African Business 2020 edition

christoffscholtz

A unique guide to business and investment in Africa.

Global Africa Network is proud to launch this inaugural edition of African Business 2020 at a time of energetic planning for a prosperous future for the continent.

The African Union’s Agenda 2063 is much more than a document about a hoped-for future, it contains concrete goals and deliverables. The Programme for Infrastructure Development in Africa (PIDA) and the development finance institution, the African Development Bank (AfDB) are already rolling out valuable projects that are changing the reality on the ground in vital areas of the African economy.

Perhaps the most significant event of recent times is the signing by African leaders of the African Continental Free Trade Area agreement (AfCFTA) which will bring together all 55 member states of the African Union and cover a market of more than 1.2-billion people. African Business 2020 has articles on all of these recent trends, plus overviews of the key economic sectors and regional and country profiles. In 2019 Ethiopian Prime Minister Abiy Ahmed received the Nobel Peace Prize for peace-making efforts in his region. The economic dividends of peace are beginning to be felt. In 2020 South African President Cyril Ramaphosa assumed the mantle of AU Chairperson. He brings to the role considerable experience in conflict management, constitution-writing and seeking consensus.

Global Africa Network is a proudly African company which has been producing region-specific business and investment guides since 2004, including South African Business and Nigerian Business, in addition to its online investment promotion platform www.globalafricanetwork.com

AFRICAN BUSINESS

THE GUIDE TO BUSINESS AND INVESTMENT IN AFRICA

2020 EDITION

JOIN US ONLINE

WWW.GLOBALAFRICANETWORK.COM


IT’S A JUNGLE OUT HERE.

A CONCRETE ONE TO BE PRECISE.

South Africa: a nation that continues to inspire

internal and continental transformation

Since the advent of democracy 26 years

ago, South Africa has been instrumental

in promoting its African agenda on the

premise of “African solutions to African

problems”. This is based on the idea that Africans

and African policymakers are inherently better suited

to understanding and hence developing solutions to

the challenges faced by its citizens. At the forefront

of this common purpose is the drive to promote

economic growth and sustainable development,

not just for South Africa, but also for the continent.

As part of these efforts domestically, President Cyril

Ramaphosa in 2018 launched an ambitious five-year

investment drive which seeks to raise $100-billion

in domestic and international investments as

a means to reignite the country’s economy. First

successes were recorded at the inaugural South

Africa Investment Conference 2018, where major

local and international corporates pledged close

to $20-billion towards investment in South Africa.

The second South Africa Investment Conference

built on the success of the inaugural event,

with companies committing to invest a further

$24.5-billion. Last year’s event was a continuation

of government’s approach to engaging with the

domestic and international business community.

Rather than being a talk shop, the conference

served as a platform for, among other things:

• Announcing bold reforms to improve the ease

of doing business

• Highlighting future growth opportunities in

South Africa and

• Showcasing bankable projects that

companies can consider for investment.

The administration under President Cyril

Ramaphosa has made the improvement of the

country’s investment attractiveness a key priority.

In his 2018 State of the Nation Address he notes, “We

are urgently working on a set of priority reforms to

improve the ease of doing business by consolidating

and streamlining regulatory processes, automating

permit and other applications, and reducing the

cost of compliance.”

But South Africa is not only focussed on

boosting its own economy, it is also committed to

continental growth for a prosperous Africa. As the

incoming Chair of the African Union in 2020, South

Africa is poised to assume an influential position

to give substance to the African Continental Free

Trade Area (AfCFTA) which came into force on 31

May 2019 for the 24 countries that had deposited

their instruments of ratification.

Intended to create the world’s largest free trade

area of over a billion people, there is no better and

more sustainable way to bolster the economic

growth of South Africa and the continent


than through accelerated intra-Africa trade.

President Ramaphosa also recognises

fellow African leaders’ shared commitment to

fundamentally transforming Africa’s fortunes. As

President Ramaphosa says, “The new generation

of leaders of Ahmed Abiy’s ilk are bold, courageous

and are focused on creating an Africa that is at

peace with itself and growing the economies

of African countries through innovation,

infrastructure development and trade.”

Investing in Africa

South Africa has always been and remains

committed to driving continental growth. As

attested by the latest EY Africa Attractiveness Report

of 2019, South Africa continues to be the most

extensive investor into the rest of the continent,

with the widest geographical spread, across the

most sectors, among African nations.

For example, 2018 saw South African investors

place a record 10 projects in Nigeria, totalling

$375-million. This was by far its greatest FDI

commitment over the last five years. Kenya also

saw a sharp rise in South African inward-bound

investment during 2018, attracting $190-million

in capital spread across six projects. On the other

hand, South Africa’s FDI into both Ghana and

Mozambique slowed in 2019, although from a

relatively high base.

These investments affirm South Africa’s

strong commitment to trading with the

continent, with the country ranking fifth-

largest FDI investor into the continent globally.

Elsewhere, the Minister responsible for Trade

and Industry and Economic Development,

Mr Ebrahim Patel, emphasised AfCFTA as the

single biggest initiative that will expand markets

for South Africa’s products and facilitate entry into

those markets. AfCFTA agreements will, he says,

“lay the basis for increased intra-African trade and

can cement the continent’s position as the next

growth frontier”.

By promoting its investment proposition,

location, infrastructure and logistics, South Africa

has positioned itself as a destination of choice.

As the most industrialised country on the African

continent, South Africa continues to make massive

investments in infrastructure development, with

many international companies utilising the country

as a strategic base for their operations on the

African continent.

South Africa has emphasised Africa’s progressive

future and the need, now more than ever, for African

states to trade with each other and, through the

AfCFTA, improve access to existing markets, while

forging access to new markets.

“As African nations, there has never been a

better time to deepen our collaboration to ensure

the African Continental Free Trade Area, our most

ambitious collective venture yet, is a success. This is

an opportunity to grow our economies and to use

our considerable collective resources to uplift our

people,” says President Ramaphosa.

As the incoming Chair of the African Union, South

Africa will put great emphasis on giving effect to this

agreement.

Contact details

Dr Judy Smith-Höhn, General Manager, Global

Markets: judys@brandsouthafrica.com

Dr Petrus de Kock, General Manager, Research:

petrusd@brandsouthafrica.com

Website: www.brandsouthafrica.com

1 AFRICAN BUSINESS 2020


Gwede Mantashe, Minister for Mineral Resources and Energy at Africa Oil Week 2019, talking to Sandisiwe Ncemane, CDC Project Development Manager: Energy.

Photo: Supplied

First LNG hub in SA to be established at Coega

Coega SEZ is ready to welcome investors to its shores for gas opportunities

In his speech at Africa Oil Week 2019, Minister for

Mineral Resources and Energy, Gwede Mantashe,

urged investors to pursue investment opportunities in

the proposed liquefied natural gas (LNG) hub at the

Coega Special Economic Zone (SEZ) in the Eastern

Cape.

“The call by the minister is certainly in line with the

various activities the Coega Development Corporation

(CDC) has been undertaking in the past couple of

years to advance its gas readiness capabilities,” says

Sandisiwe Ncemane, CDC Project Development

Manager: Energy.

“Within the next couple of weeks, the CDC will be

engaging various stakeholders, both within the private

and public sector, and inviting them to the Coega SEZ

for a tour of the proposed sites and to update them on

progress thus far,” says Ncemane.

With an established market for LNG within Coega,

over the years, the CDC, in collaboration with the

Eastern Cape provincial government, has put in place

extensive gas market analysis and preparation to

enhance Coega’s readiness for the implementation of

high impact energy programmes towards an integrated

gas economy.

“The AFRICAN Coega BUSINESS SEZ is one 2020 of the most advanced in terms

2

of preparations for the LNG hub and is the ideal

location for the associated gas to power programmes.

One of the critical game changers for the CDC is the

cost factor. The 342MW Dedisa Peaking Power Plant

currently in operation within the SEZ has existing

environmental authorisation for a 400KV transmission

line between the plant site and the Dedisa substation,

which reduces the costs of the gas to power project for

investors quite significantly,” adds Ncemane.

Another factor is that the CDC, as early as 2006,

undertook five environmental impact assessment (EIA)

studies supporting the gas to power solution.

“EIA studies were concluded for rezoning of land in the

SEZ, the establishment of a 400KV transmission line

between the plant site and the Dedisa substation, and

the marine pipeline servitude EIA, which is currently

underway.

“Further, the 2015/16 department of mineral resources

and energy and Transnet feasibility studies include the

LNG terminal at the Port of Ngqura, identifying several

berth options for its deep water seaport adjacent to

the Coega SEZ. As part of the Coega environmental

studies, in 2019, a draft scoping report was prepared for

an integrated LNG terminal and gas to power solution

at Coega,” adds Ncemane.

“We are also encouraged by the recent comments


attributed to Transnet’s chief business development

officer, Gert de Beer, on Transnet’s support and

commitment of resources to the LNG hub intended for

Coega,” says Ncemane.

The Coega SEZ has world-class infrastructure; it has

prime and serviced land that is available to host key

gas-to-power projects with spin-offs for other sectors.

In addition, the approved Coega Infrastructure Master

Plan is in place. It defines the services corridor from

the LNG project site to Dedisa substation as well as

good access via the National Road (N2) and ancillary

road network.

The short-term outlook is to import liquefied natural

gas to trigger the gas economy, which would stimulate

the exploration and production of indigenous gas

resources in the Eastern Cape.

The case for the Eastern Cape

The significance of the Eastern Cape is that it is

endowed with the possibility of both onshore and

offshore gas, gas-driven power generation, and gas

importation, handling, transshipment infrastructure as

well as industrialisation. Potential recoverable quantities

of indigenous natural gas are in the order of 20-trillion

cubic feet onshore (shale gas), and 26-trillion cubic feet

offshore.

The recent deep water drilling in Brulpadda

(approximately one billion barrels) in the Southern

Outeniqua basin could potentially unlock enough fuel

to supply South Africa’s refineries for almost four years.

It has the potential to unlock a value chain of marine

maritime services located at Coega SEZ, which could

in turn trigger opportunities eastwards and small

harbours along the Wild Coast. In line with South

Africa’s developmental programme, indigenous gas

extracted in this province must be beneficiated within

the country’s shores, maximising the economic benefit

yield within the region.

The Eastern Cape, through the department of

economic development, environmental affairs and

tourism (DEDEAT) has provided various gas support

initiatives organised in a coherent framework and is

well positioned to drive enablers for a gas economy.

DEDEAT has initiated a strategic framing process for

the provincial oil, gas and maritime complex, which has

provided much impetus, clarity and support for the

socio-economic development of the gas industry.

At the Coega SEZ, within the energy sector, there are a

multitude of operational investors, as a demonstration

of the hard work, efforts and opportunities available in

the Eastern Cape.

Some of the projects include:

• Dedisa Peaking Power Plant (Zone 13) – the

342MW Peaking Power Plant, located in the

Coega Special Economic Zone, is a R3.5-billion

foreign direct investment. The project has been

operational since September 2015 and created

around 1 500 jobs during its construction phase.

• Wind Tower Manufacturing (Zone 3) – wind

tower assembling plant, a R310-million investment

located at the Coega SEZ, which created 390 jobs

during construction.

• Lay Down Area (Port precinct / Zone 1) –

abnormal cargo related to the Renewable Energy

Power Producer Procurement Programme

(logistics). This is a R9-million investment that has

contributed to the distribution of wind turbines

throughout the EC.

• A Renewable Energy project – The first commercial

wind turbine in South Africa, valued at R1.2 billion.

In the 20 years since its establishment in 1999, the

Coega SEZ has become one of the leading SEZs in

Africa, as a gateway to African and world markets,

a transshipment hub and Southern Africa’s most

successful SEZ. To date, the CDC has delivered on

its mandate to provide socio-economic development

for the Eastern Cape, by enabling the creation of

over 120 000 accumulative jobs since inception,

with 45 operational investors, who have invested

R11.579-billion in private sector investment and

R9.53-billion in foreign direct investment. The CDC has

also trained over 100 000 people since its inception.

For investors who wish to take

advantage of opportunities in the

energy sector, please contact, Sandisiwe

Ncemane on:

E-mail: sandisiwe.ncemane@coega.co.za

Telephone: +27 41 403 0630

Fax: +27 41 403 0401

CELEBRATING

“In the broader perspective, the LNG hub at the Coega

SEZ is perfectly located as it opens up a gas corridor

1999-2019

towards the East and West coasts, and is a response to

the recently gazetted South African Integrated Resource

Plan (IRP2019), which makes provision for additional www.coega.co.za

3 AFRICAN BUSINESS 2020

1 000MW gas driven power by 2024,” adds Ncemane.

ISO 20000-1:2011 ISO 27001:2013

OF EXCELLENCE

ISO 9001:2015 ISO 14001:2015 ISO 45001:2018


AFRICA’S LEADING

CONVENTION CENTRE

The Durban International Convention

Centre (Durban ICC) prides itself on

being leading venue for meetings,

business events, conferences and

exhibitions on the African continent.

However, this is not their own opinion,

but rather the overwhelming feedback

received from their clients who have

voted it in the top 1% of Convention

Centres worldwide, as well as “Africa’s

Leading Meetings and Convention

Centre” no fewer than 17 times!

This world-class facility, renowned

for its high standards of service

excellence and has successfully

staged some the world’s most

prestigious and complex events.

The Centre’s track-record includes

the hosting of both the largest and

second-largest conferences ever held

on the African continent, (International

AIDS Conference 2016 - attended

by 22 000 delegates and the UN

Climate Change Conference COP-

17 held in 2011 - attended by 15 000

delegates.)

The Durban ICC is a versatile

venue of enormous dimensions,

flexible enough to meet any need,

no matter how extraordinary. The

Centre offers the largest column-free,

multipurpose event space on the

African continent. International and

national conventions, exhibitions,

sporting events, concerts and

special occasions of every kind can

be accommodated. Flexibility and

versatility are key factors in the design

of this state-of-the-art, technologydriven

Centre.

The Durban ICC’s highly experienced

and friendly team will ensure that

your event is seamlessly executed

giving you complete peace of mind.

Providing exceptional customer

service remains the heartbeat of the

AFRICAN BUSINESS 2020

4


Durban ICC, striving to ensure that

every delegate who walks through

the five-star facility has a memorable

experience.

Delegates visiting the Centre can

look forward to superb standards of

culinary excellence and hospitality.

As part of the Durban ICC’s gourmet

evolution over the past 22 years in

the industry, they are completely

reinventing their culinary offering

in order to showcase some of

Durban’s authentic African Cuisines.

Furthermore a wide range of new

innovative packages have been

designed to meet the unique needs

of each target market, at the best

possible rates.

Located in the City of Durban,

affectionately known as South

Africa’s entertainment playground,

the Durban ICC offers you first-world

convenience and a proudly African

meetings experience.

When one considers the Centre’s

impeccable track-record,

uncompromising commitment to

service excellence and stunning

destination it is clear to see why it

is recognised as “Africa’s Leading

Convention Centre.”

5 AFRICAN BUSINESS 2020


CONTENTS

CONTENTS

African Business2020 • Edition 1

Introduction

Foreword 10

African Business 2020 is a unique guide to business and investment in Africa.

Special features

Africa’s big chance 12

Large infrastructure projects and an increase in intra-African

trade could be the platforms to launch the continent into a new

era of prosperity.

Engines of growth 16

Giant cities and development corridors are vehicles

for tackling Africa’s infrastructure gap.

Towards free trade 20

A continent-wide free trade agreement promises to unlock

enormous value.

Success comes in many guises 28

Ethiopia and Mauritius show there is no single formula for putting

a country on the road to progress.

Economic sectors

Agriculture 32

Huge challenges present massive opportunities.

Mining 36

The global economy is demanding new minerals, and Africa has them.

Oil and gas 44

Huge new gas finds could be transformative.

Energy 46

Africa’s development depends on a power revolution.

Manufacturing 52

Growing the sector is key to higher levels of development.

AFRICAN BUSINESS 2020

6


7 AFRICAN BUSINESS 2020


CONTENTS

Transport and logistics 56

Far-sighted plans for freight can lift African trade.

Aviation 58

Movement towards open skies will see Africa fly.

Tourism 60

Hoteliers are attracted by high rates of return.

Information and communications technology 64

Africans are getting connected.

Banking and financial services 66

Innovation is paying off in finance.

Regional profiles

East Africa 68

North Africa 70

Central Africa 72

West Africa 74

Southern Africa 76

Country profiles

Kenya 69

Morocco 71

Democratic Republic of the Congo 73

Nigeria 75

Botswana 77

South Africa 78

Mozambique 80

ABOUT THE COVER: Credit: Romolo Tavami/

iStock by Getty Images.

GDP in Sub-Saharan Africa is two-fifths higher

than it was two decades ago. The continent’s

middle class is growing quickly, and the number

of mobile phone and data subscriptions are

accelerating at twice the global average.

Massive investments in infrastructure and

energy are preparing the continent for growth.

AFRICAN BUSINESS 2020

8


GOING BEYOND?

THAT’S IN OUR NATURE.

At Kemtek Imaging Systems, we’re hard-wired to source the highest quality products and advanced

technologies from the world’s leading manufacturing brands. We then distribute these to our valued

customers and resellers in the commercial print, industrial print, AM/3D print, auto ID, barcoding

and labelling industries. But far beyond this, we provide professional advice, insight and technical

support from our very own, and very human, industry specialists. To view our vast product line-up,

visit our website and contact us directly for more information.

Akhani 3D I Argox I BarTender I Brother I Cipherlab I Datalogic I Epson I Flint Flexographic I Fujifilm I Herzog+Heymann

HP Indigo I ITW Thermal Films I Komori I MBO I Rapid 3D I SATO I Vianord I Wiiboox I Xeikon ThermoflexX I Zortrax

J26782

National 0861 KEMTEK Johannesburg +27 (0)11 624 8000 Pretoria +27 (0)12 804 1410 Durban +27 (0)31 700

9363 Cape 9 Town +27 (0)21 521 9600 Port AFRICAN Elizabeth BUSINESS +27 (0)412020

364 3690

www.kemtek.co.za


African Business

A unique guide to business and investment in Africa.

Credits

Publisher: Chris Whales

Publishing director:

Robert Arendse

Editor: John Young

Managing director: Clive During

Online editor: Christoff Scholtz

Art director: Brent Meder

Designer: Richard Smith

Production: Lizel Olivier

Ad sales: Gavin van der Merwe,

Sam Oliver, Jeremy Petersen

Gabriel Venter, Vanessa Wallace,

Themba Khumalo, Shiko Diala

and Sandile Koni.

Administration & accounts:

Charlene Steynberg

and Natalie Koopman

Distribution & circulation

manager: Edward MacDonald

Printing: FA Print

Global Africa Network is proud to launch this inaugural edition

of African Business 2020 at a time of energetic planning for a

prosperous future for the continent.

The African Union’s Agenda 2063 is much more than a

document about a hoped-for future, it contains concrete goals and

deliverables. The Programme for Infrastructure Development in Africa

(PIDA) and the development finance institution, the African Development

Bank (AfDB) are already rolling out valuable projects that are changing the

reality on the ground in vital areas of the African economy.

Perhaps the most significant event of recent times is the signing by

African leaders of the African Continental Free Trade Area agreement

(AfCFTA) which will bring together all 55 member states of the African

Union and cover a market of more than 1.2-billion people. African

Business 2020 has articles on all of these recent trends, plus overviews

of the key economic sectors and regional and country profiles. In 2019

Ethiopian Prime Minister Abiy Ahmed received the Nobel Peace Prize

for peace-making efforts in his region. The economic dividends of

peace are beginning to be felt. In 2020 South African President Cyril

Ramaphosa assumed the mantle of AU Chairperson. He brings to the

role considerable experience in conflict management, constitutionwriting

and seeking consensus.

Global Africa Network is a proudly African company which

has been producing region-specific business and investment

guides since 2004, including South African Business and Nigerian

Business, in addition to its online investment promotion platform

www.globalafricanetwork.com

Chris Whales

Publisher, Global Africa Network Media • Email: chris@gan.co.za

DISTRIBUTION

African Business is distributed internationally on trade missions,

through trade and investment agencies in Africa; to foreign

offices in Africa; at top national and international events;

through the offices of African foreign representatives; as

well as nationally and regionally via chambers of commerce,

tourism offices, airport lounges, government departments,

and companies.

COPYRIGHT | AFRICA BUSINESS is an independent

publication published by Global Africa Network Media (Pty)

Ltd. Full copyright to the publication vests with Global Africa

Network Media (Pty) Ltd. No part of the publication may be

reproduced in any form without the written permission of

Global Africa Network Media (Pty) Ltd.

PHOTO CREDITS | Alliance for a Green Revolution in Africa

(AGRA), Ethiopian Investment Commission, iStock by Getty

Images, Marriott Hotels.

PUBLISHED BY

Global Africa Network Media (Pty) Ltd

Company Registration No: 2004/004982/07

Directors: Clive During, Chris Whales

Physical address: 28 Main Road, Rondebosch 7700

Postal address: PO Box 292, Newlands 7701

Tel: +27 21 657 6200 | Fax: +27 21 674 6943

Email: info@gan.co.za | Website: www.gan.co.za

ISBN 978-0-620-86689-7

DISCLAIMER | While the publisher, Global Africa Network Media (Pty)

Ltd, has used all reasonable efforts to ensure that the information

contained in African Business is accurate and up-to-date, the publishers

make no representations as to the accuracy, quality, timeliness, or

completeness of the information. Global Africa Network will not accept

responsibility for any loss or damage suffered as a result of the use of or

any reliance placed on such information.

AFRICAN BUSINESS 2020

10


YOUR BUSINESS

IS GLOBAL.

YOUR BANK

SHOULD BE TOO.

Businesses take considerable risks to enter or expand into new markets.

This is why we take considerable care to provide the right solutions.

However far from home that next big opportunity might be, it’s our

meticulous work in 15 countries across Africa today that’s enabling our

clients to transact with confidence wherever they strive to succeed.

Euromoney Awards for Excellence 2019 Best Transaction Bank in Africa

Euromoney Cash Management Survey 2019 Market Leader and Best for Service in Africa

Global Finance 2019 Best Corporate/Institutional Digital Bank in Africa

TMI Awards 2019 Best Bank in Africa and the Middle East for Financial Supply Chain Management

11 citi.com/progress

AFRICAN BUSINESS 2020

© 2020 Citigroup Inc. Citi and Citi with Arc Design are registered service marks of Citigroup Inc.


AFRICA OVERVIEW

Africa’s big chance

Large infrastructure projects and an increase in intra-African trade could

be the platforms to launch the continent into a new era of prosperity.

John Young

In the first decade of the 21st century when commodity prices

were booming, it was common to read about “Africa rising”. But

increases in gross domestic product (GDP) and increased profits for

oil and minerals producers did not bring much change for the vast

majority of Africa’s citizens, nor did they deliver any major structural

changes or useful infrastructure.

Africa remains remarkably resource-rich and its growing

population presents opportunities to build markets on a vast scale.

