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Monthly Archives: April 2013

France and Francophone Africa: A marriage of inconvenience. By Chofor Che, 29 April 2013


France colonised a great part of Africa prior to independence in the 1960s. Former colonies of France include the North African states of Morocco, Algeria, Egypt and Tunisia. In West Africa, former French colonies include Ivory Coast, Benin, Mali, Niger, Guinea, Mauritania, Senegal and Burkina Faso. In the Central African region and French Equatorial Africa, former French colonies comprise of Chad, French Cameroon, Central African Republic, the Democratic Republic of Congo (DRC), Gabon, Congo Brazzaville and São Tomé and Príncipe. In French Africa, former French colonies include Madagascar, Mauritius Seychelles, Comoros and Réunion. Some analysts, like Placide Moussounda of Nouvelle Afrique, argue that Francophone Africa has benefitted very little from France since independence.

I am one who has always viewed the on-going relationship between France and Africa as suspicious and detrimental to the continent’s growth and development. My position is fortified by a statement made in 2006 by former President of France, Nicolas Sarkozy during his presidential campaign, where he said “France does not need Africa”. During President Sarkozy’s term of office, Francophone Africans were repatriated in their numbers from France. Despite such humiliation and expulsion of Francophone Africans from France, French presence in Africa remains firm.

Another area where Francophone Africa continues to suffer from the marriage with France is the imposition of the franc CFA, a currency utilised by former French colonies in the Central African region. CFA stands for Financial Cooperation in Central Africa (Coopération financière en Afrique centrale). The CFA franc represents two currencies utilised in Africa which are guaranteed by the French treasury. The two CFA franc currencies are the Central African CFA franc and the West African CFA franc. Although theoretically separate, the two CFA franc currencies are effectively interchangeable.

According to former French minister of finance, René Pleven, the CFA franc was created on 26 December 1945, in French colonies to spare them the strong devaluation, thereby facilitating exports to France. Today the creation of the CFA has grossly impoverished Francophone Africa. This currency is regulated by three central banks in Francophone Africa, Banque des États de l’Afrique Centrale, or the Bank of the Central African States (BEAC) located in Yaoundé, Cameroon, the Banque Centrale des États de l’Afrique de l’Ouest, or the Central Bank of the West African States (BCEAO ) located in Dakar, Senegal and the Comoros Bank in Comoros. French citizens who constitute part of the board of directors of the above mentioned banks have veto rights on decisions of these banks, which means decisions concerning the CFA are influenced enormously by the French. The structuring and composition of the central banks makes it possible for a colossal flow of finances from Africa to the French public treasury. This means that very poor countries in Africa finance France. There happens to be over 8 000 billion of CFA from Africa stocked in France. This means over 40 million Africans are deprived of their revenue. This can be connoted as monetary slavery which is the outcome of the marriage of inconvenience between France and Francophone Africa.

Time for a new Africa has come. This new Africa needs to get rid of the shackles of colonialism which continue to plunge the continent down the drains of poverty. Africans need to nurture the spirit of free markets and stop relying on aid especially from France. Maybe it is time for Francophone Africa, to have its own currency as other currencies like the South African rand. Allowing impoverished African states to continuously finance the French treasury is not the way to go.

Additionally, Francophone Africa can curb the numerous trade barriers inhibiting commerce amongst them. Francophone Africa can ease trade with Anglophone Africa and benefit from a fruitful relationship which would benefit the continent as a whole, rather than relying on a marriage of inconvenience which has done nothing but plunge Francophone Africa and the entire continent into poverty.

 
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Posted by on April 29, 2013 in Africa Development

 

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Africa: World Bank Gives Scaring Statistics On Annual Losses From Lack of Sanitation, By All Africa, 22 April 2013


The World Bank has given a rather scaring statistics on the state of human conditions, saying that one out of every three people in the world have no toilet and that economic losses from lack of access to sanitation amount to an estimated US$260 billion annually, more than the entire gross domestic product of Chile.

“Without proper toilets or sewage systems, many people in developing countries go to the bathroom in rivers or fields, unknowingly spreading germs that cause diarrheal disease – the second leading cause of death in children under five – in their own communities, as well as those downstream,” the statement quoted WB experts as indicating. “We have to fix sanitation if we want to end extreme poverty by 2030 and boost the incomes of the poorest 40 percent,” said World Bank President Jim Yong Kim. “From my background in health, I know well the magnitude of the problem. This is an absolutely critical intervention. The impact of inadequate sanitation lies at the core of so many barriers to prosperity faced by poor people – health, education, environment, wealth, equity, and dignity. The return on investment is high, especially for the poor.”

