africa as a good place for business, as investors still often look to international media for info – and it needs to come from the inside.

This raises the question of whether it is just an external perception – or a reality - that Africa is a hard place to do business? Will it always be more difficult than an America or Germany, and investors just need to get over it and go for it? While there are undoubtedly people and processes that could make foreign investment easier, is it just a different way of doing business, which also sees different returns?

I don’t mean to push the onus of finding a solution back on to the international investors, but like any form of regulation or policy change, it is external pressure that will make things happen. Internal change or any kind of self-regulation is never easy, without the threat of losing something – and foreign investment is no small thing – especially in a downturn. We can at least agree on that.