Meaningful initiatives at regional and continental level suggest that

Africa is now better prepared to set itself on a path to development

and prosperity.

The African Union (AU), development agencies and banks

are pursuing policies and programmes designed to tackle the

continent’s great problems, chief among them poverty, energy

supply and infrastructure.

Despite the poor performance of the oil and mineral giants

(Nigeria, Angola and South Africa), Sub-Saharan Africa is experiencing

good growth rates. By 2021 five economies will exceed $100-billion

GDP (Angola, Ethiopia, Kenya,

Nigeria and South Africa) with a

further four topping $50-billion

(Democratic Republic of

Congo, Ghana, Ivory Coast and

Tanzania). Cameroon follows

closely behind (IMF).

Africa’s growth rate in 2017

was 3.7%. Ethiopia’s GDP grew

7% for five years to 2018. Four of

the fastest-growing economies

in the world in 2019 were

Ethiopia, Ghana, Ivory Coast and

Rwanda (World Bank).

Scoring well on the World

Bank’s “Doing Business” list is so

important that some countries

are reported to have set up

AFRICAN BUSINESS 2020

12


AFRICA OVERVIEW

“war rooms” to tackle each

category and so improve their

ranking. In the 12 months to

1 May 2019, 73 reforms to make

doing business easier were

recorded in Sub-Saharan Africa.

Reforms included measures

related to getting electricity

and construction permits and

paying taxes.

Bad politics has often held

Africa back and there are still

areas on the continent where

conflict or selfish elites block

progress. There are insistent

demands for change in

Algeria and South Sudan,

Somalia, Cameroon, Burkino

Faso and other countries are experiencing armed conflicts.

However, the new Prime Minister of Ethiopia, Abiy Ahmed, was

awarded the Nobel Peace Prize in 2019 for his efforts in his region and

the newest chairperson of the AU, Cyril Ramaphosa of South Africa,

is a good symbol of a clean broom, following as he did a discredited

leader who is widely believed to have allowed extensive looting

of the state. Two years earlier, two Southern African leaders who

collectively were in power for 75 years were ousted: Angola’s Jose

Eduardo dos Santos and Zimbabwe’s Robert Mugabe.

Challenges to opportunities

The size of Africa’s population (currently estimated at 1.2-billion)

represents both opportunity and challenge. The continent by

2030 will increase the number of children in primary school from

189-million to 251-million and by 2050 Africa will record 42% of all

global births (UNICEF).

The upside of this is that huge markets for goods will be created

13 AFRICAN BUSINESS 2020


AFRICA OVERVIEW

but housing, education and healthcare will have to expand. As things

stand, about 120-million Africans are unemployed and about 40% of

the population live below the poverty line ($1.25 daily).

Urbanisation is already happening at a fast pace: this is again an

opportunity and a challenge. The fact that Africa is arriving somewhat

later in the digital age could be an advantage because there are

opportunities to leapfrog technologies. This is happening in mobile

banking, where mobile telephones are delivering financial services

across the continent.

The AfricArena conference is one of several platforms where

African startups and innovators display their wares. Held since 2017

in Cape Town, the conference has helped to cement ties between

French tech companies and South African entrepreneurs. At the 2018

conference, 70 startups from 32 countries pitched to more than 600

conference attendees. A speaker noted that the continent has 442 tech

hubs and thousands of digital entrepreneurs but there is a need for

more Venture Capital (VC) funds. Jake Bright told the conference that

there are 51 Africa-focused VC funds globally, 22 of which are locally

run (Bizcommunity).

Another scramble

In March 2019, The Economist’s cover story was “The new scramble

for Africa. And how Africans could win it.” After laying out the extent

to which the familiar giants (US, EU and China) are investing in and

finding partners in Africa, the newspaper noted that other nations

such as Turkey, India and Russia are also showing interest. A McKinsey

report is quoted stating that 10 000 Chinese companies now operate

in Africa. In six years to 2016, 320 new embassies opened in Africa and

Turkish Airlines now flies to 50 African destinations (The Economist).

The argument that Africans can win the “scramble” is based on

individual African nations avoiding bilateral agreements with much

more powerful foreign partners. The preferential trade agreement

with the US, AGOA, is about to

come to an end and the Trump

administration does not like

multilateral deals. China often

offers soft loans or grants to

sweeten deals to poor countries.

As The Economist editorial says

of this power imbalance, “It

could be reduced somewhat

with a free-trade area or if

African regional blocs clubbed

together. After all, the benefits

of infrastructure projects spill

across borders.”

As it happens, Africa

has introduced a free trade

agreement. In 2018 the African

Continental Free Trade Area

(AfCFTA) agreement was signed

by 49 countries, making it one

of the most comprehensive

and potentially influential

agreements ever signed on the

continent. Since then, all but

one country has signed the

agreement.

Although no-one expects

that the agreement will

immediately lead to borderless

trade with no tariffs, there is

great symbolic importance in

the signing. Problems remain

with the movement of people

and certificates of origin among

other things, and the more

likely trend will be for regional

economic communities (RECs)

and large countries within RECs

to accelerate steps towards

integration. Large infrastructure

projects such as rail and energy

corridors that traverse the

continent could be gamechangers.

Regional corridors are

intended to boost intra-African

trade. The North-South Corridor

in the Southern African region

AFRICAN BUSINESS 2020

14


AFRICA OVERVIEW

runs through 26 countries and ends at the Port of

Durban. Ten corridors are being developed across the

continent to make the movement of goods easier

and to improve access to ports.

Standard Bank has launched a product to assist

African importers in evaluating and choosing

Chinese suppliers. Faced with daunting variety,

language and cultural differences, the prospect

of having to pay cash upfront to unseen suppliers

or limiting supply choices to a small group of

previously used suppliers, African importers can

use the Africa China Export Proposition (ACEP) to

validate quality while having sight of the logistics

process. Standard Bank is using its partnership

with shareholder the Industrial and Commercial

Bank of China (ICBC) to create the ACEP, which puts

importers in touch with agents and is underpinned

by a letter of credit. Standard Bank is Africa’s biggest

bank and ICBC is the world’s biggest bank.

Another country showing increased interest

in Africa is Japan. To understand the scale of the

potential investment from Japan, it is worth noting

that there are currently about 13 000 Japanese

firms invested in China. In 2017 there were 800

Japanese companies in Africa, but the number

is growing. In that year Japan imported African

goods to the value of $8.3-billion. Foreign direct

investment increased to $10-billion in 2016, from

$3.9-billion in 2007.

The Tokyo International Conference on African

Development (TICAD) is held annually. Various

bodies are promoting ties with Africa, such as the

Japan External Trade Organization (JETO) and the

Japan Oil, Gas and Metals National Corporation

(JOGMEC), which focusses on resources. The Japan

International Cooperation Agency (JICA) supports

infrastructure projects such as a $140-million bridge

over the Nile River in Uganda.

Setting worthy goals

The African Union’s Agenda 2063 lays out

ambitious goals for the continent. The flagship

projects designed to achieve these goals cover

infrastructure, education, freedom of trade and

movement of people, arts, culture and technology.

The projects are:

• Integrated high-speed train network

• Formulation of an African commodities strategy

• Establishment of the African continental free

trade area (AfCFTA)

• The African passport and free movement

of people

• Silencing the guns by 2020

• Implementation of the Grand Inga Dam

(hydropower) Project

• Establishment of a single African air-transport

market (SAATM)

• Establishment of an annual African

economic forum

• Establishment of African financial

institutions

• The pan-African e-network

• Africa outer space strategy

• Cyber security

• An African virtual and e-university

• Great African museum

• Encyclopaedia Africana.

The African Development Bank Group

comprises the African Development Bank (AfDB),

the African Development Fund (ADF) and the

Nigeria Trust Fund (NTF). The AfDB is a key funder

of infrastructure projects and has set itself a set of

goals known as the High Five: light up and power

Africa; feed Africa; industrialise Africa; integrate

Africa; and improve the quality of life for the

people of Africa.

The bank’s “African Economic Outlook 2019”

highlights energy and infrastructure as key areas for

investment. If Africa is to prosper, infrastructure has

to be improved and built. An agreement between

China and the African Union Commission as part of

Agenda 2063 aims to link all of Africa’s capital cities

by air, rail and road. On the energy front, one of the

bank’s projects, the Desert to Power Initiative in the

Sahel region, will bring power to 250-million people

who were previously unconnected.

Another key conclusion of the AEO 2019

is that Africa should increase agricultural

production in order to establish or increase

manufacturing capacity. This would in turn lead

to industrialisation.

To quote the report, “To avoid the informality

trap and chronic unemployment, Africa needs

to industrialise and add value to its abundant

agricultural, mineral and other natural resources. ■

15 AFRICAN BUSINESS 2020


SPECIAL FEATURE

Engines of growth

Giant cities and development corridors are vehicles for tackling

Africa’s infrastructure gap.

By John Young

An investment in 2007 in an acre of land

in Juja, a small town 30km north of

Nairobi, would have earned a savvy

speculator a return of 1 428% in 2019.

That’s according to The Economist, which also cites

an estate agency’s report that Nairobi’s land prices

have risen sixfold in 24 of the city’s 32 suburbs and

satellite towns in just over a decade.

About 40% of Africans live in cities but that

figure is climbing fast. By 2030, the continent will

have six megacities. Accra, Cairo, Kinshasa, Lagos,

Nairobi (pictured) and Johannesburg are currently

big conurbations, but they are expected to grow

even further. By 2050 there will be an additional

900-million Africans living in cities, according

to the African Urban Dynamics report of the Mo

Ibrahim Foundation.

One of the drivers of urbanisation is migration.

The top five destinations for African citizens

moving within Africa are South Africa, Ivory Coast,

Uganda, Nigeria and Ethiopia. The United Nations

Conference on Trade and Development (UNCTAD)

reports that migrants quite often make significant

contributions to the host country’s gross domestic

product (GDP). Migrants in Ivory Coast, for

example, contribute 19% to that country’s GDP.

Rapid urbanisation presents challenges in

terms of providing the necessary infrastructure,

but it also represents an opportunity for the

private sector. Rapidly expanding markets offer

private companies the chance to sell their goods

and services and to build infrastructure, possibly in

conjunction with state entities.

Electrification, accommodation, transport,

water and sanitation and telephony are just

some of the types of infrastructure that cities

need. Difficult and expensive as the provision

of services is, large groupings of people can

also be a blessing in that large-scale projects

can be rolled out reaching tens of thousands of

citizens. Urbanisation also creates ready markets

for retail enterprises and a potential workforce for

manufacturing and industry.

The thrust of The Economist’s March 2019

AFRICAN BUSINESS 2020

16


SPECIAL FEATURE

article (“Destroying the city to save it”) was that

poor planning and corruption are threats to

Africa’s hopes of making its cities more liveable

and efficient. Using Nairobi as its example, the

newspaper cited a shortage of skilled urban

planners, weak government investment and

unclear zoning laws as other barriers to success. A

Nairobi city regeneration taskforce was established

in 2017 and government plans to build 200 000

low-cost houses.

Whatever the obstacles, Africa has to find a way

to deal with urbanisation. Several countries, Egypt

and Senegal among them, are conceptualising

brand-new cities where a fresh start can be made

with good planning and sustainability as a part of

the process.

The African Development Bank’s latest

estimates put Africa’s infrastructure needs at

between $130–170-billion per year, with a

financing gap in the range $68–$108-billion. The

gap can’t be closed quickly but the bank (AfDB)

makes the point that not being able to fully fund

everything does not mean that a start should not

be made. The bank has devoted 60% of its funding

to infrastructure projects since 2009. In the five

years to 2018, the AfDB allocated $6-billion to

energy projects: more than 640-million Africans

have no access to energy.

Africa’s best chance of delivering infrastructure

is through cities and development corridors.

Cities allow for projects to be done on a big scale

and development corridors can be tackled on a

project-by-project basis with clear deliverables

and timelines. Another fast-tracking device for

infrastructure delivery is the Special Economic

Zone (SEZ), a dedicated parcel of land which

attracts investors with special incentives and

bespoke facilities.

Infrastructure

The World Economic Forum calculates that for

every dollar spent on infrastructure, an additional

5% to 10% in economic growth is added.

In 2016, commitments to Africa’s infrastructure

were made totalling $62.5-billion. This was the

lowest figure in five years, mainly because of a

reduction in Chinese commitments. The sector

which attracts the most funding is transport. The

figure for transport has fallen somewhat in recent

years, after peaking in 2014. In 2015, transport

spending was $32.4-billion; in 2016 it was

$24.5-billion.

The number one source of infrastructure

funding in Africa is national governments. In 2016,

governments committed $26-billion. About half

the funding for infrastructure in Africa comes from

bilateral and multilateral institutions such as AfDB

and the World Bank Group. Private investors raise

about 4% of the funding devoted to infrastructure

on the continent.

Sectoral share of investment

Transport: 39%

Energy: 32%

Water and sanitation: 17%

ICT: 3%

(Source: AfDB)

With East Africa consistently showing good growth

rates, it is no surprise to learn that infrastructure

construction is expected to experience good

growth in that region. GlobalData reports that

the figure for infrastructure spend in 2017 was

$25.9-billion in Ethiopia, Kenya and Tanzania. The

analytics company believes this will likely to climb

as high as $98.8-billion in 2022.

The formation of the Sustainable Development

Investment Partnership (SDIP) in 2015 has helped

to focus funding on infrastructure. The World

Economic Forum (WEF) and the Organisation for

Economic Co-operation and Development (OECD)

initiated the idea and a further 28 institutions

have joined, including the Senegal Strategic

Investment Fund (FONSIS), the Development Bank

of South Africa (DBSA), US Agency for International

Development (USAID), the Bill and Melinda Gates

17 AFRICAN BUSINESS 2020


SPECIAL FEATURE

Foundation and the Industrial Development

Corporation of South Africa (IDC). At the WEF

hosted by Rwanda in 2016 a commitment was

made to ensure that 16 infrastructure projects

valued at more $20-billion would be implemented.

As further proof that there is an appetite

for investment in Africa, the Emerging Africa

Infrastructure Fund (EAIF) announced that it had

raised $385-million in a fundraiser in 2018. The

EAIF, which is part of the Private Infrastructure

Development Group (PIDG), is investing over a

five-year term in what are called “fragile” states.

To date, EAIF has invested nearly $1.3-billion

which was pivotal in attracting more than

$10.9-billion of private capital investment to

over 70 projects in 22 Sub-Saharan countries.

Allianz Investment Management and Investec

Asset Management are investors in EAIF. Others

include Standard Chartered Bank, the African

Development Bank, FMO (a Dutch development

finance institution) and KFW, the German

development bank. AfDB is providing a total of

$75-million over 10 years, Standard Chartered Bank

is extending its existing lending to $50-million.

Separate articles on energy, transport and

logistics and ICT appear elsewhere in this journal.

Cities

Cement manufacturer PPC is gearing up for

the exponential growth of African cities. The

company’s roots are in South Africa, but it

has invested, and is investing, in Zimbabwe,

the Democratic Republic of the Congo,

Rwanda, Botswana and Ethiopia. Its Rwandan

investment has turned that country into a net

exporter of cement.

PPC’s projections are that producers of

cement will need to provide 1 000kg per person in

Africa for the next 35 years to keep pace with the

coming building boom. The current average in

Africa is 175kg per person against a world average

of 500kg. Given that the production of cement

is a big source of greenhouse gases, the planet

will have to hope that African cement producers’

efforts to reduce carbon emissions are successful.

An ambitious Egyptian project aims to create

a new city east of Cairo, a response to projections

that the capital city’s population will rise to

50-million on its current trajectory. Intended

to cover a land area of around 700km², the first

phase caters for government departments, the

parliament and housing.

The development company is majorityowned

by the state through the military and the

China State Contracting Engineering Corporation

(CSCEC) has a number of contracts within

the development. CSCEC was also involved

in the construction of the African Union (AU)

headquarters in Addis Ababa and the Great

Mosque of Algiers. In 2019 a cathedral and a large

mosque were dedicated in what is being called

the “New Administrative Capital”.

The 390m Nile Tower will be Africa’s tallest

building. Work on the huge building commenced

in 2019 and it will provide 35 000m² of hotel

accommodation and 60 000m² for residential

accommodation.

Other future cities include efforts by Lagos to

reclaim land and build a new urban centre, Eko

Atlantic City, and a Senegalese initiative to reduce

pressure on Dakar with the creation of Diamniadio

Lake City. The latter project, set to be completed

in 2035, makes provision for a university, an

industrial park, entertainment venues and state

ministry buildings. The proposed city is close to

Blaise Diagne International Airport.

Several planning initiatives are tackling urban

issues in the African context. One of them is

“Future Cities Africa”, a joint initiative of Cities

Alliance and UK’s Department for International

Development. The aim is to assist cities to balance

environmental risk and manage demographic

change while at the same time achieving

inclusive economic growth. Arup, an engineering

and design company, has conducted studies on

nine cities in four African countries as part of this

project. The study is called “Future Proofing City”.

One of the biggest issues facing cities is

financing. Kampala has introduced property

taxes as a new source of revenue, but as a

representative of the Royal Institution of

Chartered Surveyors told Summit Africa 2018,

“To keep pace with urbanisation, cities can’t rely

solely on user or property charges to retrofit and

expand themselves.”

AFRICAN BUSINESS 2020

18


SPECIAL FEATURE

Corridors

Africa has several transport corridors and is planning

many more. The African Union’s Agenda 2063 calls

for all African capitals to be linked by road, rail and

air. The African Union Commission and China have

signed an agreement related to this goal.

The AU’s Programme for Infrastructure

Development in Africa (PIDA) was adopted

as a strategic programme in 2012 but it has

become much more active as “corridor thinking”

has started to focus on hard issues such the

standardisation of railway gauges, border control

protocols and port efficiency.

To get an idea how important these

initiatives are, it is estimated that African port

charges are 40% more expensive than the

global norm and that more than 70% of delays

in cargo delivery arise from wasted time spent

in ports (AfDB).

Transport prices dropped 70% under

the Northern Corridor Transit and Transport

Agreement in the five years to 2015 because

logistics infrastructure was improved. In the same

period, the Central Corridor (Dar es Salaam to

Kampala) recorded 80% price rises.

This is a selection of some of the corridor

developments PIDA is working on:

• Beira-Nacala Multimodal Transport Corridor:

a modern railway system to be implemented

between the ports of Nacala and/or Beira and

the coal-exporting region of Moatize

in Mozambique

• Central Multimodal Transport Corridor:

upgrading and modernisation of roads between

Tanzania, Uganda, Rwanda, Burundi and the

Democratic Republic of Congo

• Djibouti-Addis Transport Corridor: upgrading

of 710km of railway and six smart corridor

modules between Ethiopia and Djibouti

• North-South Multimodal Transport Corridor:

a smart corridor system for road and rail on the

multi-modal African Regional Transport

Infrastructure Network in Southern Africa

• Southern Africa Hub Port and Rail Programme:

a master plan for regional port capacity in the

Southern African Development Community. ■

A true pan-African bank

Citi continues to invest in its technology,

people and partnerships in order to

consolidate its growth and development

in the region. Underpinning all this

momentum is its unrivalled global

network and client-centric strategy to

both product development and customer

service. Citi gives companies that are

looking to grow into, and out of, Africa

access to the world’s largest transaction

banking network while navigating the

local nuances that come with doing

business on the continent. Its focus is on

being simpler, safer and stronger so that

they can be the best for their clients in

the long-term.

Citi is a true pan-African bank with over

60 years of experience on the continent

across 15 presence markets covering

Southern, East, Central, West and North

Africa, in addition to a further 22 nonpresence

markets. Citi serves as a core

transactional banker to over 4,000 top tier

corporate/multi-national clients in the

region which accounts for over 80% of

the Fortune 500 companies.

Citi currently provides transactional

banking services to over 40 Non-

Governmental Organisations (NGO)

across Africa to support day-to-day

financing of critical projects in the

region. Citi is committed to lend, invest

and facilitate $100-billion over 10 years

(2014-2024) toward activities that reduce

the impacts of climate change and create

environmental solutions that benefit

communities on the continent.

19 AFRICAN BUSINESS 2020


SPECIAL FEATURE

Towards free trade

A continent-wide free trade agreement promises

to unlock enormous value.

By John Young

The African Continental Free Trade Area

(AfCFTA) will come into effect in July 2020.

A single market of 1.3-billion people is

expected to grow to 2.5-billion by 2050.

The AfCFTA aims to accelerate the growth of

intra-African trade and to use trade as an engine of

growth and sustainable development, which will

strengthen Africa’s voice in global trade negotiations.

The AfCFTA head office will be in Ghana.

Currently, trade between African nations

is between 15% and 18% of total trade, as

against 69% in Europe and 59% in Asia (United

Nations Conference on Trade and Development

(UNCTAD) and Brookings Institution). Tariffs on

90% of all goods are to be removed. The Boston

Consulting Group notes that exports between

African countries grew from $41-billion in 2007

to $65-billion by 2030 but this figure will rise

exponentially if AfCFTA is implemented.

One prediction is that intra-regional

trade could increase by 52.3% by 2022 (UN

Economic Commission on Africa). The African

Union (AU) believes trade will increase by 60%.

Just four countries currently account for 41.7%

of intra-African trade, South Africa, Namibia,

Nigeria and Zambia, according to the Export Credit

Insurance Corporation of South Africa (ECIC). The

ECIC has invested in the African Export Import

Bank in an effort to boost intra-continental trade

to $250-billion in 2021. The South Africa-Africa

Trade and Investment Promotion Programme has

the same goal.

The passing of the African Growth and

Opportunity Act (AGOA) in 2000 was a boon for

39 Sub-Saharan African countries because 6 500

products could be sold duty-free in the United

States of America. The bill will expire in 2025 so it’s

timely that Africa’s leaders are looking to stimulate

growth in new ways. In the current political

climate, it is unlikely that AGOA will be renewed.

President Trump has declared himself strongly

opposed to multi-lateral agreements. The AU will

lobby for a continent-wide agreement, but the US

is likely to seek bilateral deals.

AFRICAN BUSINESS 2020

20


SPECIAL FEATURE

Trading with the world

The United States is no longer number one when

it comes to trading with Sub-Saharan Africa.

China is first (about $150-billion in 2018), then the

European Union (EU) with the US in third place

($41.2-billion).

The Overseas Private Investment Corporation

(OPIC), the US government’s development finance

institution, has committed tens of millions of

dollars to development projects in Africa, including

the Connect Africa initiative.

The European Union Commission pledged

to support the AfCTA with a €40-billion package

that would attract investment and create jobs.

The Africa-European Alliance for Jobs and Growth

programme is intended to run from 2021 to 2027.

China’s multinational Belt and Road initiative

includes a $1-billion African infrastructure fund

and in 2018 aid to the value of $60-billion was

delivered to the continent. The total value of

Chinese investments and construction in Africa

amounts to close to nearly $2-trillion since

2005 (American Enterprise Institute). McKinsey

believes there are 10 000 Chinese businesses

active in Africa.

All of this illustrates the importance of Africa

to the world’s leading trading nations: it would

suggest that a “race for Africa” is underway.