Liberia is struggling to make any progress in achieving the factors spelled out in the WB report.

“Diarrheal disease kills thousands of children each day. Children who survive often miss school due to illness. Having no access to sanitation renders women and girls particularly vulnerable, as they risk personal security seeking private locations, or drop out of school at puberty as there are no sanitation facilities,” the statement said.

According to the statement, poor sanitation also leads to costs valued in the hundreds of billions of dollars every year by damaging health, environment, and tourism.

The World Bank is the largest multilateral financier of water and sanitation development. In FY11, the World Bank committed US$4 billion to water supply and sanitation. This is expected to help 9 million people access improved water supply and sanitation services.

“We support the effort for access to proper sanitation by 2025 for everyone,” Kim said. “We can achieve this goal and transform the lives of billions of people over the next several years. It will take real commitment and action from the heads of state of our client countries, as well as collaboration with all of our partners in civil society and the private sector. We can do this.”

In order to achieve this goal, the World Bank says in intends to take a global leadership role to advocate that countries make the required investments to meet their sanitation targets and eliminate open defecation, which affects the poorest 40 percent in these countries, and work with domestic and global private sector and other partners to scale up efforts to meet demand from households and communities for sanitation products and services, moving from open defecation to improved latrines to improved waste management.

More than that, it intends to work closely with countries where open defecation is most prevalent to ensure that the World Bank’s lending and evidence-based knowledge is supporting improved sanitation service delivery, such as through effective monitoring and use of data.

The announcement coincides with a World Bank-IMF Spring meetings side event on investing in sanitation and on the heels of a call by Deputy Secretary-General of the UN Jan Eliasson last month to end open defecation by 2025.

“I am determined to mobilize major players, on behalf of the UN Secretary-General, to boost sanitation efforts and end open defecation by 2025,” said Eliasson. “I applaud the World Bank’s commitment in this area, and look forward to working closely with the World Bank as part of the partnership between our organizations. We have less than 1,000 days of action before the 2015 target date for the Millennium Development Goals. While we have made great improvements towards all the Goals, sanitation is the target where we have made least progress, and we urgently need to scale up investment. This is an issue of fundamental human dignity, and the health of people and the environment. ”

“Poor sanitation is often ignored because people don’t like to talk about it, much less act on it, ” said Rachel Kyte, Vice President of Sustainable Development at the World Bank. “But poor sanitation is a major cause of diarrheal disease and there is increasing evidence of its link to childhood stunting, which deprives the poorest and most vulnerable from opportunities for a better life. It’s time to act.”

The side event on sanitation also included discussion by Jim McHale, Senior Vice President at American Standard of a US$1.50 toilet, affordable for many of the world’s poor, designed by one of the world’s largest producers of toilets and bathroom fixtures.

The World Bank is exploring ways of scaling up access to sanitation through new kinds of partners, such as software developers, to learn how new technology-enabled mobile phone applications can address sanitation sector needs. It is widely reported that more people in the developing world have access to cell phones than to toilets.

 
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Posted by on April 24, 2013 in Africa Development

 

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A ‘BRICs’ Bank? No Thanks, The IMF And World Bank Are Bad Enough, by Jens F. Laurson and George Pieler, 22 April 2013, Forbes.com LLC


Led by China, the five “BRICS” states (Brazil, Russia, India, China, South Africa) plan to set up a development bank of their own. This is loosely characterized as an IMF and World Bank rival, which is to say an unholy combination of the two. Does this mean the fast-growing graduates of the Developing World are finally coming together as a potent force?

It does not. Chen Yuan, the veteran of the China Development Bank, has been tasked with making this ill-defined BRICS Bank a reality, but as of yet there is no plan even on paper. The new institution might support infrastructure projects in the non-developed world, or leverage a stronger presence for China and its four friends anywhere they find takers, but so far it is still a phantom project.

What is most striking about this first really tangible BRICs initiative is its lack of originality. Everything so far points to the BRICs bank mimicking one or more of the Bretton Woods institutions that western nations devised after WWII with the objectives of supporting war recovery and spurring (peaceful) postwar development. (Whether their track record on development really makes them such good models for imitation is a question for another day.)

