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!
Friday, 31 July 2009
Tuesday, 28 July 2009
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.
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.
Friday, 24 July 2009
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.
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.
Thursday, 23 July 2009
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.
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.
Tuesday, 21 July 2009
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.
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.
Thursday, 16 July 2009
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.
Wednesday, 8 July 2009
"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.
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.
Tuesday, 7 July 2009
Zuma calls for Africa Agri-forum
President Jacob Zuma yesterday called for the creation of a ‘Conference of African Agriculture Ministers’ saying such a forum would fight hunger and poverty by facilitating agribusiness investment opportunities.
Africa’s agricultural sector is beginning to emerge as one of the sectors that will buffer African economies against the global downturn.
And given the challenges presented by the global financial crisis, and the growing threat of food security, Zuma urged the ministers to remain committed to the Maputo Declaration, which requires governments to spend at least 10% of public expenditure to agricultural development. Currently, only 10 countries in the African Union allocate more than 10% of their budget to agriculture.
Zuma’s focus on agriculture is in line with other leaders who have identified the potential of this sector to lift Africa out of poverty.
In their 2009 Economic Outlook Report, the United Nations Economic Commission for Africa singled out agricultural investment as the most important area for Africa’s development. The private sector is also seeing the opportunities that the sector holds. For example, the Danish Government, through its Africa Commission, launched a project in May 2009 to target private sector investment in agriculture
According to the Commission, if Africa processed 650,000 metric tonnes of cashews it would create 1,000 new businesses, 250,000 new jobs and an extra $150 million in annual revenue.
There are others, however, who argue that prioritising agricultural production will only cement Africa’s already weak terms of trade in the global market. The key, however, is to implement fair land distribution programmes since land tenure is a huge issue in Africa, improve rural infrastructure and integrate the agricultural sector with other sectors such as manufacturing in order to generate job creation and broad-based growth.
At the 13th Ordinary Session of the African Union summit this week, Zuma called for integrated African agricultural value chains that would link up with the global marketing system. This is a positive recognition of what needs to be done to ensure Africa’s agricultural potential is harnessed effectively.
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