History and RECs

The roots of the AfCFTA can be traced back to

the 1980 Lagos Plan of Action and a plan in 1991

to launch the African Economic Community.

Neither of these were implemented but the goal

remained alive.

The Southern African Development

Community (SADC) was established in 1992 and

the SADC Free Trade Area (FTA) came into being in

2008. The FTA covers 13 of the region’s 15 countries

(Angola and the DRC have not signed) but only

five countries are members of the Southern

African Customs Union (SACU), Botswana, Eswatini,

Lesotho, Namibia and South Africa. The SACU was

formed in 1910.

Some of Africa’s Regional Economic

Communities (RECs) have gone some way to

achieving integration. Larger countries within an

individual REC have tended to become a centre

for trading, using the relationships they have

with fellow members. Kamal Nasrollah, Partner

and Head of the law firm Baker McKenzie in

Casablanca, has studied this phenomenon and

believes that the AfCFTA could use the example

of these RECs. He cites Ivory Coast, Kenya,

Senegal and South Africa and gives some detail

on the Moroccan experience.

Writes Nasrollah, “Morocco is also an active

trade hub within the Union du Maghreb Arab

(UMA) trade agreement as well as the various

trade agreements it has entered into with the

US, the EU and the Francophone Africa free-trade

zone (UEMOA).”

Challenges

Although the AfCFTA has been signed, a range

of complicated and detailed negotiations lie

ahead. Topics include tariffs, service sector

concessions and the exact outlines of rules of

origin in each jurisdiction.

Visa restrictions for business travellers and

financial systems that are not compatible are other

potential hurdles.

In 2016 the Common Electronic Biometric

African Passport was launched, and the AU

produced a protocol on free movement of

persons. Egypt, Nigeria and South Africa are

among the countries that have not signed the

protocol. The UN Economic Commission for

Africa (UNECA) found that progress has been

slow with respect to mobility (African Regional

Integration Index).

African visitors need a visa when visiting

more than half of the nations on the continent

and only Ghana and the Seychelles make visas

available on arrival. According to The Economist,

“it’s easier for Americans to travel around Africa

than it is for Africans themselves” and the AU

passport has so far only been used for heads of

state and AU officials.

Concerns about security and the perception

that “people from other African countries are

21 AFRICAN BUSINESS 2020


SPECIAL FEATURE

taking our jobs” will have

to be addressed at national

and local levels. South Africa

has experienced outbreaks

of xenophobia. Migration

patterns will likely change

if movement around the

continent becomes easier.

A lot of work needs to be

done to synchronise financial

governance policies and to put

better technology in place so

that payments can take place

across jurisdictions. Debt and

deficit policies must chime.

The African Development

Bank is supporting regional

financial integration with

programmes focussed on

banking and financial standards

and the African Peer Review

Mechanism. Regional payment

systems are being developed in

each of COMESA, EAC, ECCAS,

and ECOWAS. Other projects

of the bank are the Africa

Financial Markets Initiative,

Making Finance Work for Africa

and the Association of African

Central Banks.

Possibly the biggest hurdle

to seamless trading is poor

infrastructure but a great many

projects are underway in every

corner of the continent.

Among the initiatives of the

Programme for Infrastructure

Development in Africa (PIDA)

is the West Africa Hub Port and

Rail Programme, a regional

hub-port, rail-linkage and

port-expansion plan. Kenya’s

$68-million Naivasha Dry Port

project supports this plan.

The Southern African

Development Community (SADC)

has been active with multimodal

projects such as the development

corridors of Nacala, Maputo and Lobito (Zambia to Angola).

The Trans-Maghreb Highway in North Africa, the North-South

Multimodal Corridor and the Central Corridor project are among

other ambitious projects intended to provide inter-regional

connectivity.

Who will benefit?

A recent research paper suggests that manufacturing will be one of

the sectors to gain the most from the AfCFTA. According to “AfCFTA’s

US$3-trillion Opportunity: Weighing Existing Barriers against Potential

Economic Gains,” the dropping of tariffs between African countries

will allow for the replacement of imported manufactured products,

industrial machinery and transport equipment, which currently make

up over 50% of Africa’s import basket.

The report, based on research done by international law firm

Baker McKenzie and Oxford Economics, contrasts Africa’s export of

raw material with this need to import manufactured goods. As a

percentage of GDP, manufacturing averages 10% in Africa but the

AfCFTA provides a chance for this to grow as markets open up.

Improved infrastructure will further spur trade, and drive demand for

more manufactured goods.

Countries which currently have strong manufacturing bases will

benefit the most from the deal. Countries with less manufacturing

like Algeria and Sudan will presumably move to diversify their

economies and start building manufacturing capacity.

Another sector likely to benefit from the deal will be the

services sector.

Countries with good infrastructure stand to benefit as efficient

ports, airports and railway systems will be better equipped to deal

with increased volumes of trade. ■

AFRICAN BUSINESS 2020

22


10 REASONS

WHY YOU SHOULD INVEST IN SOUTH AFRICA

01.

HOT EMERGING

MARKET

Growing middle class, affluent consumer

base, excellent returns on investment.

02.

MOST DIVERSIFIED

ECONOMY IN AFRICA

South Africa (SA) has the most industrialised economy in Africa.

It is the region’s principal manufacturing hub and a leading

services destination.

LARGEST PRESENCE OF MULTINATIONALS

ON THE AFRICAN CONTINENT

SA is the location of choice of multinationals in Africa.

03.

Global corporates reap the benefits of doing business in

SA, which has a supportive and growing ecosystem as a

hub for innovation, technology and fintech.

05.

FAVOURABLE ACCESS TO

GLOBAL MARKETS

ADVANCED FINANCIAL SERVICES

& BANKING SECTOR

SA has a sophisticated banking sector with a major

footprint in Africa. It is the continent’s financial hub,

with the JSE being Africa’s largest stock exchange by

market capitalisation.

The African Continental Free Trade Area will boost

intra-African trade and create a market of over one

billion people and a combined gross domestic product

(GDP) of USD2.2-trillion that will unlock industrial

development. SA has several trade agreements in

place as an export platform into global markets.

07.

04.

06.

08.

PROGRESSIVE

CONSTITUTION

& INDEPENDENT

JUDICIARY

SA has a progressive Constitution and an independent judiciary. The

country has a mature and accessible legal system, providing certainty

and respect for the rule of law. It is ranked number one in Africa for the

protection of investments and minority investors.

ABUNDANT NATURAL

RESOURCES

SA is endowed with an abundance of natural resources. It is the leading producer

of platinum-group metals (PGMs) globally. Numerous listed mining companies

operate in SA, which also has world-renowned underground mining expertise.

WORLD-CLASS

INFRASTRUCTURE

AND LOGISTICS

A massive governmental investment programme in infrastructure development

has been under way for several years. SA has the largest air, ports and logistics

networks in Africa, and is ranked number one in Africa in the World Bank’s

Logistics Performance Index.

YOUNG, EAGER LABOUR FORCE

10.

SA has a number of world-class universities and colleges

09.

producing a skilled, talented and capable workforce. It

EXCELLENT QUALITY

boasts a diversified skills set, emerging talent, a large pool

OF LIFE

of prospective workers and government support for training

SA offers a favourable cost of living, with a diversified cultural, cuisine and

and skills development.

sports offering all year round and a world-renowned hospitality sector.

23 AFRICAN BUSINESS 2020

Page | 2


AFRICA IS READY

FOR BUSINESS

…ECIC TAKES

EXPORT TRADE TO

ANOTHER LEVEL

The Export Credit Insurance Corporation

of South Africa (ECIC) is paving the way for

South Africa (SA) to champion export driven

industrialisation in Africa, while becoming a

strong proponent of Intra Africa Trade.

Since its inception in 2001, the ECIC

has grown in leaps and bounds from just

a capital of R1.6bn to a balance sheet

of R26bn. It is now the core agency in

promoting the country’s export trade and is

the key insurer on behalf of government for

capital goods and services.

ECIC GIVES TWO

TYPES OF COVERAGE.

1. Political Risk Insurance (PRI)

protects the goods and services

or project or plant against arbitrary

political annexation of that plant.

These are such occurrences as

nationalisation, expropriation

etc. In the same vein, it provides

protection against arbitrary adverse

tax that may be implemented post

implementation of the project,

as well as foreign currency

inconvertibility.

2. Commercial risk insurance.

This may entail Protection of the

SA exporter against commercial

insolvency of the buyer,

AFRICAN BUSINESS 2020

24


ECIC CEO Kutoane Kutoane says the

ECIC is geared to lead to export driven

industrialisation in SA, something that

is bound to impact positively on job

creation and a healthy economy. “Since

we are primarily a government agency

that means our policies have to align

with the intents and programmes of the

National Development Plan (NDP). Some

of these would be growing the economy

and increasing employment and poverty

alleviation.

“We consider ourselves to be on the

cutting edge of SA’s development

agenda by way of actively promoting and

facilitation SA’s export trade.” He says

exports will earn foreign exchange and

increase the country’s reserves, eventually

stimulating the economic growth trajectory

of the country.

25 AFRICAN BUSINESS 2020


In the quest to achieve this, the ECIC is able to

measure its impact.

The ECIC is committed to sustainable business

through innovative solutions, operational and

service excellence, business development and

strategic partnerships. In enabling frontier markets

to optimise production, the ECIC is effectively

motivating a positive socio-economic impact.

OUR

MISSION

Our mission is to provide export credit and investment

insurance solutions in support of South African capital

goods and services by applying best practice risk

management principles.

AFRICAN BUSINESS 2020

26


ECIC AD

Since 2001 we have continued to provide commercial and political risk insurance for cross-border transactions, offering risk mitigation solutions

to South African exporters of capital goods and investors . We have partnered with credible financial institutions and believe through partnerships

economic growth can be achieved. As Export Credit Insurance Corporation of South Africa (ECIC) we are committed to supporting our South African

businesses who export and invest in capital projects beyond our borders.

If youʼre planning on exporting to or investing in capital projects beyond our borders, contact ECIC for assistance

+27 12 471 3800 | info@ecic.co.za | www.ecic.co.za

ECIC is a registered financial service provider with the FSCA No. 30656

In partnership with

27 AFRICAN BUSINESS 2020


SPECIAL FEATURE

Success comes in many guises

Ethiopia and Mauritius show there is no single formula for putting a country

on the road to progress.

Both Ethiopia and Mauritius are members of the African Union

(AU) and the Common Market for Eastern and Southern Africa

(COMESA). Apart from these links, its difficult to see much similarity

between the landlocked Ethiopia which stretches over

more than a million square kilometres and the small island nation

of Mauritius.

What they have in common is that they have found a way to

improve their economies. To do that, both nations’ politics needed to

be less fractious. Mauritius has achieved that. Ethiopia shows signs that

it is on the way to stability.

The other common denominator is textile manufacturing,

although the two countries approached the opportunity from

opposite ends. Mauritius chose to focus on the high-end market

and has developed the skills and quality-control protocols needed to

supply that niche. Ethiopia is building a sector which can handle huge

volumes. A Bangladeshi garment manufacturer has set up a factory in

Ethiopia which supplies H&M and a Sri Lankan company, Hela Clothing,

has produced and shipped its one-millionth garment from its factory

in Ethiopia. This is part of a drive

by Ethiopia to increase its annual

export earnings in clothing from

$145-million to $30-billion (CNN).

In terms of a financial market

index published by Absa in

2019, the two countries are at

opposite ends of the scale. The

survey concluded that Mauritius

ranked second in Africa (behind

South Africa) in a set of indicators

including market depth, access

to foreign exchange and

transparency. Ethiopia placed

20th but – crucially and typically

in the current environment –

Ethiopia was sure to improve

its position in 2020 because

AFRICAN BUSINESS 2020

28


SPECIAL FEATURE

it is about to establish a stock

exchange.

Reforms in Ethiopia are just

beginning, Mauritius has been

a work in progress for several

decades.

Ethiopia

The Nobel Peace Prize winner

for 2019 was Ethiopian Prime

Minister Abiy Ahmed. He

won the award primarily for

unblocking a post-war stalemate

between his country and Eritrea

and calming other regional

conflicts, but he has also made

big changes domestically since

taking office in 2018.

In the words of the Director

of the Institute for Pan-African

Thought and Conversation

Adekeye Adebajo, Ahmed has

been a “reformist new broom

unleashing political freedoms,

encouraging foreign investment

and promoting reconciliation”.

The peace dividend has

allowed the construction of

a vital rail link to Djibouti and

encouraged a number of new

investors to visit Ethiopia, mostly

notably from Turkey. Chinese

companies have long been

present in the country, with the

previous rulers of Ethiopia having

been close to China.

Ethiopian Airways has used

the country’s strategic location

between Asia and Europe to

build Addis Ababa’s position as

a freight and passenger hub.

So successful has it been that

in 2018 it replaced Dubai as the

top transit hub for long-haul

passengers to Africa.

The country’s population

of about 94-million is young

(about 50% are younger than 15 and 70% are younger than 30)

and the state is focussed on education. Science and technology are

emphasised and the number of Ethiopians in higher education in

2017 was five times what it was in 2005 (World Bank).

Spending on public infrastructure has focussed on transport,

energy and industrial parks. The percentage of public spending is

due to come down, but it will be replaced by the private sector as

a vigorous privatisation process begins. Manufacturing currently

accounts for 10% of GDP so there is huge scope for growth. Other

state-owned assets which will become available to private investors

are in the following sectors: maritime, aviation, electricity, logistics and

railways. Exports in renewable energy are expected to generate up to

$1-billion annually.

Mauritius

Although Mauritius ranked second to South Africa in the Absa Financial

Market Index, in almost every other index the island country is ranked

number one in Africa.

For “Doing Business in Africa: Sub Saharan Africa 2018”, the World

Bank places Mauritius 25th in the world, and first in Africa. The Heritage

Foundation’s 2019 “Index of Economic Freedom” has exactly the same

result. This trend is repeated across a range of measures; a global

competitive index rates the country 45th and 1st, the WEF’s enabling

trade report gives scores of 39th and 1st.

Where the country’s GDP per capita was around $400 at

independence in 1968, it’s now above $10 000. Between 1977 and

2008, the country’s growth rate performed well above the Sub-Saharan

average of 2.9% at 4.6%.

As a colony Mauritius was a sugar-based monoculture. Sugar

accounted for 20% of GDP and 60% of exports. Today sugar cane is still

in the export basket but there are also textiles, clothing, processed fish

and cut flowers. Services exports such as financial services and tourism

are rising, and medical tourism and higher education are seen as a

high-value sectors worth investing in.

The African Development Bank (AfDB) expects growth of more

than 5% in several sectors including information and communications

technology, retail and wholesale, food processing and financial services.

In 2016 the Kenyan economy received $50-million of investment from

Mauritius-based banks and financial institutions (AfDB).

Mauritian post-independence politics was not always stable, but a

parliamentary system and strong institutions have helped the country

move forward. Property rights and an independent judiciary are factors

that promote foreign investment. Shrewd investment in an Export

Processing Zone helped to turn the economy away from a single

commodity. Personal and corporate tax rates are a flat 15% and in 2018

property transfers were simplified and other reforms were introduced

to encourage entrepreneurs. ■

29 AFRICAN BUSINESS 2020


KEY SECTORS

Agriculture 32

Mining 36

Oil and gas 44

Energy 46

Manufacturing 52

Transport and logistics 56

Aviation 58

Tourism 60

Information and communication technology 64

Banking and financial services 66

REGIONS

East Africa 68

North Africa 70

Central Africa 72

West Africa 74

Southern Africa 76

COUNTRY PROFILES

Kenya 69

Morocco

Democratic Republic of the Congo

71

73

Nigeria 75

Botswana 77

South Africa 78

Mozambique 80

AFRICAN BUSINESS 2020

30

Lekki-Ikoyi Bridge, Lagos, Nigeria. (Effi/iStock).


31 AFRICAN BUSINESS 2020


OVERVIEW

Agriculture

Huge challenges present massive opportunities.

Sector Insight

AGCO has new African

headquarters.

Ivory Coast imports more rice from China than any other country.

One-fifth of the world’s imported rice goes to West Africa. With

Africa’s population expected to double to two-billion by 2030,

these are perhaps not such surprising facts. But there was a time

when many African countries were net exporters of food and the

amount of land available for agriculture on the continent suggests

that Africa should be able to feed itself.

A quarter of Sub-Saharan Africa’s population is undernourished

and yet agriculture is often the biggest contributor to GDP. In Guinea-

Bissau the sector accounts for over 90% of exports, nearly 85% of

employment and just over 45% of GDP.

Agriculture is the second-largest contributor to the continent’s

GDP, after mining and quarrying. South Africa, Egypt and Kenya have

thriving agricultural exports, but most farming on the continent is

on a subsistence basis. Roughly 6% (or 13-million hectares) of land is

irrigated which means that the vast majority of farming relies on rain,

a risky undertaking. In countries

such as the DRC and Tanzania,

only a small fraction of arable

land is farmed.

Access to appropriate

storage, good transport and

reliable power supplies are all

constraints on African farming.

High input costs for fertiliser,

pesticide and seeds are

additional problems. Access to

good seeds has been sporadic.

The Food and Agriculture

Organisation (FAO) of the United

Nations has warned that if things

don’t change, Africa will in 2050

be able to feed only 13% of its

population.

The scale of the problem

actually holds the seeds of

the solution. While demand is

driven by a rising population

and a more demanding

middle-class, this is creating a

market for agri-business which

is expected to reach $1-trillion

by 2030. This makes agriculture

an investable sector.

There is enough arable land

in Africa for the problems to be

solved, and for Africa to become

a net exporter. Although 20% of

Tanzania is suitable for farming,

only 5% is currently cultivated.

The World Bank calculates that

Africa could farm on 202-million

hectares of arable land.

Access to new technology

AFRICAN BUSINESS 2020

32


OVERVIEW

also gives hope that progress

can be quick. Smart phones,

drones, hydroponics, improved

genetics and precision farming

equipment could be part of

renewal strategies.

Industrialisation

If Africa can scale up and make

agricultural production more

efficient, the ramifications for

the broader economy will be

profound.

Ethiopia cut poverty by 33%

in just over decade, driven largely

by annual agricultural growth

of close to 10% (World Bank).

The African Development Bank

(AfDB) has flagged increased

agricultural production as one of

the keys to improved economic

growth in countries which don’t

have minerals. The 2019 African

Economic Overview highlights

the growth of Senegal, Rwanda

and Ivory Coast and points

out that increased agricultural

production, if it is accompanied

by an expansion of the value

chain and development of

processing facilities, can lead to

the creation of manufacturing

enterprises and ultimately play

a role in industrialisation.

Countries that currently

rely too heavily on fossil fuels

are looking to diversify into

agriculture. Nigeria is increasing

the contribution that agriculture

makes to GDP. By contrast,

Kenya’s recent oil discoveries are

a welcome break for a country

very reliant on a small basket of

exports, tea and flowers chief

among them. About two-thirds

of employment is in agriculture.

Plans and policies

There are many people and organisations looking for agricultural

solutions in Africa and investors are among them.

In 2018 American agricultural company AGCO opened an African

headquarters in Johannesburg. With global sales of $8.3-billion, the

company already has an African parts warehouse, the AGCO Future

Farm and Training Centre in Zambia and an Algerian joint venture to

produce tractors.

OLAM is a Singapore-based company that is increasing its African

footprint, concentrating on developing capacity all along the value

chain of selected foods.

One of many non-governmental organisations working on

practical solutions is the Alliance for a Green Revolution in Africa

(AGRA). Started by the Rockefeller Foundation and the Bill & Melinda

Gates Foundation, AGRA’s goal is to improve food security for

30-million farming households in 11 African countries by 2021.

AGRA, whose field officers are shown in the picture, promotes

better seeds, new crop varieties, fosters small business and works to

improve soil health.

In Kenya AGRA has highlighted the plight of potato farmers who

have been short-changed by bad packaging. The crop is grown

by about 800 000 smallholder farmers and contributes more than

$500-million to the national economy.

The AfDB has a unit called the Agribusiness Development

Division and funds the Technologies for African Agricultural

Transformation (TAAT), which aims to radically transform the sector

through technology. TAAT works on soil fertility management, water

management and training. It also advocates for supportive seed

technology policies.

Investment into agri-processing is promoted via Special Agri-

Processing Zones (SAPZs). Ethiopia, Guinea and Togo have such

zones which the AfDB, together with other investment banks

such as the European Investment Bank and Korea-Exim Bank, has

helped establish.

The African Union (AU) has set up the Comprehensive African

Agricultural Development Programme. The CAADP Compact has

been signed by 44 countries to allocate 10% of their national budgets

to agriculture and 39 countries have formulated national agriculture

and food security investment plans. ■

Online Resources

Alliance for a Green Revolution in Africa: www.agra.org

Food and Agricultural Organisation UN: www.fao.org

Comprehensive African Agricultural Development Programme:

www.nepad.org/caadp

International Food Policy Research Institute: www.ifpri.org

Technologies for African Agricultural Transformation: www.taat-africa.org

33 AFRICAN BUSINESS 2020


PROFILE

Africa Biomass Company

Offering wood-chipping solutions across the continent of Africa.

Our mission

To provide a worldwide service and infrastructure

that is sustainable and above par, taking into account

the unique requirements of each client, without

deviating from our policy of innovative service and

Company

high ethical standards.

Slogan

Our values

Human dignity; Integrity; Quality; Pro-trademark

resolution; Innovation; Transparency; Individualism

Since 2004, Africa Biomass Company has

been at the forefront of the development

of biomass processing such as wood chips,

biofuels and more in Southern Africa.

Under the mentorship of Johan du

Preez, the co-owner of Môreson Grondverskuivers,

known for service excellence in the agricultural

industry since 1924, we established ourselves as

market leaders of recycling agricultural wood

waste over the past 10 years.

Africa Biomass Company offers a viable, costeffective

solution for our customers to recycle this

unwanted woody biomass into usable forms.

Towards the end of 2008, the need and demand

for the chipping of orchards increased to such an

extent that the strategy of hand-fed chippers was

switched to that of horizontal grinders, fed by a

mechanical loader.

In collaboration with Môreson Grondverskuivers,

we now offer a full range of services.

Our vision

Africa Biomass Company is your caring family,

founded in faith, trading as world leaders in the

recycling industry.

Africa Biomass Company services and

products

Contracting

• Orchard

• Windbreak recycling

• River rehabilitation

• Recycling of waste wood

• Tree (orchard) replanting (Eastern Cape)

• Mulch spreading

• Land clearing and land preparation (Môreson)

• Woodchip mulch and biomass sales

• Bandit agency (Southern Africa)

• Dezzi equipment (Western Cape)

• Workshop and field services

• Part sales

• Manufacturing

• Accredited Operator Training Facility

Orchard and windbreak recycling

With the use of excavators with specialised

attachments and three-wheel loggers, old orchards

can be removed from root to top and fed into a

horizontal grinder.

Processing of waste wood into a viable

product, that if applied correctly, could have a

AFRICAN BUSINESS 2020

34


30% increase in water conservation as well as

many other advantages.