At the core of the planned development bank of the BRICs is a large void: an apparent lack of a central mission these countries want to collectively accomplish. Their development bank-project amounts more to an announcement that they will have one, too – just like the established economic powers. They’re free to have one, of course. The BRICs nations are already enmeshed in the status quo structure of international development finance, as it is, though they are clearly not satisfied with the role they play in the IMF and World Bank. China especially, which has long demanded a larger role in the Bretton Woods institutions, has a valid point.

But these institutions seem a strange model to emulate: China is renowned for offering no-strings development aid, particularly in Africa, as opposed to the tied or limited aid that usually comes from the development banks or bilateral deals. The western concern has been that its own development aims, whether in the field of human rights, public health, or improved governance, will be shot to bits if aid recipients can get unconditional deals from China.

What the supposed BRICs bank could do, though, is heighten China’s influence in places perceived as outside of its current realm of influence, yet more amenable to suasion by Russia, India, or Brazil. That would allow China to render services (or cash and credits as needed) via the other four BRICS. Aid-laundering, as it were. This also makes sense of South Africa’s membership: While the country doesn’t fit the rapid-growth criteria of the other four, it is in the mix for prestige and an African presence.

None of this will necessarily have profound geopolitical repercussions: The BRICs have not yet proposed their own trading bloc, and deal with their share of trade tensions within the group. Particularly Brazil and South Africa lock horns on agricultural products. They aren’t trying to stop the planned Trans Pacific Partnership anchored by the US. They say they are committed to the WTO principles of free trade as an aspiration of the postwar world trade order. They are certainly not planning a Euro-style currency bloc, although China keeps pushing for Renmimbi convertibility to establish its currency as an eventual competitor for the dollar. They don’t have treaties of mutual defense and support, and they continue to embrace all the status quo institutions of international relations, in short “global governance”: the UN, WTO, G20, and the various development banks.

The BRICs alliance is probably best seen as a collective effort to secure greater leverage in all these longstanding institutions, and generally to be seen as the champion(s) of less developed nations in their decision-making processes. Not an unreasonable goal, but not a very exciting one especially since the BRICs agenda doesn’t trump the BRICs members’ extant individual obligations as members of the Bretton Woods institutions, or their commitments and treaty obligations with the rest of the developed and developing world.

The BRICs are waiting expectantly, and not necessarily vulture-like, to see what their opportunities in a multipolar world will be. Everyone assumes the so-called unipolar world revolving around the United States is on its way out (if it isn’t already), and (to the extent the Eurozone is counted as part of the U.S. orbit) it isn’t daring to predict that will happen sooner, rather than later.

It’s fair enough to extrapolate from today’s trends a trajectory for the global economy, but it would be folly to assume it can’t come out any other way. And if it weren’t to happen soon, expect the loose BRICs-alliance to break apart before long. Russia needs China much more than the reverse, and the longstanding territorial rivalries between China and India are seething just below the surface. Brazil may be better placed to play a leading role in the economies of the southern hemisphere than get enmeshed in global power-plays.

Russia isn’t growing so fast these days, China’s growth has been bogged down by systemic corruption and increasingly obvious environmental and social limits, and slowed down by design, to achieve a hope-for sustainability instead of a crash. The BRICs, by pushing modification of the old order while pretending to proclaim a new one, merely reinforce the global preference for gradual evolution of global economic relations, not a revolution led by newly-wealthy players on the global stage. This makes sense, given that wealth has been won by adopting western-style markets and – at least to some extent – newfound respect for the rule of law in international relations.

 
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Posted by on April 22, 2013 in BRICs

 

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Objectifs du Millénaire : moins de 1000 jours…, par Chofor Che


Huit objectifs du Millénaire pour le développement (OMD) ont été définis en 2000 quand un certain nombre d’agences des Nations Unies (ONU) s’étaient réunies à leur quartier général de New York. Ces agences de l’ONU promirent que d’ici à 2015, elles auraient réduit la pauvreté et la faim dans le monde de moitié, se seraient battues contre le changement climatique et les maladies, auraient résolu le problème du manque d’eau potable et accru les droits des femmes et des filles en matière d’éducation . Ce n’était pas la première fois que les dirigeants mondiaux faisaient de telles promesses grandioses.