Land clearing services

Africa Biomass Company is an expert at land clearing.

We have an extensive range of highly specialised

wood recycling machinery that will do the job

quickly and efficiently.

• Tree shears which cut and stack trees of up to

550mm in diameter

• Loggers to handle the timber rapidly and

effectively.

• Well-trained teams of chainsaw operators.

Mulch and biofuel sales

Woodchip according to specification, collected

in mass trailers or in bags and transported to end

user, where it can be used as woochip mulch

or biofuel.

Massive water savings

In 2017 Africa Biomass Company was involved in

many projects such as the removal of invasive

eucalyptus trees in the Breede River and Berg

River systems.

The removal and recycling of these alien trees,

old or unwanted orchards, vineyards or windbreaks

can be used as mulch which are spread in new and

old orchards and vineyards. This has led to a massive

water saving equal to the water usage of 50 000

households for one year.

CONTACT INFO

Physical address: 2 – 4 Joubert Street, Worcester

6850, Western Cape, South Africa

Postal address: PO Box 1322, Worcester 6849

Tel: +27 23 342 1212 • Fax: 086 515 5777

Website: www.abc.co.za

Willem van der Merwe, CEO:

willem@abc.co.za

Workshop and field services

With an intimate understanding of the operational

challenges of wood recycling in South Africa, we

established state-of-the-art facilities to service, repair

and rebuild wood chipping equipment of any make

and size.

An equally remarkable team of field service

technicians delivers repairs, maintenance and spares

to your site to optimise uptime and efficiency.

Parts

We have been widely commended as the company

in South Africa stocking the largest range of industryrelated

spare parts.

Optimal production and uptime require quality

components when needed. Understanding the

industry through experience sets us apart from

other suppliers.

Delivering quality components on time is essential

for running a successful operation. Our more than

2 500 line items is made up of quality components

sourced worldwide to meet requirements of our

customers and our own fleet.

Manufacturing

Our legacy of innovation has been built on more

than 80 000 hours of operational experience. This

enabled us to develop and adapt machines for waste

wood recycling in South Africa which truly adds

value to the customer’s operation.

A wide range of wood chipping, grinding

and spreading equipment is manufactured

locally to specification, as required for South

African conditions.

Calie Rabie, Western Cape Production:

072 602 4543

Fanie Fourie, Eastern Cape Production:

073 402 0655

Riaan Carstens, Bandit Agency:

079 874 8624

Quintis Wiid, Parts and Workshop:

066 475 7039

35 AFRICAN BUSINESS 2020


OVERVIEW

Mining

The global economy is demanding new minerals, and Africa has them.

Sector Insight

Africa’s first lithium-ion

factory has been launched.

Africa features prominently on most lists of global mineral

resources. One Botswana diamond mine produces about

quarter of the world’s annual diamond supply by value

and the continent has recently moved close to 75% of

global production of diamonds. Mining and quarrying is the largest

contributor to GDP in Africa.

The richness of Africa’s mineral resource is extraordinary. In

several categories, Africa is either the global leader or it has the

second-biggest reserve. These include cobalt, phosphate rocks,

bauxite, industrial diamonds, platinum-group metals (PGMs),

zirconium and vermiculite.

Iron ore, copper, nickel, zinc, uranium, manganese, vanadium,

ilmenite and gold, the continent’s biggest resource, are also found in

large quantities.

The mining sector is responsible for 90% of the exports of the

Democratic Republic of Congo (DRC) and the figure is about 80% for

countries such as Botswana (which has gold, nickel, copper and soda

ash in addition to its rich diamond resource), Guinea (gold, diamonds,

alumina and bauxite), Senegal (phosphate and diamonds) and Sierra

Leone (diamonds).

Ghana exported gold to the

value of $8.3-billion in 2017,

which was just less than half

of the total value of exports,

including crude petroleum.

South Africa’s top three exports

(out of a total of $108-billion)

were gold ($16.9-billion),

diamonds ($9.8-billion) and

platinum ($9-billion) (OEC).

Foreign interest in African

mining is intense. Chinese

companies are active in every

part of the continent, including

Ghana, in support of bauxite

exploration and Zambia, as a

partner in copper companies.

More than 150 Australian

companies operate in Africa

and Japan is active through

the Japan Oil, Gas and Metals

National Corporation (JOGMEC)

and several other companies

such as Toyota Tshusho Corp,

which is a minority partner in a

Moroccan tin project.

The merger of Randgold

and Barrack in 2018 created

a gold mining company with

a market capitalisation of

$19.4-billion. The new company

is likely to increase its activity in

West Africa where Gold Fields

Ltd, Newmont Mining Company

and AngloGold Ashanti have

operations.

Reliance on a single

mineral creates an exposure

AFRICAN BUSINESS 2020

36


OVERVIEW

to price fluctuations that

can trigger recessions.

Other problems include

political instability (although

the outlook has improved

recently), poor logistics,

unreliable power supply and

unpredictable regulatory

regimes. This can include

demands that local companies

be included in transactions

and variable tax and royalty

conditions. The African

Development Bank (AfDB)

reports that mining royalties

as applied in 2016 in Africa’s 21

gold-mining countries, ranged

from 2% to 12%.

The Economic Community

of West African States (ECOWAS)

stated in 2000 that it intended

to align countries’ tax and

customs regimes and to create

mining codes that did not differ

sharply from one another. The

code was not implemented but

there is an increasing awareness

of the importance of regional

(and continental) consistency

on this score.

Another aspect that needs

the attention for African mining

to reach its full potential is

geodata. There are very few

places that have good systems in

place to assist exploration efforts

with reliable and detailed data.

Minerals for the new age

New finds of “old” minerals

are happening across Africa:

gold miners are very bullish in

West Africa and Vedanta Zinc

International is developing

a huge mine in South Africa,

but the big story is in minerals

relevant to the new economy.

The announcement by the AfDB that it was “getting out of

coal” in 2019 was a clear signal that the move away from fossil

fuels is gathering speed. The bank has created a $500-million

green baseload scheme to assist African countries to transition

from coal-fired power plants to renewable sources. The bank

expects the fund to yield up to $5-billion in investments.

The most important minerals in the age of computers

and electric vehicles are cobalt, platinum, lithium, graphite,

vanadium and manganese. Africa is a global leader in these

minerals too. The DRC has more than 60% of the world’s

cobalt resource.

The critical metals in new battery production are lithium,

graphite, cobalt and nickel. A research body estimates that

the global lithium-ion battery market could be worth as

much as $77-billion by 2024 (Transparency Market Research).

Beyond the DRC, countries such as Madagascar, Morocco,

Mozambique, Namibia, Zambia and Zimbabwe stand to

benefit from this boom.

The Global Battery Alliance claims that lithium-ion batteries

can significantly reduce emissions in the power and transport

sectors. At the 2019 Batteries and Electric Vehicle Conference,

the MegaMillion Energy Company launched Africa’s first

lithium-ion factory. The company will operate out of the Coega

Industrial Development Zone in Port Elizabeth, South Africa.

Also in South Africa, Thakadu Battery Materials is building

a plant to beneficiate impure nickel to produce high-purity

battery-grade nickel sulphate for the lithium-ion battery market.

Copper and copper alloys are also important for electric

vehicles, smartphones and computers. The Central African

Copperbelt (encompassing parts of the DRC and Zambia)

increased mined volumes to 2.2-million tons in 2018, more than

twice the 800 000 tons mined in 2008.

Platinum’s role in the creation of hydrogen makes it a vital

component for the fuel cell industry. South Africa, which

produces more platinum than all the other countries in the

world combined, is investing in research into new uses of

platinum. Zimbabwe also produces platinum. ■

Online Resources

Africa Mining Vision: www.africaminingvision.org

Ecowas Federation of Chambers of Mines: www.efedcom.org

Global Battery Alliance: www.weforum.org

International Association for Engineering Geology and the Environment:

www.iaeg.info

Investing in African Mining Indaba: www.miningindaba.com

Mining Industries Association of Southern Africa: www.miasa.org.za

37 AFRICAN BUSINESS 2020


FOCUS

Palabora Mining Company

A tale of a Chinese-owned mine that sparkles with hope.

Palabora Copper (PC), also known as Palabora Mining

Company (PMC), celebrates 64 years of operation this year

(2020) – making it one of the oldest mining operations in

South Africa. Since its incorporation in 1956, PC has been

South Africa’s sole producer of refined copper, although the mine

has other by-products such as magnetite, vermiculite, sulphuric

acid, anode slimes and nickel sulphate. Despite its age, the mine

still promises a prosperous future.

Rio Tinto owned PMC, a PC mother-company, until 2013. When

Rio Tinto left, PC was protected from potential jeopardy by the South

African Industrial Development Corporation (IDC) and in the majority,

the Chinese Consortium, which is made up of HBIS, Tewoo, General

Nice and the China-Africa Development Fund, which got involved

through Smart Union Resources South Africa. This resulted in the

Chinese Consortium owning 74% and the South African government

owning 26%, jointly through the Industrial Development Corporation,

the Black Empowerment Consortium and PMC employees and local

communities. The new owners continue to maintain the mine’s

compliance with South Africa’s regulatory requirements.

When the Chinese Consortium acquired PC in 2013, PC was facing

two ostensible scenarios: (a) culmination of the life of mine, and (b)

no overhauling of the smelter,

which was outdated and facing

shutdown. Occurrence of the

first scenario would have resulted

in the loss of employment for

more than 3 700 employees

(direct and indirect) while the

second scenario would have

lead to the loss of employment

of more than 700 employees

off-stream (smelter). Soon after

the sale transaction, the new

owners fostered partnerships

between PC, Chinese and other

international and South African

companies in various areas such

as economic development, trade,

skills and technology transfers to

achieve ground-breaking and

substantive results in extending

the life of mine, refurbishing the

AFRICAN BUSINESS 2020

38


smelter and building a floatation

plant. The investment entails

the development of a new

underground block cave mining

area known as Lift II together

with supporting underground

infrastructure and a large-scale

new ventilation shaft.

At the time of the acquisition,

PC was already a wellestablished

underground mine,

having transitioned from an

open-pit operation in 2002.

The mine has maintained an

average production (as per

its design capacity) of around 45 000 tons per annum (tpa) of

copper rod (beneficiated from 0.55% copper). The entirety of this

production is generated from the Lift I block cave mine situated

around 400m below the open pit. After conducting the necessary

studies, it was determined that the establishment of a new block

cave mine – Lift II – would be feasible in extending PC’s life of

mine to around 2033.

PC employs an average of 3 700 employees (Lift I and II)

and seeks to remain industry competitive through its favorable

conditions of employment and socio-economic development

initiatives. The fact that the company regards this as important

is reflected by the manner in which the safety and health

of employees is observed, and in the investment made into

socio-economic development initiatives in the Ba-Phalaborwa

Municipal area.

Lift I – Palabora Copper’s mine that sustains its sparkle

Senior Manager for Ore Extraction

and Processing, Expect Ntsepe.

PC acknowledges that for it

to continue being efficient,

profitable and at the forefront

of employment practices in the

local mining industry, it needs solid leaders supported by unyielding

and competent teams to safely extract and process its minerals.

In the copper stream, in the Lift 1 block cave mine, an experienced

strategist and collaborative technical miner who is an inspirational

rock in his own right leads the team. This strategist is Expect Simlindile

Ntsepe, a Senior Manager for Ore Extraction and Processing. Expect

leads a great team and pushes it to safely extract copper from PC’s

underground resource for the benefit of downstream performance,

ultimately ensuring that copper is available for sale to PC customers.

Expect is also PC’s 3.1(A) Appointee, meaning, he is a qualified and

competent custodian of PC’s employees’ health and safety in terms of

the South African law (Mine Health Safety Act, 29 of 1996).

A tested Mining Engineer with a BTech in Mining Engineering

and a Higher National Diploma in Metalliferous Mining, both from

the former Technikon Witwatersrand, Expect rose through the ranks

in the mining industry over more than 17 years. He held a number

of technical, supervisory and managerial positions before becoming

a Senior Manager for the Mining and Concentrator Division and PC

Executive Committee (EXCO) member. His experience embraces

practical mining operations, planning and designing of underground

39 AFRICAN BUSINESS 2020


FOCUS

infrastructure, process analysis, optimisation,

improvement, strategic development and

implementation, leadership and management,

and budget projection and management. Expect

was PC’s Manager for Mining Operations for more

than five years before earning his current position.

Expect brings many attributes to the PC copper

bench, including Blasting and Mine Overseer

Certificates as well as Mine Managers Certificate of

Competency (MMCC).

A relentless cooperative technical strategist,

Expect is a national Council member of the

Association of Mine Managers of South Africa

(AMMSA) and the chairperson of PC AMMSA

branch. In addition to his mining and leadership

attributes, Expect is a sharp communicator who

appreciates engaging stakeholders to ensure

reaching amicable consensus. He constantly

engages the Department of Mineral Resources

(DMR) on issues related to mining to ensure

alignment and compliance. In 2017, Expect and

his Mining team won two awards from MineSAFE

for Best Safety Performance in Class and Best

Safety Performance in Copper Recovery.

Expect’s lengthy experience, coupled with

his suitable qualifications, is an assurance that

PC will continue to be at the forefront of mining

copper and meeting specifications and needs of

its copper customers.

AFRICAN BUSINESS 2020

40


Lift II – Palabora Copper Mine’s shared and sustainable future

Shaft Sinking Project Manager,

Thabo Mokoena.

Lift II refers to the construction

project of new declines

underground which will

connect the old mine (Lift I) and

the new (Lift II). The project

began in 2013. This is similar

to constructing a new mine

and so requires installing

new infrastructure such as

crushers, conveyor belt and

ventilation shaft which is

pictured on the next page. The

new mine (Lift II) is situated

400m below the old mine

(Lift I) and is being constructed

by a consortium of international

and local contractors including

the Australian Downer Group

(Integrated Services Company)

and the South African

Mvusuludzo Projects which is a 100% black-owned and Level 1

B-BBEE emerging mine contracting and development company.

The shaft-sinking company, Murray & Roberts Cementation (SA),

is responsible for sinking the ventilation shaft for Lift II project. The

ventilation shaft-sinking project commenced in February 2019 and

is expected to be completed in mid-2022. The initial phases of the

project involved drilling and reviewing of holes to determine the

best location to sink the shaft. The new ventilation shaft will be much

larger at 8.5m finished diameter, and will extend 1 200m in depth.

To ensure safety, Murray & Roberts Cementation (SA) deploys

a sinking method, which entails using a four-deck sinking stage

(for main shaft sinking comprising the top, electrical, working and

observation decks). This gives personnel the ability to conduct

various tasks simultaneously without compromising anyone’s safety

at the bottom of the shaft. A shaft-sinking charging unit comprising

emulsion tanks and pumps has been designed to facilitate shaft

blasts safely and accurately with the maximum distance allowed for

the stage above bottom not exceeding 70m.

To achieve success and fulfilment in virtually all the endeavours

of the shaft-sinking project, the Shaft Sinking Project Manager, Thabo

Daniel Mokoena, is an allrounder who understands that definite

actions stem from positive thoughts, collaboration, passion, skills and

continuous learning to stimulate power and purpose for one, the

team and Palabora Copper. A skilful Mining Engineer with a BTech

and a National Diploma in Mining Engineering from University of

Johannesburg and Technikon Witwatersrand, coupled with more

than 18 years’ experience in mining and shaft-sinking project

management, Thabo personifies the idea that learning comes

through accumulated studying and skilfulness through experience.

Thabo, something of a mining and leadership scholar, has also

acquired Mine Managers, Mine Overseers and Blasting Certificates

from the Department of Mineral Resources as well as qualifications

in Senior Management Development from the University of

Stellenbosch and an Advanced Project Management Certificate from

the University of Cape Town.

Thabo started his career as a Process Controller at Anglo Platinum

Precious Metals Refinery and ascended through the ranks to Mining

Engineering Trainee, Miner, Senior Shifts Supervisor, Study Mine

41 AFRICAN BUSINESS 2020


FOCUS

Overseer, Mining Engineer, Superintendent, Project

Manager in numerous mines including various

operations of Anglo Platinum, Murray & Roberts

and Palabora Copper. He joined Palabora Copper

as a Superintendent for Underground Mining and

ascended to the position of a Project Manager for Lift

II project, until he moved to his current position of

a Project Manager for Lift II Shaft Sinking Project in

January 2019.

Thabo has fulfilled the expectation of the most

effective miner of beneficial engagement, when he

became the Chairperson and EXCO member of the

Limpopo Region’s Mine Health and Safety Tripartite

Forum in 2019, a position he will hold until the next

election. Thabo’s obligation in the same Forum

started in 2015 as the Deputy Chairperson, a position

he held until 2018. Thabo is also a member of South

African Institute of Mining and Metallurgy (SAIMM)

and Associate member of Association of Mine

Managers South Africa (AMMSA).

PMC Vermiculite Business – a story of sustainability, resilience and agility

Senior Manager for Vermiculite and

EXCO member, John Makgatho.

Palabora Copper (PC) is known

for its copper, but the mine has

also been mining vermiculite

in a separate open pit since

the early 1900s. The Vermiculite

deposit is located within the Palabora Igneous Complex adjacent

to the Kruger National Park, and one of the largest phosphate

rock producers, the Foskor Mine. The crude vermiculite mineral

is a magnesium, aluminium and iron silicate in a flaky form with a

yellowish-to-brown colour. Vermiculite has a remarkable ability to

expand significantly when heated at high temperatures (above 850

degrees Celsius). Vermiculite is clean, non-toxic, non-combustible and

insoluble in water or organic solvents and is an excellent insulator

for thermal and auditory applications. It is used in the horticulture,

agriculture, fertiliser, manufacturing and construction industries as a

friction lining. PMC continues to be one of the largest producers of

vermiculite in the world.

PMC sells its vermiculite concentrate to local and international

markets. Local markets access the products directly from the mine

and international buyers from PMC subsidiaries located in Singapore,

the United Kingdom and the United States of America. In 2011, the

PMC Verimiculite Business was reconfigured to align the production

with market needs and stabilise the supply to various global markets.

Post 2011, the current Senior Manager for Vermiculite and PMC EXCO

member, John Makgatho, headed the turnaround strategy to ensure

that the Vermiculite Business continues to be sustainable, resilient and

agile amid market challenges and changes.

“Crucial to the success of PMC Vermiculite Business are our

AFRICAN BUSINESS 2020

42


subsidiaries, PMC Vermiculite

team and the broad PMC team

as well as the leadership of

PMC. Our vermiculite mine has

been in existence for more than

65 years and continues to be

amongst the largest producers

of vermiculite in the world.

We intend to capitalise on this

experience of more than 65

years to continue operating into

the future,” says John.

The SAMI SHE Awards,

formerly known as MineSAFE,

have recognised the PMC

Vermiculite Mine as “Best-in-

Class” in the quarry business in

South Africa for two consecutive

years since 2018. The 2019 award

included an input on “the most

improved safety performance”

and the Vermiculite Business

scooped the award on 25

October 2019 at Emperors

Palace in Gauteng for the period

2018/19.

The vermiculite team

collaborates with the PMC

Asset Management Division

to coordinate the PMC Energy

Management Programme.

Because of energy-saving

programmes by the Vermiculite

Business, Productivity South

Africa nominated PMC as a

finalist for its Energy Saving

Management Programme

and termed it one of the best

sustainable projects in the

mining industry in South Africa.

43 AFRICAN BUSINESS 2020


OVERVIEW

Oil and gas

Huge new gas finds could be transformative.

Sector Insight

Kenya is the world’s newest

oil exporter.

By 2030, Mozambique could be the world’s third-biggest

producer of liquified natural gas (LNG). The year 2030 is also

the year in which natural gas is predicted to supplant coal as

the number two fuel globally.

According to PwC Africa’s Africa oil & gas review 2019 (from which

these predictions are taken), new oil and gas discoveries, improved

prices and investor interest have collectively led to a range of

positive developments in the sector: investment in infrastructure,

better regulation and governance, the development of relevant

skills and the deployment of advanced technology.

The potential is vast for both oil and gas. The number of African

countries where successful exploration has taken place continues

to rise. It now stands at 28, with new reserves unearthed in Ghana,

Niger, Mozambique, Uganda, Kenya, Senegal, Mauritania, South

Africa and Tanzania. New finds in the oil and gas sector have

significant downstream repercussions, fertiliser plants and refineries

become viable for example.

Africa’s proven reserves of oil were calculated in 2018 to be

125.3-billion bbl, which is about

7% of global reserves and the

continent exported 7.1-million

bbl/d which is about 10% of

world activity.

Africa has 209.6tcf of

proven gas reserves (2018).

Almost all of the continent’s

gas is produced by three

North African countries

(Algeria, Egypt and Libya) and

Nigeria and Angola. But that is

set to change.

Africa’s refineries produce

2.1-million barrels of oil

per day but the continent

consumes 4 mbpd.

At least 30 countries have

national oil companies (NOC)

which aim to regulate and

control the hydrocarbon

sector. Foreign countries and

companies often try to partner

with these entities. The oil

majors such as Shell, BP and

Total have long been investors

in the continent but since

2000, China’s interaction with

Africa has increased.

Sinopec, formerly the China

Petrochemical Corporation, is

the biggest such company in

the world and is one of several

Chinese entities involved in

more than 20 African countries.

Japanese company Mitsui

& Co has invested heavily

in coal and gas projects

AFRICAN BUSINESS 2020

44


OVERVIEW

in Mozambique. These

investments are supported by

the Japan Oil, Gas and Metals

National Corporation (JOGMEC).

Gas

Massive finds off the coast of

Mozambique will potentially

change the economic trajectory

of that country. Senegal and

South Africa are among a

number of other countries to

have reported new discoveries.

As the CEO of the South

African Oil and Gas Alliance

(SAOGA), Niall Kramer, told the

inaugural Mozvest conference

in 2019, “It’s happy hour for

gas globally – maybe until

2023.” The conference brought

together business figures

from all over Africa to explore

business relationships between

South Africa and Mozambique.

Kramer argued that a

multinational collaboration can

drive industrialisation, create

jobs and improve economic

growth. He pointed to the large

scale of some investments

in Mozambique (“ENI in

Mozambique has reached FDI

for $7-8-million on Coral FLNG,”

he noted) and suggested that

South Africa should transform

into a gas-driven economy.

From the Mozambiquan

perspective, Lourenço Sambo,

Director General of APIEX

Moçambique, noted that megaprojects

require extensive

systems of complementary

infrastructure and that the

success of one industry spurs

the growth of another. The

country’s development corridors

are designed to connect areas of trade and industry while tax

incentives are playing a big role in attracting FDI.

Standard Bank estimates that about $128-billion needs to be

spent on converting Mozambique’s resources into LNG and Domgas

in the period 2017-2025. The Rovuma Basin is the site of three large

LNG projects. Complementary industries and service companies

will have be set up around these sites and the size of some of these

plants will mean that new towns will be created with populations

needing schools, shops and services.

Algeria has three transcontinental export gas pipelines, two to

Spain and one to Italy. However, there are very few trans-border

pipelines elsewhere in Africa.

A natural gas pipeline is being constructed between Tanzania

and Uganda which will bring in about $25-billion in foreign

investment to 2025.

Oil

In 2017 African countries accounted for 13% of global crude oil trade.

Nigeria is the continental giant and earned $43.6-billion in petroleum

exports in 2018. Other oil exporters are Algeria, Angola, Egypt,

Cameroon, Equatorial Guinea, Gabon and Chad. Chad’s oil exports

were responsible for 89% of that country’s export earnings in 2018.

Angola, once a giant in the field, has experienced steep declines

in production volumes and the country’s offshore oil fields are

nearing the end of their lives. The country has few other major

industries although it is now looking to expand the natural gas

sector. The decline in revenues has resulted in the country having to

accept an IMF loan.

Altogether there are now 21 African nations that have petroleum

among their most important commodity exports.

Senegal has found oil offshore and intends ramping up

production. In September 2019, Kenya joined the group of oilexporting

countries when it sent crude oil to the value of $12-million

to China. Kenya’s oil reserves are estimated at 750-million barrels.

Uganda has significant reserves.

At least 14 countries were either planning to build new

refineries in 2018, or upgrade existing facilities, according to Africa

oil & gas review. ■

Online Resources

Egypt General Petroleum Corporation: www.egpc.com

International Association of Oil & Gas Producers: www.iogp.org

Mozvest: www.mozvest.com

Petroleum Technology Association of Nigeria: www.petan.org

South African Oil & Gas Alliance: www.saoga.org.za

South African Petroleum Industry Association: www.sapia.org.za

45 AFRICAN BUSINESS 2020


OVERVIEW

Energy

Africa’s development depends on a power revolution.

At a World Economic Forum on Africa, former United Nations

Under-Secretary-General Kandeh Kolleh Yumkella,

said, “Without access to affordable, reliable, sustainable

energy, Africa cannot really take advantage of the Fourth

Industrial Revolution.”

The Sierra Leonean was also the chief executive officer of the

Sustainable Energy for All Initiative, which aims for faster action

towards the Sustainable Development Goal which calls for universal

access to sustainable energy by 2030. Yumkella urged African leaders

to do in energy what was successfully done in the mobile telephony

sector – deregulate, privatise and incentivise.

Africa had installed capacity of 96GW in 2015 and 600-million

of its citizens do not have access to electricity. Sub-Saharan Africa’s

Sector Insight

Commodity traders are

looking for opportunities

in power.

electrification rate is 32%

(African Development Bank,

AfDB).

Although all infrastructure

sectors need funding, the energy

sector is where Africa has the most

catching up to do. In response to

AFRICAN BUSINESS 2020

46


OVERVIEW

this imperative, the AfDB will invest

$12-billion in the energy sector in

the period 2016-2021.

Diversification is an

important goal for countries

in the power sector, both to

improve security of supply and

to reduce the carbon footprint.

Many nations are dependent

on hydropower and that cannot

always be relied upon. Finding

the right mix is key.

While South Africa has not

excluded the possibility of

building new nuclear power

stations, no new allocations

have been made in the most

recent Integrated Resource Plan.

Two nuclear reactors in Cape

Town supply 6% of South Africa’s

current grid capacity. Kenya

has decided that the first of

four new nuclear power plants

should begin construction

in 2024 and Nigeria has also

included nuclear in its plans.

Oil-exporting Nigeria has a

Transmission Rehabilitation and

Expansion Programme which

aims to address the fact that its

citizens spent about $14-billion

every year on generators.

South Africa’s enormously

successful Renewable Energy

Power Producer Procurement

Programme (REIPPPP)

encouraged foreign investors

and local companies to bid for

projects and started delivering

power in record time. Between

November 2011 and July 2016,

commitments to the value of

$14-billion had been received

to invest in solar, wind or

hydro projects.

Egypt plans to source 20%

of its electricity from renewables

by 2022 and 42% by 2035 in

terms of its 2035 Integrated Sustainable Energy Strategy. The plan

outlines a system with 2% hydropower, 14% wind and 25% solar,

most of which will be delivered by the private sector.

Special Economic Zones are a favoured means of the delivery

of infrastructure: having a concentration of industry in one place

allows for economies of scale. A new business park in Ghana is to

be powered solely by renewable energy. Siemens will produce a

microgrid at Takoradi.

Gas is proving popular as a source for power plants. Italian

company Ansaldo Energia has more than 16 000MW in various parts

of Africa and offices in six countries. Two peaking-power plants have

been developed in South Africa and projects are underway in the

Republic of Congo and Tunisia.

A gas-fired power plant built by the Temane Energy Consortium

will provide 400MW to Electricidade de Moçambique at Temane. The

TEC, comprising Globeleq and eleQtra, has delivered gas-fired power

projects in Cameroon, Ghana, Ivory Coast and Tanzania.

Regional cooperation is vital for functioning power grids. The

various regional economic communities such as ECOWAS and SADC

are key. A transmission line between the Democratic Republic of

Congo (DRC) and Zambia is one of the projects being pursued by

the Southern African Power Pool.

Renewable energy

In at least six African countries, hydropower is responsible for 90%

of electricity production. Ethiopia is Africa’s biggest producer, at

3 822MW. The controversial Grand Ethiopian Renaissance Dam

project will add a further 6 450MW, making it the largest single

project on the continent, but there are serious disputes about who

has what rights on the Nile River. Other countries almost wholly

dependent on hydropower are the DRC, Namibia, Sudan, Togo and

Zambia. Projects are underway in Angola, Ivory Coast and Sudan.

The much-delayed Grand Inga project could be a game-changer

if it ever comes to fruition. Inga3, a portion of the bigger plan to dam

part of the Congo River, is estimated to cost $13.9-billion and will

greatly assist mines in the Copper Belt. The greater project could

produce as much as 50 000MW.

The Global Wind Energy Council estimates that wind could

supply 18GW to the SADC grid by 2030. That amounts to a third of

the existing power pool in the region. The fact that such estimates

are published is evidence of the ambitions of the promoters of

renewable energy. A giant wind project at Lake Turkana in Kenya will

supply 310MW from 365 turbines on 40 000ha.

Africa has a plentiful supply of every kind of resource that

could conceivably produce power. Japanese company Toshiba

believes there is potential for geothermal power generation. It has

established a plant in Kenya and signed agreements with Ethiopia,

47 AFRICAN BUSINESS 2020


Djibouti, Tanzania and Uganda.

Morocco has passed

legislation allowing private

producers to sell power to clients

directly and a $140-million

loan from the European

Bank for Reconstruction and

Development and the Climate

Investment Funds’ Clean

Technology Fund enabled

ACWA Power Khalladi to build

a wind farm which is now

operational.

Tanzania’s first wind farm is

to be developed by a subsidiary

of Australia’s Windlab Ltd. The

300MW Miombo Hewani Wind

Farm will cost $300-million.

The Desert to Power

Programme, the plan to build

solar projects in the Sahel

region, is backed by Africa50,

the Green Climate Fund (GCF)

and the AfDB.

One of the biggest

challenges faced by the

renewable energy sector is the

lack of skilled technicians. The

International Renewable Energy

Agency reports that only 16 000

people work in the sector in

Sub-Saharan Africa (excluding

South Africa).

Financing

The AfDB’s investment portfolio

of $52-billion will not include

any new coal projects. The

bank has declared that it wants

to help Africa move away

from fossil fuels. The AfDB has

allocated $20-billion to solar

and clean energy plans that will

produce about 10 000MW for

the Sahel’s rapidly increasing

population.

The European Bank

for Reconstruction and Development (EBRD) is also funding

renewable energy. A $202-million loan to the Egyptian Electricity

Transmission Co will be used to integrate 1.3GW of new

renewable energy generation capacity into the national grid.

Entrepreneurs in the renewable energy sector are the target

of the $120-million Energy Entrepreneurs Growth Fund. The Shell

Foundation and FMO, the development bank of the Netherlands,

are behind the initiative.

Private-sector commodities companies are taking an interest

in the energy sector. The Daily Telegraph reports that in November

2019 Trafigura, a $180-billion commodities broker, launched a new

division for trading in power and investing in power generated by

gas and renewable energy. With demand for hydrocarbons likely

to fall in response to environmental demands, gas, wind and solar

power are obvious replacements, and the traders are following

the trend.

Microgrids

Microgrid solutions are becoming more popular in sectors such

as agriculture and mining. Financing for such projects can be

problematic but there is an expectation that development financers

such as the World Bank will provide solutions. Rapidly falling costs

for solar photo-voltaic solutions are making the idea of power

generation in remote areas more feasible.

Technological advances should allow Africa to jump ahead,

connecting in better and cheaper ways than was the norm in

the past. French energy company EDF told Engineering News in

2019 that it intends expanding its operations in Africa, including

in microgrids and renewable-energy projects. The company

cited the need to deploy appropriate technology (wind in South

Africa, biomass in Ivory Coast, for example) and noted that it has a

household off-grid solar kit.

Several mining houses in Africa provide their own power

solutions and are increasingly looking to renewable energy. Siemens

and renewable energy company juwi have jointly developed a

microgrid that is running successfully at an Australian gold mine.

The Ethiopian Electric Utility is utilising AfDB funding to contract

private contractors to develop minigrid systems for rural areas,

including backup generators and battery storage. ■

Online Resources

Alliance for Rural Electrification: www.ruralelec.org

Global Wind Energy Council: www.gwec.net

International Hydropower Association: www.hydropower.org

Programme for Infrastructure Development in Africa: www.au-pida.org

International Renewable Energy Agency: www.irena.org

Sustainable Energy for All Initiative: www.seforall.org

AFRICAN BUSINESS 2020

48


First LNG hub in SA to be established at Coega

Coega SEZ is ready to welcome investors to its shores for gas opportunities

1

2

Dedisa 400kV

ESKOM Substation

342 MW Dedisa

Peaking Power Plant

driven by diesel/gas

6

Zone 13 Gas-To-

Power Power

Plant Site

Inter-modal

transportation linkages,

including good access to

the National Road (N2)

5

Services

Corridor

4

Refinery

Port of

Ngqura

3

FSRU &

LNG Tanker

LNG Terminal &

Gas-To-Power Plant

For investors who wish to take advantage of opportunities in the energy

sector at the Coega SEZ, please contact, Sandisiwe Ncemane on:

E-mail: sandisiwe.ncemane@coega.co.za

Telephone: +27 41 403 0630

Fax: +27 41 403 0401

www.coega.co.za

49 AFRICAN BUSINESS 2020

ISO 9001:2015 ISO 14001:2015 ISO 45001:2018

ISO 20000-1:2011 ISO 27001:2013


PROFILE

Superfecta Trading

Provinding electro-mechanical services into Africa.

Superfecta Trading is an electro-mechanical engineering

company with a national footprint and a record of successful

delivery of projects in all nine provinces. The company was

founded in 2002 and has extensive experience in medium-

and high-voltage products and related services. In 2018, after 16

years of trading as a close corporation with the Registration Number:

2002/024381/23, Superfecta Trading 209 (Pty) Ltd was founded with

its new Registration Number: 2018/231813/07.

Superfecta manufactures high-tension products under the TMA

Dynamics brand and related services. TMA Dynamics products

include transformers, mini-substations and switchgear. Superfecta

also employs a team of mechanical experts. The company prides itself

on the supply, installation and maintenance of mechanical work and

boasts over 14 years of experience in the mechanical field.

Superfecta has strategically partnered with three internationally

recognised companies: Thomas C. Wilson (New York), Schneider Electric

(South Africa) and Jinshanmen Electrical Co. (China). The partnerships

have enhanced our performance and enabled us to be the providers

of the latest technology.

Ownership Status

100% black-owned registered company, with 55% of the shares owned

by women.

Our Vision

To be the leading electro-mechanical specialist in energy solutions

across Southern Africa. Superfecta aspires to excellence, innovation

and transparency; three prominent

features that distinguish us in the

marketplace and uphold our vision.

Our Mission

To enable our clients to ensure

reliable energy supply through costeffective

and quality manufacturing,

supply, installation and maintenance

of infrastructure. Superfecta strives

to deliver the best solutions

which are achieved with strong

partnerships and joint ventures with

local and international entities that

share our values and objectives. We

have a full complement of highly

skilled engineers, technical and

administrative staff. All efforts are

geared towards compliance with

health and safety standards.

Sectors

Superfecta works in a variety of

sectors, including but not limited to:

• mining

• provincial and local government

• utilities

• transport

• oil and gas.

Professional Services

Superfecta is a one-stop shop for

all transformer and transformerrelated

work and we pride ourselves

on delivering a comprehensive and

complete service, including the

supply of transformers for:

• The mining industry

• Dry-type mining

• Distribution transformers

• Power transformers.

All our transformers are SABS and

IEC compliant and operate at

AFRICAN BUSINESS 2020

50


PROFILE

higher efficiencies than any other on the market. Our turnaround

time is less than 60 days, which is a market-beater.

What gives Superfecta a

competitive edge in the industry

is investment in the latest systems

and technologies. The company

invested millions of rands in an

integrated maintenance software

called Archibus. Our maintenance

system goes above and beyond

the management of the maintenance process and asset control by

recognising that these processes are just a small part of a full life cycle.

The intellectual capability of the system enables us to ensure that our

customers are well taken care of by indicating when the following

maintenance schedules should take place. We also provide our clients

with 24/7/365 support.

Transformer oils undergo electrical

stresses while the transformer is

in operation. This, combined with

the contamination caused by the

chemical interactions with windings

and other solid insulations, gradually

render it ineffective. Regular purification is paramount. We periodically

test for electrical and chemical properties to make sure that the oil is

suitable for further use and provide the purification services needed to

extend the life of your transformer oil. This can be done online or offline.

Superfecta has played a significant role in the economic

development of South Africa, not only through employment, but

also through infrastructure development both in rural and urban

areas. We pride ourselves on having installed electricity in over 500

households in rural parts of South Africa. The company has not only

done an outstanding job but raised the bar in successfully electrifying

villages in the geographically challenging landscape of KwaZulu-Natal.

With a professional team of mechanical technologists, Superfecta

prides itself on the supply, installation and maintenance of mechanical

work. Our services include, but are not limited to:

• Supply and installation of heat exchangers tubes, boiler tubes,

steam pipes and primary air heater

• Supply and replacement of pipe works (ash, sluice lines, etc)

CONTACT INFO

Physical address: 23 Catalunya Raceway Industrial Park,

Gosforth Park, Germiston, Johannesburg 1419

Telephone: +27 11 869 3607

Fax: +27 11 825 0086

Email: info@superfectatrading.co.za

Website: www.superfectatrading.co.za

• Replacement and new

installation of steel pipe works

• Supply and installation of

pumps

• Supply and hire of tube-testing

machine, tube cleaners, vacuum

leak dictator, tube cutters,

expanding machine

• Mechanical engineering (pipe

fitting and rigging)

• Steel pipe jacking and fitting,

supply and install concrete jacks,

jacks under roads and gas lines.

All industrial concerns require

a complex system of electrical

networks to function efficiently

and successfully. Superfecta both

installs and conducts repairs to

high-tension electrical circuits.

We also oversee electrical

reticulation (urban and rural),

electricity meters (prepaid and smart

meters) and electricity works.

Clients

Superfecta is an ISO 9001:2008

certified company that fully

embraces a Total Quality

Management philosophy in

streamlining all its business

processes. Clients include Rand

Water, FNB, MTN, Airports Company

South Africa, Total, Transnet,

Passenger Rail Agency of South

Africa and Eskom. Superfecta has

done work for the public works

departments of three provinces,

the City of Johannesburg and

several other municipalities. ■

51 AFRICAN BUSINESS 2020


OVERVIEW

Manufacturing

Growing the sector is key to higher levels of development.

Africa’s abundance of natural resources could form the basis

for growth in the manufacturing sector as the continent

aims to industrialise and to diversify its economy away from

a reliance on its natural bounty in its raw form.

Increased agricultural and mineral production will produce more

material to be processed and manufactured. A report published by

The Brookings Institution in 2018 estimates that business-to-business

spending in manufacturing in Africa could be $666.3-billion by 2030. This

figure represents a $201.2-billion increase over the amount for 2015.

The African Union’s Agenda 2063 focusses on raising the

continent’s industrial and manufacturing capacity. At the Africa

Industrialisation Week held in Addis Ababa in 2018, various

complementary plans were outlined to support this goal:

the Accelerated Industrial Development of Africa (AIDA), the

Pharmaceutical Manufacturing Plan for Africa (PMPA), the SME

Strategy, the Boosting Intra-African Trade and the African Continental

Free Trade Area and the UN General Assembly’s Third Industrial

Development Decade for Africa (IDDA III).

The topics covered at the conference give a good idea of what

the priorities are for continental manufacturing:

• regional value chains and linking to global value supply

• symposium on Special Economic Zones (SEZs)

• green industrialisation

• catalysing SMEs and the productivity of start-ups

• youth entrepreneurship to reduce migration

Sector Insight

Vehicle manufacturers are

setting up plants.

• youth and women

empowerment in

enterprise development

• financing industrialisation.

The African Development

Bank (AfDB) reports that growth

spurts driven by manufacturing

have a more lasting and

deeper impact on a country’s

economy than resource-driven

booms. The AfDB concludes

that, “The implications of such

a strong association between

manufacturing-driven growth

episodes and jobs is that

industrialisation is the key to

the employment conundrum

in Africa” (African Economic

Outlook, 2019).

Growing the manufacturing

AFRICAN BUSINESS 2020

52


Excellence, innovation

and transparency

Staff at Superfecta Trading are electro-mechanical

engineering specialists.

As founder members of Superfecta Trading, Patrick and

Abigail Mphephu have developed what used to be a

company that dealt only in facility management into a

multi-faceted electro-mechanical engineering enterprise

whose partnerships with international companies gives them the

scope to offer a broad range of products and services.

General Manager,

Noluthando Nkota

Manufacturing is soon going to be part of the company’s portfolio.

Superfecta will soon open a factory where it will manufacture

transformers. With an increasing focus in South Africa on the need

for local content, the potential for this aspect of the business to

grow is enormous. Superfecta Trading is also looking forward to

providing more job opportunities as the manufacturing side of the

business takes off.

Services offered

System maintenance

This includes:

• Day-to-day/ad hoc

• Preventative maintenance

• Scheduled maintenance

• Servicing and repairs.

Mechanical

With a professional team of

mechanical technologists,

Superfecta prides itself on

the supply, installation and

maintenance of mechanical

work.

Oil purification

Transformer oils undergo

electrical stresses while the

transformer is in operation. We

provide the online or offline

purification services needed to

extend the life of transformer oils.

Electrification and distribution

Superfecta is engaged in

infrastructure development in

rural and urban areas through

an extensive programme

of installing electricity

infrastructure.

High-tension electrical

reticulation

Superfecta installs and

conducts repairs to hightension

electrical

circuits in many parts of South

Africa, in urban and rural areas.

Transformers

Superfecta is a one-stop shop

for all transformer and

transformer- related work

and we pride ourselves on

delivering a comprehensive

and complete service.

53 AFRICAN BUSINESS 2020


OVERVIEW

sector across the continent

will lead to industrialisation,

urbanisation and more value

being added. The bank reports

that, “African countries with the

highest shares of manufacturing

in value added also have higher

levels of development.”

Food processing and

beverage production are

among the strongest sectors

in Africa. The Dangote Group,

which has interests in cement,

sugar, salt, flour, pasta and

beverages, is active in 16 African

countries and has a turnover

of $4.1-billion. Anheuser-Busch

InBev has built or is building

new breweries in Nigeria,

Mozambique and Tanzania and

intends to increase its local

supply, which will help grow

local businesses.

A favoured strategy to

encourage manufacturing is

through Special Economic

Zones. These come in

different forms, including

Free Trade Zones (FTZs),

Export Processing Zones

(EPZs) and industrial parks.

Typically, these zones

attract tax benefits and

tariff exemptions. Zones in

Ethiopia, Djibouti, Nigeria

and Rwanda were established

with the help of state-owned

Chinese companies.

Automotive drive

The second-hand car market

has for a long time held back

automotive manufacturing on

the continent as there was not

sufficient demand for new cars.

South Africa has a sophisticated

automotive vehicle and

components sector. In 2018 South Africa exported 23 988 vehicles

to other African countries. Egypt and Morocco have automotive

manufacturing capacity, but several international brands are showing

interest in setting up plants in new locations on the continent.

Whereas the global average is 180 vehicles per 1 000 citizens,

Nigeria averages just 44 (Deloitte). With Africa’s middle-class set

to grow exponentially in the next decades, the car market is

likely to explode.

Although South Africa’s automotive industry is healthy, it is

strongly supported by various state incentives. As the Chairman

and Managing Director of Volkswagen Group South Africa, Thomas

Schaefer, explains, “If production stays far below a million cars

production per year, we will never be profitable or sustainable, so

Africa could be the key.”

Schaefer is the president of the African Association of Automotive

Manufacturers. He says of the potential of Sub-Saharan Africa, “When

you look at the number of cars per thousand inhabitants in most of

the African countries there is opportunity in places like Kenya and

Nigeria. If you take away the used car drag, there’s no reason why

their market could not grow. If Kenya came to a level like South Africa,

they could achieve a market of five or six hundred thousand.”

Volkswagen South Africa opened an assembly plant in Rwanda

in 2018. The first phase of the company’s integrated automotive

mobility solutions strategy will cost $20-million. In the same year, the

company signed a memorandum of understanding to develop an

automotive hub in Nigeria. Nissan signed a similar agreement in the

same year with Ghana. Nissan has a semi-knockdown assembly plant

in Nigeria, where it has an agreement with Stallion Group.

Kenya is the focus of attention of several car makers. Peugeot,

Volkswagen (VW), CNH Industrial and Nissan Motor have indicated

plans to assemble cars in the country and it is thought that Renault

and Mahindra & Mahindra are also interested. Kenyan company

Simba Corporation, which was founded on vehicle sales and service,

is looking to partner with one or more of these international brands.

Simba already owns Associated Vehicle Assemblers, which assembles

trucks on contract for the likes of Hino and Toyota in Mombasa.

The 2016 decision of Beijing Automotive International Corp (BAIC)

to build a $759-million plant at the Coega Industrial Development

site in Port Elizabeth, South Africa, has everything to do with selling

into the African market. ■

Online Resources

Accelerated Industrial Development of Africa: www.au.int/en/ti/aida

Agenda 2063: www.au.int/en/agenda2063

Association of Ghana Industries: www.agighana.org

Federation of Egyptian Industries: www.fei.org.eg

Kenya Association of Manufacturers: www.kam.co.ke

SME Strategy: www.ifc.org

AFRICAN BUSINESS 2020

54


advanced technologies in the commercial print, industrial print, 3D print/additive

manufacturing, auto identification, bar coding and labelling sectors.

As such, we are proud to be the sole distributor in Southern Africa for many of the leading

internationally-renowned brands in those sectors in which we operate, such as HP Indigo,

Komori, Flint, Fujifilm, Argox, CipherLab, Datalogic and Brother.