La voix de nombreuses critiques, en particulier en Afrique, s’était élevée, avec un fond de cynisme, arguant que de telles promesses étaient très ambitieuses et en définitive vouées à être abandonnées. Tout de même, si beaucoup reste à faire, certains optimistes font valoir que ces objectifs ont aidé à affiner les objectifs de la politique publique des États, en particulier dans le monde en développement. Selon Ban Ki-moon, Secrétaire général des Nations Unies, 600 millions de personnes ont été sorties de la pauvreté. Des petites filles et des femmes du monde entier ont bénéficié de l’enseignement primaire. Il y a eu une baisse de la mortalité infantile et de la délinquance juvénile. Les investissements injectés dans la lutte contre le paludisme, la tuberculose et le sida ont contribué à sauver des vies.

En dépit des opinions défendues par le secrétaire général, il parait clair que les OMD étaient très ambitieux. Tel est notamment le cas au Cameroun, où le Programme des Nations Unies pour le développement (PNUD) a déjà entamé un partenariat avec les organisations non gouvernementales (ONG) pour un agenda post-OMD.

Plusieurs raisons expliquent la lente réalisation des OMD. Une des principales raisons pour lesquelles ces objectifs ne pourront être réalisés en un temps record vient de l’aide financière non coordonnée, en particulier aux États en Afrique. Une grande partie de l’aide financière, envoyée aux administrations centrales par les agences de l’ONU, a été par ailleurs détournée par des fonctionnaires corrompus. Une partie de cet argent a été placé sur des comptes bancaires en Suisse en particulier. L’ONU est bien consciente de ces opérations malveillantes, mais très peu a été fait pour s’assurer que l’aide financière destinée aux pauvres et aux miséreux du monde soit utilisée à bon escient.

Une autre raison majeure pour laquelle les OMD ne pourront être réalisés en un temps record est que la plupart des agences de l’ONU préfèrent opérer avec les administrations centrales plutôt que de s’adresser aux partenaires de développement comme des groupes de la société civile et des ONG. Il est vrai que la société civile et les ONG ne sont pas aussi organisés. Malgré ce fait, la plupart de ces groupes de la société civile et ONG sont en mesure de canaliser les fonds judicieusement vers les communautés dans le besoin. Le PNUD au Cameroun semble avoir compris que travailler uniquement avec les gouvernements ne peut résoudre le casse-tête des OMD – raison pour laquelle il y existe désormais une grande implication des organisations de la société civile et des ONG à travers tout le territoire national.

Si certaines préoccupations tourmentent la communauté du développement au sujet de la réalisation des OMD d’ici 2015, il est aussi vital de remédier à certains torts commis dans le passé par le système des Nations Unies. Si la priorité est donnée par le système des Nations Unies aux créations d’emplois et aux véritable privatisations (pas entre « copains », mais dans la transparence et l’état de droit) sans coercition étatique, plutôt qu’à l’aide financière, alors il peut être possible d’atteindre les OMD en un temps record. En outre, si les groupes de la société civile et les ONG en particulier en Afrique sont bien structurés et organisés, ils pourraient alors facilement aider le système des Nations Unies dans la réalisation des OMD d’ici 2015. L’aide financière seule ne peut pas résoudre les problèmes, une approche holistique est très importante pour la réalisation des OMD en un temps record.

Chofor Che est analyste sur AfricanLiberty.org. Le 15 avril 2013. Cet article a été publiée initialement en anglais sur http://www.africanliberty.org/content/less-thousand-days-respect-promises-millennium-development-goals-2015-chofor-cheAfricanLiberty.

 
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Posted by on April 16, 2013 in Objectifs du Millénaire

 

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Oil and natural gas exploration in East Africa – The Ecologist


See on Scoop.itoil concessions in Africa

Oil and natural gas exploration in East Africa The Ecologist Kochzius says: “Protecting coastal habitats, such as coral reefs, seagrasses and mangroves, is a vital interest of East African nations, because these habitats support the livelihood of…

See on www.theecologist.org

 
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Posted by on April 15, 2013 in Uncategorized

 

Western analysts and fund managers discuss the investment case for Africa


See on Scoop.itAfrica’s development

Insight into business in Africa (Nairobi now the world’s hottest property hotspot.