And, with a focus always on providing highly skilled services and post-sales support, we’re

ensuring our customers are maximising their potential for growth and profit - day in, day out!

Kemtek’s three-dimensional growth

An industry leader in printing sees good prospects in Africa.

NATIONAL: 0861 KEMTEK as the • JHB: industry +27 (0)11 leader 624 8000 with • PTA: five +27 South (0)12 804 African 1410

• DBN: +27 (0)31 700 branches, 9363 • CPT: almost +27 (0)21 200 521 9600 employees • PE: +27 (0)41 and 364 dealer 3690

WWW.KEMTEK.CO.ZA

agreements for international brands such as Argox,

Brother, Datalogic, Epson, Fujifilm, Honeywell, HP

Indigo, and many more.

Growth for Kemtek will come in three forms:

expansion on the continent, expansion in the

product range and development in the 3D printing

market. Says CEO Johan Botes, “We’re seeing good

Targeted industry product demonstrations and prospects in Zimbabwe, Zambia, Ghana, Kenya,

events are proving popular with customers and Malawi, Mozambique and a number of others.

prospective customers alike.

What we’ve done successfully is gain partners,

bring them to South Africa, train them and maintain

Over the past decade, the printing industry a strong relationship.” Kemteck has about 200

has had a bad “rap”. Since the onset of resellers in 28 countries.

the green mindset, people have made With 3D printing, there are significant

assumptions that printing is wasteful opportunities for the African continent, where

and bad for the environment, that it results in adoption of new technology is swift. Like mobile

deforestation, and that it is expensive. In fact, using phones, 3D printing could be the killer app that

the correct technology can result in cost-effective, enables Africa to leapfrog into a new age of

environmentally-friendly printing which results in industrial production.

brilliant marketing and other important benefits to

business. Printing technology is also flexible – the Customer-oriented

industry has a responsibility to keep up with latest The focus on the customer experience at Kemtek

trends in order to remain sustainable and relevant. goes beyond the sales process and incorporates

Whether it’s simple inkjet printing, digital printing or after-sales service, maintenance, repairs and

3D printing, demand remains, and the world’s tech ensuring a quality experience. The company’s major

companies continue to supply quality products to asset is its staff through which it delivers a wealth of

this important sector.

knowledge that is not found in other organisations.

In South Africa, the current economic situation Kemtek differentiates itself through support, repairs,

has seen slowing GDP growth. Together with the dealing with warranties and telephone support.

perceptions of the print industry, this has resulted Kemtek is perfectly positioned to achieve its

in a challenging trading environment. However, vision of further growth. With its stake in the 3D

Kemtek Imaging Systems (Kemtek) is positioning printing industry, its ever-growing African operations

itself for growth and maintaining a positive outlook. and its solid base in South Africa, this is a company

Kemtek has been serving the print, labelling, bar that looks set to continue leading the way in the

coding and associated sectors since 1988. Growth specialist sectors in which it operates. ■

has been gradual but through determination and

a strong focus on staff, Kemtek is today recognised For more information, visit www.kemtek.co.za

J25589_Kemtek_Propak_Advert_FA.indd 1 2019/02/14 16:12

J25589

55 AFRICAN BUSINESS 2020


OVERVIEW

Transport and logistics

Far-sighted plans for freight can lift African trade.

Sector Insight

Trains between Tangier

and Casablanca travel

at 320km/hour.

also contribute to economic

growth in minor urban centres

and rural areas.

Road

Of the 15 big goals that the African Union (AU) has set in its

Agenda 2063 programme, four are strongly related to transport

and logistics:

• Integrated high-speed train network: The project aims to

connect all African capitals and commercial centres to promote the

movement of goods, services and people.

• Establishment of the African Continental Free Trade Area (AfCFTA):

Accelerate intra-African trade and boost Africa’s trading position in

the world.

• Introduction of an African passport and facilitation of the free

movement of people.

• Establishment of a single African air-transport market (SAATM).

The importance of transport and logistics is shown by

the relative expenditure on transport infrastructure in Africa.

Nearly 40% of all the money that is spent on infrastructure on

the continent is spent on transport. This amounted to nearly

$57-billion in 2015 and 2016.

Africa’s first railways were built to serve the occupying colonial

powers whose only concern was to get cash crops or minerals

to the nearest port. This has made it difficult to trade and travel

within Africa. Integration and coordination are integral to modern

transport and logistics planning. An emphasis on developing

functional corridors between the main centres in Africa and

to ports is a feature of current regional plans. Corridors should

The vast majority of freight

within Africa is carried by road. In

Nigeria the figure for passengers

and freight is close to 90% but in

that giant West African country,

as elsewhere on the continent,

there are plans to bolster the

rail network and to move freight

from road to rail.

All of Sub-Saharan Africa had

3 700km of highways in 2015,

compared with 24 000km in

India and 111 000km in China. A

quarter of Africa’s road are paved

against 60% in India (African

Development Bank).

There is no shortage of

activity on the road-building

front. Individual countries such

as Ethiopia have built 2 700km of

asphalt roads every year for the

last four years.

Most road-building in Africa

is happening within a broader

framework. The Trans-African

Highway (TAH) network is a

transcontinental road project

overseen and developed by

the United Nations Economic

Commission for Africa (UNECA),

the African Development

AFRICAN BUSINESS 2020

56


OVERVIEW

Bank (AfDB), the African Union

(AU) and regional bodies such

as ECOWAS and SADC. Nine

highways are envisaged in the

scheme which would eventually

stretch more than 50 000km.

TAH has been a long time in the

works but regional actors have

been building bits of it more

quickly in recent years.

Rail

African development corridors

are normally based on existing

or planned railway systems. For

landlocked countries, rail links to

ports are the lifeblood of trade.

A good symbol of the revival

of the Ethiopian economy in

north-eastern Africa was on

display at the official opening

on 1 January 2018 of the new,

standard-gauge, Addis Ababa-

Djibouti railway. Almost all

Ethiopian trade passes through

the ports of Djibouti and Doraleh

and the new railway is one of the

most important elements in that

country’s new railway network.

The Economic Community

of West African States (ECOWAS)

bases its integration plans for the

region on the development of

an integrated rail network. The

rail component is critical to the

ultimate success of the Northern

Corridor, the multimodal trade

route linking the countries of the

Great Lakes Region with the port

of Mombasa in Kenya.

Creating standardised

infrastructure is a vital part of

all regional planning. In the

rail context, this includes the

standardisation of brakes,

couplings and gauge. The

Mombasa-Nairobi Standard

Gauge Railway project is Kenya’s most ambitious infrastructure

project since independence.

China has been a leading funder of rail projects on the

continent. This includes large projects in Angola, Djibouti,

Ethiopia, Kenya and Nigeria.

The goals set out in the 2018-2022 Strategic Plan of the Southern

African Railways Association include increasing rail market share to

at least 40% and advocating for pro-rail policies.

The AU has plans for an African Integrated High-Speed Railway

Network (AIHSRN) among its goals. AUDA-NEPAD, the development

agency of the AU, has hired a consultant for AIHSRN and a first

experts meeting was held in April 2019. The Kampala-Nairobi route

is operational but not operating at full speed, unlike the Tangier-

Casablanca line in Morocco, Al-Boraq, which can reach speeds of

320km/hour. The continental plan is to build on existing networks

by delivery new infrastructure along six east-west routes and four

north-south lines.

Ports

Improving efficiency, increasing volumes and reducing costs: these are

the most important priorities for African ports. The cost of using African

ports is about 40% higher than the global average, and up to 70% of

the delays in delivering cargo that are experienced are because of the

time that containers spend in ports (AfDB).

The number of large containers handled by Sub-Saharan ports rose

rose to 15-million in 2014 but dropped to 14.1-million in 2016 (World

Bank). Egypt deals with the most containers on the continent, followed

by South Africa but Algeria has shown strong growth. West Africa is

also increasing its capacity.

All across Africa there are port expansion projects underway or

new ports are being built. A notable example is the Lamu Port on

the Kenyan coast. Lamu is the final (eastern) point in a new transport

and infrastructure corridor linking Kenya’s coast with South Sudan

and Ethiopia, thus extending the concept of the hinterland beyond

Rwanda, Burundi and Uganda. The LAPSSET Transport Corridor

encompasses railways, highways, pipelines and even airports, at Lamu,

Isiolo and Lake Turkana. There is a significant amount of competition

on the east coast, with Tanzania’s Dar es Salaam also in the business of

receiving and sending cargo. ■

Online Resources

AUDA-NEPAD: www.nepad.org

Ethiopian Railways Corporation: www.erc.gov.et

LAPSSET Corridor Development Authority: www.lapsset.go.ke

Ports Management Association of West and Central Africa:

www.agpaoc-pmawca.org

Southern African Railways Association: www.sararail.org

57 AFRICAN BUSINESS 2020


OVERVIEW

Aviation

Movement towards open skies will see Africa fly.

Africa’s landmass covers 20% of the world and its population

represents 15% of the world’s population but the continent

delivers just 2.2% of airline passengers. Sub-Saharan Africa has

fewer airline seats than Brazil. Some African cities connect to

one another via the capital cities of their old colonial rulers in Europe.

A lack of connections is one of many problems in the aviation

sector. There are also high prices (departure fees are 30% higher than

the global average), poor ground infrastructure and scarcity of skills

and financing.

But things are changing rapidly. The International Air Transport

Association (IATA) anticipates annual expansion of African air traffic of

about 5% every year for the next two decades.

Although the eastern corridor connecting the strongest aviation

hubs – South Africa, Kenya and Ethiopia – remains the busiest lane on

the continent, several other countries and airports are putting time,

money and effort into developing their aviation infrastructure.

The African Development Bank (AfDB), which has put $1-billion

into African aviation over the last decade, has outlined why that kind of

investment is a vital prerequisite for the continent’s future. According

to the bank, a strong and efficient African aviation sector will boost

productivity, employment and tourism and encourage regional

integration, trade and investment.

Ethiopian Airlines has shown the way. In a short space of time,

this state-owned enterprise has increased its market share, found

Sector Insight

Boeing believes Africa

needs to train 20 000

new pilots.

a way to operate profitably,

bought new aeroplanes and

rapidly expanded its routes to

the extent that in 2018 Addis

Ababa replaced Dubai as the

leading destination for long-haul

passengers into Africa (Reuters).

The airline is planning to sell a

stake to a private company in

the near future.

The tragedy that occurred in

March 2019 when an Ethiopian

Airlines Boeing 737 MAX crashed,

ironically served to underscore

how much credibility the airline

had built up over time. Although

serious questions were obviously

asked of the incident, there was

AFRICAN BUSINESS 2020

58


OVERVIEW

no glib assumption that the

airline or its pilots were at fault.

African success story:

Ethiopian Airlines

Planes: 111

Destinations: 119

Passengers, annual:

10.6-million

(with partner airlines)

Revenue 2017/18:

$3.7-billion

Profit 2017/18: $233-million

Some work has been done

on liberalising the African

aviation market. The 1999

Yamousssoukro Decision

allowed Ethiopian Airlines to

approach other airlines to be

partners and to gain access to

airports, but few other airlines

followed suit.

The decision by the African

Union (AU) in 2018 to sign the

Single African Air Transport

Market is a sign that there is

movement towards an “open

skies” policy. The agreement

was signed by 22 countries,

representing about 75% of the

intra-African air transport market

(and 600-million people).

The AfDB cites the case of

Morocco as a success story in

liberalising the aviation sector.

Competition led to increased

flights into the country and yet

the state airline managed to

keep going. Many state-owned

airlines in Africa are too small

and fly too few routes to be

profitable. Even South Africa’s

large state-owned airline is failing, although there are complex

reasons behind that story.

A related issue is the ease of entering a country. Rwanda and

Seychelles have achieved positive results in tourist numbers and

trade by introducing a much more relaxed visa regime, essentially

allowing African travellers to get a visa on arrival.

The journey ahead

There is an appetite for investment in the African aviation sector.

Turkish Airlines flies to 50 African cities and Turkish companies are

involved in an air terminal development in Ghana. Airports Company

South Africa (ACSA) is similarly engaged in airport developments

across the continent.

From the biggest to the smallest, airports are investing in new

runways (Cape Town International Airport and Jomo Kenyatta

International Airport), creating new terminals (Kotoka International

Airport in Accra), rolling out a metro link to the airport (Abijan) or

simply upgrading (Nnamdi Azikiwe International Airport in Abuja).

Rwanda and Mozambique are building ambitious new airports and

in January 2019 Ethiopia raised the bar when it unveiled its expansion to

the Addis Ababa Bole International Airport terminal. Funded by China

and estimated to have cost about $35-million, the project intends to

increase annual passenger capacity from seven-million to 22-million.

Boeing’s research indicates that to cope with the growth of the

aviation sector to 2035 in Africa, a total of 20 000 new pilots, 24 000

new technicians and 26 000 new cabin crew will be needed.

The Managing Director for Boeing Sub-Saharan Africa and director of

international sales in Africa, J Miguel Santos, sees this as an opportunity

for training and employment. Writing in Business Day in 2018 Santos

noted, “Considering that the 10 countries with the youngest populations

are all in Africa, this will be a boon for youngsters seeking aviation careers.”

A company such as Comair in South Africa is well-placed to deliver

training. In addition to its training academy, to which more than 30

airlines send staff, Comair has interests in technology support and

hospitality. Comair runs the British Airways operation in South Africa

and low-cost airline Kulula, as well as other companies that help it

to avoid the shocks that the airline business can sometime produce

(such as sudden fuel price increases). The African Airlines Association,

headquarted in Kenya, also offers training courses. ■

Online Resources

African Airlines Association: www.afraa.org

African Civil Aviation Commission: afcac.org

Airlines Association of Southern Africa: www.aasa.za.net

Comair Training Academy: www.aviationtraining.comair.co.za

International Air Transport Association: www.iata.org

International Civil Aviation Organisation: www.icao.org

59 AFRICAN BUSINESS 2020


OVERVIEW

Tourism

Hoteliers are attracted by high rates of return.

African tourism has weathered its fair share of knocks recently,

but it has emerged stronger and is poised for strong growth.

In 2017, tourism arrivals in Africa grew by 11.5% and hotel

construction is booming. Travel and tourism grew in Africa

at 5.6% in 2018, according to the World Travel & Tourism Council

(WTTC). The global average was 3.9% in the same period.

Accra, Cape Town, Lusaka and Lagos are among the cities

that have shown the best occupancy growth. Lagos grew off a

low base because of the recession of 2016 and Cape Town had its

own challenges in that a severe drought brought it into the world

spotlight. As it turned out, tourists continued to visit and entered into

the spirit of water-saving.

The Ebola health scare of 2013-2016 was more difficult to deal

with, especially as some potential visitors failed to distinguish

between regions where the virus was present and where it was not.

The West African tourist market is showing good signs of recovery

with a number of projects underway.

This mirrors the continental trend. In 2019 Hotelier Middle East

quoted an official from STR, a travel research company, saying, “There

are now just seven countries in Africa with no internationally branded

properties present, compared to 18 just six years ago. Accor and

Marriott continue to lead the way in Africa, not just in terms of supply,

but also pipeline.”

French group Accor had 24 512 rooms across the continent

Sector Insight

Almost every African

country has welcomed

international hotel brands.

in July 2019, while Marriott

International had 24 508

rooms. The groups were

developing a further estimated

35 000 rooms. In terms of

individual brands, Hilton that

has the most rooms, at 8 617,

with Protea Hotels by Marriott

second with 8 374 rooms.

Marriott International

expects to add 40 properties

and over 8 000 rooms across

the continent by the end of

2023. Neal Jones, Chief Sales

and Marketing Officer, Middle

East and Africa, says, “Egypt

and South Africa continue to

be our two key markets, but

AFRICAN BUSINESS 2020

60


OVERVIEW

we are also seeing a lot of

traction for our brands in West

and East Africa.

“While strengthening our

footprint in existing countries,

Marriott International is

entering new countries like

Benin, Cape Verde, Ivory Coast,

Liberia, Mozambique and

Senegal. In 2018 we opened

our first hotel in Mali, Sheraton

Bamako (pictured), and the

Marriott Hotel in Accra, Ghana,”

added Jones.

Jones says that the rate of

return on foreign investment

in Africa is higher than in any

other developing region.

He believes that African

governments are prioritising

tourism to help them achieve

their development agendas.

Says Jones, “Africa is embracing

nature and wildlife tourism,

international brands and

technological changes, giving

a much-needed impetus to

inbound tourism.”

Areas with potential for

growth in the tourism sector

include Tunisia, Zimbabwe

(with a focus on ecotourism)

and Tanzania, where the

African Development Bank

says there is “immense

development potential”.

Countries emerging from

conflict such as South Sudan

are obviously coming off a

low base, but the potential

is high. Several countries are

prioritising tourism as a means

to grow their economies and

create jobs.

The Meetings, Incentives,

Conferences and Exhibitions

(MICE) market is growing

quickly in Africa, as much as 40%

between 2008 and 2018, according to the International Congress

and Convention Association (ICCA). The top three destinations are

South Africa, Morocco and Rwanda but a Kenyan venue, the Kenyatta

International Convention Centre in Nairobi, which used to host 12

events a year, is now hosting more than 20.

Air access

A key challenge facing African tourism is accessibility. As Jones

remarks, “You can build the best hotels and tourism infrastructure

in the most beautiful setting, but if travellers cannot get to these

places then there is little you have achieved. Connectivity and

accessibility are key drivers of tourism.”

A great deal can be achieved by good policy. An open-skies

agreement between Morocco and the European Union in 2006 led

to a 51% increase in seats by 2010. The Western Cape’s Air Access

programme has been spectacularly successful in attracting new

direct flights to Cape Town. A collaborative programme between

city, province, state and private-sector actors, the initiative has led

to 15 new routes being established.

The creation by the African Union (AU) of the Africa Visa

Openness Index acknowledges the importance of relatively free

movement to the economies of the continent. HVS, in its Hotel

Valuation Index (HVI), notes that countries such as Mozambique,

Senegal and Uganda offer visas on arrival.

Recent projects

Hyatt Hotels & Resorts has six new hotels in development, in

Morocco and Tanzania (where it already has properties) and

in Algeria, Cameroon and Senegal. The company is further

considering investing in Ghana, Uganda, Ivory Coast, Rwanda,

Kenya and Mozambique.

Eleven new hotels are being launched by Bon Hotels

International, which will take the number of hotels managed by

the group in Nigeria to 25. Transcorp Hotels is building a 25-storey

hotel in Lagos, Nigeria.

StayEasy Maputo, a 125-room Tsogo Sun property, will be the

group’s third in Mozambique and 11th in Africa outside South

Africa. A new 199-suite hotel is being developed close to the

Mosi-oa-Tunya National Park and the Zambezi National Park in

Zimbabwe. Mbano Manor Hotel is just 4km from Victoria Falls. ■

Online Resources

Africa Tourism Association.org: www.africatourismassociation.org

African Tourism Board: www.africantourismboard.com

African Travel & Tourism Association: www.atta.travel

World Travel & Tourism Council: www.wttc.org

61 AFRICAN BUSINESS 2020


INDABA HOTEL, SPA & CONFERENCE CENTRE

YOUR AFRICAN DESTINATION IN JOHANNESBURG

Just north of the fast-paced business world of Sandlan in the upmarket residential suburb of Fourways, lies the

258 bedroom lndaba Hotel, Spa & Conference Centre. It is a compelling blend of business-like convenience

and efficiency, with a relaxed and warm country atmosphere.

Coupled with easy and convenient access to all main highways, OR Tambo International Airport and a mere

15km from Lanseria International Airport, the hotel features an impressive selection of some 24 multi-purpose

conference venues that can accommodate up to 2 000 delegates in total with banqueting facilities for up to

500 guests.

With two restaurants on property, there is no need to leave the comfort of the hotel to enjoy world-class cuisine.

Our 300 seater Chief's Barna Restaurant caters for all tastes with over 120 African-inspired dished ranging from

North African Moroccan cuisine to Koeksisters and Melktert from the Cape - and with a "Shisa Nyama" grill

boasting a variety of game meats sizzled to your specification, everyone is sure to find their favourite.

Well known for the lavish full South African Breakfast Buffet, the Epsom Terrace Restaurant also boasts an evening

Bistro Menu which will delight even the most demanding gourmet exacting standards. A traditional Carvery

Lunch with live music can be enjoyed every Sunday with limited outdoor seating available for those who prefer

dining al fresco- after all, Jo'burg really has the best weather in South Africa.

Take a wander through the 17 hectares of lush bushveld gardens and you will find the Mowana Spa - a wellness

sanctuary which will revive your senses, rejuvenate your body and soothe your soul. The Mowana Spa, which

takes its name from the majestic Baobab Tree of African Lore and Legend, offers wellness journeys based on the

recognised healing energy of Tribal Massaging.

AFRICAN BUSINESS 2020

62


Signature Pamper Journeys include the decadent Mowana Full Day African Rejuvenation Spa pamper which is

an indulgent spa experience including breakfast, lunch, complimentary beverages and six revitalising

treatments; the romantic Mowana African Skies Night Spa pamper with includes dinner, complimentary

beverages and three relaxing treatments; and the indulgent Mowana African Escape Spa & Stay Pamper

Journey for the ultimate decadent relaxation.

Our commitment to service excellence and staff empowerment through training and mentoring will ensure that

your needs are met and your expectations exceeded as you enjoy a Day of Pampering at Mowana Spa.

The lndaba Hotel and Mowana Spa are also PROUDLY GREEN ensuring responsible tourism and minimising

carbon footprint through extensive recycling of waste products, water-wise gardening, greening conference

initiatives, better material choices, minimising power usage and buying local - after all, a better place to live is a

better place to visit.

The lnverroche Gin School located at lndaba Hotel is an educational and exciting journey through the endless

world of Gin. Life is a journey, and so is creating your personalised bottle of Gin. With your presenter being an

able guide and a knowledgeable expert, you will be taken back in time to this spirit's origin hundreds of years

ago all the way lo the great popularity it enjoys today. You will learn new things and have a laugh with friends

about facts you would barely believe to be true.

As in life, making your own Gin is a process with many important steps. The experience gives everyone involved

the opportunity to express themselves and their unique personalities in a special and creative way.

The lndaba Hotel is sure to meet all your business and leisure requirements. We look forward to welcoming you

to our oasis in the City.

15 MINUTES FROM SANDTON ... A MILLION MILES AWAY

63 AFRICAN BUSINESS 2020


OVERVIEW

Information and Communications

Technology

Africans are getting connected.

Under UN Sustainable Development Goal 9 (Industry, Innovation

and Infrastructure) there is a call for “affordable, universal

Internet access by the year 2020 to improve socio-economic

development”.

The African Union’s Agenda 2063 outlines a number of outcomes

it wants to see by the time its agenda is implemented. One of them

reads as follows: electricity supply and Internet connectivity will be

up by 50%.

These are ambitious goals, but technological advances mean

that Africa is in a position to leapfrog over old methods. There are

already a great number of Africans connected via smartphones or

computers, but more still needs to be done. In 2018 there were

456-million mobile phone subscribers. The number is expected to

grow to 535-million by 2020.

Tanzania has 6.4-million users of the M-Pesa mobile phone

payment system. Senegal expects to achieve a 95.3% mobile phone

penetration rate in 2021.

The broadband working group of the World Bank, reporting in

2019, stated that less than a third of Africa’s population has access to

broadband connectivity. If the goal of achieving universal, affordable,

and good quality Internet access by 2030 is to be achieved, an

investment of $100-billion would be required.

The number of broadband connections in Africa crossed the

400-million mark in 2018 (which was nearly 20 times more than in

2010) but the regional average broadband penetration was only 25%.

Sector Insight

A Kenyan company

is offering free WiFi.

Mobile broadband coverage

in Africa is still at 70% of the

population.

Key areas identified by

African ICT ministers at a meeting

organised by the International

Telecommunications Union are

infrastructure, investment, digital

transformation (including digital

platforms and services), digital

skills and entrepreneurship,

cybersecurity, a common

digital market and policy

and regulation.

Smart Africa is an initiative

backed by all the leaders of the

AU to promote and expand the

telecommunications potential

of the continent. Examples

of projects under the Smart

AFRICAN BUSINESS 2020

64


OVERVIEW

Africa banner are data centres

(Djibouti), innovation and

entrepreneurship programmes

(Egypt), e-payments (Ghana),

cyber security (Ivory Coast)

and smart energy and the blue

economy (Togo).

Several countries’ overall GDP

growth has been boosted by

the telecommunications sector:

Benin (10.6%) and Gabon (18%)

are examples and Ethiopia is

expected to see a spike when

parts of its telecommunications

network are privatised. Mobile

operator association GSMA

expects mobile phone and

data usage to grow in Africa at a

compound rate of 4.5% to 2024.

The high price of data in

most African countries is a serious

obstacle to the development and

deepening of the sector.

Infrastructure

An extensive network of undersea

cables links Africa to other parts of

the world. New cables along both

the east and west coasts have

been undertaken in recent years

or are under consideration. The

planned Djibouti Africa Regional

Express (DARE) submarine fibre

optic cable system is expected

to cost $59-million while the

South Atlantic Cable System

(SACS) connected Angola to

Brazil in 2018.

The World Bank invested

$500-million into the Regional

Communication Infrastructure

Program to improve

communication lines in Africa,

which expanded capacity in

the Sub-Saharan region from

just 80Gbps in 2008 to 15.7Tbps

in 2012.

An extension of a submarine cable to Ivory Coast was celebrated in

2019. Private company MainOne laid an open-access submarine cable

with broadband to West Africa in 2010. Landing stations along the

coast of the West Coast helped to make the Internet widely available

all the way to Nigeria. Branching stations were later added at Senegal

and now Ivory Coast has its own. MainOne launched a data centre in

Abidjan but the cable is carrier-neutral so other services can use it. The

electronics on the cable have also been upgraded.

Satellites are a critical part of the telecommunications network of

Africa. Content and data providers typically use satellite services where

no fibre network is available. SES Africa has a fleet of satellites that

orbit four times closer to earth than other models. Vodacom Business

Nigeria is partnering with Intelsat to offer more to its customers in the

enterprise and Internet of Things sectors.

Several African countries are participating in the Square Kilometre

Array (SKA) radio telescope project. Based in South Africa, SKA’s Africa

programme will see the creation of the AVN (the African Very-Long

Baseline Interferometry (VLBI) network). The other participating

countries are Botswana, Ghana, Kenya, Madagascar, Mauritius,

Mozambique and Zambia.

The Overseas Private Investment Corporation, a self-sustaining

US government agency, has a three-year plan (Connect Africa) to

invest $1-billion on projects that include telecommunications and

Internet access.

Startups

A Kenyan company has found a way to offer WiFi for free. BRCK has

700 000 active unique visitors per month and operates out of 2 700

sites in East Africa. It has its own operating system, Moja, and is robust

enough to be installed in taxis.

In reporting on the introduction of BRCK to South Africa, TimesLive

quoted World Wide Worx MD Arthur Goldstuck saying, “Between 25%

and 33% of SA smartphone owners don’t use cellular data with their

devices because they can’t afford to.”

Founders Factory Africa is supporting tech startups across Africa.

The plan is to assist with the launch of 140 small businesses between

2019 and 2025. Standard Bank, which has a presence in 22 African

countries, has invested in Founders Factory Africa and may be able to

help individual entrepreneurs expand their businesses through local

knowledge and access to markets. ■

Online Resources

Connect Africa: www.opic.gov

International Telecommunication Union: www.itu.int

Research ICT Africa: www.researchictafrica.net

Smart Africa: www.smartafrica.org

West African Telecommunications Regulatory Assembly: www.watra.org

65 AFRICAN BUSINESS 2020


OVERVIEW

Banking and financial services

Innovation is paying off in finance.

The Central Bank of Kenya plays an important role in the country’s economy.

The number of banks in Africa is diminishing but the number

Africans who use banks is growing rapidly. Consolidation

of the banking sector is taking place simultaneously with a

rollout of technological innovation that is making banking

services more accessible.

Where 170-million Africans had access to banking in 2012, that

number grew to nearly 300-million in 2018. The consulting group

McKinsey expects that number to reach 450-million by 2022.

Mobile telephony is at the heart of the expansion. The highly

successful M-Pesa launched in 2007 in Kenya. M stands for mobile and

pesa is the Swahili word for money. M-Pesa is operated by Safaricom

and Vodacom and now has 37-million customers in seven countries,

the Democratic Republic of Congo, Egypt, Ghana, Kenya, Lesotho,

Mozambique and Tanzania.

The average monthly amount processed by M-Pesa is $1.9-billion.

Similar services are offered in Zimbabwe by EcoCash, Ethiopia’s M-Birr

and services like MTN Mobile Money, Orange Money and Airtel Money.

Sector Insight

M-Pesa has 37-million

customers.

A first-generation mobile

phone with USSD technology is

the only requirement for users to

make payments, send money or

apply for loans. Traditional banks

are putting huge amounts of

money into technology in an

attempt to head off fintech

startups and telecommunication

companies from encroaching on

their territory. ■

AFRICAN BUSINESS 2020

66


OVERVIEW

Banks

Kanika Saigal, writing in

Euromoney in 2019, describes

the evolution of Africa’s

banking sector as “colonialism

to consolidation”. After

listing the actual or mooted

departures of former colonial

or international banks from

Africa since 2015 (Barclays, BNP

Paribas, Credit Suisse, HSBC

and RBS), Saigal notes that

larger local banks have bought

up smaller entities. This came

about largely because of new

rules about capitalisation and

had quick results in Nigeria

where 24 banks were left

standing out of 89. Results

have been slower in other

regions, most notably in Kenya

where 40 licensed banks serve

a population of 45-million.

However, innovation

and profitability seem to be

combining in the banking

sector. Saigal quotes Kenya

Commercial Bank CE Joshua

Oigara saying, “The continent’s

overall banking industry is the

second-fastest growing, the

second-most profitable of any

global region and a hotbed of

innovation.”

Standard Bank’s history

involves both colonial and

African components, but its

current ownership reflects a

major modern trend. The bank’s

market capitalisation at the end

of 2018 was $20-billion and the

group’s largest shareholder is

the Industrial and Commercial

Bank of China (ICBC), the

world’s largest bank, with a

20.1% shareholding.

Development and trade finance

The African Development Bank (AfDB) is the principal funder of

development projects on the continent. In 2019 the bank’s capital was

increased by $115-billion to $208-billion.

AfDB is strongly focussed on infrastructure development and

energy is the most important priority within that brief. In announcing

the capital increase, the bank reported that since 2015, its projects had

connected 16-million people to electricity, provided 70-million with

agricultural technologies, given 55-million better access to transport,

nine-million people access to finance and 31-million people with

access to water and sanitation.

The New Development Bank, a relative newcomer arising out

of the establishment of BRICS, is another infrastructure funder. The

International Finance Corporation, the private-sector focussed

member of the World Bank Group, now has 21 offices in Africa and

singed long-term financing deals worth $3.5-billion in 2017. The IFC

intends to grow new markets by reducing risk.

The Export Credit Insurance Corporation of South Africa (ECIC)

provides export credit and investment guarantees, stepping in where

commercial banks might be risk-averse to support private investment.

The European Investment Bank is the investment arm of the

European Union and often partners with African institutions.

China has a wide range of financial entities who are active across a

range of sectors in Africa. These entities include the China Development

Bank (CDB), the China International Trade and Investment Corporation

(CITIC), China Export and Credit Insurance Corporation (CECIC), China

Export Credit Insurance Corporation (Sinosure) and the China Export-

Import Bank.

Exchanges

There are 27 stock exchanges in Africa, 25 of which are members

of the African Securities Exchanges Association. Ethiopia intends

launching a stock exchange in 2020. The African Exchanges Linkage

Project (AELP) aims to assist cross-border trade and the settlement

of securities, increase continental investment flows and to add

depth and liquidity to African financial markets. Seven exchanges

are currently participating, representing 85% of the continent’s

securities market capitalisation. ■

Online Resources

Africa Financial Markets Initiative: www.africanbondmarkets.org

African Securities Exchanges Association: www.african-exchanges.org

Association of African Central Banks: www.aacb.org

Financial Action Task Force: www.fatf-gafi.org

Making Finance Work for Africa: www.mfw4a.org

67 AFRICAN BUSINESS 2020


PROFILE

Region: East Africa

The population of COMESA members in 2016 was 492.5-million.

across the region. These include a trade and development bank,

a clearing house, a leather products institute, re-insurance and

monetary institutions and a trade insurance agency.

A third grouping, the Intergovernmental Authority on

Development (IGAD), tackles drought and desertification in the

Horn of Africa. The member states of IGAD are Djibouti, Ethiopia,

Eritrea, Kenya, Somalia, the Sudan, South Sudan and Uganda.

Climate

Tanzania is not a member of the

East Africa’s biggest Regional

Economic Community (REC),

the Common Market for Eastern

and Southern Africa (COMESA), but it is a

member of two other blocs, the Southern

African Development Community (SADC)

and the East African Community (EAC).

This type of overlapping membership

is fairly common but can create problems

if an REC concludes a deal with a foreign

trading partner such as the EU. African

planners are hoping that the continentwide

African Continental Free Trade Area

(AfCFTA) will iron out the anomalies that

come with multiple membership of RECs.

The EAC comprises six states: Burundi,

Kenya, Rwanda, South Sudan, Uganda

and United Republic of Tanzania.

The member states of COMESA are

Burundi, the Comoros, the Democratic

Republic of Congo, Djibouti, Egypt,

Eritrea, Ethiopia, Kenya, Libya, Madagascar,

Malawi, Mauritius, Rwanda, Sudan,

eSwatini, Seychelles, Uganda, Zambia and

Zimbabwe.

COMESA has several institutions

which support trade and investment

East Africa has been experiencing extreme weather patterns in

recent years, including droughts and storms. The high altitudes

of the Ethiopian Highlands and the mountains of the lake region

combine to create a cooler and drier climate than one might

expect for the region’s latitude. Rather than equatorial weather,

it is closer to a temperate upland climate with low temperatures.

Snow occurs on the highest peaks such as Kilimanjaro.

Savanna conditions allow for the cultivation of maize, cassava,

potatoes, millet, pulses, sorghum and beans. Cash crops include

cashew nuts, tea, coffee, cotton, tobacco, sisal and cloves.

Economy

East Africa was the fastest-growing African region in 2018 (5.7%)

and was projected to go beyond 6% in 2020. The region is Africa’s

most integrated in terms of market access (African Development

Bank). COMESA established a Free Trade Area in 2000, which led

to an average growth in intra-regional trade of 7%.

Countries within the region have been cooperating on crossborder

infrastructure and transport projects, expanding access to

electricity and building capacity in renewable energy projects.

The ICT sector is receiving investment.

Strong foreign direct investment is led by Chinese and

Turkish involvement in Ethiopia. The diverse nature of the region’s

economies makes for an attractive investment proposition.

Standard Bank expects the development of the Uganda-Tanzania

pipeline to attract capex of $25-billion. Tourism is a strong earner.

Resources

Nickel, uranium, copper, oil, diatomite, gold.

AFRICAN BUSINESS 2020

68


PROFILE

Kenya

Kenya is investing heavily in transport infrastructure.

Capital: Nairobi

Other towns/cities: Mombasa,

Kisumu, Nakuru

Population: 48.3-million (2018)

GDP: $87.9-billion (2018)

GDP per capita (PPP): $3 467

Currency: Kenyan Shilling

Regional Economic Community:

Common Market for Eastern and Southern

Africa (COMESA), East African Community

(EAC), Intergovernmental Authority on

Development (IGAD)

Landmass: 569 140km²

Coastline: 536km

Resources: Limestone, soda ash, salt,

gemstones, fluorspar, zinc, diatomite, gypsum,

graphite, tea, coffee, corn, wheat, sugarcane.

Main economic sectors: Agriculture,

tourism, horticulture.

Other sectors: Oil, ship repair, ICT, steel,

lead, manufacturing.

New sectors for investment:

Oil, infrastructure.

Key projects: Presidential “Big Four”

priorities: manufacturing, universal

healthcare, affordable housing and food

security. Lamu Port-South Sudan-Ethiopia-

Transport (LAPSSET) corridor project.

Various cross-border railway projects.

Chief exports: Tea, flowers, coffee, fish, cement,

petroleum products.

Top export destinations: Uganda, Pakistan, US,

Netherlands, UK, Tanzania.

Top import sources: China, India, UAE,

Saudi Arabia, Japan.

Main imports: Motor vehicles, oil, machinery and

transportation equipment, iron and steel.

Infrastructure: 16 airports with paved runways; pipeline

for refined products (1 432km); 177 800km of highway

(14 420km paved); the Northern Corridor (a multimodal

trade route) links the landlocked countries of the Great

Lakes Region with the maritime seaport of Mombasa

(which has an LNG terminal; other seaports: Kisumu,

Lamu.

ICT: Kenya is ranked 138 on the ICT Development

Index 2017 (ITU). Mobile phone subscriptions per 100

inhabitants: 90.

Climate: Tropical on the coast and dry inland. Mount

Kenya is Africa’s second-highest mountain. The Kenyan

Highlands is a fertile agricultural production region. Varied

wildlife abounds. Lake Victoria is the second-largest freshwater

lake in the world and the largest tropical lake.

Religion: Christianity, Islam, traditional.

Modern history: Worse than usual floods and

landslides have hit Kenya recently, attributable to

changing weather patterns. The country has experienced

violence from Al-Shabab, a Somalian grouping, which

made attacks on civilians in 2013 and 2015.

The presidential election of 2007 led to a major social

and political crisis. A peaceful election was held in 2013

but the winner, Uhuru Kenyatta, was accused of crimes

against humanity in the earlier election. He won the 2017

election, but it was overturned by the Supreme Court.

Kenyatta came out on top again when the opposition

boycotted the second running. The World Bank believes

that the new Kenyan constitution of 2010 is improving

accountability and encouraging investment at local level.

The document provides for a bicameral legislative house,

devolved county government and a judiciary which is not

dependent on politicians for tenure.

69 AFRICAN BUSINESS 2020


PROFILE

Region: North Africa

There are several ways of defining North Africa.

Climate

The Community of Sahel-Saharan

States (CEN-SAD) covers many

countries, including most of

West Africa, but includes neither

Algeria nor Liberia, which is a member

of the Economic Community of West

African States, ECOWAS.

An effort began in 1988 to create

the Arab Maghreb Union to strengthen

ties between five states on the northern

coast of Africa, but not including Egypt. It

never got off the ground.

The member States of CEN-SAD are:

Benin, Burkina Faso, Cape Verde, Central

African Republic, Chad, the Comoros,

Djibouti, Egypt, Eritrea, the Gambia, Ghana,

Guinea-Bissau, Ivory Coast, Libya, Mali,

Mauritania, Morocco, Niger, Nigeria, São

Tomé and Príncipe, Senegal, Sierra Leone,

Somalia, the Sudan, Togo and Tunisia.

The population of the CEN-SAD area was

estimated at 553-million in 2016 (UNCTAD).

The Sahel-Sahara region experienced

waves of instability after the Libyan

revolution with armed Islamist groups

rising in Mali and northern Nigeria. The

G5 Sahel Joint Force was established in

response in 2017. A CEN-SAD counterterrorism

centre is based in Cairo.

The three outstanding features of North Africa help to define

its climate: the Nile River in the east, the Atlas Mountains in the

west and the Sahara Desert to the south, the largest sand desert

on earth. Mediterranean conditions occur along the coast,

bringing rain in winter and relatively mild temperatures. Crops

include onions, figs, olives, oranges, cauliflower and tomatoes.

The hot desert and semi-arid regions are located further inland.

Temperatures range widely and can reach 130°. Desert crops

include cotton and date palms.

Economy

The Arab Spring and falling oil prices had a significant impact

on the economies of North Africa. Libya’s political turmoil

had a huge impact on the region’s GDP. Oil production levels

rose after 2016 but are still only a fraction of levels achieved

before the revolution.

North Africa contributes disproportionately to African

GDP growth figures, up to 40% (African Development

Bank). Most of the economies of North Africa have

diversified production systems and manufacturing and

industrial capacity.

Morocco receives about 11-million tourist arrivals. Egypt

experienced a significant drop in revenue from tourism after

the political upheavals of 2011. By 2017, a recovery was

underway and Egypt earned $21.1-billion and Tunisia earned

$5.17-billion (World Travel and Tourism Council).

Casablanca Finance City has been established in

Morocco in an attempt to attract investors to Africa. Tunisia

has plans to privatise large parts of its economy and Egypt is

building a mega-city to ease the overcrowding in Cairo.

Morocco and Tunisia have integrated supply chains

which are linked to the European market. Other countries in

the region have focussed on the upstream side (AfDB).

Resources

Oil, natural gas, phosphates, iron ore.

AFRICAN BUSINESS 2020

70


PROFILE

Morocco

The Green Morocco Plan is boosting the agricultural sector.

Capital: Rabat

Other towns/cities: Casablanca, Fez,

Tangiers, Marrakesh

Population: 34.3-million (2018)

GDP: $117.9-billion (2018)

GDP per capita (PPP): $8 586 (2018)

Currency: Dirham

Regional Economic Community:

Community of Sahel-Saharan States

(CEN-SAD)

Landmass: 446 300km²

Coastline: 1 835km

Resources: Fish, salt, phosphates, iron ore,

manganese, lead, zinc.

Main economic sectors: Fishing,

phosphate mining, automotive, tourism.

Other sectors: Textiles, chemicals, clothing,

agriculture.

New sectors for investment: Transport

and logistics, renewable energy (target of

50% of installed capacity from RE by 2030),

food processing, construction, leather.

Key projects: Industrial Acceleration

Plan stresses diversification (automotive,

aeronautics and electronics). Investment

into Peugot plant will double capacity.

Reform of tax system. Combating poverty

measures through job creation and social programmes.

Green Morocco Plan.

Chief exports: Citrus fruits and market vegetables, semiprocessed

and consumer goods (textiles), phosphates.

Top export destinations: Spain, France, Italy, US.

Top import sources: Spain, France, China, US, Germany,

Italy, Turkey.

Main imports: Crude petroleum, textile fabric,

telecommunications equipment, wheat, gas and

electricity, transistors, plastic.

Infrastructure: Free trade zone at Tangiers; Tangier-Med

(largest port in Africa and Mediterranean); LNG terminal

at Jorf Lasfar; high-speed rail link between Tangiers and

Casablanca; 944km gas pipeline; 57 300km of highway;

oldest library in world, University of al-Quarawiyyin Library

in Fez; 31 paved airports.

ICT: 58% Internet users. ICT Development Index 2017

(ITU) ranking: 100.

Climate: Northern part of country is Mediterranean, with

wet winters and dry summers. Further south is semi-arid

which becomes desert and the Atlas Mountains form a

rain shadow for the interior.

Religion: Predominately Muslim.

Modern history: Situated between Europe and Africa

and with coastal and desert regions, Morocco has

experienced a wide variety of influences including a

period under French rule from 1912 to 1956. Cultural

influences come from African, Arabic, Berber and

European sources.

Morocco joined the African Union (AU) in 2017,

having left the AU’s predecessor over that body’s

recognition of the independence of Western Sahara.

Morocco believes the region is part of its territory and the

dispute is unresolved. Morocco also disputes Spain’s right

to several coastal enclaves.

Morocco is a kingdom and has been ruled by

Mohammed VI since 1999. A new constitution was

introduced after the “Arab Spring” of 2010, giving more

powers to the prime minister and parliament. Huge

investments into infrastructure are paying off. The country

achieved an average capital investment rate of 34%

between 2008 and 2018 (African Development Bank).

71 AFRICAN BUSINESS 2020


PROFILE

Region: Central Africa

The Central African region has a population of approximately 158-million.

Climate

The Regional Economic

Community (REC) of the Central

African region is the Economic

Community of Central African

States (ECCAS).

ECCAS was established in 1983 when

the Customs and Economic Union of

Central Africa (UDEAC) joined forces

with the Economic Community of the

Great Lakes Countries (ECGLC) and the

island nation of São Tomé and Príncipe.

The member states of ECCAS are Angola,

Burundi, Cameroon, Central African

Republic, Chad, Congo, Democratic

Republic of the Congo, Equatorial

Guinea, Gabon, Rwanda and São Tomé

and Príncipe. ECCAS contributes to

peace-keeping through the Mission for

the Consolidation of Peace in Central

African Republic (MICOPAX).

The six members of the Economic

and Monetary Community of Central

Africa (CEMAC) share a common

currency, the Central African CFA franc

managed by the Bank of Central African

States. The countries are Cameroon,

Chad, Central African Republic,

Equatorial Guinea, Gabon and the

Republic of the Congo.

The region covers 6.5-million square kilometres. The place

where the rains from the north-east meet the winds from the

south-east is called the Intertropical Convergence Zone (ITCZ).

The ITCZ crosses the equator twice a year, creating two rainy

seasons and two dry seasons. Thunderstorms are common.

Rainfall in the southern section is more variable and proximity

to the coast influences weather patterns, as does topography.

The equatorial region is the wettest part of the continent

and its evergreen tropical rainforest is the second-biggest on

earth. The Congo Basin is Africa’s biggest water catchment

area. Variations on climate extend north and south of the

equator, starting with the savanna forest, and getting drier

the further one travels away from the equator. In the most

northerly part of the region, the thorny steppe occurs, which

is typical of the Sahel.

Economy

Commodity prices play a big role in the fate of the economies

of the Central African region because minerals and oil are the

two biggest assets currently being utilised. The vast forests

contribute to the export baskets of many nations but there are

concerns that illegal logging may be reducing this resource. The

powerful rivers of the region present further opportunities; the

Congo Basin has 44% of all Africa’s estimated internal renewable

water reserves (African Development Bank).