See on www.howwemadeitinafrica.com

 
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Posted by on April 15, 2013 in Uncategorized

 

Less than a thousand days to respect the promises of the Millennium Development Goals by 2015, by Chofor Che, 12 April 2013


Eight objectives of the Millennium Development Goals (MDGs) were defined in 2000 when a number of United Nations (UN) organisations came together at the UN Head Quarters in New York. These UN organisations vowed that by 2015, they would have reduced poverty and hunger in the world by half, fought against climatic change and illnesses, resolved the problem of lack of consumable water, and increased possibilities for the education of women and girls. This was not the first time that world leaders had made such lofty promises.

Many critics especially in Africa have been cynical that such promises were very ambitious and were going to be abandoned. All the same though a lot still has to be done, some optimists argue that these objectives have assisted in fine tuning policy objectives of states especially in the developing world. According to Ban Ki Moon, UN Secretary General, 600 million people have been taken out of poverty. Girls and women around the world have benefited from primary education. There has been a drop in infant mortality and juvenile delinquency. Investments injected in the fight against malaria, tuberculosis and HIV AIDS have helped to save lives.

Despite views propounded by UN Secretary General, it is clear that the MDGs were very ambitious. Such is the case especially in Cameroon where the United Nations Development Program (UNDP) has already started partnering with non-governmental organisations (NGOs) for a post-MDG agenda.

Many reasons account for the slow realisation of the MDGs. A major reason why these goals may not be realised in record time is because of uncoordinated financial aid especially to governments in Africa. A lot of financial aid, pumped into central governments via UN agencies, has been siphoned by corrupt officials. Some of this money has been starched in bank accounts especially in Switzerland. The UN is well aware of such malicious operations, but very little has been done to ensure that financial assistance destined for the world’s poor and destitute, are rightly utilised.

Another major reason why the MDGs may not be realised in record time is because most UN agencies prefer to operate with central governments rather than also bringing on board development partners like civil society groups and NGOs. It is true that civil society and NGOs are not so organised. Despite this fact, most of these civil society groups and NGOs are able to channel funds judiciously to affected communities. The UNDP in Cameroon seems to have realised that working solely with governments may not solve the MDG gig puzzle, reason why there is now a great involvement of civil society groups and NGOs all over the national territory.

In as much as concerns plague the development community about the attainment of the MDGs by 2015, it is vital for certain wrongs committed in the past by the UN system to be put right. If job creation and true privatisation without government coercion, rather than financial aid, is given priority by the UN system, then it may be possible to attain the MDGs in record time. Additionally, if civil society groups and NGOs especially in Africa are well structured and organised, then they could easily assist the UN system in the attainment of the MDGs by 2015. Financial aid alone cannot solve the trick, a holistic approach is very important for the attainment of the MDGs in record time.

 
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Posted by on April 12, 2013 in Africa Development

 

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Investing in Africa: The hottest frontier Strategies for putting money to work in a fast-growing continent, Apr 6th 2013 | HARARE AND JOHANNESBURG |The Economist, From the print edition


WHEN you are trying to keep a retail outfit afloat amid hyperinflation, it helps to have a sideline. “We had a business selling crocodile skins to Hermès and Gucci for shoes and handbags,” says John Koumides, chief executive of Innscor, a conglomerate based in Zimbabwe’s capital, Harare. The currency earned from this exotic export was a lifeline for the firm’s other arms, including its SPAR stores, when Zimbabwe’s shops were short of stock in 2008 as its currency collapsed.

Innscor survived. It remains an unwieldy mix of businesses even though it has shed the crocodile-skin enterprise. But it is attracting attention from investors seeking to profit from the emergence of a new class of African consumers: its shares have risen by 50% in the past year. The firm’s mainstay, and the bit that excites the most interest, is fast food, with brands including Chicken Inn and Pizza Inn. Its outlets are now in a handful of other African countries, including Nigeria.

Africa’s equity markets are hot, with investors attracted by the sub-Saharan region’s GDP growth rate of more than 5% over the past three years. The main markets in Nigeria and Kenya have risen by more than 50% in the past year (see chart). Over the past decade Africa supplied six of the world’s ten economies with the fastest growth. By 2020 more than half of African households will have enough income to splurge some of it on non-essentials, according to McKinsey, a consultancy. Furthermore, more than half of Africa’s population is aged under 20. Within three decades it will have a larger working-age population than China.

But Africa is short of savings and capital. That creates an opening for rich-world investors seeking a better return than is available at home. North Africa, tied to Mediterranean trade, is fairly well developed and is seen by some as a separate investment proposition. So is South Africa, the continent’s biggest economy, which has a slower growth rate than most of its neighbours and more mature consumer and financial industries.

The real source of excitement is the “frontier markets” of sub-Saharan Africa. “This is where the flavour is,” says Thabo Ncalo, who manages an Africa Fund for Johannesburg-based Stanlib. Small investors looking for a taste might choose to buy a stake in a mutual fund or one of the exchange-traded funds that mechanically track an index of frontier-market stocks.

Fund managers are mindful of the liquidity problems that forced the closure of New Star’s Africa Fund in 2009 barely a year after it was launched. Of 200-odd shares listed on Nigeria’s stockmarket, the largest of the frontier markets in sub-Saharan Africa, perhaps two dozen are liquid enough to make mutual-fund managers feel truly comfortable. A handful of big consumer firms that have been in Nigeria for a long time, such as Unilever and Nestlé, are listed locally and are liked by foreign investors. A local favourite is UAC, a food company with interests in paint and property, which has doubled in value in the past year. Its Gala sausage rolls are a popular snack and it is the local partner with Innscor’s fast-food outlets.

Beer companies are another way to gain exposure to the African consumer. Nigerian Breweries makes Star Lager and Legend Extra, a stout for those who think Guinness lacks punch. East African Breweries, listed in Nairobi and half-owned by Diageo, has similar appeal. Its combined market in Kenya, Uganda and Tanzania is more than 120m people, not much smaller than the Nigerian market of 167m.

Beyond Nigeria and Kenya is a big “liquidity cliff”, says Andrew Brudenell, who runs a frontier fund for HSBC. The next-largest exchange is Zimbabwe’s. Even quite large stocks can be hard to buy and sell on a given day. PZ Cussons Nigeria, an offshoot of the Manchester-based firm behind Imperial Leather soap, has an average daily turnover in its stock of $220,000, notes Mr Brudenell. But strip out the big blocks of shares that occasionally change hands and the stock churns $73,000 a day.

One way around the shortage of liquid stocks is to buy companies that have most of their assets or earnings in Africa but are listed elsewhere. Some mining firms listed in London and Toronto have most of their assets in Africa. The trouble with such stocks is that they are a gamble on commodity prices and the skill of a team of geologists rather than a bet on a broader story about Africa’s improving economy.

That is why some mutual funds prefer stocks such as MTN, a South African cellphone firm that makes a lot of its money in the rest of Africa. Shoprite, the largest grocery retailer in South Africa, is growing beyond its home base in South Africa and in a few years might similarly qualify for inclusion as a frontier investment. A concern for would-be investors is that mutual funds stick only with liquid stocks—even ones that look expensive—and miss out on small and local businesses, such as retail chains, that could turn into regional giants.

The public-equity pipeline

Some investors fret that the supply of fresh equity may fail to keep pace with the demand from rich-world buyers. Family-owned businesses are often unwilling to cede control by selling shares. A privatisation drive in Rwanda, which took off with the sale of the country’s biggest bank and of a big stake in its main brewer, has lost momentum.

Yet demand usually creates its own supply. “You can’t always put a lot of money to work very quickly,” says Clifford Sacks, the chief executive of Renaissance Capital in Africa. But patient investors can benefit from “liquidity events” when a chunk of stock is suddenly on offer. Ecobank, a Togo-based bank, raised $250m last year from PIC, South Africa’s state-employee pension fund, to buy Oceanic Bank, a Nigerian lender.

What is more, because liquid stocks are prized, a family business might be persuaded to sell a block of stock to attract a broader class of investors. In the process it will raise the value of its remaining equity. Price is always a consideration. The owner of a Nigerian consumer business would be rightly reluctant to list at 2009 prices. But if the rally in stocks continues, a spurt of initial public offerings (IPOs) should follow.

New issues tend to occur in three stages. Banks are among the first enterprises to list. Next come telecoms firms, breweries and cement companies, which need a lot of capital spending to sustain their growth. Dangote Cement, a big Nigerian firm, has plans to list a chunk of its stock in London. Cement stocks are a way for small investors to get exposure to infrastructure projects, which are financed by private and development banks. A third tier of potential listings includes consumer businesses in Nigeria, property companies in Kenya and enterprises related to the recent oil-and-gas discoveries in east Africa.

A few biggish IPOs in Africa would increase the universe of stocks. But many people think the real opportunity lies with private equity, which can stick with businesses while they grow.