Political instability hinders growth. Three of the region’s

states are considered “fragile” (Central African Republic, Chad

and the Democratic Republic of the Congo) and Cameroon

is experiencing severe tensions between English-speaking

regions that want to secede from the predominately

Francophone country. There is little integration within the

region and infrastructure is under-developed. The region’s

abundant natural resources could fuel the development of a

manufacturing sector.

Resources

Oil, timber, copper, cobalt, diamonds, uranium, gold, gas, fish.

AFRICAN BUSINESS 2020

72


PROFILE

Democratic Republic of the Congo

Conflict has held back development in this resource-rich country.

Capital: Kinshasa

Other towns/cities: Lubumbashi,

Mbuji-Mayi, Kananga, Kisangani

Population: 85.2-million (2018)

GDP: $47.2-billion (2018)

GDP per capita (PPP): $932

Currency: Congolese Franc (CDF)

Regional Economic Community:

Common Market for Eastern and Southern

Africa (COMESA), Economic Community of

Central African States (ECCAS)

Landmass: 2 267 048km²

Coastline: 37km

Resources: Cobalt, copper, niobium,

tantalum, petroleum, industrial and gem

diamonds, gold, silver, zinc, manganese, tin,

uranium, coal, timber, germanium, lithium,

granite, coffee, sugar, palm oil, rubber, tea,

cotton, cocoa, quinine, cassava, bananas,

plantains.

Main economic sectors: Mining,

agriculture.

Other sectors: Mineral processing,

consumer products, metal products, timber,

cement, ship repair.

New sectors for investment: Energy (vast

hydropower resources), agriculture (DRC

has 80-million hectares of arable land),

infrastructure.

Key projects: The DRC participates in the Extractive

Industries Transparency Initiative (EITI).

Chief exports: Cobalt, diamonds, copper, gold, cobalt,

wood products, crude oil, coffee.

Top export destinations: China, Zambia,

South Korea, Finland.

Top import sources: China, South Africa, Zambia,

Belgium, India, Tanzania.

Main imports: Mining and other machinery, transport

equipment, fuels, food.

Infrastructure: 26 airports with paved runways;

pipelines (62km gas, 77km oil, 756km refined products);

roads 152 373km of which 3 047km paved (2015); railway

4 007km (2014); seaport at Banana; river or lake ports at

Boma, Bumba, Kinshasa, Kisangani, Matadi, Mbandaka,

Kindu, Bukavu, Goma, Kalemie; waterways 15 000km.

ICT: ICT Development Index 2017 (ITU): 171. Mobile

phone subscriptions per 100 inhabitants: 42 (2017).

Internet users percent of population: 3.8% (2016).

Climate: Most of country is in a central tropical basin. The

Congo Basin is the continent’s largest water catchment

area. Hot and humid in equatorial river basin. Cool and

dry in southern highlands. Cool and wet in eastern

highlands, with alternating wet seasons.

Religion: Mostly Christian. Also Kimbanguist, Muslim

and others.

Modern history: Instability has been a constant

in the Democratic Republic of the Congo. Joseph

Kabila became president when his father Laurent was

assassinated in 2001. After winning elections in 2006,

he controversially won a second term in 2011 and then

refused to leave office in 2016. Eventually, in 2019, new

president Felix Tshisekedi took office.

Although the country has vast mineral and timber

resources, virtually unlimited hydropower potential and

millions of acres of fertile soil, it struggles to produce enough

food to feed its population. Conflict within the country and

on its eastern border has created thousands of refugees and

resulted in a lack of investment in infrastructure.

The World Bank reports that in 2018 the DRC emerged

from the economic recession triggered by the decline in

the global prices of its main export commodities.

73 AFRICAN BUSINESS 2020


PROFILE

Region: West Africa

The United Nations population estimate for West Africa is 381-million (2018).

crops are groundnuts, sorghum and millet. Further south is

the Sub-Humid Zone which includes Guinea-Bissau, Benin

and the central parts of Nigeria where grass and shrubland

predominate. The Humid Zone comprises the Guinea Zone

(annual rainfall up to 1 800mm) and the Forest Zone. Both

areas have tsetse fly, so livestock are less common. Multiple

crops are cultivated and when dense tropical forests are

cleared in the south, the land can carry oil palms, coconuts,

rubber and cocoa (FAO).

Economy

The member states of the

Economic Community of West

African States (ECOWAS) are

Benin, Burkina Faso, Cape Verde,

Ivory Coast, the Gambia, Ghana, Guinea,

Guinea Bissau, Liberia, Mali, Niger, Nigeria,

Senegal, Sierra Leone and Togo.

The languages in which ECOWAS

conducts its business reflect the varied

colonial history of the region: French,

English and Portuguese. The main

body of ECOWAS is the Authority of

Heads of States and Government.

Other institutions include the Council

of Ministers, the Commission and the

ECOWAS Bank for Investment and

Development (EBID). The peacekeeping

force of ECOWAS has deployed joint

military forces in times of instability,

most recently in the Gambia.

Climate

The region’s climate varies from very

dry in the north to humid in the south.

In the Sahelian Zone the dry season

can extend to 10 months and cattle,

sheep and goats graze on grassland.

Cotton is the main cash crop and food

The Nigerian economy contributes about 70% of regional

GDP, so when that large oil producer experiences a recession,

growth figures for the region are disproportionally affected.

Low oil prices led to such a recession in 2016.

After several good years of growth, average GDP growth

in West Africa was down to just 0.5% in 2016. In 2017 it

recovered to 2.5% and three of the six African countries

in the World Bank’s top 10 in terms of growth predictions

in 2018 were in West Africa: Ghana (8.3%), Ivory Coast

(7.2%) and Senegal (6.9%). Nigeria has also done better

with improved commodity prices and the completion of

successful presidential elections in 2019.

The African Development Bank’s West Africa Economic

Outlook 2018 notes that most of the region’s economies are

dominated by the service sector and that manufacturing

is the smallest contributor to GDP in all of them. AfDB

predicts that gross capital formation will grow quickly as the

region moves away from reliance on demand from private

consumption (70%).

Several of the region’s economies are dependent on

single commodities which makes them vulnerable to

price shocks. More than one country is looking to join the

existing producers of oil and gas, but the creation of stronger

manufacturing bases is the key to more stable economies

and more formal jobs.

Resources

Oil, gold, phosphate, iron ore, bauxite, diamonds.

AFRICAN BUSINESS 2020

74


PROFILE

Nigeria

Africa’s most populous state is also rich in resources.

Capital: Abuja

Other towns/cities: Lagos, Port Harcourt,

Ibadan, Kano, Benin City, Jos, Ilorin

Population: 203.4-million

GDP: $397-billion (2018)

GDP per capita (PPP): $5 990 (2018)

Currency: Naira

Regional Economic Communities:

Economic Community of West African

States (ECOWAS), Community of

Sahel-Saharan States (CEN-SAD)

Landmass: 910 768km²

Coastline: 853km

Resources: Natural gas, petroleum, tin, iron

ore, coal, limestone, niobium, lead, zinc.

Main economic sectors: Services,

agriculture, industry, crude oil.

Other sectors: Fertiliser, food products,

chemicals, ceramics, rubber, textiles, wood,

hides and skins.

New sectors for investment:

Agri-processing is boosted by processing

zones for staple crops. Services sector is

growing fast and mining, quarrying and

manufacturing are showing promise

(African Development Bank).

Key projects: Economic Recovery and Growth Plan

(industrialisation), Power Sector Reform Programme.

Secured Transactions in Movable Assets Act 2017

has stimulated lending to small, medium and microenterprises

(SMMEs).

Chief exports: Petroleum and petroleum products,

cocoa, rubber.

Top export destinations: India, US, Spain, China, France.

Top import sources: China, Belgium, US,

South Korea, UK.

Main imports: Machinery, chemicals, transport

equipment, manufactured goods, food.

Infrastructure: 40 paved airports; railways 3 798km

(2014); highways 195 000km, of which 60 000km paved

(2017); waterways 8 600km (Niger and Benue Rivers and

other waterways); pipelines for oil, refined products, gas,

LPG and condensate; seaports at Calabar, Lagos and Bonny

Inshore Terminal; LNG export terminal, Bonny Island.

ICT: Internet percent of population: 25.7% (2016). Mobile

subscriptions per 100 inhabitants: 76 (2017). Ranked 143

in world, ICT Development Index 2017 (ITU).

Climate: Coastal areas experience equatorial conditions

and mountainous south-east is cooler. Central plateau is

tropical while northern areas are dry and arid.

Religion: Muslim about 51%, Christian about 47%.

Modern history: Africa’s most populous country

comprises more than 250 ethnic groups. Nigeria is a federal

state with 36 states and one territory (to govern the capital

city). The 2007 elections were the first where a civilian

government handed over to a civilian government. In 2015,

Muhammadu Buhari won as an opposition candidate,

another electoral first for Nigeria. Buhari, who himself had

previously led the country as a major-general, also won

the 2019 election. Depressed oil prices have constrained

economic growth, but there are plans to improve

electricity generation and to diversify the economy.

Security concerns include religious clashes in the

central districts, attacks by Boko Haram in the northeast

and activists campaigning for a greater share of oil

revenues. Despite these challenges, Nigeria accounts for

about 70% of regional GDP.

75 WESTERN AFRICAN CAPE BUSINESS 2020


PROFILE

Region: Southern Africa

The Southern African region had a population of 312.7-million in 2016.

destructive cyclones in recent years and many parts of the

region were hit by severe drought after 2016.

South of the Zambezi River, semi-arid areas receive

some rains, but temperatures remain high. In the savanna,

temperatures are cooler than in the tropical areas. The South

African Highveld comprises a temperate upland climatic

region with temperatures that vary between warm and very

cold depending on altitude and thunderstorms are frequent.

A humid subtropical marine climate occurs on the south-east

coast. On the southern coast, Mediterranean conditions occur.

The executive arm of the Southern

African Development Community

(SADC) has eight directorates

which deal with matters

such as policy, defence, trade, finance

and investment, infrastructure, agriculture

and social and human development.

The member states of SADC are

Angola, Botswana, the Democratic

Republic of the Congo, Eswatini,

Lesotho, Madagascar, Malawi, Mauritius,

Mozambique, Namibia, Seychelles, South

Africa, Tanzania, Zambia and Zimbabwe.

The Southern African Customs Union

(SACU), which is based in the Namibian

capital of Windhoek, is a customs union

among Eswatini, Botswana, Lesotho,

Namibia and South Africa.

Climate

The fact that Africa narrows in the

south means that oceans play a

greater role in climate than they do

in the wider, northern part of the

continent. The south is generally cooler

and more humid. The eastern coast

and hinterland have experienced

AFRICAN BUSINESS 2020

Economy

The southern region is relatively well integrated and

communications is supported by good infrastructure.

South Africa has the most diverse economy with a

sophisticated banking and financial services to back it up.

Manufacturing, industry, retail and construction are other strong

sectors. The regional economy’s growth has been affected by

the weak performance of South Africa. Commodity price

fluctuations have something to do with the slump, but the

most important reason was an outbreak of looting that became

known as “state capture”.

Mining and tourism are key sectors across the region. In

Malawi, 80% of the population are dependent on agriculture

but productivity levels are low. A very stable country, Malawi

has adopted a vision to lift its people out of poverty focusing on

education, energy, agriculture, health and tourism.

The Democratic Republic of the Congo is home to a vast

array of minerals. Botswana is the world’s leading diamond

producer. Mauritius is forging ahead as an investment

destination in high-value fields. Investment in renewable

energy in Tanzania is on the rise. The discovery of big gas fields

off the coast of Mozambique could be a game-changer for

the whole region. The country is already a contributor to the

Southern Africa Power Pool through its hydropower projects.

Resources

Gas, oil, manganese, iron ore, diamonds, gold, zinc, copper,

potash, phosphate, ilmenite, rutile, cobalt, platinum

group metals.

76


PROFILE

Botswana

Botswana has the world’s single richest diamond mine.

Capital: Gaborone

Other towns/cities: Francistown,

Molepolole, Maun

Population: 2.2-million (2018)

GDP: $18.6-billion (2018)

GDP per capita (PPP): $16 625

Currency: Pula

Regional Economic Community:

Southern African Development Community

(SADC), Southern African Customs

Union (SACU)

Landmass: 581 730km²

Resources: Diamonds, copper, nickel, salt,

soda ash, potash, coal, iron ore, silver.

Main economic sectors: Mining, tourism.

Other sectors: Services, meat processing,

textiles.

New sectors for investment: Sustainable

tourism, agri-processing, leather and leather

products, renewable energy, mineral

beneficiation.

Key projects: National Development Plan

11, focus on business reforms and export

diversification strategy. The Botswana

Investment and Trade Centre aims to

attract foreign direct investment and there are proposed

amendments to immigration laws.

Chief exports: Diamonds, copper, nickel, soda ash, iron

and steel products, textiles.

Top export destinations: Belgium, India, UAE, South

Africa, Singapore, Israel.

Top import sources: South Africa, Canada, Israel.

Main imports: Machinery, electrical goods, transport

equipment, textiles, fuel and petroleum products, wood

and paper products, metal and metal products, food.

Infrastructure: 10 airports with paved runways;

31 747km of roads, of which 9 810km is paved (2017);

888km of railway (2014).

ICT: Mobile phone subscriptions per 100 inhabitants: 146

(2017). ICT Development Index 2017 (ITU) ranking: 105.

Climate: Semi-arid, warm winters and hot summers.

Kalahari Desert in the south-west and the Okavango

Delta in the north is a huge inland river delta.

Religion: Nearly 80% Christian. Also Badimo and others.

Modern history: Botswana has made the most of its

natural resources and succeeded in turning what was a

poor country at the time of its independence from Britain

in 1966 into the ranks of middle-income countries. The

country has enjoyed long periods of political stability and

runs credible elections.

Diamonds and tourism are the two big earners for the

country. Both sectors have been carefully monitored and

governed. The tourism sector caters to high-end visitors

and access to the sensitive Okavango Delta is strictly

controlled. Despite these positive factors, Botswana has a

high rate of HIV infection and has a number of challenges

including rural poverty and shortages of water and power

in many areas. It is difficult to get services to sparsely

populated parts of the country.

The Botswana Democratic Party has won every

election since independence. Sir Seretse Khama was

the first President of Botswana, from 1966 to 1980. More

recently his son Ian was president and in 2018, Mokgweetsi

Masisi become the fifth president of Botswana.

77 AFRICAN BUSINESS 2020


PROFILE

South Africa

A new president has promised to tackle corruption.

Capital: Pretoria (Tshwane)

Other towns/cities: Johannesburg, Cape

Town, Durban, Port Elizabeth, East London,

Bloemfontein

Population: 55.3-million (2018)

GDP: $368-billion (2018)

GDP per capita (PPP): $13 686

Currency: Rand

Regional Economic Community:

Southern African Development Community

(SADC), Southern African Customs Union

(SACU)

Landmass: 1 214 470km²

Coastline: 2 798km

Resources: Coal, gold, chromium,

antimony, iron ore, manganese, nickel,

zinc, rare earth elements, uranium,

diamonds, platinum, copper, corn, wheat,

sugarcane, fruits.

Main economic sectors: Mining,

automotive manufacture, agriculture,

tourism, financial.

Other sectors: Agri-processing, chemicals,

fertiliser, iron and steel, machinery, food

and beverages, boat and yacht building,

ship repair.

New sectors for investment: Renewable energy,

water, tourism.

Key projects: National Development Plan (NDP) aims

to eliminate poverty and reduce inequality. Renewable

Energy Independent Power Producer Procurement

Programme (REIPPPP).

Chief exports: Iron ore, manganese, gold, diamonds,

platinum, other metals and minerals, machinery and

equipment, agricultural products.

Top export destinations: China, US, Germany, Japan,

India, Botswana, Namibia.

Top import sources: China, Germany, US,

Saudi Arabia, India.

Main imports: Machinery and equipment, chemicals,

petroleum products, scientific instruments.

Infrastructure: Roads 750 000km, of which 158 124km

paved (2016); railways 20 986km (2014); 144 paved

airports; four crude oil refineries; multi-product pipeline

from coast to inland areas; major ports at Cape Town,

Durban, Port Elizabeth, Richards Bay and Saldanha Bay.

ICT: Mobile phone subscriptions per 100 inhabitants: 168

(2017). Internet percent of population: 54% (2016.) ICT

Development Index 2017 (ITU) ranking: 92.

Climate: Coastal areas range from dry along the

Atlantic Ocean, Mediterranean in the south-west to

subtropical on east coast. Interior is mostly dry and

semi-arid. The Drakensberg Mountains separate the east

coast from the interior.

Religion: Christian, traditional, Muslim.

Modern history: After an intense struggle against the

racist policy of apartheid, democratic South Africa installed

Nelson Mandela as its first president in 1994. Thabo

Mbeki’s two terms as president were marked by efforts

to connect with other African countries. He was ousted

by his party, the African National Congress, before the

end of his term. President Jacob Zuma was also removed

by the party, amid accusations that the president and

his supporters were responsible for wholesale looting of

the state. President Cyril Ramaphosa was inaugurated in

February 2018. Several arrests were made in late 2019.

AFRICAN BUSINESS 2020

78


Where the World

meets Africa

What makes the Durban ICC

Africa’s Leading Meetings and

Convention Centre?

The 112,000m 2 Durban ICC is renowned

for 5-star service and facilities, state-of

the-art technology, mouth-watering African

cuisine, and of course, its unique location

on Durban’s sun-drenched shores.

What sets it apart, though, is the unique

African soul that infuses and inspires every

meeting, conference, exhibition and event

to create truly unforgettable experiences.

*Voted “Africa’s Leading Meetings and Conference Centre” 17 times at the World Travel Awards.

ISO9001, ISO 14001, ISO22000 and OHSAS18001 certified. TGCSA 5-Star Graded and AIPC Quality

Standards Gold Certified.

79 AFRICAN BUSINESS 2020

AFRICA’S LEADING CONVENTION CENTRE


PROFILE

Mozambique

Huge natural gas finds could be transformative.

Capital: Maputo

Other towns/cities: Matola,

Nampula, Beira

Population: 27.2-million (2018)

GDP: $14.7-billion (2018)

GDP per capita (PPP): $1 459

Currency: Mozambican Metical

Regional Economic Community:

Southern African Development

Community (SADC)

Landmass: 786 380km²

Coastline: 2 470km

Resources: Coal, titanium, natural gas,

hydropower, tantalum, graphite, beryllium,

corundum, cotton, cashew nuts, sugarcane,

tea, cassava.

Main economic sectors: Mining, gas,

agriculture.

Other sectors: Petroleum products,

chemicals, textiles, cement, glass, asbestos,

tobacco, food.

New sectors for investment:

Gas-to-liquids and gas-to-power. Energy,

agriculture, logistics and tourism.

Key projects: The country is in debt

distress and the economy needs to be

reformed.

Chief exports: Bulk electricity (hydropower), aluminium,

prawns, cashews, cotton, sugar, citrus, timber.

Top export destinations: India, Netherlands,

South Africa.

Top import sources: South Africa, China, UAE,

India, Portugal.

Main imports: Machinery and equipment, vehicles, fuel,

chemicals, metal products, textiles, food.

Infrastructure: 21 airports with paved runways;

pipelines 972km gas, 278km refined products; railways

4 787km (2014); roads 31 083km of which 7 365km paved

(2015); seaports: Beira, Maputo, Nacala.

ICT: Mobile subscriptions per 100 inhabitants: 45 (2017).

Internet percent of population: 17.5% (2016).

ICT Development Index 2017 (ITU) ranking: 150.

Climate: Tropical and subtropical. Tropical cyclones have

hit the country hard in the last decade. Most of the country

is coastal lowlands with mountains on the western edge

and uplands (middle) and plateaus in the north-west.

Religion: Christian and Muslim account for about 80%.

Modern history: Bad weather has played a big part in

Mozambique’s economic fortunes in recent years. The

tropical cyclones Idai and Kenneth led to agricultural

production dropping. This, coupled with falling

commodity prices, had a dampening effect on the

economy.

A devastating civil war lasted from independence

from Portugal in 1975 to a peace treaty between Frelimo

and Renamo in 1992. Frelimo leader Joaquim Chissano’s

18-year stint as president ended in 2004 and two

presidents from the same party have been in power since

then. Elements of Renamo continued to fight through to

recent times. A constitutional amendment giving more

power to provinces may prove sufficient to finally end

that conflict, but the northern province of Cabo Delgado

has been the site of several extremist attacks unrelated

to Renamo. The 2011 discovery of vast fields of offshore

natural gas has the potential to completely transform

the country and massive investment commitments have

already been made by international companies. Income

from the sale of liquefied natural gas should generate

billions of dollars after 2022.

AFRICAN BUSINESS 2020

80


extraordinary

Travel

extraordinary

St Helena

Ndola

Lusaka

Victoria Falls

Kasane Livingstone

Ndola

Harare

Lusaka

Maun

Victoria Falls

Bulawayo

Kasane Livingstone

Harare

Maun

St Helena

Bulawayo

Polokwane Phalaborwa

Windhoek

Beira

Gaborone

Vilanculos

Walvis Bay

Hoedspruit

Skukuza

JNB Nelspruit

Polokwane Phalaborwa

Windhoek Sishen Gaborone

Vilanculos

Walvis Bay

Kimberley

Sikhupe Hoedspruit

Upington

Skukuza

Richards Bay

Bloemfontein MaseruJNB

Pietermaritzburg Nelspruit

Sishen

Durban

Kimberley

Sikhupe

Upington

Mthatha Richards Bay

Bloemfontein Maseru Pietermaritzburg

East London

Durban

Cape Town George Port Elizabeth

Mthatha

East London

Tete

Nosy Be

Pemba

Nampula

Nosy Be

Pemba

Antananarivo

Nampula

Beira

Tete

Antananarivo

47425

Cape Town

George

Port Elizabeth

47425

Benefits of flying with Airlink

Privately owned and financially independent, Airlink services over 55 routes and offers the

widest network and choice of flights in southern Africa and St Helena island.

We Benefits are reliable of and flying committed with to punctuality. Airlink Airlink is consistently 95% on time across

60 000 annual flights, servicing some 1.9 million customers per year. Enjoy the Airlink

hospitality Privately owned as we and soar financially to new heights independent, the years Airlink to come. services over 55 routes and offers the

widest network and choice of flights in southern Africa and St Helena island.

We are reliable and committed to punctuality. Airlink is consistently 95% on time across

60 000 annual flights, servicing some 1.9 million customers per year. Enjoy the Airlink

hospitality as we soar to new heights in the years to come.


IT’S A JUNGLE OUT HERE.

A CONCRETE ONE TO BE PRECISE.

Located on a continent that is positioned as

the future of the world for the next 20 years,

South Africa has committed itself to being a true

connector of markets and a champion for inclusive

growth. From our world-class infrastructure to our

dynamic and diversified economy, South Africa

is a globally competitive destination that offers

potential investors an abundance of opportunities.

Simply put, when looking to invest,

look to South Africa.

Visit www.brandsouthafrica.com for more.

Brand South Africa

More magazines by this user
Similar magazines