Barbarians welcome

Private equity in Africa is different from its equivalent in America and Europe. A typical rich-world deal might involve a mature but torpid firm, which is acquired and loaded with debt to magnify the returns of the equity owners. In Africa the returns come from revenue growth and efficiency gains, not from financial engineering, says Runa Alam, head of Development Partners International, a private-equity firm that specialises in Africa. Expertise as well as capital is supplied. Single-country firms are often transformed into regional ones. Celtel, a mobile-phone company started by a British-Sudanese entrepreneur, Mo Ibrahim, is one such private-equity success story. Celtel was sold to Zain, a Middle Eastern cellular outfit (it is now owned by Bharti Airtel of India). Such trade sales are a source of regret for public investors starved of biggish stock to buy.

As Africa’s stockmarkets deepen, and valuations rise, private-equity firms will increasingly look to the public markets to realise their investments. In November Actis, a British private-equity fund, reduced its stake in Umeme, an electricity-generation company bought from the Ugandan government in 2005. It did this through the first ever dual listing in Uganda and Kenya, where liquidity is greater.

Investors in Africa are buying a big-picture story of progress towards a formal and regulated economy with stable politics, the rule of law, independent central banks and stricter accounting rules. That prospect is brighter than it was. Nobody can guarantee that future progress will be in a straight line. But given the troubles in large parts of the rich world, many will feel there is a lot more to gain than to lose.

 
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Posted by on April 10, 2013 in Africa Development

 

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Industrialisation in Africa: Beautiful dream, dreadful obstacles, by Chofor Che


The 6th annual joint conference of ministers of finance of the African Union and the conference for African Ministers of Finance, Programming and Economic Development of the Economic Commission of Africa, took place in Abidjan, Ivory Coast in late March 2013. According to a report dated the 25 March 2013 by Jeanine Fankam, Cameroon Tribune’s special envoy to Abidjan, the theme of the two day conference focused on the importance of industrialisation for an economic emerging Africa.

This conference which was also attended by high ranking members of international organisations like the United Nations (UN), The African Development Bank (ADB) as well as central banks was aimed at seeing how African states could put in place strategies to revamp the industrial sector so as to reduce reliance on always importing products from the West and Asia.

In the auditorium of hotel Ivoire, President Alassane Ouattara made mention of efforts towards industrialisation in Africa since independence. According to Cameroon Tribune, some progress has been made in boasting the industrial sector in Africa, but much still has to be done.

From all indications, African products need to be more competitive in the international market. At moment, the slow industrialisation rate has made African products less competitive on the international scene.

Abdallah Msa of the Department of Economic Affairs of the AU says there are serious obstacles to industrialisation in Africa, especially financing. Africa still depends greatly for financing from the Western financial institutions like the World Bank and the ADB. Relying on financial organisations to revamp the industrial sector in Africa will definitely handicap this ambition.

Another problem which plagues the industrialisation sector are the numerous economic barriers that exists in on the African continent, between states and sub-regional groups like the Economic Community of West African states (ECOWAS) and the Economic Community of Central African States (ECCAS). How can there be industrialisation when people and goods cannot circulate freely on the continent without barriers?

There also remain serious concerns about security on the continent. Countries like the Central African Republic recently plunged into a coup d’Etat. There is definitely no way a state like Central African Republic, which has so far had six coup d’Etats, can be advanced in the industrial sector with such insecurity. Countries in the Gulf of Guinea like Cameroon and Nigeria are also plagued by attacks from kidnappers and pirates. This remains a big blow in the face of industrialisation in Africa.

Concerning internal problems in African states, the central governments in Africa remain reticent to improve on the private sector. It is via a vibrant private sector in the continent that the continent of Africa can be industrialised.

Some states like Ghana and Nigeria have beautiful legislation when it comes to industrialisation, but state actors who are called upon to implement these legislative provisions remain reluctant to see the industrialisation dream on the continent come through.

Having these conferences on the continent is a waste of time and tax payers’ money if serious action is not taken. By now the continent should have been very advanced with respect to industrialisation but this is not the case.

It is thus important for African states to curb barriers like economic barriers and corruption. It is also important for African states to revamp the private sector, because this definitely is the gateway to industrialisation. A continent with a weak private sector and many security concerns cannot advance in the industrialisation era.

 
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Posted by on April 1, 2013 in Africa Development

 

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